BANK UNITED CORP, POS AM, 1997-02-07

BANK UNITED CORP
POS AM, 1997-02-07
SAVINGS INSTITUTION, FEDERALLY CHARTERED

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 7, 1997
REGISTRATION NO. 333-19237

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

POST-EFFECTIVE AMENDMENT NO. 1

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

BANK UNITED CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 6711
(PRIMARY STANDARD INDUSTRIAL
(STATE OF INCORPORATION) CLASSIFICATION CODE NUMBER)

13-3528556
(I.R.S. EMPLOYER
IDENTIFICATION NO.)

3200 SOUTHWEST FREEWAY
SUITE 1600
HOUSTON, TX 77251
(713) 543-6500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

JONATHON K. HEFFRON, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
3200 SOUTHWEST FREEWAY
HOUSTON, TX 77251
(713) 543-6500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

COPY TO:

CRAIG M. WASSERMAN, ESQ.
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, NY 10019
(212) 403-1000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such
time or times after the Registration Statement becomes effective as the Selling
Stockholders may determine.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

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

If this Form is a post-effective amendment filed pursuant to Rule 462(e)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] __________________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]

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

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

This Post-Effective Amendment No. 1 to Registration Statement No. 333-19237 is
being filed for the purpose of (i) filing the Rule 424(b)(1) Prospectus
Supplement dated February 5, 1997 and the alternative International Prospectus
Supplement cover and back pages and (ii) adding the following exhibits to the
Registration Statement: Form of U.S. Underwriting Agreement and Form of
International Underwriting Agreement.
<PAGE>
BANK UNITED CORP.
CROSS-REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501(B)
<TABLE>
<CAPTION>
ITEM
NO.
- -----
<S> <C>
I. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Outside Front Cover Page

II. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page; Table of Contents

III. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Prospectus Summary; Risk Factors; The Company

IV. Use of Proceeds..................................... Use of Proceeds

V. Determination of Offering Price..................... Not Applicable

VI. Dilution............................................ Not Applicable

VII. Selling Security Holders............................ Selling Stockholders

VIII. Plan of Distribution................................ Outside Front Cover Page; Plan of Distribution

IX. Description of Securities to be Registered.......... Outside Front Cover Page; Inside Front Cover Page;
Description of Capital Stock

X. Interests of Named Experts and Counsel.............. Not Applicable

XI. Information with respect to the Registrant.......... Outside Front Cover Page; Prospectus Summary; Risk
Factors; The Company; Use of Proceeds; Dividend
Policy; Capitalization; Selected Consolidated
Financial and Other Data; Management's Discussion
and Analysis of Financial Condition and Results of
Operations; Business; Regulation; Description of
Properties; Legal Proceedings; Management; Selling
Stockholders; Description of Capital Stock; Plan of
Distribution; Legal Matters; Experts; Available
Information; Financial Statements

XII. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... Not Applicable
</TABLE>
<PAGE>
RULE NO. 424(b)(1)
REGISTRATION NO. 333-19237
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 27, 1997)

3,887,920 SHARES

[LOGO] BANK
UNITED CORP.

CLASS A COMMON STOCK

The 3,887,920 shares of Class A common stock, par value $0.01 per share
("Class A Common Stock"), of Bank United Corp. (the "Company") offered
hereby (the "Shares") are being sold by certain of the stockholders of the
Company named in this Prospectus Supplement or their transferees, pledges,
donors or successors (collectively, the "Selling Stockholders" and those
selling Shares in the offerings described below the "Participating Selling
Stockholders"). See "Participating Selling Stockholders" herein. Of the
3,887,920 Shares offered hereby, 3,110,320 are being offered initially in the
United States and Canada by the U.S. Underwriters (as defined below) and 777,600
are being offered initially outside the United States and Canada by the
International Managers (as defined below, and together with the U.S.
Underwriters, the "Underwriters"). Such offerings are referred to collectively
as the "Offerings". The initial public offering price and the underwriting
discount and commission per Share will be identical for each of the Offerings.
See "Underwriting". The Company will not receive any of the proceeds from the
sale of the Shares by the Participating Selling Stockholders.
The Class A Common Stock is traded on the Nasdaq Stock Market's National
Market (the "NASDAQ") under the symbol "BNKU". On February 5, 1997, the last
reported sale price of the Class A Common Stock on the NASDAQ was $29.50 per
share. Prospective purchasers of the Class A Common Stock are urged to obtain
current information as to market prices of the Class A Common Stock.

SEE "RISK FACTORS" BEGINNING ON PAGE 16 OF THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS IN THE CLASS A COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC"), THE OFFICE OF THRIFT SUPERVISION (THE "OTS")
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION, THE
FDIC, THE OTS OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
THE SHARES OF CLASS A COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION, AND ARE
NOT INSURED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY.
===============================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PARTICIPATING SELLING
PUBLIC(1) COMMISSIONS(1) STOCKHOLDERS(2)
- -------------------------------------------------------------------------------
Per Share.. $29.00 $1.02 $27.98
- -------------------------------------------------------------------------------
Total(3)... $112,749,680 $3,965,678 $108,784,002
===============================================================================
(1) The Company and the Participating Selling Stockholders have severally agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting" herein.

(2) The Company has agreed to pay certain expenses estimated at approximately
$150,000 in connection with the sale of Shares by the Selling Stockholders
pursuant to the Registration Statement (as defined in the accompanying
Prospectus), including the sale of the Shares by the Participating Selling
Stockholders in the Offerings.

<PAGE>
IN CONNECTION WITH THESE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF CLASS A
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON NASDAQ OR OTHERWISE SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

DURING THESE OFFERINGS, CERTAIN PERSONS AFFILIATED WITH PERSONS
PARTICIPATING IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN
ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS IN THE CLASS A COMMON STOCK PURSUANT TO
EXEMPTIONS FROM RULES 10B-6, 10B-7, AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED.

S-2
<PAGE>
PROSPECTUS SUPPLEMENT

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
herein and in the accompanying Prospectus. Investors should carefully review the
information contained in this Prospectus Supplement and in the accompanying
Prospectus. The fiscal year for Bank United Corp. and its subsidiary, Bank
United, a federally chartered savings bank (the "Bank"), ends September 30,
and, unless otherwise indicated, references to particular years are to fiscal
years ending September 30 of the year indicated. As used herein, the term
"Company" refers to Bank United Corp. and its predecessors, and its
consolidated subsidiaries, unless the context otherwise requires.

THE COMPANY

The Company is a broad based financial services provider to consumers and
businesses in Texas and other selected regional markets throughout the United
States. Through the Bank, the Company currently operates 70 Texas based
community banking branches serving nearly 200,000 households and businesses, 9
commercial banking offices and network of mortgage offices. At September 30,
1996, the Company had assets of $10.7 billion, deposits of $5.1 billion and
stockholders' equity of $531.0 million. The Company was the largest publicly
traded depository institution headquartered in Texas, in terms of both assets
and deposits, at September 30, 1996.

The Company operates in two business segments.

BANKING SEGMENT

-- COMMUNITY BANKING GROUP. The Community Banking Group's principal
activities include deposit gathering, consumer lending,
small-business banking and investment product sales. The community
Banking Group, which has marketed itself under the name "Bank
United" since 1993, currently operates a 70-branch community banking
network, a 24-hour telephone banking center and a 66-unit ATM
network, which together serve as the platform for the Company's
consumer and small business banking activities. The community
banking branch network includes 37 branches in the greater Houston
area, 29 branches in the Dallas/Ft. Worth metropolitan area, and two
branches each in Austin and San Antonio. Through its branch network,
the Company maintains more than 440,000 accounts with an estimated
200,000 households and businesses. See "Business -- Community
Banking Group".

-- COMMERCIAL BANKING GROUP. The Commercial Banking Group provides
credit and a variety of cash management and other services to real
estate and related businesses. Business is solicited in Texas and in
targeted regional markets throughout the United States. The
Commercial Banking Group is expanding its products and industry
specialties to include health care lending, asset-based lending and
other commercial and industrial loan products. See
"Business -- Commercial Banking Group".

-- FINANCIAL MARKETS GROUP. The Financial Markets Group manages the
Company's asset portfolio activities, including loan acquisition and
management and the securitization of loans. Additionally, under the
supervision of the Asset and Liability Committee (the "ALCO"), the
Financial Markets Group is responsible for the Company's investment
portfolio, for interest rate risk hedging strategies, and for
securing funding sources other than consumer and commercial deposits.
See "Business -- Financial Markets Group".

MORTGAGE BANKING SEGMENT

S-3
<PAGE>
The Company's address is 3200 Southwest Freeway, Houston, TX 77251, and its
phone number is (713) 543-6500.

RECENT DEVELOPMENTS

The following sets forth selected financial data for the periods indicated.
The selected consolidated financial data as of December 31, 1996 and September
30, 1996 and for the three months ended December 31, 1996 and 1995,
respectively, are derived from the unaudited consolidated financial statements
of the Company, which in the opinion of management, contain all adjustments
(consisting only of normal recurring adjustments), which are necessary for a
fair presentation of the results for such periods. The information set forth
below should be read in conjunction with the Consolidated Financial Statements
and the Notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in the accompanying
Prospectus. The results of operations for the three months ended December 31,
1996 are not necessarily indicative of the results of operations to be obtained
for the entire fiscal year.

AT AT
DECEMBER 31, SEPTEMBER 30,
1996 1996
------------ -------------
(DOLLARS IN THOUSANDS)
STATEMENT OF FINANCIAL CONDITION DATA:
Total assets....................... $11,059,646 $10,712,377
Mortgage-backed securities......... 1,592,184 1,657,908
Loans.............................. 7,957,010 7,519,488
Deposits........................... 4,999,286 5,147,945
Borrowings(1)...................... 5,013,547 4,437,672
Minority interest: Bank Preferred
Stock............................. 185,500 185,500
Total stockholders' equity......... 545,148 531,043

FOR THE THREE MONTHS
ENDED DECEMBER 31,
--------------------
1996 1995
--------- ---------
(DOLLARS IN
THOUSANDS,
EXCEPT PER SHARE
DATA)
STATEMENT OF OPERATIONS DATA:
Net interest income................ $ 65,785 $ 57,044
Provision for credit losses........ 6,914 2,669
Non-interest income................ 29,666 26,922
Non-interest expense............... 53,078 49,292
Income before income taxes and
minority interest................. 35,459 32,005
Net income......................... 17,263 14,084
Net income applicable to common
shares............................ 17,263 13,144
Earnings per common share(2)....... 0.55 0.46
Dividends paid per common share.... 0.14 --

S-4
<PAGE>
AT OR FOR THE THREE MONTHS
ENDED DECEMBER 31,
----------------------------
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)
OTHER DATA:
Mortgage servicing
portfolio -- period end........... $ 13,237,225 $ 12,133,603
Operating earnings(3).............. 33,878 28,780
Common shares outstanding
Period end.................... 31,595,596 28,863,000
Average....................... 31,595,596 28,863,000
Book value -- period end........... 17.25 17.79
Tangible book value -- period
end............................... 16.76 16.93

AT OR FOR THE
THREE MONTHS ENDED
DECEMBER 31,
--------------------
1996 1995
--------- ---------
CERTAIN RATIOS(4):
Return on average assets........ 0.80% 0.64%
Return on average common
equity.......................... 12.67 11.08
Stockholders' equity to
assets.......................... 4.93 4.43
Tangible stockholders' equity to
tangible assets................. 4.79 4.22
Net yield on interest-earning
assets.......................... 2.63 2.10
Non-interest expenses to average
total assets.................... 0.49 0.42
Efficiency ratio(5)............. 55.48 59.24
Allowance for credit losses to
net nonaccrual loans............ 48.38 40.07
Allowance for credit losses to
total loans..................... 0.54 0.47
Net loan charge-offs to average
loans........................... 0.16 0.10
Nonperforming assets to total
assets.......................... 1.12 1.02
REGULATORY CAPITAL RATIOS OF THE
BANK:
Tangible Capital................ 6.63 6.53
Core Capital.................... 6.69 6.61
Total Risk-Based Capital........ 12.74 13.97
- ------------
(1) Includes FHLB Advances, securities sold under agreements to repurchase and
long-term debt.

(2) Earnings per common share represents net income (adjusted in fiscal 1996 for
earnings on the common stock equivalents attributable to the Bank's Warrant)
divided by the weighted average number of common shares outstanding. Common
stock equivalents on the Bank's Warrant were computed using the treasury
stock method. The Warrant was exercised in August, 1996.

(4) Ratio, yield, and rate information are based on weighted average daily
balances for the three months ended December 31, 1996 and 1995, with the
exception of return on average common equity which is based on average
monthly balances. Interim rates and yields are annualized.

(5) Efficiency ratio represents non-interest expenses (excluding goodwill
amortization) divided by net interest income plus non-interest income,
excluding net gains (losses) on securities, MBS, and other loans.

S-5
<PAGE>
Net income was $17.3 million ($0.55 per share) for the quarter ended
December 31, 1996, compared to $14.1 million ($0.46 per share) for the quarter
ended December 31, 1995. The increase in net income during the quarter ended
December 31, 1996 compared to the year ago quarter primarily reflects higher net
interest income due to an increase in the net yield on interest-earning assets,
partially offset by a decrease in average interest-earning assets. The net yield
on interest-earning assets increased to 2.63% for the current quarter, up from
2.10% for the prior year quarter (2.48% and 2.04%, respectively, excluding the
effects of certain loan discounts recognized) reflecting higher rates on
adjustable-rate mortgages and lower funding costs. Average interest-earning
assets declined to $10.2 billion for the quarter ended December 31, 1996, from
$11.3 billion for the same period in the prior year as a result of a $1.5
billion reduction in average single family loans and MBS primarily due to
principal repayments and sales. Increased loan servicing fees and charges for
the current quarter reflects an increase in the portfolio of single family loans
serviced for others due to purchases. Such increases were partially offset by
higher provisions for credit losses due to changes in the composition of the
loan portfolio and increased non-interest expenses, primarily caused by higher
mortgage servicing levels and legal expenses related to the supervisory goodwill
and forbearance litigation.

Total assets increased $347.3 million during the quarter ended December 31,
1996, to $11.1 billion. The majority of the increase in assets occurred as a
result of higher levels of outstanding commercial and consumer loans.

On January 17, 1997, the Company sold all of its 61 retail mortgage
origination offices located outside of Texas, except the El Paso office, and
four of its twelve wholesale lending offices, and related administrative and
support functions. The Company's sale of these businesses further evidences its
commitment to its strategic focus on traditional community and commercial
banking products and services. The Company intends to continue its mortgage
origination capability in Texas through its 70 branch locations in the state and
will retain several other higher margin units of its mortgage business,
including its mortgage servicing business. The Company does not expect that the
loss of revenues as a result of the sale to have a material impact on its
earnings and intends to redeploy the funds previously expended on such
operations to other, higher margin areas of its operations.

THE OFFERINGS

Class A Common Stock offered by
the Participating Selling Stockholders OFFERED HEREBY OPTION SHARES
U.S. Offering........................ 3,110,320 Shares 311,033 Shares
International Offering............... 777,600 Shares 77,760 Shares
------------------- ---------------
Total........................... 3,887,920 Shares 388,793 Shares

Use of Proceeds........................... The Company will receive none of the
proceeds of the Shares sold by the
Participating Selling Stockholders.

NASDAQ Symbol............................. BNKU

S-6

<PAGE>
PARTICIPATING SELLING STOCKHOLDERS

The Participating Selling Stockholders consist of certain of the Selling
Stockholders listed in the accompanying Prospectus. See "Selling Stockholders"
in the Prospectus. Not all of the Shares covered by the Prospectus are being
offered in the Offerings. The following table sets forth information with
respect to the beneficial ownership of Class A Common Stock by the Participating
Selling Stockholders as of the date of this Prospectus Supplement and the number
of Shares of Class A Common Stock offered by each of the Participating Selling
Stockholders in the Offerings and the Shares subject to purchase upon exercise
of the Underwriters' over-allotment options.
<TABLE>
<CAPTION>
SHARES OF
CLASS A
COMMON
STOCK
OWNED
AS OF THE SHARES OPTION
HOLDER DATE HEREOF(2) OFFERED HEREBY SHARES
- ---------------------------------------- -------------- --------------- -------
<S> <C> <C> <C>
Equitable Capital Partners L.P.......... 877,908 708,675 70,868
Equitable Deal Flow Fund L.P............ 733,774 592,350 59,235
The Sweater Trust....................... 520,908 473,553 47,355
Equitable Capital Partners (Retirement
Fund) L.P............................. 432,403 348,975 34,897
SunAmerica, Inc......................... 868,181 334,710 33,471
United Congregation Mesorah............. 407,882 331,819 33,181
The Airlie Group........................ 347,273 315,703 31,570
Marilyn B. Arison....................... 694,545 315,702 31,571
Institutional Interests................. 266,993 242,721 24,272
Leslie Wexner........................... 347,273 109,307 10,931
CHESED Congregations of America......... 214,675 92,727 9,273
Ranieri Bros. Shay & Co., Inc.(1)....... 19,506 17,732 1,774
Connie S. Maniatty...................... 17,363 3,946 395
--------------- -------
Total......................... 3,887,920 388,793
=============== =======
</TABLE>
- ------------
(1) All stock owned by Lewis S. Ranieri, Salvatore A. Ranieri, Scott A. Shay,
David M. Golush, Patricia A. Sloan, David W. Marcus and Jeffrey P.
Cheeseman.

(2) Not all shares owned by certain of the Selling Stockholders are currently
registered under the Registration Statement of which the accompanying
Prospectus forms a part.

Lewis S. Ranieri is the Chairman of the Board of the Company and Salvatore
A. Ranieri and Scott A. Shay are directors of the Company. All of the
Participating Selling Stockholders are general partners and limited partners of
Hyperion Partners L.P., a Delaware limited partnership, entities with whom a
limited partner of Hyperion Partners L.P. has a fiduciary relationship, or their
transferees, pledges, donees or successors. See "Underwriting" herein and
"Selling Stockholders" in the Prospectus.

S-7
<PAGE>
UNDERWRITING

Under the terms of, and subject to the conditions contained in, the U.S.
Underwriting Agreement, the form of which is filed as an exhibit to the
Registration Statement, the underwriters named below (the "U.S.
Underwriters"), for whom Lehman Brothers Inc. is acting as representative (the
"Representative"), have severally agreed, subject to the terms and conditions
of the U.S. Underwriting Agreement, to purchase from the Participating Selling
Stockholders the aggregate number of Shares set forth opposite the name of each
such U.S. Underwriter below:

NUMBER OF
U.S. UNDERWRITERS SHARES
- ------------------------------------- ---------
Lehman Brothers Inc.................. 710,110
Merrill Lynch, Pierce, Fenner &
Smith Incorporated................... 710,105
Smith Barney Inc..................... 710,105
Bear, Stearns & Co. Inc.............. 44,500
Sanford C. Bernstein & Co., Inc...... 44,500
Credit Suisse First Boston
Corporation........................ 44,500
A.G. Edwards & Sons, Inc............. 44,500
Fox-Pitt, Kelton Inc................. 44,500
Goldman, Sachs & Co.................. 44,500
Keefe, Bruyette & Woods, Inc......... 44,500
Montgomery Securities................ 44,500
Morgan Stanley & Co. Incorporated.... 44,500
PaineWebber Incorporated............. 44,500
Principal Financial Securities,
Inc................................ 44,500
Rauscher Pierce Refsnes, Inc......... 44,500
Salomon Brothers Inc................. 44,500
H.C. Wainwright & Co., Inc........... 44,500
Advest, Inc.......................... 21,000
Robert W. Baird & Co. Incorporated... 21,000
M. R. Beal & Company................. 21,000
Cowen & Company...................... 21,000
Doft & Co., Inc...................... 21,000
First of Michigan Corporation........ 21,000
Friedman, Billings, Ramsey & Co.,
Inc................................ 21,000
Furman Selz LLC...................... 21,000
Hoefer & Arnett Inc.................. 21,000
Legg Mason Wood Walker,
Incorporated....................... 21,000
McDonald & Company Securities,
Inc................................ 21,000
Roney & Co., L.L.C................... 21,000
Sanders Morris Mundy Inc............. 21,000
Southeast Research Partners, Inc..... 21,000
Southwest Securities, Inc............ 21,000
Stifel, Nicolaus & Company,
Incorporated....................... 21,000
William K. Woodruff & Company
Incorporated....................... 21,000
---------
Total........................... 3,110,320
=========

Under the terms of, and subject to the conditions contained in, the
International Underwriting Agreement, the form of which is filed as an exhibit
to the Registration Statement, the managers named below (the "International
Managers" and, together with the U.S. Underwriters, the "Underwriters") of
the International Offering for whom Lehman Brothers International (Europe) is
acting as the lead manager (the "Lead Manager"), have severally agreed,
subject to the terms and conditions of the International Underwriting Agreement,
to

S-8
<PAGE>
purchase from the Participating Selling Stockholders the aggregate number of
Shares set forth opposite the name of each such International Manager below:

NUMBER OF
INTERNATIONAL MANAGERS SHARES
- ------------------------------------- ---------
Lehman Brothers International
(Europe)............................. 259,200
Merrill Lynch International.......... 259,200
Smith Barney Inc..................... 259,200
---------
Total........................... 777,600
=========

The U.S. Underwriting Agreement and the International Underwriting
Agreement (collectively, the "Underwriting Agreements") provide that the
obligations of the U.S. Underwriters and the International Managers to purchase
the Shares are subject to certain conditions, and that if any of the foregoing
Shares are purchased by the U.S. Underwriters pursuant to the U.S. Underwriting
Agreement or by the International Managers pursuant to the International
Underwriting Agreement, then all of the Shares agreed to be purchased by either
the U.S. Underwriters or the International Managers, as the case may be,
pursuant to their respective Underwriting Agreements, must be so purchased. The
offering price and underwriting discount and commission per share are identical
for each of the Offerings. The closing of the U.S. Offering is a condition to
the closing of the International Offering and the closing of the International
Offering is a condition to the closing of the U.S. Offering. The representatives
have performed other investment banking services outside of these Offerings for
which they have been paid customary fees.

The Participating Selling Stockholders have been advised that the U.S.
Underwriters and the International Managers propose to offer the Shares directly
to the public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain selected dealers (who may include the U.S.
Underwriters and the International Managers) at such public offering price less
a selling concession not in excess of $0.61 per share. The selected dealers may
reallow a concession not in excess of $0.10 per share to certain brokers and
dealers. After the Offerings, the public offering price, the concession to
selected dealers and the reallowance may be changed by the U.S. Underwriters and
the International Managers. The Underwriters have agreed to pay Ranieri & Co.,
Inc. a consulting fee of $0.0725 per Share for its efforts to identify and
organize the Participating Selling Stockholders. See "Participating Selling
Stockholders" herein and -- "Security Ownership of Certain Beneficial Owners
and Management -- Security Ownership of Management -- Certain Relationships and
Related Transactions" in the Prospectus.

Each of the Participating Selling Stockholders have agreed to indemnify the
U.S. Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act, and to contribute to payments
that the U.S. Underwriters and the International Managers may be required to
make in respect thereof.

The Participating Selling Stockholders have each granted to the U.S.
Underwriters and the International Managers options to purchase up to an
aggregate of 311,033 and 77,760 additional Shares, respectively, exercisable
solely to cover over-allotments, at the initial public offering price less the
underwriting discounts and commissions shown on the cover page of this
Prospectus Supplement. Such options may be exercised at any time until 30 days
after the date of the Underwriting Agreements. To the extent that such options
are exercised, each Underwriter will be committed, subject to certain
conditions, to purchase a number of additional Shares proportionate to such
Underwriter's initial commitments as indicated in the preceding tables.

The U.S. Underwriters and the International Managers have entered into an
agreement (the "Agreement between U.S. and International Managers") pursuant
to which each U.S. Underwriter has agreed that, as part of the distribution of
the Shares offered in the U.S. Offering, (i) it is not purchasing any such
Shares for the account of anyone other than a U.S. or Canadian Person (as
defined below) and (ii) it has not offered or sold, will not offer, sell resell
or deliver, directly or indirectly, any such Shares or distribute any Prospectus
relating to the U.S. Offering to anyone other than a U.S. or Canadian Person. In
addition, pursuant to such agreement, each International Manager has agreed
that, as part of the distribution of the Shares offered directly in the
International Offering (i) it is not purchasing any such shares for the account
of a U.S. or Canadian Person, and (ii) it has not offered or sold, and will not
offer, sell, resell or deliver, directly or indirectly, any of such Shares or
distribute any Prospectus relating to the International Offering to any U.S. or
Canadian Person."

The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Underwriting Agreements and the
Agreement between U.S. Underwriters and the International Managers,

S-9
<PAGE>
including (i) certain purchases, and sales between the U.S. Underwriters and the
International Managers, (ii) certain offers, sales, resales, deliveries or
distributions to or through investment advisors or other persons exercising
investment discretion, (iii) purchase, offers or sales by a U.S. Underwriter who
is also acting as an International Manager or by an International Manager who is
also acting as a U.S. Underwriter and (iv) other transactions specifically
approved by the Representative and the Lead Manager. As used herein, the term
"U.S. or Canadian Person" means any resident or national of the United States
or Canada, any corporation, partnership or other entity created or organized in
or under the laws of the United States or Canada, or any estate of trust the
income of which is subject to U.S. or Canadian federal income taxation
regardless of the source of its income (other than a foreign branch of any U.S.
or Canadian Person), and the term "United States" means the United States of
America (including the states thereof and the District of Columbia) and its
territories, possessions and other areas subject to its jurisdiction and the
term "Canada" means Canada (including the provinces thereof) and its
territories, possessions and other areas subject to its jurisdiction.

Pursuant to the Agreement between U.S. Underwriters and the International
Managers, sales may be made between the U.S. Underwriters and the International
Managers of such a number of Shares as may be mutually agreed. The price of any
Shares so sold shall be the public offering price as then in effect for the
Shares being sold by the U.S. Underwriters and the International Managers, less
an amount equal to the selling concession allocable to such Shares, unless
otherwise determined by mutual agreement. To the extent that there are sales
between the U.S. Underwriters and the International Managers pursuant to the
Agreement between U.S. Underwriters and the International Managers, the number
of Shares available for sale by the U.S. Underwriters or by the International
Managers may be more or less than the amount specified on the cover page of this
Prospectus Supplement.

Each International Manager has represented and agreed that (i) it has not
offered or sold, and, prior to the date 180 days after the closing date of the
Offerings, will not offer or sell, any Shares to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances that do not constitute an offer
to the public in the United Kingdom for the purposes of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Public Offers of Securities Regulations 1995 and
the Financial Services Act of 1986 with respect to anything done by it in
relation to the Shares in, from or otherwise involving the United Kingdom; and
(iii) it has only issued and will only issue or pass on the United Kingdom any
document in connection with the issue or sale of Shares to a person who is of a
kind described in Article 11(3) of the Financial Services Act of 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom the
document may otherwise lawfully be issued or passed on.

This Prospectus is not, and under no circumstances is to be construed as,
an advertisement or a public offering of the Shares in Canada or any province or
territory thereof. Any offer or sale of the Shares in Canada may be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made.

Purchasers of the Shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

The Underwriters have informed the Company that they do not intend to
confirm sales of Shares offered hereby to any accounts over which they exercise
discretionary authority.

LW-SP1, L.P. and LW-SP2, L.P. which own an aggregate of 2,146,748 shares of
Class A Common Stock (6.8% of the outstanding Common Stock) are limited
partnerships of which LW Real Estate Investments, L.P. is general partner and
owns a 99% interest. Lehman Brothers Inc. owns an approximately 75% partnership
interest in LW Real Estate Investments. LW-SP1 and LW-SP2 have entered into the
Letter Agreement (as defined in the accompanying Prospectus) pursuant to which,
among other things, they have agreed not to transfer their Common Stock until
August 8, 1998. Accordingly, neither LW-SP1 or LW-SP2 is among the Participating
Selling Stockholders nor are their shares of Common Stock included among the
Shares covered by the accompanying prospectus.

LEGAL MATTERS

The validity of the Shares offered hereby will be passed on for the Company
by Wachtell, Lipton, Rosen & Katz, New York, New York. Certain legal matters
will be passed on for the Underwriters by Cleary, Gottlieb, Steen & Hamilton,
New York, New York.

S-10
<PAGE>
PROSPECTUS DATED JANUARY 27, 1997

PROSPECTUS

10,208,610 SHARES

[LOGO--BANK UNITED CORP]

CLASS A COMMON STOCK

The 10,208,610 shares of Class A common stock, par value $0.01 per share
("Class A Common Stock"), of Bank United Corp. (the "Company") covered
hereby (the "Shares") may be offered (the "Offering") and sold from time to
time by the holders named in this Prospectus or by their transferees, pledgees,
donees or successors (collectively, the "Selling Stockholders") pursuant to
this Prospectus as appropriately amended or supplemented. The Selling
Stockholders are the general partners and limited partners of Hyperion Partners
L.P., a Delaware limited partnership ("Hyperion Partners") and three other
entities with which an affiliate of Hyperion Partners has a fiduciary
relationship. See "Selling Stockholders". The Company will not receive any of
the proceeds from the sale of the Shares by the Selling Stockholders. The
Company has agreed to bear certain registration and similar expenses in
connection with the Offering and the Selling Stockholders will bear all other
expenses of the Offering, including brokerage fees and any underwriting
discounts or commissions.

The Shares may be offered or sold by the Selling Stockholders from time to
time directly to purchasers or through agents, underwriters or dealers on terms
to be determined at the time of sale. See "Plan of Distribution". If required,
the names of any such agents or underwriters involved in the sale of the Shares
in respect of which this Prospectus is being delivered and the applicable
agent's commission, dealer's purchase price or underwriter's discount, if any,
will be set forth in an accompanying supplement to this Prospectus.

The Company has two classes of common stock outstanding: Class A Common
Stock and Class B Common Stock, par value $0.01 per share ("Class B Common
Stock"). The Class A Common Stock and the Class B Common Stock (together, the
"Common Stock") have identical dividend and other rights, except that the
Class B Common Stock is non-voting and is convertible into Class A Common Stock
upon sale or transfer to unaffiliated parties or, subject to certain
limitations, at the election of the holder thereof. The Shares to be offered by
the Selling Stockholders pursuant to this Prospectus will consist solely of
shares of Class A Common Stock.

The Selling Stockholders and any broker-dealers, agents or underwriters
which participate in the distribution of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Securities Act"), and any commission received by them or any profit
received by them on the resale of Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution".

The Class A Common Stock is traded on the Nasdaq Stock Market's National
Market (the "NASDAQ") under the symbol "BNKU". On January 23, 1997, the last
reported sale price of the Class A Common Stock on the NASDAQ was $27 per share.
Prospective purchasers of the Class A Common Stock are urged to obtain current
information as to market prices of the Class A Common Stock.
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE CLASS A COMMON
STOCK OFFERED HEREBY.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC"), THE OFFICE OF THRIFT SUPERVISION (THE "OTS")
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION, THE FDIC,
THE OTS OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

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

THE SHARES OF CLASS A COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION, AND ARE
NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.

<PAGE>
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information, definitions and financial statements appearing elsewhere herein.
Investors should carefully review the entire Prospectus. The fiscal year for
Bank United Corp. and its subsidiary, Bank United, a federally chartered savings
bank (the "Bank"), ends September 30, and, unless otherwise indicated,
references to particular years are to fiscal years ending
September 30 of the year indicated. As used herein, the term "Company" refers
to Bank United Corp. and its predecessors, and its consolidated subsidiaries,
unless the context otherwise requires.

THE COMPANY

The Company is a broad based financial services provider to consumers and
businesses in Texas and other selected regional markets throughout the United
States. Through the Bank, the Company currently operates 70 Texas based
community banking branches serving nearly 200,000 households and businesses, 9
commercial banking offices and a network of mortgage offices. At September 30,
1996, the Company had assets of $10.7 billion, deposits of $5.1 billion and
stockholders' equity of $531.0 million. The Company was the largest publicly
traded depository institution headquartered in Texas, in terms of both assets
and deposits, at September 30, 1996.

The Company was incorporated in Delaware on December 19, 1988 as USAT
Holdings Inc. and became the holding company for the Bank upon the Bank's
formation on December 30, 1988. The Bank is a federally chartered savings bank,
the deposits of which are insured by the Savings Association Insurance Fund (the
"SAIF") which is administered by the FDIC. In December 1996, the Company
formed a new, wholly owned, Delaware subsidiary, BNKU Holdings, Inc.
("Holdings"). After acquiring all the common stock of Holdings, the Company
contributed all the common stock of the Bank to Holdings, and Holdings assumed
the obligations of the Company's $115 million 8.05% senior notes due May 15,
1998 (the "Senior Notes"). As a result of these transactions, Holdings is the
sole subsidiary of the Company and the Bank is the sole subsidiary of Holdings.
In conjunction with the formation of Holdings, the Company's headquarters were
relocated from Uniondale, New York to Houston, Texas. The Company's address is
3200 Southwest Freeway, Houston, TX 77251, and its phone number is (713)
543-6500.

BUSINESS STRATEGY

From its incorporation in December 1988 through the early 1990's, the
Company's strategy was to obtain assets and deposits through the acquisition of
failed thrifts and through purchases from the Resolution Trust Corporation (the
"RTC"). Operationally, the Company focused on traditional single family
mortgage lending and on deposit gathering. As a complement to these activities,
the Company entered the retail and wholesale mortgage banking businesses,
leveraging management's experience in the origination, purchase, sale,
structuring and securitization of mortgage loans, and the purchase and sale of
mortgage servicing rights ("MSRs").

The Company's financial priorities initially were focused towards
minimizing interest rate and credit risk while maximizing the net value of the
Company's assets and liabilities. To this end, the Company maintained a highly
liquid pool of securitizable assets as the core holdings of its loan portfolio.
The Company was very active in the buying and selling of loans, mortgage-backed
securities ("MBS") and MSRs when economically attractive.

Over the past few years, the Company's management has pursued a strategy
designed to reduce its reliance on its traditional thrift and mortgage banking
lines of business by developing higher margin consumer and commercial lending
lines of business. During this time, the Company has engaged in more aggressive
marketing campaigns and increased its portfolio of multi-family, residential
construction, consumer and commercial loans

2
<PAGE>

and the level of lower cost transaction and commercial deposit accounts. While
the pursuit of this strategy entails risks different than those present in
traditional single family lending lines of business, the Company believes it has
taken appropriate measures to manage these risks adequately. To manage potential
credit risk the Company has developed comprehensive credit approval and
underwriting policies and procedures for these lines of business. To offset
operational and competitive risk, the Company has hired experienced commercial
bank professionals, trained other personnel to manage and staff these
businesses, and closely monitors the conduct and performance of the business. In
addition to its efforts to increase originations of commercial and consumer
loans, the Company has been increasing the retention of higher yielding single
family and multi-family mortgage loans that, in the past, may have been sold or
securitized. The Company intends to continue to pursue additional expansion
opportunities, including acquisitions, while maintaining adequate
capitalization. See "Risk Factors -- Evolution of Business" and
"Business -- Community Banking Group" and " -- Commercial Banking Group".

On January 17, 1997, the Company sold all of its 61 retail mortgage
origination offices located outside of Texas, its El Paso retail origination
office and four of its twelve wholesale lending offices, and related
administrative and support functions, to National City Mortgage Co. ("NCM"). The
Company retained its network of retail origination branches in Texas, except for
the El Paso office, and continues to conduct its wholesale origination business
in several western states. The assets sold will be transferred to NCM on
February 1, 1997.

3
<PAGE>
OPERATIONAL OVERVIEW

The Company's operating structure reflects its current strategy, with four
business groups in two business segments.

Bank United Corp.
("the Company")
|
BNKU Holdings, Inc.
("Holdings")
|
Bank United
("the Bank")
|
|
--------------|-----------------
| |
| |
| |
Banking Segment Mortgage Banking Segment
| |
---------------------------------------------- |
| | | |
Community Commercial Financial Mortgage
Banking Banking Markets Banking
Group Group Group Group

ACTIVITIES
o Deposit Gathering o Mortgage Banker o Loan Acquisitions o Retail
o Consumer Lending Finance o Wholesale Fundings Mortgage
o Small Business o Multi-Family o Investment Portfolio Operations
Banking Lending Management o Wholesale
o Investment Product o Residential o Securitization of Mortgage
Sales Construction loans Operations
Lending o Mortgage
o Commerical Real Servicing
Estate Lending Operations

-- COMMUNITY BANKING GROUP. The Community Banking Group's principal
activities include deposit gathering, consumer lending, small-business
banking, and investment product sales. The Community Banking Group,
which has marketed itself under the name "Bank United" since 1993,
currently operates a 70 branch community banking network, a 24-hour
telephone banking center, and a 66-unit ATM network, which together
serve as the platform for the Company's consumer and small business
banking activities. The community banking branch network includes 37
branches in the greater Houston area, 29 branches in the Dallas/Ft.
Worth metropolitan area, and two branches each in Austin and San
Antonio. Through its branch network, the Company maintains more than
440,000 accounts with an estimated 200,000 households and businesses.

4
<PAGE>
-- COMMERCIAL BANKING GROUP. The Commercial Banking Group provides credit
and a variety of cash management and other services to certain real
estate and real estate related businesses. The Commercial Banking Group
conducts its activities through four units: Mortgage Banker Finance
("MBF"), a financial service provider to small- to medium-sized
mortgage companies; Multi-Family Lending; Residential Construction
Lending; and Commercial Real Estate Lending. Business is solicited in
Texas and in targeted regional markets throughout the United States.
The Commercial Banking Group is expanding its products and industry
specialties to include health care lending, asset-based lending and
other commercial and industrial loan products.

-- FINANCIAL MARKETS GROUP. The Financial Markets Group manages the
Company's asset portfolio activities, including loan acquisition and
management and the securitization of loans. Additionally, under the
supervision of the Asset and Liability Committee (the "ALCO"), the
Financial Markets Group is responsible for the Company's investment
portfolio, for interest rate risk hedging strategies, and for securing
funding sources other than consumer and commercial deposits.

-- MORTGAGE BANKING GROUP. The Mortgage Banking Group principally engages
in three activities: retail mortgage originations, wholesale mortgage
originations and mortgage servicing. The Mortgage Banking Group
operates under the names "Bank United Mortgage" in Texas and Virginia
and "Commonwealth United Mortgage" elsewhere in the United States.
The Mortgage Banking Group originates and services first mortgage loans
for single family residences for both the Company's portfolio and for
investors. The Company's servicing portfolio at September 30, 1996 was
$13.2 billion. The Company has implemented a profitability improvement
plan with respect to its mortgage origination business which included
office closures, workforce reductions and related actions, and in
fiscal 1996 the Company recorded a $10.7 million restructuring charge,
before taxes, and recorded $1.8 million of other expenses related to
the mortgage origination business. On January 17, 1997, the Company
sold all of its 61 retail mortgage origination offices located outside
of Texas and four of its twelve wholesale lending offices, and related
administrative and support functions, to NCM. The Company retained its
network of retail origination branches in Texas, except its El Paso
office, and continues to conduct its wholesale origination business in
several western states. The assets will be transferred to NCM on
February 1, 1997.

BACKGROUND OF THE OFFERING

The Company was organized, and through June 17, 1996, operated as a
subsidiary of Hyperion Holdings Inc., a Delaware corporation ("Hyperion
Holdings"). During that period, all of the outstanding shares of Hyperion
Holdings were owned by Hyperion Partners L.P., a Delaware Limited Partnership
("Hyperion Partners"). The general partner of Hyperion Partners is indirectly
controlled by three individuals, including Lewis S. Ranieri, who from the
Company's organization in 1988 has served as Chairman of the Board of the
Company and, until July 15, 1996, also as President and Chief Executive Officer
("CEO") of the Company and Chairman of the Board of the Bank.

DIVIDEND, DISTRIBUTION AND RESTRUCTURING

In May 1996, the Company paid a dividend of $100 million to Hyperion
Holdings and other holders of its common stock and made a related contractually
required payment in lieu of dividends to the FDIC, as manager of the Federal
Savings and Loan Insurance Corporation ("FSLIC") Resolution Fund (the
"FDIC-FRF"), in the amount of $5.9 million. The dividends received by Hyperion
Holdings were paid by Hyperion Holdings as a dividend to Hyperion Partners which
distributed such amount to its limited and general partners in accordance with
its limited partnership agreement. During the quarter ended June 30, 1996, the
Company also recorded a $101.7 million tax benefit related to its net operating
loss carryforwards ("NOLs").

During June 1996, the following actions were taken in the order indicated
(collectively, the "Restructuring"): (i) Hyperion Holdings exchanged shares of
a newly created class of its nonvoting common stock for certain shares of its
voting common stock held by Hyperion Partners; (ii) Hyperion Partners then
distributed the

5
<PAGE>
Hyperion Holdings common stock owned by it to its limited and general partners
in accordance with its limited partnership agreement (the "Distribution"); and
(iii) following the Distribution, Hyperion Holdings was merged with and into the
Company (the "Merger"), with the result that holders of Hyperion Holdings
voting and non-voting common stock received shares of Class A Common Stock and
Class B Common Stock and the holders of the Company's Class C common stock, par
value $0.01 per share ("Class C Common Stock") received shares of Class B
Common Stock. As part of the Restructuring, the common stock of the Company was
converted 1,800 to one. Subsequent to the Restructuring, there were no shares of
Class C Common Stock outstanding. The Restructuring was undertaken to simplify
the ownership structure of the Company in order to facilitate financial and tax
reporting, marketing of the Class A Common Stock and management of the Company's
operations. In addition, the FDIC-FRF surrendered to the Bank a portion of the
warrant (the "Warrant") it held to purchase 158,823 shares of Common Stock of
the Bank ("Bank Common Stock") for a cash payment of $6.1 million and
exercised the remainder of the Warrant. Immediately thereafter, the FDIC-FRF
exchanged the shares of Bank Common Stock issued upon exercise of the balance of
the Warrant for 1,503,560 shares of Common Stock. See "Business -- The
Assistance Agreement" and "Selling Stockholders".

In August 1996, the Company completed the offering of 12,075,000 shares of
Class A Common Stock (the "August Offering"). Of the 12,075,000 shares sold,
910,694 were sold by the Company, with the balance sold by certain selling
stockholders, including the FDIC-FRF which sold all of the shares received upon
exercise of the Warrant. Since the August Offering, the Class A Common Stock has
been listed on the NASDAQ under the symbol "BNKU". On January 23, 1997, the
last reported sale price of the Class A Common Stock on the NASDAQ was $27 per
share. The 10,208,610 shares of Class A Common Stock covered by this Prospectus
may be sold by the Selling Stockholders from time to time following the
expiration of the lock-up agreements to which the shares are subject, the first
of which expires on February 10, 1997. See "Selling Stockholders" and "Plan
of Distribution".

MANAGEMENT

Day-to-day operations of the Bank are directed by Barry C. Burkholder,
President and CEO of the Bank, who brings over 20 years of commercial banking
experience to the Bank, with specific experience in consumer banking, mortgage
banking and related areas. In connection with the Restructuring and the August
Offering, on July 15, 1996 Mr. Burkholder became Chairman of the Board of the
Bank as well as President and CEO of the Company. The executive management group
of the Bank consists of eight individuals who have worked together for the past
six years, giving them a thorough understanding of the businesses they have
developed together. They average more than 20 years of related industry
experience, the majority of which comes from commercial banking. As a team, they
have brought the discipline and sophistication of commercial banking to the
Bank. The next level of senior management is composed of 41 executives, a third
of whom were hired directly from commercial banks. The balance of the senior
management team has experience working with various financial services
companies, including mortgage banks, thrifts and accounting firms. See
"Management".

Lewis S. Ranieri, who has over 20 years of investment experience with
particular expertise in the field of MBS, previously served as Chairman of the
Board of the Bank and of the Company as well as President and CEO of the Company
in which capacities he has served as a source of strategic advice to the senior
management of the Bank. Mr. Ranieri serves as Chairman of the Board of the
Company and as a director of the Bank and provides strategic and managerial
advice to the Company under the terms of a three year consulting agreement
entered into between Mr. Ranieri and the Company at the time of the August
Offering pursuant to which he receives an annual consulting fee of $250,000. See
"Risk Factors -- Dependence on Key Personnel" and "Management -- Certain
Relationships and Related Transactions".

FUTURE TAX BENEFITS

In connection with the acquisition from the FSLIC of certain of the assets
and the assumption of all the deposits and certain other liabilities of United
Savings Association of Texas ("Old USAT"), an insolvent thrift (the
"Acquisition"), and the related Assistance Agreement (as defined herein), the
Company succeeded to and

6
<PAGE>
recorded substantial NOLs which have resulted in certain tax benefits. As of
September 30, 1996, the Company had NOLs of $817 million available to reduce
taxable income in future years. Pursuant to the Tax Benefits Agreement (as
defined herein), the Bank is required to pay to the FRF a specified portion of
net tax benefits obtained through the taxable year ending nearest to September
30, 2003. See "Regulation -- Taxation -- FSLIC Assistance".

The August Offering and the Offering have been structured with the intent
to preserve the beneficial tax attributes of the Company as described above. See
"Regulation -- Taxation". Accordingly, transfers and other dispositions of
Common Stock by certain of the Selling Stockholders and other holders of the
Common Stock were limited by provisions of the Company's Restated Certificate of
Incorporation (the "Certificate") and the Company's By-Laws (the "By-Laws")
for up to three years following the August Offering, except in certain
circumstances, including the approval of the Board of Directors of the Company.
See "Description of Capital Stock -- Common Stock". The limitations on
transfers and other dispositions of Common Stock allowed the Company to record a
$101.7 million tax benefit in the quarter ended June 30, 1996. See "Risk
Factors -- Limitations on Use of Tax Losses; Restrictions on Transfers of
Stock", "Capitalization" and Note 14 to the Consolidated Financial
Statements.

CLAIMS RELATED TO FORBEARANCE AGREEMENT

In connection with the original acquisition of the Bank by the Company, the
Federal Home Loan Bank Board (the "FHLBB") approved a forbearance letter,
issued on February 15, 1989 (the "Forbearance Agreement"). Under the terms of
the Forbearance Agreement, the FSLIC agreed to waive or forbear from the
enforcement of certain regulatory provisions with respect to regulatory capital
requirements, liquidity requirements, accounting requirements and other matters.
After the enactment of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), the OTS took the position that the capital
standards set forth in FIRREA apply to all savings institutions, including those
institutions that had been operating under previously granted capital and
accounting forbearances, and that FIRREA eliminated these forbearances. While
the Bank has not had to rely on such forbearances or waivers in order to remain
in compliance with existing capital requirements as interpreted by the OTS, the
position of the OTS has adversely affected the Bank by curtailing the growth and
reducing the leverage contemplated by the terms of the Forebearance Agreement.
The Bank also has been and continues to be in compliance with all of the other
referenced regulatory capital provisions and, accordingly, has not had to rely
on the waivers or forbearances provided in the Acquisition.

On July 25, 1995, the Bank, the Company, and Hyperion Partners
(collectively, "Plaintiffs") filed suit against the United States in the Court
of Federal Claims for alleged failures of the United States (i) to abide by a
capital forbearance, which would have allowed the Bank to operate for ten years
under negotiated capital levels lower than the levels required by the then
existing regulations or successor regulations, (ii) to abide by its commitment
to allow the Bank to count $110 million of subordinated debt as regulatory
capital for all purposes, and (iii) to abide by an accounting forbearance, which
would have allowed the Bank to count as capital for regulatory purposes, and to
amortize over a period of twenty-five years, the $30.7 million difference
between certain FSLIC payment obligations to the Bank and the discounted present
value of those future FSLIC payments. The lawsuit is in a preliminary stage. The
lawsuit was stayed pending the United States Supreme Court's review of UNITED
STATES V. WINSTAR CORP., an action by three other thrifts raising similar issues
(the "WINSTAR cases"). On July 1, 1996, the Supreme Court upheld lower court
rulings that the United States had breached the contracts involved in the
WINSTAR cases and remanded the case for further proceedings on the issue of
damages. Since the Supreme Court ruling, the Chief Judge of the Court of Federal
Claims convened a number of status conferences to establish a case management
protocol for the more than 100 lawsuits on the Court of Federal Claims docket,
that, like Plaintiffs' case, involve issues similar to those raised in the
WINSTAR cases.

7
<PAGE>
other judges of the United States Court of Federal Claims to resolve pre-trial
discovery disputes and common legal issues and to conduct trials. The Government
and Plaintiffs exchanged certain significant documents as early as October 2,
1996 pursuant to a court order, and the Company and the Bank are in the process
of responding to the Government's first discovery request. Trials on damages in
two of the three WINSTAR cases that were decided by the United States Supreme
Court in July 1996 are scheduled for early 1997. Damages trials in the remaining
cases subject to the Omnibus Case Management Plan are scheduled to begin four
months after completion of the first two damages trials. The Company's case is
one of thirteen cases that "shall be accorded priority in the scheduling" of
the damages trials under the Omnibus Case Management Order.

In December 1996, Chief Judge Smith decided the motion IN LIMINE on damage
theories of Glendale Federal, one of the four WINSTAR plaintiffs, and allowed
Glendale Federal to assert several alternative damages theories against the
Government.

While the Company expects Plaintiffs' claims for damages to exceed $200
million, the Company is unable to predict the outcome of Plaintiffs' suit
against the United States and the amount of judgment for damages, if any, that
may be awarded. The Company, on November 27, 1996, moved for partial summary
judgement on liability and is pursuing an early trial on damages. Uncertainties
remain concerning the administration of the Omnibus Case Management Order and
the future course of the Company's lawsuit pursuant to the Omnibus Case
Management Order. Accordingly, the Company cannot predict the timing of any
resolution of its claims. The Company expects the trial of its case to commence
during the first quarter of fiscal 1998. The Company is also unable to predict
the outcome of its suit against the United States and the amount of judgment for
damages, if any, that may be awarded. Consequently, no assurances can be given
as to the results of this suit. See "Legal Proceedings".

The Company and the Bank have entered into an agreement with Hyperion
Partners acknowledging the relative value, as among the parties, of their claims
in the pending litigation. The agreement confirms that the Company and the Bank
are entitled to receive 85% of the amount, if any, recovered as a result of the
settlement of or a judgment on such claims, and that Hyperion Partners is
entitled to receive 15% of such amount. The agreement was approved by the
disinterested directors of the Company. Plaintiffs will continue to cooperate in
good faith and will use their best efforts to maximize the total amount, if any,
that they may recover.

8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The following table presents summary selected historical financial data of
the Company. The information set forth below should be read in conjunction with
the consolidated financial statements of the Company and the Notes thereto set
forth elsewhere herein (the "Consolidated Financial Statements") and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations". The statement of operations data set forth below for each of the
three years ended September 30, 1996, 1995 and 1994 and the statement of
financial condition data at September 30, 1996 and 1995 are derived from, and
are qualified by reference to, the audited Consolidated Financial Statements.
The statement of operations data set forth below for the years ended September
30, 1993 and 1992 and the statement of financial condition data at September 30,
1994, 1993 and 1992 are derived from the Company's audited consolidated
financial statements.
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF FINANCIAL CONDITION DATA
Total assets......................... $ 10,712,377 $ 11,983,534 $ 8,910,161 $ 8,440,556 $ 6,255,283
Loans................................ 7,519,488 8,260,240 5,046,174 4,862,379 4,101,716
Mortgage-backed securities........... 1,657,908 2,398,263 2,828,903 2,175,925 833,425
Deposits............................. 5,147,945 5,182,220 4,764,204 4,839,388 4,910,760
Federal Home Loan Bank advances(1)... 3,490,386 4,383,895 2,620,329 2,185,445 632,345
Securities sold under agreements to
repurchase and federal funds
sold............................... 832,286 1,172,533 553,000 310,000 --
Long-term borrowings(1).............. 115,000 115,000 115,000 115,000 106,090
Minority interest -- Bank Preferred
Stock(2)........................... 185,500 185,500 85,500 85,500 --
Total stockholders' equity(3)........ 531,043 496,103 451,362 389,203 232,373
Book value per common share(4)....... 16.81 17.19 15.64 13.48 8.19

STATEMENT OF OPERATIONS DATA
Interest income...................... $ 812,312 $ 746,759 $ 494,706 $ 482,490 $ 502,854
Interest expense..................... 584,778 552,760 320,924 300,831 348,291
------------- ------------- ------------ ------------ ------------
Net interest income............. 227,534 193,999 173,782 181,659 154,563
Provision for credit losses.......... 16,469 24,293 6,997 4,083 21,133
------------- ------------- ------------ ------------ ------------
Net interest income after
provision for credit losses... 211,065 169,706 166,785 177,576 133,430
Non-interest income.................. 110,036 114,981 118,889 146,691 103,790
Non-interest expense................. 253,265 194,576 199,593 201,964 180,415
------------- ------------- ------------ ------------ ------------
Income before income taxes,
minority interest and
extraordinary loss............ 67,836 90,111 86,081 122,303 56,805
Income tax expense (benefit)......... (75,765) 37,415 (31,899) (26,153) 200
Less minority interest(2)(5)......... 24,666 10,977 9,010 6,537 --
Extraordinary loss(6)................ -- -- -- 14,549 --
------------- ------------- ------------ ------------ ------------
Net income...................... $ 118,935 $ 41,719 $ 108,970 $ 127,370 $ 56,605
============= ============= ============ ============ ============
Net income applicable to common
shares........................ $ 113,327 $ 38,824 $ 102,519 $ 118,640 $ 52,406
Earnings per common share(4)......... 3.87 1.35 3.55 4.11 1.85
Average number of common shares
outstanding(4)..................... 29,260 28,863 28,863 28,863 28,366

9
<PAGE>
<CAPTION>
AT OR FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------ ------------ ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
CERTAIN RATIOS AND OTHER DATA(7)
Operating earnings(8)................ $ 114,659 $ 91,295 $ 75,514 $ 77,105 $ 50,024
Return on average assets(9).......... 1.28% 0.50% 1.42% 1.83% 0.89%
Return on average common equity...... 23.06 8.80 26.32 44.87 28.18
Stockholders' equity to assets....... 4.96 4.14 5.07 4.61 3.71
Tangible stockholders' equity to
tangible assets.................... 4.81 3.93 4.68 4.14 2.58
Net yield on interest-earning
assets(10)......................... 2.10 1.92 2.20 2.61 2.60
Non-interest expense to average total
assets............................. 2.26 1.86 2.41 2.76 2.85
Efficiency ratio(11)................. 74.97 59.50 66.38 65.11 63.98
Allowance for credit losses to net
nonaccrual loans................... 44.24 48.74 30.73 71.71 74.04
Allowance for credit losses to total
loans.............................. 0.52 0.44 0.46 0.61 0.68
Net loan charge-offs to average
loans.............................. 0.17 0.16 0.30 0.05 0.07
Nonperforming assets to total
assets............................. 1.12 0.84 1.09 0.72 0.89
Regulatory capital ratios of the
Bank(12)
Tangible capital................ 6.57 6.20 6.01 6.17 4.24
Core capital.................... 6.64 6.29 6.17 6.43 5.04
Total risk-based capital........ 13.09 13.45 14.02 14.87 12.19
Number of community banking
branches........................... 70 65 62 62 65
Number of commercial banking
origination offices................ 9 9 5 3 2
Number of mortgage banking
origination offices................ 85 122 145 109 93
Single family servicing portfolio.... $ 13,246,848 $ 12,532,472 $ 8,920,760 $ 8,073,226 $ 7,187,000
Single family originations(13)....... 3,762,198 3,447,250 5,484,111 6,737,762 6,118,363
Loans purchased for held to maturity
portfolio.......................... 148,510 2,658,093 1,406,275 1,212,103 916,613
CERTAIN RATIOS AND OTHER
DATA -- EXCLUDING NON-RECURRING AND
CERTAIN OTHER ITEMS(14)
Net income........................... $ 56,392 $ 41,719 $ 50,804 $ 97,736 $ 56,605
Net income applicable to common
shares............................. 53,295 38,824 47,585 91,461 52,406
Earnings per common share............ 1.82 1.35 1.65 3.17 1.85
Return on average assets(9).......... 0.67% 0.50% 0.72% 1.42% 0.89%
Return on average common equity...... 11.47 8.80 12.27 34.43 28.18
Efficiency ratio(11)................. 58.85 59.50 66.38 65.11 63.98
</TABLE>
- ------------

(1) Long-term borrowings are comprised of Senior Notes and other long-term
debt. Long-term borrowings exclude Federal Home Loan Bank ("FHLB")
advances with maturities greater than one year. FHLB advances with
maturities greater than one year were $926,291, $1,992,010, $782,129,
$708,945, and
10
<PAGE>
$55,445 at September 30, 1996, 1995, 1994, 1993, and 1992, respectively.
See Note 9 to the Consolidated Financial Statements.

(2) During fiscal 1993, the Bank issued Bank Preferred Stock, Series A, and
during fiscal 1995, the Bank issued Bank Preferred Stock, Series B. None of
the shares of Bank Preferred Stock are owned by the Company. All of the
outstanding shares of common stock of the Bank are owned by the Company.

(3) In August 1996, the Company filed a registration statement with the
Commission and 12,075,000 shares of the Company Class A Common Stock were
sold to the public. The Company sold 910,694 shares and certain
stockholders sold 11,164,306 shares. See "Management's Discussion and
Analysis -- Capital Resources and Liquidity -- Capital" and Note 16 to the
Consolidated Financial Statements.

(4) Earnings per common share represents net income (adjusted for earnings on
the common stock equivalents attributable to the Bank's Warrant) divided by
the weighted average number of common shares outstanding. Per share results
have been restated to reflect an 1,800 to one common stock conversion in
June 1996. See Notes 1 and 16 to the Consolidated Financial Statements.

(5) The Bank had issued to the FDIC-FRF the Warrant to acquire 158,823 shares
of common stock of the Bank at an exercise price of $0.01 per share.
Payments in lieu of dividends related to the Warrant. In August 1996, the
FDIC-FRF surrendered a portion of the Warrant for a cash payment of $6.1
million, exercised the remainder of the Warrant and immediately exchanged
the shares of common stock of the Bank it received for 1,503,560 shares of
Common Stock of the Company. The FDIC-FRF sold all of these shares in the
August Offering. See "Business -- The Assistance Agreement -- Warrant
Agreement".

(6) Reflects costs and charges associated with the repayment of the note
payable to related party and the 15.75% Notes (as defined, see
"Management's Discussion and Analysis -- Capital Resources and
Liquidity -- Notes Payable") and the issuance of the Senior Notes.

(7) Ratio, yield, and rate information are based on weighted average daily
balances for fiscal 1996, 1995, 1994, and 1993 and average monthly balances
for prior periods, with the exception of return on average common equity,
which is based on average monthly balances for all periods presented.

(8) Operating earnings represents income, including net gains (losses) on the
sales of single family servicing rights and single family warehouse loans,
before taxes, minority interest, and extraordinary loss and excludes net
gains (losses) on securities, MBS, and other loans and excludes certain
non-recurring items in fiscal 1996. See note 14 herein and
"Business -- General."

(9) Return on average assets represents income before minority interest and
extraordinary loss, divided by average total assets.

(10) Net yield on interest-earning assets represents net interest income as a
percentage of average interest-earning assets.

(11) Efficiency ratio represents non-interest expenses (excluding goodwill
amortization), divided by net interest income plus non-interest income,
excluding net gains (losses) on securities, MBS, and other loans.

(12) Regulatory capital ratios presented are those of the Bank. No regulatory
capital ratios are presented for the Company because there are no such
applicable requirements for savings and loan holding companies such as the
Company. For a discussion of the regulatory capital requirements applicable
to the Bank, see "Business -- Regulation -- Safety and Soundness
Regulations -- Capital Requirements".

(13) Includes $129.0 million, $135.3 million, $100.3 million, $116.5 million,
and $127.0 million of brokered and purchased loans for fiscal 1996, 1995,
1994, 1993, and 1992, respectively.

(14) Certain items have been excluded as they are deemed to be non-recurring and
not part of the routine core business operations of the Company.
Non-recurring items for fiscal 1996 were comprised of: (i) a one-time SAIF
assessment charge of $33,657 ($20,729 net of tax); (ii) compensation
expense of $7,820 ($4,816 net of tax); (iii) charges totalling $12,537
($7,729 net of tax), related to the restructuring of and items associated
with the mortgage origination business; (iv) a contractual payment to
previous minority interests of $5,883; and (v) a tax benefit of $101,700.
Non-recurring items totalled $2.05 per common share for fiscal 1996. See
Notes 13, 14, 15, 16, and 18 to the Consolidated Financial Statements.
During fiscal 1994, a tax benefit of $58,166 or $1.90 per common share was
recorded. During fiscal 1993, a tax benefit of $44,183 and an extraordinary
loss of $14,549 (see note 6 herein) were recorded, totalling $0.94 per
common share in fiscal 1993.

11
<PAGE>
THE OFFERING

<TABLE>
<CAPTION>
<S> <C>
Class A Common Stock offered by
the Selling Stockholders................ 10,208,610 shares
Common Stock to be Outstanding immediately
after the Offering...................... 28,354,276 shares Class A Common Stock(1)
3,241,320 shares Class B Common Stock(2)

Total........................... 31,595,596 shares of Common Stock

Risk Factors.............................. General Business Risks; Evolution of Business; Interest Rate Risk;
Competition; Funding and Liquidity; Concentration of Loan Portfolio;
Active Purchaser of Loan Portfolios; Limitations on Use of Tax
Losses; Restrictions on Transfers of Stock; Holding Company
Structure; Ability to Pay Dividends; Regulation; Federal Programs;
Limitations on Stock Ownership; Anti-takeover Provisions; Dependence
on Key Personnel; Conversion of Class B Common Stock; Potential
Effect of Shares Eligible for Future Sale; Dilution of Voting Power;
Liability under Representations and Warranties and Other Credit
Risks; Litigation.
Use of Proceeds........................... The Company will receive none of the proceeds of the sales of shares
by the Selling Stockholders. See "Use of Proceeds".
NASDAQ Symbol............................. BNKU
</TABLE>
- ------------
(1) Excludes shares issuable upon exercise of options to be issued to employees
of the Company and shares to be issued, or issuable upon exercise of options
to be issued, to non-employee directors of the Company. See
"Management -- Executive Management Compensation Program" and
" -- Compensation of Directors".
(2) Assuming no conversion of Class B Common Stock into Class A Common Stock
other than as a result of sale pursuant to the Offering. As described under
"Description of Capital Stock", the two classes of Common Stock are
identical other than with respect to conversion and voting rights. The Class
B Common Stock is non-voting common stock, but is convertible to Class A
Common Stock upon sale or transfer to unaffiliated parties or at the
election of the holder, subject to certain restrictions. See "Description
of Capital Stock -- Common Stock -- Conversion".

12
<PAGE>
RECENT DEVELOPMENTS

The following sets forth selected financial data for the periods indicated.
The selected consolidated financial data as of December 31, 1996 and September
30, 1996 and for the three months ended December 31, 1996 and 1995,
respectively, are derived from the unaudited consolidated financial statements
of the Company, which in the opinion of management, contain all adjustments
(consisting only of normal recurring adjustments), which are necessary for a
fair presentation of the results for such periods. The information set forth
below should be read in conjunction with the Consolidated Financial Statements
and the Notes thereto and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Prospectus. The
results of operations for the three months ended December 31, 1996 are not
necessarily indicative of the results of operations to be obtained for the
entire fiscal year.

FOR THE THREE MONTHS
ENDED DECEMBER 31,
--------------------
1996 1995
--------- ---------
(DOLLARS IN
THOUSANDS,
EXCEPT PER SHARE
DATA)
STATEMENT OF OPERATIONS DATA:
Net interest income................ $ 65,785 $ 57,044
Provision for credit losses........ 6,914 2,669
Non-interest income................ 29,666 29,922
Non-interest expense............... 53,078 49,292
Income before income taxes and
minority interest................. 35,459 32,005
Net income......................... 17,263 14,084
Net income applicable to common
shares............................ 17,263 13,144
Earnings per common share(2)....... 0.55 0.46
Dividends paid per common share.... 0.14 --

AT OR FOR THE THREE MONTHS
ENDED DECEMBER 31,
----------------------------
1996 1995
------------- -------------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)
OTHER DATA:
Mortgage servicing
portfolio--period end............. $ 13,237,225 $ 12,133,603
Operating earnings(3).............. 33,878 28,780
Common shares outstanding
Period end.................... 31,595,596 28,863,000
Average....................... 31,595,596 28,863,000
Book value--period end............. 17.25 17.79
Tangible book value--period end.... 16.76 16.93

13
<PAGE>
AT OR FOR THE
THREE MONTHS ENDED
DECEMBER 31,
--------------------
1996 1995
--------- ---------
CERTAIN RATIOS(4):
Return on average assets........ 0.80% 0.64%
Return on average common
equity.......................... 12.67 11.08
Stockholders' equity to
assets.......................... 4.93 4.43
Tangible stockholders' equity to
tangible assets................. 4.79 4.22
Net yield on interest-earning
assets.......................... 2.63 2.10
Non-interest expenses to average
total assets.................... 0.49 0.42
Efficiency ratio(5)............. 55.48 59.24
Allowance for credit losses to
net nonaccrual loans............ 48.38 40.07
Allowance for credit losses to
total loans..................... 0.54 0.47
Net loan charge-offs to average
loans........................... 0.16 0.10
Nonperforming assets to total
assets.......................... 1.12 1.02
REGULATORY CAPITAL RATIOS OF THE
BANK:
Tangible Capital................ 6.63 6.53
Core Capital.................... 6.69 6.61
Total Risk-Based Capital........ 12.74 13.97

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

(1) Includes FHLB Advances, securities sold under agreements to repurchase and
long-term debt.

(2) Earnings per common share represents net income (adjusted in fiscal 1996
for earnings on the common stock equivalents attributable to the Bank's
Warrant) divided by the weighted average number of common shares
outstanding. Common stock equivalents on the Bank's Warrant were computed
using the treasury stock method. The Warrant was exercised in August, 1996.

(3) Operating earnings represents net income, before taxes and minority
interest, and excludes net gains (losses) on securities, MBS, and other
loans. Management believes operating earnings, as defined, reflects the
revenues and expenses of the Company and facilitates trend analysis as it
excludes transactions that are typically considered opportunistic and not
part of the routine core business operations of the Company. Operating
earnings is provided as other data and should not be considered an
alternative to net income as an indicator of the Company's operating
performance or to cash flow as a measure of liquidity.
(4) Ratio, yield, and rate information are based on weighted average daily
balances for the three months ended December 31, 1996 and 1995, with the
exception of return on average common equity which is based on average
monthly balances. Interim rates and yields are annualized.

Net income was $17.3 million ($0.55 per share) for the quarter ended
December 31, 1996, compared to $14.1 million ($0.46 per share) for the quarter
ended December 31, 1995. The increase in net income during the quarter ended
December 31, 1996 compared to the year ago quarter primarily reflects higher net
interest income due to an increase in the net yield on interest-earning assets,
partially offset by a decrease in average interest-earning assets. The net yield
on interest-earning assets increased to 2.63% for the current quarter, up from
2.10% for the prior year quarter (2.48% and 2.04%, respectively, excluding the
effects of certain loan discounts recognized) reflecting higher rates on
adjustable-rate mortgages and lower funding costs. Average interest-earning
assets declined to $10.2 billion for the quarter ended December 31, 1996, from
$11.3 billion for the same period in the prior year as a result of a $1.5
billion reduction in average single family loans and MBS primarily due to
principal repayments and sales. Increased loan servicing fees and charges for
the current quarter reflects an increase in the portfolio of single family loans
serviced for others due to purchases. Such increases were partially offset by
higher provisions for credit losses due to changes in the composition of the
loan portfolio and increased non-interest expenses, primarily caused by higher
mortgage servicing levels and legal expenses related to the supervisory goodwill
and forbearance litigation.

14
<PAGE>
Total assets increased $347.3 million during the quarter ended December 31,
1996, to $11.1 billion. The majority of the increase in assets occurred as a
result of higher levels of outstanding commercial and consumer loans.

In January 1997, the Company filed a registration statement with the
Commission for the offering of $100 million fixed rate subordinated notes due
2004 and $120 million fixed rate subordinated notes due 2007. Net proceeds from
this offering will be used to purchase and retire the Company's $115 million,
8.05% Senior Notes due May 1998 and to pay related costs and expenses. The
Company will use the remainder of the net proceeds of the offering to enhance
the equity capital of the Bank. The Bank will use the proceeds of such
investment for general corporate purposes, which may include the acquisition of
the stock or assets of financial institutions and the funding of internal
growth. The completion of the subordinated debt offering is contingent upon
market conditions and other factors.
On January 17, 1997, the Company sold all of its 61 retail mortgage
origination offices located outside of Texas, except the El Paso office, and
four of its twelve wholesale lending offices, and related administrative and
support functions, to NCM. The Company's sale of these businesses further
evidences its commitment to its strategic focus on traditional community and
commercial banking products and services. The Company intends to continue its
mortgage origination capability in Texas through its 70 branch locations in the
state and will retain several other higher margin units of its mortgage
business, including its mortgage servicing business. The Company does not expect
that the loss of revenues as a result of the sale to have a material impact on
its earnings and intends to redeploy the funds previously expended on such
operations to other, higher margin areas of its operations.

<PAGE>
RISK FACTORS

Investment in the Class A Common Stock involves certain risks. Prospective
purchasers should carefully consider the following risk factors, in addition to
the other information included in this Prospectus, when evaluating the Company
and its business in making an investment decision.

GENERAL BUSINESS RISKS

The Company's business is subject to various material business risks. For
example, changes in prevailing interest rates can have significant effects on
the Company's business. Some of the risks to which the Company's business are
subject may become more acute in periods of economic slowdown or recession.
During such periods, payment delinquencies and foreclosures generally increase
and could result in an increased incidence of claims and legal actions against
the Company. In addition, such conditions could lead to a potential decline in
demand for the Company's products and services.

EVOLUTION OF BUSINESS

The Company's strategy in recent years has been to emphasize and grow its
Community Banking Group and Commercial Banking Group and to reduce the
significance over time of its residential mortgage lending business. See
"Prospectus Summary -- Business Strategy". The Community Banking Group and the
Commercial Banking Group are expected to continue to represent a growing portion
of the Company's business. This strategic shift has occurred at a time of
increasing competitive pressures in the mortgage banking business. Community and
commercial banking activities, while potentially more profitable, generally
entail a greater degree of credit risk than does single family lending, the
historical focus of the Company. Specifically, the performance of commercial,
construction and small business loans is more sensitive to regional and local
economic conditions. Collateral valuation requires more detailed analysis and is
more variable than residential mortgage lending. Loan balances for these types
of loans are typically larger than those for residential mortgage loans and,
thus, when there are defaults and losses, they can be greater on a per loan
basis than those for residential mortgages. Similarly, loss levels are more
difficult to predict. Commercial and community banking typically includes a
greater amount of unsecured lending, which presents different risks than secured
residential mortgage lending. The sources of repayment are not related to
collateral and can be more difficult to understand and pursue. Similarly, loan
default prevention and collection for commercial and community banking also can
be more complex and difficult than that for residential mortgage lending. For
example, business loans are not typically made with standardized loan documents.
Thus, the opportunity for mistakes and documentation risks are increased.
Moreover, a liquid secondary market for most types of commercial and business
loans does not exist. The operational, interest rate, and competitive risks
associated with commercial and community banking are different than those for
residential mortgage lending and require skills and experience of management and
staff different than that for residential mortgage lending. When evaluating such
credits, more factors need to be considered. Management must be more
knowledgeable of a wider variety of business enterprises and industries that
borrow money. Intensive, ongoing customer contact is required, as well as
complex analysis of financial statements at the time of loan approval and on an
ongoing basis. Servicing these customers requires closer monitoring and more
individualized analysis than does residential mortgage lending. Commercial and
community banking pricing is very competitive and more subjective than that for
residential mortgage lending.

INTEREST RATE RISK

The Company's net interest income is the differential or "spread" between
the interest earned on loans and investments and the interest paid on deposits,
borrowings and notes payable. The Company has traditionally managed its business
to limit its overall exposure to changes in interest rates; however, under the
Company Board's current policies, management has more latitude to increase the
Company's interest rate sensitivity position within certain limits. See
"Prospectus Summary -- Business Strategy" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations". As a result,
changes in market interest rates may have a greater impact on the Company's
financial performance in the future than they have had historically. See
"Business -- Asset and Liability Management".

16
<PAGE>
An increase in the general level of interest rates may affect the Company's
net interest spread due to the periodic caps which limit the interest rate
change on the Company's MBS and loans that pay interest at adjustable rates.
Additionally, an increase in interest rates may, among other things, reduce the
demand for loans and the Company's ability to originate loans. A decrease in the
general level of interest rates may affect the Company through, among other
things, increased prepayments on its loan and servicing portfolios and increased
competition for deposits. Accordingly, changes in the level of market interest
rates affect the Company's net interest spread, loan origination volume, loan
and servicing portfolios, and the overall results of the Company.

COMPETITION

The Company experiences substantial competition both in attracting and
retaining deposits and in making loans. Its most direct competition for deposits
historically has come from other thrift institutions, commercial banks and
credit unions doing business in the Houston and Dallas/Ft. Worth metropolitan
areas. The Company competes primarily with seven commercial banks and five
thrift institutions, all of which have a substantial presence in the same
markets as the Company. In addition, as with all banking organizations, the
Company has experienced increasing competition from nonbanking sources. For
example, the Company also competes for funds with full service and discount
broker-dealers and with other investment alternatives, such as mutual funds and
corporate and governmental debt securities. The Company's competition for loans
comes principally from other thrift institutions, commercial banks, mortgage
banking companies, consumer finance companies, insurance companies and other
institutional lenders. The Company and its peers compete primarily on price at
which products are offered and on customer service. A number of institutions
with which the Company competes for deposits and loans have significantly
greater assets and capital than the Company and some also may have significantly
lower deposit insurance costs.

FUNDING AND LIQUIDITY

In recent years, the Company has relied primarily on collateralized
borrowings, borrowings from FHLB of Dallas ("FHLB Dallas") and borrowings on
securities sold under agreement to repurchase ("reverse repurchase agreement")
to fund its asset growth. At September 30, 1996, such borrowings funded 45% of
the Company's assets. The Company's collateralized borrowings have an average
maturity of approximately six months.

The Company borrows funds from the FHLB Dallas under a security and pledge
agreement that restricts the amount of such borrowings to 65% of fully disbursed
single family loans, unless assets are physically pledged to the FHLB Dallas,
not to exceed 45% of total assets in any event. At September 30, 1996, the
amounts available under these restrictions were $4.3 billion and $4.8 billion,
respectively. The Company had $3.5 billion of outstanding advances at September
30, 1996.

The Company's ability to borrow on reverse repurchase agreements is limited
to the amount and market value of collateral that is available to collateralize
through reverse repurchase agreements. At September 30, 1996, the Company had
$1.2 billion in such collateral, $1.0 billion of which was collateralizing such
reverse repurchase agreements. See "-- Interest Rate Risk". There can be no
assurance that the Company will continue to be able to arrange collateralized
borrowings or other borrowing arrangements to fund continued growth in its
assets.

CONCENTRATION OF LOAN PORTFOLIO

The Company's current single family mortgage loan portfolio is concentrated
in certain geographical regions, particularly California. The performance of
such loans may be affected by changes in local economic and business conditions.
The California economy since the early 1990s has experienced an economic
recession, although the economy has not shown signs of further deterioration.
Unfavorable or worsened economic conditions throughout California could have a
material adverse effect on the Company's financial condition and results of
operations. See "Business -- Loan Portfolio".

ACTIVE PURCHASER OF LOAN PORTFOLIOS

The Company has been an active purchaser and securitizer of residential
mortgage loans originated by other financial institutions. See
"Business -- Financial Markets Group". While the Company intends to continue
to

17
<PAGE>
pursue this strategy on a selective basis, no assurance can be given as to the
continued availability of portfolio acquisition opportunities or the Company's
ability to obtain such portfolios on favorable terms.

When purchased by the Company, loan portfolios generally do not contain
delinquent or defaulted loans and may contain loans that have been outstanding
for a relatively short period of time. Consequently, the delinquency and loss
experience of the Company's loan portfolios to date are not necessarily
indicative of future results.

LIMITATIONS ON USE OF TAX LOSSES; RESTRICTIONS ON TRANSFERS OF STOCK

As of September 30, 1996, the Company had NOLs of $817 million available to
reduce taxable income in future years. Such tax deductions would be subject to
significant limitation under Section 382 of the Internal Revenue Code of 1986,
as amended (the "Code") if the Company undergoes an ownership change (as
defined herein, an "Ownership Change"). In the event of an Ownership Change,
Section 382 of the Code imposes an annual limitation on the amount of taxable
income a corporation may offset with NOLs and certain recognized built-in
losses. The limitation imposed by Section 382 of the Code for any post-change
year would be determined by multiplying the value of the Company's stock
(including both common stock and preferred stock) at the time of the Ownership
Change by the applicable long-term tax exempt rate (which was 5.8% for September
1996). Any unused annual limitation may be carried over to later years, and the
limitation may under certain circumstances be increased by the built-in gains in
assets held by the Company at the time of the change that are recognized in the
five-year period after the change. Under current conditions, if an Ownership
Change were to occur, the Company's annual NOL utilization would be limited to
approximately $32 million. If the Company were to undergo an Ownership Change, a
significant portion of the $101.7 million tax benefit recognized in the quarter
ended June 30, 1996 would be required to be reversed, with a corresponding
charge to earnings. The amount of the charge to earnings would decline as the
Company utilizes its NOLs.

The Company would undergo an Ownership Change if, among other things, the
stockholders who own or have owned, directly or indirectly, 5% or more of the
common stock of the Company or are otherwise treated as 5% stockholders or a
"higher tier entity" under Section 382 of the Code and the regulations
promulgated thereunder ("5% Stockholders"), increase their aggregate
percentage ownership of such stock by more than 50 percentage points over the
lowest percentage of such stock owned by such stockholders at any time during
the testing period (generally the preceding three years). In applying Section
382 of the Code, at least a portion of the Class A Common Stock sold pursuant to
the Offering would be considered to be acquired by a new 5% Stockholder even if
no person acquiring the stock in fact owns as much as 5% of the Company's stock.
While the application of Section 382 of the Code is highly complex and uncertain
in some respects, the sale of shares of Class A Common Stock as contemplated by
this Prospectus is not expected to cause an Ownership Change. In addition,
events could occur prior to or after the Offering that are beyond the control of
the Company which could result in an Ownership Change. See
"Regulation -- Taxation -- Net Operating Loss Limitations".

In an effort to protect against a future Ownership Change that is not
initiated by the Company, the Certificate and By-Laws limit Transfers (as
defined below), subject to certain exceptions, at any time during the three
years following the August Offering, of shares of Common Stock that would either
cause a person or entity to become a 5% Stockholder or increase a 5%
Stockholder's percentage ownership interest. "Transfers" are defined to
include any sale, transfer, assignment, conveyance, pledge, short sale,
hypothecation or other disposition or the issuance of any option to sell,
transfer, assign, convey, pledge or otherwise dispose. While such Transfers are
deemed prohibited by the Certificate and the Company is authorized not to
recognize any transferee of such a Transfer as a stockholder to the extent of
such Transfer, these restrictions are incomplete since the Company cannot,
consistent with NASDAQ requirements, prevent the settlement of transactions
through NASDAQ, and because the prohibition on Transfers by 5% Stockholders does
not limit transactions in the securities of such 5% Stockholders that could give
rise to ownership shifts within the meaning of the applicable Section 382 rules.
Moreover, the Board of Directors of the Company retains the discretion to waive
these limitations or to take certain other actions that could trigger an
Ownership Change, including through the issuance of additional shares of Common
Stock in subsequent public or private offerings or through subsequent merger or
acquisition transactions.

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Because the Company has utilized a substantial portion of its available
ownership limitation in connection with the August Offering, the Company may not
be able to engage in significant transactions that would create a further shift
in ownership within the meaning of Section 382 of the Code within the three-year
period following the August Offering without triggering an Ownership Change.
There can be no assurance that future actions on the part of the Company's
stockholders or the Company itself will not result in the occurrence of an
Ownership Change. See "Regulation -- Taxation -- Net Operating Loss
Limitations".

HOLDING COMPANY STRUCTURE; ABILITY TO PAY DIVIDENDS

As a holding company without significant assets other than the Common Stock
of Holdings, whose sole asset is the Bank Common Stock, the Company's ability to
pay dividends on the Common Stock and to meet its other cash obligations,
including debt service on the Senior Notes and its other debt obligations, is
dependent upon the receipt of dividends from Holdings, which, in turn, is
dependent on receipt of dividends from the Bank on the Bank Common Stock. The
declaration of dividends by the Bank on all classes of its capital stock is
subject to the discretion of the Board of Directors of the Bank, the terms of
the Bank Preferred Stock, applicable regulatory requirements and compliance with
the covenants of the Senior Notes. Dividends may not be paid on the Bank Common
Stock if full dividends on the Bank Preferred Stock have not been paid for the
four most recent quarterly dividend periods. Thus, if for any reason the Bank
failed to declare and pay full quarterly dividends on the Bank Preferred Stock,
the Company would not receive any cash dividends from the Bank until four full
quarterly dividends on the Bank Preferred Stock had been paid. While it is the
present intention of the Board of Directors of the Bank to declare dividends in
an amount sufficient to provide the Company (through Holdings) with the cash
flow necessary to meet its debt service obligations in respect of the Senior
Notes and to pay dividends to the holders of Common Stock, subject to applicable
regulatory restrictions, no assurance can be given that circumstances which
would limit or preclude the declaration of such dividends will not exist in the
future. At September 30, 1996, the Bank would be permitted to pay $152.7 million
of dividends on its capital stock without prior approval of the OTS, and the
Company would be able to pay $76.8 million of dividends on its Common Stock
under the covenants of the Senior Notes. See "Dividend Policy", "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Capital Resources and Liquidity", "Regulation -- Safety and
Soundness Regulations -- Capital Requirements -- Capital Distributions" and
Notes 11, 15 and 16 to the Consolidated Financial Statements. If the Company
were to undergo an Ownership Change, these amounts would be significantly
reduced. See " -- Limitations on Use of Tax Losses; Restriction on Transfers of
Stock".

REGULATION

Both the Company, as a savings and loan holding company, and the Bank, as a
federal stock savings bank, are subject to significant regulation. Statutes and
regulations now affecting the Company and the Bank, respectively, may be changed
at any time, and the interpretation of these statutes and regulations by
examining authorities is also subject to change. There can be no assurance that
future changes in the regulations or in their interpretation will not adversely
affect the business of the Company. As a savings and loan holding company, the
Company is subject to regulation and examination by the OTS. As a federal
savings bank, the Bank is subject to examination from time to time by the OTS,
its primary regulator, and the FDIC, as administrator of the Bank Insurance Fund
(the "BIF") and the SAIF. There can be no assurance that the OTS or the FDIC
will not, as a result of such examinations or otherwise, impose various
requirements or regulatory sanctions upon the Bank or the Company, respectively.
See "Regulation".

FEDERAL PROGRAMS

The continuation of programs administered by the Federal National Mortgage
Association (the "FNMA"), the Federal Home Loan Mortgage Corporation (the
"FHLMC") and the Government National Mortgage Association (the "GNMA"),
which facilitate the issuance of MBS, as well as the Company's continued
eligibility to participate in such programs, enhances the Company's ability to
generate funds by sales of mortgage loans or MBS. A portion of the Company's
business is also dependent upon the continuation of various programs
administered by the Federal Housing Administration (the "FHA"), which insures
mortgage loans, and the Department of Veterans' Affairs (the "VA"), which
partially guarantees mortgage loans.

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Any discontinuation of, or significant reduction in, the operation of such
programs would have a material adverse effect on the Company's mortgage banking
operations. The Company expects to remain eligible to participate in such
programs; however, any significant impairment of its eligibility could have a
material adverse impact on its operations. See "Business -- Mortgage Banking
Group".

LIMITATIONS ON STOCK OWNERSHIP

With certain limited exceptions, federal regulations prohibit a person or
company or a group of persons deemed to be acting in concert from, directly or
indirectly, acquiring more than 10% of any class of voting stock or obtaining
the ability to control in any manner the election of a majority of the directors
or otherwise direct the management or policies of a savings institution, such as
the Bank, without prior notice or application to and the approval of the OTS.
See "Regulation -- Regulation of Savings and Loan Holding Companies". See also
" -- Limitations on Use of Tax Losses; Restrictions on Transfers of Stock".

ANTI-TAKEOVER PROVISIONS

The Certificate and the By-Laws, and applicable provisions of the Delaware
General Corporation Law (the "DGCL"), contain several provisions that may make
more difficult the acquisition of control of the Company without the approval of
the Company Board. Certain provisions of the Certificate and the By-Laws, among
other things, (i) authorize the issuance of additional shares of Common Stock
and shares of "blank check" preferred stock; (ii) classify the Company Board
into three classes, each of which (after an initial transition period) will
serve for staggered three year periods; (iii) provide that a director of the
Company may be removed by the stockholders only for cause; (iv) provide that
only the Company Board or the Chairman of the Board of the Company may call
special meetings of the stockholders; (v) provide that the stockholders may take
action only at a meeting of the stockholders or by unanimous written consent;
(vi) provide that stockholders must comply with certain advance notice
procedures in order to nominate candidates for election to the Company Board or
to place stockholders' proposals on the agenda for consideration at meetings of
the stockholders; and (vii) provide that the stockholders may amend or repeal
any of the foregoing provisions of the Certificate or the By-Laws only by a vote
of 80% of the stock entitled to vote generally in the election of directors (the
"Voting Stock"). With certain exceptions, Section 203 of the DGCL ("Section
203") imposes certain restrictions on mergers and other business combinations
between the Company and any holder of 15% or more of the Common Stock. See
"Description of Capital Stock -- Certain Provisions of the Certificate and
By-Laws; Anti-takeover Effects" and " -- Delaware Business Combination
Statute".

DEPENDENCE ON KEY PERSONNEL

The Company and the Bank are managed by a small number of senior management
and operating personnel, the loss of certain of whom could have a material
adverse effect on the Company. See "Management" for detailed information on
the Company's management and directors. The key employees of the Company are
Messrs. Burkholder, Nocella, Heffron, Bender and Coben. The Company does not
maintain key person insurance for any of these individuals. The primary
retention vehicles used by the Company are employment agreements or letters and
participation in the Executive Management Compensation Program and the 1996
Stock Incentive Plan.

Lewis S. Ranieri serves as non-executive Chairman of the Company Board and
a director of the Bank. In addition to Mr. Lewis Ranieri, four other members of
the boards of directors of the Company and the Bank are Selling Stockholders who
received their shares through the general partner of Hyperion Partners.

As discussed under "The Company -- Background of the Offering", at the
time of the August Offering the Company entered into a three-year consulting
agreement with Mr. Lewis Ranieri, under which Mr. Ranieri provides strategic and
managerial advice to the Company in addition to his continuing role as
non-executive Chairman of the Company and a director of the Bank. While the
Company has entered into a consulting agreement with Mr. Ranieri, he may devote
a substantial amount of time to other business ventures, including activities
which are competitive with the Company, through Hyperion Partners II L.P., a
Delaware limited partnership ("Hyperion Partners II") and its affiliates and
otherwise. While the Company does not believe that the loss of Mr. Ranieri's
services would have a material adverse effect on the day-to-day operations of
the Company, the loss of the overview afforded by Mr. Ranieri's market
experience, contacts and insight would be

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difficult for the Company to replace. In addition, three other directors of the
Company, Ms. Sloan, Mr. Shay and Mr. Golush, also have an economic interest in
Hyperion Partners II.

CONVERSION OF CLASS B COMMON STOCK; DILUTION OF VOTING POWER

Certain Selling Stockholders retain shares of Class B Common Stock (which
have no voting rights) which they may elect to convert to Class A Common Stock
subject to certain restrictions. See "Description of Capital Stock -- Common
Stock -- Conversion". Class B Common Stock is also converted to Class A Common
Stock automatically upon transfer to a person who is not an affiliate of the
holder, including in any such transfer effected pursuant to the Offering.
Transfers of Class B Common Stock by certain persons are subject to certain
restrictions. See "Description of Capital Stock -- Common Stock -- Restrictions
on Transfers of Stock".

POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE

The Company currently has 31,595,596 shares of Common Stock outstanding. Of
such shares, 12,075,000 were registered under the Securities Act and sold to the
public in August 1996 and 19,520,596 are subject to contractual restrictions on
sale which expire at various times. The Company has agreed to use its best
efforts to register the 19,520,596 shares under the Securities Act and to
maintain the effectiveness of such registration for a specified period. The
Registration Statement of which this Prospectus forms a part covers the
10,208,610 shares which will become available for sale in 1997. Pursuant to the
terms of the Letter Agreement, the Company intends to register the remaining
9,311,986 shares of Common Stock covered hereby as promptly as practicable. See
"Selling Stockholders".

LIABILITY UNDER REPRESENTATIONS AND WARRANTIES AND OTHER CREDIT RISKS

In the ordinary course of business, the Company has liability under
representations and warranties made to purchasers and insurers of mortgage loans
and to purchasers of MSRs. In connection with MSRs that the Company purchases,
it may have liability as a successor to third-party originators' representations
and warranties. Under certain circumstances, the Company may become liable for
the unpaid principal and interest on defaulted loans if there has been a breach
of representations or warranties. In the case of any mortgage loans found to be
defective with respect to representations or warranties made or succeeded to by
the Company, the Company may be required to repurchase such mortgage loans, with
any subsequent loss on resale or foreclosure being borne by the Company. The
Company's losses from breaches of representations and warranties have not been
material to date.

LITIGATION

The operations of financial institutions, such as the Company, are subject
to substantial statutory and regulatory compliance obligations. These
requirements are complex, and even inadvertent noncompliance could result in
liability. During the past several years, numerous individual claims and
purported consumer class action claims were commenced against a number of
financial institutions, their subsidiaries, and other mortgage lending
institutions, alleging violations of various statutory and regulatory provisions
relating to mortgage lending and servicing, including the Truth in Lending Act
(the "TILA"), the Real Estate Settlement Procedures Act (the "RESPA"), the
Equal Credit Opportunity Act (the "ECOA"), the Fair Housing Act (the "FH
Act") and various state laws. The Bank has had asserted against it one putative
class action claim under the RESPA and three separate putative class action
claims involving the Bank's loan servicing practices. Management does not expect
these claims, in the aggregate, to have a material adverse impact on the
Company's financial condition, results of operation, or liquidity.

Maxxam, Inc. ("Maxxam") has filed a petition for review in the United
States Court of Appeals for the Fifth Circuit and a motion to intervene in the
U.S. District Court for the Southern District of Texas, each challenging the
December 30, 1988 order of the FSLIC approving the Acquisition. See "The
Company -- History". Maxxam contends that it should have been selected as the
winning bidder. In its brief to the Court of Appeals, Maxxam has asserted that
the court should order the OTS "to award Bank United to Maxxam" and that the
Company would bear no harm in that event because it is entitled to full
indemnification by the FDIC-FRF pursuant to section 7(a)(2) of the Assistance
Agreement. On December 10, 1996, the Fifth Circuit Court, in a PER

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<PAGE>
CURIAM opinion and order, affirmed the order approving the Acquisition in all
respects. The time for appeal to the Supreme Court of the United States has not
yet expired, and the Company does not know whether Maxxam will appeal the Fifth
Circuit decision. Management of the Company believes, after consultation with
legal counsel, that Maxxam's claims for relief are barred by applicable time
limits, have no basis under existing law, and will not have a material adverse
effect on the Bank's or the Company's financial condition, results of operations
or liquidity. See "Legal Proceedings".

THE COMPANY

GENERAL

The Company is a broad based financial services provider to consumers and
businesses in Texas and other selected regional markets throughout the United
States. Through the Bank, the Company currently operates 70 Texas based
community banking branches serving nearly 200,000 households and businesses, 9
commercial banking offices and a network of mortgage offices. At September 30,
1996, the Company had assets of $10.7 billion, deposits of $5.1 billion and
stockholders' equity of $531.0 million. The Company was the largest publicly
traded depository institution headquartered in Texas, in terms of both assets
and deposits, at September 30, 1996.

The Bank is a federally chartered savings bank, the deposits of which are
insured by the SAIF, which is administered by the FDIC. In December 1996, the
Company formed a new, wholly owned, Delaware subsidiary, Holdings. After
acquiring all the common stock of Holdings, the Company contributed all the
common stock of the Bank to Holdings, and Holdings assumed the obligations of
the Company's Senior Notes. As a result of these transactions, Holdings is the
sole subsidiary of the Company and the Bank is the sole subsidiary of Holdings.
In conjunction with the formation of Holdings, the Company's corporate
headquarters were relocated from Uniondale, New York to Houston, Texas.

HISTORY

The Company was incorporated in Delaware on December 19, 1988 as USAT
Holdings Inc. and became the holding company for the Bank upon the Bank's
formation on December 30, 1988. In the Acquisition, the Company initially
acquired from the FSLIC certain of the assets and assumed all the deposits and
certain other liabilities of Old USAT, an insolvent thrift. In connection with
the Acquisition, the Company entered into an agreement which, among other
things, provided for federal financial assistance to the Bank (the "Assistance
Agreement"). On December 23, 1993, the Company and the FDIC entered into an
agreement providing for the termination of the Assistance Agreement. See
"Business -- The Assistance Agreement".

Immediately after the Acquisition, the Bank operated 19 banking branches,
primarily in the greater Houston metropolitan area, with no significant loan
origination capabilities. Through both acquisitions and internal growth, the
Bank has substantially expanded its Texas community banking branch network,
built a nationwide mortgage banking business, and established itself as a
provider of a broad array of financial products, including commercial banking
services and products. In 1990, 1991, and 1992, the Bank entered into various
agreements with the RTC, whereby the Bank purchased assets approximating $1.2
billion and assumed certain liabilities, primarily deposit liabilities
approximating $4.3 billion, of six thrift institutions in RTC receivership. In
connection with these acquisitions, the Bank received cash from the RTC. The
amount of cash received from the RTC was based on the amount by which the sum of
the liabilities assumed exceeded the sum of the market values of the assets
purchased, less a purchase premium. As a result of federal legislation, the RTC
no longer exists. In 1990, the Bank consummated its agreement to purchase
certain assets and assume certain liabilities relating to the loan origination
operations of Commonwealth Mortgage of America, L.P. Since July 1992, and
particularly in 1994, the Bank has entered into agreements to purchase several
mortgage origination networks. The Company intends to continue to pursue
additional community and commercial banking expansion opportunities, including
through acquisitions, while maintaining adequate capitalization.

BACKGROUND OF THE OFFERING

The Company was organized, and through June 17, 1996 operated, as a
subsidiary of Hyperion Holdings. During that period, all of the outstanding
shares of Hyperion Holdings were owned by Hyperion Partners. The

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general partner of Hyperion Partners is indirectly controlled by three
individuals, including Lewis S. Ranieri, who, from December 1988, has served as
Chairman of the Company Board and, until July 15, 1996, also as President and
CEO of the Company and Chairman of the Board of the Bank.

DIVIDEND, DISTRIBUTION AND RESTRUCTURING

In May 1996, the Company paid a dividend of $100 million on its common
stock to Hyperion Holdings and other holders of its Common Stock and made a
related contractually required payment in lieu of dividends to the FDIC-FRF in
the amount of $5.9 million. The proceeds of this dividend received by Hyperion
Holdings were paid by Hyperion Holdings as a dividend to Hyperion Partners which
distributed such amount to its limited and general partners in accordance with
its limited partnership agreement. During the quarter ended June 30, 1996, the
Company also recorded a $101.7 million tax benefit related to its NOLs.

During June 1996, the Restructuring was effected as follows: (i) Hyperion
Holdings exchanged shares of a newly created class of its nonvoting common stock
for certain shares of its voting common stock held by Hyperion Partners; (ii)
Hyperion Partners then distributed the Hyperion Holdings common stock to its
limited and general partners in accordance with the limited partnership
agreement of Hyperion Partners; and (iii) following the Distribution, Hyperion
Holdings was merged with and into the Company, with the result that holders of
Hyperion Holdings voting and nonvoting common stock received shares of Class A
Common Stock and Class B Common Stock and the holders of Class C Common Stock
received shares of Class B Common Stock. As part of the Restructuring, the
common stock of the Company was converted 1,800 to one. The Restructuring was
undertaken to simplify the ownership structure of the Company in order to
facilitate financial and tax reporting, marketing of the Common Stock and
management of the Company's operations. In addition, the FDIC-FRF surrendered to
the Bank a portion of the Warrant for a cash payment of $6.1 million and
exercised the remainder of the Warrant. Immediately thereafter, the FDIC-FRF
exchanged the shares of Bank Common Stock issued upon exercise of the balance of
the Warrant for 1,503,560 shares of the Company's Common Stock.

In August 1996, the Company completed the August Offering of 12,075,000
shares of Class A Common Stock. Of the 12,075,000 shares sold, 910,694 were sold
by the Company, with the balance sold by certain stockholders, including the
FDIC-FRF which sold all of the shares received upon exercise of the Warrant. See
"Business -- The Assistance Agreement" and "Selling Stockholders". The Class
A Common Stock is listed on NASDAQ under the symbol "BNKU". On January 23,
1997, the last reported sale price of the Class A Common Stock on the NASDAQ was
$27 per share. Prospective purchasers of the Class A Common Stock are advised to
obtain current information as to market prices of the Class A Common Stock.
The 10,208,610 shares of Class A Common Stock covered by this Prospectus
may be sold by the Selling Stockholders from time to time following the
expiration of the lock-up agreements to which the Shares are subject, the first
of which expires on February 10, 1996. See "Selling Stockholders" and "Plan
of Distribution."

The August Offering and this Offering have been structured with the intent
to preserve the beneficial tax attributes of the Company as described below. See
"Regulation -- Taxation". Accordingly, pursuant to the provisions of the
Certificate, certain of the Selling Stockholders and other holders of Common
Stock may not make further transfers or other dispositions of Common Stock for
up to three years following the August Offering except in certain circumstances,
including with approval of the Board of Directors of the Company. See
"Description of Capital Stock -- Common Stock -- Restrictions on Transfers of
Stock". The limitations on Transfers allowed the Company to record a $101.7
million tax benefit in the quarter ended June 30, 1996. See "Risk
Factors -- Limitations on Use of Tax Losses; Restrictions on Transfers of
Stock" and Note 14 to the Consolidated Financial Statements.

Pursuant to the terms of the Letter Agreement, (as defined herein), this
Prospectus covers all of the Shares received by the Selling Stockholders in the
Restructuring and not sold in the August Offering. This Prospectus enables the
Selling Stockholders to sell the Shares held by them upon the expiration of the
restrictions on sale and transfer to which such Shares are subject. See
"Selling Stockholders". The table contained under the caption "Selling
Stockholders" sets forth the Shares held by each Selling Stockholder covered by
this Prospectus and also indicates the time when the Shares held by each of the
Selling Stockholders will become available for sale: February 10, 1997 or August
14, 1997. The sale of Shares may also be subject to additional restrictions on
sale

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and transfer contained in the Certificate and By-Laws. See "Description of
Capital Stock -- Common Stock -- Restrictions on Transfer of Stock."

MANAGEMENT

Day-to-day operations of the Bank are directed by Barry C. Burkholder,
President and CEO of the Bank, who brings over 20 years of commercial banking
experience to the Bank, with specific experience in consumer banking, mortgage
banking and related areas. In connection with the Restructuring and the August
Offering, on July 15, 1996 Mr. Burkholder became Chairman of the Board of the
Bank as well as President and CEO of the Company. The executive management group
of the Bank consists of eight individuals who have worked together for the past
six years, giving them a thorough understanding of the businesses they have
developed together. They average more than 20 years of related industry
experience, the majority of which comes from commercial banking. As a team, they
have brought the discipline and sophistication of commercial banking to the
Bank. The next level of senior management comprises 41 executives, a third of
whom were hired directly from commercial banks. The balance of the senior
management team has experience working with various financial services
companies, including mortgage banks, thrifts and accounting firms. See
"Management".

Lewis S. Ranieri, who has over 20 years of investment experience with
particular expertise in the field of MBS, served as Chairman of the Board of the
Bank and of the Company, as well as President and CEO of the Company from the
inception of the Company and the Bank until July 15, 1996. In his capacities
with the Company and the Bank, Mr. Ranieri has been involved in numerous
significant aspects of the development of the Company, beginning with the
Acquisition, and continuing through formulation of original business plans,
hiring of key management personnel, strategic advice on growth of the deposit
and mortgage franchises, including by de novo branches and through acquisitions,
and asset and liability management. Mr. Ranieri continues to serve as
nonexecutive Chairman of the Board of the Company and as a director of the Bank,
for which he is paid an annual retainer and meeting fees, and continues to
provide strategic and managerial advice to the Company under the terms of a
three-year consulting agreement which was entered into between Mr. Ranieri and
the Company at the time of the August Offering pursuant to which he receives an
annual consulting fee of $250,000.

CLAIMS RELATED TO FORBEARANCE AGREEMENT

In connection with the original acquisition of the Bank by the Company, the
FHLBB approved the Forbearance Agreement. Under the terms of the Forbearance
Agreement, the FSLIC agreed to waive or forbear from the enforcement of certain
regulatory provisions with respect to regulatory capital requirements, liquidity
requirements, accounting requirements and other matters. After the enactment of
FIRREA, the OTS took the position that the capital standards set forth in FIRREA
apply to all savings institutions, including those institutions that had been
operating under previously granted capital and accounting forbearances, and that
FIRREA eliminated these forbearances. While the Bank has not had to rely on such
forbearances or waivers in order to remain in compliance with existing capital
requirements as interpreted by the OTS, the position of the OTS has adversely
affected the Bank by curtailing the growth and reducing the leverage
contemplated by the terms of the Forbearance Agreement. The Bank also has been
and continues to be in compliance with all of the other referenced regulatory
capital provisions and, accordingly, has not had to rely on the waivers or
forbearances provided in the Acquisition.

On July 25, 1995, Plaintiffs filed suit against the United States in the
Court of Federal Claims for alleged failures of the United States (i) to abide
by a capital forbearance, which would have allowed the Bank to operate for ten
years under negotiated capital levels lower than the levels required by the then
existing regulations or successor regulations, (ii) to abide by its commitment
to allow the Bank to count $110 million of subordinated debt as regulatory
capital for all purposes, and (iii) to abide by an accounting forbearance, which
would have allowed the Bank to count as capital for regulatory purposes, and to
amortize over a period of twenty-five years, the $30.7 million difference
between certain FSLIC payment obligations to the Bank and the discounted present
value of those future FSLIC payments. The lawsuit is in a preliminary stage. The
lawsuit was stayed pending the United States Supreme Court's review of WINSTAR.
On July 1, 1996, the Supreme Court upheld lower court rulings that the United
States had breached the contracts involved in the WINSTAR cases and remanded the
case for further proceedings on the issue of damages. Since the Supreme Court
ruling, the Chief Judge of the Court of

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Federal Claims convened a number of status conferences to establish a case
management protocol for the more than 100 lawsuits on the Court of Federal
Claims docket, that, like Plaintiffs' case, involve issues similar to those
raised in the WINSTAR cases.

Following a number of status conferences, Chief Judge Loren Smith of the
United States Court of Federal Claims has transferred all WINSTAR-related cases
to his own docket and entered an Omnibus Case Management Order governing
proceedings in such cases, including the Company's case. Under the Omnibus Case
Management Order, Chief Judge Smith serves as the "Managing Judge" for all
WINSTAR-related cases and may assign other judges of the United States Court of
Federal Claims to resolve pre-trial discovery disputes and common legal issues
and to conduct trials. The Government and Plaintiffs in WINSTAR-related cases
were directed to exchange certain significant documents as early as October 2,
1996. Trials on damages in two of the three Winstar cases that were decided by
the United States Supreme Court in July 1996 are scheduled for early 1997.
Damages trials in the remaining cases subject to the Omnibus Case Management
Plan are scheduled to begin four months after completion of the first two
damages trials. The Company's case is one of thirteen cases that "shall be
accorded priority in the scheduling" of the damages trials under the Omnibus
Case Management Order.

In December 1996, Chief Judge Smith decided the motion in limine on damage
theories of Glendale Federal, one of the four WINSTAR plaintiffs, and allowed
Glendale Federal to assert several alternative damages theories against the
Government.

While the Company expects Plaintiffs' claims for damages to exceed $200
million, the Company is unable to predict the outcome of Plaintiffs' suit
against the United States and the amount of judgment for damages, if any, that
may be awarded. The Company, on November 27, 1996, moved for partial summary
judgement on liability and is pursuing an early trial on damages. Uncertainties
remain concerning the administration of the Omnibus Case Management Order and
the future course of the Company's lawsuit pursuant to the Omnibus Case
Management Order. Accordingly, the Company cannot predict the timing of any
resolution of its claims. The Company expects the trial of its case to commence
during the first quarter of fiscal 1998. The Company is also unable to predict
the outcome of its suit against the United States and the amount of judgement
for damages, if any, that may be awarded. Consequently, no assurances can be
given as to the results of this suit. See "Legal Proceedings".

USE OF PROCEEDS

The Company will not receive any of the proceeds from the sale of Class A
Common Stock by the Selling Stockholders. See "Selling Stockholders".

DIVIDEND POLICY

On December 5, 1996, the Company's Board declared a dividend of $0.14 per
share, payable on
December 26, 1996 to holders of record of the Company's Class A and Class B
Common Stock on December 16, 1996. This was the first dividend declared since
the August Offering. The Company intends, subject to its financial results,
contractual, legal, and regulatory restrictions, and other factors that the
Company's Board of Directors may deem relevant, to declare and pay a dividend
for the Common Stock on a quarterly basis.

The Company's ability to pay dividends and to meet its other cash
obligations, including debt service on the Senior Notes and its other debt
obligations, is dependent on the receipt of dividends from Holdings, which, in
turn, is dependent on receipt of dividends from the Bank on the Bank Common
Stock. The declaration of dividends by the Bank on all classes of its capital
stock is subject to the discretion of the Board of Directors of the Bank, the
terms of the Bank Preferred Stock, applicable regulatory requirements and
compliance with the

25
<PAGE>
covenants of the Senior Notes. Dividends may not be paid on the Bank Common
Stock if full dividends on the Bank Preferred Stock have not been paid for the
four most recent quarterly dividend periods. Thus, if for any reason the Bank
failed to declare and pay full quarterly dividends on the Bank Preferred Stock,
the Company would not receive any cash dividends from the Bank until four full
quarterly dividends on the Bank Preferred Stock had been paid. See "Risk
Factors -- Holding Company Structure; Ability to Pay Dividends".

While it is the present intention of the Board of Directors of the Bank to
declare dividends in an amount sufficient to provide the Company (through
Holdings) with the cash flow necessary to meet its debt service obligations in
respect of the Senior Notes and to pay dividends to holders of Common Stock,
subject to applicable regulatory restrictions, no assurance can be given that
circumstances which would limit or preclude the declaration of such dividends
will not exist in the future. See "Risk Factors -- Holding Company Structure;
Ability to Pay Dividends". Prior to the August Offering, the Company had not
historically paid dividends on its Common Stock with the exception of a $100
million dividend paid to holders of Class A Common Stock and its former Class C
Common Stock on May 6, 1996. On the same day, the Bank paid a dividend on the
Bank Common Stock in the amount of $100 million and also made a related
contractually required payment in lieu of dividends in the amount of $5.9
million to the FDIC, the holder of the Warrant. Thus, the dividends historically
paid by the Company are not indicative of its future dividend policy.

26
<PAGE>
CAPITALIZATION

The following table sets forth the historical capitalization of the Company
at September 30, 1996 and the pro forma capitalization of the Company as of
September 30, 1996. In addition to the long-term debt of the Company reflected
below, at September 30, 1996, the Bank had long-term debt consisting of
deposits, FHLB advances, and certain other funding liabilities incurred in the
ordinary course of business. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Capital Resources and
Liquidity" and Notes 8, 9, 10 and 11 to the Consolidated Financial Statements.

AT SEPTEMBER 30, 1996
---------------------------
HISTORICAL PRO FORMA
----------- ----------
(IN THOUSANDS, EXCEPT
RATIOS AND SHARE DATA)
Long-term debt -- Senior Notes....... $ 115,000 $ 115,000
Minority Interest(1)................. 185,500 185,500
Stockholders' equity:
Preferred stock(2).............. -- --
Common stock.................... 316 316
Paid-in capital(3).............. 129,286 129,036
Retained earnings............... 403,674 403,674
Unrealized gains (losses) on
securities and mortgage-backed
securities available for sale,
net of tax.................... (2,233) (2,233)
----------- ----------
Total stockholders' equity...... 531,043 530,793
----------- ----------
Total consolidated
capitalization........... $ 831,543 $ 831,293
=========== ==========
Ratio of equity to assets............ 4.96% 4.96%
Ratio of tangible equity to tangible
assets............................. 4.81% 4.80%
Shares outstanding
Class A......................... 27,735,934 28,354,276(4)
Class B......................... 3,859,662 3,241,320(4)
Class C......................... -- --
Book value per common share.......... $ 16.81 $ 16.80
Tangible book value per share........ $ 16.27 $ 16.26
Regulatory capital of the Bank
Tangible capital
Amount..................... $ 695,821 $ 695,821
Ratio...................... 6.57% 6.57%
Core capital
Amount..................... $ 703,908 $ 703,908
Ratio...................... 6.64% 6.64%
Total risk-based capital
Amount..................... $ 743,623 $ 743,623
Ratio...................... 13.09% 13.09%

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

(1) Minority interest consists of $185.5 million stated value of the Bank
Preferred Stock. See Note 16 to the Consolidated Financial Statements.

(2) The Company had 10,000,000 shares of Preferred Stock authorized, none of
which were issued as of September 30, 1996.

(3) Offering expenses are estimated to be $250 thousand.

(4) Reflects changes in actual shareholdings through December 31, 1996.

27
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following selected consolidated financial and other data as of and for
each of the years in the five-year period ended September 30, 1996 are derived
from the Company's audited Consolidated Financial Statements. The information
set forth below should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations". The Consolidated Statements of
Financial Condition as of September 30, 1996 and 1995, and the Consolidated
Statements of Operations for each of the years in the three year period ended
September 30, 1996, and the report thereon of Deloitte & Touche LLP are included
elsewhere in this Prospectus.

FIVE-YEAR CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND
RATIOS)
<S> <C> <C> <C> <C> <C>
SUMMARY OF FINANCIAL CONDITION
ASSETS
Cash and cash equivalents............ $ 119,523 $ 112,931 $ 76,938 $ 65,388 $ 94,723
Securities purchased under agreements
to resell and federal
funds sold......................... 674,249 471,052 358,710 547,988 206,000
Trading account assets............... 1,149 1,081 1,011 1,006 94,691
Securities........................... 64,544 116,013 114,115 43,430 4,909
Mortgage-backed securities........... 1,657,908 2,398,263 2,828,903 2,175,925 833,425
Loans................................ 7,519,488 8,260,240 5,046,174 4,862,379 4,101,716
Covered Assets and related
assets(1)............................ -- -- -- 392,511 610,901
All other assets..................... 675,516 623,954 484,310 351,929 308,918
---------- ---------- --------- --------- ---------
Total assets................. $10,712,377 $11,983,534 $8,910,161 $8,440,556 $6,255,283
========== ========== ========= ========= =========
LIABILITIES, MINORITY INTEREST, AND
STOCKHOLDERS' EQUITY
Deposits............................. $5,147,945 $5,182,220 $4,764,204 $4,839,388 $4,910,760
Federal Home Loan Bank advances(2)... 3,490,386 4,383,895 2,620,329 2,185,445 632,345
Securities sold under agreements to
repurchase and federal funds
purchased.......................... 832,286 1,172,533 553,000 310,000 --
Note payable to related party........ -- -- -- -- 4,090
Long-term debt ("15.75% Notes").... -- -- -- -- 102,000
Senior Notes......................... 115,000 115,000 115,000 115,000 --
All other liabilities................ 410,217 448,283 320,766 516,020 373,715
---------- ---------- --------- --------- ---------
Total liabilities............ 9,995,834 11,301,931 8,373,299 7,965,853 6,022,910
---------- ---------- --------- --------- ---------
Minority interest -- Bank Preferred
Stock(3)........................... 185,500 185,500 85,500 85,500 --
Total stockholders' equity... 531,043 496,103 451,362 389,203 232,373
---------- ---------- --------- --------- ---------
Total liabilities, minority
interest, and
stockholders'
equity(4)................ $10,712,377 $11,983,534 $8,910,161 $8,440,556 $6,255,283
========== ========== ========= ========= =========
28
<PAGE>
<CAPTION>
AT OR FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- --------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA AND RATIOS)
SUMMARY OF OPERATIONS
Interest income...................... $ 812,312 $ 746,759 $ 494,706 $ 482,490 $ 502,854
Interest expense..................... 584,778 552,760 320,924 300,831 348,291
---------- ---------- --------- --------- ---------
Net interest income.............. 227,534 193,999 173,782 181,659 154,563
Provision for credit losses.......... 16,469 24,293 6,997 4,083 21,133
---------- ---------- --------- --------- ---------
Net interest income after
provision for credit losses.... 211,065 169,706 166,785 177,576 133,430
Non-interest income
Net gains (losses)
Sales of single family
servicing rights and single
family warehouse loans..... 43,074 60,495 63,286 67,403 67,223
Securities and
mortgage-backed
securities................. 4,002 26 10,404 43,702 2,022
Other loans.................. 3,189 (1,210) 163 1,496 4,759
Loan servicing fees and
charges........................ 44,230 43,508 31,741 21,780 20,823
Other............................ 15,541 12,162 13,295 12,310 8,963
---------- ---------- --------- --------- ---------
Total non-interest income........ 110,036 114,981 118,889 146,691 103,790
---------- ---------- --------- --------- ---------
Non-interest expense
Compensation and benefits........ 87,640 83,520 86,504 81,472 69,476
SAIF deposit insurance
premiums....................... 45,690 11,428 11,329 10,162 11,101
Amortization of intangibles...... 20,432 21,856 18,247 24,469 22,832
Restructuring charges............ 10,681 -- -- -- --
Other............................ 88,822 77,772 83,513 85,861 77,006
---------- ---------- --------- --------- ---------
Total non-interest expense....... 253,265 194,576 199,593 201,964 180,415
---------- ---------- --------- --------- ---------
Income before income taxes,
minority interest, and
extraordinary loss............. 67,836 90,111 86,081 122,303 56,805
Income tax (benefit) expense......... (75,765) 37,415 (31,899) (26,153) 200
---------- ---------- --------- --------- ---------
Income before minority interest
and extraordinary loss......... 143,601 52,696 117,980 148,456 56,605
Less minority interest
Bank Preferred Stock
dividends(3)................... 18,253 10,600 8,653 6,537 --
Payments in lieu of
dividends(5)................... 6,413 377 357 -- --
---------- ---------- --------- --------- ---------
Income before extraordinary
loss........................... 118,935 41,719 108,970 141,919 56,605
Extraordinary loss(6)................ -- -- -- 14,549 --
---------- ---------- --------- --------- ---------
Net income(7).................... $ 118,935 $ 41,719 $ 108,970 $ 127,370 $ 56,605
========== ========== ========= ========= =========
Net income applicable to common
shares......................... $ 113,327 $ 38,824 $ 102,519 $ 118,640 $ 52,406
========== ========== ========= ========= =========
Earnings per common share(8)
Income before extraordinary
loss........................... $ 3.87 $ 1.35 $ 3.55 $ 4.61 $ 1.85
Extraordinary loss............... -- -- -- 0.50 --
---------- ---------- --------- --------- ---------
Net income....................... $ 3.87 $ 1.35 $ 3.55 $ 4.11 $ 1.85
========== ========== ========= ========= =========
Book value per common share(8)....... $ 16.81 $ 17.19 $ 15.64 $ 13.48 $ 8.19
Average number of common shares
outstanding(8)..................... 29,260 28,863 28,863 28,863 28,366

CERTAIN RATIOS AND OTHER DATA(9)
Operating earnings(10)............... $ 114,659 $ 91,295 $ 75,514 $ 77,105 $ 50,024
Regulatory capital ratios of the
Bank(11)
Tangible capital................. 6.57% 6.20% 6.01% 6.17% 4.24%
Core capital..................... 6.64 6.29 6.17 6.43 5.04
Total risk-based capital......... 13.09 13.45 14.02 14.87 12.19
Return on average assets(12)......... 1.28 0.50 1.42 1.83 0.89
Return on average common equity...... 23.06 8.80 26.32 44.87 28.18
Stockholders' equity to assets....... 4.96 4.14 5.07 4.61 3.71
Tangible stockholders' equity to
tangible assets.................... 4.81 3.93 4.68 4.14 2.58
Net yield on interest-earning
assets(13)......................... 2.10 1.92 2.20 2.61 2.60
Interest rate spread(13)............. 1.78 1.61 1.95 2.41 2.54

29
<PAGE>
<CAPTION>
AT OR FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA AND
RATIOS)
CERTAIN RATIOS AND OTHER
DATA -- CONTINUED(9)
Average interest-earning assets to
average interest-bearing
liabilities........................ 1.06 1.06 1.06 1.04 1.01
Non-interest expense to average total
assets............................. 2.26% 1.86% 2.41% 2.76% 2.85%
Net operating expense ratio(14)...... 1.28 0.76 0.97 0.76 1.21
Efficiency ratio(15)................. 74.97 59.50 66.38 65.11 63.98
Nonperforming assets to total
assets............................. 1.12 0.84 1.09 0.72 0.89
Net nonaccrual loans to total
loans.............................. 1.19 0.91 1.51 0.85 0.92
Allowance for credit losses to net
nonaccrual loans................... 44.24 48.74 30.73 71.71 74.04
Allowance for credit losses to
nonperforming assets............... 32.95 36.65 24.18 49.28 50.54
Allowance for credit losses to total
loans.............................. 0.52 0.44 0.46 0.61 0.68
Net loan charge-offs to average
loans.............................. 0.17 0.16 0.30 0.05 0.07
Full-time equivalent employees....... 2,310 2,663 2,894 3,122 2,720
Number of community banking
branches........................... 70 65 62 62 65
Number of commercial banking
origination offices................ 9 9 5 3 2
Number of mortgage banking
origination offices................ 85 122 145 109 93
Single family servicing portfolio.... $13,246,848 $12,532,472 $8,920,760 $8,073,226 $7,187,000
Single family originations(16)....... 3,762,198 3,447,250 5,484,111 6,737,762 6,118,363
Loans purchased for held to maturity
portfolio.......................... 148,510 2,658,093 1,406,275 1,212,103 916,613
CERTAIN RATIOS AND OTHER
DATA -- EXCLUDING NON-RECURRING AND
CERTAIN OTHER ITEMS(17)
Net income........................... $ 56,392 $ 41,719 $ 50,804 $ 97,736 $ 56,605
Net income applicable to common
shares............................. 53,295 38,824 47,585 91,461 52,406
Earnings per common share............ 1.82 1.35 1.65 3.17 1.85
Return on average assets(12)......... 0.67% 0.50% 0.72% 1.42% 0.89%
Return on average common equity...... 11.47 8.80 12.27 34.43 28.18
Efficiency ratio(15)................. 58.85 59.50 66.38 65.11 63.98
</TABLE>
- ------------
(1) Reflects assets governed under the Assistance Agreement between the Bank
and the FRF. See "Business -- The Assistance Agreement".

(2) FHLB advances with maturities greater than one year were $926,291,
$1,992,010, $782,129, $708,945, and $55,445 at September 30, 1996, 1995,
1994, 1993, and 1992, respectively. See Note 9 to the Consolidated
Financial Statements.

(3) During fiscal 1993, the Bank issued Bank Preferred Stock, Series A, and
during fiscal 1995, the Bank issued Bank Preferred Stock, Series B. None of
the shares of Bank Preferred Stock are owned by the Company. All of the
outstanding shares of common stock of the Bank are owned by the Company.

(4) In August 1996, the Company filed a registration statement with the
Commission and 12,075,000 shares of Class A Common Stock were sold to the
public. The Company sold 910,694 shares and certain stockholders sold
11,164,306 shares. See "Management's Discussion and Analysis -- Capital
Resources and Liquidity -- Capital" and Note 16 to the Consolidated
Financial Statements.

(5) The Bank had issued to the FDIC-FRF the Warrant to acquire 158,823 shares
of Common Stock of the Bank at an exercise price of $0.01 per share.
Payments in lieu of dividends related to the Warrant. In August 1996, the
FDIC-FRF surrendered a portion of the Warrant for a cash payment of $6.1
million, exercised the remainder of the Warrant and immediately exchanged
the shares of Common Stock of the Bank it received for 1,503,560 shares of
Common Stock of the Company. The FDIC-FRF sold all of these shares in the
August Offering. See "Business -- The Assistance Agreement -- Warrant
Agreement".

(7) Net income for fiscal 1994, 1993, and 1992 included $23.1 million, $9.3
million, and $32.1 million, respectively, of financial assistance payments
received from the FRF. No such payments were received during fiscal 1996 or
1995 as a result of the termination of the Assistance Agreement in December
1993. See "Business -- Assistance Agreement".

(8) Earnings per common share represents net income (adjusted for earnings on
the common stock equivalents attributable to the Bank's Warrant) divided by
the weighted average number of common shares outstanding. Per share results
have been restated to reflect an 1,800 to one common stock conversion in
June 1996. See Notes 1 and 16 to the Consolidated Financial Statements.

(9) Ratio, yield, and rate information are based on weighted average daily
balances for fiscal 1996, 1995, 1994, and 1993 and average monthly balances
for prior periods, with the exception of return on average common equity,
which is based on average monthly balances for all periods presented.

(10) Operating earnings represents income, including net gains (losses) on the
sales of single family servicing rights and single family warehouse loans,
before taxes, minority interest, and extraordinary loss and excludes net
gains (losses) on securities, MBS, and other loans and excludes certain
non-recurring items in fiscal 1996. See note 17 herein and
"Business -- General."

(11) Regulatory capital ratios presented are those of the Bank. No regulatory
capital ratios are presented for the Company because there are no such
applicable requirements for savings and loan holding companies such as the
Company. For a discussion of the regulatory capital requirements applicable
to the Bank, see "Business -- Regulation -- Safety and Soundness
Regulations -- Capital Requirements".

(12) Return on average assets represents income before minority interest and
extraordinary loss, divided by average total assets.

30
<PAGE>
(13) Net yield on interest-earning assets represents net interest income as a
percentage of average interest-earning assets. Interest rate spread
represents the difference between the average yield on interest-earning
assets and the average rate on interest-bearing liabilities.

(14) Net operating expense ratio represents total non-interest expense less
total non-interest income as a percentage of average assets for each
period.

(15) Efficiency ratio represents non-interest expenses (excluding goodwill
amortization), divided by net interest income plus non-interest income,
excluding net gains (losses) on securities, MBS, and other loans.

(16) Includes $129.0 million, $135.3 million, $100.3 million, $116.5 million,
and $127.0 million of brokered and purchased loans for fiscal 1996, 1995,
1994, 1993, and 1992, respectively.

(17) Certain items have been excluded as they are deemed to be non-recurring and
not part of the routine core business operations of the Company. Non-
recurring items for fiscal 1996 were comprised of: (i) a one-time SAIF
assessment charge of $33,657 ($20,729 net of tax); (ii) compensation
expense of $7,820 ($4,816 net of tax); (iii) charges totalling $12,537
($7,729 net of tax), related to the restructuring of and items associated
with the mortgage origination business; (iv) a contractual payment to
previous minority interests of $5,883; and (v) a tax benefit of $101,700.
Non-recurring items totalled $2.05 per common share for fiscal 1996. See
Notes 13, 14, 15, 16, and 18 to the Consolidated Financial Statements.
During fiscal 1994, a tax benefit of $58,166 or $1.90 per common share was
recorded. During fiscal 1993, a tax benefit of $44,183 and an extraordinary
loss of $14,549 (see note 6 herein) were recorded, totalling $0.94 per
common share in fiscal 1993.

<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

DISCUSSION OF RESULTS OF OPERATIONS

OVERVIEW.

1996 COMPARED TO 1995. Net income was $118.9 million ($3.87 per share) for
fiscal 1996, compared to $41.7 million ($1.35 per share) for fiscal 1995. The
increase was primarily due to the recognition of a $101.7 million ($3.33 per
share) tax benefit for the expected utilization of NOLs. No such benefits were
recorded during fiscal 1995. Net income for fiscal 1996, excluding the $101.7
million tax benefit and certain non-recurring charges discussed below, was $56.4
million ($1.82 per share) compared to $41.7 million ($1.35 per share) in the
prior year. Higher levels of interest-earning assets and an increase in the
yield on interest-earning assets contributed to the increase in net income,
partially offset by lower gains on sales of single family MSRs and single family
warehouse loans and increased expenses attributable to the minority interests.
The single family loan servicing portfolio increased to $13.2 billion at
September 30, 1996.

Results for fiscal 1996 included several non-recurring charges: (i) a
one-time SAIF assessment charge of $33.7 million ($20.7 million after tax or
$0.67 per share); (ii) charges totalling $12.5 million ($7.8 million after tax
or $0.25 per share) relating to the restructuring of and items associated with
the mortgage origination business; (iii) $7.8 million of compensation expense
($4.8 million after tax or $0.16 per share) relating to a management
compensation program adopted in connection with the August Offering; and (iv) a
$5.9 million contractual payment ($0.20 per share) to previous minority
interests.

Operating earnings, were $114.7 million for fiscal 1996, compared to $91.3
million for fiscal 1995, a 26% increase. Operating earnings represents income,
including net gains (losses) on the sales of single family servicing rights and
single family warehouse loans, before taxes and minority interest, and excludes
net gains (losses) on securities, MBS, and other loans. Operating earnings for
fiscal 1996 excludes a one-time SAIF assessment, compensation expense related to
the adoption of a management compensation program, and a charge related to the
restructuring of the Mortgage Banking Group because these items are considered
non-recurring. See Notes 13, 15, and 18 to the Consolidated Financial
Statements. Management believes operating earnings reflects the revenues and
expenses of the Company's business segments and facilitates trend analysis as it
excludes transactions that are typically considered opportunistic or
non-recurring and not part of the routine core business operations of the
Company. Operating earnings is provided as other data and should not be
considered an alternative to net income as an indicator of the Company's
operating performance or to cash flow as a measure of liquidity.

1995 COMPARED TO 1994. Net income was $41.7 million ($1.35 per share) for
fiscal 1995, compared to $109.0 million ($3.55 per share) for fiscal 1994. The
decrease primarily reflects the effect of a tax benefit of $58.2 million ($1.90
per share) recognized in fiscal 1994 for the expected utilization of NOLs under
SFAS No. 109, a lower net interest-rate spread, lower gains on sales of
securities and MBS, and higher provisions for credit losses in fiscal 1995. Net
income for fiscal 1995 was favorably impacted by the effect of higher levels of
interest-earning assets during fiscal 1995 compared to fiscal 1994 and an
increase in the single family servicing portfolio. The single family servicing
portfolio increased to $12.5 billion at September 30, 1995 compared to $8.9
billion at September 30, 1994, contributing to increased loan servicing fees and
charges during fiscal 1995.

Operating earnings were $91.3 million for fiscal 1995, compared to $75.5
million for fiscal 1994. This increase primarily reflects the higher levels of
interest-earning assets and increased loan servicing fees and charges, partially
offset by higher provisions for credit losses.

32
<PAGE>
The following table sets forth a reconciliation of Bank and Company net
income.

FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------
1996 1995 1994
----------- ---------- ----------
(IN THOUSANDS)
BANK
Net income........................... $ 134,196 $ 62,708 $ 124,761
Preferred stock dividends............ (18,253) (10,600) (8,653)
----------- ---------- ----------
Net income available for Bank's
common stock.................... 115,943 52,108 116,108
Dividends to Company(1).............. (109,011) (6,409) (11,435)
Payments in lieu of dividends(1)..... (6,413) (377) (357)
----------- ---------- ----------
Undistributed income of Bank....... 519 45,322 104,316
----------- ---------- ----------
COMPANY
Dividends from Bank.................. 109,011 6,409 11,435
Interest expense..................... (10,353) (10,407) (10,177)
Income tax benefit(2)................ 20,898 1,397 5,299
Other expense, net................... (1,140) (1,002) (1,903)
----------- ---------- ----------
Net income (loss) of Company
without including undistributed
income of Bank.................. 118,416 (3,603) 4,654
----------- ---------- ----------
Consolidated net income............ $ 118,935 $ 41,719 $ 108,970
=========== ========== ==========

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

(1) In May 1996, the Bank paid a $100 million dividend on the common stock of
the Bank and paid $5.9 million in lieu of dividends to the FDIC-FRF. See
"Business -- Assistance Agreement -- Warrant Agreement".

(2) During fiscal 1996, the Company recognized a tax benefit for the expected
utilization of NOLs against future taxable income. See " -- Income Taxes".

MORTGAGE BANKING RESTRUCTURE

The Company has been in the process of evaluating its strategic
alternatives with respect to its mortgage banking business in order to mitigate
the negative effect on profitability resulting from increased competition in the
loan origination business. Increased competition has resulted in the Company
receiving lower fees and lower rates on originated loans. Additionally,
profitability is impacted by fluctuations in the volume of originations due to
changes in market interest rates. The Company implemented a profitability
improvement program in an effort to reduce the amount of fixed charges necessary
to operate its loan origination business in response to lower levels of fee
revenue and to reduce the volume of staff necessary to process loan applications
and to complete the loan origination process. As a result of the office
closures, workforce reductions, and related actions taken in connection with the
plan, the Company recorded a $10.7 million restructuring charge and recorded
$1.8 million of other expenses related to the mortgage origination business in
June 1996. The restructuring charge includes estimated costs for severance and
other benefits of $800,000, asset write-downs of $5.3 million, lease termination
costs of $3.4 million, and other costs of $1.2 million. The non-cash write-off
of $5.3 million reflects $3.5 million of goodwill and $1.8 million of fixed
assets and leasehold improvements written off in connection with the closed
production offices. On January 17, 1997, the Company sold all of its 61 retail
mortgage origination offices located outside of Texas, its one office located in
El Paso, and four of its twelve wholesale lending offices, and related
administrative and support functions, to NCM. The Company retained its network
of retail origination branches in Texas, except the El Paso office, and
continues to conduct its wholesale orgination business in several western
states.

NET INTEREST INCOME

Net interest income is based on the relative amounts of interest-earning
assets and interest-bearing liabilities and the spread between the yields earned
on assets and rates paid on liabilities. The net interest-rate spread is
affected by changes in general market interest rates, including changes in the
relationship between short- and long-term interest rates (the yield curve), the
effects of periodic caps on the Company's adjustable-rate mortgage and MBS
portfolios and the interest rate sensitivity position or "gap". The Company
has traditionally managed

33
<PAGE>
its business to limit its overall exposure to changes in interest rates.
However, under current policies of the Company's Board of Directors, management
has been given some latitude to increase the Company's interest rate sensitivity
position within certain limits if, in management's judgment, that will enhance
profitability. As a result, changes in market interest rates may have a greater
impact on the Company's financial performance in the future than they have had
historically. See "Business -- General" and "Business -- Asset and Liability
Management".

The Company enters into certain financial instruments with
off-balance-sheet risk in the ordinary course of business to reduce its exposure
to changes in interest rates. The Company does not enter into instruments such
as leveraged derivatives or structured notes. The financial instruments used for
hedging interest rate risk include interest rate swaps, caps, floors, financial
options, financial futures contracts, and forward delivery contracts. A hedge is
an attempt to reduce risk by creating a relationship whereby any losses on the
hedged asset or liability are expected to be offset in whole or in part by gains
on the hedging financial instrument. Thus, market risk resulting from a
particular off-balance-sheet instrument is normally offset by other on or
off-balance-sheet transactions. See Note 12 to the Consolidated Financial
Statements.

34
<PAGE>
AVERAGE BALANCES AND AVERAGE YIELDS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------
1996 1995
------------------------------ ------------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- --------- ------ ---------- --------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Short-term interest-earning
assets........................ $ 668,657 $ 39,302 5.88% $ 466,276 $ 29,675 6.36%
Trading account assets.......... 1,154 67 5.81 1,079 62 5.75
Securities(1)................... 76,637 3,917 5.11 116,934 5,893 5.04
Mortgage-backed securities(1)... 1,968,230 128,143 6.51 2,618,990 173,155 6.61
Loans(2)........................ 7,889,828 627,940 7.96 6,707,868 526,528 7.85
FHLB stock...................... 213,242 12,943 6.07 180,416 11,446 6.34
Covered Assets and related
assets........................ -- -- -- -- -- --
---------- --------- ------ ---------- --------- ------
TOTAL INTEREST-EARNING
ASSETS...................... 10,817,748 812,312 7.51 10,091,563 746,759 7.40
Non-interest-earning assets....... 411,683 345,500
---------- ----------
Total assets.................. $11,229,431 $10,437,063
========== ==========
INTEREST-BEARING LIABILITIES:
Deposits:
Transaction accounts.......... $ 218,859 2,593 1.18 $ 225,799 3,384 1.50
Insured money fund accounts... 1,464,577 69,100 4.72 1,032,873 57,848 5.60
Savings accounts.............. 138,007 3,598 2.61 171,308 4,715 2.75
Certificates of deposit....... 3,244,291 196,929 6.07 3,560,420 198,419 5.57
---------- --------- ------ ---------- --------- ------
Total deposits............ 5,065,734 272,220 5.37 4,990,400 264,366 5.30
---------- --------- ------ ---------- --------- ------
FHLB advances................... 4,073,297 247,093 6.07 3,560,844 224,767 6.31
Reverse repurchase agreements
and federal funds purchased... 955,708 55,112 5.77 888,453 53,220 5.99
Senior Notes.................... 115,000 10,353 9.00 115,000 10,407 9.05
Other........................... -- -- -- -- -- --
---------- --------- ------ ---------- --------- ------
TOTAL INTEREST-BEARING
LIABILITIES................. 10,209,739 584,778 5.73 9,554,697 552,760 5.79
Non-interest-bearing liabilities
and stockholders' equity...... 1,019,692 882,366
---------- ----------
Total liabilities and
stockholders' equity........ $11,229,431 $10,437,063
========== ==========
Net interest income/interest rate
spread.......................... $ 227,534 1.78% $ 193,999 1.61%
========= ====== ========= ======
Net yield on interest-earning
assets.......................... 2.10% 1.92%
====== ======
Ratio of average interest-earning
assets to average
interest-bearing liabilities.... 1.06 1.06
========== ==========
</TABLE>

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------
1994
----------------------------
AVERAGE YIELD/
BALANCE INTEREST RATE
--------- --------- ------
INTEREST-EARNING ASSETS:
Short-term interest-earning
assets........................ $ 461,530 $ 19,019 4.12%
Trading account assets.......... 1,026 (144) (14.04)
Securities(1)................... 108,751 5,007 4.60
Mortgage-backed securities(1)... 2,595,163 151,972 5.86
Loans(2)........................ 4,524,158 308,804 6.83
FHLB stock...................... 132,277 5,558 4.20
Covered Assets and related
assets........................ 74,547 4,490 6.02
--------- --------- ------
TOTAL INTEREST-EARNING
ASSETS...................... 7,897,452 494,706 6.26
Non-interest-earning assets....... 386,175
---------
Total assets.................. $8,283,627
=========
INTEREST-BEARING LIABILITIES:
Deposits:
Transaction accounts.......... $ 237,537 3,753 1.58
Insured money fund accounts... 582,126 18,508 3.18
Savings accounts.............. 284,885 7,311 2.57
Certificates of deposit....... 3,662,043 179,462 4.90
--------- --------- ------
Total deposits............ 4,766,591 209,034 4.39
--------- --------- ------
FHLB advances................... 2,285,630 91,060 3.98
Reverse repurchase agreements
and federal funds purchased... 274,666 10,574 3.85
Senior Notes.................... 115,000 10,177 8.85
Other........................... 3,350 79 2.36
--------- --------- ------
TOTAL INTEREST-BEARING
LIABILITIES................. 7,445,237 320,924 4.31
Non-interest-bearing liabilities
and stockholders' equity...... 838,390
---------
Total liabilities and
stockholders' equity........ $8,283,627
=========
Net interest income/interest rate
spread.......................... $ 173,782 1.95%
========= ======
Net yield on interest-earning
assets.......................... 2.20%
======
Ratio of average interest-earning
assets to average
interest-bearing liabilities.... 1.06
=========
- ------------
(1) For purposes of computing yields, the effects of Statements of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for
Certain Investments in Debt and Equity Securities", have been
excluded from the average balances.
(2) Includes nonaccrual loans.

35
<PAGE>
The following table analyzes net interest income in terms of changes in the
volume of interest-earning assets and interest-bearing liabilities and changes
in yields and rates. The table reflects the extent to which changes in the
interest income and interest expense are attributable to changes in volume
(changes in volume multiplied by prior year rate) and changes in rate (changes
in rate multiplied by prior year volume). Changes attributable to the combined
impact of volume and rate have been allocated proportionately to changes due to
volume and changes due to rate.

RATE/VOLUME ANALYSIS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1996 VS. 1995 1995 VS. 1994
--------------------------------- ----------------------------------
VOLUME RATE NET VOLUME RATE NET
---------- --------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Short-term interest-earning
assets.......................... $ 12,015 $ (2,388) $ 9,627 $ 198 $ 10,458 $ 10,656
Trading account assets............. 4 1 5 (7) 213 206
Securities......................... (2,057) 81 (1,976) 390 496 886
Mortgage-backed securities......... (42,429) (2,583) (45,012) 1,418 19,765 21,183
Loans.............................. 93,941 7,471 101,412 166,278 51,446 217,724
FHLB stock......................... 2,002 (505) 1,497 2,453 3,435 5,888
Covered assets and related
assets.......................... -- -- -- (4,490) -- (4,490)
---------- --------- ---------- ---------- ---------- ----------
Total...................... 63,476 2,077 65,553 166,240 85,813 252,053
---------- --------- ---------- ---------- ---------- ----------
INTEREST EXPENSE
Deposits........................... 4,189 3,665 7,854 10,219 45,113 55,332
FHLB advances...................... 31,178 (8,852) 22,326 65,246 68,461 133,707
Reverse repurchase agreements and
federal funds purchased......... 3,906 (2,014) 1,892 34,151 8,495 42,646
Senior Notes....................... -- (54) (54) -- 230 230
Other.............................. -- -- -- (79) -- (79)
---------- --------- ---------- ---------- ---------- ----------
Total...................... 39,273 (7,255) 32,018 109,537 122,299 231,836
---------- --------- ---------- ---------- ---------- ----------
NET CHANGE IN NET INTEREST INCOME.... $ 24,203 $ 9,332 $ 33,535 $ 56,703 $ (36,486) $ 20,217
========== ========= ========== ========== ========== ==========
</TABLE>
1996 COMPARED TO 1995. Net interest income increased $33.5 million or 17%
to $227.5 million for fiscal 1996, compared to $194.0 million for fiscal 1995.
The increase in net interest income is primarily attributable to a $726.2
million, or 7%, increase in average interest-earning assets and a 18 basis point
increase in the net yield on interest-earning assets.

Interest-earning assets are primarily comprised of single family mortgage
loans and MBS. Interest-bearing liabilities primarily include deposits and FHLB
advances. The increase in average interest-earning assets during fiscal 1996 can
be principally attributed to two single family loan purchases during the second
half of fiscal 1995, approximating $1.9 billion. The increase in average
interest-earning assets was funded primarily with FHLB advances and reverse
repurchase agreements.

Approximately 78% of the Company's interest-earning assets at September 30,
1996 were adjustable-rate assets, a portion of which are tied to indices that
normally lag the changes in market interest rates. Substantially all of the
Company's adjustable-rate assets are subject to periodic and/or lifetime
interest rate caps. Periodic caps limit the amount by which the interest rate on
a particular mortgage loan may increase at its next interest rate reset date. In
a rising-rate environment, the interest rate spread may be negatively impacted
when the repricing of interest-earning assets is limited by caps on periodic
interest rate adjustments, compared to market interest rate movements.

36
<PAGE>
During fiscal 1995, the periodic caps on loans and MBS with adjustable
rates limited the increase in income relative to the cost of deposits and
borrowings, as average market interest rates increased during fiscal 1995. The
net interest rate spread for fiscal 1996 reflects an improvement over fiscal
1995 due to a lessening of the impact of caps. As of September 30, 1996,
substantially all of the mortgages subject to caps would have no limitation on
their next scheduled rate reset due to the level of market interest rates and
the related reset margin being less than the current coupon rate on the mortgage
loan plus the applicable periodic cap limitation. The net interest rate spread
was also positively impacted during fiscal 1996 due to higher yields earned on
loans purchased in the later part of fiscal 1995.

1995 COMPARED TO 1994. Net interest income increased $20.2 million, or
12%, to $194.0 million for fiscal 1995, compared to $173.8 million for fiscal
1994. Average interest-earning assets increased $2.2 billion, or 28%, during the
period, principally attributable to single family loan purchases during the
second half of fiscal 1995. The increase in average interest-earning assets was
funded primarily with FHLB advances and reverse repurchase agreements. Increased
net interest income resulting from higher volumes of interest-earning assets was
offset, to some extent, by unfavorable changes in the net spread between the
yield on interest-earning assets and the cost of funds. The net interest rate
spread decreased 34 basis points as a result of the rapid rise in market
interest rates during the early part of fiscal 1995. Increases in market
interest rates and the effect of lagging rate indices and caps on
adjustable-rate assets and the sale of higher yielding assets in fiscal 1994 all
contributed to the drop in the net yield on interest-earning assets.

PROVISION FOR CREDIT LOSSES

1996 COMPARED TO 1995. The provision for credit losses decreased to $16.5
million for fiscal 1996 down from $24.3 million for fiscal 1995. Decreased loan
purchases during fiscal 1996 resulted in lower single family provisions of $6.8
million for fiscal 1996 compared to $18.5 million for fiscal 1995. Consumer loan
provisions increased to $7.8 million for fiscal 1996, compared to $4.2 million
for fiscal 1995, reflecting increased losses and charge-offs on the unsecured
line of credit portfolio. See "-- Asset Quality" and Note 5 to the
Consolidated Financial Statements.

1995 COMPARED TO 1994. The provision for credit losses increased to $24.3
million for fiscal 1995 compared to $7.0 million for fiscal 1994. This increase
primarily resulted from provisions on single family loans, which totalled $18.5
million for fiscal 1995 compared to $2.4 million for fiscal 1994. The single
family loan portfolio increased to $7.1 billion at September 30, 1995 from $4.2
billion at September 30, 1994, which included loan purchases totalling $2.7
billion and originations retained for portfolio of $1.0 billion during fiscal
1995. The growth in the consumer lending business and loss experience on the
unsecured consumer line of credit portfolio also increased consumer provisions
to $4.2 million for fiscal 1995, from $2.8 million for fiscal 1994. Consumer
loans increased to $123.1 million at September 30, 1995, from $108.2 million at
September 30, 1994, while consumer charge-offs increased to $2.8 million for
fiscal 1995, from $1.3 million for fiscal 1994. See "-- Asset Quality" and
Note 5 to the Consolidated Financial Statements.

37
<PAGE>
NON-INTEREST INCOME

Non-interest income includes gains from sales of single family servicing
rights and single family warehouse loans, gains (losses) on securities and MBS,
gains (losses) on other loans, loan servicing fees and charges, and other fees
and charges.

NON-INTEREST INCOME

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(IN THOUSANDS)
NON-INTEREST INCOME
Net gains (losses)
Sales of single family servicing
rights........................ $ 4,678 $ 34,080 $ 67,198
Single family warehouse loans... 38,396 26,415 (3,912)
------------ ------------ ------------
43,074 60,495 63,286
Securities and mortgage-backed
securities.................... 4,002 26 10,404
Other loans..................... 3,189 (1,210) 163
Loan servicing fees and charges.... 44,230 43,508 31,741
Other.............................. 15,541 12,162 13,295
------------ ------------ ------------
Total non-interest
income..................... $ 110,036 $ 114,981 $ 118,889
============ ============ ============
PRINCIPAL SOLD
MSRs............................... $ 1,488,885 $ 2,854,114 $ 4,521,491
Single family warehouse loans...... 2,984,211 2,100,662 4,786,413

1996 COMPARED TO 1995. Non-interest income was $110.0 million for fiscal
1996 compared to $115.0 million for fiscal 1995, a decrease of $5.0 million.
During fiscal 1996 and 1995, $1.5 billion and $2.9 billion, respectively, of
single family MSRs were sold. The decrease in single family MSR sales during
fiscal 1996 reflects management's decision to retain a greater portion of MSRs
in response to the implementation of SFAS No. 122, "Accounting for Mortgage
Servicing Rights, an Amendment of Financial Accounting Standards Board Statement
No. 65". See "Business -- Loan Servicing Portfolio". Fiscal 1995 included
substantial gains on sales of servicing rights originated in prior years. Gains
on sales of single family warehouse loans were $38.4 million during fiscal 1996,
compared to $26.4 million during fiscal 1995, reflecting an increase in the
volume of single family warehouse loans sold. Excluding gains from sales of
single family MSRs and single family warehouse loans, non-interest income
increased $12.5 million in fiscal 1996 compared to fiscal 1995, primarily due to
increased gains on sales of securities and MBS and other loans.

Net gains on securities and MBS were $4.0 million and $26,000 for fiscal
1996 and 1995, respectively. During fiscal 1996, the net gains on MBS were from
the sale of $293.0 million of MBS. See " -- Discussion of Financial
Condition".

Net gains (losses) on other loans were $3.2 million and $(1.2) million for
fiscal 1996 and 1995, respectively. During fiscal 1996, the Company sold $98.1
million of single family loans held by the Financial Markets Group for a gain of
$608,000 and $178.4 million of multi-family loans for a gain of $2.7 million.
See " -- Discussion of Financial Condition".

During fiscal 1996, loan servicing fees and charges increased $722,000, or
2% from the prior year. This increase is due primarily to an increase in the
portfolio of single family servicing for others, $9.5 billion at September 30,
1996 compared to $8.5 billion at September 30, 1995. Offsetting this increase
was a decrease in the average service fee rate due to a change in the mix of the
portfolio.

Other non-interest income was $15.5 million in fiscal 1996 compared to
$12.2 million in fiscal 1995. The increase was primarily due to growth in mutual
fund and annuity sales. The growth in the sale of these products reflected the
low interest rate environment, more experienced salespeople, and increased
marketing of those products.

38
<PAGE>
1995 COMPARED TO 1994. Non-interest income was $115.0 million for fiscal
1995, a $3.9 million decrease from $118.9 million for fiscal 1994. This decrease
is attributable, in part, to a $2.8 million decrease in gains on sales of single
family MSRs and single family warehouse loans which were $60.5 million and $63.3
million, respectively, for fiscal 1995 and 1994.

In September 1995, the Company adopted SFAS No. 122, effective October 1,
1994. This statement requires that, among other things, the book value of
mortgage loans be allocated at the time of origination between the MSRs and the
related loans, provided there is a plan to sell or securitize such loans. With
the implementation of SFAS No. 122, the original cost basis of the loan is
allocated between the loan and the MSRs, thus increasing the gains on sales of
loans and reducing the gains on sales of MSRs.

The implementation of SFAS No. 122 resulted in the capitalization of $28.7
million of originated MSRs during fiscal 1995 and an increase to net income and
stockholders' equity of $9.8 million. This implementation also had the effect of
decreasing the gains on sales of single family MSRs by $17.7 million and
increasing the gains on single family warehouse loans by $34.6 million.
Excluding the effects of implementing SFAS No. 122, the gains on sales of single
family MSRs and the gains (losses) on single family warehouse loans would have
been $51.8 million and $(8.2) million, respectively. In accordance with the
requirements of SFAS No. 122, the prior year amounts were not restated.

Excluding the effects of SFAS No. 122 in fiscal 1995, the gains on single
family MSRs were $51.8 million, compared to $67.2 million for fiscal 1994.
During fiscal 1995, single family MSRs were sold at an average premium of 181
basis points, compared to 149 basis points during fiscal 1994. The average
premiums on MSRs sold in fiscal 1994 were lower compared to fiscal 1995,
reflecting the lower interest rate environment during the first half of fiscal
1994. The rise in market interest rates during the second half of fiscal 1994,
and continuing through the beginning of fiscal 1995 had a positive effect on the
average premiums on servicing rights sold, reflecting an increase in the value
of the servicing portfolio due to actual and anticipated declines in
prepayments. The increase in interest rates during the second half of fiscal
1994 and during fiscal 1995 also resulted in a decrease in originations. The
decrease in originations and the retention of a greater proportion of originated
loans for the Company's own portfolio decreased the volume of MSRs available for
sale during fiscal 1995.

Excluding the effects of SFAS No. 122 in fiscal 1995, the losses on single
family warehouse loans were $(8.2) million in fiscal 1995 and $(3.9) million in
1994. Increased losses in fiscal 1995 reflect the increasingly competitive
pricing in the market during that period.

Net gains on securities and MBS were $26,000 and $10.4 million for fiscal
1995 and 1994, respectively. The gains in fiscal 1994 primarily relate to the
sale of $213.0 million of MBS created when the Company securitized single family
loans from its own portfolio.

Loan servicing fees and charges increased $11.8 million, or 37%, during
fiscal 1995 compared to fiscal 1994. The increase was due primarily to an
increase in the portfolio of single family servicing for others and an increase
in the average fees collected on those loans due to a change in the composition
of that portfolio. The portfolio of single family servicing for others increased
to $8.5 billion at September 30, 1995, compared to $6.2 billion at September 30,
1994, primarily due to loan originations and purchases of MSRs. See " --
Discussion of Financial Condition". The increase in the single family loan
servicing portfolio during fiscal 1995 includes $3.4 billion of loans associated
with MSRs purchased in fiscal 1994 that were not transferred to the Company
until fiscal 1995 and were not included in the portfolio as of September 30,
1994. See Note 6 to the Consolidated Financial Statements.

39
<PAGE>
NON-INTEREST EXPENSE

Non-interest expense was comprised of the following significant items:

NON-INTEREST EXPENSE

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
Compensation and benefits............ $ 87,640 $ 83,520 $ 86,504
Occupancy............................ 18,415 18,713 17,196
Data processing...................... 16,196 16,360 15,821
Advertising and marketing............ 8,025 9,262 10,796
Amortization of intangibles.......... 20,432 21,856 18,247
SAIF deposit insurance premiums...... 45,690 11,428 11,329
Furniture and equipment.............. 6,121 6,428 6,810
Restructuring charges................ 10,681 -- --
Other................................ 40,065 27,009 32,890
---------- ---------- ----------
Total non-interest expense...... $ 253,265 $ 194,576 $ 199,593
========== ========== ==========

1996 COMPARED TO 1995. Non-interest expense was $253.3 million for fiscal
1996 and $194.6 million for fiscal 1995, or 2.26% and 1.86%, respectively, of
average total assets for those same periods. Non-interest expense for fiscal
1996 included several non-recurring items including $7.8 million in compensation
expense, $33.7 million in SAIF deposit insurance premiums, and a $10.7 million
restructuring charge. Excluding these non-recurring items, non-interest expense
was $201.1 million for fiscal 1996 compared to $194.6 million for fiscal 1995,
or 1.79% and 1.86%, respectively, of average total assets for those same
periods. The $7.8 million compensation charge related to a management
compensation program adopted in June 1996 in connection with the August
Offering. This program provided, among other things, for a cash bonus and the
award of Company common stock to certain executives and officers of the Company.
See Note 13 to the Consolidated Financial Statements. Excluding the $7.8 million
charge, compensation and benefits decreased to $79.8 million in fiscal 1996
compared to $83.5 million in fiscal 1995. This decrease reflects a decrease in
the number of average full-time equivalent employees to 2,548 for fiscal 1996,
from 2,729 for fiscal 1995. The $33.7 million SAIF deposit insurance premium
charge reflects a one-time assessment on all SAIF-insured deposits aimed at
fully-capitalizing the SAIF. The United States Congress passed legislation that
was signed into law on September 30, 1996 that mandated this assessment, which
was set at 65.7 basis points of SAIF-assessable deposits at March 31, 1995. See
"Business -- Regulation -- Charter, Supervision, and Examination -- Insurance
Assessments". The $10.7 million restructuring charge is discussed above in
" -- Mortgage Banking Restructure". During fiscal 1996 and 1995, $878,000 and
$11.2 million, respectively, of gains on sales of Real Estate Owned ("REO")
properties were recognized and included in other non-interest expense.

1995 COMPARED TO 1994. Non-interest expense was $194.6 million for fiscal
1995 compared to $199.6 million for fiscal 1994, or 1.86% and 2.41%,
respectively, of average total assets for those periods. Compensation and
benefits were $83.5 million for fiscal 1995 and $86.5 million for fiscal 1994,
or 43% of total non-interest expense for both of these periods. Advertising
expenses were lower during fiscal 1995 reflecting the introduction of community
banking products in the prior year. During fiscal 1995 and 1994, $11.2 million
and $5.8 million, respectively, of gains on sales of REO properties were
recognized and included in other non-interest expense. Amortization of
intangibles increased in fiscal 1995, reflecting increased amortization of MSRs
due to servicing acquisitions.

INCOME TAXES

The provision for income taxes is comprised of current federal income
taxes, deferred federal income taxes, state income taxes, and payments due in
lieu of taxes. The provision for income taxes was a net benefit of $75.8 million
for fiscal 1996, an expense of $37.4 million for fiscal 1995, and a net benefit
of $31.9 million in fiscal 1994. In June 1996, the Certificate of Incorporation
and By-Laws were restated with the intent to preserve certain

40
<PAGE>
beneficial tax attributes limiting the disposition of certain common stock and
other interests in the Company by certain of its stockholders. The preservation
of certain tax attributes allowed the recognition of tax benefits in June 1996
for the expected utilization of NOLs. These tax benefits were not recognized in
prior periods due to limitations on the utilization of NOLs if an Ownership
Change had occurred. In June 1996, the Company and the Bank entered into a tax
sharing agreement. This agreement resulted in the recognition of a tax benefit
for the expected utilization of the Company's NOLs by the Bank. As a result of
the tax sharing agreement and the restatement of the Certificate of
Incorporation and By-laws, a total tax benefit of $101.7 million was recognized
in fiscal 1996 as a reduction of income tax expense and an increase in the net
deferred tax asset. No tax benefits were recorded in fiscal 1995 due to
limitations on NOLs if an Ownership Change had occurred. During fiscal 1994, tax
benefits of $58.2 million were recorded due to the expected utilization of NOLs
against future taxable income. See "Business -- Taxation" and Note 14 to the
Consolidated Financial Statements.

As of September 30, 1996, future taxable income of $721 million would fully
utilize the net deferred tax asset. The Company earned taxable income of $130
million in fiscal 1995 and estimates taxable income of $80 million for fiscal
1996.

MINORITY INTEREST

Dividends on Bank Preferred Stock paid by the Bank increased to $18.3
million for fiscal 1996 from $10.6 million for fiscal 1995, due to the Bank's
issuance of Bank Preferred Stock, Series B during the fourth quarter of fiscal
1995. These shares are not owned by the Company and, accordingly, are reflected
as minority interest in the Consolidated Financial Statements. Payments in lieu
of dividends increased during the year due to the contractual payment of $5.9
million made to the FDIC-FRF in connection with the declaration of a $100
million dividend on the common stock of the Bank. See "Business -- The
Assistance Agreement -- Warrant Agreement" and Note 16 to the Consolidated
Financial Statements.

DISCUSSION OF FINANCIAL CONDITION

OVERVIEW

The Company, through the Bank, is a broad based financial services provider
to consumers and businesses in Texas and other selected regional markets
throughout the United States. Historically, the Company focused on traditional
single family mortgage lending and deposit gathering, as well as retail and
wholesale mortgage banking activities. Over the past few years, however, the
Company's management has pursued a strategy designed to reduce the Bank's
reliance on its thrift and mortgage banking lines of business by developing
potentially higher margin community banking and commercial banking lines of
business. During this time, the Company has engaged in more aggressive marketing
campaigns and has increased its originations and retention of commercial and
consumer loans and increased the level of lower cost transaction and commercial
deposit accounts. While the pursuit of this strategy entails risks different
from and in addition to those found in traditional thrift and mortgage banking
lines of business, the Company believes it has taken appropriate measures to
manage these risks adequately. To manage potential credit risk, the Company has
developed comprehensive credit approval and underwriting policies and procedures
for these lines of business. To offset operational and competitive risk, the
Company has hired experienced commercial bank professionals, trained other
personnel to manage and staff these businesses, and has closely monitored the
conduct and performance of the businesses. In addition to its efforts to
increase originations of commercial and consumer loans, the Company plans to
increase the retention of higher-yielding single family and multi-family
mortgage loans that, in the past, may have otherwise been sold or securitized.
The Company intends to continue to pursue additional expansion opportunities,
including through acquisitions, while maintaining adequate capital.

41
<PAGE>
The following table reflects activity in the MBS portfolio.

MORTGAGE-BACKED SECURITIES

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(IN THOUSANDS)
HELD TO MATURITY
Beginning balance.................... $ 2,051,304 $ 2,394,978 $ 358,896
Loans securitized.................. -- -- 906,652
Purchases.......................... 3,841 38,515 83,854
Net change in unrealized gains
(losses) before tax............. 2,841 162 (10,202)
Sales.............................. -- -- (38,252)
Repayments......................... (178,926) (390,364) (162,328)
Transfers.......................... (1,244,945) -- 1,260,971
Other.............................. (4,067) 8,013 (4,613)
------------ ------------ ------------
Ending balance....................... $ 630,048 $ 2,051,304 $ 2,394,978
============ ============ ============
AVAILABLE FOR SALE
Beginning balance.................... $ 346,959 $ 433,925 $ 1,817,029
Loans securitized.................. -- -- 275,520
Purchases.......................... -- 230 583,444
Net change in unrealized gains
(losses) before tax............. 3,660 8,415 (61,613)
Sales.............................. (292,990) (77,610) (174,702)
Repayments......................... (272,059) (16,346) (760,111)
Transfers.......................... 1,244,945 -- (1,260,971)
Other.............................. (2,655) (1,655) 15,329
------------ ------------ ------------
Ending balance....................... $ 1,027,860 $ 346,959 $ 433,925
============ ============ ============

The unrealized gains on the MBS held to maturity portfolio were $2.2
million at September 30, 1996, $14.5 million at September 30, 1995, and $1.8
million at September 30, 1994. The unrealized losses on the MBS held to maturity
portfolio were $23.0 million at September 30, 1996, $34.6 million at September
30, 1995, and $56.0 million at September 30, 1994. The changes in the unrealized
gains and losses in the MBS held to maturity portfolio relate to changes in
market conditions relating to MBS. At September 30, 1996, the Company's MBS held
to maturity portfolio was comprised primarily of privately-issued and
credit-enhanced MBS, of which 99% were rated AA/Aa or higher by the Standard &
Poor's Corporation or Moody's Investor Services, Inc., respectively. These
ratings and the individual MBS are reviewed monthly to ensure that no credit
deterioration has occurred. At September 30, 1996, none of the MBS in the held
to maturity portfolio were on credit watch for possible downgrading by either of
the rating agencies. See "Business -- Investment Portfolio."

42
<PAGE>
The following table reflects activity in the loan portfolio.

LOANS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1996 1995 1994
------------- ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
HELD TO MATURITY
Beginning balance.................... $ 7,763,676 $ 4,780,328 $ 3,434,440
Originations
Single family................... 818,563 1,012,771 1,319,020
Single family residential
construction.................. 554,260 239,481 133,609
Consumer........................ 125,596 99,249 94,153
Multi-family, commercial real
estate, and business credit... 248,185 246,131 207,546
Purchases
Single family................... 140,583 2,640,755 1,312,827
Consumer........................ -- 68 24,982
Multi-family and commercial real
estate........................ 7,927 17,270 68,466
Net change in mortgage banker
finance line of credit.......... 30,481 (38,124) (238,223)
Repayments......................... (2,298,915) (1,188,489) (807,574)
Securitized loans sold or
transferred..................... -- -- (1,125,050)
Transfers (to) from held for
sale............................ (104,235) 805 398,645
Sales.............................. (4,420) (34,865) (26,930)
Other.............................. (54,548) (11,704) (15,583)
------------- ------------- -------------
Ending balance....................... $ 7,227,153 $ 7,763,676 $ 4,780,328
============= ============= =============
HELD FOR SALE
Beginning balance.................... $ 496,564 $ 265,846 $ 1,427,939
Originations
Single family................... 2,783,446 2,213,553 4,105,530
Multi-family, commercial real
estate, and business credit... 88,861 61,505 23,449
Purchases
Single family................... 85,715 65,103 60,900
Multi-family, commercial real
estate, and business
credit........................ 57,594 38,823 --
Repayments......................... (15,581) (3,667) (54,846)
Securitized loans sold or
transferred(1).................. (2,669,406) (1,864,313) (4,470,275)
Transfers from (to) held to
maturity........................ 104,235 (805) (398,645)
Sales.............................. (642,559) (273,747) (430,342)
Other.............................. 3,466 (5,734) 2,136
------------- ------------- -------------
Ending balance....................... $ 292,335 $ 496,564 $ 265,846
============= ============= =============
</TABLE>
- ------------

(1) Includes $2.6 billion, $1.9 billion, and $4.4 billion of loans securitized
by the Mortgage Banking Group and sold to third parties during fiscal 1996,
1995, and 1994, respectively.

1996 ACTIVITY. Total assets decreased by $1.3 billion, or 11%, to $10.7
billion at September 30, 1996 down from $12.0 billion at September 30, 1995.
This decrease primarily resulted from loan and MBS sales and repayments.

Securities purchased under agreements to resell ("repurchase agreements")
and federal funds sold increased to $674.2 million at September 30, 1996 from
$471.1 million at September 30, 1995. The increase primarily reflects the
Company's decision to borrow and invest funds at a positive spread on a
short-term basis.

Securities decreased $51.5 million, to $64.5 million at September 30, 1996
from $116.0 million at September 30, 1995 reflecting the purchase of $22.4
million and the sale of $96.5 million in securities. During

43
<PAGE>
fiscal 1996, $58.0 million of Small Business Administration ("SBA") loans were
purchased, a portion of which were pooled into securities totalling $30.5
million. At September 30, 1996, $6.5 million of the securities created remain in
the Company's portfolio.

MBS decreased $740.4 million during fiscal 1996, primarily due to sales and
repayments. During fiscal 1996, the Company sold $293.0 million in MBS for a
gain of $2.7 million, compared to $77.6 million in sales for a gain of $16,000
during fiscal 1995. The increase in repayments resulted from a decline in market
interest rates.

In November 1995, the Financial Accounting Standards Board ("FASB")
issued "A Guide to Implementation of Statement 115 on Accounting for Certain
Investments in Debt and Equity Securities". This implementation guide provided
the Company the opportunity to reassess the appropriateness of the
classification of its securities, and provided that reclassifications of
securities from the held to maturity category resulting from this one-time
reassessment would not call into question the intent to hold other securities to
maturity in the future. During the first quarter of fiscal 1996, the Company
reassessed its securities portfolios and reclassified $1.2 billion in MBS from
the held to maturity portfolio to the available for sale portfolio. An
unrealized gain of $4.2 million before tax, or $2.6 million after tax, was
recorded in stockholders' equity as a result of this transfer. At September 30,
1996 and 1995, the Company had unrealized losses on securities and MBS available
for sale, net of tax, of $2.2 million and $6.6 million, respectively. See Note 4
to the Consolidated Financial Statements.

The increase in single family loan originations during fiscal 1996 resulted
from a decline in market interest rates in comparison to a year ago. The decline
in market interest rates prompted borrowers to refinance their mortgages at
lower rates of interest, resulting in an increase in repayments as well as in
single family mortgage loan originations. Refinancings approximated $1.2 billion
and $600.6 million, or 31% and 17% of total single family mortgage loan
originations during fiscal 1996 and 1995, respectively. Multi-family, commercial
real estate, and business credit loan originations increased $29.4 million
during fiscal 1996 as compared to fiscal 1995. The increase in multi-family,
commercial real estate, and business credit loan originations, as well as the
increase in residential construction loan originations during fiscal 1996, as
compared to fiscal 1995, reflects the geographic expansion of the offering of
these products. Increased consumer loan originations during fiscal 1996 as
compared to fiscal 1995 are primarily due to increased home improvement loan
originations resulting from increased marketing efforts.

As a result of the decline in market interest rates during fiscal 1996, the
MBF line of credit portfolio increased $30.5 million to $139.9 million at
September 30, 1996.

Single family loan purchases were $226.3 million during fiscal 1996,
compared to $2.7 billion during fiscal 1995. The decrease in purchases reflects
a decrease in products available at attractive yields.

During fiscal 1996, total loans decreased $740.8 million, primarily due to
sales and repayments. During this period, the Company sold $98.1 million of
single family portfolio loans for a gain of $608,000 and $178.4 million of
multi-family loans for a gain of $2.7 million.

MSRs increased $48.3 million to $123.4 million at September 30, 1996 from
$75.1 million at September 30, 1995. During fiscal 1996, the Company purchased
servicing rights associated with $1.2 billion of single family loans at a
premium of $23.5 million.

In the aggregate, FHLB advances, reverse repurchase agreements, and federal
funds purchased decreased $1.3 billion to $4.3 billion at September 30, 1996
from $5.6 billion at September 30, 1995, reflecting a reduction in the Company's
asset base.

The decrease in deposits is primarily due to maturities of consumer and
wholesale certificates of deposits ("CDs") that were not renewed. These
decreases were partially offset by increased consumer checking and insured money
fund deposits, reflecting the Company's emphasis on high levels of customer
service and innovative products.

1995 ACTIVITY. Total assets increased to $12.0 billion at September 30,
1995 from $8.9 billion at September 30, 1994, reflecting an increase of $3.1
billion. The majority of this increase occurred in the loan portfolio, primarily
as a result of single family adjustable-rate loan originations retained for the
Company's portfolio and purchases of single family loans.

44
<PAGE>
Repurchase agreements and federal funds sold increased to $471.1 million at
September 30, 1995 from $358.7 million at September 30, 1994. The increase
primarily reflected the Company's decision to borrow and invest funds on a
short-term basis.

MBS decreased $430.6 million during fiscal 1995, primarily due to
repayments of $406.7 million. The decrease in purchases to $38.7 million for
fiscal 1995 from $667.3 million for fiscal 1994 reflected lower yields available
in the marketplace on MBS during fiscal 1995. The decreased volume of MBS sales,
to $77.6 million for fiscal 1995 as compared to $213.0 million during fiscal
1994, primarily resulted from reduced sales of securitized assets. There were no
loans securitized during fiscal 1995, as compared to $1.2 billion securitized
during fiscal 1994. The $515.7 million decrease in repayments for fiscal 1995,
as compared to fiscal 1994, reflected rising interest rates beginning in the
second half of fiscal 1994.

At September 30, 1995 and 1994, unrealized losses on securities and MBS
available for sale, net of tax, were $6.6 million and $13.4 million,
respectively. The decrease resulted principally from a decline in market prices
due to increased interest rates in the second half of fiscal 1994 and
prepayments of certain high yielding securities. See Note 4 to the Consolidated
Financial Statements.

During fiscal 1995, loans increased $3.2 billion, primarily as a result of
the retention of single family adjustable-rate loan originations for the
Company's portfolio and purchases of single family loans.

While the total loan portfolio increased, single family loan originations
decreased $2.2 billion, or 41%, in fiscal 1995 compared to fiscal 1994 and $1.2
billion, or 18%, in fiscal 1994 compared to fiscal 1993. The decrease in single
family loan originations during fiscal 1995 and 1994 can be attributed to higher
interest rates during those periods leading to a decline in mortgage loan
refinance activity during fiscal 1995 and 1994. Refinancings approximated $600.6
million and $2.0 billion, or 17% and 37%, respectively, of total originations in
fiscal 1995 and 1994. Despite lower origination volumes, the Company retained a
greater percentage of originations for its portfolio due to an increase in the
proportion of adjustable-rate loans as compared to fixed-rate loans originated
by the Mortgage Banking Group. During fiscal 1995, 30% of single family loan
originations were retained for portfolio, as compared to 24% in fiscal 1994. The
higher market interest rates also resulted in a decline in the MBF line of
credit portfolio.

During fiscal 1994 and 1995, despite the decline in single family mortgage
loan originations, the Company's single family loan portfolio increased as a
result of purchases from third parties. While purchases of single family loans
increased during these periods, purchases of MBS decreased. During fiscal 1995,
yields on loan purchases were higher than yields on MBS purchased. During fiscal
1995, $2.7 billion of single family loans yielding 8.46% were purchased,
including a $1.3 billion purchase consisting of adjustable-rate loans, compared
to $38.7 million of MBS purchased at a yield of 5.93%.

Increased single family residential construction, multi-family, and
commercial real estate loan originations in fiscal 1995 reflect geographic
expansion of the offering of these products.

Total deposits increased $418.0 million, to $5.2 billion at September 30,
1995, from $4.8 billion at September 30, 1994. The majority of the increase is
due to an increase in commercial deposits from MBF customers, reflecting the
Company's effort to build its customer base for this type of deposit.

In the aggregate, FHLB advances, reverse repurchase agreements, and federal
funds purchased increased to $5.6 billion at September 30, 1995 from $3.2
billion at September 30, 1994, primarily to fund asset originations and
purchases. In connection with the increase in FHLB advances, FHLB stock was
purchased to maintain the required balance of such stock. The Bank was in
compliance with such stock requirements at September 30, 1995.

During fiscal 1995, the Bank issued the Bank Preferred Stock, Series B.
Costs incurred in connection with the stock issuance were recorded as a
reduction to paid-in capital. The Bank's total capital was increased by $96.2
million as a result of this offering.

ASSET QUALITY

The Company is exposed to certain credit risks related to the value of the
collateral that secures loans held in its portfolio and the ability of borrowers
to repay their loans during the term thereof. The Company has a Credit

45
<PAGE>
Committee comprised of senior officers, that continually monitors the loan and
REO portfolios for potential problems and reports to the Board of Directors at
regularly scheduled meetings. The Company also has established an Asset
Classification Committee comprised of senior management. This committee reviews
the classification of assets and reviews the allowance for credit losses. This
committee reviews all assets and periodically reports its findings directly to
the Board of Directors. The Company also has an Asset Review Department, the
function of which is to provide to the Board of Directors an independent ongoing
review and evaluation of the quality of assets.

Nonperforming assets consist of nonaccrual loans and REO. Loans are usually
placed on nonaccrual status when the loan is past due 90 days or more, or the
ability of a borrower to repay principal and interest is in doubt. At September
30, 1994 and 1993, nonaccrual loans included $5.7 million and $9.0 million,
respectively, of single family loans 90 days delinquent that were subject to
government guaranty and upon which interest continued to accrue. There were no
such loans at September 30, 1996, 1995, and 1992. At September 30, 1995, single
family nonaccrual loans included $10.2 million of loans which were contractually
current pursuant to the borrowers' court-approved bankruptcy plans. At September
30, 1996, $10.6 million of such loans were excluded from single family
nonaccrual loans.

NONPERFORMING ASSETS
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
----------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
NONACCRUAL LOANS
Single family(1)................ $ 92,187 $ 83,954 $ 85,722 $ 61,451 $ 60,209
Single family residential
construction.................. -- 505 -- -- 672
Consumer........................ 1,039 563 506 427 --
Multi-family.................... 144 213 3,802 3,233 --
Commercial real estate and
business credit............... 350 -- 2,342 -- --
---------- ---------- ---------- ---------- ----------
93,720 85,235 92,372 65,111 60,881
---------- ---------- ---------- ---------- ----------
DISCOUNTS
Accretable(2)................... (286) (560) (669) (781) (1,524)
Non-accretable(3)............... (3,791) (9,167) (15,384) (22,684) (21,250)
---------- ---------- ---------- ---------- ----------
(4,077) (9,727) (16,053) (23,465) (22,774)
---------- ---------- ---------- ---------- ----------
Net nonaccrual loans....... 89,643 75,508 76,319 41,646 38,107
REO, primarily single family
properties......................... 30,730 24,904 20,684 18,954 17,722
---------- ---------- ---------- ---------- ----------
Total nonperforming
assets................... $ 120,373 $ 100,412 $ 97,003 $ 60,600 $ 55,829
========== ========== ========== ========== ==========
</TABLE>
- ------------

(1) Originated single family nonaccrual loans to total single family nonaccrual
loans were 28.82%, 20.64%, and 13.66% at September 30, 1996, 1995, and 1994,
respectively.

(2) Accretable discount arises principally from the purchase of performing
single family residential loans in the secondary market. The discount in
effect functions principally as an additional reserve by lowering the book
value of the outstanding loans. If the accretable discount is included with
the allowance for credit losses, the resulting ratio of the allowance for
credit losses to total loans would have been 0.73% at September 30, 1996.

(3) The loan principal amount related to the non-accretable discounts were $29.5
million, $33.7 million, $60.2 million, $41.4 million, and $43.1 million at
September 30, 1996, 1995, 1994, 1993, and 1992, respectively.

46
<PAGE>
SELECTED ASSET QUALITY RATIOS
<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for credit losses to net
nonaccrual loans
Single family................... 32.46% 39.74% 22.70% 39.69% 41.61%
Total........................... 44.24 48.74 30.73 71.71 74.04
Allowance for credit losses to
nonperforming assets............... 32.95 36.65 24.18 49.28 50.54
Allowance for credit losses and
non-accretable discounts to net
nonaccrual loans................... 48.47 60.88 50.89 126.18 129.80
Allowance for credit losses to total
loans.............................. 0.52 0.44 0.46 0.61 0.68
Nonperforming assets to total
assets............................. 1.12 0.84 1.09 0.72 0.89
Net nonaccrual loans to total
loans.............................. 1.19 0.91 1.51 0.85 0.92
Nonperforming assets to total loans
and REO............................ 1.59 1.21 1.91 1.23 1.35
Net loan charge-offs to average loans
Single family................... 0.12 0.08 0.04 0.05 0.07
Total........................... 0.17 0.16 0.30 0.05 0.07
</TABLE>
PORTFOLIO OF GROSS NONACCRUAL LOANS BY STATE AND TYPE
AT SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
% OF
STATE SINGLE FAMILY OTHER TOTAL TOTAL
- ------------------------------------- ------------- ------ --------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
California........................... $53,093 $ -- $ 53,093 56.65%
Florida.............................. 8,657 97 8,754 9.34
Texas................................ 4,359 905 5,264 5.62
Illinois............................. 4,500 -- 4,500 4.80
New Jersey........................... 3,251 -- 3,251 3.47
New York............................. 2,592 -- 2,592 2.77
Maryland............................. 1,642 -- 1,642 1.75
Pennsylvania......................... 1,588 22 1,610 1.72
Virginia............................. 1,162 -- 1,162 1.24
Oregon............................... 1,025 -- 1,025 1.09
Other................................ 10,318 509 10,827 11.55
------------- ------ --------- ------
Total........................... $92,187 $1,533 $ 93,720 100.00%
============= ====== ========= ======
% of Total...................... 98.36% 1.64% 100.00%
============= ====== =========
</TABLE>
The allowance for credit losses to net nonaccrual loans decreased from a
five year high of 74.04% at September 30, 1992 to 48.74% at September 30, 1995.
The decrease in the ratio resulted from the charge-off of $10.1 million in
fiscal 1994 and $3.4 million in fiscal 1995 related to a single large commercial
real estate loan which reduced the amount of the reserve. The ratio decreased to
44.24% at September 30, 1996 primarily due to loan originations and purchases in
the latter half of 1995.

The allowance for credit losses to net nonaccrual loans was 44.24% at
September 30, 1996 and 48.74% at September 30, 1995. This compares to ratios for
peer institutions (thrifts with assets over $5.0 billion) of 83.47% and 80.94%
at June 30, 1996 and 1995, respectively. The Company's charge-off ratios were
0.17% and 0.16% in fiscal 1996 and 1995, respectively, compared to 0.51% and
0.52% for the twelve months ended June 30, 1996 and 1995, respectively, for peer
institutions. Because 98% of the Company's nonaccrual loans are single family
mortgages, its allowance is lower than is typical of its peers. The Company
believes that because of its underwriting standards and substantial purchase
discounts, historical charge-offs on its single family loans have been lower in
the aggregate than the corresponding aggregate net gains from the sales of the
underlying collateral. The Company believes that its allowance levels
approximate the allowances for future potential losses.

47
<PAGE>
At September 30, 1995 and 1994 the Company's single family loan portfolio
represented 84.8% and 82.1%, respectively, of gross loans outstanding compared
to 72.22% and 65.80% for peer institutions.

Total nonperforming assets increased $20.0 million to $120.4 million at
September 30, 1996 from $100.4 million at September 30, 1995. The single family
nonaccrual loans increased $8.2 million, reflecting, in part, the effects of the
loan purchases which occurred in the second half of 1995.

The portion of the purchase discount attributable to potential credit risk
on certain acquired delinquent single family loans is treated as non-accretable
discount. The Company believes that these purchase discounts are sufficient to
cover losses from these portfolios and to provide a market rate of return. The
non-accretable discount on nonaccrual loans decreased $5.4 million to $3.8
million at September 30, 1996 from $9.2 million at September 30, 1995. This
decrease resulted primarily from loan sales and loans being foreclosed upon and
transferred to REO. At September 30, 1996, total non-accretable discount was
$7.1 million, of which $3.8 million related to nonaccrual loans. The
non-accretable discount will reduce future REO losses. REO increased $5.8
million to $30.7 million at September 30, 1996 from $24.9 million at September
30, 1995. This increase primarily resulted from higher levels of delinquencies
on a larger loan portfolio.

Total nonperforming assets increased $3.4 million to $100.4 million at
September 30, 1995 from $97.0 million at September 30, 1994. The multi-family
and commercial real estate nonaccrual loans decreased $5.9 million from
September 30, 1994. This decrease resulted primarily from loans being paid in
full, and improvement in performance and cash flows. The non-accretable discount
decreased $6.2 million to $9.2 million at September 30, 1995 from $15.4 million
at September 30, 1994. This decrease resulted primarily from loans being
foreclosed upon and transferred to REO. REO increased $4.2 million to $24.9
million at September 30, 1995 from $20.7 million at September 30, 1994. This
increase resulted primarily from increased volumes in the single family
portfolio.

The Company adopted SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan", and SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosures, an amendment of SFAS No. 114",
effective October 1, 1995. These statements address the accounting by creditors
for impairment of certain loans. They apply to all creditors and to all loans,
uncollateralized as well as collateralized, except for large groups of
small-balance homogeneous loans that are collectively evaluated for impairment,
loans that are measured at fair value or at lower of cost or fair value, leases
and debt securities. These statements apply to all loans that are restructured
in a troubled debt restructuring involving a modification of terms. Loans within
the scope of these statements are considered impaired when, based on current
information and events, it is probable that all principal and interest amounts
due will not be collected in accordance with the contractual terms of the loans.
At September 30, 1996, the recorded investment in impaired loans, pursuant to
SFAS No. 114, totalled $3.9 million. There was no allowance for credit losses
determined in accordance with SFAS No. 114 related to these impaired loans
because the measured values of the loans exceeded the recorded investments in
the loans.

48
<PAGE>
Criticized and classified assets are identified pursuant to management's
asset classification policy, which was established in accordance with regulatory
guidelines.

RECONCILIATION OF CRITICIZED AND CLASSIFIED ASSETS TO
NONPERFORMING ASSETS
AT SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
NONPERFORMING PERFORMING TOTAL
------------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Criticized assets
Special Mention
Multi-family....................... $ -- $ 10,288 $ 10,288
Commercial real and business
credit........................... -- 2,440 2,440
------------- ---------- ----------
Total criticized assets....... -- 12,728 12,728
------------- ---------- ----------
Classified
Substandard
Single family...................... 88,522 -- 88,522
Consumer........................... 942 -- 942
Multi-family....................... 115 17,781 17,896
Commercial real estate and business
credit........................... 234 2,652 2,886
Real estate owned.................. 30,730 -- 30,730
------------- ---------- ----------
120,543 20,433 140,976
Doubtful
Multi-family....................... -- 339 339
Commercial real estate and business
credit........................... 116 -- 116
------------- ---------- ----------
116 339 455
Loss.................................. -- -- --
Total classified assets....... 120,659 20,772 141,431
------------- ---------- ----------
Total criticized and
classified assets........... $ 120,659 $ 33,500 $ 154,159
============= ========== ==========
Total classified assets as a %
of total gross loans........ 1.87%
Total allowance for credit
losses as a % of total
classified assets........... 28.04%
</TABLE>
The allowance for credit losses is established based on management's
periodic evaluation of the loan portfolio and considers such factors as
historical loss experience, delinquency status, identification of adverse
situations that may affect the ability of obligators to repay, known and
inherent risks in the portfolio, assessment of economic conditions, regulatory
policies, and the estimated value of the underlying collateral, if any. Although
the credit management systems have resulted in a very low loss experience, there
can be no assurance that such results will continue in the future. The allowance
for credit losses is based principally on delinquency status and historical loss
experience.

The following table presents the allowance for credit losses. See Note 5 to
the Consolidated Financial Statements for activity in the allowance for credit
losses by loan type.

ALLOWANCE FOR CREDIT LOSSES

FOR THE YEAR ENDED SEPTEMBER
30,
-------------------------------
1996 1995 1994
--------- --------- ---------
(IN THOUSANDS)
Beginning balance....................... $ 36,801 $ 23,454 $ 29,864
Provision.......................... 16,469 24,293 6,997
Charge-offs net of recoveries...... (13,610) (10,946) (13,407)
--------- --------- ---------
Ending balance.......................... $ 39,660 $ 36,801 $ 23,454
========= ========= =========

49
<PAGE>
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES

AT SEPTEMBER 30,
-------------------------------
1996 1995 1994
--------- --------- ---------
(IN THOUSANDS)
Single family........................ $ 28,645 $ 29,594 $ 15,905
Single family residential
construction....................... 693 361 399
Consumer............................. 5,219 3,247 1,822
Multi-family......................... 4,118 2,855 2,329
Multi-family construction............ 232 199 127
Commercial real estate and business
credit............................. 314 97 2,112
Mortgage banker finance line of
credit............................. 412 410 684
Single family mortgage warehouse..... 27 38 76
--------- --------- ---------
Total........................... $ 39,660 $ 36,801 $ 23,454
========= ========= =========

The allowance for credit losses increased to $39.7 million at September 30,
1996 from $36.8 million at September 30, 1995. The single family allowance for
credit losses decreased to $28.6 million at September 30, 1996 from $29.6
million at September 30, 1995. This decrease primarily resulted from a reduced
level of single family loans as repayments exceeded originations. The consumer
allowance for credit losses increased to $5.2 million at September 30, 1996 from
$3.2 million at September 30, 1995. This increase primarily resulted from
increased losses related to the unsecured line of credit portfolio. The
multi-family allowance for credit losses increased to $4.1 million at September
30, 1996 from $2.9 million at September 30, 1995. This increase primarily
resulted from an increase in the multi-family held to maturity portfolio.

The allowance for credit losses increased to $36.8 million at September 30,
1995 from $23.5 million at September 30, 1994. The single family allowance for
credit losses increased to $29.6 million at September 30, 1995 from $15.9
million at September 30, 1994. This increase primarily resulted from an increase
in the single family loan portfolio to $7.1 billion at September 30, 1995 from
$4.2 billion at September 30, 1994 due to purchases of $2.7 billion during
fiscal 1995 and additional originations retained for portfolio of $1.0 billion.
The consumer allowance for credit losses increased to $3.2 million at September
30, 1995 from $1.8 million at September 30, 1994, reflecting increased losses
related to the unsecured consumer line of credit portfolio.

The Company charges-off loans, other than consumer loans, when all attempts
have been exhausted to resolve any outstanding loan or legal issues. For
consumer loans, all loans are charged-off when they contractually become 120
days delinquent.

50
<PAGE>
The components of charge-offs and recoveries by property type for the
periods indicated are as follows:

NET LOAN CHARGE-OFFS

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
CHARGE-OFFS
Single family................... $ (7,751) $ (4,840) $ (1,722)
Consumer........................ (5,995) (2,847) (1,365)
Multi-family.................... -- -- (233)
Commercial real estate and
business credit............... (39) (3,389) (10,145)
Single family mortgage
warehouse..................... -- (2) --
---------- ---------- ----------
Total charge-offs.......... (13,785) (11,078) (13,465)
---------- ---------- ----------
RECOVERIES
Single family................... 31 36 20
Consumer........................ 144 94 38
Multi-family.................... -- 2 --
---------- ---------- ----------
Total recoveries........... 175 132 58
---------- ---------- ----------
Total net charge-offs...... $ (13,610) $ (10,946) $ (13,407)
========== ========== ==========
Net loan charge-offs to
average loans............ 0.17% 0.16% 0.30%

Net loan charge-offs for all loan types increased to $13.6 million for
fiscal 1996 from $10.9 million for fiscal 1995. The loan portfolio consists
primarily of single family mortgage loans. Net charge-offs on the single family
portfolio increased to $7.7 million for fiscal 1996 from $4.8 million for fiscal
1995. This resulted in net charge-offs as a percentage of single family loans on
average of 0.12% and 0.08%, respectively, for fiscal 1996 and 1995. Net single
family REO gains of $17.6 million exceeded net single family charge-offs of
$16.4 million for the four years ended September 30, 1996. REO gains have
historically been significant because of discounts attributable to the original
loan purchases. Net charge-offs on the consumer loan portfolio increased to $5.9
million for fiscal 1996 from $2.8 million for fiscal 1995. The increase
primarily relates to the unsecured consumer line of credit portfolio.

Net loan charge-offs for all loans decreased to $10.9 million for fiscal
1995 compared to $13.4 million for fiscal 1994. Net charge-offs on the
commercial real estate and business credit portfolio decreased to $3.4 million
for fiscal 1995 compared to $10.1 million for fiscal 1994. The charge-off in
fiscal 1994 resulted primarily from a $10.1 million charge-off related to a
single commercial real estate loan. The charge-off in fiscal 1995 included an
additional $3.4 million charge related to the sale of the single commercial real
estate loan. Excluding the commercial real estate loan charge-offs, net
charge-offs to average loans outstanding would have been $7.5 million and $3.3
million or 0.11% and 0.07%, respectively, for fiscal 1995 compared to fiscal
1994. Net charge-offs on the single family portfolio increased to $4.8 million
for fiscal 1995 compared to $1.7 million for fiscal 1994. This resulted in net
charge-offs as a percentage of single family loans on average of 0.08% and
0.04%, respectively, for fiscal 1995 compared to fiscal 1994. Net charge-offs on
the consumer loan portfolio increased to $2.8 million for fiscal 1995 compared
to $1.3 million for fiscal 1994. This increase primarily relates to the
unsecured consumer line of credit portfolio.

The only credit product that has had charge-offs higher than its original
formula reserves is the unsecured consumer line of credit, which was first
offered in fiscal 1993. This product has loans outstanding at September 30, 1996
of $51.2 million, for which allowances for credit losses were recently increased
from 4% to 6% of loans outstanding. Due to the initial growth and loss
experience in this portfolio, underwriting, approval and collection processes
were modified. Net of charge-offs, the portfolio has had positive net interest
income after loss provisions. The Company believes that its current formula
reserve policy is appropriate for this product.

51
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY

Liquidity refers to the ability or the financial flexibility to manage
future cash flows to meet the needs of depositors and borrowers and fund
operations on a timely and cost-effective basis. The Bank is required by the OTS
to maintain average daily balances of liquid assets and short-term liquid assets
in amounts equal to 5% and 1%, respectively, of net-withdrawable deposits plus
borrowings payable on demand or with remaining maturities of one year or less.
The average daily liquidity ratio for September 1996 was 5.95%, and the average
short-term liquidity ratio for September 1996 was 3.40%.

The primary sources of funds have consisted of deposits, advances from the
FHLB, reverse repurchase agreements, principal repayments on loans and MBS, and
proceeds from the issuance of Bank Preferred Stock. Liquidity may also be
provided from other sources including investments in short-term high credit
quality instruments. At September 30, 1996, these instruments generally
comprised repurchase agreements, federal funds sold, trading account assets, and
MBS and securities available for sale. These instruments totalled $1.8 billion,
$933.2 million, and $905.4 million at September 30, 1996, 1995, and 1994,
respectively. Funding resources are principally used to meet ongoing commitments
to fund deposit withdrawals, repay borrowings, fund existing and continuing loan
commitments, and maintain liquidity. See Notes 8, 9, 10, and 12 to the
Consolidated Financial Statements.

In December 1996, the Company contributed all of the outstanding stock of
its subsidiary, the Bank, to Holdings, and Holdings assumed the obligations of
the Senior Notes. The Company has no significant assets other than its equity in
Holdings and the Company's ability to pay dividends on its common stock and to
meet its other cash obligations is dependent upon the receipt of dividends from
Holdings. Holdings' ability to pay dividends to the Company and meet debt
service requirements on the Senior Notes will be dependent on the extent to
which it receives common stock dividends from the Bank. The declaration of
dividends by the Bank on all classes of its capital stock is subject to the
discretion of the Board of Directors of the Bank, the terms of the Bank
Preferred Stock, applicable regulatory requirements, and compliance with the
covenants of the Senior Notes. The Bank currently has outstanding 7,420,000
shares of the Bank Preferred Stock, stated value $25 per share or $185.5 million
in the aggregate. Total aggregate annual dividend requirements on the Bank
Preferred Stock are $18.25 million. While the Bank Preferred Stock is
noncumulative, common stock dividends may not be paid by the Bank if full
dividends on the Bank Preferred Stock have not been paid for the four most
recent quarterly dividend periods. Thus, if for any reason the Bank failed to
declare and pay full quarterly dividends on the Bank Preferred Stock, Holdings
would not receive any cash dividends from the Bank until four full quarterly
dividends on the Bank Preferred Stock had been paid. While it is the present
intention of the Board of Directors of the Bank to declare dividends in an
amount sufficient to provide the cash flow necessary to meet debt service
obligations in respect of the Senior Notes and to pay dividends to the holders
of the Company's common stock, subject to applicable regulatory restrictions, no
assurance can be given that circumstances which would limit or preclude the
declaration of such dividends will not exist in the future. At September 30,
1996, the Bank would be permitted to pay $152.7 million of dividends on its
capital stock without prior approval of the OTS, and the Company would be able
to pay $76.8 million of dividends on its common stock under the covenants of the
Senior Notes. See "Business -- Regulation -- Safety and Soundness
Regulations -- Capital Requirements -- Capital Distributions" and Notes 11, 15,
and 16 to the Consolidated Financial Statements.

DEPOSITS

Deposits have provided the Company with a source of relatively stable and
low cost funds. Average deposits funded 45% of average total assets for fiscal
1996, 48% for fiscal 1995, and 58% for fiscal 1994. The relationship of the
Company's deposits to its average assets has decreased over the past three
years, while overall deposit levels have remained constant. This change in the
relationship of deposit funding is due to the opportunities for leverage created
by increased capital raised through the issuance of the Bank Preferred Stock in
1993 and 1995 and earnings retained by the Company. Additionally, other
financial instrument opportunities available to consumers, who have
traditionally invested in bank deposit products, have become more widely used as
an alternative to deposit products.

52
<PAGE>
The following table reflects net activity in the Company's deposit
accounts:

DEPOSIT ACCOUNT ACTIVITY

FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
(IN THOUSANDS)
Consumer accounts
Checking accounts (including
interest-bearing and
non-interest bearing)......... $ 43,541 $ 4,984 $ 5,467
Savings accounts................ (17,762) (83,089) (97,286)
Money market accounts........... 171,064 (24,028) (1,275)
Time deposits................... (231,656) 35,425 (389,465)
----------- ----------- -----------
Total consumer activity.... (34,813) (66,708) (482,559)
Commercial deposits.................. (45,682) 482,726 384,387
Wholesale deposits................... (125,859) (157,019) (108,196)
----------- ----------- -----------
Total activity before
interest credited........ (206,354) 258,999 (206,368)
Interest credited.................... 172,079 159,017 131,184
----------- ----------- -----------
Net change in deposits..... $ (34,275) $ 418,016 $ (75,184)
=========== =========== ===========

The Company has historically utilized CDs to compete for consumer deposits.
Beginning in 1995, the Company's strategy has been to increase checking and
money market deposit accounts which are the core relationships that provide a
stable source of funding for the Company. As a complement to this strategy, the
Company continues to offer traditional deposit products, such as savings
accounts and CDs. See Note 8 to the Consolidated Financial Statements.

The Company offers cash management services to its MBF customers. These
services are commercial deposit accounts comprised of (i) operating accounts of
MBF customers, (ii) escrow deposits, and (iii) principal and interest payments
on the loans serviced by the MBF customers. At September 30, 1996, 1995, and
1994, these deposits totalled $879.3 million, $911.8 million, and $402.5
million, respectively. The Company also raises wholesale deposits from
institutional customers through its Financial Markets Group. These deposits tend
to be interest rate sensitive and are subject to withdrawal if the rates paid on
these deposits are not competitive with other market rates. While the Company
does not generally solicit brokered deposits, the Company may accept brokered
deposits when permitted by regulation and available at favorable rates.

BORROWINGS

The Company relies upon borrowings, primarily collateralized borrowings
such as advances from the FHLB and reverse repurchase agreements, to fund its
assets. Borrowings were the primary source of funds for the recent asset growth
and accounted for 45% of the funding of average assets for fiscal 1996, 43% for
fiscal 1995, and 31% for fiscal 1994. Fixed and adjustable-rate advances are
obtained from the FHLB Dallas under a security and pledge agreement that
restricts the amount of borrowings to the greater of a percentage of (i) fully
disbursed single family loans, unless assets are physically pledged to the FHLB
Dallas, and (ii) total assets. At September 30, 1996, these limitations were 65%
and 45%, respectively. The Company's ability to borrow on reverse repurchase
agreements is limited to the amount and market value of collateral that is
available to collateralize those reverse repurchase agreements. At September 30,
1996, the Company had $1.2 billion in such collateral, $1.0 billion of which was
collateralizing such reverse repurchase agreements. See Notes 9 and 10 to the
Consolidated Financial Statements.

NOTES PAYABLE

In May 1993, the Company issued $115 million of Senior Notes at an initial
rate of 8.05% and repaid long-term debt (the "15.75% Notes") and a note
payable to a related party. The interest rate on the Senior Notes was subject to
increase in certain circumstances and the PER ANNUM interest rate was increased
to 8.55% in October 1993, and to 9.05% in February 1994. The Senior Notes mature
on May 15, 1998. An exchange offer ("Exchange Offer") was consummated in
August 1996, which satisfied the condition of the Senior Notes pursuant to which
the interest rate on the Senior Notes reverted from 9.05% to 8.05% PER ANNUM in
September 1996. See Note 11 to the Consolidated Financial Statements.

53
<PAGE>
COMMITMENTS

At September 30, 1996, the Company had mandatory forward delivery contracts
for single family loans of $322 million and had warehouse loans and commitments
to originate single family mortgage loans ("mortgage pipeline") of $261
million and $175 million, respectively, available to fill these contracts. At
September 30, 1996 the Company had $988 million of commitments to extend credit.
Because such commitments may expire without being drawn upon, the commitments do
not necessarily represent future cash requirements. Scheduled maturities of CDs
and borrowings (including advances from the FHLB and reverse repurchase
agreements) during the twelve months following September 30, 1996, total $2.0
billion and $3.4 billion, respectively. Management believes that the Company has
adequate resources to fund all of its commitments.

CAPITAL

On May 6, 1996, the Bank paid a $100 million dividend to the Company on the
common stock of the Bank and on the same day, the Company paid a dividend on its
common stock in the amount of $100 million.

Prior to June 1996, the Company was a subsidiary of Hyperion Holdings,
which in turn was a subsidiary of Hyperion Partners. In June 1996, the following
actions were taken: (i) Hyperion Holdings exhanged shares of a newly created
class of its nonvoting common stock for certain shares of its voting common
stock held by Hyperion Partners; (ii) Hyperion Partners then distributed the
Hyperion Holdings common stock owned by it to its limited and general partners
in accordance with the terms of the limited partnership agreement of Hyperion
Partners in the Distribution; and (iii) following the Distribution, the Merger
was consummated pursuant to which Hyperion Holdings was merged with and into the
Company. As a result of the Merger, the common stockholders of Hyperion Holdings
(i.e. the limited and general partners of Hyperion Partners) received shares of
Class A voting and Class B nonvoting common stock of the Company. As of the date
of the Merger, Hyperion Holdings had no significant assets, liabilities or
business other than its investment in the Company. The Merger was accounted for
in a manner similar to a pooling of interests. Due to the immaterial nature of
the assets, liabilities, and operations of Hyperion Holdings prior to the
Merger, prior period results were not restated.

Prior to June 1996, the Company had 13,238 shares of Class A and 2,797
shares of Class C Common Stock outstanding. The June 1996 Merger and
Restructuring discussed above included a 1,800 to one stock conversion and the
conversion of all Class C and certain Class A shares to Class B shares. The
Class C shares were then cancelled. Also in June 1996, 318,342 shares of Class B
Common Stock with restrictions on its transferability for a period of three
years from its issuance ("Restricted Stock") were awarded as part of the
management compensation program. See Note 13 to the Consolidated Financial
Statements.

In August 1996, the Company filed a registration statement with the
Commission and 12,075,000 shares of the Company Class A Common Stock were sold
to the public. The Company sold 910,694 shares and selling stockholders sold
11,164,306 shares. The net proceeds to the Company, proceeds to the Selling
Stockholders, and the underwriting discount were $14.0 million, $210.4 million,
and $13.9 million, respectively. The net proceeds to the Company from the August
Offering was contributed to the capital of the Bank in the first quarter of
fiscal 1997 for general corporate purposes.

Concurrent with the execution of the Assistance Agreement, the Bank and the
FSLIC entered into the warrant agreement ("Warrant Agreement"), dated December
30, 1988, pursuant to which the FSLIC was granted the Warrant to purchase up to
158,823 shares of common stock of the Bank at an exercise price of $0.01 per
share. In August 1996, the FDIC surrendered a portion of the Warrant for a cash
payment of $6.1 million and exercised the remainder of the Warrant. The FDIC
immediately exchanged the shares of Common Stock of the Bank it received for
1,503,560 shares of Common Stock. The FDIC sold all of the 1,503,560 shares of
Common Stock of the Company in the August Offering.

At September 30, 1996, after the 1,800 to one stock conversion, the
issuance of Restricted Stock, the August Offering, and the Warrant conversion,
the Company had a total of 31,595,596 shares of Common Stock (par value $0.01)
outstanding as follows: Class A (voting) -- 27,735,934 shares and Class B
(nonvoting) -- 3,859,622 shares. The authorized stock of the Company consists of
the following: Class A Common Stock -- 40,000,000 shares, Class B Common
Stock -- 40,000,000 shares, and preferred stock -- 10,000,000 shares. Class B
Common Stock may be converted to Class A Common Stock subject to certain
restrictions. At December 16, 1996, the Company had 28,354,276 shares of Class A
Common Stock and 3,541,320 shares of Class B Common Stock outstanding.

54
<PAGE>
In December 1996, the Company contributed all of the outstanding common
stock of its subsidiary, the Bank, to Holdings, and Holdings assumed the
obligations of the Senior Notes.

REGULATORY MATTERS

The Bank is subject to regulatory capital requirements as defined in the
OTS capital regulations. The Bank's capital level at September 30, 1996 and 1995
qualified it as "well-capitalized", the highest of five tiers under applicable
regulatory definitions. See "Business -- Regulation -- Safety and Soundness
Regulations -- Capital Requirements," and Note 15 to the Consolidated Financial
Statements.

The following table sets forth the regulatory capital ratios of the Bank as
of the dates indicated.

REGULATORY CAPITAL RATIOS

AT SEPTEMBER 30,
-------------------------------
1996 1995 1994
--------- --------- ---------
Tangible capital..................... 6.57% 6.20% 6.01%
Core capital......................... 6.64% 6.29% 6.17%
Total risk-based capital............. 13.09% 13.45% 14.02%
Tier I capital....................... 12.40% 12.82% 13.44%

During fiscal 1993, the Bank issued its Preferred Stock, Series A and
during fiscal 1995, the Bank issued its Preferred Stock, Series B. Shares
totalling $85.5 million were issued as a result of the Preferred Stock, Series A
offering and shares totalling $100 million were issued as a result of the
Preferred Stock, Series B offering. These shares are not owned by the Company.
Bank Preferred Stock, which is treated as core capital for regulatory purposes,
was issued to increase total capital to support further growth.

The United States Congress passed legislation that was signed into law on
September 30, 1996, which resulted in an assessment on all SAIF-insured deposits
in such amounts that will fully-capitalize the SAIF at a reserve ratio of 1.25%
of SAIF-insured deposits. This one-time assessment has been set at 65.7 basis
points of SAIF-assessable deposits at March 31, 1995. The Bank's assessment of
$33.7 million, $20.7 million net of tax, was recorded in the fourth quarter of
fiscal 1996 and will be paid in the first quarter of fiscal 1997.

As a result of this one-time assessment, the SAIF has met its designated
reserve ratio at October 1, 1996. For the first quarter of fiscal 1997, a
special interim rate of 18 to 27 basis points will apply to pay interest on the
Financing Corporation ("FICO") obligations. Effective January 1, 1997, well
capitalized SAIF institutions such as the Bank will pay a base assessment rate
of 0 basis points and FICO assessments of 6.44 basis points.

CONTINGENCIES AND UNCERTAINTIES

Maxxam has filed a petition for review in the United States Court of
Appeals for the Fifth Circuit seeking to modify, terminate, and set aside the
order approving the Acquisition, which involved substantially all the Bank's
initial assets and liabilities. In its brief to the Court of Appeals, Maxxam has
asserted that the Court of Appeals should order the OTS "to award Bank United
to Maxxam" and that the Company would bear no harm in that event because it is
entitled to full indemnification by the FDIC-FRF pursuant to Section 7(a)(2) of
the Assistance Agreement. The same petitioner has filed a Motion to Intervene
and a Complaint in Intervention in an action pending in the United States
District Court for the Southern District of Texas, also seeking to set aside the
order approving the Acquisition. Maxxam contends, in both cases, that it
submitted the most favorable bid to acquire the assets and liabilities of Old
USAT and that it should have been selected as the winning bidder.

The Company is not a party to either of these proceedings. The Bank has
intervened in the Fifth Circuit case and may file a Motion to Intervene in the
District Court case at a later date. On December 10, 1996, the Fifth Circuit
Court, in a PER CURIAM opinion and order, affirmed the order approving the
Acquisition in all respects. The time for appeal to the Supreme Court of the
United States has not yet expired, and the Company does not know whether Maxxam
will appeal the Fifth Circuit decision. Management believes, after consultation
with legal counsel, that the claims of the petitioner are barred by applicable
time limits, have no basis for assertion under existing law, and will not have a
material adverse effect on the Bank's or the Company's financial condition,
results of operations, or liquidity. See "Legal Proceedings".

The Bank, in its various operations, is subject to substantial statutory
and regulatory compliance obligations. See "Business -- Regulation". The Bank
attempts in good faith to comply with the requirements of the various statutes
and regulations to which it is subject. These statutes and regulations are
complex, however, and even inadvertent noncompliance could result in civil and,
in some cases, criminal liability. In this regard, a substantial

55
<PAGE>
part of the Bank's business has involved the origination, purchase, and sale of
mortgage loans. During the past several years, numerous individual claims and
purported consumer class action claims have been commenced against a number of
financial institutions, their subsidiaries, and other mortgage lending
institutions, alleging violations of various state and regulatory provisions
relating to mortgage lending and servicing, including the TILA and the RESPA.

In addition to the foregoing, mortgage lending institutions have been
subjected to an increasing number of other types of individual claims and
purported consumer class action claims that relate to various aspects of the
origination, pricing, closing, servicing and collection of mortgage loans, and
that allege inadequate disclosure, breach of fiduciary duty, breach of contract,
or violation of federal or state laws. Claims have involved, among other things,
interest rates and fees charged in connection with loans, interest rate
adjustments on adjustable-rate mortgage loans, timely release of liens upon loan
payoffs, the disclosure and imposition of various fees and charges, and the
placing of collateral protection insurance. The Bank has had asserted against it
one putative class action claim under the RESPA and three separate putative
class action claims involving the Bank's loan servicing practices. Management
does not expect these claims, in the aggregate, to have a material adverse
effect on the Bank's or the Company's financial condition, results of operations
or liquidity. See "Legal Proceedings".

As of September 30, 1996, the Company had NOLs of $817 million available to
reduce taxable income in future years. There can be no assurance that the tax
deductions associated with these NOLs will be allowed by the IRS. In addition,
such tax deductions would be subject to significant limitation under Section 382
of the Code if the Company undergoes an Ownership Change. In the event of an
Ownership Change, Section 382 of the Code imposes an annual limitation on the
amount of taxable income a corporation may offset with NOLs and certain
recognized built-in losses. See "Business -- Taxation -- Net Operating Loss
Limitations".

FEDERAL FINANCIAL ASSISTANCE

Pursuant to the Assistance Agreement and the Settlement Agreement (as
defined herein) the Bank received substantial payments from the FRF during
fiscal 1994 as follows:

(IN THOUSANDS)
Payments affecting the results of
operations......................... $ 23,143
Other Payments
Settlement payment.............. 195,300
Other........................... 468
--------------
Total FRF payments.... $218,911
==============

FRF Assistance on Covered Assets (as defined herein) was offset by the
interest expense to carry these assets and certain related operating expenses,
neither of which were reimbursed by the FRF.

Pursuant to the Settlement Agreement, all financial assistance and related
payments ceased to accrue as of December 28, 1993, and, as of that date, the
Bank no longer managed or owned any Covered Assets. There was no material
adverse effect on the Company or the Bank as a result of the Settlement
Agreement, the transfer of certain Covered Assets to the FDIC, and the retention
of the remainder of such Covered Assets without financial assistance. See
"Business -- The Assistance Agreement".

RECENTLY ISSUED ACCOUNTING STANDARDS

In March 1995, SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of" was issued. This statement
establishes accounting standards for recognizing and measuring impairment of
long-lived assets (and related goodwill) to be held and used and for such assets
held for disposal. The statement is effective for financial statements with
fiscal years beginning after December 15, 1995. Implementation of this
pronouncement should have no material effect on the Consolidated Financial
Statements.

In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation"
was issued. This statement defines a fair value based method of accounting for
an employee stock option or similar equity instrument and encourages adoption of
that method for all employee stock compensation plans. However, it also allows
an entity to continue to measure compensation cost for those plans using the
intrinsic value based method currently being followed and make pro forma
disclosures of net income and earnings per share under the fair value based
method of accounting. This statement is effective for financial statements with
fiscal years beginning after December 15, 1995. Management is currently
evaluating the proposed alternatives under this statement.

56
<PAGE>
In June 1996, SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" was issued. This statement
requires that, after a transfer of financial assets, an entity recognize the
financial and servicing assets it controls and the liabilities it has incurred,
derecognize financial assets when control has been surrendered, and derecognize
liabilities when extinguished. This statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers that
are secured borrowings. This statement is effective for transfers and servicing
of financial assets and extinguishment of liabilities occurring after December
31, 1996, and is to be applied prospectively. Earlier or retroactive application
is not permitted. Implementation of this pronouncement should have no material
effect on the Consolidated Financial Statements.

FORWARD-LOOKING INFORMATION

Statements and financial discussion and analysis by management contained
herein that are not historical facts are forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements involve a number of risks and
uncertainties. The important factors that could cause actual results to differ
materially from the forward-looking statements include, without limitation,
changes in interests rates and economic conditions; the shift in the Company's
emphasis from residential mortgage lending to community and commercial banking
activities; the restructuring of the Company's Mortgage Banking origination
business; increased competition for deposits and loans; changes in the
availability of funds; changes in local economic and business conditions;
changes in availability of residential mortgage loans orginated by other
financial institutions or the Company's ability to purchase such loans on
favorable terms; transactions in the Common Stock that might result in an
Ownership Change triggering an annual limitation on the use of the Company's
NOLs under Section 382 of the Code; changes in the ability of the Bank to pay
dividends on its common stock; changes in applicable statutes and government
regulations or their interpretation; the continuation of the significant
disparity in the deposit insurance premiums paid by thrift institutions and
commercial banks; changes in government programs that facilitate the issuance of
MBS or the Company's continued eligiblity to participate in such programs; the
loss of senior management or operating personnel; claims with respect to
representations and warranties made by the Company to purchasers and insurers of
mortgage loans and to purchasers of MSRs; claims of noncompliance by the Company
with statutory and regulatory requirements; and changes in the status of
litigation to which the Company is a party. For further information regarding
these factors, see "Risk Factors".

<PAGE>
BUSINESS

GENERAL

The Company is a broad based financial services provider to consumers and
businesses in Texas and other selected regional markets throughout the United
States. Through the Bank, the Company currently operates 70 Texas based
community banking branches serving nearly 200,000 households and businesses, 9
commercial banking offices and a nationwide network of mortgage offices. At
September 30, 1996, the Company had assets of $10.7 billion, deposits of $5.1
billion and stockholders' equity of $531.0 million. The Company was the largest
publicly traded depository institution headquartered in Texas, in terms of both
assets and deposits, at September 30, 1996.

The Company's operating structure reflects its current business strategy,
with four business groups in two business segments.

58
<PAGE>
The tables below present an overview of the operating results of the
Company and its business segments for fiscal 1996, 1995, and 1994. See
"Management's Discussion and Analysis -- Discussion of Results of Operations"
and Note 18 to the Consolidated Financial Statements.

EARNINGS (LOSS) BEFORE INCOME TAXES, AND MINORITY INTEREST,
BY BUSINESS SEGMENT
<TABLE>
<CAPTION>
BANKING MORTGAGE BANKING BANK UNITED TOTAL
SEGMENT SEGMENT CORP.(1) ELIMINATIONS(2) EARNINGS
------- ---------------- ----------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Years ended September 30,
1996............................... $ 82.4 $ (3.1) $97.5 $(109.0) $ 67.8
1995............................... 82.1 19.4 (5.0) (6.4) 90.1
1994............................... 73.8 24.4 (0.7) (11.4) 86.1
</TABLE>
<TABLE>
<CAPTION>
OPERATING EARNINGS (LOSS) BY BUSINESS SEGMENT

BANKING MORTGAGE BANKING BANK UNITED TOTAL OPERATING
SEGMENT SEGMENT CORP.(1) ELIMINATIONS(2) EARNINGS
------- ---------------- ----------- --------------- ---------------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Years ended September 30,
1996............................... $114.4 $ 11.8 $97.5 $(109.0) $ 114.7
1995............................... 83.3 19.4 (5.0) (6.4) 91.3
1994............................... 63.2 24.4 (0.7) (11.4) 75.5
</TABLE>
- ------------

(1) Principally dividends received by the Company from the Bank, net of interest
expense on the Senior Notes. In May 1996, the Bank paid a $100 million
dividend on its common stock. See Notes 16 and 18 to the Consolidated
Financial Statements.

(2) Reflects the elimination of dividends received by the Company from the Bank.

Operating earnings represents income, including net gains (losses) on the
sales of single family servicing rights and single family warehouse loans,
before taxes and minority interest, and excludes net gains (losses) on
securities, MBS, and other loans. Operating earnings for fiscal 1996 excludes a
one-time SAIF assessment, compensation expense related to the adoption of a
management compensation program, and a charge related to the restructuring of
the Mortgage Banking Group because these items are considered non-recurring. See
Notes 13, 15, and 18 to the Consolidated Financial Statements. Management
believes operating earnings reflects the revenues and expenses of the Company's
business segments and facilitates trend analysis as it excludes transactions
that are typically considered opportunistic or non-recurring and not part of the
routine core business operations of the Company. Operating earnings is provided
as other data and should not be considered an alternative to net income as an
indicator of the Company's operating performance or to cash flow as a measure of
liquidity.

COMMUNITY BANKING GROUP

The Community Banking Group's principal activities include deposit
gathering, consumer lending, small-business banking, and investment product
sales. The Community Banking Group, which has marketed itself under the name
"Bank United" since 1993, currently operates a 70 branch community banking
network, a 24-hour telephone banking center, and a 66-unit ATM network, which
together serve as the platform for the Company's consumer and small business
banking activities. The community banking branch network includes 37 branches in
the greater Houston area, 29 branches in the Dallas / Ft. Worth metropolitan
area, and two branches each in Austin and San Antonio. Through this branch
network, the Company maintains approximately 440,000 accounts with an estimated
200,000 households and businesses.

DEPOSIT GATHERING

The Community Banking Group offers a variety of traditional deposit
products and services, including checking and savings accounts, money market
accounts, and CDs and offers deposit products and services

59
<PAGE>
tailored specifically to small business needs. The Community Banking Group's
strategy is to become its customers' primary financial services provider by
emphasizing high levels of customer service and innovative products. The Company
has a history of introducing innovative products that have helped it increase
its competitive position within its primary banking markets. At September 30,
1996, the Community Banking Group maintained over 338,000 deposit accounts with
$4.1 billion in deposits.

CONSUMER LENDING

Since 1992, the Community Banking Group has engaged in consumer lending for
its own portfolio. At September 30, 1996, consumer loans outstanding totalled
$173.5 million. Through the Community Banking Group, the Company offers a
variety of consumer loan products, including home improvement loans, unsecured
lines of credit, and automobile loans. Home improvement loans are fixed-rate
loans and are offered for terms up to 15 years, unsecured loans are open ended
maturities with fixed and adjustable-rates, and automobile loans are offered for
terms up to six years on a fixed-rate basis. These loans are underwritten
utilizing credit scoring and collateral value, and are subject to collection,
collateral valuation, and fraud risks. In addition, while the Company has
offered its customers credit cards since 1990, the Company intends to begin
credit card lending for its own portfolio in fiscal 1997. The consumer lending
division of the Community Banking Group also offers home equity lines of credit
("HELOCs") outside of Texas. (Current laws prohibit HELOC lending in the state
of Texas; however, the Company has in place the systems and controls needed to
manage a Texas based HELOC operation in anticipation of possible Texas
legislative and constitutional changes that would authorize such lending.)
During fiscal 1997, the Company intends to begin offering mortgages through its
community banking branch network. The Community Banking Group has developed the
technology required for efficient loan processing and underwriting, including
credit scoring and such services as taking loan applications by telephone.
Unsecured line of credit loans and credit card loans have the additional risks
of no collateral, greater chance of fraud and complex consumer protection laws
and regulations. In addition, the ease of credit card availability to the
consumer increases risk. Automobile loans carry the risk of collateral
depreciation and mobility. Also, repossession laws make it difficult to take
possession of the collateral to enforce lien rights.

SMALL BUSINESS BANKING

The Community Banking Group provides a broad range of credit services to
its small business customers, including lines of credit, working capital loans,
equipment loans, owner-occupied real estate loans, and SBA loans. These loans
are offered with both fixed and adjustable-rates on a term basis, and
adjustable-rate revolving basis with maturities up to 10 years for term loans
and one year for revolving loans. These loans are underwritten on the financial
strength of the guarantor, collateral utilized, and projected cashflow of the
business. Small business loan risks are similar to the risks associated with
unsecured commercial loans, but tend to be magnified due to business cycles and
the nature of the assets that small businesses tend to maintain. Additionally,
the Company requires borrowers to provide periodic financial information for
review and assessment. At September 30, 1996, the Community Banking Group had
approximately 480 business credit loans outstanding, totalling approximately
$26.8 million. At September 30, 1996, the Community Banking Group also had
approximately $16.2 million in unfunded commitments and another $1.3 million in
pending applications for business credit loans. The Community Banking Group's
small business strategy is focused on offering loan products and services
tailored specifically to most small business needs, with highly responsive
credit decision-making. The Company is aggressively seeking to increase its
small business lending volume. Specifically, the Company is offering a
comprehensive line of small business products and services. It has hired a
number of experienced officers, developed a formal customer calling program,
trained community banking branch managers to source small business loans from
and in proximity to branches, is utilizing modern loan application processing
and credit scoring technology, and offering a comprehensive line of cash and
treasury management services to small business customers. Small business lines
of credit and working capital loans may be made on an unsecured basis and
therefore may have no secondary source of repayment. When such loans are
secured, the value of the collateral may fluctuate with local economic
conditions. Small business equipment loans are typically made for longer terms
and at higher loan-to-value ratios than other types of equipment loans, and the
collateral may have limited marketability or may become obsolete during the term
of the loan. Small business owner-occupied real estate loans may be secured by
single-use or limited-use real estate. The valuation of these properties is
based, in

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<PAGE>
part, upon their ability to operate successfully as going concerns. SBA loans
are typically originated at higher loan-to-value ratios and for longer terms
than other commercial loans and are made to borrowers that might not meet the
Company's underwriting guidelines for other commercial loans.

INVESTMENT PRODUCT SALES

Since 1993, a subsidiary of the Bank has been marketing investment products
to the Company's consumer customer base. At September 30, 1996, the investment
product sales force was comprised of 24 commissioned Series 7 and Group I
licensed registered representatives. A broad range of investment products,
including stocks, bonds, mutual funds, annuities, and securities are offered by
these registered representatives. Investment product sales increased to $157.2
million in fiscal 1996 from $81.0 million in fiscal 1995. Gross fee revenue from
such sales were $5.4 million and $3.6 million for fiscal 1996 and 1995,
respectively.

COMMERCIAL BANKING GROUP

The Commercial Banking Group provides credit and a variety of cash
management and other services to certain real estate and real estate related
businesses. The Commercial Banking Group conducts its activities through four
units: MBF, a financial service provider to small- and medium-sized mortgage
companies; Multi-Family Lending; Residential Construction Lending; and
Commercial Real Estate Lending. Business is solicited in Texas and in targeted
regional markets throughout the United States. The Commercial Banking Group
earns fees on committed lines and fees and interest on loans outstanding. The
Commercial Banking Group is expanding its products and industry specialties to
include health care lending, asset-based lending, and other industrial and
commercial loan products.

MORTGAGE BANKER FINANCE

The Commercial Banking Group's MBF unit provides third-party mortgage
companies with credit facilities, including warehouse lines of credit,
repurchase agreements, term loans secured by MSRs, and working capital credit
lines, as well as cash management services. The loans provided by the MBF are
generally collateralized by single family mortgages or related servicing rights.
The Company lends based on a percentage of the loan market value. The collateral
for these loans typically is available for the period of time from the
origination of the loan by the borrower until its subsequent sale in the
secondary market. At September 30, 1996, the MBF unit had $199.2 million in
unfunded commitments and $139.9 million of loans outstanding. Since 1994, the
MBF unit has also offered commercial banking services (I.E., cash management,
document custody and deposit services) to its mortgage banking customers.
Deposits related to MBF activities totalled $879.3 million at September 30,
1996. MBF loans and lines of credit are subject to the risk of collateral that
fluctuates in value with changing interest rates. The loans are also subject to
the risk that the collateral may be fraudulently or improperly documented. MBF
loans are also generally made to borrowing entities that are more thinly
capitalized than other commercial borrowers.

MULTI-FAMILY LENDING

Since 1990, the Commercial Banking Group has been providing multi-family
financing for established, operating multi-family properties, real estate
investment trusts, and selected construction, acquisition, and rehabilitation
projects. Permanent and construction multi-family loans are offered on a fixed
or adjustable-rate basis. Multi-family lending is subject to the risk that the
borrower may not complete the improvements to the real estate collateral in a
timely manner or may fraudulently misrepresent the progress or status of the
project. Additionally, the value of the completed collateral is subject to
market fluctuations and may be adversely affected by the presence of undetected,
environmentally sensitive substances. The Company utilizes certain lending
practices to reduce these risks. These include limiting the loan amount to an
amount less than its appraised value, verifying historical cash flows, assessing
the general economic conditions and the financial condition of the borrower. At
September 30, 1996, the Multi-Family Lending unit had $152.3 million in unfunded
multi-family commitments and $511.2 million in such loans outstanding ($479.8
million in permanent loans and $31.4 million in construction loans). Loans are
solicited directly in Texas and in targeted regional markets throughout the
United States, through regional offices and selected preapproved multi-family
mortgage banking correspondents. From time to time, the Commercial Banking Group
also purchases servicing rights related to multi-family loans.

61
<PAGE>
At September 30, 1996, the multi-family servicing portfolio totalled $716.9
million, of which $433.5 million represented loans in the Company's portfolio.

RESIDENTIAL CONSTRUCTION LENDING

Since 1989, the Commercial Banking Group has been active in making loans to
builders for the construction of single family residential properties and, on a
more limited basis, loans for acquisition and development of improved
residential lots. These loans are made on a commitment term that generally is
for a period of one to two years. Residential construction loans are subject to
the risk that a general downturn in the builder's local economy could prevent it
from marketing its product profitably. Such loans are also subject to the risk
that a builder might misrepresent the completion status of the homes against
which it has drawn loan funds. The Company seeks to limit these risks by
reviewing individual builders' experience and reputation, general financial
condition, and speculative inventory levels. Additionally, construction status
is reviewed by onsite inspections and the builders' ongoing financial position
is monitored. During fiscal 1995 and 1994, the Company expanded into several
other major markets outside of Texas, including Atlanta, Chicago, Denver,
Orlando, Phoenix, and Philadelphia. Current markets in Texas include Houston,
Dallas, Austin, and San Antonio. At September 30, 1996, the Company had $175.9
million in unfunded commitments for single family residential construction loans
and $242.5 million of such loans outstanding.

COMMERCIAL REAL ESTATE LENDING

The Commercial Banking Group is engaged in commercial real estate lending
for specific products, emphasizing permanent mortgages on income producing
properties, such as assisted living facilities and retail shopping centers. At
September 30, 1996, the Company had $40.8 million in permanent commercial real
estate loans outstanding. Commercial real estate loans are typically made to
single-purpose business entities with limited secondary sources of repayment
outside the specific project financed. The value of the collateral for such
loans may be adversely affected by local market conditions and by the presence
of environmentally sensitive substances. Competitive marketplace underwriting
guidelines are followed in evaluating each loan transaction.

FINANCIAL MARKETS GROUP

The Financial Markets Group manages the Company's asset portfolio
activities, including loan acquisition and management and the securitization of
loans. Additionally, under the supervision of the ALCO, the Financial Markets
Group is responsible for the Company's investment portfolio, for interest rate
risk hedging strategies, and for securing funding sources other than consumer
and commercial deposits. See " -- Asset and Liability Management".

LOAN ACQUISITIONS

The Financial Markets Group acquires residential loans, primarily single
family loans, through traditional secondary market sources (mortgage companies,
financial institutions, and investment banks), as well as from the Mortgage
Banking Group. Since September 1992, the Company has closed more than 60 loan
acquisition transactions representing more than $5.3 billion in loans. While the
Company intends to continue to pursue this strategy on a selective basis, no
assurance can be given as to the continued availability of portfolio acquisition
opportunities or the Company's ability to obtain such portfolios on favorable
terms. At September 30, 1996, a majority of the $7.3 billion of loans held to
maturity by the Company were managed by the Financial Markets Group.

WHOLESALE FUNDINGS

The Financial Markets Group arranges funding sources other than consumer
and commercial deposits for the Company. Wholesale funding sources include
advances from the FHLB Dallas, borrowings on securities sold under reverse
repurchase agreements, and brokered CDs. At September 30, 1996, wholesale
activities provided $4.5 billion in funding. See "Management's Discussion and
Analysis -- Capital Resources and Liquidity" and Notes 8, 9, and 10 to the
Consolidated Financial Statements.

62
<PAGE>
INVESTMENT PORTFOLIO MANAGEMENT

The Financial Markets Group manages the Company's investment portfolio,
which totalled nearly $2.4 billion at September 30, 1996. The Financial Markets
Group seeks to maintain a portfolio of assets that provides for liquidity needs
and maintains an interest rate spread over matched funded liabilities, including
assets that may be pledged as collateral for secured borrowings, and that
maximize utilization of the Bank's risk-based capital. See " -- Investment
Portfolio", "-- Asset and Liability Management", and Notes 2, 3, and 4 to the
Consolidated Financial Statements.

SECURITIZATION OF LOANS

From time to time, the Financial Markets Group evaluates the Company's loan
portfolio for securitization opportunities and, when appropriate, creates
securities and retains the master servicing. During the past four years, the
Financial Markets Group has structured seven securitization transactions,
creating $1.8 billion in MBS. The Company has sold substantially all of the
non-investment grade MBS created, thus enhancing the Bank's risk-based capital
ratios and credit quality. During fiscal 1996, the Financial Markets Group
purchased $58 million in SBA loans, a portion of which was pooled into seven
securities totalling $30.5 million. These securitization activities are separate
from the secondary marketing activities of the Mortgage Banking Group.

MORTGAGE BANKING GROUP

The Mortgage Banking Group operates under the names "Bank United
Mortgage" in Texas and Virginia and "Commonwealth United Mortgage" elsewhere
in the United States. The Mortgage Banking Group originates and services first
mortgage loans for single family residences for both the Company's portfolio and
for investors. The Company's servicing portfolio at September 30, 1996 was $13.2
billion. To manage the risk on the mortgage pipeline, the Company estimates the
portion of the loans that will close and then enters into forward sales of such
loans in the secondary market. See Note 12 to the Consolidated Financial
Statements.

Consistent with the increasing emphasis on its community and commercial
banking business, the Company has been in the process of evaluating its
strategic alternatives with respect to its mortgage banking business. As a
result of this evaluation and in order to attempt to mitigate the negative
effect on profitability of increased competition in the loan origination
business of the Mortgage Banking Group, the Company implemented a profitability
improvement plan. As a result of this plan, in June 1996, the Company recorded a
restructuring charge of $10.7 million before tax, to recognize the costs of
closing or consolidating production offices and several regional operation
centers and recorded $1.8 million of other expenses related to the mortgage
origination business. On January 17, 1997, the Company sold all of its 61 retail
mortgage origination offices located outside of Texas, its one office located in
El Paso, and four of its twelve wholesale lending offices, and related
administrative and support functions, to NCM. The Company retained its network
of retail origination branches in Texas, except the El Paso office, and
continues to conduct its wholesale origination business in several western
states.

The Mortgage Banking Group principally engages in three activities: Retail
Mortgage Operations, Wholesale Mortgage Operations, and Mortgage Servicing
Operations.

RETAIL MORTGAGE OPERATIONS

The Mortgage Banking Group offers a variety of fixed and adjustable-rate
mortgage products for consumers through a network of retail mortgage origination
offices in Texas. For fiscal 1996, the Mortgage Banking Group originated $2.1
billion in retail mortgage loans. Loans are originated through direct contact
with individual borrowers by commissioned retail loan officers.

WHOLESALE MORTGAGE OPERATIONS

The Mortgage Banking Group provides qualified mortgage brokers nationwide
with a variety of fixed and adjustable-rate mortgage products through its
network of wholesale mortgage origination offices. For fiscal 1996, the Mortgage
Banking Group originated $1.7 billion in mortgage loans through its wholesale
operations. Loans are originated through contact with one of the Company's 1,195
mortgage brokers, serviced by the wholesale account executives. All loans
originated through wholesale mortgage operations are underwritten by the

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<PAGE>
Company's staff according to secondary market requirements and internal
guidelines. The loans are originated and closed in either the name of the
Company or, under certain circumstances, the mortgage broker's name with
immediate assignment to the Company.

MORTGAGE SERVICING OPERATIONS

The Mortgage Banking Group services residential mortgage loans owned by the
Company and by others, including the GNMA, the FNMA, the FHLMC, and private
mortgage investors. At September 30, 1996, the Mortgage Banking Group serviced
over $13.2 billion in mortgage loans, including $3.8 billion for the Company's
portfolio and $9.4 billion for others. Mortgage servicing operations are
technology and process management intensive. The Company views itself as being
competitively positioned to service loans in an efficient and cost effective
manner relative to its peers. See " -- Loan Servicing Portfolio".

LOAN PORTFOLIO

The Company has focused in recent years on originating and servicing
commercial banking assets. However, the loan portfolio still reflects the Bank's
origins as a thrift institution, with single family mortgage originations
constituting a majority of loans made. The following tables set out loan
origination levels, as well as the product and geographic distribution of the
loan portfolio. See the loan table in "Management's Discussion and
Analysis -- Discussion of Financial Condition" and see Note 5 to the
Consolidated Financial Statements.

LOAN ORIGINATIONS

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(IN THOUSANDS)
Single family........................ $ 3,602,009 $ 3,226,324 $ 5,424,550
Single family residential
construction....................... 554,260 239,481 133,609
Consumer............................. 125,596 99,249 94,153
Multi-family, commercial real estate,
and business credit................ 337,046 307,636 230,995
------------ ------------ ------------
Total...................... $ 4,618,911 $ 3,872,690 $ 5,883,307
============ ============ ============

LOAN PORTFOLIO

AT SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(IN THOUSANDS)
Single family........................ $ 6,152,504 $ 7,061,088 $ 4,203,614
Single family residential
construction....................... 242,525 115,436 57,786
Consumer............................. 173,518 123,096 108,179
Multi-family......................... 479,833 444,368 268,897
Multi-family construction............ 31,355 35,430 20,437
Commercial real estate and business
credit............................. 96,427 38,326 61,919
Mortgage banker finance line of
credit............................. 139,872 109,339 147,754
Single family mortgage warehouse..... 260,745 411,287 252,153
------------ ------------ ------------
7,576,779 8,338,370 5,120,739
Allowance for credit losses.......... (39,660) (36,801) (23,454)
Accretable unearned discount......... (15,307) (38,460) (50,650)
Net deferred loan origination fees... (2,324) (1,727) (461)
Unrealized losses.................... -- (1,142) --
------------ ------------ ------------
Total loans................ $ 7,519,488 $ 8,260,240 $ 5,046,174
============ ============ ============

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<PAGE>
GEOGRAPHIC DISTRIBUTION OF REAL ESTATE LOAN PORTFOLIO

AT SEPTEMBER 30,
----------------------------------------
STATE 1996 1995 1994
- ------------------------------------ ------------ ------------ ------------
(IN THOUSANDS)
California.......................... $ 3,404,731 $ 3,958,293 $ 1,764,531
Texas............................... 1,245,459 1,259,306 1,131,225
Florida............................. 436,338 479,379 456,812
Illinois............................ 166,783 190,801 138,072
Arizona............................. 139,264 115,260 30,142
Pennsylvania........................ 125,876 128,693 68,728
Georgia............................. 120,881 94,413 56,442
New Jersey.......................... 108,113 118,825 80,727
Virginia............................ 100,565 107,420 92,704
Washington.......................... 98,243 81,005 32,899
Other states........................ 1,088,044 1,202,943 827,480
Other -- single family mortgage
warehouse......................... 260,745 411,287 252,153
------------ ------------ ------------
Total real estate loans........ 7,295,042 8,147,625 4,931,915
Mortgage banker finance line of
credit............................ 139,872 109,339 147,754
Business credit..................... 55,588 7,320 --
Non-real estate consumer............ 93,352 89,509 72,987
------------ ------------ ------------
7,583,854 8,353,793 5,152,656
Non-accretable unearned discounts... (7,075) (15,423) (31,917)
------------ ------------ ------------
Total.......................... $ 7,576,779 $ 8,338,370 $ 5,120,739
============ ============ ============

GEOGRAPHIC AND PRODUCT DISTRIBUTION OF LOAN PORTFOLIO
AT SEPTEMBER 30, 1996
<TABLE>
<CAPTION>

SINGLE SINGLE SINGLE
FAMILY FAMILY COMMERCIAL FAMILY TOTAL NON-REAL
AND RESIDENTIAL MULTI- REAL MORTGAGE REAL ESTATE ESTATE
STATE CONSUMER CONSTRUCTION FAMILY ESTATE WAREHOUSE LOANS LOANS
- ---------------------------------------- --------- ------------ -------- ---------- --------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
California.............................. $3,383,554 $ -- $ 21,177 $ -- $ -- $3,404,731 $ 66
Texas................................... 851,832 124,941 242,554 26,132 -- 1,245,459 119,999
Florida................................. 393,402 28,440 12,522 1,974 -- 436,338 89
Illinois................................ 155,920 10,863 -- -- -- 166,783 --
Arizona................................. 97,763 14,611 26,890 -- -- 139,264 --
Pennsylvania............................ 109,816 13,582 2,478 -- -- 125,876 1
Georgia................................. 56,022 33,820 31,039 -- -- 120,881 --
New Jersey.............................. 108,113 -- -- -- -- 108,113 --
Virginia................................ 98,568 -- 1,997 -- -- 100,565 3
Washington.............................. 56,517 -- 41,726 -- -- 98,243 --
Other................................... 925,289 16,268 132,211 14,276 260,745 1,348,789 168,654
--------- ------------ -------- ---------- --------- ----------- --------
Total............................... $6,236,796 $242,525 $512,594 $ 42,382 $260,745 $7,295,042 $288,812
========= ============ ======== ========== ========= =========== ========
% of Total.............................. 82.24% 3.20% 6.76% 0.55% 3.44 % 96.19% 3.81%
========= ============ ======== ========== ========= =========== ========
</TABLE>
% OF
STATE TOTAL TOTAL
- ---------------------------------------- --------- ------

California.............................. $3,404,797 44.90%
Texas................................... 1,365,458 18.00
Florida................................. 436,427 5.75
Illinois................................ 166,783 2.20
Arizona................................. 139,264 1.84
Pennsylvania............................ 125,877 1.66
Georgia................................. 120,881 1.59
New Jersey.............................. 108,113 1.42
Virginia................................ 100,568 1.33
Washington.............................. 98,243 1.30
Other................................... 1,517,443 20.01
--------- ------
Total............................... $7,583,854 100.00%
========= ======
% of Total.............................. 100.00%
=========

LOAN SERVICING PORTFOLIO

At September 30, 1996, the Mortgage Banking Group serviced $3.8 billion in
residential mortgage loans owned by the Company and $9.4 billion in mortgages
owned by others. Mortgage loan servicing consists of collecting and accounting
for principal and interest payments from borrowers, remitting principal and
interest payments to investors, making cash advances when required, collecting
funds for and paying mortgage-related expenses such as taxes and insurance,
inspecting mortgaged properties when required, collecting delinquent mortgages,
conducting foreclosures and property dispositions in the event of unremedied
defaults, and generally

65
<PAGE>
administering the loans. Since September 30, 1996, the Mortgage Banking Group
has acquired an additional $1.12 billion in mortgage loan servicing rights and
also has contracted to purchase an additional $3.96 billion in such rights.

In return for performing the servicing functions listed above, the Mortgage
Banking Group receives servicing fees under loan administration contracts. These
fees are withheld from the monthly payments made to investors, are usually based
on the principal balance of the loan being serviced, generally range from 0.25%
to 0.50% annually of the outstanding principal amount of the loan, and are
collected only as payments are received. Minimum servicing fees for
substantially all loans serviced under MBS are set from time to time by the
sponsoring agencies. As a servicer of loans securitized by the GNMA, the FNMA,
and the FHLMC, the Company may be obligated to make timely payment of principal
and interest to security holders, whether or not such payments have been made by
borrowers on the underlying mortgage loans. With respect to mortgage loans
securitized under GNMA programs, the Company is insured by the FHA against
foreclosure loss on FHA loans, and by the VA through guarantees on VA loans.
Although the GNMA, the FNMA, and the FHLMC are obligated to reimburse the
Company for principal and interest payments advanced by the Company as a
servicer, the funding of delinquent payments or the exercise of foreclosure
rights involves costs to the Company that may not be fully reimbursed or
recovered.

The following table sets forth information on the Mortgage Banking Group's
single family servicing portfolio.

SINGLE FAMILY SERVICING PORTFOLIO
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
------------------------------------------
1996 1995 1994
------------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Beginning servicing portfolio........ $ 12,532,472 $ 8,920,760 $ 8,073,226
------------- ------------- ------------
Add: Servicing acquisitions
transferred in(1).................. 1,189,387 3,730,401 567,010
Servicing on loans purchased by
the Company........................ 21,192 439,834 97,681
Servicing originated........... 3,689,994 3,338,628 5,406,548
Subservicing acquired.......... 22,538 254,959 --
------------- ------------- ------------
Total additions............ 4,923,111 7,763,822 6,071,239
------------- ------------- ------------
Less: Prepayments.................... 1,600,195 937,509 1,050,849
Foreclosures................... 104,572 79,790 40,764
Servicing
released/transferred(1)............ 2,130,004 2,840,244 3,913,243
Amortization................... 373,964 294,567 218,849
------------- ------------- ------------
Total reductions........... 4,208,735 4,152,110 5,223,705
------------- ------------- ------------
Ending servicing portfolio........... $ 13,246,848 $ 12,532,472 $ 8,920,760
============= ============= ============
COMPOSITION OF ENDING SERVICING
PORTFOLIO BY TYPE
Conventional.................... $ 9,663,715 $ 9,442,600 $ 6,143,604
Government...................... 3,583,133 3,089,872 2,777,156
------------- ------------- ------------
Total servicing portfolio............ $ 13,246,848 $ 12,532,472 $ 8,920,760
============= ============= ============
COMPOSITION OF ENDING SERVICING
PORTFOLIO BY OWNER
Company......................... $ 3,752,060 $ 4,010,700 $ 2,714,291
Others.......................... 9,494,788 8,521,772 6,206,469
------------- ------------- ------------
Total servicing portfolio............ $ 13,246,848 $ 12,532,472 $ 8,920,760
============= ============= ============
</TABLE>
- ------------

(1) Represents loans transferred into the servicing portfolio during the fiscal
year. The actual release or transfer of servicing does not necessarily take
place during the same period as the related sale or purchase of MSRs.

During fiscal 1996, 1995, and 1994, the Mortgage Banking Group purchased
MSRs associated with loan principal amounts of $1.2 billion, $594.7 million, and
$3.9 billion at premiums of $23.5 million, $12.5 million,

66
<PAGE>
and $50.9 million, respectively. Certain MSR purchase transactions that occurred
at or near year-end in fiscal 1994 were not transferred in until fiscal 1995.
See "Management's Discussion and Analysis -- Discussion of Results of
Operations -- Non-Interest Income" and Note 6 to the Consolidated Financial
Statements.

Gains on the sale of MSRs are affected by changes in interest rates as well
as the amount of MSRs capitalized at the time of loan origination or MSR
acquisition. Purchasers of MSRs analyze a variety of factors, including
prepayment sensitivity, to assess the purchase price they are willing to pay.
Lower market interest rates prompt an increase in prepayments as consumers
refinance their mortgages at lower rates of interest. As prepayments increase,
the life of the servicing portfolio is reduced, decreasing the servicing fee
revenue that will be earned over the life of that portfolio and the price
third-party purchasers are willing to pay. The fair value of servicing is also
influenced by the supply and demand of servicing available for purchase at any
point in time. Conversely, as interest rates rise, prepayments generally
decrease, resulting in an increase in the value of the servicing portfolio as
well as the gains on sales of MSRs. As indicated in the table above, prepayments
increased in fiscal 1996 as compared to fiscal 1995 reflecting the lower market
interest rates experienced during fiscal 1996. In addition, the valuation of
MSRs incorporates market assumptions regarding expected prepayment speeds. There
was no MSR valuation allowance at September 30, 1996.

In September 1995, the Company adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights, an amendment of FASB Statement No. 65," effective
October 1, 1994. This statement requires that, among other things, the book
value of mortgage loans be allocated at the time of origination between the MSRs
and the related loans, provided there is a plan to sell or securitize such
loans. With the implementation of SFAS No. 122, the original cost basis of the
loan is allocated between the loan and the MSRs, thus increasing the gains on
sales of loans and reducing the gains on sales of MSRs.

Prior to fiscal 1996, the Company sold substantially all of its originated
MSRs ("OMSRs") related to non-portfolio loans. After the implementation of
SFAS No. 122, the Company began evaluating which of its OMSRs to retain for
portfolio and which of its OMSRs to sell based on the returns available and the
corresponding risks associated with the different types of servicing rights. The
Company may also retain servicing in order to maintain the servicing portfolio
at an acceptable level, particularly during periods of unusually high levels of
prepayments or low levels of new originations. See "Management's Discussion and
Analysis -- Discussion of Results of Operations -- Non-Interest Income".

The following table presents the percentage of loans in the single family
servicing portfolio in each interest rate category.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
-----------------------------------------------------------------------
LESS
THAN 7.00- 8.01- 9.01- 10.01- 11.01- 12.01%
7.00% 8.00% 9.00% 10.00% 11.00% 12.00% & ABOVE
--------- --------- --------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Government........................... 7.3% 10.0% 7.4% 1.9% 0.3% 0.2% -- %
Conventional......................... 7.1 29.2 27.5 6.6 1.6 0.5 0.4
--------- --------- --------- ------ ------ ------ -------
Total........................... 14.4% 39.2% 34.9% 8.5% 1.9% 0.7% 0.4%
========= ========= ========= ====== ====== ====== =======
</TABLE>
The weighted average interest rate in the single family servicing portfolio
has decreased from 9.57% at September 30, 1991 to 8.14% at September 30, 1996,
principally as a result of the origination of mortgage loans with increasingly
lower rates during fiscal 1991 to 1996, the prepayment and refinance of higher
rate mortgages, and purchases of MSRs on loans originated by others at lower
rates. At September 30, 1996, the weighted average contractual maturity
(remaining years to maturity) of the loans in the residential mortgage loan
servicing portfolio was 23.6 years.

67
<PAGE>
At September 30, 1996, the single family servicing portfolio was secured by
properties located in the following states:

STATE PERCENT
- ------------------------------------- -------
California........................... 27.8%
Texas................................ 17.0
Florida.............................. 5.8
Illinois............................. 5.6
New Jersey........................... 4.9
Arizona.............................. 3.5
Other states, individually less than
3%................................. 35.4
-------
Total........................... 100.0%
=======

Of the approximately 176,000 loans serviced by the Mortgage Banking Group,
at September 30, 1996, 4.43% were delinquent and an additional 0.61% were in
foreclosure. The following table presents certain information regarding the
number of the delinquent single family loans serviced by the Mortgage Banking
Group as of the dates indicated. Completed foreclosures and loans less than 30
days delinquent have been excluded from the table below.

AT SEPTEMBER 30,
----------------------
1996 1995 1994
---- ---- ----
30-59 Days Past Due.................. 3.3 % 2.7 % 2.3 %
60-89 Days Past Due.................. 0.6 0.6 0.5
90+ Days Past Due.................... 0.5 0.9 0.8
Loans in foreclosure................. 0.6 0.6 0.7
---- ---- ----
Total........................... 5.0 % 4.8 % 4.3 %
==== ==== ====

Loan administration contracts with the FNMA, and typically with private
investors, provide for continuation of servicing over the term of the loan, but
permit termination for cause or termination without cause upon payment of a
cancellation fee. Loan administration contracts with the GNMA and the FHLMC are
terminable only for cause. Management believes that the Mortgage Banking Group
is currently in substantial compliance with all material rules, regulations, and
contractual obligations related to mortgage loan servicing.

INVESTMENT PORTFOLIO

The Company maintains an investment portfolio for investment and liquidity
purposes.

INVESTMENT PORTFOLIO

AT SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(IN THOUSANDS)
Securities purchased under agreements
to resell and federal funds sold... $ 674,249 $ 471,052 $ 358,710
Trading account assets............... 1,149 1,081 1,011
Securities........................... 64,544 116,013 114,115
Mortgage-backed securities........... 1,657,908 2,398,263 2,828,903
------------ ------------ ------------
Total........................... $ 2,397,850 $ 2,986,409 $ 3,302,739
============ ============ ============

The investment portfolio consists primarily of MBS. MBS were acquired as a
means of investing in housing-related mortgage instruments while incurring less
credit risk than that which arises in holding a portfolio of non-securitized
loans. Additionally, MBS include securities created through the securitization
of the Company's single family loans. The MBS in the investment portfolio
include FNMA, FHLMC, and GNMA certificates, privately issued and credit enhanced
MBS ("non-agency securities"), and certain types of collateralized mortgage
obligations ("CMOs").

68
<PAGE>
MORTGAGE-BACKED SECURITIES
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
--------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED CARRYING
COST GAINS LOSSES FAIR VALUE VALUE
------------ ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
HELD TO MATURITY
Agency CMOs -- fixed-rate.......... $ 1,548 $ 5 $ -- $ 1,553
Non-agency
Fixed-rate...................... 7,042 1,753 126 8,669
Adjustable-rate................. 521,280 401 17,634 504,047
CMOs -- fixed-rate.............. 99,966 -- 5,277 94,689
Other.............................. 212 55 -- 267
------------ ---------- ---------- ------------
Held to maturity........... 630,048 $2,214 $ 23,037 609,225 $ 630,048
========== ========== ============
------------ ------------
AVAILABLE FOR SALE
Agency
Adjustable-rate................. 326,338 $1,860 $ 13 328,185
CMOs -- fixed-rate.............. 1,818 -- 1 1,817
CMOs -- adjustable-rate......... 224,081 1,414 192 225,303
Non-agency
Fixed-rate...................... 61,893 2,253 -- 64,146
Adjustable-rate................. 373,876 1,119 1,702 373,293
CMOs -- adjustable-rate......... 34,017 -- 862 33,155
Other.............................. 1,961 -- -- 1,961
------------ ---------- ---------- ------------
Available for sale......... 1,023,984 $6,646 $ 2,770 1,027,860 $ 1,027,860
========== ========== ============
------------ ------------
Total mortgage-backed
securities............... $ 1,654,032 $ 1,637,085
============ ============
</TABLE>
FNMA, FHLMC, and GNMA certificates are modified pass-through MBS that
represent undivided interests in underlying pools of fixed-rate or certain types
of adjustable-rate, single family loans issued by the GNMA, a governmental
agency, and by the FNMA and the FHLMC, government-sponsored enterprises. The
non-agency securities acquired by the Company have been pooled and sold by
private issuers and were generally underwritten by large investment banking
firms. These securities provide for the timely payments of principal and
interest either through insurance issued by a reputable insurer, or by
subordinating certain payments under other securities secured by the same
mortgage pool in a manner that is sufficient to have the senior MBS earn one of
the two highest credit ratings from one or more of the nationally recognized
statistical rating agencies. As of September 30, 1996, 99% of the non-agency MBS
had a credit rating of AA/Aa or higher as defined by the Standard & Poor's
Corporation or Moody's Investor Services, Inc., respectively.

The securities purchased under repurchase agreements outstanding at
September 30, 1996 were collateralized by single family, multi-family, and
commercial real estate loans, and MBS. The loans and MBS underlying the
repurchase agreements are held by the counterparty in safekeeping for the
account of the Company or by a third-party custodian for the benefit of the
Company. All of the investments in repurchase agreements and federal funds sold
at September 30, 1996 matured on or before October 21, 1996. The repurchase
agreements provide for the same loans and MBS to be delivered to the repurchase
counterparty at maturity.

See Notes 1 through 4 to the Consolidated Financial Statements for
additional information related to the assets in the investment portfolio.

DEPOSITS AND BORROWINGS

DEPOSITS

The Company attracts deposits through the 70 community banking branches
located primarily in the Houston and Dallas/Ft. Worth areas including four
supermarket branches, three of which were opened in June of

69
<PAGE>
1996. Currently, the principal methods used by the Company to attract and retain
deposit accounts include offering generally competitive interest rates, having
branch locations in these major Texas markets, and offering a variety of
services for the Company's customers. The Company uses traditional marketing
methods to attract new customers and savings deposits, including newspaper,
radio, and television advertising. The Company offers a traditional line of
deposit products that currently includes checking, commercial checking, money
market, savings accounts, and CDs. These deposit products are specifically
tailored to meet the needs of the Company's consumer and small business banking
customers.

The following table illustrates the levels of deposits gathered by the
Company's community banking network at September 30, 1996.

COMMUNITY BANKING NETWORK

AVERAGE
DEPOSITS
NUMBER OF DEPOSITS PER
LOCATION BRANCHES OUTSTANDING BRANCH
- ------------------------------------- --------- ------------ ---------
(DOLLARS IN THOUSANDS)
Houston Area......................... 37 $ 2,449,487 $ 66,202
Dallas/Ft. Worth Area................ 29 1,371,803 47,304
Other................................ 4 229,765 57,441
--
------------
Total deposits.................. 70 $ 4,051,055 57,872
== ============ =========

The Company also offers cash management services to its MBF customers.
These services are commercial deposit accounts comprised of operating accounts
of MBF customers, escrow deposits, and principal and interest payments on the
loans serviced by MBF customers. At September 30, 1996, these deposits totalled
$879.3 million. While the Company does not generally solicit brokered deposits,
the Company from time to time accepts brokered deposits when permitted by
regulation and available at favorable rates. Wholesale deposits are raised from
time to time through the Company's money desk from institutional investors.

The following table sets forth, by account types, the aggregate amount and
weighted average rate of the Company's deposits.

DEPOSITS
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
------------------------------------------------------------------
1996 1995 1994
-------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE AMOUNT RATE
--------- -------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
NON-INTEREST BEARING DEPOSITS........ $ 284,304 -- % $ 181,196 -- % $ 76,498 -- %
INTEREST-BEARING DEPOSITS
Transaction accounts............... 211,976 1.00 219,307 1.50 233,666 1.49
Insured money fund accounts
Consumer......................... 588,585 4.36 397,473 3.73 407,029 3.12
Commercial....................... 810,743 5.29 857,669 5.82 416,571 4.84
--------- -------- --------- --- --------- ---
Subtotal....................... 1,399,328 4.90 1,255,142 5.16 823,600 3.99
--------- -------- --------- --- --------- ---
Savings accounts................... 130,137 2.48 144,301 2.73 222,769 2.60
Certificates of deposit
Consumer......................... 2,911,682 5.71 3,063,631 5.84 2,949,715 4.88
Commercial....................... 2,667 4.88 2,273 5.36 -- --
Wholesale........................ 207,851 10.28 316,370 9.06 457,956 7.92
--------- -------- --------- --- --------- ---
Subtotal....................... 3,122,200 6.01 3,382,274 6.14 3,407,671 5.29
--------- -------- --------- --- --------- ---
Total interest-bearing
deposits..................... 4,863,641 5.38 5,001,024 5.59 4,687,706 4.74
--------- -------- --------- --- --------- ---
Total deposits................. $5,147,945 5.08% $5,182,220 5.40% $4,764,204 4.67%
========= ======== ========= === ========= ===
Consumer............................. $3,939,631 $3,868,498 $3,834,239
Commercial........................... 1,000,463 997,352 472,009
Wholesale............................ 207,851 316,370 457,956
--------- --------- ---------
Total deposits................. $5,147,945 $5,182,220 $4,764,204
========= ========= =========
</TABLE>
70
<PAGE>
The following table sets forth, by various interest rate categories, the
dollar amounts and the periods to maturity of the Company's time deposits at
September 30, 1996.
DEPOSIT MATURITIES
<TABLE>
<CAPTION>
CERTIFICATES MATURING IN THE YEAR ENDING SEPTEMBER 30,
------------------------------------------------------------------
STATED RATE 1997 1998 1999 2000 2001 THEREAFTER TOTAL
----------------- --------- --------- --------- --------- --------- ---------- ---------
(IN THOUSANDS)
<C> <C> <C> <C> <C> <C> <C> <C>
2.99% and below...................... $ 1,584 $ -- $ -- $ -- $ -- $ -- $ 1,584
3.00% to 3.99%....................... 21,867 740 8 -- -- 3 22,618
4.00% to 4.99%....................... 437,650 23,983 33,839 1,063 2,645 61 499,241
5.00% to 5.99%....................... 861,376 409,903 92,854 6,826 34,185 449 1,405,593
6.00% to 6.99%....................... 440,730 246,208 74,373 61,165 49,022 1,788 873,286
7.00% to 7.99%....................... 79,767 7,747 5,778 21,536 11,276 1,529 127,633
8.00% to 8.99%....................... 1,399 678 4,485 2,326 354 27 9,269
9.00% to 9.99%....................... 579 6,480 3,062 12 138 308 10,579
10.00% to 10.99%..................... 40,224 14,699 11,166 664 97 228 67,078
Over 10.99%.......................... 88,281 16,757 281 -- -- -- 105,319
--------- --------- --------- --------- --------- ---------- ---------
$1,973,457 $ 727,195 $ 225,846 $ 93,592 $ 97,717 $ 4,393 $3,122,200
========= ========= ========= ========= ========= ========== =========
</TABLE>
The following table sets forth the amount of the Company's CD's that are
$100,000 or greater by time remaining until maturity at September 30, 1996.

TIME DEPOSITS GREATER THAN $100,000

NUMBER OF DEPOSIT
ACCOUNTS AMOUNT
---------- --------
(DOLLARS IN THOUSANDS)
Three months or less.................... 1,234 $130,243
Over three through six months........... 551 57,661
Over six through twelve months.......... 957 101,299
Over twelve months...................... 1,813 190,973
---------- --------
4,555 $480,176
========== ========

BORROWINGS

The Company relies upon borrowings, primarily collateralized borrowings
such as advances from the FHLB and reverse repurchase agreements, to fund its
assets. Borrowings were the primary source of funds for the recent asset growth
and accounted for 45% of the funding of average assets for fiscal 1996, 43% for
fiscal 1995, and 31% for fiscal 1994. Fixed and adjustable-rate advances are
obtained from the FHLB Dallas under a security and pledge agreement that
restricts the amount of borrowings to the greater of a percentage of (i) fully
disbursed single family loans, unless assets are physically pledged to the FHLB
Dallas, and (ii) total assets. At September 30, 1996, these limitations were 65%
and 45%, respectively. The Company's ability to borrow on reverse repurchase
agreements is limited to the amount and market value of collateral that is
available to collateralize these reverse repurchase agreements. At September 30,
1996, the Company had $1.2 billion in such collateral, $1.0 billion of which was
collateralizing such reverse repurchase agreements. See Notes 9 and 10 to the
Consolidated Financial Statements.

71
<PAGE>
The following table sets forth certain information regarding the borrowings
of the Company as of or for the period indicated.

BORROWINGS

AT OR FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
FHLB ADVANCES
Balance outstanding period-end..... $ 3,490,386 $ 4,383,895 $ 2,620,329
Maximum outstanding at any
month-end....................... 4,384,798 4,386,605 2,697,829
Daily average balance.............. 4,073,297 3,560,844 2,285,630
Average interest rate.............. 6.07% 6.31% 3.98%
REVERSE REPURCHASE AGREEMENTS
Balance outstanding at period-end.. $ 832,286 $ 1,172,533 $ 553,000
Fair value of collateral at
period-end...................... 1,020,405 1,239,527 673,000
Maximum outstanding at any
month-end....................... 1,096,508 1,355,540 553,000
Daily average balance.............. 955,681 887,932 273,899
Average interest rate.............. 5.77% 5.99% 3.85%
FEDERAL FUNDS PURCHASED
Balance outstanding at period-end.. $ -- $ -- $ --
Maximum outstanding at any
month-end....................... -- -- 15,000
Daily average balance.............. 27 521 767
Average interest rate.............. 6.02% 5.95% 3.73%

ASSET AND LIABILITY MANAGEMENT

The Company's asset and liability management process is utilized to manage
the Company's interest rate risk through structuring the balance sheet and
off-balance-sheet portfolios to maximize net interest income while maintaining
acceptable levels of risk to changes in market interest rates. The achievement
of this goal requires a balance between profitability, liquidity, and interest
rate risk.

Interest rate risk is managed by the ALCO, which is composed of senior
officers of the Company, in accordance with policies approved by the Company's
Board of Directors. The ALCO formulates strategies based on appropriate levels
of interest rate risk. In determining the appropriate level of interest rate
risk, the ALCO considers the impact on earnings and capital of the current
outlook on interest rates, potential changes in interest rates, regional
economies, liquidity, business strategies, and other factors. The ALCO meets
regularly to review, among other things, the sensitivity of assets and
liabilities to interest rate changes, the book and market values of assets and
liabilities, unrealized gains and losses, purchase and sale activity, the
mortgage pipeline, and the maturities of investments and borrowings.
Additionally, the ALCO reviews liquidity, cash flow flexibility, maturities of
deposits, consumer and commercial deposit activity, current market conditions,
and interest rates on both a local and national level.

The "interest rate sensitivity gap" is defined as the difference between
interest-earning assets and interest-bearing liabilities maturing or repricing
within a given time period. A gap is considered positive when the amount of
interest rate sensitive assets exceeds the amount of interest rate sensitive
liabilities. A gap is considered negative when the amount of interest rate
sensitive liabilities exceeds interest rate sensitive assets. During a period of
rising interest rates, a negative gap would tend to affect net interest income
adversely, while a positive gap would tend to result in an increase in net
interest income. During a period of falling interest rates, a negative gap would
tend to result in an increase in net interest income, while a positive gap would
tend to affect net interest income adversely. Different types of assets and
liabilities with the same or similar maturities may react differently to changes
in overall market rates or conditions, thus changes in interest rates may affect
net interest income positively or negatively even if an institution were
perfectly matched in each maturity category. The Company's one year cumulative
interest rate gap position at September 30, 1996 was negative $483.5 million or
4.51% of total assets. This is a one-day position which is continually changing
and is not necessarily indicative of the Company's position at any other time.
Additionally, the gap analysis does not consider the many factors accompanying
interest rate movements. While the interest rate sensitivity gap is a useful
measurement and

72
<PAGE>
contributes toward effective asset and liability management, it is difficult to
predict the effect of changing interest rates solely on that measure, without
accounting for alterations in the maturity or repricing characteristics of the
balance sheet that occur during changes in market interest rates. During periods
of rising interest rates the Company's assets tend to have prepayments that are
slower than those in an interest rate sensitivity gap and would increase the
negative gap position. Conversely, during a period of falling interest rates the
Company's assets would tend to prepay faster than expected thus decreasing the
negative gap.

To effectively measure and manage interest rate risk, the Company uses
simulation analysis to determine the impact on net interest income under various
interest rate scenarios, balance sheet trends, and strategies. From these
simulations, interest rate risk is quantified and appropriate strategies are
developed and implemented. Additionally, duration and market value sensitivity
measures are utilized when they provide added value to the overall interest rate
risk management process. The overall interest rate risk position and strategies
are reviewed by executive management and the Company's Board of Directors on an
ongoing basis. The Company has traditionally managed its business to reduce its
overall exposure to changes in interest rates. However, under current policies
of the Company's Board of Directors, management has been given some latitude to
increase the Company's interest rate sensitivity position within certain limits
if, in management's judgment, that will enhance profitability. As a result,
changes in market interest rates may have a greater impact on the Company's
financial performance in the future than they have had historically.

73
<PAGE>
The following table sets forth the expected repricing characteristics of
the Company's consolidated assets and liabilities at September 30, 1996,
utilizing assumptions noted below:

ASSET/LIABILITY REPRICING
<TABLE>
<CAPTION>
AMOUNTS MATURING OR REPRICING IN
--------------------------------------------------------------------
AFTER
THREE AFTER AFTER
LESS THAN MONTHS SIX MONTHS ONE YEAR
THREE BUT WITHIN BUT WITHIN BUT WITHIN AFTER
MONTHS SIX MONTHS ONE YEAR FIVE YEARS FIVE YEARS
---------- ----------- ----------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS(1)(2)
Cash and investment
securities(3).................... $ 950,698 $ 52,600 $ -- $ -- $ 35,327
Adjustable-rate loans and
mortgage-backed securities....... 3,448,182 1,847,089 1,296,890 1,070,999 53,714
Fixed-rate loans and
mortgage-backed securities....... 51,630 51,204 101,226 641,860 312,254
Single family mortgage warehouse... 260,745 -- -- -- --
Other assets....................... 64,251 -- -- -- --
---------- ----------- ----------- ---------- ----------
Total assets................... $4,775,506 $1,950,893 $1,398,116 $1,712,859 $401,295
========== =========== =========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Certificates of deposit............ $ 820,917 $ 455,130 $ 699,554 $1,142,401 $ 4,198
Checking and savings(4)............ 2,025,745 -- -- -- --
---------- ----------- ----------- ---------- ----------
Total deposits................. 2,846,662 455,130 699,554 1,142,401 4,198
Senior Notes....................... -- -- -- 115,000 --
FHLB advances and other
borrowings....................... 3,881,427 365,000 50,000 23,545 2,700
Other liabilities.................. 310,217 -- -- -- --
Minority interest.................. -- -- -- -- --
Stockholders' equity............... -- -- -- -- --
---------- ----------- ----------- ---------- ----------
Total liabilities, minority
interest, and stockholders'
equity....................... $7,038,306 $ 820,130 $ 749,554 $1,280,946 $ 6,898
========== =========== =========== ========== ==========
Gap before off-balance-sheet
financial instruments.............. $(2,262,800) $1,130,763 $ 648,562 $ 431,913 $394,397
OFF-BALANCE-SHEET(5)
Interest rate swap
agreements -- pay floating....... (25,000) 25,000 -- -- --
---------- ----------- ----------- ---------- ----------
Gap.................................. $(2,287,800) $1,155,763 $ 648,562 $ 431,913 $394,397
========== =========== =========== ========== ==========
Cumulative gap....................... $(2,287,800) $(1,132,037) $(483,475)
===========
Cumulative gap as a percentage of
total assets....................... (21.36)% (10.57 )% (4.51)%
</TABLE>
NON-
REPRICING TOTAL
--------- ----------
ASSETS(1)(2)
Cash and investment
securities(3).................... $ -- $ 1,038,625
Adjustable-rate loans and
mortgage-backed securities....... -- 7,716,874
Fixed-rate loans and
mortgage-backed securities....... -- 1,158,174
Single family mortgage warehouse... -- 260,745
Other assets....................... 473,708 537,959
--------- ----------
Total assets................... $ 473,708 $10,712,377
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Certificates of deposit............ $ -- $ 3,122,200
Checking and savings(4)............ -- 2,025,745
--------- ----------
Total deposits................. -- 5,147,945
Senior Notes....................... -- 115,000
FHLB advances and other
borrowings....................... -- 4,322,672
Other liabilities.................. 100,000 410,217
Minority interest.................. 185,500 185,500
Stockholders' equity............... 531,043 531,043
--------- ----------
Total liabilities, minority
interest, and stockholders'
equity....................... $ 816,543 $10,712,377
========= ==========
Gap before off-balance-sheet
financial instruments.............. $(342,835)
OFF-BALANCE-SHEET(5)
Interest rate swap
agreements -- pay floating....... --
---------
Gap.................................. $(342,835)
=========
Cumulative gap.......................
Cumulative gap as a percentage of
total assets.......................
- ------------

(1) Fixed-rate loans and MBS are distributed based on their contractual maturity
adjusted for anticipated prepayments, and adjustable-rate loans and MBS are
distributed based on the interest rate reset date and contractual maturity
adjusted for anticipated prepayments. Loans and MBS runoff and repricing
assumes a constant prepayment rate based on coupon rate and maturity. The
weighted average annual projected prepayment rate was 19%.

(2) Assets repricing to lagging rate indices are adjusted to reflect the delay
in the repricing of the index to market interest rates. The lagging indices
are based on a blended cost of funds, primarily the FHLB 11th District Cost
of Funds Index. These indices are assumed to take 18 months to reprice fully
to a change in the general level of interest rates.

(3) Investment securities include repurchase agreements, federal funds sold,
trading account assets, securities, and FHLB stock.

(4) Checking and savings deposits are presented in the earliest repricing period
since amounts in these accounts are subject to withdrawal upon demand.

(5) The above table includes only those off-balance-sheet financial instruments
which impact the gap in all interest rate environments. The Company also has
certain off-balance-sheet financial instruments which hedge specific
interest rate risks.

74
<PAGE>
COMPETITION

The Company competes primarily with seven commercial banks and five thrift
institutions, all of which have a substantial presence in the same markets as
the Company. Competitors for deposits include thrift institutions, commercial
banks, credit unions, full service and discount broker dealers, and other
investment alternatives, such as mutual funds, money market funds, and savings
bonds or other government securities. The Company and its peers compete
primarily on price at which products are offered and on customer service.

The Company competes for mortgage originations with thrift institutions,
banks, insurance companies, and mortgage companies, many of which operate
nationwide mortgage origination networks similar to that of the Company. Primary
competitive factors include service quality, relationships with builders and
real estate brokers, and rates and fees. Many of the Company's competitors are,
or are affiliated with, organizations with substantially larger asset and
capital bases (including regional and multi-national banks and bank holding
companies) and with lower funding costs.

SUBSIDIARIES

At September 30, 1996, the Company had no direct subsidiaries other than
Holdings, which has one direct subsidiary, the Bank. The Bank is permitted to
invest in the capital stock, obligations, and other securities of its service
corporations in an aggregate amount not to exceed 2% of the Bank's assets, plus
an additional 1% of assets if such investment is used for community development
or innercity development purposes. In addition, if the Bank meets minimum
regulatory capital requirements, it may make certain conforming loans in an
amount not exceeding 50% of the Bank's regulatory capital to service
corporations of which the Bank owns more than 10% of the stock. At September 30,
1996, the Bank was authorized to have a maximum investment of approximately
$320.8 million in its subsidiaries.

BNKU HOLDINGS, INC.

In December 1996, the Company formed a new, wholly-owned, Delaware
subsidiary, Holdings. After acquiring all the common stock of Holdings, the
Company contributed all the common stock of the Bank to Holdings, and Holdings
assumed the obligations of the Company's Senior Notes. As a result of these
transactions, Holdings is the sole subsidiary of the Company and the Bank is the
sole subsidiary of Holdings.

COMMONWEALTH UNITED MORTGAGE COMPANY

The Bank is the sole shareholder of Commonwealth United Mortgage Company, a
Texas corporation formed in 1992 to function as a licensed mortgage banker in
the state of Vermont.

UNITED AGENCY CORPORATION

United Agency Corporation is a wholly-owned subsidiary of the Bank whose
primary purpose is holding the stock of Commonwealth General Services Agency,
Inc., an Arkansas corporation incorporated in 1951 ("CGSA"). CGSA is a
managing general insurance agency that contracts with insurance companies and
agencies that offer insurance products to the Bank's mortgage loan customers.
CGSA earns a commission on each insurance policy sold by the insurance companies
or agencies with which CGSA contracts.

UNITED CAPITAL MANAGEMENT CORPORATION

The Bank is the sole shareholder of United Capital Management Corporation,
a Texas corporation formed in 1985 to function in the deposit referral business
and is currently inactive.

UNITED FINANCIAL MARKETS, INC.

The Bank is the sole shareholder of United Financial Markets, Inc.
("UFM"), a Texas corporation, which acts as a full-service broker-dealer. UFM,
through its institutional division, sells various securities products and whole
loans and engages in the deposit referral business with institutional and
sophisticated retail customers. Through its retail division, UFM markets
annuities and securities, including mutual funds, stocks and bonds, to the
Bank's retail customers. UFM is a broker-dealer registered with the Commission
and a member of the National Association of Securities Dealers, Inc. ("NASD").
This subsidiary commenced operations in late 1992, and its activities have been
expressly approved by the OTS.

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UNITED GREENWAY SECURITIES SERVICES, INC.

The Bank is the sole shareholder of United Greenway Securities Services,
Inc., a Texas corporation formed in 1989 to make mutual funds and other
non-deposit products available to retail customers through referrals to a
registered broker-dealer. This subsidiary is currently inactive.

UNITED MORTGAGE SECURITIES CORPORATION

The Bank is the sole shareholder of United Mortgage Securities Corporation,
a Delaware corporation formed in 1993 to issue MBS securitized with mortgage
loans purchased from the Bank.

USAT MORTGAGE SECURITIES, INC.

The Bank is the sole shareholder of USAT Mortgage Securities, Inc., a Texas
corporation formed in 1985 to function as an issuer of three series of CMOs.
This subsidiary is currently inactive.

PERSONNEL

As of September 30, 1996, the Company employed 2,216 full-time employees
and 166 part-time employees. The employees are not represented by a collective
bargaining agreement, and the Company believes that it has good relations with
its employees. See Note 13 to the Consolidated Financial Statements.

THE ASSISTANCE AGREEMENT

In connection with the Acquisition, the Bank, the Company and certain of
their direct and indirect parent entities entered into an overall agreement with
the FSLIC and the FHLBB that was evidenced by several written agreements (the
"Agreements"). The principal contract relating to the Acquisition was the
Assistance Agreement, dated December 30, 1988, among the FSLIC, the Company, the
Bank, and certain of the Bank's other direct and indirect parent entities and
which set forth certain mutual, interdependent commitments of the parties with
respect to the Acquisition. The other written agreements comprising the overall
agreement were the Acquisition Agreement, dated December 30, 1988, between the
FSLIC and the Bank; the Warrant Agreement, dated December 30, 1988, between the
FSLIC and the Bank; the Regulatory Capital Maintenance Agreement, dated December
30, 1988, among the FSLIC, the Bank, the Company, Hyperion Holdings and Hyperion
Partners; and the Forbearance Agreement, dated February 15, 1989, among the
FHLBB, the Bank, the Company, Hyperion Holdings and Hyperion Partners. The
Acquisition Agreement set forth the terms of the Bank's acquisition of
substantially all of the assets of Old USAT and the assumption of Old USAT's
secured, deposit and certain tax liabilities. The Warrant Agreement granted the
FSLIC a Warrant to purchase up to 158,823 shares of Bank Common Stock at an
exercise price of $0.01 per share. The Regulatory Capital Maintenance Agreement
placed certain restrictions on the Bank's payment of dividends on the Bank
Common Stock. The Agreement for Operating Policies required the Bank to prepare
a three year business plan and certain specified written operating policies. The
Forbearance Agreement granted to the Bank, the Company, Hyperion Holdings and
Hyperion Partners forbearances from regulatory action relating to capital
requirements and accounting procedures. All of the Agreements have terminated
except one provision of the Assistance Agreement granting certain indemnities to
the Bank, the Company, Hyperion Holdings, Hyperion Partners, the Forbearance
Agreement and the Tax Benefits Agreement, dated December 28, 1993, among the
Bank, the Company, Hyperion Holdings and Hyperion Partners, which governs the
sharing of tax benefits with the FDIC-FRF.

The Company also succeeded to substantial NOLs as a result of the
Acquisition and has recorded substantial additional NOLs for tax purposes due to
the exclusion of assistance payments received from the FRF under the Assistance
Agreement from taxable income and the deduction of losses and writedowns on
certain assets (the "Covered Assets") for which tax-free assistance payments
were received. See "Regulation -- Taxation -- FSLIC Assistance".

The Assistance Agreement was terminated on December 23, 1993, when the
Company, the Bank, certain of their direct and indirect parent entities, and the
FDIC entered an agreement settling certain disputes with respect to various
matters relating to the Acquisition and the Assistance Agreement (the
"Settlement Agreement"). Pursuant to the Settlement Agreement, the Assistance
Agreement was terminated, the Bank no longer managed or owned the Covered Assets
(except for certain of the Covered Assets that were "uncovered" and retained),
and,

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as of December 28, 1993, the Bank no longer received any significant financial
assistance from the FRF. The Settlement Agreement also provided for the
continuation of certain of the Company's and the Bank's claims against the
United States in the United States Court of Federal Claims. See
"-- Forbearance".

Pursuant to the Assistance Agreement and the Settlement Agreement, the Bank
received substantial payments from the FRF during fiscal 1994 as follows:

(IN THOUSANDS)
Payments affecting the results of
operations........................... $ 23,143
Other payments
Settlement payment................. 195,300
Other.............................. 468
--------------
Total FRF payments............ $218,911
==============

WARRANT AGREEMENT

Concurrent with the execution of the Assistance Agreement, the Bank and the
FSLIC entered into the Warrant Agreement, pursuant to which the FSLIC was
granted the Warrant to purchase up to 158,823 shares of Bank Common Stock at an
exercise price of $0.01 per share. Pursuant to the Settlement Agreement, the
Bank and the FDIC-FRF entered into the First Amendment to the Warrant Agreement
on December 28, 1993 (the "First Amendment to Warrant Agreement"). References
to the Warrant Agreement below are to the Warrant Agreement as amended by the
First Amendment to Warrant Agreement.

Pursuant to the Settlement Agreement, all disputes with respect to the
Warrant were resolved, and the parties agreed that the Bank was to make payments
to the holder of the Warrant in lieu of dividends upon any payment of dividends
on the Bank Common Stock (other than dividends for which anti-dilution
adjustments are made) beginning December 28, 1993 until December 30, 1998 or
such earlier date as the Warrant was no longer outstanding. In May 1996, the
Bank made a payment to the FDIC-FRF of $5.9 million in lieu of such dividends in
connection with the declaration of a $100 million dividend on the Bank Common
Stock.

In August 1996, the FDIC surrendered a portion of the Warrant for a cash
payment of $6.1 million, exercised the remainder of the Warrant for Bank Common
Stock, and immediately exchanged the shares of Bank Common Stock issued upon
exercise of the Warrant for 1,503,560 shares of Class B Common Stock. As part of
the August Offering, the FDIC-FRF sold all of such shares of Class B Common
Stock. Following the consummation of the August Offering, all rights and
obligations under the Warrant and the Warrant Agreement were terminated, and the
FDIC-FRF no longer owned any shares of Common Stock.

FORBEARANCE

In connection with the original acquisition of the Bank by the Company, the
FHLBB also approved the Forbearance Agreement. Under the terms of the
Forbearance Agreement, the FSLIC agreed to waive or forbear from the enforcement
of certain regulatory provisions with respect to regulatory capital
requirements, liquidity requirements, accounting requirements and other matters.
After the enactment of FIRREA, OTS took the position that the capital standards
set forth in FIRREA apply to all savings institutions, including those
institutions that had been operating under previously granted capital and
accounting forbearances, and that FIRREA eliminated these forbearances. While
the Bank has not had to rely on such forbearances or waivers in order to remain
in compliance with existing capital requirements as interpreted by the OTS, the
position of the OTS has adversely affected the Bank by curtailing the growth and
reducing the leverage contemplated by the terms of the Forbearance Agreement.
The Bank also has been and continues to be in compliance with all of the other
referenced regulatory capital provisions and, accordingly, has not had to rely
on the waivers or forbearances provided in the Acquisition. Pursuant to the
Settlement Agreement, the Company, the Bank and certain of their then-direct and
indirect parent entities have retained all causes of action and claims relating
to the forbearances against the United States in the United States Court of
Federal Claims, and the FDIC and the other governmental parties to the lawsuit
have reserved any and all defenses to such causes of actions and claims. While
the Bank has not had to rely on such forbearances or waivers in order to remain
in compliance with existing capital requirements as interpreted by the OTS, the
position of the OTS has adversely affected the Bank by curtailing the

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growth and reducing the leverage contemplated by the terms of the Forbearance
Agreement. The Bank also has been and continues to be in compliance with all of
the other referenced regulatory capital provisions and, accordingly, has not had
to rely on the waivers or forbearances provided in the Acquisition.

On July 25, 1995, Plaintiffs filed suit against the United States in the
Court of Federal Claims for alleged failures of the United States (i) to abide
by a capital forbearance, which would have allowed the Bank to operate for ten
years under negotiated capital levels lower than the levels required by the then
existing regulations or successor regulations, (ii) to abide by its commitment
to allow the Bank to count $110 million of subordinated debt as regulatory
capital for all purposes, and (iii) to abide by an accounting forbearance, which
would have allowed the Bank to count as capital for regulatory purposes, and to
amortize over a period of twenty-five years, the $30.7 million difference
between certain FSLIC payment obligations to the Bank and the discounted present
value of those future FSLIC payments. The lawsuit is in a preliminary stage. The
lawsuit was stayed pending the United States Supreme Court's review in WINSTAR.
On July 1, 1996, the Supreme Court upheld lower court rulings that the United
States had breached the contracts involved in the WINSTAR cases and remanded the
case for further proceedings on the issue of damages. Since the Supreme Court
ruling, the Chief Judge of the Court of Federal Claims convened a number of
status conferences to establish a case management protocol for the more than 100
lawsuits on the Court of Federal Claims docket, that, like Plaintiffs case,
involve issues similar to those raised in the WINSTAR cases.

Following a number of status conferences Chief Judge Loren Smith of the
United States Court of Federal Claims has transferred all WINSTAR-related cases
to his own docket and entered an Omnibus Case Management Order governing
proceedings in such cases, including the Company's case. Under the Omnibus Case
Management Order, Chief Judge Smith serves as the "Managing Judge" for all
WINSTAR-related cases and may assign other judges of the United States Court of
Federal Claims to resolve pre-trial discovery disputes and common legal issues
and to conduct trials. The Government and Plaintiffs exchanged certain
significant documents as early as October 2, 1996 pursuant to a court order, and
the Company and the Bank are in the process of responding to the Government's
first discovery request. Trials on damages in two of the three WINSTAR cases
that were decided by the United States Supreme Court in July 1996 are scheduled
for early 1997. Damages trials in the remaining cases subject to the Omnibus
Case Management Plan are scheduled to begin four months after completion of the
first two damages trials. The Company's case is one of thirteen cases that
"shall be accorded priority in the scheduling" of the damages trials under the
Omnibus Case Management Order. In December 1996, Chief Judge Smith decided the
motion IN LIMINE on damage theories of Glendale Federal, one of the four WINSTAR
plaintiffs, and allowed Glendale Federal to assert several alternative damages
theories against the Government.

While the Company expects Plaintiffs' claims for damages to exceed $200
million, the Company is unable to predict the outcome of Plaintiffs' suit
against the United States and the amount of judgment for damages, if any, that
may be awarded. The Company, on November 27, 1996, moved for partial summary
judgement on liability and is pursuing an early trial on damages. Uncertainties
remain concerning the administration of the Omnibus Case Management Order and
the future course of the Company's lawsuit pursuant to the Omnibus Case
Management Order. Accordingly, the Company cannot predict the timing of any
resolution of its claims. The Company expects the trial of its case to commence
during the first quarter of fiscal 1998. The Company is also unable to predict
the outcome of its suit against the United State and the amount of judgment for
damages, if any, that may be awarded. Consequently, no assurances can be given
as to the results of this suit. See "Legal Proceedings".

<PAGE>
REGULATION

REGULATION OF SAVINGS AND LOAN HOLDING COMPANIES

The Company is a savings and loan holding company that is regulated and
subject to examination by the OTS. The activities of savings and loan holding
companies are governed by the provisions of the Home Owners' Loan Act, as
amended (the "HOLA"). Pursuant to the HOLA, a savings and loan holding company
may not (i) acquire control of a savings association or savings and loan holding
company without prior OTS approval; (ii) acquire, except with prior OTS
approval, by process of merger, consolidation, or purchase of assets of another
savings association or savings and loan holding company, all or substantially
all of the assets of any such association or holding company; or (iii) acquire,
by purchase or otherwise, more than 5% of the voting shares of a savings
association that is not a subsidiary, or of a savings and loan holding company
that is not a subsidiary. Other restrictions on activities of a savings and loan
holding company do not apply to the Company because its savings association
subsidiary is a qualified thrift lender. See " -- Safety and Soundness
Regulations -- Investment Authority -- QTL Test". Every subsidiary savings
association of a savings and loan holding company must give the OTS not less
than 30 days of advance notice of proposed dividend declarations.

SAFETY AND SOUNDNESS REGULATIONS

CHARTER, SUPERVISION, AND EXAMINATION

CHARTER. The Bank is chartered under the HOLA, which imposes certain
obligations and restrictions upon, and grants certain powers to, federally
chartered savings banks such as the Bank. The provisions of the HOLA are
implemented by regulations adopted and administered by the OTS.

OTS. Federally chartered savings banks, such as the Bank, are subject to
extensive regulation by the OTS and must regularly file financial and other
reports with that agency. The supervision and regulation to which the Bank is
subject is intended primarily for the protection of its depositors. The OTS
performs periodic examinations of the Bank to test compliance by the Bank with
various regulatory requirements. The OTS may revalue assets of an insured
institution based upon appraisals and require establishment of specific reserves
in amounts equal to the difference between such revaluation and the book value
of the assets, as well as require specific charge-offs relating to such assets.

The OTS prescribes regulations for the collection of fees in order to
recover the expenses of the agency, the cost of supervision of savings
associations, the examination of savings associations and their subsidiaries,
and the processing of applications, filings, notices, and certain other requests
of savings associations filed with the OTS. The OTS adopted a two-pronged
sliding scale approach in 1990 by which all institutions pay a general
assessment and troubled institutions pay an additional premium assessment. The
Bank has never been subject to a premium assessment. The Bank's general
assessments amounted to approximately $1.5 million and $1.2 million in the
aggregate during fiscal 1996 and 1995, respectively.

FDIC. The FDIC administers the SAIF, which insures the deposits of savings
associations such as the Bank. The Bank's deposits are insured by the SAIF to a
maximum of $100,000 for each insured depositor. In addition, the FDIC has
certain regulatory and full examination authority over OTS regulated savings
associations. The FDIC may also recommend enforcement actions against savings
associations to the OTS and, if the OTS fails to act on the FDIC's
recommendation, the FDIC may, under certain circumstances, compel the OTS to
take the requested enforcement action.

INSURANCE ASSESSMENTS. The FDIC establishes premium assessment rates for
SAIF deposit insurance. There is no statutory limit on the maximum assessment
and the percent of increase in the assessment that the FDIC may impose in any
one year. Effective January 1, 1993, the FDIC adopted risk-based assessment
regulations.

To arrive at a risk-based assessment for each bank and thrift, the FDIC
places it in one of nine risk categories using a two-step process based first on
capital ratios and then on relevant supervisory information. Each institution is
assigned to one of three groups (well-capitalized, adequately capitalized, or
undercapitalized) based on its capital ratios. A "well-capitalized"
institution is one that has at least a 10% "total risk-based capital" ratio
(the ratio of total capital to risk-weighted assets), a 6% "tier 1 risk-based
capital" ratio (the ratio of

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tier 1 (core) capital to risk-weighted assets) and a 5% "leverage capital"
ratio (the ratio of core capital to adjusted total assets). An "adequately
capitalized" institution has at least an 8% total risk-based capital ratio, a
4% tier 1 (core) risk-based capital ratio and a 4% leverage capital ratio. An
"undercapitalized" institution is one that does not meet either the definition
of well-capitalized or adequately capitalized.

The FDIC also assigns each institution to one of three supervisory
subgroups based on an evaluation of the risk posed by the institution. These
supervisory evaluations modify premium rates within each of the three capital
groups. The nine risk categories and the corresponding SAIF assessment rates are
as follows:

SUPERVISORY SUBGROUP
-------------------------------
A B C
-- -- --
Meets numerical standards for:
Well-capitalized................ 23 26 29
Adequately capitalized.......... 26 29 30
Undercapitalized................ 29 30 31

For purposes of assessments of FDIC insurance premiums, as of September 30,
1996, the Company believes that the Bank is a "well-capitalized" institution.
FDIC regulations prohibit disclosure of the supervisory subgroup to which an
insured institution is assigned. The Bank's insurance assessments for fiscal
1996 and 1995 were $12.0 million and $11.4 million, respectively.

Both the SAIF and the BIF, the deposit insurance fund that covers most
commercial bank deposits, are statutorily required to achieve and maintain a
reserve ratio equal to 1.25% of estimated insured deposits. As a result of the
BIF reaching the 1.25% level, on August 16, 1995, the FDIC lowered the deposit
insurance premium assessment rate for BIF members to between .04% and .31% of
insured deposits, while retaining the assessment rate of .23% to .31% of insured
deposits for members of SAIF. On November 14, 1995, the FDIC further reduced
insurance premiums on BIF deposits by 0.04% of insured deposits, creating an
assessment range of 0% to .27% of insured deposits, subject to a statutory
requirement that all institutions pay at least $2,000 annually. Approximately
92% of BIF members qualify for the lowest assessment rate. As a result of the
significant disparity in the deposit insurance premiums paid by well-capitalized
SAIF members, such as the Bank, and well-capitalized BIF members, SAIF members
were at a competitive disadvantage to BIF members with respect to the pricing of
loans and deposits and the ability to achieve lower operating costs.

On September 30, 1996, President Clinton signed into law the Economic
Growth and Paperwork Reduction Act of 1996 (the "1996 Act"). The 1996 Act
required the FDIC to impose a one-time assessment on institutions holding SAIF
deposits in an amount sufficient to increase the SAIF's net worth to 1.25% of
SAIF-insured deposits, as of October 1, 1996. The special assessment, which was
collected on November 27, 1996, was 65.7 basis points times the amount of
deposits held by an institution as of March 31, 1995. The special assessment is
deductible in the tax year paid.

As a result of the special assessment, the SAIF is deemed to have met its
designated reserve ratio as of October 1, 1996. On October 8, 1996, the FDIC
proposed new risk-based assessments for SAIF-insured institutions. The SAIF base
assessment rates would effectively range from 0 to 27 basis points beginning
October 1, 1996. For the last calendar quarter of 1996, a special interim
schedule of rates ranging from 18 to 27 basis points would apply, reflecting the
assessments necessary to pay interest on the FICO bonds. Any excess assessments
collected under the prior assessment schedule will be refunded or credited, with
interest. Thus, except to the extent of FICO assessments, SAIF and BIF
institutions will have the same assessment schedule as of January 1, 1997.

Under the 1996 Act, during the period beginning January 1, 1997 through
December 31, 1999, SAIF-insured institutions will pay 6.44 basis points toward
FICO bonds and BIF-insured institutions will pay 1.29 basis points. Starting in
the year 2000, BIF and SAIF institutions will begin sharing the FICO burden on a
pro rata basis until termination of the FICO obligation in 2017, thus
eliminating all assessment disparities.

TERMINATION OF INSURANCE. The FDIC may terminate the deposit insurance of
any insured depository institution if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound

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practices, is in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, or order, or any condition imposed by
an agreement with the FDIC. It also may suspend deposit insurance temporarily
during the hearing process for the permanent termination of insurance if the
institution has no tangible capital. If insurance of an institution's accounts
is terminated, the accounts at the institution at the time of such termination,
less subsequent withdrawals, would continue to be insured for a period of six
months to two years, as determined by the FDIC.

AUDIT REQUIREMENTS. In May 1993, the FDIC adopted rules establishing
annual independent audits and financial reporting requirements for all
depository institutions with assets of more than $500 million, and for their
management, and their independent auditors. The rules also establish
requirements for the composition, duties, and authority of such institutions'
audit committees and boards of directors. Among other things, all depository
institutions with assets in excess of $500 million are required to prepare and
make available to the public annual reports on their financial condition and
management, including statements of management's responsibility for preparing
the institution's financial statements, for establishing and maintaining an
internal control structure and procedures for financial reporting, and for
complying with specified laws and regulations relating to safety and soundness,
and an assessment of the effectiveness of such internal controls and procedures
and the institution's compliance with laws and regulations designated by the
FDIC. The institution's independent auditors are required to attest to these
management assessments. Each such institution also is required to have an audit
committee composed of directors who are independent of management of the
institution. Audit committees of large institutions (institutions with assets
exceeding $3.0 billion) must: (i) include members with banking or related
financial management expertise; (ii) have the ability to engage their own
independent legal counsel; and (iii) must not include any entities designated as
"large customers" of the institution. In some cases, the institution's
responsibilities under these rules may be fulfilled by its holding company.

The 1996 Act repealed the requirement that an independent auditor attest on
the procedures employed by financial institutions to detect and report
violations of designated laws. The 1996 Act also authorizes the appropriate
Federal banking agency to permit the independent audit committee to contain
inside as well as outside directors if the institution has encountered hardships
in recruiting and retaining outside directors to serve on the committee.

FEDERAL RESERVE BOARD. The Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") requires all depository institutions
(including savings associations) to maintain reserves against their transaction
accounts (primarily NOW and Super NOW checking accounts) and non-personal time
deposits. Reserves of 3% must be maintained against total transaction accounts
of $52.0 million or less (subject to adjustment by the Federal Reserve Board)
and an initial reserve of $1,560,000 plus 10% (subject to adjustment by the
Federal Reserve Board to a level between 8% and 14%) must be maintained when
total transaction accounts exceed such amount. The balances maintained to meet
the reserve requirements imposed by the Federal Reserve Board may be used to
satisfy liquidity requirements imposed by the OTS. See " -- Investment
Authority -- Liquidity".

Savings associations are authorized to borrow from the Federal Reserve Bank
"discount window," but Federal Reserve Board regulations require savings
associations to exhaust other reasonable alternative sources of funds, including
FHLB advances, before borrowing from the Federal Reserve Bank.

FEDERAL HOME LOAN BANKS. The Bank is a member of the FHLB Dallas, which is
one of 12 regional FHLBs, each subject to supervision and regulation by the
Federal Housing Finance Board. The FHLBs provide a central credit facility
primarily for member thrift institutions, as well as for qualified commercial
banks and other entities involved in home mortgage finance. The Bank, as a
member of the FHLB Dallas, is required to purchase and hold shares of the
capital stock in that FHLB in an amount at least equal to the greater of: (i) 1%
of the aggregate principal amount of its unpaid mortgage loans, home purchase
contracts and similar obligations at the beginning of each year; (ii) 0.3% of
its assets; or (iii) 5% (or such greater fraction as established by the FHLB) of
its advances (I.E., borrowings) from the FHLB.

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CAPITAL REQUIREMENTS

REQUIREMENTS AND STANDARDS. The OTS capital regulations have three
components: a leverage limit, a tangible capital requirement, and a risk-based
capital requirement. See Note 15 to the Consolidated Financial Statements for
compliance with the regulatory capital requirements. The OTS has broad
discretion to impose capital requirements in excess of minimum applicable
ratios. See " -- Enforcement".

LEVERAGE LIMIT. The leverage limit requires that a savings association
maintain "core capital" of at least 3% of its adjusted total assets. For
purposes of this requirement, total assets are adjusted to exclude intangible
assets and investments in certain subsidiaries, and to include the assets of
certain other subsidiaries, certain intangibles arising from prior period
supervisory transactions, and permissible MSRs. "Core capital" includes common
shareholders' equity and retained earnings, noncumulative perpetual preferred
stock and related surplus and minority interests in consolidated subsidiaries,
minus intangibles, plus certain MSRs and certain goodwill arising from prior
regulatory accounting practices.

Although accounted for under Generally Accepted Accounting Principles
("GAAP") as an intangible asset, certain MSRs need not be deducted in
computing core and tangible capital. Generally, the lower of 90% of the fair
market value of readily marketable MSRs, or the current unamortized book value
as determined under GAAP may be included in core and tangible capital up to a
maximum of 50% of core capital computed before the deduction of any disallowed
qualifying intangible assets. At September 30, 1996, the Bank's core capital
included $121.3 million of MSRs.

In determining core capital, all investments in and loans to subsidiaries
engaged in activities not permissible for national banks, which are generally
more limited than activities permissible for savings associations and their
subsidiaries ("nonconforming subsidiaries"), must be deducted. Certain
exceptions are provided, including exceptions for mortgage banking subsidiaries
and subsidiaries engaged in agency activities for customers (unless determined
otherwise by the FDIC on safety and soundness grounds). Generally, all
subsidiaries engaged in activities permissible for national banks are required
to be consolidated for purposes of calculating capital compliance by the parent
savings association.

TANGIBLE CAPITAL REQUIREMENT. The tangible capital requirement mandates
that a savings association maintain tangible capital of at least 1.5% of
adjusted total assets. For purposes of this requirement, adjusted total assets
are calculated on the same basis as for the leverage limit. "Tangible capital"
is defined in the same manner as core capital, except that all intangible assets
except qualifying MSRs must be deducted. At September 30, 1996, the Bank's
tangible capital ratio was 6.57%.

RISK-BASED CAPITAL REQUIREMENT. The risk-based requirement promulgated by
the OTS is required by the HOLA to track the standard applicable to national
banks, except that the OTS may determine to reflect interest rate and other
risks not specifically included in the national bank standard. However, such
deviations from the national bank standard may not result in a materially lower
risk-based requirement for savings associations than for national banks. The
risk-based standard adopted by the OTS is similar to the Office of the
Comptroller of the Currency ("OCC") standard for national banks.

The risk-based standards of the OTS require maintenance of core capital
equal to at least 4% of risk-weighted assets and total capital equal to at least
8% of risk-weighted assets. "Total capital" includes core capital plus
supplementary capital (except that includable supplementary capital may not
exceed core capital). Supplementary capital includes: cumulative perpetual
preferred stock; mutual capital certificates, income capital certificates and
net worth certificates; nonwithdrawable accounts and pledged deposits to the
extent not included in core capital; perpetual and mandatory convertible
subordinated debt and maturing capital instruments meeting specified
requirements; and general loan and lease loss allowances, up to a maximum of
1.25% of risk-weighted assets. At September 30, 1996, the Bank's core capital
and total capital ratios were 6.64% and 13.09%, respectively.

In determining the amount of risk-weighted assets, all assets, including
certain off-balance-sheet assets, are multiplied by a risk factor ranging from
0% to 100%, as assigned by the OTS based on the risks it believes inherent in
the type of asset. Comparable weights are assigned to off-balance-sheet
activities.

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INTEREST RATE RISK ("IRR") COMPONENT. OTS regulations add an IRR
component to the 8% risk-based capital requirement discussed above. Only savings
associations with more than a "normal" level of IRR are subject to IRR
requirements. The IRR component is calculated as one-half of the difference
between the institution's measured IRR and 2%, multiplied by the market value of
the institution's assets.

On October 13, 1994, the OTS waived the IRR capital deduction until
guidelines under which institutions may appeal such a deduction were published.
The OTS extended the waiver on March 20, 1995 until further notice. On August
21, 1995, the OTS adopted and approved an appeal process, but again delayed the
IRR capital deduction indefinitely.

FAILURE TO MEET REQUIREMENTS. Any savings association that fails to meet
its regulatory capital requirements is subject to enforcement actions by the OTS
or the FDIC. The OTS must limit the asset growth of any undercapitalized
association and issue a capital directive against the association. See
" -- Enforcement -- Prompt Corrective Action".

CAPITAL DISTRIBUTIONS. Limitations are imposed upon all "capital
distributions" by savings associations, including cash dividends, payments by
an institution in a cash-out merger, and other distributions charged against
capital. The capital distribution regulation establishes a three-tiered system,
with the greatest flexibility afforded to well-capitalized institutions.

Under the capital distribution regulation, an association that immediately
prior to a proposed capital distribution, and on a pro forma basis after giving
effect to a proposed capital distribution, has capital that is equal to or
greater than the amount of its fully phased-in capital requirement is a "tier 1
association". To qualify, an association must maintain the following capital
ratios: (i) tangible capital to adjusted total assets ratio of 1.50%, (ii) core
capital to adjusted total assets ratio of 3.00%, and (iii) total risk-based
capital to risk-weighted assets ratio of 8.00%, of which at least 4.00% must be
core capital. An association that immediately prior to a proposed capital
distribution, and on a pro forma basis after giving effect to a proposed capital
distribution, has capital that is equal to or in excess of its minimum capital
requirements is a "tier 2 association". An association that immediately prior
to a proposed capital distribution, and on a pro forma basis after giving effect
to a proposed capital distribution, has capital that is less than its minimum
regulatory capital requirement is a "tier 3 association". The Bank currently
qualifies as a tier 1 association. See "Management's Discussion and
Analysis -- Capital Resources and Liquidity -- Regulatory Matters".

Upon 30 days' notice to the OTS, a tier 1 association may make capital
distributions during a calendar year up to the higher of 100% of its net income
to date during the calendar year, plus the amount that would reduce by one-half
its surplus capital ratio at the beginning of the calendar year or 75% of its
net income over the most recent four quarter period. A tier 1 association may
not make capital distributions in excess of the foregoing limitations except
upon notice to the OTS and an opportunity for the OTS to object to such capital
distribution. The OTS may prohibit an otherwise permissible capital distribution
upon a determination that making such a distribution would be an unsafe or
unsound practice. The OTS may notify an institution that qualifies as a tier 1
association that it is subject to more than normal supervision and thereafter,
treat it as a tier 2 or tier 3 association.

Under the prompt corrective action provisions discussed below, no insured
depository institution may make a capital distribution if after such
distribution it would be undercapitalized. See " -- Enforcement -- Prompt
Corrective Action". The OTS has proposed to amend its capital distribution
regulation to conform to the prompt corrective action system and to provide
additional flexibility. Under the proposal, savings associations that have a
composite CAMEL rating (examination rating) of "1" or "2" and that are not
holding company subsidiaries need not notify the OTS before making a capital
distribution. Savings associations that were adequately or well-capitalized
under prompt corrective action and that would remain at least adequately
capitalized after a capital distribution would be permitted to make a
distribution after providing notice to the OTS. "Troubled" and
undercapitalized institutions could make capital distributions only by filing an
application and receiving OTS approval, which would be granted only under
certain limited conditions. The proposal defines "troubled condition" as a
function of an institution's examination rating, its capital condition, or on
the basis of supervisory directives issued or designation made by the OTS.

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INVESTMENT AUTHORITY

PERMISSIBLE LOANS AND INVESTMENTS. Federally chartered savings banks, such
as the Bank, are authorized to originate, invest in, sell, purchase, service,
participate, and otherwise deal in: (i) loans made on the security of
residential and nonresidential real estate, (ii) commercial loans, and (iii)
consumer loans, including credit card loans. The lending authority of federally
chartered associations is subject to numerous OTS requirements, including, as
applicable, requirements governing amortization, term, loan-to-value ratio,
percentage-of-assets limits, and loans-to-one-borrower limits. In September of
1996, the OTS substantially revised its investment and lending regulations
eliminating many of their specific requirements in favor of a more general
standard of "safety and soundness".

A federally chartered savings association may invest, without limitation,
in the following assets: (i) obligations of the United States government or
certain agencies or instrumentalities thereof; (ii) stock issued or loans made
by the FHLBs or the FNMA; (iii) obligations issued or guaranteed by the FNMA,
the Student Loan Marketing Association, the GNMA, or any agency of the United
States government; (iv) certain mortgages, obligations, or other securities that
have been sold by the FHLMC; (v) stock issued by a national housing partnership
corporation; (vi) demand, time, or savings deposits, shares, or accounts of any
insured depository institution; (vii) certain "liquidity" investments approved
by the OTS to meet liquidity requirements; (viii) shares of registered
investment companies the portfolios of which are limited to investments that a
federal association is otherwise authorized to make; (ix) certain MBS; (x)
general obligations of any state of the United States or any political
subdivision or municipality thereof, PROVIDED that not more than 10% of a
savings association's capital may be invested in the general obligations of any
one issuer; (xi) loans on the security of liens upon residential real property;
(xii) credit card loans; and (xiii) education loans. Federally chartered savings
associations are authorized by the HOLA to make investments in business
development credit corporations, certain commercial paper and corporate debt
securities, service corporations, and small business investment companies, all
of which investments are subject to percentage-of-assets and various other
limitations.

LENDING LIMITS. Generally, savings associations, such as the Bank, are
subject to the same loans to one borrower limits that apply to national banks.
Generally, a savings association may lend to a single or related group of
borrowers, on an unsecured basis, in an amount not greater than 15% of its
unimpaired capital and unimpaired surplus. An additional amount, not greater
than 10% of the savings association's unimpaired capital and unimpaired surplus,
may be loaned if the loan is secured by readily marketable collateral, which is
defined to include certain securities and bullion, but generally does not
include real estate. Notwithstanding the general lending limits, a savings
association may make loans to one borrower of up to $500,000, or to develop
domestic residential housing units, up to the lesser of $30 million or 30% of
the savings association's unimpaired capital and unimpaired surplus, if certain
conditions are satisfied.

In addition to limits on loans to one borrower, the HOLA also limits a
federal savings association's aggregate nonresidential real property loans to
400% of the savings association's capital as determined pursuant to the OTS's
capital requirements. See "-- Capital Requirements". The OTS may allow a
savings association to exceed the aggregate limitation if the OTS determines
that exceeding the limitation would pose no significant risk to the safe and
sound operations of the association and would be consistent with prudent
operating practices.

SUBSIDIARIES -- SERVICE CORPORATIONS. The HOLA authorizes federally
chartered savings associations, such as the Bank, to invest in the capital
stock, obligations or other securities of service corporations. The HOLA
authorizes a savings association to invest up to a total of 3% of its assets in
service corporations. The last 1% of the 3% statutory investment limit
applicable to service corporations must be primarily invested in community
development investments drawn from a broad list of permissible investments that
include, among others: government guaranteed loans; loans for investment in
small businesses; investments in revitalization and rehabilitation projects; and
investments in low- and moderate-income housing developments.

Service corporations are authorized to engage in a variety of preapproved
activities, some of which (E.G.,securities brokerage and real estate
development) are ineligible activities for the parent savings association. The
OTS regulations implementing the service corporation authority contained in the
HOLA also provide that activities reasonably related to the activities of a
federally chartered savings association may be approved on a case-by-case basis
by the Director of the OTS.

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OPERATING SUBSIDIARIES. All federal savings associations are authorized to
establish or acquire one or more operating subsidiaries. Operating subsidiaries
are subject to examination and supervision by the OTS to the same extent as the
parent thrift. An "operating subsidiary" is a corporation that meets all of
the following requirements: (i) it engages only in activities that a federal
savings association is permitted to engage in directly; (ii) the parent savings
association owns, directly or indirectly, more than 50% of the subsidiary's
voting stock; and (iii) no person or entity other than the parent thrift may
exercise "effective operating control" over the subsidiary. While a savings
association's investment in its service corporations is generally limited to an
amount that does not exceed 3% of the parent savings association's total assets,
OTS regulations do not limit the amount that a parent savings association may
invest in its operating subsidiaries. Operating subsidiaries may be incorporated
and operated in any geographical location where its parent may operate. An
operating subsidiary that is a depository institution may accept deposits in any
location, provided that the subsidiary has federal deposit insurance.

FINANCE SUBSIDIARIES. In accordance with OTS regulations, federal savings
associations may establish one or more finance subsidiaries. The sole purpose of
a finance subsidiary is to issue securities that a federal savings association
may issue directly and to remit the net proceeds of the issuance to the parent
savings association.

In June 1996, the OTS proposed substantial revisions to its regulations
governing subsidiaries. If adopted as proposed, the revised regulations would,
among other things, expand the activities in which a service corporation may
engage, reclassify finance subsidiaries as operating subsidiaries, and permit
federal savings associations to invest in pass-through investments, including
limited partnerships and similar vehicles, whose activities are confined to
those the savings association could conduct directly.

QTL TEST. All savings associations are required to meet a qualified thrift
lender ("QTL") test for, among other things, future eligibility for FHLB
advances. An association must have invested at least 65% of its portfolio assets
in qualified thrift investments and must maintain this level of qualified thrift
investments on a monthly average basis in nine of every 12 months.

"Portfolio assets" is defined as total assets less intangibles,
properties used to conduct business and liquid assets (up to 20% of total
assets). The following assets may be included as qualified thrift investments
without limit: domestic residential housing or manufactured housing loans; home
equity loans and MBS backed by residential housing or manufactured housing
loans; FHLB stock as well as certain obligations of the FDIC and certain other
related entities. Other qualifying assets, which may be included up to an
aggregate of 20% of portfolio assets, are: (i) 50% of originated residential
mortgage loans sold within 90 days of origination; (ii) investments in debt or
equity of service corporations that derive 80% of their gross revenues from
housing-related activities; (iii) 200% of certain loans to, and investment in,
low cost one-to four-family housing; (iv) 200% of loans for residential real
property, churches, nursing homes, schools and small businesses in areas where
the credit needs of low- and moderate-income families are not met; (v) other
loans for churches, schools, nursing homes and hospitals; and (vi) personal,
family, household, or education loans (up to 10% of total portfolio assets).

Any savings association that fails to meet the QTL test must convert to a
national bank charter, unless it requalifies. A savings association may
requalify the next time it meets the requirement in nine of the preceding 12
months, but it may requalify only one time. If a savings association converts to
a bank charter, it must remain SAIF-insured until the expiration of the
moratorium (the moratorium, enacted in 1989, effectively prohibits most
conversions from the SAIF to the BIF insurance fund), which will not occur until
the date on which the SAIF fund meets its designated reserve ratio. As a result
of the one-time assessment in SAIF deposits, the SAIF is deemed to have met its
designated reserve ratio as of October 1, 1996. If an institution that fails the
QTL test has not yet requalified and has not converted to a national bank, its
new investments and activities are limited to those permissible for a national
bank, it is immediately ineligible to receive any new FHLB advances, is subject
to national bank limits for payment of dividends, and may not establish a branch
office at any location at which a national bank located in the savings
association's home state could not establish a branch.

The 1996 Act amended the QTL test to permit small business, credit card,
and student loans to be counted without limitation toward the 65% of assets
component of the QTL test. The terms "small business" and "credit card" will
be defined by the OTS. The Act also creates an alternative test by which a
thrift may demonstrate that

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it is a qualified thrift lender for branching. A thrift may now qualify by
meeting the Code test for being a domestic building and loan association, as
that term is defined in Section 7701(a)(19) of the Code.

LIQUIDITY. The Bank is required to maintain an average daily balance of
"liquid assets" (cash, certain time deposits, bankers' acceptances, highly
rated corporate debt securities and commercial paper, securities of certain
mutual funds, reserves maintained pursuant to Federal Reserve Board
requirements, and specified government, state or federal agency obligations)
equal to a certain percentage of net withdrawable deposit accounts and
borrowings payable in one year or less. The liquidity requirement may vary from
time to time (between 4% and 10%) depending upon economic conditions and savings
flows of all savings associations. Currently, OTS regulations require a savings
association, such as the Bank, to maintain liquid assets equal to not less than
5% of its net withdrawable deposit accounts and borrowings payable in one year
or less and short-term liquid assets of not less than 1%. Penalties may be
imposed for failure to meet the liquidity requirements.

MERGERS AND ACQUISITIONS

RESTRICTIONS ON ACQUISITIONS. As previously described, the Bank is
controlled by the Company. The Company must obtain approval from the OTS before
acquiring control of any other savings association. Such acquisitions are
generally prohibited if they result in a savings and loan holding company
controlling savings associations in more than one state. However, such
interstate acquisitions are permitted based on specific state authorization or
in supervisory acquisitions of failing savings associations. The Company may
acquire up to 5%, in the aggregate, of the voting stock of any non-subsidiary
savings association or savings and loan holding company without being deemed to
acquire control of the association or holding company. In addition, a savings
and loan holding company may hold shares of a savings association or a savings
and loan holding company for certain purposes, including as a bona fide
fiduciary, as an underwriter, or in an account solely for trading purposes.
Under certain conditions, a savings and loan holding company may acquire up to
15% of the shares of a savings association or savings and loan holding company
in a "qualified stock issuance".

The Change in Bank Control Act and the savings and loan holding company
provisions of the HOLA, together with the regulations of the OTS under such
Acts, require that the consent of the OTS be obtained prior to any person or
company acquiring control of a savings association or a savings and loan holding
company. Under OTS regulations, "control" is conclusively presumed to exist if
an individual or company acquires more than 25% of any class of voting stock of
a savings association or holding company. Control is rebuttably presumed to
exist if a person acquires more than 10% of any class of voting stock (or more
than 25% of any class of non-voting stock) and is subject to any of several
"control factors". The control factors relate, among other matters, to the
relative ownership position of a person, the percentage of debt and/or equity of
the association or holding company controlled by the person, agreements giving
the person influence over a material aspect of the operations of the association
or holding company, and the number of seats on the board of directors thereof
held by the person or his designees. The regulations provide a procedure for
challenge of the rebuttable control presumption. Certain restrictions applicable
to the operations of savings and loan holding companies and certain conditions
imposed by the OTS in connection with its approval of companies to become
savings and loan holding companies may deter companies from seeking to obtain
control of the Bank.

Insured depository institutions are authorized to merge or engage in
purchase and assumption transactions with other insured depository institutions
with the prior approval of the federal banking regulator of the resulting
entity.

BRANCHING. Subject to certain statutory restrictions in the HOLA and the
Federal Deposit Insurance Act (the "FDIA"), the Bank is authorized to branch
on a nationwide basis. Branching by savings associations is also subject to
other regulatory requirements, including compliance with the Community
Reinvestment Act (the "CRA") and its implementing regulations.

OFFICERS, DIRECTORS, AND CONTROLLING SHAREHOLDERS

INSIDER LOANS. Loans to an executive officer, director, or to any person
who directly or indirectly, or acting through or in concert with one or more
persons, owns, controls, or has the power to vote more than 10% of any class of
voting securities of such institution ("Principal Shareholder") and their
related interests (I.E., any company controlled by such executive officer,
director, or Principal Shareholder), or to any political or campaign

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committee, the funds or services of which will benefit such executive officer,
director or Principal Shareholder, or which is controlled by such executive
officer, director or Principal Shareholder, are subject to Sections 22(g) and
22(h) of the Federal Reserve Act (the "FRA") and the regulations promulgated
thereunder. Among other things, such loans must be made on terms substantially
the same as those prevailing on transactions made to unaffiliated individuals,
and certain extensions of credit to such persons must first be approved in
advance by a disinterested majority of a savings association's entire board of
directors. Section 22(h) of the FRA prohibits loans to any such individuals
where the aggregate amount exceeds an amount equal to 15% of an insured
institution's unimpaired capital and surplus, plus an additional 10% of
unimpaired capital and surplus (as defined) in the case of loans that are fully
secured by readily marketable collateral, or when the aggregate amount on all
such extensions of credit outstanding to all such persons would exceed the
Bank's unimpaired capital and unimpaired surplus. Section 22(g) identifies
limited circumstances in which the Bank is permitted to extend credit to
executive officers.

CHANGES IN DIRECTORS AND SENIOR EXECUTIVE OFFICERS. Section 32 of the
FDIA, as amended by the 1996 Act, requires a depository institution or holding
company thereof to give 30 days' prior written notice to its primary federal
regulator of any proposed appointment of a director or senior executive officer
if the institution is not in compliance with the minimum capital requirements or
otherwise is in a troubled condition. The regulator then has the opportunity to
disapprove any such appointment.

TRANSACTIONS WITH AFFILIATES

Pursuant to Section 11 of the HOLA, savings associations are subject to
restrictions regarding transactions with affiliates ("Covered Transactions")
substantially similar to those imposed upon member banks under Sections 23A and
23B of the FRA. Savings associations are also prohibited from extending credit
to any affiliate engaged in an activity not permissible for a bank holding
company.

The term "affiliate" includes any company that controls or is controlled
by a company that controls the Bank, or a bank or savings association subsidiary
of the Bank. The term "affiliate" also includes any company controlled by
controlling stockholders of the Bank or the Company and any company sponsored
and advised on a contractual basis by the Bank or any subsidiary or affiliate of
the Bank. The Company is an affiliate of the Bank.

Section 23A of the FRA limits Covered Transactions with any one affiliate
to 10% of an association's capital stock and surplus (as defined therein) and
limits aggregate affiliate transactions to 20% of the Bank's capital stock and
surplus. A Covered Transaction is defined generally as a loan to an affiliate,
the purchase of securities issued by an affiliate, the purchase of assets from
an affiliate, the acceptance of securities issued by an affiliate as collateral
for a loan, or the issuance of a guarantee, acceptance or letter of credit on
behalf of an affiliate. In addition, the Bank generally may not purchase
securities issued or underwritten by an affiliate. Sections 23A and 23B of the
FRA provide that a loan transaction with an affiliate generally must be
collateralized (but may not be collateralized by a low quality asset or
securities issued by an affiliate) and that all Covered Transactions, as well as
the sale of assets, the payment of money, or the provision of services by the
Bank to an affiliate, must be on terms and conditions that are substantially the
same, or at least as favorable to the Bank, as those prevailing for comparable
nonaffiliate transactions.

The OTS generally requires savings associations, such as the Bank, to
attribute to an affiliate the amounts of all transactions conducted with
subsidiaries of that affiliate and grants the Director of the OTS the authority
to deem certain non-bank or non-thrift subsidiaries of a savings association as
affiliates.

ENFORCEMENT

PROMPT CORRECTIVE ACTION. The OTS is required by statute to take certain
actions against savings associations that fail to meet certain capital-based
requirements. Each of the federal banking agencies, including the OTS, is
required to establish five levels of insured depository institutions based on
leverage limit and risk-based capital requirements established for institutions
subject to their jurisdiction plus, in each agency's discretion, individual
additional capital requirements for such institutions.

Under the final rules that have been adopted by each of the federal banking
agencies, an institution will be designated well-capitalized if the institution
has a total risk-based capital ratio of 10% or greater, a core risk-

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based capital ratio of 6% or greater, and a leverage ratio of 5% or greater, and
the institution is not subject to an order, written agreement, capital
directive, or prompt corrective action directive to meet and maintain a specific
capital level for any capital measure.

An institution will be designated adequately capitalized if the institution
has a total risk-based capital ratio of 8% or greater, a core risk-based capital
ratio of 4% or greater, and a leverage ratio of 4% or greater (or a leverage
ratio of 3% or greater if the institution is rated a composite 1 in its most
recent report of examination). An institution will be designated
undercapitalized if the institution has a total risk-based capital ratio of less
than 8%, a core risk-based capital ratio of less than 4%, or a leverage ratio of
less than 4% (or a leverage ratio of less than 3% if the institution is rated
composite 1 in its most recent report of examination). An institution will be
designated significantly undercapitalized if the institution has a total
risk-based capital ratio of less than 6%, a core risk-based capital ratio of
less than 3%, or a leverage ratio of less than 3%. An institution will be
designated critically undercapitalized if the institution has a ratio of
tangible equity to total assets equal to or less than 2%.

Undercapitalized institutions are required to submit capital restoration
plans to the appropriate federal banking agency and are subject to certain
operational restrictions. Moreover, companies controlling an undercapitalized
institution are required to guarantee the subsidiary institution's compliance
with the capital restoration plan subject to an aggregate limitation of the
lesser of 5% of the institution's assets, or the amount of the capital
deficiency when the institution first failed to meet the plan.

Significantly or critically undercapitalized institutions and
undercapitalized institutions that have not submitted or complied with
acceptable capital restoration plans are subject to regulatory sanctions. A
forced sale of shares or merger, restrictions on affiliate transactions, and
restrictions on rates paid on deposits are required to be imposed unless the
supervisory agency has determined that such restrictions would not further
capital improvement. The agency may impose other specified regulatory sanctions
at its option. Generally, the appropriate federal banking agency is required to
authorize the appointment of a conservator or receiver within 90 days after an
institution becomes critically undercapitalized.

The federal banking agencies have adopted uniform procedures for the
issuance of directives by the appropriate federal banking agency. Under these
procedures, an institution will generally be provided advance notice when the
appropriate federal banking agency proposes to impose one or more of the
sanctions set forth above. These procedures provide an opportunity for the
institution to respond to the proposed agency action or, where circumstances
warrant immediate agency action, an opportunity for administrative review of the
agency's action.

ADMINISTRATIVE ENFORCEMENT AUTHORITY. The OTS exercises extensive
enforcement authority over all savings associations and their
"institution-affiliated parties" (I.E., officers, directors, controlling
shareholders, employees, as well as attorneys, appraisers or accountants) who
knowingly or recklessly participate in a wrongful action likely to have adverse
effect on an insured institution. This enforcement authority includes, among
other things, the ability to assess civil money penalties, to issue
cease-and-desist or removal and prohibition orders, and to initiate injunctive
actions. In general, these enforcement actions may be initiated for violations
of laws and regulations and unsafe or unsound practices. The OTS may use written
agreements to correct compliance deficiencies with respect to applicable laws
and regulations and to ensure safe and sound practices. Except under certain
narrow circumstances, public disclosure of final enforcement actions by the
federal banking agencies, including the OTS, is required.

The OTS has the authority, when statutorily prescribed grounds exist, to
appoint a conservator or receiver for a savings association. Grounds for such
appointment include: insolvency; substantial dissipation of assets or earnings;
existence of an unsafe or unsound condition to transact business; likelihood
that the association will be unable to pay its obligations in the normal course
of business; undercapitalization where the association (i) has no reasonable
prospect of becoming adequately capitalized, (ii) fails to become adequately
capitalized when required to do so, (iii) fails timely to submit an acceptable
capital restoration plan, or (iv) materially fails to implement a capital
restoration plan; or where the association is "critically undercapitalized" or
"otherwise has substantially insufficient capital".

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CONSUMER PROTECTION REGULATIONS

The Bank is subject to many federal consumer protection statutes and
regulations including, but not limited to, the following:

MORTGAGE AND CONSUMER LENDING

THE TRUTH IN LENDING ACT ("TILA"). The TILA, enacted into law in 1968,
is designed to ensure that credit terms are disclosed in a meaningful way so
that consumers may compare credit terms more readily and knowledgeably. As a
result of the TILA, all creditors must use the same credit terminology and
expressions of rates, the annual percentage rate, the finance charge, the amount
financed, the total of payments, and the payment schedule.

The TILA is implemented by the Federal Reserve Board's Regulation Z.
Regulation Z contains disclosure and advertising rules, rules related to the
calculation of annual percentage rates, document retention rules, and error
resolution procedures. The appendices to the regulation set forth model forms
and clauses that creditors may use when providing open-end and closed-end
disclosures. The appendices also contain detailed rules for calculating the
annual percentage rate. Official staff interpretations of the regulation are
published in the Federal Reserve Board's Commentary. Good faith compliance with
the Commentary protects creditors from civil liability under the TILA.

Under certain circumstances involving extensions of credit secured by the
borrower's principal dwelling, the TILA and Regulation Z thereunder provide a
right of rescission. The period within which the consumer may exercise the right
to rescind runs for three business days from the last of three events: (i) the
occurrence that gives rise to the right of rescission; (ii) delivery of all
required material disclosures, I.E., the annual percentage rate, the finance
charge, the amount financed, the total of payments, and the payment schedule; or
(iii) delivery to the consumer of the required rescission notice. When a
creditor has failed to take the action necessary to start the three-day
rescission period running, the right to rescind automatically lapses on the
occurrence of the earliest of the following three events: (i) the expiration of
three years after the occurrence giving rise to the right of rescission; (ii)
transfer of all the consumer's interest in the property; or (iii) sale of the
consumer's interest in the property. After that time, depending on state law, a
consumer may assert a right of rescission as a defense in a foreclosure action
under certain circumstances. Under the TILA, the consumer cannot be required to
pay any amount in the form of money or property either to the creditor or to a
third party as a part of the transaction in which a consumer exercises the right
of rescission. Any amounts of this nature already paid by the consumer must be
refunded. "Any amount" includes finance charges already accrued, as well as
other charges such as application and commitment fees or fees for a title search
or appraisal. Once the creditor has fulfilled its rescission obligation under
the TILA, the consumer must tender to the creditor any property or money the
creditor has already delivered to the consumer.

The regulatory agencies are authorized to order creditors to make monetary
and other adjustments to the accounts of consumers in cases where an annual
percentage rate or finance charge is inaccurately disclosed. Generally, the
agencies order restitution when such disclosure errors resulted from a clear and
consistent pattern or practice of violation or gross negligence or a willful
violation that was intended to mislead the person to whom the credit was
extended. However, the agencies are not precluded from ordering restitution for
isolated disclosure errors. The TILA also provides for statutory damages of
twice the finance charge, with a minimum of $200 and a maximum of $2,000 for
closed end loans secured by real property or a dwelling. If successful, the
borrower is entitled to reasonable attorneys' fees and the costs of bringing the
action. The TILA also provides for class actions for actual damages and for
statutory damages of the lesser of $500,000 or 1% of the creditor's net worth,
plus court costs and attorneys' fees.

On September 30, 1995, President Clinton signed into law the Truth In
Lending Amendments of 1995 (the "1995 Amendments"). The 1995 Amendments
increase finance charge tolerances, limit the liability of assignees and loan
servicers, and provide protection from civil liability for claims based on
certain disclosure rules covered by the 1995 Amendments, including prohibiting
the maintenance of certain class action cases not certified as class actions
prior to January 1, 1995. The 1995 Amendments also clarify that third party fees
not required or

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retained by a lender, taxes levied on a security interest, and fees to prepare
all loan-related documents for real estate loans, as well as pest and flood
inspections, are excluded from the finance charge.

The Bank attempts in good faith to comply with the TILA and Regulation Z
thereunder. The requirements are complex, however, and even inadvertent
non-compliance could result in civil liability or the extension of the
rescission period for a mortgage loan for up to three years from the date the
loan was made. During the past several years, numerous individual claims and
purported consumer class action claims were commenced against a number of
financial institutions, their subsidiaries, and other mortgage lending
institutions, seeking civil statutory and actual damages and rescission under
the TILA, as well as remedies for alleged violations of various state unfair
trade practices acts and restitution or unjust enrichment in connection with
certain mortgage loan transactions.

THE FAIR HOUSING ACT ("FH ACT"). The FH Act, enacted into law in 1968,
regulates many practices, including making it unlawful for any lender to
discriminate in its housing-related lending activities against any person
because of race, color, religion, national origin, sex, handicap, or familial
status.

Section 805 of the FH Act, which applies to the financing of housing, makes
it unlawful for a bank to deny a loan or any other financial assistance for the
purpose of purchasing, constructing, improving, repairing, or maintaining a
dwelling because of the race, color, religion, national origin, sex, handicap,
or familial status of the loan applicant, any person associated with the loan
applicant, any present or prospective owner of the dwelling, any lessees, or any
tenants or occupants. It is also unlawful to discriminate in fixing the amount,
interest rates, duration, or other terms of the credit.

Section 813 of the FH Act provides that aggrieved persons may sue anyone
who they believe has discriminated against them. Section 814 of the FH Act
provides that the Attorney General of the United States may sue for an
injunction against any pattern or practice that denies civil rights granted by
the FH Act. Section 810 of the FH Act allows a person to file a discrimination
complaint with the Department of Housing and Urban Development ("HUD"). The
HUD will investigate the complaint and may attempt to resolve the grievance
through conciliation or persuasion. Penalties for violation of the FH Act
include actual damages suffered by the aggrieved person and injunctive or other
equitable relief. The court's order may also assess civil penalties.

THE EQUAL CREDIT OPPORTUNITY ACT ("ECOA"). The ECOA, enacted into law in
1974, prohibits discrimination in any credit transaction, whether for consumer
or business purposes, on the basis of race, color, religion, national origin,
sex, marital status, age (except in limited circumstances), receipt of income
from public assistance programs, or good faith exercise of any rights under the
Consumer Credit Protection Act. Regulation B, which implements the ECOA, covers
all individuals and institutions that regularly participate in decisions to
extend credit. In addition to prohibiting outright discrimination on any of the
impermissible bases listed above, an effects test has been applied to the
analysis of discrimination under Regulation B. This means that if a creditor's
actions have had the effect of discriminating, the creditor may be held
liable -- even when there is no intent to discriminate.

In addition to actual damages, the ECOA provides for punitive damages of up
to $10,000 in individual lawsuits and up to the lesser of $500,000 or 1% of the
creditor's net worth in class action suits. Successful complainants may also be
entitled to an award of court costs and attorneys' fees.

THE REAL ESTATE SETTLEMENT PROCEDURES ACT ("RESPA"). The RESPA, enacted
into law in 1974, requires lenders to provide borrowers with disclosures
regarding the nature and cost of real estate settlements. Also, the RESPA
prohibits certain abusive practices, such as kickbacks, and places limitations
on the amount of money that a lender may require a borrower to place in an
escrow account. Regulation X, which implements RESPA, also establishes escrow
accounting procedures and mandates the use of aggregate accounting for
determining the maximum dollar amount that may be collected in connection with
escrow accounts.

RESPA is applicable to all federally related mortgage loans. A "federally
related mortgage loan" includes any loan secured by a first or subordinate lien
on residential real property designed for occupancy by one to four families,
including a refinancing of an existing loan secured by the same property, if:
(i) the loan is made by any lender, the deposits of which are federally insured
or any lender that is regulated by a federal agency; or (ii) the

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loan is insured, guaranteed or supplemented by a federal agency; or (iii) the
loan is intended to be sold to the FNMA, the GNMA, or the FHLMC; or (iv) the
loan is made by any creditor who makes or invests in residential real estate
loans aggregating more than $1 million per year.

Section 8 of the RESPA prohibits any person from giving or receiving a fee
or a thing of value (payments, commissions, fees, gifts, or special privileges)
for a referral of settlement business. Such "kickbacks" include payments in
excess of the reasonable value of goods provided or services rendered.
Violations of Section 8 of the RESPA may result in imposition of the following
penalties: (i) civil liability equal to three times the amount of any charge
paid for the settlement services; (ii) the possibility that court costs and
attorneys' fees can be recovered; and (iii) a fine of not more than $10,000 or
imprisonment for not more than one year, or both.

The Bank attempts in good faith to comply with the requirements of the
RESPA and its implementing regulations. The requirements are complex, however,
and even inadvertent non-compliance could result in civil or criminal liability.
During the past several years, numerous individual claims and purported consumer
class action claims were commenced against a number of financial institutions,
their subsidiaries, and other mortgage lending institutions alleging violations
of the RESPA's escrow account rules and seeking civil damages, court costs, and
attorneys' fees.

THE HOME MORTGAGE DISCLOSURE ACT ("HMDA"). The HMDA, enacted into law in
1975, is intended to provide public information that can be used to help
determine whether financial institutions are serving the housing credit needs of
the neighborhoods and communities in which they are located and to assist in
identifying possible discriminatory lending patterns.

The HMDA requires institutions to report data regarding applications for
one-to four-family loans, home improvement loans, and multi-family loans, as
well as information concerning originations and purchases of such types of
loans. The HMDA also requires most lenders to report the race, sex, and income
of mortgage applicants and borrowers. Generally, insured institutions, like the
Bank, are also required to indicate the reasons for decisions not to grant
credit.

Compliance with the HMDA implementing regulations is enforced by the
appropriate federal banking agency, or, in some cases, by HUD. Administrative
sanctions, including civil money penalties, may be imposed by supervisory
agencies for violations.

THE COMMUNITY REINVESTMENT ACT. The CRA, enacted into law in 1977, is
intended to encourage insured depository institutions, while operating safely
and soundly, to help meet the credit needs of their communities. The CRA
specifically directs the federal regulatory agencies, in examining insured
depository institutions, to assess their record of helping to meet the credit
needs of their entire community, including low-and moderate-income
neighborhoods, consistent with safe and sound banking practices. The CRA further
requires the agencies to take a financial institution's record of meeting its
community credit needs into account when evaluating applications for, among
other things, domestic branches, consummating mergers or acquisitions, or
holding company formations. Under the CRA, which is implemented by uniform
regulations adopted by each of the bank regulatory agencies, including the OTS,
financial institutions are required to describe their local community by
outlining the community on a map. If the financial institution has more than one
local community, it must describe each one. A financial institution's local
community consists of the areas surrounding each deposit-taking office or
cluster of offices, including any low- or moderate-income neighborhoods within
that area.

The regulations require the banking agencies to assess each financial
institution's record of performance in helping to meet the credit needs of its
community by reviewing 12 assessment factors. These assessment factors include:
(i) activities conducted by a financial institution to ascertain the credit
needs of its community; (ii) the extent of marketing and special credit related
programs to make members of the community aware of credit services; (iii) the
extent of participation of the financial institution's board of directors in
formulating policy and reviewing performance; (iv) the presence or absence of
practices intended to discourage applications for types of credit set forth in
the institution's CRA statement; (v) the geographic distribution for the
financial institution's credit extensions, credit applications, and denials;
(vi) the presence or absence of evidence of prohibited discriminatory or other
illegal credit practices; (vii) the financial institution's record of opening
and closing offices and providing services at offices; (viii) the financial
institution's participation, including investments, in

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local community development projects; (ix) the financial institution's
origination or purchase of residential mortgage loans, housing rehabilitation
loans, home improvement loans, and small business and farm loans within its
community; (x) the financial institution's participation in governmentally
insured, guaranteed, or subsidized loan programs for housing and small farms and
businesses; (xi) the financial institution's ability to meet various community
credit needs based on its financial condition, size, and other factors; and
(xii) any other factors, that in the agencies' judgment, reasonably bear on the
extent to which a financial institution has helped to meet the credit needs of
its community.

The agencies use the CRA assessment factors in order to provide a rating to
the financial institution. The ratings range from a high of "outstanding" to a
low of "substantial noncompliance".

On April 19, 1995, the agencies jointly adopted revised CRA regulations.
Under the new system, the 12 assessment factors used to evaluate the CRA
performance of most large retail institutions, such as the Bank, will be
replaced with three tests, the lending, investment, and service tests, with the
lending test carrying the primary importance. To receive a satisfactory or
better rating, an institution must achieve at least a satisfactory lending
performance.

The lending test evaluates an institution's record of helping to meet the
credit needs of its assessment area(s) through its lending activities by
considering, among other things, the number, amount, geographic distribution,
and certain borrower characteristics of the institution's home mortgage, small
business, small farm, and community development lending. The investment test
evaluates an institution's record of helping to meet the credit needs of its
assessment area or areas through "qualified investments" (lawful investments,
deposits, membership shares, or grants that have community development as their
primary purpose). The service test evaluates an institution's record of helping
to meet the credit needs of its assessment area or areas by analyzing the
availability and effectiveness of an institution's systems for delivering retail
banking services and an institution's community development services. An
institution may elect to be evaluated on the basis of a strategic plan approved
by its primary regulator rather than the three tests.

Although the regulations became effective on July 1, 1995, the primary
provisions are subject to a two-year phase-in period. Most large retail
institutions will become subject to the new examination criteria beginning July
1, 1997, although institutions may elect to be examined with the new tests
beginning January 1, 1996. Finally, new data collection requirements that became
effective on January 1, 1996 are included in the new regulations.

While the Bank is strongly committed to serving all of its CRA communities,
including its low- and moderate-income neighborhoods, the OTS might determine
the Bank's CRA-related programs to be insufficient. The Bank was last examined
for CRA compliance by its primary regulator, the OTS, on October 14, 1995 and
received a CRA assessment rating of "outstanding". The Bank's previous CRA
assessment rating, as of March 8, 1993, was also "outstanding".

SAVINGS AND CHECKING ACCOUNTS AND PUBLIC ACCOMMODATIONS

THE BANK SECRECY ACT ("BSA") AND MONEY LAUNDERING LAWS. The BSA, enacted
into law in 1970, requires every financial institution within the United States
to file a Currency Transaction Report with the Internal Revenue Service
("IRS") for each transaction in currency of more than $10,000 not exempted by
the Treasury Department. The reports must be filed within 15 days of the
transaction. A "transaction in currency" is defined by the regulations to
include any transaction "involving the physical transfer of currency from one
person to another". The Treasury Department deems multiple transactions by the
same person on the same day exceeding $10,000 in the aggregate to be reportable.
Financial institutions are also required to file a Suspicious Activity Report
with respect to any known or suspected criminal conduct or suspicious
activities, including transactions valued at more than $5,000 that the
institution knows or suspects involve funds derived from illegal activities, are
designed to evade the requirements of the BSA, have no business or apparent
lawful purpose, or are not the sort in which the particular customer would
normally be expected to engage.

In 1988, Congress enacted the Money Laundering Prosecution Improvements Act
(the "1988 Act"). The 1988 Act expanded the BSA's definition of "financial
institution" and broadened the BSA's reporting requirements to require
financial institutions, typically banks, to verify and record the identity of
the purchaser

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upon the issuance or sale of bank checks or drafts, cashier's checks, traveler's
checks, or money orders involving $3,000 or more in cash. Institutions must also
verify and record the identity of the originator and beneficiary of certain
funds transfers.

Under the FDIA, a receiver or conservator may be appointed for an insured
depository institution on the receipt of written notice from the Attorney
General that an insured depository institution has been found guilty of a
criminal money laundering offense or criminal offense under the BSA. The FDIC
may also take action to terminate the deposit insurance of an institution
convicted of criminal violations of the BSA and money laundering offenses. Any
person who willfully causes a violation of the BSA's record-keeping requirements
for insured institutions is subject to the imposition of up to a $50,000 civil
money penalty, in addition to any other applicable penalties.

The Bank has instituted a policy against money laundering that is
communicated by top management to the Bank's employees. The policy includes
safeguards to prevent money laundering, including, but not limited to, regular
education programs to teach employees the requirements of the federal money
laundering laws and to make them aware of the innovative and ever-changing
techniques employed by money launderers.

ELECTRONIC FUND TRANSFER ACT (THE "EFTA"). The EFTA, enacted into law in
1978, provides a basic framework establishing the rights, liabilities, and
responsibilities of participants in "electronic fund transfer systems",
defined to include automated teller machine transfers, telephone bill-payment
services, point-of-sale terminal transfers, and preauthorized transfers from or
to a consumer's account (E.G., direct deposit of Social Security payments). Its
primary objective is to protect the rights of individuals using these systems.
The EFTA limits a consumer's liability for certain unauthorized electronic fund
transfers and requires certain error resolution procedures.

Unless an error is resolved in accordance with the error-resolution
procedures specified in the EFTA, the institution may be liable for civil
damages. The statutory damages the institution would have to pay in a successful
individual action are actual damages and statutory damages between $100 and
$1,000, as determined by the court, plus court costs and attorneys' fees. In a
successful class action, the institution would have to pay actual damages and
statutory damages up to the lesser of $500,000 or 1% of the institution's net
worth, plus court costs and reasonable attorneys' fees. The EFTA also sets forth
provisions for criminal liability for certain EFTA violations. Penalties under
these provisions run from a $5,000 fine and one year's imprisonment for
knowingly and willfully failing to comply with the EFTA, to a $10,000 fine and
10 years' imprisonment for fraudulent use of a debit card.

THE EXPEDITED FUNDS AVAILABILITY ACT ("EXPEDITED FUNDS ACT"). The
Expedited Funds Act, enacted into law in 1987, seeks to insure prompt
availability of funds deposited into a customer's account and to expedite the
return of checks. The Expedited Funds Act is implemented by the Federal Reserve
Board's Regulation CC. The Act and Regulation CC include specific detailed
provisions requiring a financial institution to: (i) make funds available to its
customers within specified time frames; (ii) ensure that interest accrues on
funds in interest-bearing transaction accounts not later than the day the
financial institution receives credit; and (iii) disclose the financial
institution's funds-availability policies to its customers.

In addition to administrative enforcement, there is civil liability for
violations of the Expedited Funds Act. Any depository institution that fails to
comply with any requirement of the Expedited Funds Act or regulation with
respect to any person other than another depository institution is liable to
such person in an amount equal to the sum of actual damages, such additional
amount as the court may allow (with a minimum of $100 and a maximum of $1,000 in
an individual action and, in a class action, a maximum of the lesser of $500,000
or 1% of the net worth of the depository institution), plus court costs and
attorneys' fees in the case of any successful action.

THE TRUTH IN SAVINGS ACT ("TISA"). The TISA, enacted into law in 1991,
is principally a disclosure law, the purpose of which is to encourage
comparative shopping for deposit products. The common denominator used by the
TISA to facilitate comparison shopping of interest payable on deposit accounts
is the Annual Percentage Yield (the "APY"). TISA is implemented by Regulation
DD. The TISA and Regulation DD thereunder require depository institutions to pay
interest on the full amount of the principal in the account for each day, under
either

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the "daily balance method" or the "average daily balance method". No other
balance calculation methods are permitted by the TISA.

In addition to administrative enforcement, TISA violations carry civil
liability. Any depository institution that fails to comply with any requirement
of the TISA with respect to any person who is an account holder is liable to
such person in an amount equal to the sum of actual damages, such additional
amount as the court may allow (with a minimum of $100 and a maximum of $1,000 in
an individual action and, in a class action, a maximum of the lesser of $500,000
or 1% of the net worth of the depository institution), plus court costs and
attorneys' fees in the case of any successful action.

The 1996 Act repeals the civil liability provisions of the TISA effective
September 30, 2001.

THE AMERICANS WITH DISABILITIES ACT ("ADA"). The ADA, enacted into law
in 1990, prohibits private employers, state and local governments, employment
agencies, and labor unions from discriminating against qualified individuals
with disabilities in connection with job application procedures, hiring, firing,
advancement, compensation, job training, and other terms, conditions, and
privileges of employment. An individual with a disability is a person who: (i)
has a physical or mental impairment that substantially limits one or more major
life activities; (ii) has a record of such an impairment; or (iii) is regarded
as having such an impairment.

Title 3 of the ADA covers banks, thrifts, credit unions, and finance
companies -- all of which are considered to be "public accommodations".
Section 302(a) of the ADA provides that "no individual shall be discriminated
against on the basis of disability in the full and equal enjoyment of the goods,
services, or facilities, privileges, advantages, or accommodations of any place
of public accommodation". Section 302(b) of the ADA sets forth specific
requirements and prohibitions for public accommodations; for example, a place of
public accommodation, such as a retail branch office of the Bank, may not impose
eligibility criteria that screen out persons with disabilities. Discrimination
also includes the failure to provide the auxiliary aids and services necessary
to enable individuals with disabilities to take advantage of a financial
institution's services, unless the financial institution can demonstrate that
providing the aids and services would "fundamentally" alter the nature of the
service or would result in an "undue burden". Another significant provision of
Section 302 of the ADA is the requirement to remove from public accommodations
all architectural barriers and communication barriers that are structural in
nature if the removal is "readily achievable". "Readily achievable" is
defined as "easily accomplishable and able to be carried out without much
difficulty or expense". In deciding whether a particular action is readily
achievable, the size of the institution and the nature and the cost of the
action will be considered. The last substantive provision of Title 3 of the ADA
that applies to financial institutions is Section 303, dealing with new
construction. It provides that any building opening to the public after January
26, 1993 must be "readily accessible to and useable by individuals with
disabilities" unless doing so is structurally impracticable.

Anyone who has been discriminated against on the basis of a disability in
relation to employment may file an action with the United States Equal
Employment Opportunity Commission and may be entitled to remedies that include
rehiring, promotion, reinstatement, back pay or remuneration, or reasonable
accommodation including reassignment. Such individuals may also be entitled to
damages intended to compensate for future pecuniary losses, mental anguish, and
inconvenience. The ADA authorizes the Attorney General to sue institutions that
are engaged in a pattern or practice of discrimination. At the Attorney
General's request, the court may impose civil penalties of $50,000 for a first
violation and $100,000 for any subsequent violation or certain other remedies.

The Bank attempts in good faith to assure compliance with the requirements
of the consumer protection statutes to which it is subject, as well as the
regulations that implement the statutory provisions. The requirements are
complex, however, and even inadvertent non-compliance could result in civil and,
in some cases, criminal liability. Based on the Bank's history of claims under
the consumer protection statutes and regulations to which it is subject,
management does not believe that claims are likely to be asserted that will have
a material adverse effect on the Bank's or the Company's financial condition,
results of operations, or liquidity.

LEGISLATION

Federal legislation and regulation have significantly affected the
operations of federally insured savings associations, such as the Bank, and
other federally regulated financial institutions in the past several years and

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have increased competition among savings associations, commercial banks, and
other financial institutions. The operations of regulated depository
institutions will continue to be subject to changes in applicable statutes and
regulations from time to time, which changes could adversely affect the Bank and
its affiliates.

On September 30, 1996, President Clinton signed into law the 1996 Act. The
1996 Act, among other things imposed a special assessment on SAIF deposits held
as of March 31, 1995, to capitalize the SAIF.

TAXATION

FEDERAL TAXATION

Bank United Corp. is a savings and loan holding company (the "Parent
Company") and the Bank is a federal savings bank. Both are subject to
provisions of the Code, in the same manner, with certain exceptions, as other
corporations. The Parent Company and the Bank participate in the filing of a
consolidated federal income tax return with their "affiliated group", as
defined by the Code. For financial reporting purposes, however, the Parent
Company and the Bank compute their tax on a separate company basis. The
accompanying Consolidated Financial Statements include provisions for income
taxes as a result of the Parent Company's and the Bank's taxable income for
fiscal 1996, 1995, and 1994. In addition to federal income taxes, the Bank is
required to make payments in lieu of federal income taxes pursuant to the
Assistance Agreement with the FSLIC. The tax benefit sharing provisions
contained in the Assistance Agreement were replaced by similar provisions
contained in the Tax Benefits Agreement entered into in connection with the
Settlement Agreement; these provisions, relating to the obligation to share tax
benefit utilization, will continue through the taxable year ending nearest to
September 30, 2003. See " -- FSLIC Assistance" and Note 14 to the Consolidated
Financial Statements.

ENACTED LEGISLATION

The Small Business Job Protection Act of '96 ("The Small Business Act")
was signed into law on August 20, 1996. The legislation requires recapture of a
thrift's post-1987 tax bad debt reserve over a six taxable year period with the
opportunity to defer recapture by up to two years if certain residential loan
requirements are met. Under the Small Business Act, thrift institutions, which
are treated as banks for computing bad debt, with over $500 million in assets
("Large Banks"), will be required to use the specific charge-off method to
account for bad debts. The Small Business Act also repeals the ability of thrift
institutions to use NOLs to offset income from a residual interest in a Real
Estate Mortgage Investment Conduit ("REMIC") that meets a significant value
test.

The effective date of the enacted legislation for the Bank is fiscal 1997.
The amendment to a thrift's ability to utilize NOLs against residual income from
a REMIC with significant value does not apply to any residual interest held by
the taxpayer on November 1, 1995 and at all times thereafter. All residual
interests held by the Bank that meet a significant value test are grandfathered
under this clause. See " -- Residual Interest".

It is management's belief the Bank will not have the opportunity to defer
recapture of the bad debt reserve because it has been determined the residential
loan requirements will not be met. There will be no financial statement impact
on the Company from this recapture as a deferred tax liability has already been
provided for on the Bank's post-1987 tax bad debt reserves. At September 30,
1996, the Bank had approximately $90 million of post-1987 tax bad debt reserves.
The current tax liability resulting from recapture of this reserve will be
reduced by NOLs available to offset this income.

The pre-1988 reserve will be required to be recaptured into income under
certain circumstances, including any distribution in redemption of stock of the
Bank (with certain exceptions for preferred stock); partial or complete
liquidation of the Bank following the merger or liquidation; or a dividend
distribution in excess of certain earnings and profits. If a thrift with a
pre-1988 reserve is merged, liquidated tax free, or acquired by another
depository institution, the remaining institution will inherit the thrift's
pre-1988 reserve and post-1951 earning and profits. Because management believes
the circumstances requiring recapture of the pre-1988 reserve in the amount of
$52 million are not likely to occur, deferred taxes of $18 million have not been
provided.

Legislation was signed into law on September 30, 1996, which resulted in an
assessment on all SAIF-insured deposits in such amounts that will
fully-capitalize the SAIF at a reserve ratio of 1.25% of SAIF-insured deposits.
See " -- Regulation -- Charter, Supervision, and Examination -- Insurance
Assessments" and Note 15 to the Consolidated Financial Statements. This
one-time assessment is not tax-deductible until fiscal 1997,

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when it will be paid. The deduction associated with the one-time assessment was
deferred with the tax effect included as a deferred tax asset.

RESIDUAL INTEREST

The Bank is a holder of residual interests in REMICs as defined by the
Code. The Code limits the amount of NOLs that may be used to offset the taxable
income derived by holders of residual interests in a REMIC. However, the Code
states that this limitation does not apply to certain financial institutions
that are holders of residual interests that meet a significant value test
prescribed by applicable Treasury regulations. The Bank incurs taxable income
from residual interests that meet such test and, therefore, may be offset by
NOLs without respect to this limitation. Also, the Bank incurs taxable income
from residual interests that does not meet such test and, therefore, may not be
offset by NOLs. This income caused the Bank to incur a regular tax liability for
fiscal 1994.

Enacted legislation repeals the ability of a thrift institution to use a
NOL to offset its income from a residual interest in a REMIC. This does not
apply to any residual interest in a REMIC held by a taxpayer on November 1,
1995, and at all times thereafter. See "-- Enacted Legislation".

DOMESTIC BUILDING AND LOAN ("DBL") TEST

Savings institutions such as the Bank that meet the definitional DBL test
prescribed by the Code may benefit from certain favorable provisions regarding
their deductions from taxable income for annual additions to their bad debt
reserve. The DBL test consists of a supervisory test, a business operations
test, and an asset test. If the Bank fails to meet these tests, the transition
from the reserve method to the direct charge-off method of tax accounting for
bad debts would result in a recapture of this reserve into taxable income. At
September 30, 1996, the Bank was in excess of the minimum thresholds. Enacted
legislation has repealed the reserve method of accounting for bad debts by large
thrifts for taxable years beginning after 1995; thereby eliminating the Bank's
requirement to meet the definitional DBL test. See "-- Enacted Legislation".

BAD DEBT DEDUCTION

For purposes of the bad debt reserve deduction, loans are separated into
"qualifying real property loans", which generally are loans secured by certain
interests in real property, and "non-qualifying loans", which are all other
loans. The deduction with respect to non-qualifying loans must be computed under
the experience method, which generally allows a deduction based on a savings
association's actual bad debt loss experience, consisting of the current year
and the prior five years. The bad debt reserve deduction with respect to
qualifying real property loans, however, may be the larger of the amounts
computed under (i) the experience method, or (ii) the percentage of taxable
income method. The percentage of taxable income method generally permits a
qualifying savings association to deduct 8% of its taxable income prior to such
deduction, as adjusted for certain items. Enacted legislation has repealed the
bad debt reserve deduction for Large Banks effective for taxable years beginning
after December 31, 1995.

Savings associations, such as the Bank, that file federal income tax
returns as part of a consolidated group are required by applicable Treasury
regulations to reduce their taxable income, for purposes of computing the
percentage of taxable income deduction, for losses attributable to activities of
the non-savings association members of the consolidated group that are
functionally related to the activities of the savings association member.
Currently, the Bank is computing its bad debt deduction pursuant to the
experience method. Due to enacted legislation, the Bank's post-1987 bad debt
reserve will be required to be recaptured into taxable income with the specific
charge-off method being used to account for bad debts for taxable years
beginning with fiscal 1997. See "-- Enacted Legislation".

ALTERNATIVE MINIMUM TAX ("AMT")

In addition to regular income taxes, corporations including saving and loan
holding companies and savings associations are subject to an AMT, which is
generally equal to 20% of alternative minimum taxable income ("AMTI") (taxable
income increased by tax preference items and adjusted for other items). The
preference item principally affecting the Bank relates to the adjusted current
earnings ("ACE") adjustment, which includes FRF assistance. See "-- The
Assistance Agreement". Although the amounts received by the Bank pursuant to
the Assistance Agreement are not taxable for federal income tax purposes, a
portion of such amounts are considered

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to be an ACE adjustment. For fiscal 1996 and 1995, AMTI was incurred that was
offset by the utilization of AMT NOLs. However, corporations may offset only 90%
of their AMTI with the related NOLs. For fiscal 1994, an AMT liability was not
incurred.

ENVIRONMENTAL TAX

The Code imposes an additional tax at the rate of .12% on the modified AMTI
of a corporation. Because the tax was enacted to provide funds for various
environmental programs, it is denominated as an environmental tax. Modified AMTI
is essentially AMTI without regard to any utilization of available AMT NOLs less
$2 million.

FSLIC ASSISTANCE

Pursuant to the Assistance Agreement, the FRF, as successor to the FSLIC,
was obligated to provide the Bank with financial assistance in connection with
various matters that arose under the Assistance Agreement. See "-- The
Assistance Agreement". The tax treatment of the assistance payments to savings
associations that acquire assets from institutions in receivership (such as the
predecessor to the Bank) has been amended several times in recent years.
Payments to the Bank pursuant to the Assistance Agreement were subject to the
applicable provisions of the Code that were in effect in 1988, the year of the
Acquisition. Payments from the FRF to the Bank pursuant to the Assistance
Agreement were not included in the Bank's taxable income, and the Bank was not
required to reduce its basis in the Covered Assets by the amount of such
financial assistance; however, certain writedowns and losses were limited as
discussed below. Accordingly, there was no requirement to pay federal income
taxes with respect to any amount of the assistance payments received pursuant to
the Assistance Agreement. The Bank also succeeded to substantial NOLs as a
result of the Acquisition.

The Assistance Agreement required the Bank to pay to the FRF an amount
equal to one-third of the sum of federal and state net tax benefits ("Net Tax
Benefits") (as defined by the Assistance Agreement). The Net Tax Benefits shall
be equal to the excess of any of the federal income tax liability which would
have been incurred if the tax benefit item had not been deducted or excluded
from income over the federal income tax liability actually incurred. The Net Tax
Benefits items are the tax savings resulting from (i) the utilization of the
deduction by the Bank of any amount of NOLs, capital loss carryforwards, and
certain other carryforwards on the books and records of Old USAT, (ii) the
exclusion from gross income of the amount of certain interest or assistance
payments made to the Bank by the FRF, and (iii) the deduction of certain costs,
expenses, or losses incurred by the Bank for which the FRF has made tax-free
assistance payments. These provisions were replaced by similar provisions in the
Tax Benefits Agreement entered into in connection with the termination of the
Assistance Agreement. Pursuant to the Tax Benefits Agreement, these provisions
relating to the obligation to share tax benefit utilization will continue
through the taxable year ending nearest to September 30, 2003.

Under the Assistance Agreement, the Bank received assistance payments from
the FRF for writedowns and losses from the sales of Covered Assets. For federal
income tax purposes, the Bank included the writedowns and losses from the sale
of Covered Assets in its calculation of the bad debt deduction, using the
experience method. However, the Revenue Reconciliation Act of 1993 denied the
inclusion of writedowns and losses from the sale of Covered Assets in the
calculation of bad debt deductions for assistance payments credited on or after
March 4, 1991. Amendment of federal tax returns for fiscal 1991 and 1992 did not
cause any additional federal tax liabilities to be incurred. However, the new
tax law reduced the Bank's federal NOLs by approximately $259 million.

The aforementioned tax relief provided savings (costs) on the amount of
taxes required to be paid. The estimated tax savings (costs), by year, were as
follows (in millions):

FOR THE YEAR ENDED
SEPTEMBER 30, SAVINGS (COSTS)
- ------------------------------------- ---------------
1991............................ $(1.7)
1992............................ (2.8)
1993............................ 10.5
1994............................ 3.6
1995............................ 31.4
1996............................ 19.8

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NET OPERATING LOSSES

The Company's total NOLs at September 30, 1996 were $817 million, of which
$754 million are attributable to tax relief discussed above. The remaining NOLs
of $63 million are a result of the Company's taxable losses from business
operations in years prior to fiscal 1993. Included in the $817 million is $33
million of Old USAT's NOLs that will expire in fiscal 2003 if not utilized.
Because Old USAT's NOLs are "separate return limitation year" losses within
the meaning of the consolidated return Treasury regulations, their utilization
is limited to future taxable income of the Bank. The remaining $784 million of
NOLs are attributable to operations for fiscal 1989 to 1994, and will begin
expiring in fiscal 2004 if not utilized. These NOLs may be utilized against the
taxable income of the other companies within the consolidated group of which the
Parent Company and the Bank are members. See Note 14 to the Consolidated
Financial Statements.

NET OPERATING LOSS LIMITATIONS

In the event of an Ownership Change, Section 382 of the Code imposes an
annual limitation on the amount of taxable income a corporation may offset with
NOLs and certain recognized built-in losses. The limitation imposed by Section
382 of the Code for any post-change year would be determined by multiplying the
value of the Company's stock (including both common stock and preferred stock)
at the time of the Ownership Change by the applicable long-term tax exempt rate
(which was 5.80% for September 1996). Any unused annual limitation may be
carried over to later years, and the limitation may under certain circumstances
be increased by the built-in gains in assets held by the Company at the time of
the change that are recognized in the five-year period after the change. Under
current conditions, if an Ownership Change were to occur, the Company's annual
NOL utilization would be limited to a maximum of approximately $32 million.

The Company would undergo an Ownership Change if, among other things, 5%
Stockholders, increase their aggregate percentage ownership of such stock by
more than 50 percentage points over the lowest percentage of such stock owned by
such stockholders at any time during the Testing Period (generally the preceding
three years). In applying Section 382 of the Code, at least a portion of the
stock sold pursuant to the Offering would be considered to be acquired by a new
5% Stockholder even if no person acquiring the stock in fact owns as much as 5%
of the issuer's stock. While the application of Section 382 of the Code is
highly complex and uncertain in some respects, the August Offering, sales
pursuant to the Offering, the conversion of the Warrant, and the issuance of
stock options during fiscal 1996 did not cause an Ownership Change. In addition,
events could occur in future periods that are beyond the control of the Company
which could result in an Ownership Change.

In an effort to protect against a future Ownership Change that is not
initiated by the Company, the Certificate and the By-Laws limit Transfers,
subject to certain exceptions, at any time during the three years following the
Offering of shares of common stock that would either cause a person or entity to
become a 5% Stockholder or increase a 5% Stockholder's percentage ownership
interest. While Transfers are deemed prohibited by the Certificate, the Company
is authorized not to recognize any transferee of such a Transfer as a
stockholder to the extent of such Transfer, these restrictions are incomplete
since the Company cannot, consistent with NASDAQ requirements, prevent the
settlement of transactions through NASDAQ, and because the prohibition on
Transfers by 5% Stockholders does not limit transactions in the securities of
such 5% Stockholders that could give rise to ownership shifts within the meaning
of the applicable Section 382 rules. Moreover, the Company's Board of Directors
retains the discretion to waive these limitations or to take certain other
actions that could trigger an Ownership Change, including through the issuance
of additional shares of common stock in subsequent public or private offerings
or through subsequent merger or acquisition transactions.

Because the Company has utilized a substantial portion of its available
ownership limitation in connection with the Offering, the Company may not be
able to engage in significant transactions that would create a further shift in
ownership within the meaning of Section 382 of the Code within the following
three-year period without triggering an Ownership Change. There can be no
assurance that future actions on the part of the Company's stockholders or the
Company itself will not result in the occurrence of an Ownership Change.

Preferred stock that meets the requirements of section 1504(a)(4) of the
Code is not considered stock when calculating an Ownership Change. Preferred
stock meets the definition under section 1504(a)(4) of the Code if such stock:
(i) is not entitled to vote; (ii) is limited and preferred as to dividends and
does not participate in corporate growth to any significant extent; (iii) has
redemption and liquidation rights which do not exceed the issue price of such
stock (except for a reasonable redemption or liquidation premium); and (iv) is
not convertible into another class of stock.

98
<PAGE>
In fiscal 1995, the Bank publicly issued 4,000,000 shares, $25 liquidation
preference per share, of 9.60% Preferred Stock, Series B (par value $0.01). In
fiscal 1993, the Bank publicly issued 3,420,000 shares, $25 liquidation
preference per share, of 10.12% noncumulative Preferred Stock, Series A (par
value $0.01). The Preferred Stock, Series A and Series B, are collectively
referred to as the "Bank Preferred Stock". Management believes that the Bank's
issuance of the Bank Preferred Stock met the requirements of Section 1504(a)(4)
of the Code and, therefore, did not result in an Ownership Change.

The tax laws in effect in 1988 that applied to the Acquisition provided
that generally applicable limitations on the ability of an acquiring corporation
to utilize the NOLs, and built-in losses, of acquired savings associations did
not apply in the case of the acquisition of assets from insolvent savings and
loan associations. Pursuant to this exception to the generally applicable law,
which existed in 1988, the Bank is allowed to use the NOLs and built-in losses
of Old USAT without limitation.

If an Ownership Change should occur, the Company's ability to utilize its
NOLs will be limited as described above, and the Company's ability to deduct its
built-in losses, if any, as they are realized will be subject to the same
limitation. Limitation of the utilization of these tax benefits could have a
material impact on the Company's financial condition.

CONSOLIDATED GROUP

The Company and the Bank were and are members of an "affiliated group" of
corporations, as defined in the Code and, accordingly, participate in the filing
of a consolidated tax return. One of the requirements of being a member of an
affiliated group is that 80% of the total voting power and 80% of the total
value of stock be owned, directly or indirectly, by other members of the
affiliated group. Stock for this purpose does not include preferred stock that
meets certain definitional requirements prescribed by the Code. Therefore, the
Bank did not cease to be a member of an affiliated group as a result of the
prior issuance of the Bank Preferred Stock. However, if subsequent events occur
that cause the Bank Preferred Stock to no longer meet these requirements (as
could occur if a default in dividends permitted the holders of such stock to
vote in the election of Bank directors), the Bank may cease to be a member of
the affiliated group. If the Bank ceases to be a member of the affiliated group,
other members of the affiliated group will lose their ability to utilize the
Bank's nonseparate return year limitation NOLs in the amount of $759 million.
See " -- Net Operating Losses".

TAX SHARING AGREEMENT

The Company and the Bank are parties to a tax sharing agreement pursuant to
which the Bank will pay to the Company amounts equal to the taxes that the Bank
would be required to pay if it were to file a return separately from the
affiliated group of which the Company is the common parent. The tax sharing
agreement will not increase the amounts payable by the Bank over the amounts
that it would have to pay if it were not a member of the Company's affiliated
group.

ACCOUNTING FOR INCOME TAXES

Effective October 1, 1992, the Company adopted SFAS No. 109, "Accounting
for Income Taxes", which changed the method of computing income taxes for
financial statement purposes by adopting the liability method under which the
net deferred tax asset or liability is determined based on the tax effects of
tax benefits attributable to tax carryforwards such as NOLs, investment tax
credits and capital losses, and the differences between the book and tax bases
of the various assets and liabilities. The deferred tax asset must be reduced by
a valuation allowance if, based on available evidence, it is more likely than
not that some portion of the tax benefit will not be realized. Accounting
guidance under Accounting Principles Board No. 11, "Accounting for Income
Taxes", did not require these amounts to be recognized previously.

In June 1996, the Certificate and By-Laws were restated with the intent to
preserve certain beneficial tax attributes limiting the disposition of certain
common stock and other interests in the Company by certain of its stockholders.
The preservation of certain tax attributes allowed the recognition of tax
benefits of $85.2 million by the Bank in June 1996 for the expected utilization
of $365 million of NOLs against future taxable income. These tax benefits were
not recognized in prior periods due to limitations on the utilization of NOLs if
an Ownership Change had occurred. In June 1996, the Company and the Bank entered
into a tax sharing agreement. This agreement resulted in the recognition of a
tax benefit of $16.5 million by the Company for the expected utilization of $47
million of the Company's NOLs by the Bank. The total tax benefit of $101.7
million was recognized as a reduction of income tax expense and an increase in
the net deferred tax asset, in accordance with SFAS No. 109.

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<PAGE>
In fiscal 1995, no tax benefits were recorded by the Company or the Bank.
The Company recognized no benefit for its stand alone NOLs as it did not
generate taxable income to offset such losses and it was not party to a federal
tax sharing agreement with the Bank at that time. The Bank recognized no tax
benefits due to limitations on the utilization of its NOLs if an Ownership
Change had occurred.

In fiscal 1994, no tax benefits were recorded by the Company due to
circumstances similar to those described in the preceding paragraph. The Bank
recognized a $58.2 million tax benefit in fiscal 1994 for the expected
utilization of $249 million of its NOLs against future taxable income.

STATE TAXATION

The Company and the Bank file unitary and combined state returns with
certain subsidiaries and also file separate state returns. The location of
mortgage bank branches, loan solicitations, or real property securing loans
creates jurisdiction for taxation in certain states, which results in the filing
of state income tax returns. Amounts for state tax liabilities are included in
the Statements of Operations for fiscal 1996, 1995, and 1994. See Note 14 to the
Consolidated Financial Statements.

PROPERTIES

Effective December 1996, the headquarters of the Company were relocated to
leased premises in Houston, Texas in conjunction with the formation of Holdings.

The leases for the Company's headquarters have terms expiring from one to
four years, with annual rental expenses of $4.4 million, subject to increases
under certain circumstances. The following table sets forth the number and
location of the community banking, commercial banking, and mortgage banking
offices of the Company as of September 30, 1996:
<TABLE>
<CAPTION>
NUMBER OF OFFICES
--------------------------------------------------------------
COMMUNITY
BANKING
BRANCHES COMMERCIAL
--------------- BANKING MORTGAGE BANKING
LOCATION OWNED LEASED OFFICES LEASED OFFICES LEASED TOTAL
- ------------------------------------- ----- ------ -------------- ---------------- -----
<S> <C> <C> <C> <C> <C>
Houston Area......................... 14 23 1 3 41
Dallas/Ft. Worth Area................ 12 17 1 2 32
Other Texas.......................... -- 4 -- 2 6
California........................... -- -- 1 14 15
Florida.............................. -- -- 1 4 5
Other U.S............................ -- -- 5 60 65
----- ------ -- --- -----
Total............................ 26 44 9 85 164
===== ====== == === =====
</TABLE>
A majority of leases outstanding at September 30, 1996 expire within five
years or less. See Note 17 to the Consolidated Financial Statements.

Net investment in premises and equipment totalled $40.2 million at
September 30, 1996.

LEGAL PROCEEDINGS

MAXXAM, INC.

On December 7, 1995, Maxxam filed a Petition for Review in the United
States Court of Appeals for the Fifth Circuit seeking to modify, terminate, and
set aside the order, dated December 30, 1988 (the "Order"), of the FSLIC
approving the Acquisition, which was consummated on December 31, 1988 and
involved substantially all the Bank's initial assets and liabilities. See
"Business -- Assistance Agreement". On December 8, 1995, Maxxam filed a Motion
to Intervene and a Complaint in Intervention in an action pending in the U.S.
District Court for the Southern District of Texas, entitled FEDERAL DEPOSIT
INSURANCE CORPORATION V. CHARLES E. HURWITZ, also seeking to set aside the
Order. Maxxam's Motion to Intervene was granted by the District Court Judge on
November 21, 1996. Maxxam contends, in both cases, that it submitted the most
favorable bid to acquire the assets and liabilities of Old USAT and that it
should have been selected as the winning bidder. In its brief to the Court of
Appeals, Maxxam has asserted that the Court should order the OTS "to award Bank
United to Maxxam" and that the Company would bear no harm in that event because
it is entitled to full indemnification by the FDIC-FRF, pursuant to Section
7(a)(2) of the Assistance Agreement.

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<PAGE>
The Company is not a party to either of these proceedings. The Bank
intervened in the Fifth Circuit case and may file a Motion to Intervene in the
District Court case at a later date. On December 10, 1996, the Fifth Circuit
Court, in a PER CURIAM opinion and order, affirmed the order approving the
Acquisition in all respects. The time for appeal to the Supreme Court of the
United States has not yet expired, and the Company does not know whether Maxxam
will appeal the Fifth Circuit decision. Management believes, after consultation
with legal counsel, that the claims of Maxxam are barred by applicable time
limits, have no basis for assertion under existing law, and will not have a
material adverse effect on the Bank's or the Company's financial condition,
results of operations, or liquidity.

REGULATORY ACTIONS

The Bank's operations are subject to various consumer protection statutes
and regulations, including, for example, the TILA, the FH Act, the CRA, the
ECOA, the HMDA, the RESPA, the EFTA, the Expedited Funds Act, the TISA, and the
ADA. See "Business -- Regulation -- Consumer Protection Regulations". During
the past several years, numerous individual claims and purported consumer class
action claims were commenced against a number of financial institutions, their
subsidiaries, and other mortgage lending institutions seeking civil statutory
and actual damages and rescission under the TILA, as well as remedies for
alleged violations of various state unfair trade practices laws and restitution
or unjust enrichment in connection with certain mortgage loan transactions.
Also, there have been numerous individual claims and purported consumer class
action claims commenced against a number of financial institutions, their
subsidiaries, and other mortgage lending institutions seeking declaratory relief
that certain of the lenders' escrow account servicing practices violate the
RESPA and breach the lenders' contracts with borrowers. Such claims also
generally seek actual damages and attorneys' fees.

In addition to the foregoing, mortgage lending institutions have been
subjected to an increasing number of other types of individual claims and
purported consumer class action claims that relate to various aspects of the
origination, pricing, closing, servicing, and collection of mortgage loans and
that allege inadequate disclosure, breach of contract, breach of fiduciary duty,
or violation of federal or state laws. Claims have involved, among other things,
interest rates and fees charged in connection with loans, interest rate
adjustments on adjustable-rate mortgage loans, timely release of liens upon loan
payoffs, the disclosure and imposition of various fees and charges, and the
placing of collateral protection insurance. The Bank has had asserted against it
one putative class action claim under the TILA, one putative class action claim
under the RESPA and three separate putative class action claims involving the
Bank's loan servicing practices. Management does not expect these claims, in the
aggregate, to have a material adverse impact on the Company's financial
condition, results of operation, or liquidity.

WINSTAR-BASED CLAIMS

On July 25, 1995, Plaintiffs filed suit against the United States of
America in the United States Court of Federal Claims for breach of contract and
taking of property without compensation in contravention of the Fifth Amendment
of the United States Constitution. The action arose because the passage of
FIRREA and the regulations adopted by the OTS pursuant to FIRREA deprived
Plaintiffs of their contractual rights.

In December 1988, the United States, through its agencies, entered into
certain agreements with the Plaintiffs that resulted in contractual obligations
owed to Plaintiffs. Plaintiffs contend that the obligations were undertaken to
induce, and did induce, the Company's acquisition of substantially all of the
assets and the secured, deposit, and certain tax liabilities of Old USAT, an
insolvent savings and loan association, thereby relieving the FSLIC, an agency
of the United States government, of the immense costs and burdens of taking over
and managing or liquidating the institution. The FSLIC actively solicited buyers
for Old USAT, and in the weeks preceding the Acquisition the Company and the
FSLIC negotiated the terms of a complex transaction involving some six
contractual documents. To accomplish this transaction, the FSLIC and its
regulating agency, the FHLBB, which was also an agency of the United States
government, were required to undertake to pay certain other amounts of money
over time and to count for regulatory purposes certain monies and book entries
of the Bank in ways that allowed the Company greater leverage to increase the
size of the Bank prudently and profitably. The United States obtained the right
to share in this leveraged growth through warrants for stock and through
so-called "tax benefit payments" to the United States from the Company and the
Bank.

101
<PAGE>
The lawsuit alleges breaches of the United States' contractual obligations
(i) to abide by a capital forbearance, which would have allowed the Bank to
operate for ten years under negotiated capital levels lower than the levels
required by the then existing regulations or successor regulations, (ii) to
abide by its commitment to allow the Bank to count $110 million of subordinated
debt as regulatory capital for all purposes and (iii) to abide by an accounting
forbearance, which would have allowed the Bank to count as capital for
regulatory purposes, and to amortize over a period of twenty-five years, the
$30.7 million difference between certain FSLIC payment obligations to the Bank
and the discounted present value of those future FSLIC payments. The lawsuit
seeks monetary relief for the breaches by the United States of its contractual
obligations to Plaintiffs and, in the alternative, seeks just compensation for a
taking of property and for a denial of due process under the Fifth Amendment to
the United States Constitution.

The lawsuit was stayed from the outset by a judge of the Court of Federal
Claims pending the Supreme Court's decision in the WINSTAR cases. Since the
Supreme Court ruling, the Chief Judge of the Court of Federal Claims convened a
number of status conferences to establish a case management protocol for the
more than 100 lawsuits on the Court of Federal Claims docket, that, like
Plaintiffs' case, involve issues similar to those raised in the WINSTAR cases.

Following a number of status conferences, Chief Judge Loren Smith of the
United States Court of Federal Claims transferred all WINSTAR-related cases to
his own docket and entered an Omnibus Case Management Order governing
proceedings in such cases, including the Company's case. Under the Omnibus Case
Management Order, Chief Judge Smith serves as the "Managing Judge" for all
WINSTAR-related cases and may assign other judges of the United States Court of
Federal Claims to resolve pre-trial discovery disputes and common legal issues
and to conduct trials. The Government and Plaintiffs exchanged certain
significant documents as early as October 2, 1996 pursuant to a court order, and
the Company and the Bank are in the process of responding to the Government's
first discovery request. Trials on damages in two of the three WINSTAR cases
that were decided by the United States Supreme Court in July 1996 are scheduled
for early 1997. Damages trials in the remaining cases subject to the Omnibus
Case Management Plan are scheduled to begin four months after completion of the
first two damages trials. The Company's case is one of thirteen cases that
"shall be accorded priority in the scheduling" of the damages trials under the
Omnibus Case Management Order.

In December, 1996, Chief Judge Smith decided the motion IN LIMINE on damage
theories of Glendale Federal, one of four WINSTAR Plaintiffs, and allowed
Glendale Federal to assert several other alternative damage theories against the
Government. While the Company expects Plaintiffs' claims for damages to exceed
$200 million, the Company is unable to predict the outcome of Plaintiffs' suit
against the United States and the amount of judgment for damages, if any, that
may be awarded. The Company, on November 27, 1996, moved for partial summary
judgement on liability and is pursuing an early trial on damages. Uncertainties
remain concerning the administration of the Omnibus Case Management Order and
the future course of the Company's lawsuit pursuant to the Omnibus Case
Management Order. Accordingly, the Company cannot predict the timing of any
resolution of its claims. The Company expects the trial of its case to commence
during the first quarter of fiscal 1998. The Company is also unable to predict
the outcome of its suit against the United States and the amount of judgment for
damages, if any, that may be awarded. Consequently, no assurances can be given
as to the results of this suit.

The Company and the Bank have entered into an agreement with Hyperion
Partners acknowledging the relative value, as among the parties, of their claims
in the pending litigation. The agreement confirms that the Company and the Bank
are entitled to receive 85% of the amount, if any, recovered as a result of any
settlement of or a judgment on such claims, and that Hyperion Partners is
entitled to receive 15% of such amount. The agreement was approved by the
disinterested directors of the Company. Plaintiffs will continue to cooperate in
good faith and will use their best efforts to maximize the total amount, if any,
that they may recover.

The Bank is involved in other legal proceedings occurring in the ordinary
course of business that management believes, after consultation with legal
counsel, are not, in the aggregate, material to the financial condition, results
of operations, or liquidity of the Bank or the Company.

102

<PAGE>
MANAGEMENT

DIRECTORS

The Board of Directors of the Company consists of 12 members and is divided
into three classes. The members of each class are elected for a term of three
years with one class being elected annually. Each director of the Company is
also a director of the Bank. The following table sets forth certain information
with respect to the directors of the Company, including information regarding
their ages and when they became directors.
<TABLE>
<CAPTION>
DIRECTOR OF DIRECTOR OF
THE COMPANY THE BANK TERM
NAME AGE SINCE SINCE EXPIRES
- ------------------------------------- --- ----------- ------------ --------
<S> <C> <C> <C> <C>
Lewis S. Ranieri..................... 50 1988 1988 1997
Salvatore A. Ranieri................. 48 1988 1988 1998
Barry C. Burkholder.................. 56 1996 1991 1997
Lawrence Chimerine................... 56 1996 1990 1997
David M. Golush...................... 52 1996 1988 1998
Paul M. Horvitz...................... 61 1996 1990 1999
Alan E. Master....................... 57 1996 1995 1997
Anthony J. Nocella................... 55 1996 1990 1998
Scott A. Shay........................ 39 1988 1988 1999
Patricia A. Sloan.................... 53 1996 1988 1999
Michael S. Stevens................... 46 1996 1996 1999
Kendrick R. Wilson III............... 50 1996 1988 1998
</TABLE>
The principal occupation and position with the Company and the Bank of each
director is set forth below.

LEWIS S. RANIERI. Mr. Ranieri is the Chairman of the Company. He was also
the President and CEO of the Company and Chairman of the Bank from 1988 until
July 15, 1996. Mr. Ranieri is the Chairman and CEO of Ranieri & Co., positions
he has held since founding Ranieri & Co. in 1988. Mr. Ranieri is a founder of
Hyperion Partners and of Hyperion Partners II. He is also Chairman of Hyperion
Capital Management, Inc., a registered investment advisor ("Hyperion Capital")
and The Hyperion Total Return Fund, Inc. He is director of the Hyperion 1999
Term Trust, Inc., the Hyperion 1997 Term Trust, Inc., the Hyperion 2002 Term
Trust, Inc. and Hyperion 2005 Investment Grade Opportunity Trust, Inc. Mr.
Ranieri is also Chairman and President of various other indirect subsidiaries of
Hyperion Partners and Hyperion Partners II. Along with his brother, Salvatore A.
Ranieri, and Scott A. Shay, Mr. Ranieri controls the general partner of Hyperion
Partners. Along with Mr. Shay, Mr. Ranieri controls the general partner of
Hyperion Partners II, a recently formed investment partnership which plans to
make investments primarily in the financial and real estate sectors of the
economy. He is also Chairman of the Board and a director of American Marine
Holdings, Inc. ("American Marine"). Mr. Ranieri is also a director of Delphi
Financial Group, Inc.

Mr. Ranieri is a former Vice Chairman of Salomon Brothers Inc ("Salomon")
where he was employed from 1968 to 1987, and was one of the principal developers
of the secondary mortgage market. While at Salomon, Mr. Ranieri helped to
develop the capital markets as a source of funds for housing and commercial real
estate and to establish Salomon's then leading position in the MBS area. He is a
member of the National Association of Home Builders Mortgage Roundtable.

Mr. Ranieri is a Trustee for the Parish of Our Lady of the Rosary/Shrine of
St. Elizabeth Ann Seton and the Environmental Defense Fund. Mr. Ranieri is also
a director of the Peninsula Hospital Center in Queens, New York. Mr. Ranieri
received his Bachelor of Arts degree from St. John's University.

SALVATORE A. RANIERI. Mr. Ranieri is the General Counsel and a Managing
Director of Ranieri & Co. He was also the Vice President, Secretary and General
Counsel of the Company from 1988 until July 15, 1996. He is a director of
Hyperion Capital, as well as of various other direct and indirect subsidiaries
of Hyperion Partners. Along with his brother, Lewis S. Ranieri, and Scott A.
Shay, Mr. Ranieri controls the general partner of Hyperion Partners. He is also
a director of American Marine. Mr. Ranieri was one of the original founders of
Ranieri & Co. and of Hyperion Partners. Prior to joining Ranieri & Co., he had
been President of Livia

103
<PAGE>
Enterprises, Inc., a private venture capital and real estate investment company
that oversaw investments in the real estate, construction, and manufacturing
sectors. In addition to his business experience, Mr. Ranieri is also a lawyer.
During his career, his practice has included the areas of corporate, litigation,
real estate and regulatory matters. Until 1984, he had been a member of a law
firm in New York City. He is admitted to practice law in New York and various
federal courts. He received his Bachelor of Arts degree from New York University
and his Juris Doctor degree from Columbia University School of Law.

BARRY C. BURKHOLDER. Mr. Burkholder has been the President and CEO of the
Company since July 15, 1996, and has held similar positions with the Bank since
joining it on April 10, 1991. Since July 15, 1996, Mr. Burkholder has also been
Chairman of the Bank. In May 1994, Mr. Burkholder assumed the additional
responsibilities of managing the Bank's retail banking operations. Prior to
joining the Bank, Mr. Burkholder was employed at Citicorp/Citibank for 15 years.
Mr. Burkholder became associated with Citicorp through its then newly formed
Consumer Services Group in 1976, and then became a member of its International
Staff. Mr. Burkholder moved to Citibank Savings in London where he was named
Chairman and Managing Director in 1977. Mr. Burkholder returned to the United
States in 1981 to become President of Citicorp Person-to-Person, now part of
Citicorp Mortgage, Inc., a nationwide mortgage lending business with related
mortgage banking, servicing, and insurance activities. In 1984, he was named
Chairman and CEO of Citibank Illinois, and two years later became Central
Division Executive for the U.S. Consumer Bank. As Central Division Executive,
Mr. Burkholder was responsible for Citicorp's consumer banking activities in the
Midwest and Southeast. Mr. Burkholder began his career at Ford Motor Company in
the financial planning area and moved to Certain-teed Corporation where his last
position prior to joining Citicorp was as President of its real estate
development subsidiary. Mr. Burkholder received a B.S. and an M.B.A. from Drexel
University. Mr. Burkholder is a Member of the Thrift Institutions Advisory
Council of the Federal Reserve System. He is President of the Houston Symphony
and serves on the Board of Trustees of the Texas Gulf Coast United Way.

LAWRENCE CHIMERINE, PH.D. Dr. Chimerine has served as President of his own
economic consulting firm, Radnor Consulting Services, since 1990. He is
currently also the Managing Director and Chief Economist of the Economic
Strategy Institute in Washington, D.C. Dr. Chimerine served as Chairman and
Chief Executive Officer of the WEFA Group from 1987 to 1990 and of Chase
Econometrics from 1979 to 1987, both of which provide economic consulting. He
was manager of economic research for the IBM Corporation from 1965 to 1979. Dr.
Chimerine received a B.S. from Brooklyn College and a Ph.D. from Brown
University.

DAVID M. GOLUSH. Mr. Golush is a Managing Director of Ranieri & Co. with
which he has been associated since the firm's founding in 1988. He is a director
of Transworld Home Healthcare, Inc., as well as an officer of direct and
indirect subsidiaries of Hyperion Partners and Hyperion Partners II, and has an
economic interest in Hyperion Partners and Hyperion Partners II. Mr. Golush was
at Salomon from 1972 to 1987 and was a Vice President from 1975. From 1984 to
1987, he was Chief Administrative Officer of Salomon's Mortgage and Real Estate
Department. From 1966 to 1972, he held positions in public accounting and
private industry. He has been a certified public accountant in New York since
1972. Mr. Golush received a B.B.A. from the University of Cincinnati. He is
Treasurer of the New York Police & Fire Widows' and Children's Fund, Inc. and a
member of the board of the Jewish Federation of Central New Jersey.

PAUL M. HORVITZ, PH.D. Dr. Horvitz has been on the faculty of the
University of Houston since 1977, and holds the University's Judge James Elkins
Chair of Banking and Finance. From 1967 to 1977, Dr. Horvitz held positions as
Assistant Director of Research, Director of Research and Deputy to the Chairman
at the FDIC. Prior to joining the FDIC he was an economist at the Federal
Reserve Bank of Boston and the Office of Comptroller of the Currency. From 1983
to 1990, Dr. Horvitz was a member of the Board of Directors of the FHLB Dallas,
and in 1986 and 1987 he was a member of the Federal Savings and Loan Advisory
Council. He is currently a director of the Pulse EFT Association, and a member
of the Shadow Financial Regulatory Committee. Dr. Horvitz received a B.A. from
the University of Chicago, an M.B.A. from Boston University, and a Ph.D. from
MIT.

ALAN E. MASTER. Mr. Master began his career with Chemical Bank in 1961 as
a commercial lending officer, became a Branch Office Head, and worked on
start-ups or clean-ups of banks in Miami, Florida. In 1973, he joined Barnett
Banks of Florida ("Barnett") and led a unit of Barnett formed from the
reorganization and

104
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merger of five subsidiaries of Barnett. In 1977, he became President, CEO, and
Chief Financial Officer, and in 1978 was elected Vice Chairman of United
Americas Bank of New York. Mr. Master joined The Merchants Bank of New York in
1979 as Executive Vice President and was elected a director in 1980. In 1983,
Mr. Master joined Ensign Bank FSB in New York City as President and CEO. In
1991, Mr. Master established a consulting practice specializing in the financial
services and banking sectors. Mr. Master has served on the Board of Trustees of
the Hyperion Government Mortgage Trust II, has participated in meetings of the
Advisory Board of Hyperion Partners and Hyperion Partners II, is a member of the
Advisory Board of the Johnson Graduate School of Management of Cornell
University and joined PaineWebber Incorporated in April 1996. Mr. Master
received a B.A. from Cornell University and has completed course work in finance
and accounting at the New York University Graduate School of Business
Administration.

ANTHONY J. NOCELLA. Mr. Nocella has been the Executive Vice President and
Chief Financial Officer of the Company since June 27, 1996, and has held those
same positions with the Bank since joining it in July 1990. He manages the
Financial Markets and Commercial Banking Groups of the Bank. From 1988 to 1990,
Mr. Nocella provided consulting services to the Bank as President of Nocella
Management Company, a firm that specialized in asset and liability management
consulting for financial institutions. From 1981 to 1987, Mr. Nocella served as
Executive Vice President and Chief Financial Officer of Meritor Financial Group,
as well as President of the Company's commercial banking/financial markets arm,
Meritor Financial Markets ("Meritor"). During his 13 years at Meritor
(1974-1987), he also served as President of PSFS Management Company, Inc., the
holding company of The Philadelphia Saving Fund Society, the nation's largest
savings institution at the time. Mr. Nocella's other positions have included
Controller and Director of Financial Services for American Medicorp (now
Humana), Managing Auditor and Consultant for Peat Marwick and adjunct professor
of finance at St. Joseph's University and Drexel University. Mr. Nocella, a
Certified Public Accountant, received an undergraduate degree in accounting from
LaSalle University, and an M.B.A. in computer science and finance from Temple
University. He also completed the graduate Bank Financial Management Program of
the Wharton School at the University of Pennsylvania. Mr. Nocella is the
President and a director of the Community Bankers Association of Southeast
Texas, a delegate and member of the Mortgage Finance and Accounting Committees
of the America's Community Bankers, a director of the Texas Community Bankers
Association, and delegate and past President of the Financial Executives
Institute.

SCOTT A. SHAY. Mr. Shay has been a Managing Director of Ranieri & Co.
since its formation in 1988. He was also a Vice President of the Company from
1988 until July 15, 1996. Mr. Shay is a founder of Hyperion Partners and
Hyperion Partners II. Mr. Shay is currently a director of Hyperion Capital and
Transworld Home Healthcare, Inc., as well as an officer or director of other
direct and indirect subsidiaries of Hyperion Partners and Hyperion Partners II.
Along with Lewis S. Ranieri and Salvatore A. Ranieri, Mr. Shay controls the
general partner of Hyperion Partners. Along with Mr. Lewis S. Ranieri, Mr. Shay
controls the general partner of Hyperion Partners II. Prior to joining Ranieri &
Co., Mr. Shay was a director of Salomon where he was employed from 1980 to 1988.
Mr. Shay was involved with Salomon's thrift mergers and acquisitions practice
and with mortgage banking financing and mergers and acquisitions. Mr. Shay also
worked on acquisitions of real estate investment trusts while at Salomon. Mr.
Shay graduated Phi Beta Kappa from Northwestern University with a B.A. degree in
economics and received a Master of Management degree with distinction from
Northwestern's Kellogg Graduate School of Management. Mr. Shay currently serves
as a member of the board and was President of Hillel of New York from 1990 until
June 30, 1992. He is also on the board of UJA-Federation of New York.

PATRICIA A. SLOAN. Ms. Sloan is a Managing Director of Ranieri & Co. and
has an economic interest in Hyperion Partners and Hyperion Partners II. She is
also a director of certain funds managed by Hyperion Capital Management,
including Hyperion 1999 Term Trust, Inc., Hyperion 1997 Term Trust, Inc.,
Hyperion 2002 Term Trust, Inc., Hyperion Investment Grade Opportunity Term
Trust, Inc., and the Hyperion Total Return Fund, Inc. Prior to joining Ranieri &
Co. in 1988, Ms. Sloan was employed at Salomon from 1972 to 1988, where she
served as Director of the Company's Financial Institutions Group. Prior to
joining Salomon, Ms. Sloan was employed at Bache & Co., Inc. from 1965 to 1972.
Ms. Sloan received a B.A. from Radcliffe College and an M.B.A. from Northwestern
University.

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<PAGE>
MICHAEL S. STEVENS. Mr. Stevens has been a Director of the Company since
August 1996, and a Director of the Bank since October 1996. Mr. Stevens is
Chairman of Michael Stevens Interests, Inc. In 1981, Mr. Stevens founded the
companies that now constitute this real estate investment and management
company. Since its inception, the firm has developed, acquired, or managed over
70 real estate projects valued at over $300 million and representing over 8.5
million square feet of building area and apartment units. From 1974 to 1981, Mr.
Stevens was an executive, board member, and significant shareholder of Insyte
Corporation, a diversified public holding company with extensive real estate
interests, and from 1973 to 1974, he was an Associate of John McClelland and
Associates, a financial consulting firm. Mr. Stevens currently serves as
Houston's first Assistant to the Mayor on Housing and Inner-City Revitalization,
as well as the President of the Housing Finance Corporation for the City. He
plays a major role in leading Houston's affordable housing program, HOMES FOR
HOUSTON. Mr. Stevens serves as Chair of the Houston International Sports
Committee, a non-profit organization working to bring the Olympic Games to
Houston, and he is a deacon at Second Baptist Church. He graduated from the
University of Houston in 1973 with a Bachelors of Business Administration.

KENDRICK R. WILSON III. Mr. Wilson currently is a Managing Director and
head of investment banking of Lazard Freres & Co. LLC ("Lazard Freres"), a New
York-based investment banking firm. Prior to his joining Lazard Freres in 1990,
Mr. Wilson served as President of Ranieri & Co. from March 1988 to December
1989, and Senior Executive Vice President for E.F. Hutton from April 1987 to
February 1988. Mr. Wilson was also employed at Salomon from June 1978 to April
1987 where he became a Managing Director. Mr. Wilson has an economic interest in
Hyperion Partners. He is a director of ITT Corporation, Black Rock Asset
Investors, American Marine Holdings, American Buildings Company, Inc., and
Meigher Communications, Inc. Mr. Wilson received a B.A. from Dartmouth College
and an M.B.A. from Harvard Business School.

Mr. Lewis Ranieri and Mr. Salvatore Ranieri are brothers. No other director
or executive officer is related to any other director or executive officer by
blood, marriage, or adoption. There are no existing arrangements or
understandings between a director and any other person pursuant to which such
person was elected a director.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company Board has established two committees: an Audit Committee and a
Compensation Committee.

The Audit Committee meets with management to consider the adequacy of the
internal controls and the objectivity of financial reporting. The Audit
Committee also meets with the independent auditors and with appropriate
financial personnel and internal auditors of the Company regarding these
matters. The Audit Committee recommends to the Board of Directors of the Company
the appointment of the independent auditors, subject to ratification by the
stockholders at the annual meeting. Both the internal auditors and the
independent auditors periodically meet alone with the Audit Committee and have
unrestricted access to the Audit Committee. The Audit Committee consists of
directors who are not employees of the Company: Dr. Chimerine, Dr. Horvitz and
Mr. Master, with Dr. Horvitz serving as Chair.

The Compensation Committee's functions include administering management
incentive compensation plans, including the 1996 Incentive Compensation Plan (as
defined herein), and making recommendations to the Board of Directors of the
Company with respect to the compensation of directors and officers of the
Company. The Compensation Committee also supervises the Company's employee
benefit plans. The Compensation Committee consists of all directors except Mr.
Burkholder and Mr. Nocella.

To the extent that any permitted action taken by the Board of Directors of
the Company conflicts with action taken by the Compensation Committee, the Board
of Directors of the Company action shall control. Mr. Burkholder and Mr. Nocella
have excused themselves from Board of Directors of the Company deliberations
regarding their compensation and it is anticipated that this practice will
continue.

COMPENSATION OF DIRECTORS

Each director, except Mr. Burkholder and Mr. Nocella, who are employees of
the Bank, receives a single annual retainer ("Annual Retainer") of $25,000 for
service on the boards of directors of Company and the Bank. All non-employee
directors also receive a fee of $1,000 for each in person meeting of the Board
of Directors of the Company that they attend and a fee of $500 for each
telephonic meeting of the Company Board and each

106
<PAGE>
meeting of any Committee of the Board of Directors of the Company that they
attend. The chair of the Audit Committee receives an additional annual retainer
of $2,000. Directors who are employees of the Company or any subsidiary do not
receive additional compensation for service as directors, including
participation in the Director Stock Plan. See also "The Director Stock
Compensation Plan" and "Certain Relationships and Related Transactions".

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

The following table sets forth information concerning principal executive
officers of the Company and principal executive officers of the Bank who do not
serve on the Board of Directors of the Company. All executive officers of the
Company and the Bank are elected by the Board of Directors of the Company and
the Board of Directors of the Bank, respectively, and serve until their
successors are elected and qualified. There are no arrangements or
understandings between any director and any other person pursuant to which such
individual was elected an executive officer.

PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
<TABLE>
<CAPTION>
NAME AGE POSITION AND OCCUPATION
- ------------------------------------- ---- ----------------------------------------------------
<S> <C> <C>
Jonathon K. Heffron.................. 44 Executive Vice President and General Counsel of the
Company since July 15, 1996 and of the Bank since
May 1990. Chief Operating Officer of the Company
since July 15, 1996 and of the Bank since May 1994.
Prior to joining the Bank, Mr. Heffron served for
two years as President and CEO of First Northern
Bank, Keene, New Hampshire. Prior to joining First
Northern Bank, Mr. Heffron served for more than 10
years in several capacities at the FHLB Board,
Washington, D.C. and at the FHLB Dallas, including
as Attorney Advisor, Trial Attorney, General
Counsel, Chief Administrative Officer, and Chief
Operating Officer. Mr. Heffron received a B.A. Magna
Cum Laude from the University of Minnesota, a J.D.
from Southwestern University School of Law, and an
LL.M. from the National Law Center of George
Washington University. Mr. Heffron serves on the
Boards of Directors of the Credit Coalition of
Greater Houston and the Texas Conference for
Homeowners' Rights and he is a member of the
Government Affairs Steering Committee and the FHLB
System Committee of America's Community Bankers.

George R. Bender..................... 57 Executive Vice President -- Mortgage Banking of the
Company since July 15, 1996 and of the Bank since
July 1990. Prior to joining the Bank, Mr. Bender was
employed by CenTrust Mortgage Corporation as
President and CEO from June 1985 to February 1990.
As President and CEO, Mr. Bender was responsible for
the overall management of this mortgage banking
subsidiary of CenTrust Savings. Mr. Bender's career
also includes positions as Chairman and CEO of
WestAmerica Mortgage Company in Denver, President
and CEO of Unity Mortgage Corporation in Chicago;
Senior Vice President of United First Mortgage
Corporation of San Diego; and Senior Vice President
of Production and Marketing at Advance Mortgage
Corporation. Mr. Bender attended the University of
Michigan in Ann Arbor.

107
<PAGE>
Ronald D. Coben...................... 39 Executive Vice President -- Community Banking of the
Company since July 15, 1996 and of the Bank since
July 1996. Previously, Mr. Coben served as Regional
Retail Director and Marketing Director since joining
the Bank in October 1989. Prior to joining the Bank,
Mr. Coben was employed by Texas Commerce Bancshares
(Chemical Bank) since 1986 as Vice President and
Manager of the Relationship Banking Division of the
Retail Bank. Prior to joining Texas Commence Banc-
shares, Mr. Coben served as the Director of Market
Research for ComputerCraft, Inc. and Foley's De-
partment Stores. Mr. Coben received a B.A. degree
from the University of Texas at Austin. He has
provided marketing skills to various organizations
including the Houston Symphony and the Houston
Holocaust Museum. Mr. Coben also received the MS
Leadership Award in 1996 and a Gold Effie for the
nation's most effective financial advertising
campaign of 1989.

Leslie H. Green...................... 59 Senior Vice President -- Operations and Technology
of the Company since July 15, 1996 and of the Bank
since June 1991. Prior to joining the Bank, Mr.
Green was employed by Equimark since 1988 as
Executive Vice President -- Systems and Operations.
Prior to joining Equimark, Mr. Green
served in several capacities at Keystone Computer
Associates, Fidelity Bank, National Information
Systems and RCA Computer Systems. Mr. Green received
a degree in Business Management from Rutgers
University.

Karen J. Hartnett.................... 48 Senior Vice President -- Human Resources of the
Company since July 15, 1996 and of the Bank since
January 1991. Prior to joining the Bank, Ms.
Hartnett was employed by Equimark as Senior Vice
President Human Resources since 1989. From 1988 to
1989, Ms. Hartnett was Senior Vice President and
Chief Personnel Officer for NCNB Texas, and she
served predecessor organizations as Vice President
and as Director of Human Resources from 1983. Ms.
Hartnett's human resources experiences include
positions at Zale Corporation, Mobil Oil Corporation
and Sweet Briar College. Ms. Hartnett received an
A.B. from Sweet Briar College in 1970. Ms. Hartnett
serves on the Board of Directors of the Gulf Coast
Chapter of the American Heart Association, on the
Board of Trustees for the Houston Ballet Foundation
and is a lifetime member of the Houston Livestock
Show and Rodeo.

108
<PAGE>
<CAPTION>
Sonny B. Lyles....................... 51 Senior Vice President and Chief Credit Officer of
the Company since July 15, 1996 and of the Bank
since February 1991. Prior to joining the Bank, Mr.
Lyles was employed by First Union National Bank as
Senior Credit Officer beginning in 1983. Prior to
joining First Union National Bank, Mr. Lyles was
employed at First Tulsa Bank, Florida National Bank
and South Carolina National Bank. Mr. Lyles received
a B.A. from Wofford College. Mr. Lyles is a member
of the Board, First Vice President of the Texas
Chapter, and a national member, of the Credit and
Risk Management Council of Robert Morris Associates,
a trade association of bank lending and credit
officers. Mr. Lyles is the Wofford College alumni
representative from Houston.
</TABLE>
EXECUTIVE COMPENSATION

SUMMARY OF CASH AND CERTAIN COMPENSATION

The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the CEO of the Company
and the other four most highly compensated executive officers of the Company and
the Bank. The individuals listed below became executive officers of the Company
in June and July 1996. Prior to that time, Lewis S. Ranieri served as President
and CEO of the Company, Salvatore A. Ranieri served as Vice President, Secretary
and General Counsel of the Company, Scott A. Shay served as Vice President of
the Company and Robert A. Perro served as Chief Financial Officer of the
Company. None of the former executive officers received any compensation from
the Company.

109
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------ -------------------------
OTHER SECURITIES PAYOUTS(7)
ANNUAL UNDERLYING -------
COMPEN- RESTRICTED OPTIONS/ LTIP
SALARY BONUS(1)(2) SATION(4) STOCK(5) SAR(6) PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($)
- ------------------------------------- ---- ------- ----------- -------- ---------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Barry C. Burkholder.................. 1996 375,000 2,552,000 -- 1,578,051 491,327 --
President and 1995 375,000 594,000 -- -- -- --
Chief Executive Officer 1994 375,000 607,500 -- -- -- --

Anthony J. Nocella................... 1996 315,000 874,000 -- 508,103 157,959 --
Executive Vice President and 1995 315,000 235,000 -- -- -- --
Chief Financial Officer 1994 315,000 200,000 -- -- -- --
Financial Markets/Treasury
Commercial Banking

Jonathon K. Heffron.................. 1996 225,000 804,000 -- 508,103 157,959 --
Executive Vice President, 1995 225,000 200,000 -- -- -- --
General Counsel, and 1994 225,000 175,000 -- -- -- --
Chief Operating Officer

Ronald D. Coben(3)................... 1996 200,000 160,000 -- 79,115 24,534 --
Executive Vice President 1995 144,000 30,000 -- -- -- --
Community Banking 1994 144,000 25,000 -- -- -- --

Leslie H. Green...................... 1996 175,000 165,000 -- 79,115 24,534 --
Senior Vice President 1995 175,000 75,000 -- -- -- --
Operations & Technology 1994 175,000 70,000 -- -- -- --
</TABLE>
ALL
OTHER
COMPEN-
SATION(8)
NAME AND PRINCIPAL POSITION ($)
- ------------------------------------- --------
Barry C. Burkholder.................. 6,706
President and 9,240
Chief Executive Officer 9,240
Anthony J. Nocella................... 7,919
Executive Vice President and 9,402
Chief Financial Officer 8,878
Financial Markets/Treasury
Commercial Banking
Jonathon K. Heffron.................. 9,458
Executive Vice President, 9,402
General Counsel, and 8,984
Chief Operating Officer
Ronald D. Coben(3)................... 6,130
Executive Vice President 3,240
Community Banking 2,874
Leslie H. Green...................... 5,433
Senior Vice President 4,620
Operations & Technology 4,615

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

(1) For all named executives, the bonus column for 1996 includes payments from:
(i) the Executive Management Compensation Plan and (ii) the Bank's annual
bonus plan.

(2) Mr. Burkholder was hired on April 10, 1991, and was paid a bonus based on
the financial performance of the Bank, according to the provisions of his
employment contract, for each of the first five full years of his
employment. Amounts indicated for 1994 and 1995 represent the amount paid in
the respective fiscal year. Mr. Burkholder's 1996 bonus amount included two
bonus payments pursuant to his employment contract: one payment of $550,000
for the 12-month period ended April 9, 1996 and a second payment of $300,000
for the period April 10, 1996 through September 30, 1996. The latter amount
was made to change Mr. Burkholder's performance cycle to correspond to the
Bank's fiscal year. See "-- Management Employment Arrangements". All other
management bonuses were paid as determined by the Compensation Committee of
the Bank's Board of Directors and were based on the Bank's financial and
individual performance for the respective fiscal year. The Bank's financial
performance is measured by net income, return on assets, and return on
equity as compared to the Bank's annual business plan and a specified peer
group of other thrifts of comparable size.

(3) Mr. Coben was promoted to Executive Vice President, Community Banking
effective July 1, 1996.

(4) Messrs. Burkholder, Coben, Nocella, and Heffron are each provided an auto
allowance and a country club and/or dining club membership. However, in no
case does the aggregated value of such auto allowance and memberships exceed
the lesser of $50,000 or 10% of such officer's annual cash compensation.
Therefore, the value of auto allowances and club memberships are excluded
from this table.

(5) A total of 236,265 shares of Class B Common Stock were awarded to the named
executive officers in June 1996 and these shares were subsequently converted
into Class A Common Stock of the Company. Such shares are subject to
restrictions on transfer, which lapse on August 8, 1999 ("Officers
Restricted Stock"). As there was no public market for the Common Stock at
the date of grant, the fair market value of the shares at that date was
estimated by the Bank. Based on the last reported sale price of the Class A
Common Stock on the NASDAQ on September 30, 1996, these shares had an
aggregate fair market value of $5,877,092 ($24.875 per share), without
giving effect to the diminution of value attributable to the restrictions on
such stock. Dividends will be paid on the Officers Restricted Stock at the
same rate payable on all other shares of Common Stock.

(6) In August 1996, the Company issued 856,313 options to the named executives
pursuant to management option agreements under the Executive Management
Compensation Plan.

(7) Represents the dollar value of all payouts pursuant to long-term incentive
plans ("LTIP"). An LTIP is any plan providing compensation intended to
serve as incentive for performance to occur over a period longer than one
fiscal year, whether such performance is measured by reference to financial
performance of the registrant or an affiliate, the registrant's stock price,
or any other measure, but excluding restricted stock, stock option and stock
appreciation right ("SAR") plans. The Bank made no such payments for the
periods presented.

(8) "All Other Compensation" amounts represent contributions by the Bank to
each executive's account in the Bank's 401(k) Plan.

110
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR. The following table sets forth
individual grants of options under the Executive Management Compensation Plan
that were made during fiscal 1996 to the executive officers named in the Summary
Compensation Table. This table is intended to allow stockholders to ascertain
the number and size of option grants made during the fiscal year, the expiration
date of the grants, and the grant date present value of such options under
specified assumptions. All options granted in fiscal 1996 have an exercise price
no less than the fair market value at the date of grant.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/
UNDERLYING SARS
OPTIONS/ GRANTED TO EXERCISE
SARS EMPLOYEES OR BASE GRANT DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT VALUE
NAME (#) YEAR(1) ($/SH) DATE $(2)
- ------------------------------------- ---------- ---------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Barry C. Burkholder.................. 491,327 42.6 20.125 8/8/06 3,173,972
Anthony J. Nocella................... 157,959 13.7 20.125 8/8/06 1,020,415
Jonathon K. Heffron.................. 157,959 13.7 20.125 8/8/06 1,020,415
Ronald D. Coben...................... 24,534 2.1 20.125 8/8/06 158,490
Leslie H. Green...................... 24,534 2.1 20.125 8/8/06 158,490
</TABLE>
- ------------

(1) Based upon 1,154,520 options to purchase Class A Common Stock granted in
fiscal 1996.

(2) The $6.46 per share value is based on the Black-Scholes Option pricing
model. The calculation included the following assumptions: estimated
volatility of 27.0% (based on 2-year stock prices of comparable companies);
risk-free interest rate of 6.55 percent (based on returns available through
U.S. Treasury bonds); dividend yield of 3.0 percent (assumes dividend yield
paid through expiration); and 3,612 days to expiration of options. Option
values are dependent on general market conditions and the performance of the
Common Stock. There can be no assurance that the values in this table will
be realized.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES. The following table sets forth, with respect to the executive officers
named in the Summary Compensation Table, information with respect to the
aggregate amount of options exercised during fiscal 1996, any value realized
thereon, the number of unexercised options at the end of the fiscal year
(exercisable and unexercisable) and the value with respect thereto.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS
SHARES FISCAL YEAR END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Barry C. Burkholder.................. -- -- -- 491,327 -- 2,333,803
Anthony J. Nocella................... -- -- -- 157,959 -- 750,305
Jonathon K. Heffron.................. -- -- -- 157,959 -- 750,305
Ronald D. Coben...................... -- -- -- 24,534 -- 116,537
Leslie H. Green...................... -- -- -- 24,534 -- 116,537
</TABLE>
- ------------

(1) Total value of options based on a fair market value of $24.875 per share as
of September 30, 1996, the last reported sale price of the Class A Common
Stock as reported by the NASDAQ on that date.

EXECUTIVE MANAGEMENT COMPENSATION PROGRAM

In June 1996, the Board of Directors of the Company approved an Executive
Management Compensation Program (the "Compensation Program") providing for the
following: (i) a cash bonus of $4.0 million; (ii) the award of 318,342 shares of
Class B Common Stock pursuant to management stock grant agreements (the
"Management Stock Grant Agreements") providing that (I) such shares may not be
transferred for three years from the date of issuance and (II) such shares may
be converted into shares of Class A Common Stock only if the holder of such
stock would not, after such conversion, own more than 9.9% of the outstanding
shares of Class A Common Stock; and (iii) the issuance of 1,154,520 options upon
consummation of the August Offering pursuant to management option agreements
(the "Management Option Agreements") for purchase of an equivalent number of
shares of common stock providing that (I) such options have an exercise price of
$20.125 per share which approximated the fair market value of such stock on the
date of grant; (II) such options vest ratably over

111
<PAGE>
three years; (III) such options may not be exercised prior to the third
anniversary of the date of grant; and (IV) such options expire if not exercised
by the tenth anniversary of the date of grant. Twenty-three individuals,
including the eight executive officers -- Ms. Hartnett and Messrs. Burkholder,
Nocella, Heffron, Bender, Green, Lyles and Coben -- and three directors -- Drs.
Chimerine and Horvitz and Mr. Master -- are participating in the executive
management compensation program. The remaining twelve individuals participating
are other key officers and employees of the Bank. Mr. Burkholder received
$1,702,000 of the cash bonus and 491,327 of the stock options; he has received
135,455 of the shares of Class B Common Stock. Messrs. Nocella and Heffron each
received $549,000 of the cash bonus and 157,959 of the stock options; each one
received 43,614 of the shares of Class B Common Stock. Messrs. Bender and Green
each received $85,000 of the cash bonus and 24,534 of the stock options; each
one received 6,791 shares of the Class B Common Stock. Drs. Chimerine and
Horvitz each received $52,000 of the cash bonus and 15,087 of the stock options;
each one received 4,138 shares of the Class B Common Stock. Mr. Master received
$17,000 of the cash bonus and 4,854 of the stock options; he has received 1,380
shares of the Class B Common Stock. Implementation of this program replaced an
equity based bonus program previously contemplated in the case of all
participants except Mr. Burkholder, whose participation satisfies the terms of
his former employment agreement.

THE 1996 STOCK INCENTIVE PLAN

The Company has adopted the Bank United 1996 Stock Incentive Plan (the
"1996 Stock Incentive Plan"). The 1996 Stock Incentive Plan is designed to
promote the success and enhance the value of the Company by linking the
interests of certain of the full-time employees of the Company
("Participants") to those of the Company's stockholders and by providing
Participants with an incentive for outstanding performance. The 1996 Stock
Incentive Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract and retain Participants upon whose judgment,
interest and special efforts the Company's successful operation largely is
dependent. As determined by the Compensation Committee of the Board of Directors
of the Company, or any other designated committee of the Board of Directors of
the Company, the Company employees, including employees who are members of the
Board of Directors of the Company, are eligible to participate in the 1996 Stock
Incentive Plan. Non-employee directors are not eligible to participate in the
1996 Stock Incentive Plan. The Board of Directors of the Company has provided
for the 1996 Stock Incentive Plan to remain in effect for 10 years, to 2006. In
December 1996, the Company granted options to purchase 147,500 shares of Common
Stock, at the market price on the date of grant, to 30 employees of the Bank,
none of whom were the executive officers named herein.

The description below is intended as a summary of material terms only.

GENERAL

The 1996 Stock Incentive Plan will be administered by the Compensation
Committee of the Board of Directors of the Company or, at the discretion of the
Board of Directors of the Company, any other committee appointed by the Company
for such purpose (the "Committee"). Four types of awards may be granted to
Participants under the 1996 Stock Incentive Plan: (i) stock options (both
non-qualified and incentive) ("Options"), (ii) SARs, (iii) restricted Common
Stock ("Restricted Stock") and (iv) performance units ("Performance Units",
and together with the Options, SARs and Restricted Stock, the "Awards").

Any authority granted to the Committee may also be exercised by the full
Board of Directors of the Company, except to the extent that the grant or
exercise of such authority would cause any Award or transaction to become
subject to (or lose an exemption under) the short-swing recovery profit recovery
provisions of Section 16 of the Exchange Act or cause an award designated as a
qualified performance-based award not to qualify for, or to cease to qualify
for, the Section 162(m) of the Code exemption. To the extent that any permitted
action taken by the Board of Directors of the Company conflicts with action
taken by the Committee, the Board of Directors of the Company action shall
control.

The 1996 Stock Incentive Plan provides that the total number of shares of
Class A Common Stock available for grant under the 1996 Stock Incentive Plan may
not exceed 1,600,000 shares. No Participant may be granted Awards covering in
excess of 50% of the shares of Class A Common Stock Awards granted in any fiscal
year or 25% of the shares of Class A Common Stock available for issuance over
the life of the 1996 Stock Incentive

112
<PAGE>
Plan. If any Award is cancelled or forfeited or terminates, expires, or lapses
(other than a termination of a Tandem SAR (as defined herein)), upon exercise of
the related Option or the termination of a related Option upon exercise of the
corresponding Tandem SAR, shares subject to such Award will be available for the
grant of an Award under the 1996 Incentive Compensation Plan.

In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation,
separation, including a spin-off, or other distribution of stock or property of
the Company, any reorganization or partial or complete liquidation of the
Company, the Committee or the Board of Directors of the Company may make such
substitutions or adjustments in the aggregate number and class of shares
reserved for issuance or subject to outstanding Awards and in the number, kind
and price of shares subject to outstanding Options of SARs as it may determine
to be appropriate.

The Committee may condition the grant of Restricted Stock and Performance
Units upon the attainment of one or more of the following performance goals:
earnings per share, sales, net profit after tax, gross profit, operations
profit, cash generation, unit volume, return on equity, change in working
capital, return on capital or shareholder return. Such performance goals shall
be set by the Committee within the time period prescribed by Section 162(m) of
the Code.

The 1996 Stock Incentive Plan is not subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and is
not qualified under Section 401(a) of the Code.

OPTIONS

The term of Options granted under the 1996 Stock Incentive Plan may not
exceed 10 years. The exercise price for each Option granted will be determined
by the Committee; provided that the exercise price may not be less than 100% of
the fair market value (as defined in the 1996 Stock Incentive Plan) of a share
of Class A Common Stock on the date of grant.

A Participant exercising an Option may pay the exercise price in full in
cash, or, if approved by the Committee, with previously acquired shares of Class
A Common Stock. The Committee, in its discretion, may allow cashless exercise of
Options.

Options are nontransferable other than by will or laws of descent and
distribution (and, in the case of a non-qualified Option, pursuant to a domestic
relations order or by gift to members of the holder's immediate family, whether
directly or indirectly or by means of a trust or partnership), and, during the
Participant's lifetime, may be exercised only by the Participant or his legal
representative.

SARS

SARs may be granted by the Committee in connection with all or part of any
Option grant ("Tandem SARs"). A Tandem SAR may be exercised only with respect
to the shares for which its related Option is then exercisable. SARs permit the
Participant to receive in cash or shares of Class A Common Stock (or a
combination of both) an amount equal to the excess of the fair market value of a
share of Class A Common Stock on the date the SAR is exercised over the exercise
price for the SAR times the number of shares of Class A Common Stock with
respect to which such SAR is exercised.

The term of SARs granted in connection with incentive stock options under
the 1996 Stock Incentive Plan may not exceed 10 years. The exercise price of a
Tandem SAR will equal the exercise price of the related Option.

SARs are nontransferable other than by will or laws of descent and
distribution, and, during the Participant's lifetime, may be exercised only by
the Participant; provided that, at the discretion of the Committee, an Award
agreement may permit transfer of an SAR by a Participant solely to members of
the Participant's immediate family or trusts or partnerships for the benefit of
such persons.

RESTRICTED STOCK

The Committee may grant Restricted Stock to eligible employees in such
amounts as the Committee determines. At the time of each award of Restricted
Stock the Committee will establish a restricted period (the "Restricted
Period") during which such stock may not be sold, transferred, pledged,
assigned or otherwise alienated; provided that the Committee may permit
transfers of Restricted Stock during such period to members

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<PAGE>
of the Participant's immediate family or trusts or partnerships for the benefit
of such persons. If a Participant terminates his employment or is involuntarily
terminated for cause during the Restricted Period, all Restricted Stock held by
such Participant will be forfeited. If a Participant is involuntarily terminated
other than for cause, the Committee may waive all or part of any remaining
restrictions on such Participant's Restricted Stock. After the Restricted Period
has expired, the related Restricted Stock is freely transferable.

PERFORMANCE UNITS

The Committee may from time to time grant Performance Units, either alone
or in addition to other Awards. The Committee will set the performance goals and
restrictions applicable to each Performance Unit, including establishing the
applicable performance period and the value of the Performance Unit. After the
applicable performance period has ended, the holder of a Performance Unit will
be entitled to receive the payout earned to the extent to which the
corresponding performance goals were satisfied.

A holder may elect to defer receipt of cash or stock in settlement of
Performance Units for a specified period or until a specified event, subject in
each case to the Committee's approval. Generally, upon a holder's termination of
employment for any reason during a performance period or before the applicable
performance goals are satisfied, the holder shall forfeit his right to receive
cash or stock in settlement of his Performance Units.

CHANGE OF CONTROL

In the event of a Change of Control, (i) any Option or SAR that is not then
exercisable and vested will become fully exercisable and vested, (ii) the
restrictions on any Restricted Stock will lapse and (iii) all Performance Units
will be deemed earned. The 1996 Stock Incentive Plan defines a Change of Control
as (i) the acquisition of 25% or more of the common stock of the Company, (ii) a
change in a majority of the Board of Directors, unless approved by the incumbent
directors (other than as a result of a contested election) and (iii) certain
reorganizations, mergers, consolidations, liquidations or dissolutions.

During the 60-day period following a Change of Control, any Participant
will have the right to surrender all or part of any Option held by such
Participant, in lieu of payment of the exercise price, and to receive cash in an
amount equal to the difference between (i) the higher of the price received for
Common Stock in connection with the Change of Control and the highest reported
sales price of a share of Common Stock on a national exchange or on NASDAQ
during the 60-day period prior to and including the date of a Change of Control
(the "Change of Control Price"), and (ii) the exercise price (the difference
between (i) and (ii) being referred to as the "Spread") multiplied by the
number of shares of Class A Common Stock granted in connection with the exercise
of such Option; provided that such Change of Control transaction would not
thereby be made ineligible for pooling of interests accounting; and provided,
further, that, if the Option is an "incentive stock option" under Section 422
of the Code, the Change of Control Price will equal the fair market value of a
share of the Class A Common Stock on the date, if any, that such Option is
cancelled.

AMENDMENTS

The Board of Directors of the Company may at any time terminate, amend, or
modify the 1996 Stock Incentive Plan; provided that no amendment, alteration or
discontinuation will be made which will impair the rights of Award holders or
will disqualify the 1996 Stock Incentive Plan from the exemption provided by
Rule 16b-3 promulgated under the Exchange Act, and, to the extent required by
law, no such amendment will be made without the approval of the Company's
stockholders.

FEDERAL INCOME TAX CONSIDERATIONS

The following brief summary of the United States federal income tax rules
currently applicable to nonqualified stock options, incentive stock options,
SARs, restricted stock and performance awards is not intended to be specific tax
advice to Participants under the 1996 Stock Incentive Plan.

Two types of stock options may be granted under the 1996 Stock Incentive
Plan: nonqualified stock options ("NQOs") and incentive stock options
("ISOs"). SARs, Restricted Stock and Performance Awards may also be granted
under the Plan. The grant of an Award generally has no immediate tax
consequences to the Participant or

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the Company. Generally, Participants will recognize ordinary income upon: (i)
the exercise of NQOs or SARs; (ii) the vesting of shares of Restricted Stock;
and (iii) the actual receipt of cash or stock pursuant to Performance Awards. In
the case of NQOs and SARs, the amount of income recognized is measured by the
difference between the exercise price and the fair market value of Common Stock
on the date of exercise. In the case of Restricted Stock and Performance awards,
the amount of income is equal to the fair market value of the stock or other
property (including cash) received. The exercise of an ISO for cash generally
has no immediate tax consequences to a Participant or to the Company.
Participants may, in certain circumstances, recognize ordinary income upon the
disposition of shares acquired by exercise of an ISO, depending upon how long
such shares were held prior to disposition. Special rules apply to shares
acquired by exercise of ISOs for previously held shares. In addition, special
tax rules may result in the imposition of a 20% excise tax on any "excess
parachute payments" that result from the acceleration of the vesting or
exercisability of Awards upon a change of control.

The Company is generally required to withhold applicable income and Social
Security taxes ("employment taxes") from ordinary income which a Participant
recognizes on the exercise or receipt of an Award. The Company thus may either
require Participants to pay to the Company an amount equal to the employment
taxes the Company is required to withhold or retain or sell without notice a
sufficient number of the shares to cover the amount required to be withheld.

The Company generally will be entitled to a deduction for the amount
includible in a Participant's gross income for federal income tax purposes upon
the exercise or actual receipt of an Award. However, such deduction generally is
available only if the Company timely complies with applicable information
reporting requirements under Sections 6041 and 6041A of the Code. Furthermore,
Section 162(m) of the Code and the regulations thereunder may, in some
circumstances, limit deductibility with respect to "covered employees" whose
total annual compensation exceeds one million dollars, and Section 280G of the
Code and the regulations thereunder may render nondeductible amounts includible
in income by employees that are contingent upon a Change of Control and that are
characterized as "excess parachute payments".

RESALE OF SHARES

The registration requirements of any applicable state securities laws and
the resale restrictions of Rule 144 under the Securities Act may restrict the
sale of shares of Class A Common Stock acquired pursuant to the exercise of
Awards by "affiliates" of the Company within the meaning of the Securities
Act. For purposes of creating short-swing profit liability under Section 16 of
the Exchange Act, sales of such shares by affiliates will be matchable with
market purchases within less than six months before or after such sales.

THE DIRECTOR STOCK COMPENSATION PLAN

The Company has adopted the Bank United Director Stock Compensation Plan
(the "Director Stock Plan"). The purposes of the Director Stock Plan are to
(i) promote a greater identity of interest between the Company's non-employee
directors and its stockholders, and (ii) attract and retain individuals to serve
as directors and to provide a more direct link between directors' compensation
and stockholder value.

GENERAL

The Director Stock Plan will be administered by the Board of Directors of
the Company or a committee of the Board of Directors of the Company designated
for such purpose.

Pursuant to the terms of the Director Stock Plan, non-employee directors of
the Company (each an "Eligible Director") will be eligible to participate in
the Director Stock Plan. A maximum of 250,000 shares of Class A Common Stock
will be available for issuance and available for grants under the Director Stock
Plan.

In the event of any change in corporate capitalization (such as a stock
split) or a corporate transaction (such as a merger, consolidation, separation
including a spin-off or other distribution of stock or property of the Company,
any reorganization or any complete liquidation of the Company), the Board of
Directors of the Company or the designated committee may make such substitution
or adjustments in the aggregate number and class of shares reserved for issuance
under the Director Stock Plan, in the number, kind and option price of shares
subject to outstanding Options, in the number and kind of shares subject to
other outstanding awards granted under the Director Stock Plan, and/or such
other equitable substitution or adjustments as it may determine to be

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<PAGE>
appropriate in its sole discretion; provided, however, that the number of shares
subject to any award must always be a whole number.

CLASS A COMMON STOCK

With respect to the Annual Retainer, each Eligible Director may make an
annual irrevocable election prior to the beginning of the fiscal year to receive
shares of Class A Common Stock in lieu of all or any portion (in 25% increments)
of the Annual Retainer; provided that the election of cash and Class A Common
Stock under the Director Stock Plan are alternatives and taken together, may not
exceed 100% of such Annual Retainer. The number of shares of Class A Common
Stock granted to an Eligible Director will be equal to the appropriate
percentage of the Annual Retainer payable in each fiscal quarter divided by the
fair market value (as defined in the Director Stock Plan) of a share of Class A
Common Stock on the last business day of such fiscal quarter rounded to nearest
number of shares of Class A Common Stock. Fractional shares of Class A Common
Stock will not be granted and any remainder in Annual Retainer which otherwise
would have purchased fractional shares will be paid in cash.

OPTIONS CLASS A

On the first Tuesday following his or her election and thereafter on the
day after each annual meeting of stockholders during such director's term, each
Eligible Director shall be granted options ("Director Options") on 1,000
shares of Class A Common Stock. The exercise price for the options will be 115%
of the fair market value of Class A Common Stock on the date of the grant of
such option. Each Director Option will become vested and exercisable, if at all,
when and if, during the 30-day period commencing on the first anniversary of the
date of grant of such Director Option, a share of Class A Common Stock has a
fair market value equal to or greater than the exercise price of such Director
Option. If such stock does not attain such fair market value during such 30-day
period, then such Director Option will terminate and be cancelled as of the
close of business on the last business day during such 30-day period. Each
Director Option terminates no later than the tenth anniversary of the date of
grant. Any unvested Director Options terminate and are cancelled as of the date
the optionee's service as a Director ceases for any reason (including death,
disability, retirement, removal from office or otherwise). All Director Options
become fully vested and exercisable upon a Change of Control. The Parent Company
granted 10,000 Director Options during fiscal 1996.

TRANSFERABILITY

Grants and awards under the Director Stock Plan are nontransferable other
than by will or laws of descent and distribution, or pursuant to domestic
relations order or qualified domestic relations order or by gift to members of
the holder's immediate family, whether directly or indirectly or by means of a
trust or partnership, and, during the Eligible Director's lifetime, may be
exercised only by the Eligible Director.

AMENDMENTS

The Director Stock Compensation Plan may be amended by the Board of
Directors of the Company, provided that, to the extent required to qualify
transactions under the Director Stock Plan for exemption under Rule 16b-3
promulgated under the Exchange Act, no amendment to the Director Stock
Compensation Plan may be adopted without further approval by the holders of at
least a majority of the shares of Class A Common Stock present, or represented,
and entitled to vote at a meeting held for such purpose; and provided, further,
that, if and to the extent required for the Director Stock Compensation Plan to
comply with Rule 16b-3, no amendment to the Director Stock Compensation Plan
shall be made more than once in any six-month period that would change the
amount, price or timing of the grants of awards or Options thereunder other than
to comply with changes in the Code, ERISA, or the regulations thereunder.

TERMINATION

The Director Stock Compensation Plan may be terminated at any time by
either the Board of Directors of the Company or by holders of a majority of the
shares of Class A Common Stock present and entitled to vote at a duly convened
meeting of stockholders.

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CHANGE OF CONTROL

In the event of a Change of Control, any outstanding options that are not
then exercisable and vested will become fully exercisable and vested. During the
60-day period following a Change of Control, any Eligible Director will have the
right to surrender all or part of any option or award of Class A Common Stock
held by such Eligible Director, and, in the case of an option, in lieu of
payment of the exercise price, to receive cash in an amount equal to the Spread
multiplied by the number of shares of Class A Common Stock granted in connection
with the exercise of such option so surrendered, or, in the case of an award of
Class A Common Stock, to receive cash in an amount equal to the Change of
Control Price multiplied by the number of shares of Class A Common Stock so
surrendered; provided that, if the Change of Control is within six months of the
grant date for any such option or award, no such election may be made prior to
six months from such grant date. If such 60-day period ends within the period
six months after the grant date for an option or award, such option or award
will be cancelled and the holder thereof will receive six months and one day
after the grant of such option or award, an amount equal, in the case of an
option, to the Spread multiplied by the number of shares of Class A Common Stock
granted under such option and in the case of an award, the Change of Control
Price multiplied by the number of Class A Common Stock so awarded.

FEDERAL INCOME TAX CONSIDERATIONS

Eligible Directors electing Class A Common Stock in lieu of cash fees will
be taxed on the value of the Class A Common Stock at the time of receipt.
Eligible Directors will be taxed upon their exercise of the options. The amount
of income recognized is measured by the differences between the exercise price
and the fair market value of the Class A Common Stock covered by the option. In
each case, the Company will receive a corresponding deduction; provided that
Section 280G of the Code and the regulations thereunder may render nondeductible
amounts that are contingent upon a Change of Control and are characterized as
"excess parachute payments".

RESALE OF SHARES. The holders of shares of Class A Common Stock received
upon the exercise of an option must comply with the resale requirements of the
Securities Act and the rules and regulations promulgated thereunder. Securities
registration requirements under the Securities Act may be applicable to resales
by any Eligible Director. The restrictions imposed by Section 16 of the Exchange
Act upon any Eligible Director and the registration requirements of any
applicable state securities laws may restrict the resales of shares acquired
pursuant to the exercise of options by an Eligible Director.

MANAGEMENT EMPLOYMENT ARRANGEMENTS

NEW EMPLOYMENT AGREEMENTS

Effective as of the date of the consummation of the August Offering, the
Company entered into new employment agreements with the following four
executives which superseded all prior employment arrangements.

Mr. Burkholder's agreement with the Company provides for his employment for
three years at an annual base salary of not less than $375,000 and a
discretionary bonus. Mr. Coben's agreement with the Company provides for his
employment for three years at an annual base salary of not less than $200,000
and a discretionary bonus. Mr. Nocella's agreement with the Company provides for
his employment for three years at an annual base salary of not less than
$315,000 and a discretionary bonus. Mr. Heffron's agreement with the Company
provides for his employment for three years at an annual base salary of not less
than $225,000 and a discretionary bonus. These agreements provide that the
period of employment is automatically extended on the first day of each month so
that the period of employment terminates three years from such date, unless the
executive or the Company gives notice to terminate the agreement at least sixty
days before such monthly renewal date. In addition, upon a change of control, if
the executive is still employed by the Company, the period of employment will be
extended until the third anniversary of the effective date of the change of
control or if the period of employment has terminated prior to the change of
control, a new three year employment period shall commence upon a change of
control. If for any reason other than cause the Company elects to terminate the
employment of any of the above executives before the scheduled expiration date
of his agreement, the executive's employment will be deemed to

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have been terminated by the Company without cause for purpose of the severance
and retirement benefits described below.

Under the terms of Mr. Burkholder's employment agreement, the amount of the
discretionary bonus paid to Mr. Burkholder is in the sole discretion of the
Board of Directors of the Company, which will take into account such matters as
(i) the Company's actual financial performance as compared to its budgeted
financial performance, (ii) Mr. Burkholder's performance in implementing new
business initiatives approved by the Board of Directors of the Company, (iii)
Mr. Burkholder's performance in improving the financial performance of any
division or unit of the Company or the Bank, or any of their respective
subsidiaries as determined by the Board of Directors of the Company in its sole
discretion, (iv) the Company's actual financial performance compared to its
peers', and (v) Mr. Burkholder's total compensation as compared to the total
compensation of CEOs at comparable financial institutions. The discretionary
bonuses to be paid to the other executive officers are at the discretion of the
CEO and the Board of Directors of the Company.

Under each agreement described above, if the executive's employment is
terminated (i) by the Company other than for cause or disability or (ii) by the
executive for good reason or within a 30-day period following the first
anniversary of a change of control, he is generally entitled to (a) receive a
lump sum equal to three times (for Mr. Burkholder) or two times (for Messrs.
Coben, Nocella and Heffron) (I) his annual base salary and (II) the higher of
his most recent bonus under the Company's annual incentive plans and the highest
bonus under such annual incentive plans for the last three full fiscal years
prior to the effective date of the change of control, (b) continue in the
Company's welfare benefit plans for three years (for Mr. Burkholder) or two
years (for Messrs. Coben, Nocella and Heffron), and (c) receive in a lump sum a
supplemental pension amount based on three years (for Mr. Burkholder) or two
years (for Messrs. Coben, Nocella and Heffron) of deemed employment after
termination, (d) have all stock options, restricted stock and other stock-based
compensation become immediately exercisable or vested, (e) receive outplacement
services, at the Company's sole expense, as incurred, up to a maximum of $45,000
(for Messrs. Burkholder, Nocella and Heffron), and $25,000 (for Mr. Coben). A
change of control ("Change of Control") is generally defined for purposes of
these agreements as (i) the acquisition of 25% or more of the common stock of
the Company, (ii) a change in a majority of the Board of Directors, unless
approved by the incumbent directors (other than as a result of a contested
election) and (iii) certain reorganizations, mergers, consolidations,
liquidations or dissolutions. If any payment or distribution by the Company to
an executive is determined to be subject to the excise tax imposed by Section
4999 of the Code, the amount of payment or distribution may be reduced so that
the excise tax liability of the executive is minimized.

In addition Mr. Burkholder received 42.5% of the executive management
compensation program, which satisfies the terms of his former employment
agreement.

Mr. Bender has an employment letter from the Bank. It provides for payment
of an annual salary and a bonus up to 2.86% of the added economic value of the
mortgage banking segment. The employment letter provides that added economic
value is defined to be the sum of pre-tax income and the value of new loan
servicing reduced by the sum of excess servicing revenues and revenues from the
sale of servicing.

NON-QUALIFIED RETIREMENT SAVINGS PLAN

In June 1995, the Board of Directors of the Bank approved the
implementation of a Supplemental Executive Savings Plan ("SESP"). The SESP was
effective on August 1, 1995. The 1995 SESP year covered the period of August 11,
1995 to December 31, 1995. In subsequent years, the SESP Plan coincides with the
calendar year. The SESP is available to a select group of management and other
highly compensated employees. Eligible employees are allowed to make irrevocable
decisions prior to the beginning of the plan year to defer up to 20% of
compensation (as defined in the SESP) and up to 100% of bonus income. As of
September 30, 1996, the monies deferred earn interest at a rate approximately
equal to the Bank's one year certificate of deposit rate. The Bank does not
contribute to the SESP.

The SESP is funded from the general assets of the Bank and participants are
general unsecured creditors of the Bank. As of September 30, 1996, there were 12
participants in the SESP, and the total amount of deferrals and interest equaled
approximately $433,629. The rate of interest for the SESP was 51.2% as of
September 30, 1996.

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DIRECTORS SUPPLEMENTAL SAVINGS PLAN

In June 1995, the Board of Directors of the Bank approved the
implementation of a Directors Supplemental Savings Plan ("DSSP"). The DSSP was
effective on August 1, 1995. The 1995 DSSP year covered the period of August 1,
1995 to December 31, 1995. In subsequent years the Plan year coincides with the
calendar year. The DSSP is available to outside directors. Eligible Directors
are allowed to make irrevocable decisions prior to the beginning of the plan
year to defer up to 100% of retainer and meeting fees. The monies deferred earn
interest at a rate approximately equal to the Bank's one year CD rate. The Bank
does not contribute to the DSSP.

The DSSP is funded from the general assets of the Bank, and participants
are general unsecured creditors of the Bank. As of September 30, 1996, there was
one participant in the DSSP and the total amount of deferrals and interest
equaled approximately $47,080. The rate of interest for the DSSP was 5.12% as of
Sepember 30, 1996.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors of the Company
determines the compensation of the Company's executive officers. The
Compensation Committee consists of all of the directors of the Company other
than Barry C. Burkholder and Anthony J. Nocella. No other member of the Bank
Compensation Committee is an officer or employee of the Company or the Bank.
Lewis S. Ranieri, Salvatore A. Ranieri and Scott A. Shay are also members of the
Compensation Committee of the Board of Directors of the Bank and are also
members of various boards of directors and compensation committees of various
companies which are subsidiaries of, or entities controlled by, Hyperion
Partners and, in the case of Lewis S. Ranieri, Scott A. Shay and David M.
Golush, of subsidiaries of, or entities controlled by, Hyperion Partners II as
well.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

As of the date hereof, the outstanding capital stock of the Company
consists of 28,354,276 shares of Class A Common Stock, which entitles the holder
thereof to one vote per share on each matter on which the stockholders of the
Company are entitled to vote, and 3,241,320 shares of Class B Common Stock,
which have no voting rights. Shares of Class B Common Stock are convertible, at
the election of the holder thereof, into shares of Class A Common Stock, subject
to certain restrictions set forth in the Certificate and the Letter Agreement,
including to the extent that the holder of the Class B Common Stock is
prohibited by any applicable Federal or state regulation from holding voting
securities of the type or in the amount represented by the shares of Class A
Common Stock that such holder would hold upon such conversion. See "Description
of Capital Stock -- Common Stock -- Conversion". Conversion of such shares of
Class B Common Stock by a holder thereof to shares of Class A Common Stock has
the effect of diluting the voting power of the existing holders of Class A
Common Stock and increasing the voting power of such holder commensurately.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information, as of the date of this
Prospectus, about certain persons who own more than 5% of the Company's voting
stock. As discussed under "Description of Capital Stock -- Common
Stock -- Conversion," the Certificate, the Letter Agreements and the Management
Stock Grant Agreements impose certain restrictions on the ability of holders to
convert their shares of Class B Common Stock into Class A Common Stock which
generally prohibit any holder, other than the holders of the currently
outstanding shares of Class A Common Stock, from converting shares of Class B
Common Stock into Class A Common Stock if after giving effect to such conversion
such holder would become the beneficial owner of more than 9.9% of the then
outstanding shares of Class A Common Stock. In addition, under the terms of the
Charter and the Letter Agreements, the shares of Class B Common Stock owned by
The Equitable Life Assurance Society of the United States, Equitable Variable
Life Insurance Company and The Prudential Insurance Company of America are
subject to additional conversion restrictions. For further information
concerning the ownership of shares of Class A Common Stock and Class B Common
Stock before and following the Offering, see "Selling Stockholders" and
" -- Security Ownership of Management".

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<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL COMMON STOCK
NAME OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP OWNED
- ---------------------------------------- -------------------- ----------------- ------------
<S> <C> <C> <C>
The Prudential Insurance Company
of America............................ Class B Common Stock 2,441,137 7.7
LW-SP1, L.P. and LW-SP2, L.P............ Class A Common Stock 2,146,748 6.8
</TABLE>
Under the terms of the Letter Agreement, The Prudential Insurance Company
of America may sell its share of Common Stock beginning August 14, 1999 and
LW-SP1, L.P. and LW-SP2, L.P. may sell their shares beginning August 8, 1998.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information, as of the date of this
Prospectus, regarding each class of equity securities of the Company
beneficially owned by all directors and each of the executive officers set forth
in the Summary Compensation Table and all of the directors and executive
officers of the Company as a group.

SECURITY OWNERSHIP OF MANAGEMENT

CLASS A COMMON STOCK

NUMBER OF SHARES
AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------------- ----------------------- --------
Lewis S. Ranieri..................... 1,283,067(2) 4.53%
Salvatore A. Ranieri................. 759,543(3) 2.68
Barry C. Burkholder.................. 139,455 *
Lawrence Chimerine................... 6,138 *
David M. Golush...................... 342,340 1.21
Paul M. Horvitz...................... 4,138 *
Alan E. Master....................... 1,430(4) *
Anthony J. Nocella................... 43,614 *
Scott A. Shay........................ 764,820(5) 2.70
Patricia A. Sloan.................... 156,745 *
Michael S. Stevens................... -- *
Kendrick R. Wilson III............... 227,311(6) *
Ronald D. Coben...................... 6,791 *
Leslie H. Green...................... 6,791 *
Jonathon K. Heffron.................. 43,614 *
Directors and executive officers as a
group (18 persons)................. 3,805,294 13.42%

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

* Percentages do not exceed 1% of the issued and outstanding shares.

(1) Calculated in accordance with Rule 13d-3 under the Exchange Act. Nature of
beneficial ownership is direct unless indicated otherwise by footnote.
Beneficial ownership of shares owned indirectly arises from shared voting
and investment power, unless otherwise indicated.

(2) Includes 1,210,933 shares held by LSR Hyperion Corp., a corporation that is
wholly owned by Mr. Ranieri; 43,403 shares owned by Hyperion Funding Corp.,
a corporation of which Mr. Ranieri is a stockholder and a director; and
19,506 shares held by Ranieri Bros. Shay & Co., Inc., a corporation, of
which Mr. Ranieri is a stockholder and a director. Excludes 608 shares held
as custodian for minors, as to which Mr. Ranieri disclaims beneficial
ownership.

(3) All shares are held by SAR Hyperion Corp., a corporation that is wholly
owned by Mr. Ranieri. Excludes 6,078 shares held as custodian for a minor,
as to which Mr. Ranieri disclaims beneficial ownership.

(4) Includes 1,380 shares held by Mr. Master's wife.

(5) Includes 759,453 shares held by SAS Hyperion Corp., a corporation that is
wholly owned by Mr. Shay.

(6) All shares are held by KRW Hyperion Corp., a corporation that is wholly
owned by Mr. Wilson.

120
<PAGE>
PRINCIPAL STOCKHOLDERS, BANK PREFERRED STOCK

The following table sets forth with respect to the Bank's Preferred Stock,
Series A and Series B, as of the date hereof: (i) shares beneficially owned by
all directors; (ii) each of the executive officers named in the Summary
Compensation Table set forth herein; and (iii) shares beneficially owned by all
directors, and executive officers as a group.

PREFERRED STOCK
<TABLE>
<CAPTION>
SERIES A SERIES B
------------------------------------ ------------------------------------
NUMBER OF SHARES NUMBER OF SHARES
AND NATURE OF PERCENT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP(1) OF CLASS BENEFICIAL OWNERSHIP(1) OF CLASS
- ------------------------------------- ----------------------- --------- ----------------------- ---------
<S> <C> <C> <C> <C>
Lewis S. Ranieri..................... -- * -- *
Salvatore A. Ranieri................. -- * -- *
Barry C. Burkholder.................. 8,000 * -- *
Lawrence Chimerine................... 1,000 * 1,000 *
David M. Golush...................... 2,100 * -- *
Paul M. Horvitz...................... 400(2) * -- *
Alan E. Master....................... 600 * 2,000 *
Anthony J. Nocella................... 1,000 * 2,000 *
Scott A. Shay........................ -- * -- *
Patricia A. Sloan.................... -- * -- *
Michael S. Stevens................... -- * -- *
Kendrick R. Wilson III............... -- * -- *
Ronald D. Coben...................... 200 * -- *
Leslie H. Green...................... 1,000 * 1,000 *
Jonathon K. Heffron.................. 1,400(3) * -- *
Directors and executive officers as a
group (18 persons)................. 16,070 * 10,000 *
</TABLE>
- ------------

* Percentages do not exceed 1% of the issued and outstanding shares.

(1) Calculated in accordance with Rule 13d-3 under the Exchange Act. Nature of
beneficial ownership is direct unless indicated otherwise by footnote.

(2) 200 shares direct, 200 shares owned by spouse.

(3) 1,000 shares direct, 400 shares held as custodian for minor children.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Bank may from time to time make home mortgage or consumer loans to
directors, officers, and employees. Any such loan will be made in the ordinary
course of business, and on the same terms and conditions, including interest
rates and collateral, as those of comparable transactions prevailing at the time
with non-affiliated parties. The Bank had no loans to directors or executive
officers outstanding in fiscal 1996, 1995 or 1994.

Historically, expenses paid to related parties were (i) for services
provided in connection with hedging and asset and liability management
strategies, and (ii) for services provided in connection with the management and
marketing of real estate properties. No such expenses were incurred in fiscal
1996, 1995 or 1994. At September 30, 1996, 1995 and 1994, the Company and the
Bank had no outstanding receivables from or payables to related parties other
than those related to participation in the filing of the consolidated tax return
and there are no loans outstanding to directors, executive officers, or
principal holders of the Company's equity securities.

As a general benefit to all full-time employees with at least six months of
service (excluding executive officers), the Bank, through its Mortgage Banking
Group, will waive the 1% origination fee for a mortgage loan for the purchase or
refinance of the employee's principal residence. In addition, the Bank offers a
0.50% discount on its posted rates for consumer installment loans made to
employees.

121
<PAGE>
The disinterested directors of the Bank have approved an agreement with a
subsidiary of Hyperion
Partners II, Cardholder Management Services L.P. ("CMS"), an affilate of the
Bank, whereby CMS acts as the servicer for a debit card offered to customers of
the Bank and a credit card portfolio originated by the Bank. Lewis S. Ranieri,
Scott A. Shay, David M. Golush and Patricia A. Sloan, who are directors of the
Company, have a material interest in Hyperion Partners II. The Company believes
that the terms and conditions of this agreement are as favorable to the Bank as
those that could have been arranged with an independent third party.

In August 1996, the Company entered into a consulting agreement pursuant to
which Lewis S. Ranieri serves as a consultant to the Company providing strategic
and managerial advice to the Company in exchange for an annual consulting fee of
$250,000. The consulting agreement will be in effect until the earliest of (i)
the third anniversary of the agreement, (ii) the date that is 180 days after the
date on which either Mr. Ranieri or the Company delivers written notice to the
other party terminating the agreement, and (iii) the date on which Mr. Ranieri
becomes disabled or dies. The consulting agreement does not prevent Mr. Ranieri
from engaging in business endeavors which may be competitive with the businesses
of the Company. Mr. Ranieri is paid an Annual Retainer and meeting fees for his
service as a director of the Company and of the Bank.

The Bank is a party to a written investment advisory services agreement
which provides for payment by the Bank to Hyperion Capital, an affiliate of the
Bank, of $175,000 per year for investment advisory services and for payment by
Hyperion Capital to the Bank of $175,000 for information regarding the Bank's
mortgage pipeline. The Company believes that the terms and conditions of this
agreement are as favorable to the Bank as those that could have been arranged
with an independent third party.

The Company and the Bank have entered into an agreement with Hyperion
Partners acknowledging the relative value, as among the parties, of their claims
in the pending litigation. See "Legal Proceedings". The agreement confirms
that the Company and the Bank are entitled to receive 85% of the amount, if any,
recovered as a result of the settlement of or a judgment on such claims, and
that Hyperion Partners is entitled to receive 15% of such amount. The agreement
was approved by the disinterested directors of the Company. Plaintiffs will
continue to cooperate in good faith and will use their best efforts to maximize
the total amount, if any, that they may recover.

Prior to January 1993, Hyperion Holdings, as a subsidiary of Hyperion
Partners, held a majority interest in a number of closely-held corporations,
including Hyperion Capital, Centeq Holdings Inc., which held the Centeq
Companies, which were real estate service companies, and general partners in
limited partnerships that held real estate investments. See "Selling
Stockholders". In January 1993, Hyperion Holdings transferred all of its
holdings to Hyperion Partners in exchange for a note of approximately $25
million which was paid out to Hyperion Partners in April 1996 in connection with
the Restructuring. See "Prospectus Summary -- Background of the Offering".

122
<PAGE>
SELLING STOCKHOLDERS

The Selling Stockholders consist of the general partners and certain of the
limited partners of Hyperion Partners, and three other entities with which an
affiliate of Hyperion Partners has a fiduciary relationship. The Selling
Stockholders received Class A Common Stock and Class B Common Stock in the
Restructuring which was effected in June 18, 1996. See "Prospectus
Summary -- Background of the Offering". The following table sets forth
information with respect to the beneficial ownership of Common Stock by the
Selling Stockholders as of the date of this Prospectus and the number of shares
of Class A Common Stock offered hereby.

<TABLE>
<CAPTION>
SHARES OF SHARES OF TOTAL PERCENTAGE SHARES SHARES
CLASS A CLASS B SHARES OF OF AVAILABLE AVAILABLE
COMMON COMMON COMMON COMMON FOR SALE FOR SALE
STOCK STOCK STOCK STOCK FEBRUARY 10, AUGUST 14,
HOLDER OWNED OWNED OWNED OWNED 1997(8) 1997(8)
- ---------------------------------------- --------- --------- --------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
LSR Hyperion(1)......................... 1,210,933 -- 1,210,933 3.83% -- 198,184
SAR Hyperion Corp(2).................... 759,543 -- 759,543 2.40% -- 759,543
SAS Hyperion Corp(3).................... 759,543 -- 759,543 2.40% -- 759,543
Hyperion Funding Corp.(4)............... 43,403 -- 43,403 0.14% -- 43,403
Lewis S. Ranieri........................ 9,225 -- 9,225 0.03% 9,225 --
Ranieri Bros., Shay & Co.(5)............ 19,506 -- 19,506 0.06% 19,506 --
KRW Hyperion Corp(6).................... 227,311 -- 227,311 0.72% -- 227,311
CJK Hyperion Corp(7).................... 183,343 -- 183,343 0.58% -- 183,343
David M. Golush......................... 342,340 -- 342,340 1.08% -- 342,340
Patricia A. Sloan....................... 156,745 -- 156,745 0.50% -- 156,745
David W. Marcus......................... 142,866 -- 142,866 0.45% -- 142,866
Jeffrey P. Cheeseman.................... 128,813 -- 128,813 0.41% 2,630 126,183
Robert A. Perro......................... 79,386 -- 79,386 0.25% -- 79,386
Equitable Deal Flow Fund L.P............ 733,774 -- 733,774 2.32% 733,774 --
Equitable Capital Partners L.P.......... 877,908 -- 877,908 2.78% 877,908 --
Equitable Capital Partners (Retirement
Fund) L.P............................. 432,403 -- 432,403 1.37% 432,403 --
Salvatore A. Ranieri Cust. for Margaret
Ranieri, NY/UGMA --
Age 21................................ 6,078 -- 6,078 0.02% 6,078 --
Lewis S. Ranieri A/C/F Eric Jimenez NJ
UTMA -- 21............................ 304 -- 304 0.00% 304 --
Lewis S. Ranieri A/C/F Jason Jimenez NJ
UTMA -- 21............................ 304 -- 304 0.00% 304 --
Ranieri Family Trust F/B/O -- Claudia L.
Ranieri U/A 7/1/93.................... 3,994 -- 3,994 0.01% 3,994 --
Ranieri Family Trust F/B/O -- Angela S.
Ranieri U/A 7/1/93.................... 3,994 -- 3,994 0.01% 3,994 --
Trust F/B/O Dara Jen Golush U/A
12/20/89.............................. 2,496 -- 2,496 0.01% 2,496 --
Trust F/B/O Jason Reid Golush U/A
12/20/89.............................. 2,170 -- 2,170 0.01% 2,170 --
Gail W. Marcus.......................... 1,845 -- 1,845 0.01% 1,845 --
Janet L. Perro.......................... 867 -- 867 0.00% 867 --
The Sweater Trust....................... 520,908 -- 520,908 1.65% 520,908 --
Sun America Life Insurance.............. 868,181 -- 868,181 2.75% 868,181 --
Marilyn B. Arison....................... 694,545 -- 694,545 2.20% 694,545 --
Masco Capital Corp...................... 434,091 -- 434,091 1.37% 434,091 --
Leslie Wexner........................... 347,273 -- 347,273 1.10% 347,273 --
The Airlie Group........................ 347,273 -- 347,273 1.10% 347,273 --
Julius Berman........................... 7,130 -- 7,130 0.02% 7,130 --
FAME Associates......................... 111,710 -- 111,710 0.35% 111,710 --
Institutional Interests................. 266,993 -- 266,993 0.85% 266,993 --
Houston Fireman's Relief & Retirement... 434,091 -- 434,091 1.37% 434,091 --
Alpine Investment Partners.............. 173,636 -- 173,636 0.55% 173,636 --
Mortimer Zuckerman...................... 17,363 -- 17,363 0.05% 17,363 --
Edward Linde............................ 17,363 -- 17,363 0.05% 17,363 --
Connie S. Maniatty...................... 17,363 -- 17,363 0.05% 17,363 --
Micha Astrachan......................... 53,571 -- 53,571 0.17% 53,571 --
Scott Shay.............................. 5,367 -- 5,367 0.02% 5,367 --
Trust F/B/O Benjamin Jacob Shay U/A
7/23/93............................... 2,254 -- 2,254 0.01% 2,254 --
Trust F/B/O Ariel Rebecca Shay U/A
7/23/93............................... 2,254 -- 2,254 0.01% 2,254 --
Henry Reichman.......................... 144,704 -- 144,704 0.45% 144,704 --
Alan & Carol Charity Fund Inc........... 1,891 -- 1,891 0.01% 1,891 --
Barbara & Mark Kronman Foundation....... 1,757 -- 1,757 0.01% 1,757 --
United Congregation Mesorah............. 407,882 -- 407,882 1.29% 407,882 --
CHESED Congregations of America......... 214,675 -- 214,675 0.68% 214,675 --
</TABLE>

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

(1) All stock owned by Lewis S. Ranieri.

(2) All stock owned by Salvatore A. Ranieri.

(3) All stock owned by Scott A. Shay.

(4) All stock owned by Lewis S. Ranieri, Salvatore A. Ranieri, Scott A. Shay and
Kendrick R. Wilson III.

(5) All stock owned by Lewis S. Ranieri, Salvatore A. Ranieri, Scott A. Shay,
David M. Golush, Patricia A. Sloan, David W. Marcus and Jeffrey P.
Cheeseman.

(6) All stock owned by Kendrick R. Wilson III.

(7) All stock owned by Clinton J. Kendrick.

(8) May represent shares of both Class A Common Stock and Class B Common Stock
owned, all of which will be offered as Class A Common Stock. Additional
restrictions on sales of such Shares also may apply. See " -- Selling
Stockholder Letter Agreement" and "Description of Capital
Stock -- Restrictions on Transfers of Stock".

123
<PAGE>
SELLING STOCKHOLDER LETTER AGREEMENT

The following summary of the material provisions of the Letter Agreement
does not purport to be complete and is qualified in its entirety by reference to
the Letter Agreement which is an exhibit to the Registration Statement on Form
S-1 (File No. 333-06229) filed by the Company with the Commission on August 7,
1996.

Each of the Selling Stockholders has entered into a Letter Agreement with
each of Hyperion Partners and the Company (the "Letter Agreement"). Pursuant
to the Letter Agreement, each Selling Stockholder consented to the Distribution
and agreed to hold the common stock of Hyperion Holdings received pursuant to
the Distribution according to the terms of such Letter Agreement. Also, each
Selling Stockholder (including those who prior to the Merger held voting shares
of capital stock of Hyperion Holdings and those who prior to the Merger held
shares of Class C Common Stock), by executing the Letter Agreement and agreeing
to be bound thereby, consented to and approved of, for purposes of Section 228
of the DGCL and otherwise, the Merger Agreement, dated as of June 17, 1996, by
and between Hyperion Holdings and the Company (the "Merger Agreement"), and
the Merger.

Pursuant to the Letter Agreement, each Selling Stockholder acknowledged (i)
that under the By-Laws of Hyperion Holdings, it is not permitted to Transfer any
shares of capital stock of Hyperion Holdings except pursuant to the Merger
Agreement and (ii) that, under the By-Laws, after the Distribution and prior to
the consummation of the August Offering, such stockholder would not effect any
Transfer of shares of capital stock of the Company (a) in the case of Selling
Stockholders who received shares in respect of Class C Common Stock in the
Merger, except as such stockholder would have been permitted to transfer such
Class C Common Stock under the Stockholders' Agreement, dated as of January 5,
1990, by and among the Company and the other parties specified therein (the
"Stockholders Agreement"), and (b) in the case of any other Selling
Stockholders, except in accordance with the terms of the limited partnership
agreement of Hyperion Partners applicable to the transfer of partnership
interests of Hyperion Partners. Each 5% Stockholder acknowledged that it is not
permitted, prior to the earlier of an initial public offering ("IPO") or
October 31, 1996, to transfer any such shares owned by such 5% Stockholder
(other than to a person of whom the 5% Stockholder is a wholly-owned subsidiary)
or acquire any additional such shares. If an IPO had not been consummated within
six months of the date of the Letter Agreement, the Company would have been
obligated to provide each stockholder with registration and tag-along rights
substantially similar to those set forth in the Stock Purchase Agreement, dated
as of August 1, 1989, by and among the Company and certain Selling Stockholders
and the Stockholders' Agreement. Under the Letter Agreements, each Selling
Stockholder was also obligated to provide certain cooperation to the Company in
the case of an IPO, including entering into customary underwriting and lockup
agreements.

Each Selling Stockholder retaining shares of Common Stock is not permitted
to sell such shares for (1) one year after the August Offering, if such stock
was received in respect of general partnership interests in Hyperion Partners or
(2) six months after the August Offering (although a regulated New Jersey
insurance company may sell shares in a private off-market transaction subject to
Rule 144 limits and reasonable representations requested by the underwriters).
Subject to certain adjustments by the Board of Directors of the Company based
upon advice of the underwriters to improve the marketability of the shares of
Common Stock to be sold in the August Offering, each 5% Stockholder was
permitted to sell up to 45% of such holder's shares of Common Stock in the
August Offering, except for LW-SP1 and LW-SP2, affiliates of Lehman Brothers
Inc., which were prohibited from selling any shares until August 8, 1998, and
any other Selling Stockholder was permitted to sell up to 16% of its shares in
the August Offering (subject to increase pro rata in the discretion of the Board
of Directors of the Company if the 5% Stockholders elected to sell fewer than
the maximum number of shares they are permitted to sell in the August Offering).
Each Selling Stockholder acknowledged that, except for shares that could have
been sold pursuant to the August Offering but were not sold at the election of
such 5% Stockholder, no 5% Stockholder is permitted by the By-Laws to acquire or
Transfer any shares of capital stock of the Company for three years following
the August Offering (or upon termination of the Letter Agreement, if earlier)
unless as of an earlier date the Company Board determines that such acquisition
or Transfer would not be reasonably likely to have a material adverse effect on
the tax position of the Company.

124
<PAGE>
The Board of Directors of the Company approved sales of shares of Class A
Common Stock in excess of the 45% and 16% limitations as necessary to satisfy
the underwriters' over-allotment options in the August Offering.

Pursuant to the Letter Agreement, as soon as practicable after the August
Offering, the Company is obligated to file, and to use best efforts to cause to
promptly become effective, a registration statement under the Securities Act
with respect to shares of Class A or Class B Common Stock then held by any
Selling Stockholder. The Company is also obligated to take action to keep such
registration statement effective (subject to occasional periods of suspension of
such effectiveness as necessary) until the first to occur of (i) the date on
which all shares of Common Stock registered thereunder have been sold pursuant
thereto, (ii) December 31, 1999, and (iii) the date on which such registration
under the Securities Act is no longer required to sell such shares without
restriction. The Registration Statement of which this Prospectus forms a part is
being filed by the Company to satisfy this obligation.

Pursuant to the terms of the Letter Agreement, this Prospectus covers all
of the Shares received by the Selling Stockholders in the Restructuring and not
sold in the August Offering. This Prospectus enables the Selling Stockholders to
sell the Shares held by them upon the expiration of the restrictions on sale and
transfer to which such Shares are subject. The table above sets forth the Shares
held by each Selling Stockholder covered by this Prospectus and also indicates
the time when the Shares held by each of the Selling Stockholders will become
available for sale: February 10, 1997 or August 14, 1997. The sale of Shares may
also be subject to additional restrictions on sale and transfer contained in the
Certificate and By-Laws. See "Description of Capital Stock -- Common
Stock -- Restrictions on Transfer of Stock". The Letter Agreement also
restricts the conversion rights of holders of Class B Common Stock. See
"Description of Capital Stock -- Common Stock -- Conversion".

PLAN OF DISTRIBUTION

All or part of the Shares may be offered by the Selling Stockholders from
time to time in transactions on the Nasdaq, in privately negotiated
transactions, through the writing of options on the Shares or a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The methods by which the Shares may be sold or
distributed may include, but not be limited to, the following: (a) a cross or
block trade in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account; (c) an exchange
distribution in accordance with the rules of such exchange; (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(e) privately negotiated transactions; (f) short sales or borrowings, returns
and reborrowings of the Shares pursuant to stock loan agreements to settle short
sales; and (g) delivery in connection with the issuance of securities by
issuers, other than the Company that are exchangeable for (whether optional or
mandatory), or payable in, such Shares (whether such securities are listed on a
national securities exchange or otherwise) or pursuant to which such Shares may
be distributed, and (h) a combination of any such methods of sale or
distribution. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from the Selling Stockholders or
from the purchasers in amounts to be negotiated immediately prior to the sale.
The Selling Stockholders may also sell such shares in accordance with Rule 144
under the Securities Act. If Shares are sold in an underwritten offering, the
Shares may be acquired by the underwriters for their own account and may be
further resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of sale. The names of the underwriters with respect to
any such offering and the terms of the transactions, including any underwriting
discounts, concessions or commissions and other items constituting compensation
of the underwriters and broker-dealers, if any, will be set forth in a
Prospectus Supplement relating to such offering. Any public offering price and
any discounts, concessions or commissions allowed or reallowed or paid to
broker-dealers may be changed from time to time. Unless otherwise set forth in a
Prospectus Supplement, the obligations of the underwriters to purchase the
Shares will be subject to certain conditions precedent and the underwriters will
be obligated to purchase all of the Shares specified in such Prospectus
Supplement if any such Shares are purchased. This Prospectus also may be used by
donees of the Selling Stockholders or by other persons acquiring Shares,
including brokers who borrow the Shares to settle short sales

125
<PAGE>
of shares of the Common Stock, and who wish to offer and sell such Shares under
circumstances requiring or making desirable its use.

From time to time the Selling Stockholders may engage in short sales, short
sales against the box, puts and calls and other transactions in securities of
the Company or derivatives thereof, and may sell and deliver the shares in
connection therewith. From time to time Selling Stockholders may pledge their
Shares pursuant to the margin provisions of their respective customer agreements
with their respective brokers or otherwise. Upon a default by a Selling
Stockholder, the broker or pledgees may offer and sell the pledged shares of
Class A Common Stock from time to time.

The Company has agreed to use its best efforts to maintain the
effectiveness of the registration of the Shares being offered hereunder until
the first to occur of (i) the date on which all shares of Common Stock
registered thereunder have been sold pursuant thereto, (ii) December 31, 1999,
and (iii) the date on which such registration under the Securities Act is no
longer required to sell such shares without restriction.

None of the proceeds from the sales of the Shares by the Selling
Stockholders will be received by the Company. No underwriting commissions or
discounts will be paid by the Company in connection with the Offering. The
Company has agreed to bear certain expenses in connection with the registration
of the Shares being offered by the Selling Stockholders. The Company has agreed
to indemnify the Selling Stockholders and any underwriters, brokers, dealers or
agents (and controlling persons) against certain liabilities, including certain
liabilities under the Securities Act.

The Selling Stockholders and any broker-dealers who act in connection with
the sale of Shares hereunder may be deemed to be "underwriters" as that term
is defined in the Securities Act, and any commissions received by them and
profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.

No person is authorized in connection with any offering made hereby to give
any information or to make any representation not contained or incorporated by
reference in this Prospectus, and any information or representation not
contained or incorporated herein must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, by any person in any jurisdiction in which
it is unlawful for such person to make such offer or solicitation. Neither the
delivery of this Prospectus at any time nor any sale made hereunder shall, under
any circumstances, imply that the information herein is correct as of any date
subsequent to the date hereof.

DESCRIPTION OF CAPITAL STOCK

The following summary of the material provisions of the Certificate and
By-Laws and the Letter Agreements and does not purport to be complete and is
qualified in its entirety by reference to the Certificate and By-Laws and the
Letter Agreements which are exhibits to the Registration Statement on Form S-1
(File No. 333-06229) filed by the Company with the Commission on August 7, 1996.

AUTHORIZED CAPITAL STOCK

The Company's authorized capital stock consists of 10 million shares of
preferred stock, par value $0.01 per share ("Preferred Stock"), 40 million
shares of Class A Common Stock and, 40 million shares of Class B Common Stock.
As of the date of this Prospectus, 28,354,276 shares of Class A Common Stock and
3,241,320 shares of Class B Common Stock were outstanding. All of the shares of
Class A Common Stock outstanding are validly issued, fully paid and
nonassessable.

COMMON STOCK

DIVIDENDS

The holders of each class of Common Stock, to the exclusion of the holders
of Preferred Stock, share equally, share for share, in all dividends or other
distributions. The Company's ability to pay dividends is limited by certain
restrictions generally imposed on Delaware corporations. Under these
restrictions, dividends may be paid only out of "surplus," as defined by
Delaware law, or, if there should be no surplus, out of the corporation's

126
<PAGE>
net profits for the fiscal year in which the dividend is declared and/or the
preceding fiscal year. See "Dividend Policy".

LIQUIDATION RIGHTS

In the event of a liquidation, dissolution or winding up of the affairs of
the Company, after payment has been made to the holders of Preferred Stock of
the full amount to which they are entitled, the holders of Common Stock share
ratably according to the number of shares of Common Stock held by them, in all
remaining assets of the Company available for distribution to its stockholders.

VOTING RIGHTS

The holders of Class A Common Stock are entitled to vote on each matter on
which the stockholders of the Company are entitled to vote, and each holder of
Class A Common Stock is entitled to one vote for each share held. The holders of
Class B Common Stock do not have any voting rights except as otherwise required
by applicable law.

CONVERSION

Each share of Class B Common Stock is convertible into one share of Class A
Common Stock (a) automatically, upon the sale or other transfer of such share of
Class B Common Stock to a person other than an Affiliate (as defined in the
Certificate) of the holder or (b) at the election of the holder of such share of
Class B Common Stock, subject to the terms, conditions and restrictions set
forth in the Letter Agreements, except that clause (b) does not apply to shares
of Class B Common Stock held by The Equitable Life Assurance Society of the
United States or Equitable Variable Life Insurance Company. An "Affiliate" of
a person is defined in the Certificate as any other person directly or
indirectly controlling, controlled by or under common control with such person,
and "control" with respect to any person means the possession, directly or
indirectly, of the power to direct the management and policies of such person,
whether through the ownership of voting securities, by contract or otherwise.
Elective conversion of Class B Common Stock pursuant to clause (b) of the first
sentence of this paragraph was not permitted to be effected by a Selling
Stockholder prior to the earlier to occur of the consummation of an initial
public offering of shares of capital stock of the Company (including the August
Offering) or October 31, 1996, unless the Board of Directors of the Company
agrees to such conversion or unless such holder is subject to Title I of ERISA.
Pursuant to the Letter Agreement no holder of Class B Common Stock may convert
such Class B Common Stock to Class A Common Stock if after the conversion the
holder would beneficially own (within the meaning of applicable federal banking
and thrift regulations) more than 9.9% of the outstanding shares of Class A
Common Stock (or such lower percentage as may apply to such holder under
regulatory restrictions). In addition, based upon certain federal bank
regulations requirements, the shares of Class B Common Stock held by The
Prudential Insurance Company of America are currently treated as being non-
convertible into shares of Class A Common Stock under the restrictions contained
in the Letter Agreement. The Management Stock Grant Agreements contain
restrictions on the ability to convert shares of Class B Common Stock into Class
A Common Stock that are substantially similar to the restrictions contained in
the Letter Agreements.

RESTRICTIONS ON TRANSFERS OF STOCK

The Certificate prohibits and renders void any transfer of legal or
beneficial ownership of the capital stock of the Company, including warrants,
options and other arrangements that would be treated as options or as stock of
the Company under the Code and applicable IRS regulations, prior to the earlier
of (i) three years following the consummation of an offering of the Company's
capital stock, and (ii) October 31, 1996, if the trading of Common Stock on the
New York Stock Exchange or NASDAQ has not occurred prior to October 31, 1996, in
either case if such transfer would either (a) cause any person or group of
persons to become a 5% Stockholder or (b) increase the percentage ownership of a
5% Stockholder. The Certificate's prohibition will not, however, preclude the
settlement of any transaction on the NASDAQ, and will not apply to any
transaction approved in advance by the Board of Directors of the Company or made
in compliance with exceptions adopted by the Board of Directors of the Company.
This restriction was intended to prevent transfers of stock of the Company from

127
<PAGE>
triggering an Ownership Change which would result in the limitation of certain
potential tax benefits available to the Company. See "Regulation -- Taxation".

Also, pursuant to the Letter Agreement, the holders of shares of Class B
Common Stock may not transfer such shares of Class B Common Stock other than (i)
to an affiliate, (ii) in a widely-dispersed offering of shares of the Company's
capital stock under an effective registration statement filed under the
Securities Act, or (iii) to any single person, entity or group acting in concert
if the number of shares of Class B Common Stock, if converted into shares of
Class A Common Stock, would entitle the holder to exercise more than 2% of the
voting power of all of the shares of Class A Common Stock that would be
outstanding upon conversion of such shares of Class B Common Stock.

PREFERRED STOCK

The Certificate authorizes the Board of Directors of the Company to
establish one or more series of Preferred Stock and to determine, with respect
to any series of Preferred Stock, the terms and rights of such series, including
(i) the designation of the series, (ii) the number of shares of the series,
which number the Company Board may thereafter (except where otherwise provided
in the applicable certificate of designation) increase or decrease (but not
below the number of shares thereof then outstanding), (iii) whether dividends,
if any, will be cumulative or noncumulative, and, in the case of shares of any
series having cumulative dividend rights, the date or dates or method of
determining the date or dates from which dividends on the shares of such series
shall be cumulative, (iv) the rate of any dividends (or method of determining
such dividends) payable to the holders of the shares of such series, any
conditions upon which such dividends will be paid and the date or dates or the
method for determining the date or dates upon which such dividends will be
payable; (v) the redemption rights and price or prices, if any, for shares of
the series, (vi) the terms and amounts of any sinking funds provided for the
purchase or redemption of shares of the series, (vii) the amounts payable on and
the preferences, if any, of shares of the series in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the affairs of the
Company, (viii) whether the shares of the series will be convertible or
exchangeable into shares of any other class or series, or any other security, of
the Company or any other corporation, and, if so, the specification of such
other class or series or such other security, the conversion or exchange price
or prices or rate or rates, any adjustments thereof, the date or dates as of
which such shares will be convertible or exchangeable and all other terms and
conditions upon which such conversion or exchange may be made, (ix) restrictions
on the issuance of shares of the same series or of any other class or series,
(x) the voting rights, if any, of the holders of the shares of the series, and
(xi) any other relative rights, preferences and limitations of such series.

The Company believes that the ability of the Board of Directors of the
Company to issue one or more series of Preferred Stock, while providing the
Company with flexibility in structuring possible future financings and
acquisitions and in meeting other corporate needs which might arise, could make
it more difficult for a third party to acquire a majority of the outstanding
voting stock. The authorized shares of Preferred Stock, as well as shares of
Common Stock, will be available for issuance without further action by the
Company's stockholders, unless such action is required by applicable law or the
rules of any stock exchange or automated quotation system on which the Company's
securities may be listed or traded. If the approval of the Company's
stockholders is not required for the issuance of shares of Preferred Stock or
Common Stock, the Board of Directors of the Company may determine not to seek
stockholder approval. Accordingly, the issuance of Preferred Stock may be used
as an "anti-takeover" device without further action on the part of the
Company's stockholders.

Although the Board of Directors of the Company has no intention at the
present time of doing so, it could issue a series of Preferred Stock that could,
depending on the terms of such series, impede the completion of a merger, tender
offer or other takeover attempt. The Board of Directors of the Company will make
any determination to issue such shares based on its judgment as to the best
interests of the Company and its stockholders. The Board of Directors of the
Company, in so acting, could issue Preferred Stock having terms that could
discourage an acquisition attempt through which an acquirer may be able to
change the composition of the Board of Directors of the Company, including a
tender offer or other transaction that some, or a majority, of the Company's
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock.

128
<PAGE>
CERTAIN PROVISIONS OF THE CERTIFICATE AND BY-LAWS; ANTI-TAKEOVER EFFECTS

BOARD OF DIRECTORS

The Certificate provides that, except as otherwise fixed by or pursuant to
the provisions of a certificate of designations setting forth the rights of the
holders of any class or series of Preferred Stock, the number of the directors
of the Company will be fixed from time to time exclusively pursuant to a
resolution adopted by a majority of the total number of directors which the
Company would have if there were no vacancies (the "Whole Board") (but shall
not be less than three). The directors, other than those who may be elected by
the holders of Preferred Stock, will be classified with respect to the time for
which they severally hold office into three classes, as nearly equal in number
as possible, one class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1996, another class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1997 and another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1998, with each director to
hold office until its successor is duly elected and qualified. Commencing with
the 1996 annual meeting of stockholders, directors elected to succeed directors
whose terms then expire will be elected for a term of office to expire at the
third succeeding annual meeting of stockholders after their election, with each
director to hold office until such person's successor is duly elected and
qualified.

The Certificate provides that, except as otherwise provided for or fixed by
or pursuant to a certificate of designations setting forth the rights of the
holders of any class or series of Preferred Stock, newly created directorships
resulting from any increase in the number of directors and any vacancies on the
Board of Directors of the Company resulting from death, resignation,
disqualification, removal or other cause will be filled by the affirmative vote
of a majority of the remaining directors then in office, even though less than a
quorum of the Board of Directors of the Company, and not by the stockholders.
Any director elected in accordance with the preceding sentence will hold office
for the remainder of the full term of the class of directors in which the new
directorship was created or the vacancy occurred and until such director's
successor shall have been duly elected and qualified. No decrease in the number
of directors constituting the Board of Directors of the Company will shorten the
term of any incumbent director. Subject to the rights of holders of Preferred
Stock, any director may be removed from office only for cause by the affirmative
vote of the holders of at least a majority of the voting power of all Voting
Stock then outstanding, voting together as a single class.

These provisions would preclude a third party from removing incumbent
directors and simultaneously gaining control of the Board of Directors of the
Company by filling the vacancies created by removal with its own nominees. Under
the classified board provisions described above, it would take at least two
elections of directors for any individual or group to gain control of the Board
of Directors of the Company. Accordingly, these provisions could discourage a
third party from initiating a proxy contest, making a tender offer or otherwise
attempting to gain control of the Company.

STOCKHOLDER ACTION BY UNANIMOUS WRITTEN CONSENT; SPECIAL MEETINGS

Except as otherwise required by law and subject to the rights of the
holders of any Preferred Stock, special meetings of stockholders of the Company
for any purpose or purposes may be called only by the Board of Directors of the
Company pursuant to a resolution stating the purpose or purposes thereof
approved by a majority of the Whole Board or by the Chairman of the Board. Any
power of stockholders to call a special meeting is specifically denied. No
business other than that stated in the notice shall be transacted at any special
meeting. Stockholders entitled to vote at an annual or special meeting may act
by written consent in lieu of such meeting only if such consent is unanimous.
These provisions may have the effect of delaying consideration of a stockholder
proposal until the next annual meeting unless a special meeting is called by the
Board of Directors of the Company or the Chairman of the Board.

ADVANCE NOTICE PROCEDURES

The By-Laws establish an advance notice procedure for stockholders to make
nominations of candidates for election as directors or to bring other business
before an annual meeting of stockholders of the Company (the "Stockholder
Notice Procedure"). The Stockholder Notice Procedure provides that only
individuals who are nominated by, or at the direction of, the Chairman of the
Board, or by a stockholder who has given timely written

129
<PAGE>
notice to the Secretary of the Company prior to the meeting at which directors
are to be elected, will be eligible for election as directors of the Company.
The Stockholder Notice Procedure also provides that at an annual meeting only
such business may be conducted as has been brought before the meeting by, or at
the direction of, the Chairman of the Board or the Board of Directors of the
Company, or by a stockholder who has given timely written notice to the
Secretary of the Company of such stockholder's intention to bring such business
before such meeting. Under the Stockholder Notice Procedure, for notice of
stockholder nominations to be made at an annual meeting to be timely, such
notice must be received by the Company not later than the close of business on
the 90th calendar day nor earlier than the close of business on the 120th
calendar day prior to the first anniversary of the preceding year's annual
meeting (except that, in the event that the date of the annual meeting is more
than 30 calendar days before or more than 60 calendar days after such
anniversary date, notice by the stockholder to be timely must be so delivered
not earlier than the close of business on the 120th calendar day prior to such
annual meeting and not later than the close of business on the later of the 90th
calendar day prior to such annual meeting or the 10th calendar day following the
day on which public announcement of a meeting date is first made by the
Company).

Notwithstanding the foregoing, in the event that the number of directors to
be elected to the Board of Directors of the Company is increased and there is no
public announcement by the Company naming all of the nominees for director or
specifying the size of the increased Board of Directors of the Company at least
100 calendar days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice also will be considered timely, but only with
respect to nominees for any new positions created by such increase, if it shall
be delivered not later than the close of business on the 10th calendar day
following the day on which such public announcement is first made by the
Company. Under the Stockholder Notice Procedure, for notice of a stockholder
nomination to be made at a special meeting at which directors are to be elected
to be timely, such notice must be received by the Company not earlier than the
close of business on the 120th calendar day prior to such special meeting and
not later than the close of business on the 90th calendar day prior to such
special meeting or the 10th calendar day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors of the Company to be elected at such
meeting.

In addition, under the Stockholder Notice Procedure, a stockholder's notice
to the Company proposing to nominate an individual for election as a director or
relating to the conduct of business other than the nomination of directors must
contain certain specified information. If the chairman of a meeting determines
that an individual was not nominated, or other business was not brought before
the meeting, in accordance with the Stockholder Notice Procedure, such
individual will not be eligible for election as a director, or such business
will not be conducted at such meeting, as the case may be.

AMENDMENT

The Certificate provides that the affirmative vote of the holders of at
least 80% of the Voting Stock, voting together as a single class, is required to
amend provisions of the Certificate relating to stockholder action without a
meeting; the calling of special meetings; the number, election and term of the
Company's directors; the filling of vacancies; and the removal of directors. The
Certificate further provides that the related By-Laws described above (including
the Stockholder Notice Procedure) may be amended only by the Board of Directors
of the Company or by the affirmative vote of the holders of at least 80% of the
voting power of the outstanding shares of Voting Stock, voting together as a
single class.

DELAWARE BUSINESS COMBINATION STATUTE

Section 203 of the DGCL provides that, subject to certain exceptions
specified therein, an "interested stockholder" of a Delaware corporation shall
not engage in any business combination, including mergers or consolidations or
acquisitions of additional shares of the corporation, with the corporation for a
three-year period following the time that such stockholder becomes an interested
stockholder unless (i) prior to such time, the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the

130
<PAGE>
voting stock of the corporation outstanding at the time the transaction
commenced (excluding certain shares), or (iii) at or subsequent to such time,
the business combination is approved by the board of directors of the
corporation and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding voting stock which
is not owned by the interested stockholder. Except as otherwise specified in
Section 203, an interested stockholder is defined to include any person that is
(x) the owner of 15% or more of the outstanding voting stock of the corporation,
or (y) is an affiliate or associate of the corporation and was the owner of 15%
or more of the outstanding voting stock of the corporation at any time within
the three-year period immediately prior to the date of determination; and the
affiliates and associates of any such person.

Under certain circumstances, Section 203 makes it more difficult for a
person who would be an interested stockholder to effect various business
combinations with a corporation for a three-year period. The Company has not
elected to be exempt from the restrictions imposed under Section 203. The
provisions of Section 203 may encourage persons interested in acquiring the
Company to negotiate in advance with the Board of Directors of the Company since
the stockholder approval requirement would be avoided if a majority of the
directors then in office approves either the business combination or the
transaction which results in any such person becoming an interested shareholder.
Such provisions also may have the effect of preventing changes in the management
of the Company. It is possible that such provisions could make it more difficult
to accomplish transactions which the Company's stockholders may otherwise deem
to be in their best interests.

LIABILITY OF DIRECTORS; INDEMNIFICATION

The Certificate provides that a director of the Company will not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except, if required by the DGCL as
amended from time to time, for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, which concerns unlawful payments of
dividends, stock purchases or redemptions, or (iv) for any transaction from
which the director derived an improper personal benefit. Neither the amendment
nor repeal of such provision will eliminate or reduce the effect of such
provision in respect of any matter occurring, or any cause of action, suit or
claim that, but for such provision, would accrue or arise prior to such
amendment or repeal.

While the Certificate provides directors with protection from awards for
monetary damages for breaches of their duty of care, it does not eliminate such
duty. Accordingly, the Certificate will have no effect on the availability of
equitable remedies such as an injunction or rescission based on a director's
breach of his or her duty of care.

The Certificate provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, will be indemnified and held harmless by
the Company to the fullest extent authorized by the DGCL, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss reasonably incurred or
suffered by such person in connection therewith. Such right to indemnification
includes the right to have the Company pay the expenses incurred in defending
any such proceeding in advance of its final disposition, subject to the
provisions of the DGCL. Such rights are not exclusive of any other right which
any person may have or thereafter acquire under any statute, provision of the
Certificate, By-Laws, agreement, vote of stockholders or disinterested directors
or otherwise. No repeal or modification of such provision will in any way
diminish or adversely affect the rights of any director, officer, employee or
agent of the Company thereunder in respect of any occurrence or matter arising
prior to any such repeal or modification. The Certificate also specifically

131
<PAGE>
authorizes the Company to maintain insurance and to grant similar
indemnification rights to employees or agents of the Company.

TRANSFER AGENT AND REGISTRAR

The Bank of New York is the transfer agent and registrar for the Class A
Common Stock.

LEGAL MATTERS

Certain legal matters with respect to the validity of the Class A Common
Stock offered hereby will be passed upon for the Company by Wachtell, Lipton,
Rosen & Katz, New York, New York.

EXPERTS

The consolidated financial statements of the Company as of September 30,
1996 and 1995 and for each of the three years in the period ended September 30,
1996 included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and have been
so included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.

AVAILABLE INFORMATION

This Prospectus, which constitutes a part of a Registration Statement filed
by the Company with the Commission under the Securities Act, omits certain of
the information set forth in the Registration Statement in accordance with the
rules and regulations of the Commission. Reference is hereby made to the
Registration Statement and to the exhibits thereto for further information with
respect to the Company and the securities offered hereby. Copies of the
Registration Statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained upon payment of the prescribed fee or may be
examined without charge at the public reference facilities of the Commission
described below. The Commission also maintains a Web site (http: //www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants such as the Company which file electronically with the
Commission.

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company with the Commission may be inspected and copied
at the public reference facility maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and the
following regional offices of the Commission: New York Regional Office, Seven
World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional
Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material also may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.

The Company furnishes its stockholders with annual reports containing
audited financial statements.

132

<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
-----

Independent Auditors' Report......... F-2

Consolidated Statements of Financial
Condition as of September 30, 1996
and 1995........................... F-3

Consolidated Statements of Operations
for the Years Ended September 30,
1996, 1995, and 1994............... F-4

Consolidated Statements of
Stockholders' Equity for the Years
Ended September 30, 1996, 1995, and
1994............................... F-5

Consolidated Statements of Cash Flows
for the Years Ended September 30,
1996, 1995, and 1994............... F-6

Notes to Consolidated Financial
Statements......................... F-8

All supplemental schedules are omitted as inapplicable or because the
required information is included in the Consolidated Financial Statements or
Notes thereto.

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
of Bank United Corp.:

We have audited the accompanying consolidated statements of financial
condition of Bank United Corp. and its subsidiary (collectively known as the
"Company") as of September 30, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended September 30, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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, such consolidated financial statements present fairly, in
all material respects, the consolidated financial position of the Company at
September 30, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 1996 in
conformity with generally accepted accounting principles.

Our audits were conducted for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The information as of
September 30, 1994, 1993, and 1992 and for the years ended September 30, 1993
and 1992 included in notes 3, 4, 5, and 8 is presented for the purpose of
additional analysis and is not a required part of the basic consolidated
financial statements. This information is the responsibility of the Company's
management. Such information has been subjected to the auditing procedures
applied in our audits of the basic consolidated financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
consolidated financial statements from which such information has been derived.

As discussed in notes 1 and 6 to the consolidated financial statements,
effective October 1, 1994, the Company changed its method of accounting for
mortgage servicing rights to conform with Statement of Financial Accounting
Standards No. 122.

DELOITTE & TOUCHE LLP
Houston, Texas
October 28, 1996

F-2
<PAGE>
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
----------------------------
NOTES 1996 1995
----------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............ $ 119,523 $ 112,931
Securities purchased under agreements
to resell and federal funds sold... 2 674,249 471,052
Trading account assets, at fair
value.............................. 1,149 1,081
Securities 3, 12
Held to maturity, at amortized
cost (fair value of $169
thousand in 1996 and $2.7
million in 1995)............... 168 1,902
Available for sale, at fair
value.......................... 64,376 114,111
Mortgage-backed securities 4, 9, 10
Held to maturity, at amortized
cost (fair value of $609.2
million in 1996 and $2,031
million in 1995)............... 630,048 2,051,304
Available for sale, at fair
value.......................... 1,027,860 346,959
Loans 5, 9
Held to maturity (net of the
allowance for credit losses of
$39.6 million in 1996 and $36.8
million in 1995)............... 7,227,153 7,763,676
Held for sale................... 292,335 496,564
Federal Home Loan Bank stock......... 179,643 225,952
Premises and equipment............... 40,209 37,687
Mortgage servicing rights............ 6 123,392 75,097
Intangible assets.................... 16,922 26,519
Real estate owned (net of allowance
for losses of $986 thousand in 1996
and $1.1 million in 1995).......... 29,744 23,764
Deferred tax asset................... 14 168,323 77,571
Other assets......................... 117,283 157,364
------------- -------------
TOTAL ASSETS......................... $ 10,712,377 $ 11,983,534
============= =============
LIABILITIES, MINORITY INTEREST, AND
STOCKHOLDERS' EQUITY
LIABILITIES
Deposits............................. 8 $ 5,147,945 $ 5,182,220
Federal Home Loan Bank advances...... 4, 5, 9 3,490,386 4,383,895
Securities sold under agreements to
repurchase and federal funds
purchased.......................... 4, 10 832,286 1,172,533
Senior Notes......................... 11 115,000 115,000
Advances from borrowers for taxes and
insurance.......................... 146,634 183,968
Other liabilities.................... 263,583 264,315
------------- -------------
Total liabilities.......... 9,995,834 11,301,931
------------- -------------
COMMITMENTS AND CONTINGENCIES........ 12, 15, 17
MINORITY INTEREST
Preferred stock issued by
consolidated subsidiary............ 16 185,500 185,500
------------- -------------
STOCKHOLDERS' EQUITY................. 15, 16
Common stock......................... 316 289
Paid-in capital...................... 129,286 117,722
Retained earnings.................... 403,674 384,739
Unrealized gains (losses) on
securities and mortgage-backed
securities available for sale, net
of tax............................. 4 (2,233) (6,647)
------------- -------------
Total stockholders'
equity................... 531,043 496,103
------------- -------------
TOTAL LIABILITIES, MINORITY INTEREST,
AND
STOCKHOLDERS' EQUITY............... $ 10,712,377 $ 11,983,534
============= =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.

F-3
<PAGE>
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

FOR THE YEAR ENDED SEPTEMBER
30,
-------------------------------
NOTES 1996 1995 1994
------ --------- --------- ---------
INTEREST INCOME
Short-term interest-earning assets... $ 39,302 $ 29,675 $ 19,019
Trading account assets............... 67 62 (144)
Securities........................... 3 3,917 5,893 5,007
Mortgage-backed securities........... 4 128,143 173,155 151,972
Loans................................ 5 627,940 526,528 308,804
Federal Home Loan Bank stock......... 12,943 11,446 5,558
Covered Assets and related assets.... 7 -- -- 4,490
--------- --------- ---------
Total interest income....... 812,312 746,759 494,706
--------- --------- ---------
INTEREST EXPENSE
Deposits............................. 8 272,220 264,366 209,034
Federal Home Loan Bank advances...... 9 247,093 224,767 91,060
Securities sold under agreements to
repurchase and federal funds
purchased.......................... 10 55,112 53,220 10,574
Senior Notes......................... 11 10,353 10,407 10,177
Other................................ -- -- 79
--------- --------- ---------
Total interest expense...... 584,778 552,760 320,924
--------- --------- ---------
Net interest income......... 227,534 193,999 173,782
PROVISION FOR CREDIT LOSSES.......... 5 16,469 24,293 6,997
--------- --------- ---------
Net interest income after
provision for credit
losses.................... 211,065 169,706 166,785
--------- --------- ---------
NON-INTEREST INCOME
Net gains (losses)
Sales of single family servicing
rights and single family
warehouse loans................. 43,074 60,495 63,286
Securities and mortgage-backed
securities...................... 3, 4 4,002 26 10,404
Other loans...................... 3,189 (1,210) 163
Loan servicing fees and charges...... 44,230 43,508 31,741
Other................................ 15,541 12,162 13,295
--------- --------- ---------
Total non-interest income... 110,036 114,981 118,889
--------- --------- ---------
NON-INTEREST EXPENSE
Compensation and benefits............ 13 87,640 83,520 86,504
Occupancy............................ 17 18,415 18,713 17,196
Data processing...................... 17 16,196 16,360 15,821
Advertising and marketing............ 8,025 9,262 10,796
Amortization of intangibles.......... 20,432 21,856 18,247
SAIF deposit insurance premiums...... 15 45,690 11,428 11,329
Furniture and equipment.............. 6,121 6,428 6,810
Restructuring charges................ 18 10,681 -- --
Other................................ 40,065 27,009 32,890
--------- --------- ---------
Total non-interest
expense................... 253,265 194,576 199,593
--------- --------- ---------
Income before income taxes
and minority interest..... 67,836 90,111 86,081
INCOME TAX (BENEFIT) EXPENSE......... 14 (75,765) 37,415 (31,899)
--------- --------- ---------
INCOME BEFORE MINORITY INTEREST...... 143,601 52,696 117,980
Less minority interest:
Subsidiary preferred stock
dividends....................... 18,253 10,600 8,653
Payments in lieu of dividends.... 16 6,413 377 357
--------- --------- ---------
NET INCOME........................... $ 118,935 $ 41,719 $ 108,970
========= ========= =========
EARNINGS PER COMMON SHARE............ 16 $ 3.87 $ 1.35 $ 3.55
========= ========= =========

See accompanying Notes to Consolidated Financial Statements.

F-4
<PAGE>
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------- ----------------- ------------------- PAID-IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
----------- ------ --------- ------ ----------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1993.................. 23,828,400 $239 -- $ -- 5,034,600 $ 50 $ 121,480
Net income................................. -- -- -- -- -- -- --
Change in unrealized gains (losses)........ -- -- -- -- -- -- --
----------- ------ --------- ------ ----------- ------ ---------
BALANCE AT SEPTEMBER 30, 1994.................. 23,828,400 239 -- -- 5,034,600 50 121,480
Net income................................. -- -- -- -- -- -- --
Cost of subsidiary's preferred stock
issuance................................. -- -- -- -- -- -- (3,758)
Change in unrealized gains (losses)........ -- -- -- -- -- -- --
----------- ------ --------- ------ ----------- ------ ---------
BALANCE AT SEPTEMBER 30, 1995.................. 23,828,400 239 -- -- 5,034,600 50 117,722
Net income................................. -- -- -- -- -- -- --
Dividend declared: common stock ($3.46 per
share)................................... -- -- -- -- -- -- --
Restricted Stock issued (Note 13).......... -- -- 318,342 3 -- -- 3,706
Conversion of Warrant (Note 16)............ -- -- 1,503,560 15 -- -- (6,099)
Redistribution of common stock (Note 16)... 2,996,840 29 2,037,760 21 (5,034,600) (50) --
Common stock offering (Note 16)............ 910,694 9 -- -- -- -- 13,957
Change in unrealized gains (losses)........ -- -- -- -- -- -- --
----------- ------ --------- ------ ----------- ------ ---------
BALANCE AT SEPTEMBER 30, 1996.................. 27,735,934 $277 3,859,662 $ 39 -- $ -- $ 129,286
=========== ====== ========= ====== =========== ====== =========
<CAPTION>
UNREALIZED TOTAL
RETAINED GAINS STOCKHOLDERS'
EARNINGS (LOSSES) EQUITY
--------- ----------- -------------
<S> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1993.................. $ 234,050 $ 33,384 $ 389,203
Net income................................. 108,970 -- 108,970
Change in unrealized gains (losses)........ -- (46,811) (46,811)
--------- ----------- -------------
BALANCE AT SEPTEMBER 30, 1994.................. 343,020 (13,427) 451,362
Net income................................. 41,719 -- 41,719
Cost of subsidiary's preferred stock
issuance................................. -- -- (3,758)
Change in unrealized gains (losses)........ -- 6,780 6,780
--------- ----------- -------------
BALANCE AT SEPTEMBER 30, 1995.................. 384,739 (6,647) 496,103
Net income................................. 118,935 -- 118,935
Dividend declared: common stock ($3.46 per
share)................................... (100,000) -- (100,000)
Restricted Stock issued (Note 13).......... -- -- 3,709
Conversion of Warrant (Note 16)............ -- -- (6,084)
Redistribution of common stock (Note 16)... -- -- --
Common stock offering (Note 16)............ -- -- 13,966
Change in unrealized gains (losses)........ -- 4,414 4,414
--------- ----------- -------------
BALANCE AT SEPTEMBER 30, 1996.................. $ 403,674 $ (2,233) $ 531,043
========= =========== =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.

F-5
<PAGE>
BANK UNITED CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-------------------------------------------
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income...................................................................... $ 118,935 $ 41,719 $ 108,970
Adjustments to reconcile net income to net cash provided (used) by operating
activities:
Provision for credit losses................................................ 16,469 24,293 6,997
Deferred tax (benefit) expense............................................. (93,401) 16,615 (31,436)
Net gains on sales of assets............................................... (53,491) (72,918) (80,524)
Net depreciation, amortization, and accretion.............................. (12,095) (49,335) (7,921)
Amortization of intangibles................................................ 20,432 21,856 18,247
Federal Home Loan Bank stock dividend...................................... (12,943) (11,446) (5,558)
Purchases of trading account assets........................................ (12,955) (203) (46)
Proceeds from sales of trading account assets.............................. 12,819 143 103
Originations of loans held for sale........................................ (2,872,307) (2,275,058) (4,128,979)
Purchases of loans held for sale........................................... (143,309) (103,926) (60,900)
Proceeds from sales of loans held for sale................................. 3,321,599 2,164,407 4,838,051
Change in mortgage servicing rights........................................ (62,142) (29,251) (50,955)
Change in loans held for sale.............................................. 17,991 5,661 53,117
Change in interest receivable.............................................. 25,957 (37,778) (10,284)
Change in other assets..................................................... 19,397 (3,068) 86,496
Change in other liabilities................................................ (3,274) 89,056 (44,432)
Management Restricted Stock award.......................................... 3,709 -- --
------------- ------------- -------------
Net cash provided (used) by operating activities...................... 291,391 (219,233) 690,946
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in securities purchased under agreements to resell and federal
funds sold............................................................... (203,197) (117,342) 189,278
Purchases of securities held to maturity................................... (6,327) (2,920) (32,812)
Proceeds from maturities of securities held to maturity.................... 7,715 3,472 33,000
Purchases of mortgage-backed securities held to maturity................... (3,841) (38,515) (83,854)
Proceeds from sales of mortgage-backed securities held to maturity......... -- -- 38,294
Repayments of mortgage-backed securities held to maturity.................. 178,926 390,364 162,328
Purchases of securities available for sale................................. (16,029) -- (135,930)
Proceeds from sales of securities available for sale....................... 96,815 -- 61,482
Purchases of mortgage-backed securities available for sale................. -- (230) (735,757)
Proceeds from sales of mortgage-backed securities available for sale....... 295,702 77,626 187,189
Repayments of mortgage-backed securities available for sale................ 272,059 16,346 760,111
Change in mortgage-backed securities available for sale.................... -- -- (12,148)
Purchases of loans held to maturity........................................ (148,510) (2,658,093) (1,406,275)
Proceeds from sales of loans held to maturity.............................. 3,539 31,543 27,093
Change in loans held to maturity........................................... 509,704 (379,229) (734,276)
Change in Covered Assets................................................... -- -- 318,176
Purchases of Federal Home Loan Bank stock.................................. -- (100,190) (793)
Redemption of Federal Home Loan Bank stock................................. 59,252 18,500 --
Purchases of premises and equipment........................................ (9,394) (6,132) (10,379)
Proceeds from sales of real estate owned acquired through
foreclosure.............................................................. 42,741 34,137 31,212
Proceeds from sales of servicing rights.................................... 33,187 48,237 58,880
------------- ------------- -------------
Net cash provided (used) by investing activities...................... 1,112,342 (2,682,426) (1,285,181)
------------- ------------- -------------
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Change in deposits.............. $ (34,378) $ 419,738 $ (73,290)
Proceeds from Federal Home Loan
Bank advances................. 1,498,700 3,821,754 2,161,384
Repayment of Federal Home Loan
Bank advances................. (2,391,764) (2,058,200) (1,726,500)
Net change in securities sold
under agreements to repurchase
and federal funds purchased... (340,247) 619,533 243,000
Change in advances from
borrowers for taxes and
insurance..................... (37,334) 38,585 1,191
Proceeds from issuance of common
stock......................... 13,966 -- --
Cost of converting Bank common
stock Warrant................. (6,084) -- --
Proceeds from issuance of the
Bank's preferred stock........ -- 96,242 --
Payment of common stock
dividends..................... (100,000) -- --
----------- ----------- -----------
Net cash (used) provided by
financing activities..... (1,397,141) 2,937,652 605,785
----------- ----------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS........................ 6,592 35,993 11,550
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR.................. 112,931 76,938 65,388
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
YEAR............................... $ 119,523 $ 112,931 $ 76,938
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION AND NONCASH INVESTING
ACTIVITIES
Cash paid for interest.......... $ 606,911 $ 523,250 $ 313,092
Cash paid for income taxes...... 3,953 9,863 5,102
Cash paid in lieu of taxes...... 12,096 157 4,000
Real estate owned acquired
through foreclosure........... 70,843 49,403 44,753
Securitization of loans......... 33,167 -- 1,182,172
Transfer of loans from held to
maturity to held for sale..... 188,957 810 88,100
Transfer of loans from held for
sale to held to maturity...... 84,722 1,615 486,745
Transfer of mortgage-backed
securities from available for
sale to held to maturity...... -- -- 1,318,877
Transfer of mortgage-backed
securities from held to
maturity to available for
sale.......................... 1,244,945 -- 68,741
Change in unrealized gains
(losses) on securities and
mortgage-backed securities
available for sale............ 4,414 6,780 (46,811)
</TABLE>
See accompanying Notes to Consolidated Financial Statements.

F-7
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

Bank United Corp. (the "Parent Company") was incorporated in the State of
Delaware on December 19, 1988, and became the holding company for Bank United, a
federal savings bank (the "Bank") upon the Bank's formation on December 30,
1988. The Parent Company has no significant assets other than its equity
interest in the Bank. The Parent Company owns all of the outstanding common
stock of the Bank. The Parent Company and the Bank, are referred to on a
consolidated basis as the "Company". Substantially all of the Company's
consolidated revenues are derived from the operations of the Bank.

Prior to June 1996, the Company was a subsidiary of Hyperion Holdings Inc.,
a Delaware corporation ("Hyperion Holdings"), which in turn was a subsidiary
of Hyperion Partners L.P., a Delaware limited partnership ("Hyperion
Partners"). In June 1996, in contemplation of a public offering of the
Company's common stock, the following actions were taken (collectively, the
"Restructuring"): (i) Hyperion Holdings exchanged shares of a newly created
class of its nonvoting common stock for certain shares of its voting common
stock held by Hyperion Partners; (ii) Hyperion Partners then distributed the
Hyperion Holdings common stock owned by it to its limited and general partners
in accordance with the terms of the limited partnership agreement of Hyperion
Partners (the "Distribution"); and (iii) following the Distribution, Hyperion
Holdings was merged with and into the Company (the "Merger"). As a result of
the Merger, the common stockholders of Hyperion Holdings (i.e. the limited and
general partners of Hyperion Partners) received shares of Class A voting and
Class B nonvoting common stock of the Company. As of the date of the Merger,
Hyperion Holdings had no significant assets, liabilities, or business other than
its investment in the Company. The Merger was accounted for in a manner similar
to a pooling of interests. Due to the immaterial nature of the assets,
liabilities, and operations of Hyperion Holdings prior to the Merger, prior
period results were not restated.

The Company is a broad based financial services provider to consumers and
businesses in Texas and other selected regional markets throughout the United
States. The Company currently operates 70 Texas based community banking branches
serving nearly 200,000 households and businesses, 9 commercial banking offices,
and a nationwide network of mortgage offices.

The accompanying consolidated financial statements include the accounts of
the Parent Company, the Bank, and the Bank's wholly-owned subsidiaries. To date,
the results of operations of the Bank's subsidiaries have not been significant
to the consolidated results of operations. All significant intercompany accounts
and balances have been eliminated in consolidation.

The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires managment 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.

The accounting and reporting policies conform to generally accepted
accounting principles and general practices within the thrift and mortgage
banking industries.

SHORT-TERM INTEREST-EARNING ASSETS

Short-term interest-earning assets are comprised of cash, cash equivalents,
securities purchased under agreements to resell ("repurchase agreements"), and
federal funds sold. Short-term instruments with original maturities of three
months or less (measured from their acquisition date) and highly liquid
instruments readily convertible to cash are generally considered to be cash
equivalents. Cash and cash equivalents consist primarily of interest-earning and
non-interest earning deposits in other banks.

The Board of Governors of the Federal Reserve System ("Federal Reserve
Board") regulations require average cash reserve balances based on deposit
liabilities to be maintained by the Bank with the Federal Reserve

F-8
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Bank. The required reserve balances were approximately $48.7 million and $63.7
million for the periods including September 30, 1996 and 1995, respectively. The
Bank was in compliance with these requirements for each of these periods.

TRADING ACCOUNT ASSETS, SECURITIES, AND MORTGAGE-BACKED SECURITIES

Debt and equity securities, including mortgage-backed securities ("MBS"),
are classified into one of three categories: held to maturity, available for
sale, or trading.

Trading account assets are carried at fair value with any realized or
unrealized gains and losses recognized in current operations. Trading account
assets are generally comprised of assets that are actively and frequently bought
and sold with the objective of generating income on short-term changes in price.

Securities and MBS that the Company has the positive intent and ability to
hold to maturity are classified as held to maturity and recorded at cost,
adjusted for the amortization of premiums and the accretion of discounts. Under
certain circumstances (including the deterioration of the issuer's
creditworthiness or a change in tax law, statutory requirements, or regulatory
requirements), securities and MBS held to maturity may be sold or transferred to
another portfolio.

Securities and MBS that the Company intends to hold for indefinite periods
of time are classified as available for sale and are recorded at fair value.
Unrealized holding gains or losses are excluded from earnings and reported net
of tax as a separate component of stockholders' equity until realized.

In connection with the securitization of certain loans, a portion of the
original loan basis is allocated to an excess servicing receivable for all loans
having a servicing fee rate greater than the "normal" servicing fee rate. This
receivable represents the present value of the estimated future servicing
revenue in excess of a "normal" service fee. The securitized portion of the
receivable is classified and accounted for as MBS in the Consolidated Statements
of Financial Condition. That portion of the receivable not securitized is
classified as other assets in the Consolidated Statements of Financial Condition
and is amortized to operations over the lives of the underlying mortgages. The
Company reviews this asset periodically for valuation impairment in a manner
similar to its mortgage servicing rights ("MSRs").

The overall return or yield earned on MBS depends on the amount of interest
collected over the life of the security and the amortization of any premium or
discount. Premiums and discounts are recognized in income using the level-yield
method over the assets' remaining lives (adjusted for anticipated prepayments).
The actual yields and maturities of MBS depend on the timing of the payment of
the underlying mortgage principal and interest. Accordingly, changes in interest
rates and prepayments can have a significant impact on the yields of MBS.

If the fair value of a security or MBS classified as held to maturity or
available for sale was to decline for reasons other than temporary market
conditions, the carrying value of such a security would be written down to
current fair value by a charge to operations.

Net gains or losses on sales of trading account assets, securities, and MBS
are computed on the specific identification method.

LOANS

Loans that the Company has the intent and ability to hold to maturity are
classified as held to maturity and are carried at unpaid principal balances,
adjusted for unamortized premiums, unearned discounts, the allowance for credit
losses, and net deferred loan origination fees or costs ("Book Value"). Loans
held for sale, excluding single family mortgage warehouse loans, are carried at
the lower of allocated Book Value, as applicable, or fair value on an aggregate
basis, as determined by discounting contractual cash flows (adjusted for
anticipated prepayments) and using discount rates based on secondary market
sources. Single family mortgage warehouse loans held for sale are carried at the
lower of aggregate allocated Book Value or market value, as determined by

F-9
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
commitments from investors or current investor yield requirements. Any net
unrealized losses on loans held for sale are recognized in a valuation allowance
by a charge to current operations. The Book Value is allocated to loans and the
MSRs in accordance with Statement of Financial Accounting Standards ("SFAS")
No. 122. See "-- Loan Servicing".

Interest income on loans, including impaired loans, is recognized
principally using the level-yield method. Based upon management's periodic
evaluation or at the time a loan is ninety days past due ("nonperforming"),
the related accrued interest is generally reversed by a charge to operations and
the subject loan is simultaneously placed on nonaccrual. Once a loan becomes
current and the borrower demonstrates a continuation of its ability to repay the
loan, the loan is returned to accrual status.

Premiums, discounts, and loan fees (net of certain direct loan origination
costs) on warehouse loans held for sale are recognized in income when the
related loans are sold. Premiums, discounts, and loan fees (net of certain
direct loan origination costs) associated with other loans for which collection
is probable and estimable are recognized in income using the level-yield method,
over the loans' remaining lives (adjusted for anticipated prepayments) or when
such loans are sold. Net discounts associated with loans for which collection
may not be probable and estimable are not accreted to income ("non-accretable
discounts"). These non-accretable discounts relate to bulk purchases of loans,
a portion of which were nonperforming and acquired at discounts from their
principal balance. Management periodically evaluates current loss estimates on
loans with non-accretable discounts to determine if the remaining non-accretable
discounts should be accreted to income.

ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses is maintained at levels management deems
adequate to cover estimated losses on loans. The adequacy of the allowance is
based on management's periodic evaluation of the loan portfolio and considers
such factors as historical loss experience, delinquency status, identification
of adverse situations that may affect the ability of obligors to repay, known
and inherent risks in the portfolio, assessment of economic conditions,
regulatory policies, and the estimated value of the underlying collateral, if
any. Provisions for credit losses are charged to current operations when they
are determined to be both probable and estimable. Losses are charged to the
allowance for credit losses when the loss actually occurs or when a
determination is made that a loss is likely to occur. Cash recoveries are
credited to the allowance for credit losses.

The Company adopted SFAS No. 114, "Accounting by Creditors for Impairment
of a Loan," and SFAS No. 118, "Accounting by Creditors for Impairment of a
Loan -- Income Recognition and Disclosures, an amendment of SFAS No. 114,"
effective October 1, 1995. These statements address the accounting by creditors
for impairment of certain loans. They apply to all creditors and to all loans,
uncollateralized as well as collateralized, except for large groups of
small-balance homogenous loans that are collectively evaluated for impairment,
loans that are measured at fair value or at lower of cost or fair value, leases,
and debt securities. These statements apply to the Company's single family
residential construction, multi-family, commercial real estate, business credit,
and mortgage banker finance line of credit loan categories in the held to
maturity portfolio. See Note 5. These statements apply to all loans that are
restructured in a troubled debt restructuring involving a modification of terms.
Loans within the scope of these statements are considered impaired when, based
on current information and events, it is probable that all principal and
interest amounts due will not be collected in accordance with the contractual
terms of the loans.

The adoption of SFAS No. 114 did not result in additional provisions for
credit losses. SFAS No. 114 requires that impaired loans that are within the
scope of this statement be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate or, as a
practical expedient, at the loan's observable market price or the fair value of
the collateral if the loan is collateral dependent. Any excess of the Company's
recorded investment in the loans (unpaid principal balance, adjusted for
unamortized premium or discount, net deferred loan origination fees or costs and
accrued interest receivable) over the measured value of the loans is provided
for in the allowance for credit losses.

F-10
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

LOAN SERVICING

In September 1995, the Company adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights, an amendment of Financial Accounting Standards Board
Statement No. 65," effective October 1, 1994. This statement requires mortgage
loan servicing rights to be recognized as separate assets from the related
loans, regardless of how those servicing rights are acquired. Upon origination
of a mortgage loan, the Book Value of the mortgage loan is allocated to the MSR
and to the loan (without the MSR) based on its estimated relative fair value,
provided there is a plan to sell or securitize the related loan. The allocation
of the Book Value of the loan between the MSR and the loan basis results in
increased gains on the sales of the loan, reflecting the value of the servicing
rights. Prior to the implementation of SFAS No. 122, the value of the originated
mortgage servicing rights ("OMSRs") was not recognized until the servicing
rights were sold.

The statement further requires that MSRs, both OMSRs and purchased mortgage
servicing rights ("PMSRs"), periodically be evaluated for impairment based on
the fair value of those rights. The fair value of MSRs is determined by
discounting the present value of estimated expected future cash flows using a
discount rate commensurate with the risks involved. This method of valuation
incorporates assumptions that market participants would use in their estimates
of future servicing income and expense, including assumptions about prepayment,
default, and interest rates. For purposes of measuring impairment, the loans
underlying the MSRs are stratified on the basis of interest rate and type
(conventional or government). The amount of impairment is the amount by which
the MSRs, net of accumulated amortization, exceed their fair value. Impairment,
if any, is recognized through a valuation allowance and a charge to current
operations.

MSRs, net of valuation allowances, are amortized in proportion to, and over
the period of, the estimated net servicing revenue of the underlying mortgages,
which are collateralized by single family properties. The amortization expense
is reflected in amortization of intangibles in the Consolidated Statements of
Operations.

An allowance for other losses associated with the mortgage servicing
portfolio and certain receivables, advances, and other assets associated with
that portfolio is established for expected costs that are incurred as a result
of the Company's responsibility as servicer of Federal Housing Administration
("FHA") insured and Department of Veteran Affairs ("VA") guaranteed loans
and is determined based on a number of variables. The allowance is netted
against the related assets in the Consolidated Statements of Financial Condition
and the related provision is included in non-interest expense in the
Consolidated Statements of Operations.

SALES OF SINGLE FAMILY LOANS

Loans are sold periodically to institutional and private investors. Gains
or losses on loan sales are recognized at the time of sale, determined using the
specific identification method, and reflect the extent that net sales proceeds
differ from the allocated Book Value of the loans. Single family mortgage
warehouse loans are generally packaged into pools and sold as MBS. Accordingly,
gains or losses on loan sales include both gains from sales of MBS created from
single family mortgage warehouse loans and whole loan sales. Certain of the
loans and servicing rights are sold with general representations and warranties
under contracts for sales of loans and servicing rights. Repurchases of the
loans and servicing rights may be required when a loan fails to meet certain
conditions specified in the contract pursuant to which the loans and servicing
rights were sold and that failure was caused by a matter covered by the general
representations and warranties. An accrual is determined for the estimated
future costs of such obligations and is maintained at a level management
believes is adequate to cover estimated losses. This accrual is included in
other liabilities on the Consolidated Statements of Financial Condition and the
related expense is reflected in non-interest expense in the Consolidated
Statements of Operations.

FEDERAL HOME LOAN BANK STOCK

As a member of the Federal Home Loan Bank ("FHLB") System, the Bank is
required to purchase and maintain stock in the FHLB of Dallas in an amount equal
to the greater of 1% of the aggregate unpaid balance of

F-11
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
loans and securities secured by single family and multi-family properties, .3%
of total assets, or 5% of total FHLB advances. FHLB stock is redeemable at par
value at the discretion of the FHLB of Dallas and is used to collateralize FHLB
advances.

PREMISES AND EQUIPMENT

Premises and equipment are carried at cost, less accumulated depreciation,
and include certain branch facilities and the related furniture, fixtures, and
equipment. Depreciation is computed using the straight-line method over the
estimated useful lives of the assets ranging from two to 40 years.

INTANGIBLE ASSETS

Intangible assets consist of the excess cost over fair value of net assets
acquired and debt issuance costs. The excess of cost over fair value of net
assets acquired is comprised of identifiable and unidentifiable intangibles. The
identifiable portion relates to core deposit premiums paid and the value of
mortgage origination networks acquired. The core deposit premiums are amortized
using an accelerated method over the estimated lives of the deposit
relationships acquired. The premiums paid for mortgage origination networks are
amortized using the straight-line method over 5 years. The unidentifiable
intangible, or goodwill, resulting from thrift related acquisitions is amortized
at a constant rate applied to the carrying amount of the long-term
interest-earning assets acquired that are expected to be outstanding at the
beginning of each subsequent period based on their terms. The original estimated
lives of these long-term interest-earning assets ranged from one to 26 years.
The identifiable and unidentifiable intangibles are evaluated on an ongoing
basis to determine whether events and circumstances have developed that warrant
revision of the estimated lives of the related assets or their write-off. Debt
issuance costs are being amortized over the life of the notes using the
straight-line method.

REAL ESTATE OWNED ("REO")

At the time of foreclosure, REO is recorded at the lower of the outstanding
loan amount (including accrued interest, if any) or fair value (less estimated
costs to sell). The resulting loss, if any, is charged to the allowance for
credit losses. Subsequent to foreclosure, REO is carried at the lower of its new
cost basis or fair value, with any further declines in fair value charged to
current operations. Revenues, expenses, gains or losses on sales, and increases
or decreases in the allowance for losses are charged to operations as incurred.
Net gains on sales of certain REO properties, primarily single family
residences, are deferred (a) when such properties are acquired through the
foreclosure of loans that are part of discounted bulk purchases of loans and (b)
uncertainty exists as to the total gains or losses that would be realized from
foreclosures associated with the bulk loan purchase. Upon obtaining sufficient
loss history or seasoning of the purchases, the deferred net gains are
recognized.

OTHER FINANCIAL INSTRUMENTS

The Company enters into traditional financial instruments such as interest
rate exchange agreements ("swaps"), interest rate caps and floors, financial
options and futures contracts, and forward delivery contracts in the normal
course of business in an effort to reduce its exposure to changes in interest
rates. Fees incurred to enter into these financial contracts are amortized over
the lives of the contracts as a component of the income or expense on the asset
or liability hedged. Gains or losses on early termination of such contracts, if
any, are amortized over the remaining terms of the hedged items. The Company
does not utilize instruments such as leveraged derivatives or structured notes.

INTEREST RATE EXCHANGE AGREEMENTS, CAPS, FLOORS, AND OPTIONS. Amounts
receivable and payable are accrued and offset against interest income or expense
on the hedged items.

FINANCIAL FUTURES CONTRACTS. Changes in the market value of futures
contracts are deferred and recognized as interest income or expense over the
remaining terms of the hedged items or recognized at the time the hedged items
are sold.

F-12
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

FORWARD DELIVERY CONTRACTS. Any gains or losses resulting from entering
into forward delivery contracts are recognized when the hedged items are sold as
net gains (losses) on sales of single family warehouse loans. Fees paid for
commitments to deliver loans are charged to other non-interest expense if the
likelihood that the commitment will be exercised is remote or the fees are
offset against the related net gains as the commitment is filled.

OTHER OFF-BALANCE-SHEET INSTRUMENTS. The Company has entered into other
off-balance-sheet financial instruments consisting of commitments to extend
credit. Such financial instruments are recorded in the financial statements when
they are funded.

FEDERAL INCOME TAXES

The Parent Company and the Bank are members of a consolidated group of
corporations as defined by the Internal Revenue Code of 1986, as amended (the
"Code") and accordingly participate in the filing of a consolidated tax
return. For financial reporting purposes, however, the Parent Company and the
Bank each compute their tax on a separate company basis and the results are
combined for purposes of preparing the consolidated financial statements.
Deferred tax assets and liabilities are recognized for the estimated tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. A deferred tax asset has been recognized for certain net operating losses
("NOLs") and credit carryforwards that will be utilized against future taxable
income. The valuation allowance reduces the net deferred tax asset to an amount
management believes will more likely than not be realized.

RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1996, SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" was issued. This statement
requires that, after a transfer of financial assets, an entity recognizes the
financial and servicing assets it controls and the liabilities it has incurred,
derecognizes financial assets when control has been surrendered, and
derecognizes liabilities when extinguished. This statement provides consistent
standards of distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. This statement is effective for transfers
and servicing of financial assets and extinguishment of liabilities occurring
after December 31, 1996, and is to be applied prospectively. Earlier or
retroactive application is not permitted. Implementation of this pronouncement
should have no material effect on the Consolidated Financial Statements.

F-13
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

EARNINGS PER COMMON SHARE

Earnings per common share is calculated by dividing net income (adjusted
for earnings on the common stock equivalents attributable to the Bank's Warrant)
by the weighted average number of shares of common shares outstanding. Common
stock equivalents on the Bank's Warrant were computed using the treasury stock
method. Average shares and per common share results have been restated for all
periods presented to reflect an 1,800 to one stock conversion in June 1996.

RECLASSIFICATIONS

Certain amounts within the accompanying Consolidated Financial Statements
and the related Notes as of September 30, 1995, 1994, 1993, and 1992 have been
reclassified to conform to the current presentation. Such reclassifications had
no effect on previously presented net income or retained earnings.

2. SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL AND
FEDERAL FUNDS SOLD

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
REPURCHASE AGREEMENTS
Balance outstanding at
period-end.................... $ 649,249 $ 428,052 $ 248,710
Fair value of collateral at
period-end.................... 693,306 449,152 255,210
Maximum outstanding at any
month-end..................... 785,178 602,274 768,200
Daily average balance........... 608,102 420,355 422,745
Average interest rate........... 5.83% 6.28% 4.04%

FEDERAL FUNDS SOLD
Balance outstanding at
period-end.................... $ 25,000 $ 43,000 $ 110,000
Maximum outstanding at any
month-end..................... 110,000 75,000 110,000
Daily average balance........... 50,418 37,493 16,948
Average interest rate........... 5.36% 5.68% 4.01%

The repurchase agreements outstanding at September 30, 1996 were
collateralized by single family, multi-family and commercial real estate loans,
and MBS. The loans and MBS underlying the repurchase agreements are held by the
counterparty in safekeeping for the account of the Company or by a third party
custodian for the benefit of the Company. All of the investments in repurchase
agreements and federal funds sold at September 30, 1996 matured on or before
October 21, 1996. The repurchase agreements provide for the same loans and MBS
to be resold at maturity. At September 30, 1996, the following concentrations of
repurchase agreements and federal funds sold outstanding with individual
counterparties exceeded ten percent of stockholders' equity:

CARRYING VALUE
--------------

(IN THOUSANDS)
Salomon Brothers Holding Company
Inc. .............................. $107,000
Paine Webber Real Estate Securities
Inc................................ 107,000
Bear Stearns and Company, Inc........ 106,547
Donaldson, Lufkin, and Jenrette
Mortgage Capital................... 95,524
Lehman Brothers...................... 77,000
--------------
$493,071
==============

F-14
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

3. SECURITIES
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
--------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
COST GAINS LOSSES VALUE VALUE
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996
HELD TO MATURITY
Federal agency.................. $ 168 $ 1 $-- $ 169 $ 168
========== ========== ==========
AVAILABLE FOR SALE
Federal agency.................. 12,082 $-- $ 40 12,042
U.S. Treasury notes............. 52,544 -- 210 52,334
---------- ---------- ---------- ----------
Available for sale......... 64,626 $-- $ 250 64,376 $ 64,376
========== ========== ==========
---------- ----------
Total securities........... $ 64,794 $ 64,545
========== ==========
1995
HELD TO MATURITY
Federal agency.................. $ 1,902 $ 799 $ 1 $ 2,700 $ 1,902
========== ========== ==========
AVAILABLE FOR SALE
U.S. Treasury notes............. 114,924 $-- $ 813 114,111 $ 114,111
========== ========== ==========
---------- ----------
Total securities........... $ 116,826 $ 116,811
========== ==========
1994
HELD TO MATURITY
Federal agency.................. $ 1,894 $ 541 $ 76 $ 2,359
U.S. Treasury notes............. 464 -- -- 464
---------- ---------- ---------- ----------
Held to maturity........... 2,358 $ 541 $ 76 2,823 $ 2,358
========== ========== ==========
---------- ----------
AVAILABLE FOR SALE
U.S. Treasury notes............. 114,833 $-- $3,076 111,757 $ 111,757
========== ========== ==========
---------- ----------
Total securities........... $ 117,191 $ 114,580
========== ==========
</TABLE>
During fiscal 1996, there were $96.5 million of available for sale
securities sold with proceeds of $96.8 million and a net gain of $267,000.
During fiscal 1994, there were $62.7 million of available for sale securities
sold with proceeds of $61.5 million and a gross loss of $1.2 million. There were
no sales of securities during fiscal 1995. At September 30, 1996, securities
with carrying values totalling $1.0 million and fair values totalling $1.0
million, were pledged toward margin requirements for interest rate swap
agreements.

Securities outstanding at September 30, 1996 mature as follows:
<TABLE>
<CAPTION>
HELD TO MATURITY AVAILABLE FOR SALE
---------------------- ----------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- --------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Due in one year or less......................... $ -- $ -- $ 52,544 $ 52,334
Due from one to five years...................... 168 169 -- --
Due from five to ten years...................... -- -- 12,082 12,042
---------- --------- ---------- ---------
$168 $ 169 $ 64,626 $ 64,376
========== ========= ========== =========
</TABLE>
F-15
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. MORTGAGE-BACKED SECURITIES
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
--------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
COST GAINS LOSSES VALUE VALUE
------------ ---------- ---------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996
HELD TO MATURITY
Agency
CMOs -- fixed-rate............ $ 1,548 $ 5 $ -- $ 1,553
Non-agency
Fixed-rate.................... 7,042 1,753 126 8,669
Adjustable-rate............... 521,280 401 17,634 504,047
CMOs -- fixed-rate............ 99,966 -- 5,277 94,689
Other........................... 212 55 -- 267
------------ ---------- ---------- ------------
Held to maturity........... 630,048 $2,214 $ 23,037 609,225 $ 630,048
------------ ========== ========== ------------ ============
AVAILABLE FOR SALE
Agency
Adjustable-rate............... 326,338 $1,860 $ 13 328,185
CMOs -- fixed-rate............ 1,818 -- 1 1,817
CMOs -- adjustable-rate....... 224,081 1,414 192 225,303
Non-agency
Fixed-rate.................... 61,893 2,253 -- 64,146
Adjustable-rate............... 373,876 1,119 1,702 373,293
CMOs -- adjustable-rate....... 34,017 -- 862 33,155
Other........................... 1,961 -- -- 1,961
------------ ---------- ---------- ------------
Available for sale......... 1,023,984 $6,646 $ 2,770 1,027,860 $ 1,027,860
------------ ========== ========== ------------ ============
Total mortgage-backed
securities............... $ 1,654,032 $ 1,637,085
============ ============
</TABLE>
F-16
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
--------------------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
COST GAINS LOSSES VALUE VALUE
------------ ---------- ---------- ------------ ------------
1995 (IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
HELD TO MATURITY
Agency
Fixed-rate.................... $ 4,259 $ 167 $ 77 $ 4,349
Adjustable-rate............... 489,412 5,212 2,711 491,913
CMOs -- fixed-rate............ 57,935 96 1,623 56,408
Non-agency
Fixed-rate.................... 126,562 4,489 318 130,733
Adjustable-rate............... 1,130,102 4,343 21,256 1,113,189
CMOs -- fixed-rate............ 239,487 173 8,643 231,017
Other........................... 3,547 56 -- 3,603
------------ ---------- ---------- ------------
Held to maturity........... 2,051,304 $ 14,536 $ 34,628 2,031,212 $ 2,051,304
------------ ========== ========== ------------ ============
AVAILABLE FOR SALE
Agency
CMOs -- adjustable-rate....... 250,208 $ 1,132 $ 217 251,123
Non-agency
Fixed-rate.................... 22,060 627 -- 22,687
CMOs -- fixed-rate............ 36,895 -- 640 36,255
CMOs -- adjustable-rate....... 37,580 7 693 36,894
------------ ---------- ---------- ------------
Available for sale......... 346,743 $ 1,766 $ 1,550 346,959 $ 346,959
------------ ========== ========== ------------ ============
Total mortgage-backed
securities............... $ 2,398,047 $ 2,378,171
============ ============
1994
HELD TO MATURITY
Agency
Fixed-rate.................... $ 5,313 $ 20 $ 15 $ 5,318
Adjustable-rate............... 563,629 830 15,290 549,169
CMOs -- fixed-rate............ 81,395 -- 3,967 77,428
Non-agency
Fixed-rate.................... 184,929 603 2,057 183,475
Adjustable-rate............... 1,288,271 226 23,048 1,265,449
CMOs -- fixed-rate............ 267,658 -- 11,601 256,057
Other........................... 3,783 113 -- 3,896
------------ ---------- ---------- ------------
Held to maturity........... 2,394,978 $ 1,792 $ 55,978 2,340,792 $ 2,394,978
------------ ========== ========== ------------ ============
AVAILABLE FOR SALE
Agency
Fixed-rate.................... 85,492 $ 1,688 $ 1,552 85,628
CMOs -- adjustable-rate....... 254,933 -- 2,727 252,206
Non-agency
Fixed-rate.................... 22,141 -- 1,198 20,943
CMOs -- fixed-rate............ 41,825 -- 2,634 39,191
CMOs -- adjustable-rate....... 37,733 -- 1,776 35,957
------------ ---------- ---------- ------------
Available for sale......... 442,124 $ 1,688 $ 9,887 433,925 $ 433,925
------------ ========== ========== ------------ ============
Total mortgage-backed
securities............... $ 2,837,102 $ 2,774,717
============ ============
</TABLE>
F-17
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In November 1995, the Financial Accounting Standards Board ("FASB")
issued, "A Guide to Implementation of Statement 115 on Accounting for Certain
Investments in Debt and Equity Securities." This implementation guide provided
the Company the opportunity to reassess the appropriateness of the
classifications of its securities and provided that reclassifications of
securities from the held to maturity category resulting from this one-time
reassessment would not call into question the intent to hold other securities to
maturity in the future. During the first quarter of fiscal 1996, the Company
reassessed its securities portfolios and reclassified $1.2 billion in MBS from
the held to maturity portfolio to the available for sale portfolio. An
unrealized gain of $4.2 million before tax, or $2.6 million after tax, was
recorded in stockholders' equity as a result of this transfer.

During fiscal 1994, $68.7 million of fixed-rate collateralized mortgage
obligations ("CMOs") were transferred at fair value from the held to maturity
portfolio to the available for sale portfolio. The related unrealized gain
($66,000 at the time of transfer, before taxes) was included as a component of
stockholders' equity. This transfer was made in response to the classification
of securities as high-risk under the FASB's Emerging Issues Task Force
guidelines in effect at that time. Subsequent to the transfer, these securities
were sold.

During fiscal 1994, $38.3 million of non-agency MBS that had been included
in the held to maturity portfolio were sold. This sale was made due to a
deterioration of the issuer's creditworthiness and resulted in a gross gain of
$42,000.

MBS of approximately $1.3 billion were transferred from the available for
sale portfolio to the held to maturity portfolio at fair value during fiscal
1994. The gross unrealized loss of $10.8 million on these securities at the time
of transfer is included as a component of stockholders' equity and is being
amortized over the remaining lives of the securities.

At September 30, 1996, MBS with carrying values totalling $1,105.7 million
and fair values totalling $1,095.2 million were used to collateralize FHLB
advances and securities sold under agreements to repurchase ("reverse
repurchase agreements").

CHANGES IN UNREALIZED GAINS (LOSSES)
<TABLE>
<CAPTION>
MORTGAGE-BACKED
SECURITIES
----------------------- SECURITIES
AVAILABLE HELD TO AVAILABLE TAX
FOR SALE MATURITY FOR SALE EFFECT TOTAL
--------- --------- ----------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1994........ $ (8,199) $ (10,202) $(3,076) $ 8,050 $(13,427)
Market value changes and the
effect of prepayments......... 8,431 -- 2,263 (4,005) 6,689
(Gains) losses realized due to
sales......................... (16) -- -- 6 (10)
Amortization of held to
maturity...................... -- 162 -- (61) 101
--------- --------- ----------- ------- --------
Balance at September 30, 1995........ 216 (10,040) (813) 3,990 (6,647)
--------- --------- ----------- ------- --------
Market value changes and the
effect of prepayments......... 3,332 -- 830 (1,561) 2,601
(Gains) losses realized due to
sales......................... (2,712) -- (267) 1,117 (1,862)
Transfer from held to
maturity...................... 3,040 1,114 -- (1,558) 2,596
Amortization of held to
maturity...................... -- 1,727 -- (648) 1,079
--------- --------- ----------- ------- --------
Balance at September 30, 1996........ $ 3,876 $ (7,199) $ (250) $ 1,340 $ (2,233)
========= ========= =========== ======= ========
</TABLE>
F-18
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In fiscal 1994, the Banking Segment securitized $1.2 billion of single
family loans into MBS. There were no securitizations of single family loans
during fiscal 1996 and 1995. In fiscal 1996, the Banking Segment securitized
business credit loans into securities totalling $30.5 million. There were no
business credit securitizations in fiscal 1995 and 1994. The activity in the
excess servicing receivable generated as a result of these securitizations was
as follows:

EXCESS SERVICING RECEIVABLE

FOR THE YEAR ENDED SEPTEMBER
30,
-------------------------------
1996 1995 1994
--------- --------- ---------
(IN THOUSANDS)
Balance at beginning of period....... $ 11,116 $ 12,182 $ 15,023
Additions....................... 2,645 -- 2,044
Amortization.................... (1,028) (1,066) (4,885)
Allowance for losses............ (5) -- --
--------- --------- ---------
Balance at end of period............. $ 12,728 $ 11,116 $ 12,182
========= ========= =========

Approximately $3.4 million, $4.0 million, and $4.3 million of the excess
servicing receivable balance at September 30, 1996, 1995, and 1994,
respectively, represented the securitized portion of the receivable, which was
included in the MBS portfolio. The remaining balance was included in other
assets.

The following table provides information related to the sales of MBS
available for sale.

FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------
1996 1995 1994
---------- --------- ----------
(IN THOUSANDS)
Proceeds from sales..... $ 295,702 $ 77,626 $ 186,190
Gross gains on sales.... 3,529 217 16,300
Gross losses on sales... 817 201 4,812

F-19
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. LOANS

The loan portfolio, less the non-accretable unearned discounts and the
undisbursed portion of loans in process, was as follows:
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
HELD TO MATURITY
Single family................... $ 6,152,504 $ 7,061,088 $ 4,203,614 $ 2,847,602 $ 2,302,073
Single family residential
construction.................. 242,525 115,436 57,786 35,904 31,920
Consumer........................ 173,518 123,096 108,179 57,902 21,732
Multi-family.................... 479,833 356,587 256,362 94,120 50,741
Multi-family construction....... 31,355 35,430 20,437 17,935 --
Commercial real estate.......... 40,839 31,006 61,919 49,510 58,521
Business credit................. 22,798 6,495 -- -- --
Mortgage banker finance line of
credit........................ 139,872 109,339 147,754 385,548 --
------------ ------------ ------------ ------------ ------------
7,283,244 7,838,477 4,856,051 3,488,521 2,464,987
Allowance for credit losses..... (39,633) (36,763) (23,378) (27,970) (25,529)
Accretable unearned discounts... (12,846) (34,784) (50,384) (25,486) (53,174)
Net deferred loan origination
fees.......................... (3,612) (3,254) (1,961) (625) (402)
------------ ------------ ------------ ------------ ------------
Held to maturity........... 7,227,153 7,763,676 4,780,328 3,434,440 2,385,882
------------ ------------ ------------ ------------ ------------
HELD FOR SALE
Single family mortgage
warehouse..................... 260,745 411,287 252,153 899,602 1,016,854
Single family................... -- -- -- 528,579 783,002
Multi-family.................... -- 87,781 12,535 -- --
Business credit................. 32,790 825 -- -- --
------------ ------------ ------------ ------------ ------------
293,535 499,893 264,688 1,428,181 1,799,856
Allowance for credit losses..... (27) (38) (76) (1,894) (2,685)
Unrealized losses............... -- (1,142) -- -- --
Accretable unearned discounts... (2,461) (3,676) (266) (2,437) (85,115)
Net deferred loan origination
costs......................... 1,288 1,527 1,500 4,089 3,778
------------ ------------ ------------ ------------ ------------
Held for sale.............. 292,335 496,564 265,846 1,427,939 1,715,834
------------ ------------ ------------ ------------ ------------
Total loans................ $ 7,519,488 $ 8,260,240 $ 5,046,174 $ 4,862,379 $ 4,101,716
============ ============ ============ ============ ============
SUPPLEMENTAL INFORMATION
Non-accretable unearned
discounts..................... $ (7,075) $ (15,423) $ (31,917) $ (42,975) $ (41,060)
Undisbursed portion of loans in
process....................... (262,081) (179,737) (136,797) (39,162) (41,534)
</TABLE>
F-20
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table sets forth the geographic distribution of loans by
states with concentrations of 4% of loans or greater at September 30, 1996. The
geographic data was based on gross loan principal and excludes non-accretable
unearned discounts.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
---------------------------------------------------------------------------------------------
SINGLE SINGLE SINGLE
FAMILY FAMILY COMMERCIAL FAMILY TOTAL NON-REAL
AND RESIDENTIAL MULTI- REAL MORTGAGE REAL ESTATE ESTATE
STATE CONSUMER CONSTRUCTION FAMILY ESTATE WAREHOUSE LOANS LOANS
- ------------------------------------- ------------- ------------- -------- ---------- ---------- ------------ ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
California........................... $3,383,554 $ -- $ 21,177 $ -- $ -- $3,404,731 $ 66
Texas................................ 851,832 124,941 242,554 26,132 -- 1,245,459 119,999
Florida.............................. 393,402 28,440 12,522 1,974 -- 436,338 89
Other................................ 1,608,008 89,144 236,341 14,276 260,745 2,208,514 168,658
------------- ------------- -------- ---------- ---------- ------------ ---------
Total.............................. $6,236,796 $ 242,525 $512,594 $ 42,382 $260,745 $7,295,042 $288,812
============= ============= ======== ========== ========== ============ =========
% of Total........................... 82.24% 3.20% 6.76% 0.55% 3.44% 96.19% 3.81%
============= ============= ======== ========== ========== ============ =========
</TABLE>
% OF
STATE TOTAL TOTAL
- ------------------------------------- --------- ------

California........................... $3,404,797 44.90%
Texas................................ 1,365,458 18.00
Florida.............................. 436,427 5.75
Other................................ 2,377,172 31.35
--------- ------
Total.............................. $7,583,854 100.00%
========= ======
% of Total........................... 100.00%
=========

Contractual maturities of the loans held to maturity portfolio as of
September 30, 1996, were as follows:
<TABLE>
<CAPTION>
PRINCIPAL PAYMENTS CONTRACTUALLY DUE IN YEARS ENDED SEPTEMBER 30,
---------------------------------------------------------------------------
2000- 2002- 2007- 2012 AND
1997 1998 1999 2001 2006 2011 THEREAFTER TOTAL
--------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TYPE OF LOAN
Single family........................ $ 94,810 $ 102,314 $ 110,413 $ 247,738 $ 812,708 $1,189,495 $3,595,026 $6,152,504
Single family residential
construction....................... 242,525 -- -- -- -- -- -- 242,525
Consumer............................. 86,119 11,175 12,353 28,747 35,124 -- -- 173,518
Multi-family......................... 92,631 100,890 84,795 28,811 172,706 -- -- 479,833
Multi-family construction............ 13,134 13,173 1,763 3,285 -- -- -- 31,355
Commercial real estate............... 1,576 1,708 1,853 3,156 20,096 7,367 5,083 40,839
Business credit...................... 4,786 5,284 5,833 6,736 159 -- -- 22,798
Mortgage banker finance line of
credit............................. 137,186 -- -- 2,686 -- -- -- 139,872
--------- --------- --------- --------- --------- --------- --------- ---------
Total............................ $ 672,767 $ 234,544 $ 217,010 $ 321,159 $1,040,793 $1,196,862 $3,600,109 $7,283,244
========= ========= ========= ========= ========= ========= ========= =========
TYPE OF INTEREST
Fixed-rate loans..................... $ 47,176 $ 51,297 $ 55,790 $ 124,938 $ 411,665 $ 297,328 $ 18,025 $1,006,219
Adjustable-rate loans................ 625,591 183,247 161,220 196,221 629,128 899,534 3,582,084 6,277,025
--------- --------- --------- --------- --------- --------- --------- ---------
Total............................ $ 672,767 $ 234,544 $ 217,010 $ 321,159 $1,040,793 $1,196,862 $3,600,109 $7,283,244
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
The performing single family loans are pledged, under a blanket lien, as
collateral securing advances from the FHLB at September 30, 1996.

F-21
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PRINCIPAL BALANCE OF NONACCRUAL LOANS

AT SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
NONACCRUAL LOANS
Single family................... $ 92,187 $ 83,954 $ 85,722
Single family residential
construction.................. -- 505 --
Consumer........................ 1,039 563 506
Multi-family.................... 144 213 3,802
Commercial real estate and
business credit............... 350 -- 2,342
---------- ---------- ----------
93,720 85,235 92,372
Discounts....................... (4,077) (9,727) (16,053)
---------- ---------- ----------
Net nonaccrual loans............ $ 89,643 $ 75,508 $ 76,319
========== ========== ==========
ALLOWANCE FOR CREDIT LOSSES TO NET
NONACCRUAL LOANS
Single family................... 32.46% 39.74% 22.70%
Total........................... 44.24 48.74 30.73

At September 30, 1994, nonaccrual loans above included $5.7 million of
single family loans that were ninety days delinquent, subject to government
guaranty, and upon which interest continued to accrue. There were no such loans
at September 30, 1996 and 1995.

If the nonaccrual loans as of September 30, 1996 had been performing in
accordance with their original terms throughout fiscal 1996, interest income
recognized would have been $8.3 million. The actual interest income recognized
on these loans for fiscal 1996 was $3.4 million. No commitments exist to lend
additional funds to borrowers whose loans were on nonaccrual status at September
30, 1996.

At September 30, 1996, the recorded investment in impaired loans pursuant
to SFAS No. 114 totalled $3.9 million and the average outstanding balance for
fiscal 1996 was $4.4 million. No allowance for credit losses was required on
these loans because the measured values of the loans exceeded the recorded
investments in the loans. Interest income of $393,000 was recognized on impaired
loans during fiscal 1996, of which $355,000 was collected in cash.

F-22

<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

ALLOWANCE FOR CREDIT LOSSES
<TABLE>
<CAPTION>
LOANS HELD TO MATURITY
---------------------------------------------------------------------------------
COMMERCIAL
REAL MORTGAGE
SINGLE ESTATE BANKER
FAMILY MULTI- AND FINANCE
SINGLE RESIDENTIAL MULTI- FAMILY BUSINESS LINE OF
FAMILY CONSTRUCTION CONSUMER FAMILY CONSTRUCTION CREDIT CREDIT
------- ------------ -------- ------ ------------ ---------- --------
(IN THOUSANDS)
Balance at
<S> <C> <C> <C> <C> <C> <C> <C>
September 30, 1991................. $ 8,956 $186 $ 81 $ 144 $-- $ 552 $--
Provision........................ 14,156 135 39 75 -- 6,261 --
Charge-offs...................... (2,835) -- (76 ) -- -- -- --
Recoveries....................... 8 -- -- -- -- -- --
Other............................ (6,817) -- 100 -- -- 4,564 --
------- ------------ -------- ------ ------------ ---------- --------
Balance at
September 30, 1992................. 13,468 321 144 219 -- 11,377 --
Provision........................ 1,824 56 264 1,178 107 (25) 944
Charge-offs...................... (2,167) (71) (72 ) -- -- -- --
Recoveries....................... 6 -- 19 -- -- -- --
Other............................ 378 -- -- (31 ) 1 30 --
------- ------------ -------- ------ ------------ ---------- --------
Balance at
September 30, 1993................. 13,509 306 355 1,366 108 11,382 944
Provision........................ 2,369 93 2,794 1,187 28 875 (260)
Charge-offs...................... (1,722) -- (1,365 ) (233 ) -- (10,145) --
Recoveries....................... 20 -- 38 -- -- -- --
Other............................ 1,729 -- -- 9 (9) -- --
------- ------------ -------- ------ ------------ ---------- --------
Balance at
September 30, 1994................. 15,905 399 1,822 2,329 127 2,112 684
Provision........................ 18,493 (38) 4,178 524 72 1,374 (274)
Charge-offs...................... (4,840) -- (2,847 ) -- -- (3,389) --
Recoveries....................... 36 -- 94 2 -- -- --
------- ------------ -------- ------ ------------ ---------- --------
Balance at
September 30, 1995................. 29,594 361 3,247 2,855 199 97 410
Provision........................ 6,771 332 7,823 1,263 33 256 2
Charge-offs...................... (7,751) -- (5,995 ) -- -- (39) --
Recoveries....................... 31 -- 144 -- -- -- --
------- ------------ -------- ------ ------------ ---------- --------
Balance at
September 30, 1996................. $28,645 $693 $ 5,219 $4,118 $ 232 $ 314 $ 412
======= ============ ======== ====== ============ ========== ========
</TABLE>
LOANS HELD FOR SALE
---------------------
SINGLE
FAMILY
MORTGAGE SINGLE
WAREHOUSE FAMILY TOTAL
--------- ------- --------

Balance at
September 30, 1991................. $ 229 $ -- $ 10,148
Provision........................ 467 -- 21,133
Charge-offs...................... (118) -- (3,029)
Recoveries....................... -- -- 8
Other............................ -- 2,107 (46)
--------- ------- --------
Balance at
September 30, 1992................. 578 2,107 28,214
Provision........................ (265) -- 4,083
Charge-offs...................... (148) -- (2,458)
Recoveries....................... -- -- 25
Other............................ -- (378) --
--------- ------- --------
Balance at
September 30, 1993................. 165 1,729 29,864
Provision........................ (89) -- 6,997
Charge-offs...................... -- -- (13,465)
Recoveries....................... -- -- 58
Other............................ -- (1,729) --
--------- ------- --------
Balance at
September 30, 1994................. 76 -- 23,454
Provision........................ (36) -- 24,293
Charge-offs...................... (2) -- (11,078)
Recoveries....................... -- -- 132
--------- ------- --------
Balance at
September 30, 1995................. 38 -- 36,801
Provision........................ (11) -- 16,469
Charge-offs...................... -- -- (13,785)
Recoveries....................... -- -- 175
--------- ------- --------
Balance at
September 30, 1996................. $ 27 $ -- $ 39,660
========= ======= ========
F-23
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. LOAN SERVICING

SINGLE FAMILY SERVICING PORTFOLIO
PRINCIPAL BALANCES

AT SEPTEMBER 30,
----------------------------
1996 1995
------------- -------------
(IN THOUSANDS)
OWNED LOANS.......................... $ 6,694,634 $ 7,602,869
Less: Loans serviced by
others........................ 2,700,049 3,476,733
------------- -------------
Total owned loans serviced
by Company............... 3,994,585 4,126,136
------------- -------------
LOANS SERVICED FOR OTHERS
Purchased servicing rights...... 4,841,534 4,652,081
Loans originated and sold with
servicing retained............ 3,008,615 1,186,951
Servicing sales -- not yet
transferred from Company...... 464,053 1,045,839
Other........................... 349,389 276,457
------------- -------------
Total loans serviced for
others................... 8,663,591 7,161,328
MORTGAGE-BACKED SECURITIES
SECURITIZED BY BANKING SEGMENT..... 831,197 1,360,443
------------- -------------
Total servicing
portfolio................ $ 13,489,373 $ 12,647,907
============= =============

The table above includes single family, single family residential
construction, and single family mortgage warehouse loans. In addition to the
single family servicing portfolio, there were $283 million and $177 million of
multi-family loans serviced for others at September 30, 1996 and 1995,
respectively.

FAIR VALUE OF SINGLE FAMILY SERVICING PORTFOLIO

AT SEPTEMBER 30,
----------------------------
1996 1995
------------- -------------
(IN THOUSANDS)
PRINCIPAL
Total loans serviced for
others........................ $ 8,663,591 $ 7,161,328
Mortgage-backed securities
securitized by Banking
Segment....................... 831,197 1,360,443
Servicing sales -- not yet
transferred from Company...... (464,053) (1,045,839)
Single family mortgage warehouse
loans subject to SFAS No.
122........................... 260,745 411,287
------------- -------------
Total single family
servicing portfolio, as
adjusted................. $ 9,291,480 $ 7,887,219
============= =============
FAIR VALUE........................... $ 168,971 $ 122,250
------------- -------------
BOOK VALUE
OMSR............................ 62,571 23,062
PMSR............................ 60,821 52,035
------------- -------------
Total book value........... 123,392 75,097
------------- -------------
Fair value in excess of
book value (see Note
12)...................... $ 45,579 $ 47,153
============= =============

F-24
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

MORTGAGE SERVICING RIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------
1996 1995 1994
-------------------- -------------------- ---------
OMSRS PMSRS OMSRS PMSRS PMSRS

(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at beginning of period....... $ 23,062 $ 52,035 $ -- $ 56,677 $ 10,650
Additions....................... 48,412 23,535 28,694 12,546 50,955
Amortization.................... (4,107) (9,740) (1,010) (9,821) (4,928)
Deferred hedging gains.......... -- (2,140) -- (7,173) --
Sales........................... (4,796) (2,869) (4,622) (194) --
--------- --------- --------- --------- ---------
Balance at end of period............. $ 62,571 $ 60,821 $ 23,062 $ 52,035 $ 56,677
========= ========= ========= ========= =========
</TABLE>
7. COVERED ASSETS AND FEDERAL FINANCIAL ASSISTANCE

Concurrent with the Bank's incorporation on December 30, 1988, the Parent
Company, the Bank, and certain of their direct and indirect parent entities
entered into an Assistance Agreement ("Assistance Agreement") with the Federal
Savings and Loan Insurance Corporation ("FSLIC") whereby the Bank acquired
substantially all of the assets and assumed all of the deposits and certain
liabilities of United Savings Association of Texas ("Old USAT"), an insolvent
thrift institution (the "Acquisition"). The majority of assets acquired were
designated as Covered Assets ("Covered Assets") and were subject to certain
provisions contained in the Assistance Agreement. The Assistance Agreement
provided for, among other things, financial assistance to the Bank.

On December 23, 1993, the Parent Company, the Bank, and certain of their
direct and indirect parent entities, and the Federal Deposit Insurance
Corporation, ("FDIC") as manager of the FSLIC Resolution Fund ("FRF"),
entered into a Settlement and Termination Agreement (the "Settlement
Agreement") providing, among other things, for the termination of the
Assistance Agreement and the disposition of Covered Assets. Accordingly,
effective December 28, 1993, the Bank no longer owned or managed any Covered
Assets and stopped receiving financial assistance from the FRF. In connection
with this settlement, the Bank received a payment totalling $195.3 million. The
following table shows the composition of FRF payments received in fiscal 1994.

(IN THOUSANDS)
Payments affecting the results of
operations......................... $ 23,143
Other payments
Settlement payment.............. 195,300
Other........................... 468
--------------
Total FRF payments......... $218,911
==============

F-25
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. DEPOSITS
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
------------------------------------------------------------------------
1996 1995 1994
---------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE AMOUNT RATE
----------- -------- ----------- -------- ----------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
NON-INTEREST BEARING DEPOSITS........ $ 284,304 -- % $ 181,196 -- % $ 76,498 -- %
INTEREST-BEARING DEPOSITS
Transaction accounts............. 211,976 1.00 219,307 1.50 233,666 1.49
Insured money fund accounts
Consumer....................... 588,585 4.36 397,473 3.73 407,029 3.12
Commercial..................... 810,743 5.29 857,669 5.82 416,571 4.84
----------- -------- ----------- --- ----------- ---
Subtotal.................... 1,399,328 4.90 1,255,142 5.16 823,600 3.99
----------- -------- ----------- --- ----------- ---
Savings accounts................. 130,137 2.48 144,301 2.73 222,769 2.60
Certificates of deposit
Consumer....................... 2,911,682 5.71 3,063,631 5.84 2,949,715 4.88
Commercial..................... 2,667 4.88 2,273 5.36 -- --
Wholesale...................... 207,851 10.28 316,370 9.06 457,956 7.92
----------- -------- ----------- --- ----------- ---
Subtotal.................... 3,122,200 6.01 3,382,274 6.14 3,407,671 5.29
----------- -------- ----------- --- ----------- ---
Total interest-bearing
deposits.................. 4,863,641 5.38 5,001,024 5.59 4,687,706 4.74
----------- -------- ----------- --- ----------- ---
Total deposits.............. $ 5,147,945 5.08% $ 5,182,220 5.40% $ 4,764,204 4.67%
=========== ======== =========== === =========== ===
Consumer............................. $ 3,939,631 $ 3,868,498 $ 3,834,239
Commercial........................... 1,000,463 997,352 472,009
Wholesale............................ 207,851 316,370 457,956
----------- ----------- -----------
Total deposits.............. $ 5,147,945 $ 5,182,220 $ 4,764,204
=========== =========== ===========
</TABLE>
At September 30, 1996, certificates of deposit ("CDs") summarized by
scheduled maturity by year and weighted average interest rate were as follows:
<TABLE>
<CAPTION>
CERTIFICATES MATURING IN THE YEAR ENDING SEPTEMBER 30,
-----------------------------------------------------------------------
STATED RATE 1997 1998 1999 2000 2001 THEREAFTER TOTAL
- ------------------------------------- ------------ ---------- ---------- --------- --------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
2.99% and below...................... $ 1,584 $ -- $ -- $ -- $ -- $-- $ 1,584
3.00% to 3.99%....................... 21,867 740 8 -- -- 3 22,618
4.00% to 4.99%....................... 437,650 23,983 33,839 1,063 2,645 61 499,241
5.00% to 5.99%....................... 861,376 409,903 92,854 6,826 34,185 449 1,405,593
6.00% to 6.99%....................... 440,730 246,208 74,373 61,165 49,022 1,788 873,286
7.00% to 7.99%....................... 79,767 7,747 5,778 21,536 11,276 1,529 127,633
8.00% to 8.99%....................... 1,399 678 4,485 2,326 354 27 9,269
9.00% to 9.99%....................... 579 6,480 3,062 12 138 308 10,579
10.00% to 10.99%..................... 40,224 14,699 11,166 664 97 228 67,078
Over 10.99%.......................... 88,281 16,757 281 -- -- -- 105,319
------------ ---------- ---------- --------- --------- ---------- ------------
$ 1,973,457 $ 727,195 $ 225,846 $ 93,592 $ 97,717 $4,393 $ 3,122,200
============ ========== ========== ========= ========= ========== ============
</TABLE>
F-26
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Scheduled maturities of CDs of $100,000 or more outstanding at September
30, 1996 were as follows:

NUMBER OF DEPOSIT
ACCOUNTS AMOUNT
--------- --------
(DOLLARS IN
THOUSANDS)
Three months or less................. 1,234 $130,243
Over three through six months........ 551 57,661
Over six through twelve months....... 957 101,299
Over twelve months................... 1,813 190,973
--------- --------
Total...................... 4,555 $480,176
========= ========

INTEREST EXPENSE ON DEPOSITS

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- ----------
(IN THOUSANDS)
Transaction and insured money fund
accounts........................... $ 71,693 $ 61,232 $ 22,261
Savings accounts..................... 3,598 4,715 7,311
Certificates of deposit.............. 196,929 198,419 179,462
---------- ---------- ----------
Total........................... $ 272,220 $ 264,366 $ 209,034
========== ========== ==========

9. FEDERAL HOME LOAN BANK ADVANCES

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
Maximum outstanding at any
month-end.......................... $ 4,384,798 $ 4,386,605 $ 2,697,829
Daily average balance................ 4,073,297 3,560,844 2,285,630
Average interest rate................ 6.07% 6.31% 3.98%

The aggregate amounts of principal maturities for FHLB advances for the
periods indicated were as follows:

AT SEPTEMBER 30,
-------------------------------------------------
1996 1995
----------------------- -----------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AMOUNT RATE AMOUNT RATE
------------ -------- ------------ --------
(DOLLARS IN THOUSANDS)
1996................. $ -- -- % $ 2,391,885 6.22%
1997................. 2,564,095 5.82 1,855,765 6.33
1998................. 905,046 5.47 115,000 6.60
1999................. 8,700 7.65 8,700 7.65
2000................. 2,700 7.80 2,700 7.80
2001................. 7,145 8.16 4,800 7.92
Thereafter........... 2,700 8.04 5,045 8.33
------------ -------- ------------ --------
Total...... $ 3,490,386 5.74% $ 4,383,895 6.28%
============ ======== ============ ========

F-27
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
AND FEDERAL FUNDS PURCHASED

FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------
1996 1995 1994
------------ ------------ ----------
(DOLLARS IN THOUSANDS)
REVERSE REPURCHASE AGREEMENTS
Balance outstanding at
period-end.................... $ 832,286 $ 1,172,533 $ 553,000
Fair value of collateral at
period-end.................... 1,020,405 1,239,527 673,000
Maximum outstanding at any
month-end..................... 1,096,508 1,355,540 553,000
Daily average balance........... 955,681 887,932 273,899
Average interest rate........... 5.77% 5.99% 3.85%
FEDERAL FUNDS PURCHASED
Balance outstanding at
period-end.................... $ -- $ -- $ --
Maximum outstanding at any
month-end..................... -- -- 15,000
Daily average balance........... 27 521 767
Average interest rate........... 6.02% 5.95% 3.73%

Scheduled maturities of reverse repurchase agreements outstanding at
September 30, 1996 were as follows:

(IN THOUSANDS)
October 1996......................... $472,286
March 1997........................... 360,000
--------------
$832,286
==============

The counterparties to all reverse repurchase agreements at September 30,
1996 have agreed to resell the same securities upon maturity of such agreements.
The securities collateralizing the reverse repurchase agreements have been
delivered to the counterparty or its agent. At September 30, 1996, the reverse
repurchase agreements were outstanding with the following counterparties:

CARRYING VALUE
---------------
(IN THOUSANDS)
Morgan Stanley and Co.
Incorporated....................... $ 360,000
Donaldson, Lufkin, and Jenrette
Securities Corporation............. 301,524
Goldman, Sachs and Co................ 57,000
Federal Home Loan Bank............... 45,000
CS First Boston Corporation.......... 44,215
PaineWebber, Inc..................... 24,547
---------------
$ 832,286
===============

11. SENIOR NOTES

In May 1993, the Parent Company issued $115 million of 8.05% Senior Notes
due May 15, 1998 ("Senior Notes") and repaid long-term debt and a note payable
to a related party.

The Senior Notes were not registered under the Securities Act of 1933, as
amended (the "Securities Act"), but were offered and sold in a private
offering to qualified institutional investors in reliance on Rule 144A under the
Securities Act and to a limited number of institutional accredited investors
within the meaning of Rule 501 of Regulation D under the Securities Act.

The Senior Notes had an initial interest rate of 8.05% PER ANNUM, payable
semi-annually. The interest rate on the Senior Notes was subject to increase in
certain circumstances if an exchange offer ("Exchange Offer")

F-28
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
was not consummated by certain dates. The PER ANNUM interest rate on the Senior
Notes increased by 0.5%, to 8.55% in October 1993, and increased by 0.5% to
9.05% in February 1994. The Exchange Offer was consummated in August 1996 and
the interest rate reverted to the initial rate of 8.05% in September 1996.

The Senior Notes are not redeemable prior to maturity, except upon the
occurrence of a change of control (as defined) of the Parent Company or the Bank
(i) at the option of the Parent Company, in whole but not in part, and (ii) at
the option of holders, in whole or in part, in each case, at 101% of their
principal amount plus accrued interest to the date of redemption. The Senior
Notes do not have the benefit of any sinking fund obligation.

The cost of issuing the Senior Notes, including the costs of the Exchange
Offering, totalled $5.4 million, and amortization for fiscal 1996, 1995, and
1994 was $1.0 million, $976,000, and $977,000, respectively.

The Parent Company's ability to meet its long-term obligations is
contingent on the Bank's ability to pay dividends on its common stock. As
discussed in Note 15, the ability of the Bank to pay dividends on its preferred
or common stock without prior Office of Thrift Supervision ("OTS") approval is
subject to its continued profitability and the maintenance of certain capital
ratios. Further, the payment of dividends by the Bank to the Parent Company on
the Bank's common stock is subordinate to the payment of dividends on the Bank's
preferred stock. See Note 16 for a discussion of the preferred stock of the
Bank. Under the Senior Note indenture, aggregate dividends paid by the Parent
Company on its common stock and by the Bank on its preferred stock, and certain
other payments or investments, is limited to the sum of (i) 50% of cumulative
consolidated net income (or, if negative 100% of such deficit) after March 31,
1993, subject to certain exclusions, (ii) the proceeds from any issuance of
capital stock by the Parent Company after March 31, 1993, and (iii) $12 million.
At September 30, 1996, $76.8 million was available for payment of future
dividends by the Parent Company under this restriction.

12. FINANCIAL INSTRUMENTS

DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

SFAS No. 107, "Disclosures about Fair Value of Financial Instruments",
requires the disclosure of fair value information about financial instruments,
whether or not recognized in the statement of financial condition. Quoted market
prices, when available, are used as the measure of fair value. In cases where
quoted market prices are not available, fair values are based on present value
estimates or other valuation techniques. Because assumptions used in these
valuation techniques are inherently subjective in nature, the estimated fair
values cannot always be substantiated by comparison to independent market quotes
and, in many cases, the estimated fair values could not necessarily be realized
in an immediate sale or settlement of the instrument.

The fair value estimates presented herein are based on relevant information
available to management as of September 30, 1996 and 1995. Management is not
aware of any factors that would significantly affect these estimated fair value
amounts. As these reporting requirements exclude certain financial instruments
and all non-financial instruments, the aggregate fair value amounts presented
herein do not represent management's estimate of the underlying value of the
Company. Additionally, such amounts exclude intangible asset values such as the
value of core deposit intangibles. The following methods and assumptions were
used to estimate the fair value of each class of financial instrument for which
it is practicable to estimate that value.

SHORT-TERM INTEREST-EARNING ASSETS. The carrying amount approximates fair
value.

TRADING ACCOUNT ASSETS. The carrying values are market values, which are
generally based on quoted market prices or dealer quotes, if available. If a
quoted market price is not available, market value is estimated using quoted
market prices for instruments with similar credit, maturity, and interest
characteristics.

SECURITIES AND MORTGAGE-BACKED SECURITIES. The carrying amounts for
certain securities and MBS approximate their fair values as they mature within
90 days and do not present significant credit concerns. The fair

F-29
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
values of securities and MBS with longer maturities are estimated based on bid
prices published in financial newspapers or bid quotations received from
securities dealers.

LOANS. Fair values are estimated for portfolios of loans with similar
characteristics and include the value of related servicing rights, if
appropriate. Loans are segregated by type, by rate, and by performing and
nonperforming categories. As adjustable-rate loans (excluding single family)
reprice frequently, their carrying value approximates their fair value. For
fixed-rate loans and single family loans, excluding the single family mortgage
warehouse, fair value is estimated using contractual cash flows discounted at
secondary market rates, adjusted for prepayment estimates, or using current
rates offered for similar loans. Fair value of the single family mortgage
warehouse loans is estimated using outstanding commitment prices from investors
or current investor yield requirements. The fair value of nonperforming loans is
estimated using the carrying value less any related allowance for credit losses.

FHLB STOCK. The carrying amount approximates fair value as it is
redeemable at its par value.

DEPOSITS. Under SFAS No. 107, the estimated fair value of deposits with no
stated maturity, which includes demand deposits, money market, and other savings
accounts, is equal to the amount payable on demand. Although market premiums
paid for depository institutions reflect an additional value for these deposits,
SFAS No. 107 prohibits adjusting fair value for any value expected to be derived
from retaining those deposits for a future period of time or from the benefit
that results from the ability to fund interest-earning assets with these deposit
liabilities. The SFAS No. 107 fair value of fixed-maturity deposits is estimated
using a discounted cash flow model with rates currently offered by the Company
for deposits of similar remaining maturities.

FHLB ADVANCES, REVERSE REPURCHASE AGREEMENTS, AND FEDERAL FUNDS
PURCHASED. Fair values are estimated based on the discounted value of
contractual cash flows using rates currently available to the Company for
borrowings with similar terms and remaining maturities.

SENIOR NOTES. The fair value of the Senior Notes is based on discounting
future cash flows using the current rates at which similar debt would be issued
by issuers with similar credit ratings and remaining maturities.

OTHER ASSETS AND LIABILITIES. With the exception of that portion of the
excess servicing receivable classified as other assets, the carrying amounts of
financial instruments in these classifications are considered a reasonable
estimate of fair value due to their short-term nature. At September 30, 1996 and
1995, the fair value of the excess servicing receivable exceeded its carrying
value of $9.3 million and $7.1 million, by $5.2 million and $5.1 million,
respectively. The fair value of the excess servicing receivable is equal to the
present value of estimated net future cash flows discounted at a current market
rate.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK. The fair values of
financial instruments with off-balance-sheet risk are based on current market
prices.

SERVICING PORTFOLIO. See Note 1 for a description of the method used to
value the single family servicing portfolio.

F-30
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

SFAS NO. 107 FAIR VALUES
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
-----------------------------------------------------
1996 1995
------------------------- -------------------------
CARRYING SFAS NO. CARRYING SFAS NO.
VALUE 107 VALUE VALUE 107 VALUE
------------- --------- ------------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
FINANCIAL ASSETS
Short-term interest-earning
assets........................ $ 793,772 $ 793,772 $ 583,983 $ 583,983
Trading account assets.......... 1,149 1,149 1,081 1,081
Securities...................... 64,544 64,545 116,013 116,811
Mortgage-backed securities...... 1,657,908 1,637,085 2,398,263 2,378,171
Loans........................... 7,519,488 7,657,483 8,260,240 8,418,464
FHLB stock...................... 179,643 179,643 225,952 225,952
Other assets.................... 110,441 115,658 150,542 155,631
NON-FINANCIAL ASSETS................. 385,432 N/A 247,460 N/A
========= =========
------------- -------------
Total assets............... $ 10,712,377 $ 11,983,534
============= =============
FINANCIAL LIABILITIES
Deposits........................ $ 5,147,945 $5,164,988 $ 5,182,220 $5,215,438
FHLB advances................... 3,490,386 3,493,086 4,383,895 4,395,965
Reverse repurchase agreements
and federal funds purchased... 832,286 832,328 1,172,533 1,171,884
Senior Notes.................... 115,000 118,396 115,000 115,383
Other liabilities............... 170,870 170,870 162,073 162,073
NON-FINANCIAL LIABILITIES, MINORITY
INTEREST, AND STOCKHOLDERS'
EQUITY............................. 955,890 N/A 967,813 N/A
========= =========
------------- -------------
Total liabilities, minority
interest, and
stockholders' equity..... $ 10,712,377 $ 11,983,534
============= =============
OTHER FINANCIAL ASSETS
(LIABILITIES) -- FAIR VALUE
Interest rate swaps........... $ (66) $ (1,517)
Interest rate caps............ 1,057 1,113
Interest rate floors.......... 2,515 4,895
Financial options............. -- 103
Financial futures contracts... -- (1,869)
Forward delivery contracts.... (176) (2,877)
Commitments to extend
credit..................... 2,238 897
OTHER NON-FINANCIAL
ASSETS -- UNREALIZED GAINS
Single family servicing
portfolio, as adjusted (See
Note 6).................... 45,579 47,153
</TABLE>
The carrying values of other financial assets (liabilities) and other
non-financial assets, if any, were included with the carrying values of the
related assets and liabilities.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

F-31
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
are expected to be offset in whole or part by gains on the hedging financial
instrument. Thus, market risk resulting from a particular off-balance-sheet
instrument is normally offset by other on or off-balance-sheet transactions. The
Company seeks to manage credit risk by limiting the total amount of arrangements
outstanding, both by counterparty and in the aggregate, by monitoring the size
and maturity structure of the financial instruments, by assessing the
creditworthiness of the counterparty, and by applying uniform credit standards
for all activities with credit risk.

Notional principal amounts indicated in the following table represent the
extent of the Company's involvement in particular classes of financial
instruments and generally exceed the expected future cash requirements relating
to the instruments.

AT SEPTEMBER 30,
----------------------
1996 1995
---------- ----------
(IN THOUSANDS)
Interest rate swaps.................. $ 50,000 $ 615,000
Interest rate caps................... 659,000 565,000
Interest rate floors................. 688,500 310,000
Financial options.................... -- 23,000
Financial futures contracts.......... -- 529,000
Forward delivery contracts........... 321,923 509,463
Commitments to extend credit......... 988,120 999,792

Financial instruments with off-balance-sheet risk at September 30, 1996
were scheduled to mature as follows:
<TABLE>
<CAPTION>
MATURING IN THE YEAR ENDING SEPTEMBER 30,
------------------------------------------------
1997 1998 1999 THEREAFTER TOTAL
------------ ---------- --------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Interest rate swaps.................. $ 50,000 $ -- $ -- $ -- $ 50,000
Interest rate caps................... 237,000 121,000 58,000 243,000 659,000
Interest rate floors................. 60,000 250,000 -- 378,500 688,500
Forward delivery contracts........... 321,923 -- -- -- 321,923
Commitments to extend credit......... 844,112 100,459 9,728 33,821 988,120
------------ ---------- --------- ---------- ------------
Total...................... $ 1,513,035 $ 471,459 $ 67,728 $ 655,321 $ 2,707,543
============ ========== ========= ========== ============
</TABLE>
F-32
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INTEREST RATE SWAPS. Below is an itemization of swaps by type and items
hedged. These swaps were entered into in an effort to more closely match the
repricing of the Company's liabilities with the related assets. During fiscal
1996, $565.0 million of interest rate swap contracts expired.
<TABLE>
<CAPTION>
NOTIONAL FIXED FLOATING HEDGED
AMOUNT RATE RATE ITEM
-------- ------- -------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AT SEPTEMBER 30, 1996
Receive Fixed/Pay Floating........... $ 25,000 6.00% 5.50%(1) Consumer deposits
25,000 4.60 5.69(2) Consumer deposits
--------
Total........................... $ 50,000
========

AT SEPTEMBER 30, 1995
Receive Floating/Pay Fixed........... $ 75,000 6.10 5.81(1) FHLB advances
340,000 6.50 5.86(1) Reverse repurchase
agreements
100,000 6.58 6.00(2) Commercial deposits
Receive Fixed/Pay Floating........... 75,000 4.32 5.88(2) Consumer deposits
25,000 6.00 5.81(1) Consumer deposits
--------
Total........................... $615,000
========
</TABLE>
(1) Based on the one month London InterBank Offered Rate ("LIBOR") as of the
last reset prior to the date reported.

(2) Based on the three month LIBOR as of the last reset prior to the date
reported.

INTEREST RATE CAPS. During fiscal 1995, interest rate caps with original
notional principal amounts totalling $565.0 million were entered into in an
effort to hedge certain adjustable-rate loans. After considering expected
prepayments and the amortization of the loans that were being hedged, the
amortized notional principal amounts of these caps totalled $459.0 million at
September 30, 1996. Interest rate caps with notional principal amounts totalling
$950.0 million were entered into during fiscal 1996 in an effort to hedge
certain adjustable-rate MBS and FHLB advances. During fiscal 1996, $750.0
million of the caps entered into during fiscal 1996 were sold as the MBS being
hedged were sold. The resulting gain on the sale of the caps of $1.9 million
partially offset the loss on the sale of the MBS.

NOTIONAL INDEX CONTRACTED
AMOUNT RATE RATE
-------- ----- ----------
(DOLLARS IN THOUSANDS)
AT SEPTEMBER 30, 1996..... buy $459,000 5.93 %(1) 7.86%
200,000 5.66 (2) 6.19
sell 459,000 5.93 (1) 8.57

AT SEPTEMBER 30, 1995..... buy 565,000 5.91 (1) 7.86
sell 565,000 5.91 (1) 8.57

(1) Based on the six month LIBOR as of the last reset prior to the date
reported.

(2) Based on the three month LIBOR as of the last reset prior to the date
reported.

F-33
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INTEREST RATE FLOORS. Floor contracts were entered into during fiscal 1996
and 1995 in an effort to hedge the MSRs against declines in value as a result of
prepayments.

AVERAGE
NOTIONAL INDEX FLOOR HEDGED
AMOUNT RATE RATE ITEM
-------- ----- ------- ------
(DOLLARS IN THOUSANDS)
AT SEPTEMBER 30, 1996......... $498,500 6.67 %(1) 5.99% MSRs
190,000 6.88 (2) 6.25 MSRs
--------
Total.................... $688,500
========
AT SEPTEMBER 30, 1995......... $260,000 6.01 (1) 6.70 MSRs
50,000 6.17 (2) 7.20 MSRs
--------
Total.................... $310,000
========

(1) Based on the five year Constant Maturity Treasury ("CMT") as of the last
reset prior to the date reported.

(2) Based on the ten year CMT as of the last reset prior to the date reported.

An interest rate floor agreement with a notional principal amount of $530.0
million hedging single family MSRs was sold prior to its original maturity
during fiscal 1995, resulting in a gain of $6.4 million. The gain was deferred
and is being accreted to operations offsetting the related MSR intangible
amortization expense. At September 30, 1996, the deferred gain remaining from
the sale of the interest rate floor was approximately $4.9 million. Interest
received on interest rate floor agreements totalled $2.1 million and $817,000 at
September 30, 1996 and 1995, respectively. The interest received was deferred
and is being amortized over the life of the MSRs.

FINANCIAL OPTIONS. At September 30, 1995 there was a Treasury call option
outstanding with a notional principal amount of $23.0 million. A Treasury call
option with a notional principal amount of $22.5 million was purchased and
expired during fiscal 1996. These options were entered into in an effort to
hedge MSRs against declines in value as a result of an increase in prepayments
caused by declining interest rates. The Treasury call option outstanding at
September 30, 1995 was sold during fiscal 1996, for a gain of $319,000 as the
MSRs being hedged were sold. This gain was included in the gain on the sale of
MSRs.

During fiscal 1996, a Eurodollar put option with notional principal amount
of $2.0 billion was purchased in an effort to hedge certain MBS. The Eurodollar
put option was sold during fiscal 1996 for a loss of $49,000 as the MBS being
hedged were sold. The loss was included in the gain on the sale of the MBS.

During fiscal 1996, Treasury put options with notional principal amounts
totalling $26.6 million were entered into in an effort to hedge loans the
Company originated for its own portfolio from the date that the interest rate is
locked until the date the loans are sold or funded ("portfolio pipeline").
These options were sold during fiscal 1996.

A Treasury call option with a notional principal amount of $50.0 million
was purchased and expired during fiscal 1996. The option was entered into as
trading activity.

At September 30, 1996 there were no options outstanding.

FINANCIAL FUTURES CONTRACTS. Treasury futures were entered into during
fiscal 1996 and 1995 in an effort to hedge loans in the portfolio pipeline. As
of September 30, 1996, all such Treasury futures contracts were closed or had
expired as the loans being hedged had been sold or were included in the held to
maturity loan portfolio. A net gain of $222,000 on the sale of Treasury futures
contracts as of September 30, 1996 was deferred and is being amortized over the
life of the loans. A loss of $6.0 million on the sale of Treasury futures
contracts was deferred as of September 30, 1995 and recognized into income
during fiscal 1996 as the loans being hedged were sold.

F-34
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Eurodollar futures contracts outstanding at September 30, 1995 were
entered into in an effort to hedge the interest costs for a fixed period on
certain borrowings that reprice based on short-term rates. As of September 30,
1996, all of the Eurodollar futures contracts outstanding at September 30, 1995
were closed or had expired. At September 30, 1996, losses of $135,000 on closed
Eurodollar futures contracts were deferred and are being amortized over the life
of the borrowings.

FORWARD DELIVERY CONTRACTS. Forward delivery contracts are entered into to
sell single family mortgage warehouse loans and to manage the risk that a change
in interest rates will decrease the value of the single family mortgage loan
warehouse or commitments to originate mortgage loans ("mortgage pipeline").

FORWARD DELIVERY CONTRACTS

AT SEPTEMBER 30,
----------------------
1996 1995
---------- ----------
(IN THOUSANDS)
COUNTERPARTY
GNMA............................ $ 197,389 $ 205,250
FNMA............................ 89,203 264,797
Other........................... 35,331 39,416
---------- ----------
Total...................... $ 321,923 $ 509,463
========== ==========
TYPE
Fixed........................... $ 252,587 $ 428,013
Variable........................ 69,336 81,450
---------- ----------
Total...................... $ 321,923 $ 509,463
========== ==========
LOANS AVAILABLE TO FILL COMMITMENTS
Single family mortgage
warehouse....................... $ 260,745 $ 411,287
Mortgage pipeline (estimated)... 174,883 185,204
---------- ----------
Total...................... $ 435,628 $ 596,491
========== ==========

COMMITMENTS TO EXTEND CREDIT. The Company's exposure to credit loss for
commitments to extend credit is represented by the contractual amount of those
agreements. The Company uses the same credit policies in making funding
commitments as it does for on-balance-sheet instruments. These commitments
generally have fixed expiration dates or other termination clauses and may
require the payment of a fee to the Company. Because commitments may expire
without being drawn upon, the total contract amounts do not necessarily
represent future cash requirements.

COMMITMENTS TO EXTEND CREDIT

AT SEPTEMBER 30,
----------------------
1996 1995
---------- ----------
(IN THOUSANDS)
Single family........................ $ 429,332 $ 589,157
Other................................ 558,788 410,635
---------- ----------
Total...................... $ 988,120 $ 999,792
========== ==========
Fixed................................ $ 201,649 $ 282,101
Variable............................. 786,471 717,691
---------- ----------
Total...................... $ 988,120 $ 999,792
========== ==========

F-35
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Included in the commitments to extend credit amounts above were letters of
credit of $8.8 million and $5.4 million at September 30, 1996 and 1995,
respectively.

RECOURSE OBLIGATIONS. The Company had servicing of approximately $20.8
million and $26.6 million at September 30, 1996 and 1995, respectively, for
which certain recourse obligations apply. Management believes that it has
adequately provided reserves for its recourse obligations related to this
servicing.

13. EMPLOYEE BENEFITS

SAVINGS PLAN

The Company has an employee tax deferred savings plan (plan 401(k) under
the Code) available to all eligible employees. Through June 30, 1995, the
Company contributed dollar for dollar up to three percent of the participant's
earnings and employees could contribute up to twelve percent of their earnings
on a tax deferred basis. The Company's 401(k) plan was amended effective July 1,
1995. The Company currently contributes fifty cents for every dollar contributed
up to two percent of the participant's earnings, and dollar for dollar for
contributions between two and four percent of the participant's earnings. The
maximum contribution percentage is now fifteen percent of an employee's earnings
on a tax deferred basis, subject to Internal Revenue Service maximum
contributions limitations. This is a participant directed plan. Plan assets are
held in trust and managed by Fidelity Institutional Retirement Services Company.
Contributions to the plan are in such amounts and within certain limitations as
the Company may authorize. The Company's contributions to the plan were
approximately $1.5 million, $1.5 million, and $1.7 million, for fiscal 1996,
1995, and 1994, respectively.

MANAGEMENT COMPENSATION PROGRAM

In June 1996, the Company's Board of Directors approved a management
compensation program for the Company's executive officers, other key officers
and employees, and certain directors containing the following provisions: (i) a
cash bonus of $4.0 million; (ii) the award of 318,342 shares of Company Class B
common stock with restrictions on its transferability for a period of three
years from its issuance ("Restricted Stock"); and (iii) the issuance of
1,154,520 options for purchase of an equivalent number of shares of Company
common stock (such options vest ratably over three years from the date of grant
and may not be exercised prior to the third anniversary of the date of grant).
The options' exercise price of $20.125 per share was set at an amount not less
than the fair market value at the date of the grant and the options will expire
if not exercised within ten years of the date of the grant.

Compensation expense totalling $7.8 million, $4.8 million net of tax, was
recognized in the quarter ended June 30, 1996 for the cash bonus and the
Restricted Stock award. Compensation expense was not recognized for the stock
options, as the options had an exercise price approximating the fair value of
the Company's common stock at the date of issuance.

DIRECTOR STOCK COMPENSATION PLAN

In June 1996, the Company's Board of Directors approved a director stock
plan for each member of the Company's Board who is not an employee of the
Company or any subsidiary of the Company ("Eligible Director"). Each Eligible
Director will be granted stock options to purchase 1,000 shares of Class A
common stock of the Company when first elected to the Company's Board of
Directors and following each annual stockholders' meeting thereafter. The
options exercise price is 115% of the fair value of the Company's common stock
at the date of grant. The Company granted 10,000 options under the director
stock plan during fiscal 1996. These options vest and become exerciseable if and
when the fair value of the Company's common stock equals or exceeds the exercise
price of the option on any day during the 30-day period commencing on the first
anniversary of the date of the grant ("vesting window"). If these stock
options do not vest during the vesting window, they will be cancelled and all
vested options will expire if not exercised within ten years of the date of
grant.

F-36
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

14. INCOME TAXES

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
----------- --------- ----------
(IN THOUSANDS)
CURRENT TAX EXPENSE (BENEFIT)
Federal......................... $ 3,012 $ 3,459 $ 1,145
State........................... 3,097 2,080 1,841
Payments due in lieu of taxes... 11,528 15,261 (3,449)
DEFERRED TAX EXPENSE (BENEFIT)
Federal......................... 8,910 16,575 17,681
State........................... 1,388 40 (1,279)
Change in valuation
allowance -- utilization of
NOLs.......................... (101,700) -- (47,838)
Change in valuation
allowance -- reduction of
NOLs.......................... (2,000) -- --
----------- --------- ----------
Total income tax (benefit)
expense.................. $ (75,765) $ 37,415 $ (31,899)
=========== ========= ==========

In June 1996, the Parent Company's Certificate of Incorporation and By-Laws
were restated with the intent to preserve certain beneficial tax attributes
limiting the disposition of certain common stock and other interests in the
Parent Company by certain of its stockholders. The preservation of certain tax
attributes allowed the recognition of tax benefits of $85.2 million by the Bank
in June 1996 for the expected utilization of $365 million of NOLs against future
taxable income. These tax benefits were not recognized in prior periods due to
limitations on the utilization of NOLs if an Ownership Change ("Ownership
Change," as defined in Section 382 of the Code) had occurred. In June 1996, the
Parent Company and the Bank entered into a tax sharing agreement. This agreement
resulted in the recognition of a tax benefit of $16.5 million by the Parent
Company for the expected utilization of $47 million of the Parent Company's NOLs
by the Bank. The total tax benefit of $101.7 million was recognized as a
reduction of income tax expense and an increase in the net deferred tax asset,
in accordance with SFAS No. 109, "Accounting for Income Taxes".

In fiscal 1995, no tax benefits were recorded by the Parent Company or the
Bank. The Parent Company recognized no benefit for its stand alone NOLs as it
did not generate taxable income to offset such losses and it was not party to a
federal tax sharing agreement with the Bank at that time. The Bank recognized no
tax benefits due to limitations on the utilization of its NOLs if an Ownership
Change had occurred.

In fiscal 1994, no tax benefits were recorded by the Parent Company due to
circumstances similar to those described in the preceding paragraph. The Bank
recognized a $58.2 million tax benefit in fiscal 1994 for the expected
utilization of $249 million of its NOLs against future taxable income.

Tax NOLs at September 30, 1996 were as follows:

ALTERNATIVE EXPIRATION
YEAR GENERATED REGULAR TAX MINIMUM TAX DATE
- ------------------------------------- ----------- ----------- ----------
(IN MILLIONS)
December 30, 1988.................... $ 33 $ 53 2003
September 30, 1989................... 329 154 2004
September 30, 1990................... 296 141 2005
September 30, 1991................... 119 56 2006
September 30, 1992................... 33 7 2007
September 30, 1994................... 7 -- 2009

Utilization of the NOLs generated for the year ended December 30, 1988 is
subject to federal income tax rules that limit the utilization to federal
taxable income of the Bank and its subsidiaries only. The remaining NOLs may be
utilized against the federal taxable income of the other companies within the
"affiliated group" of which the Parent Company and the Bank are members.

F-37
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Parent Company and the Bank are subject to regular income tax and
alternative minimum tax ("AMT"). For fiscal 1996 and 1995, the current federal
tax expense is the result of AMT. Even though the Parent Company and the Bank
have AMT net operating loss carryforwards ("AMT NOLs"), the Code limits the
amount of utilization of AMT NOLs by 90% of alternative minimum taxable income
("AMTI"). For fiscal 1994, the federal tax expense was the result of
residential interests in real estate mortgage investment conduits ("REMIC"),
which could not be offset by NOLs.

Income tax and related payments differ from the amount computed by applying
the federal income tax statutory rate on income as follows:

FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
----------- --------- ----------
(IN THOUSANDS)
TAXES CALCULATED..................... $ 23,743 $ 31,539 $ 34,356
INCREASE (DECREASE) FROM
Reduction in valuation allowance
for the utilization of NOLs... (101,700) -- (47,838)
Reduction in valuation allowance
for reduction of NOLs......... (2,000) -- --
Change in estimate of net
deferred tax assets........... -- -- (11,340)
Nontaxable assistance........... -- -- (8,100)
Benefit for payments due in lieu
of taxes...................... -- -- (3,449)
State income tax................ 3,097 2,080 1,841
Other........................... 1,095 3,796 2,631
----------- --------- ----------
Total...................... $ (75,765) $ 37,415 $ (31,899)
=========== ========= ==========

F-38
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DEFERRED TAX ASSETS AND LIABILITIES

AT SEPTEMBER 30,
------------------------
1996 1995
----------- -----------
(IN THOUSANDS)
DEFERRED TAX ASSETS
Net operating losses............ $ 196,326 $ 211,637
Purchase accounting............. 6,252 10,064
Capital loss carryforwards...... 1,449 --
Tax mark to market.............. 3,654 --
Unrealized losses on securities
available for sale............. 1,340 3,990
REMIC........................... 6,830 7,083
Goodwill amortization........... 1,897 413
State........................... 1,455 2,817
AMT credit...................... 4,065 2,985
Depreciation -- premises and
equipment...................... 2,975 3,084
SAIF assessment(1).............. 11,780 --
Other........................... 9,832 2,926
----------- -----------
Total deferred tax
assets................... 247,855 244,999
----------- -----------
DEFERRED TAX LIABILITIES
Bad debt reserve................ 18,199 11,577
FHLB stock...................... 12,196 8,673
OMSR............................ 19,958 --
REO............................. -- 7,096
Tax mark to market.............. -- 2,816
State........................... -- 16
Other........................... 1,679 6,050
----------- -----------
Total deferred tax
liabilities.............. 52,032 36,228
----------- -----------
Net deferred tax asset before
valuation allowance............ 195,823 208,771
Valuation allowance............. (27,500) (131,200)
----------- -----------
Net deferred tax assets.... $ 168,323 $ 77,571
=========== ===========

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

(1) Assessed in fiscal 1996, but not tax-deductible until fiscal 1997 when paid.
See Note 15.

The Bank is permitted under the Code to deduct an annual addition to a
reserve for bad debts in determining taxable income, subject to certain
limitations. This addition differs from the provision for credit losses for
financial reporting purposes. Due to recently enacted legislation, the Bank's
post-1987 tax bad debt reserve will be required to be recaptured into income
beginning with fiscal 1997. The reserve will be recaptured over a six taxable
year period with the opportunity to defer recapture by up to two years if
certain residential loan requirements are met. Management believes the Bank will
not have the opportunity to defer recapture of the bad debt reserve as the
residential loan requirements will not be met. At September 30, 1996, the Bank
has approximately $90 million of post-1987 tax bad debt reserves. There will be
no financial statement impact from this recapture as a deferred tax liability
has already been provided for on the Bank's post-1987 tax bad debt reserves. The
current tax liability resulting from recapture of these reserves will be reduced
by NOLs available to offset this income.

No deferred taxes have been provided on approximately $52 million of
pre-1988 tax bad debt reserves. This tax reserve for bad debts is included in
taxable income in later years if certain circumstances occur, such as, a
distribution in redemption of stock of the Bank (with certain exceptions for
preferred stock); partial or complete liquidation of the Bank following a merger
or liquidation; or a dividend distribution in excess of certain earnings

F-39
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
and profits. However, if a thrift with a pre-1988 reserve is merged, liquidated
on a tax free basis, or acquired by another depository institution, the
remaining institution will inherit the thrift's pre-1988 reserve and post-1951
earnings and profits. Because management believes the circumstances requiring
recapture of the reserve are not likely to occur, deferred income taxes of
approximately $18 million have not been provided.

PAYMENTS DUE IN LIEU OF TAXES

Pursuant to the terms of the Assistance Agreement, the amount of financial
assistance paid to the Bank by the FRF was reduced each year by an amount equal
to one-third of any federal and state net tax benefits ("Net Tax Benefits")
(as defined by the Assistance Agreement). The Assistance Agreement further
provided that in no event would the amount paid to the FRF related to Net Tax
Benefits be less than a guaranteed minimum totalling $10 million payable over
five years. Additional payments due in lieu of taxes above the guaranteed
minimum payments are included in the Consolidated Statements of Operations as
incurred as a component of tax expense. The final guaranteed payment was made in
July 1994 for fiscal 1993. The Assistance Agreement was terminated in December
1993. As part of the Settlement Agreement, the Parent Company, the Bank, and
certain of their direct and indirect parent entities entered into a tax benefit
agreement (the "Tax Benefits Agreement"), pursuant to which the Bank will pay
one-third of certain tax benefits that are utilized by the Bank through the
taxable year ending nearest to September 30, 2003. The amounts reflected in the
Consolidated Financial Statements are based on estimated tax benefits utilized
by the Bank and may vary from amounts paid due to the actual utilization of tax
benefits reported in the federal income tax return.

15. REGULATORY MATTERS

The Bank is subject to regulatory capital requirements as defined in the
OTS capital regulations (as set forth in the table below). Any savings
association that fails to meet its regulatory capital requirements is subject to
enforcement actions by the OTS which could have a material effect on its
financial statements. Under the capital adequacy requirements and prompt
corrective action provisions, the Bank must meet specific capital requirements
based on its capital, assets, and certain off-balance-sheet items as calculated
under regulatory accounting practices.

To meet the capital adequacy requirements, the Bank must maintain minimum
amounts and ratios of tangible capital, core capital, and total risk-based
capital (as set forth in the table below). As of September 30, 1996 and 1995,
the Bank met all capital adequacy requirements.

As of September 30, 1996 and 1995, the most recent notification from the
OTS categorized the Bank as well-capitalized, the highest of five tiers, under
the prompt corrective action provisions. To be categorized as well-capitalized,
the Bank must maintain minimum amounts and ratios of core capital, tier 1
capital, and total risk-based capital (as set forth in the table below). As of
September 30, 1996, there are no conditions or events since the OTS notification
that management believes would change the institution's category.

F-40
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following tables show the Bank's compliance with the regulatory capital
requirements:
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
----------------------------------------------------------------
CAPITAL ADEQUACY WELL-CAPITALIZED
ACTUAL REQUIREMENTS REQUIREMENTS
-------------------- -------------------- --------------------
RATIO AMOUNT RATIO AMOUNT RATIO AMOUNT
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1996
Stockholders' equity of the Bank..................... $ 793,527
Add: Net unrealized losses......................... 2,233
Less: Intangible assets of the Bank................ (14,867)
Non-qualifying deferred tax assets............. (85,036)
Non-qualifying MSRs............................ (36)
---------
TANGIBLE CAPITAL..................................... 6.57% 695,821 1.50% $ 158,943
Add: Core deposit intangibles...................... 8,087
---------
CORE CAPITAL......................................... 6.64% $ 703,908 3.00% 318,129 5.00% $ 530,216
=========

TIER 1 CAPITAL....................................... 12.40% $ 703,908 6.00% 340,734
Add: Allowance for loan and MBS credit losses...... 39,715
---------
TOTAL RISK-BASED CAPITAL............................. 13.09% $ 743,623 8.00% 454,312 10.00% 567,890
=========
1995
Stockholders' equity of the Bank..................... $ 794,678
Add: Net unrealized losses......................... 6,647
Less: Intangible assets of the Bank................ (23,956)
Non-qualifying deferred tax assets............. (37,617)
Non-qualifying MSRs............................ (25)
---------
TANGIBLE CAPITAL..................................... 6.20% 739,727 1.50% $ 178,844
Add: Core deposit intangibles...................... 10,838
---------
CORE CAPITAL......................................... 6.29% $ 750,565 3.00% 358,013 5.00% $ 596,688
=========

TIER 1 CAPITAL....................................... 12.82% $ 750,565 6.00% 351,184
Add: Allowance for loan and MBS credit losses...... 36,855
---------
TOTAL RISK-BASED CAPITAL............................. 13.45% $ 787,420 8.00% 468,245 10.00% 585,307
=========
</TABLE>
The Bank meets its fully phased-in capital requirements. OTS regulations
generally allow dividends to be paid without prior OTS approval under certain
conditions provided that the level of regulatory capital, following the payment
of such dividends, meets the fully phased-in capital requirements. At September
30, 1996, there was an aggregate of approximately $152.7 million available for
the payment of dividends under these requirements.

The Bank's net income and stockholders' equity figures as presented in the
Consolidated Statements of Financial Condition and Operations in the Bank's
Annual Report on Form 10-K agree with the information included in the Bank's
Thrift Financial Report filed with the OTS as of September 30, 1996.

FORBEARANCE

Notwithstanding the above capital requirements, the Bank's capital
requirements were established pursuant to the forbearance letter (a
"Forbearance Agreement") issued simultaneously with the Assistance Agreement.
The OTS has taken the position, with which the Bank disagrees, that the capital
forbearances are no longer available because of the enactment of the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"). Despite
the OTS position, management believes that all significant waivers, approvals,
and

F-41
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
forbearances related to the Bank's acquisition, including the capital
forbearances, remain in full force and effect following the enactment of FIRREA.
Pursuant to the Settlement Agreement, the Bank has retained all claims relating
to the forbearances against the United States of America, and on July 25, 1995,
the Bank, the Parent Company, and Hyperion Partners (collectively,
"Plaintiffs") filed suit against the United States in the Court of Federal
Claims for alleged failures of the United States (i) to abide by a capital
forbearance which would have allowed the Bank to operate for ten years under
negotiated capital levels lower than the levels required by the then existing
regulations or successor regulations, (ii) to abide by its commitment to allow
the Bank to count $110 million of subordinated debt as regulatory capital for
all purposes and (iii) to abide by an accounting forbearance, which would have
allowed the Bank to count as capital for regulatory purposes, and to amortize
over a period of twenty-five years, the $30.7 million difference between certain
FSLIC payment obligations to the Bank and the discounted present value of those
future FSLIC payments. The lawsuit is in a preliminary stage. The lawsuit was
stayed pending the United States Supreme Court's review of UNITED STATES V.
WINSTAR CORP., an action by three other thrifts raising similar issues (the
"WINSTAR cases"). On July 1, 1996, the Supreme Court upheld lower court
rulings that the United States had breached the contracts involved in the
WINSTAR case and remanded the case for further proceedings on the issue of
damages. Since the Supreme Court ruling, the Chief Judge of the Court of Federal
Claims convened a number of status conferences to establish a case management
protocol for the more than 100 lawsuits on the Court of Federal Claims docket,
that, like Plaintiffs case, involve issues similar to those raised in the
WINSTAR case. Following a number of status conferences beginning on July 30,
1996, Chief Judge Loren Smith of the United States Court of Federal Claims has
transferred all WINSTAR-related cases to his own docket and entered an Omnibus
Case Management Order governing proceedings in such cases, including the
Company's case. Under the Omnibus Case Management Order, Chief Judge Smith
serves as the "Managing Judge" for all WINSTAR-related cases and may assign
other judges of the United States Court of Federal Claims to resolve pre-trial
discovery disputes and common legal issues and to conduct trials. The Government
and Plaintiffs in WINSTAR-related cases were directed to exchange certain
significant documents as early as October 2, 1996. Trials on damages in two of
the three WINSTAR cases that were decided by the United States Supreme Court in
July 1996 are scheduled for early 1997. Damages trials in the remaining cases
subject to the Omnibus Case Management Plan are scheduled to begin four months
after completion of the first two damages trials. The Company's case is one of
thirteen cases that "shall be accorded priority in the scheduling" of the
damages trials under the Omnibus Case Management Order.

The Company intends to move promptly for partial summary judgement on
liability and to pursue an early trial on damages. Uncertainties remain
concerning the administration of the Omnibus Case Management Order and the
future course of the Company's lawsuit pursuant to this order. Accordingly, the
Company cannot predict the timing of any resolution of its claims. The Company
expects the trial of its case to commence during the first quarter of fiscal
1998. The Company is also unable to predict the outcome of its suit against the
United States and the amount of judgment for damages, if any, that may be
awarded. Consequently, no assurances can be given as to the results of this
suit. The Company and the Bank have entered into an agreement with Hyperion
Partners acknowledging the relative value, as among the parties, of their claims
in the pending litigation. The agreement confirms that the Company and the Bank
are entitled to receive 85% of the amount, if any, recovered as a result of any
settlement of or a judgment on such claims, and that Hyperion Partners is
entitled to receive 15% of such amount. The agreement was approved by the
disinterested directors of the Company. Plaintiffs will continue to cooperate in
good faith and will use their best efforts to maximize the total amount, if any,
that they may recover.

SAIF ASSESSMENT

The United States Congress passed legislation that was signed into law on
September 30, 1996, which resulted in an assessment on all Savings Association
Insurance Fund ("SAIF")-insured deposits in such amounts that will
fully-capitalize the SAIF at a reserve ratio of 1.25% of SAIF-insured deposits.
This one-time assessment has been set at 65.7 basis points of SAIF-assessable
deposits at March 31, 1995. The Company's assessment of

F-42
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$33.7 million, $20.7 million net of tax, was recorded in the fourth quarter of
fiscal 1996 and will be paid in the first quarter of fiscal 1997.

16. MINORITY INTEREST AND STOCKHOLDERS' EQUITY

MINORITY INTEREST

The Bank is authorized by its charter to issue a total of 10,000,000 shares
of preferred stock. In fiscal 1995, the Bank publicly issued 4,000,000 shares,
$25 liquidation preference per share, of 9.60% noncumulative preferred stock
(par value $0.01) (the "Preferred Stock, Series B"). In fiscal 1993, the Bank
publicly issued 3,420,000 shares, $25 liquidation preference per share, of
10.12% noncumulative preferred stock (par value $0.01) (the "Preferred Stock,
Series A"). Costs incurred in connection with the stock issuances were recorded
as reductions of paid-in capital. These shares are not owned by the Company.

Shares of the Series A and Series B Preferred Stock are not subject to
redemption prior to December 31, 1997 and September 30, 2000, respectively,
except in the event of certain mergers and other transactions. The shares of
Series A and Series B Preferred Stock are redeemable at the option of the Bank,
in whole or in part, at any time on or after December 31, 1997 or September 30,
2000, at the redemption prices set forth in the table below:
<TABLE>
<CAPTION>
SERIES A SERIES B DOLLAR EQUIVALENT
BEGINNING DECEMBER 31, BEGINNING SEPTEMBER 30, REDEMPTION PRICE PER SHARE
- ----------------------- ------------------------ ---------------- -----------------
<S> <C> <C> <C> <C>
1997 2000 105% $ 26.25
1998 2001 104 26.00
1999 2002 103 25.75
2000 2003 102 25.50
2001 2004 101 25.25
2002 and thereafter 2005 and thereafter 100 25.00
</TABLE>

WARRANT

In connection with the Acquisition, the Bank issued a warrant, which
entitled the FDIC to purchase 158,823 shares of the Bank's common stock for an
exercise price of $0.01 per share (the "Warrant"). In August 1996, the FDIC
surrendered a portion of the Warrant for a cash payment of $6.1 million, and
exercised the remainder of the Warrant. The FDIC immediately exchanged the
shares of common stock of the Bank it received for 1,503,560 shares of common
stock of the Company. The FDIC sold all of the 1,503,560 shares of common stock
of the Company in the offering discussed below.

As part of the Settlement Agreement discussed in Note 7, the Bank made
payments to the FDIC in lieu of dividends on the common stock of the Bank from
December 1993 through August 1996 when the Warrant was no longer outstanding.

CAPITAL STOCK

Prior to June 1996, the Company had 13,238 shares of Class A and 2,797
shares of Class C common stock outstanding. The June 1996 Merger and
Restructuring discussed in Note 1 included a 1,800 to one stock conversion and
the conversion of Class C and certain Class A shares to Class B shares. After
conversion, the Class C shares were cancelled. Also in June 1996, 318,342 shares
of Restricted Stock were awarded as part of the management compensation program
discussed in Note 13.

In August 1996, the Company filed a registration statement with the
Securities and Exchange Commission ("SEC") and 12,075,000 shares of the
Company Class A common stock were sold to the public (the

F-43
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
"Offering"). The Company sold 910,694 shares and certain shareholders
("selling shareholders") sold 11,164,306 shares. The net proceeds to the
Company, proceeds to the selling shareholders and the underwriting discount were
$14.0 million, $210.4 million, and $13.9 million, respectively. The net proceeds
to the Company from the Offering will be contributed to the capital of the Bank
in the first quarter of fiscal 1997 for general corporate purposes.

After the 1,800 to one stock conversion, the Warrant conversion, the
issuance of Restricted Stock, and the Offering, the Company had a total of
31,595,596 shares of common stock (par value $0.01) outstanding as follows:
Class A (voting) -- 27,735,934 shares and Class B (nonvoting) -- 3,859,662
shares. The authorized stock of the Company consists of the following: Class A
common stock -- 40,000,000 shares, Class B common stock -- 40,000,000 shares,
and preferred stock -- 10,000,000 shares. Class B common stock may be converted
to Class A common stock subject to certain restrictions.

EARNINGS PER COMMON SHARE

The table below presents information necessary for the computation of
earnings per common share (in thousands, except per share data). The dilutive
effect of the Bank Warrant has been considered in computing earnings per common
share. Average shares and per share results have been restated to reflect the
1,800 to one stock conversion in June 1996.

FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------
1996 1995 1994
---------- --------- ----------
Net income........................... $ 118,935 $ $41,719 $ 108,970
Less: Bank's net income attributable
to common stock equivalents on the
Warrant............................ (5,608) (2,895) (6,451)
---------- --------- ----------
Net income applicable to common
shares............................. $ 113,327 $ 38,824 $ 102,519
========== ========= ==========
Average number of common shares
outstanding........................ 29,260 28,863 28,863
========== ========= ==========
EARNINGS PER COMMON SHARE............ $ 3.87 $ 1.35 $ 3.55
========== ========= ==========

17. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

A petition for review has been filed in the United States District Court of
Appeals for the Fifth Circuit seeking to modify, terminate, and set aside the
order approving the Acquisition, which involved substantially all of the Bank's
initial assets and liabilities. The same petitioner filed a Motion to Intervene
and a Complaint in Intervention in an action pending in the U.S. District Court
of Texas, also seeking to set aside the order approving the Acquisition. The
petitioner contends, in both cases, that it submitted the most favorable bid to
acquire the assets and liabilities of Old USAT and that it should have been
selected as the winning bidder.

The Parent Company is not a party to either of these proceedings. The Bank
has intervened in the Fifth Circuit case and may file a Motion to Intervene in
the District Court case at a later date. Management believes, after consultation
with legal counsel, that the claims of the petitioner are barred by applicable
time limits, have no basis for assertion under existing law, and will not have a
material adverse effect on the Bank's or the Company's financial condition,
results of operations, or liquidity.

A substantial part of the Bank's business has involved the origination,
purchase, and sale of mortgage loans. During the past several years, numerous
individual claims and purported consumer class actions were commenced against a
number of financial institutions, their subsidiaries, and other mortgage lending
companies seeking civil statutory and actual damages and rescission under the
federal Truth In Lending Act (the "TILA"), as well as remedies for alleged
violations of various state unfair trade practices laws and restitution or
unjust enrichment in connection with certain mortgage loan transactions.

F-44
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Bank has a substantial mortgage loan servicing portfolio and maintains
escrow accounts in connection with this servicing. During the past several
years, numerous individual claims and purported consumer class action claims
were commenced against a number of financial institutions, their subsidiaries,
and other mortgage lending institutions generally seeking declaratory relief
that certain of the lenders' escrow account servicing practices violate the Real
Estate Settlement Practices Act and breach the lenders' contracts with
borrowers. Such claims also generally seek actual damages and attorney's fees.

While the Bank has had various claims similar to those discussed above
asserted against it, management does not expect these claims to have a material
adverse effect on the Bank's or the Company's financial condition, results of
operations, or liquidity.

The Bank is involved in legal proceedings occurring in the ordinary course
of business that management believes, after consultation with legal counsel, are
not, in the aggregate, material to the financial condition, results of
operations, or liquidity of the Bank or the Company.

FACILITIES OPERATIONS

Future minimum commitments on data processing agreements and significant
operating leases in effect at September 30, 1996 were as follows (in thousands):

YEARS ENDING
SEPTEMBER 30, AMOUNT
- ------------------------------------- ---------
1997.............................. $ 19,707
1998.............................. 15,900
1999.............................. 9,279
2000.............................. 2,331
2001.............................. 1,906
Thereafter........................ 10,853
---------
$ 59,976
=========

Total data processing and rental expense for fiscal 1996, 1995, and 1994
under the same or similar agreements as in the preceding table, after
consideration of certain credits and rental income, were $22.4 million, $22.9
million, and $22.4 million, respectively.

F-45
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

18. FINANCIAL HIGHLIGHTS BY PRINCIPAL BUSINESS OPERATION

The Company operates as a broad based financial services provider to
consumers and businesses in Texas and other selected regional markets throughout
the United States. This business is conducted through the Community Banking,
Financial Markets, and Commercial Banking Groups, which comprise the Banking
Segment, and the Mortgage Banking Segment. Summarized financial information by
business segment and for the Parent Company for the periods indicated, was as
follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------------
MORTGAGE
BANKING BANKING PARENT
SEGMENT SEGMENT COMPANY ELIMINATIONS COMBINED
------------- ------------- ------- ------------ -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996
Revenues................................ $ 248,968 $ 103,161 $98,714 $ (113,273) $ 337,570
Earnings before income taxes and
minority interest..................... 82,449 (3,120) 97,518 (109,011) 67,836
Depreciation and amortization of
intangibles........................... 9,214 23,155 1,000 (4,262) 29,107
Capital expenditures.................... 8,951 443 -- -- 9,394
Average identifiable assets............. 10,947,844 640,780 9,972 (369,165) 11,229,431
Loan transfers to (from)................ 818,563 (818,563) -- -- --
Interest income (expense) on single
family mortgage warehouse outstanding
loan balance.......................... 21,878 (21,878) -- -- --
Servicing (expense) income on Banking
Segment's loans....................... (13,723) 13,723 -- -- --
1995
Revenues................................ $ 203,115 $ 119,601 $(3,910) $ (9,826) $ 308,980
Earnings before income taxes and
minority interest..................... 82,163 19,357 (5,000 ) (6,409) 90,111
Depreciation and amortization of
intangibles........................... 12,305 20,965 976 (3,417) 30,829
Capital expenditures.................... 5,859 273 -- -- 6,132
Average identifiable assets............. 10,258,857 482,965 8,061 (312,820) 10,437,063
Loan transfers to (from)................ 1,012,771 (1,012,771) -- -- --
Interest income (expense) on single
family mortgage warehouse outstanding X
loan balance.......................... 19,903 (19,903) -- -- --
Servicing (expense) income on Banking
Segment's loans....................... (12,672) 12,672 -- -- --
</TABLE>
F-46
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------
MORTGAGE
BANKING BANKING PARENT
SEGMENT SEGMENT COMPANY ELIMINATIONS COMBINED
------------ ------------ ------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1994
Revenues................................ $ 189,378 $ 115,544 $1,279 $ (13,530) $ 292,671
Earnings before income taxes and
minority interest..................... 73,757 24,404 (645 ) (11,435) 86,081
Depreciation and amortization of
intangibles........................... 16,560 10,696 977 (2,095) 26,138
Capital expenditures.................... 5,456 4,962 -- -- 10,418
Average identifiable assets............. 8,174,275 717,551 4,401 (612,600) 8,283,627
Loan transfers to (from)................ 1,319,020 (1,319,020) -- -- --
Interest income (expense) on single
family mortgage warehouse outstanding X
loan balance.......................... 33,173 (33,173) -- -- --
Servicing (expense) income on Banking
Segment's loans....................... (10,223) 10,223 -- -- --
</TABLE>
Revenues are comprised of net interest income (before the provision for
credit losses) and non-interest income, and, in the case of Parent Company only
revenue, dividends received from the Bank. On May 6, 1996, the Bank paid a $100
million dividend to the Parent Company on the common stock of the Bank. Interest
costs incurred by the Parent Company are included in its revenues above since
they relate to long-term debt and are not directly attributable to a specific
segment. Earnings before income taxes and minority interest equal revenue, less
the provision for credit losses and non-interest expenses. Non-interest expenses
of the Bank are fully allocated to each segment of the Bank. Non-interest
expenses incurred by support departments that are directly attributable to a
segment are charged to that segment. General corporate overhead expenses not
specifically identified to an individual segment, but necessary for the
maintenance of the Bank as a going concern, are also allocated to the two
segments. Parent Company expenses are not allocated to the Bank's business
segments. The elimination amounts reflect the following: (i) dividends received
by the Parent Company from the Bank, (ii) interest income and MSR amortization
expense relating to loans held by the Banking Segment serviced by the Mortgage
Banking Segment, and (iii) the single family mortgage warehouse funded by the
Banking Segment.

For segment reporting purposes, the value of servicing related to loans
purchased from third parties by the Banking Segment is segregated from the
original loan basis and is allocated to the Mortgage Banking Segment. The
amortization of this capitalized amount approximated $2.3 million for fiscal
1996, $2.4 million for fiscal 1995, and $1.8 million for fiscal 1994 and is
reflected in the Mortgage Banking Segment figures above.

For loans transferred from the Mortgage Banking Segment to the Banking
Segment, the difference, if any, between the Banking Segment's "purchase
price" and the actual Book Value of the loans is retained by the Mortgage
Banking Segment at the time of transfer. The amount retained is amortized to
operations of the Mortgage Banking Segment and approximated $1.9 million for
fiscal 1996, $1.0 million for fiscal 1995, and $283,000 for fiscal 1994.

MORTGAGE BANKING CHARGES

In June 1996, the Company recorded a restructuring charge of $10.7 million
before tax, to recognize the costs of closing or consolidating production
offices and several regional operations centers and recorded $1.8 million of
other expenses related to the mortgage origination business. These closures and
consolidations will result in personnel reductions of approximately 265 people,
including both salaried and commissioned employees. The restructuring charge
included estimated costs for severance and other benefits of $800,000, asset
write-downs of $5.3 million, lease termination costs of $3.4 million and other
costs of $1.2 million. The non-cash write-off of $5.3 million reflects $3.5
million of goodwill and $1.8 million of fixed assets and leasehold

F-47
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
improvements written off in connection with the closed production offices. At
September 30, 1996, the unpaid liability relating to the restructuring charge
was $4.6 million and is expected to be paid in full by fiscal 1999. As of
September 30, 1996, 31 mortgage origination branches and 6 regional operation
centers had been closed and the workforce was reduced by 208.

19. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following table represents summarized data for each of the quarters in
fiscal 1996 and 1995 (in thousands, except earnings per share).
<TABLE>
<CAPTION>
1996 1995
------------------------------------------ ------------------------------------------
FOURTH THIRD SECOND FIRST FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income...................... $ 191,893 $ 199,198 $ 203,436 $ 217,785 $ 224,308 $ 194,865 $ 172,992 $ 154,594
Interest expense..................... 136,752 138,737 148,548 160,741 166,580 146,220 129,915 110,045
--------- --------- --------- --------- --------- --------- --------- ---------
Net interest income.............. 55,141 60,461 54,888 57,044 57,728 48,645 43,077 44,549
Provision for credit losses.......... 6,314 4,305 3,181 2,669 9,663 10,473 3,223 934
--------- --------- --------- --------- --------- --------- --------- ---------
Net interest income after provision
for credit losses.................. 48,827 56,156 51,707 54,375 48,065 38,172 39,854 43,615
Non-interest income.................. 31,954 23,473 27,687 26,922 25,201 23,127 30,641 36,012
Non-interest expense................. 85,272 68,689 50,012 49,292 52,466 40,465 51,553 50,092
--------- --------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
minority interest.................. (4,491) 10,940 29,382 32,005 20,800 20,834 18,942 29,535
Income tax (benefit) expense......... (2,121) (98,922) 12,144 13,134 8,169 9,060 8,062 12,124
--------- --------- --------- --------- --------- --------- --------- ---------
Net income before minority
interest........................... (2,370) 109,862 17,238 18,871 12,631 11,774 10,880 17,411
Less minority interest:
Subsidiary preferred stock
dividends...................... 4,564 4,563 4,563 4,563 4,111 2,163 2,163 2,163
Payments in lieu of dividends.... -- 6,189 -- 224 -- 71 -- 306
--------- --------- --------- --------- --------- --------- --------- ---------
NET INCOME....................... $ (6,934) $ 99,110 $ 12,675 $ 14,084 $ 8,520 $ 9,540 $ 8,717 $ 14,942
========= ========= ========= ========= ========= ========= ========= =========
Net income applicable to common
shares............................. $ (6,934) $ 94,143 $ 11,824 $ 13,144 $ 7,936 $ 8,851 $ 8,086 $ 13,951
Earnings per common share............ $ (0.23) $ 3.26 $ 0.41 $ 0.46 $ 0.28 $ 0.31 $ 0.28 $ 0.48
Average common shares outstanding.... 30,441 28,863 28,863 28,863 28,863 28,863 28,863 28,863
</TABLE>
The 1995 figures have been restated to reflect the implementation of SFAS
No. 122 effective October 1, 1994. See Note 1. Average shares and per share
results have been restated to reflect the 1,800 to one stock conversion in June
1996. See Note 16.

F-48
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY

The condensed financial statements of the Parent Company do not include all
of the information and notes normally included with financial statements
prepared in accordance with generally accepted accounting principles.

PARENT COMPANY
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)

SEPTEMBER 30,
----------------------
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents............ $ 18,790 $ 1
Securities purchased under agreements
to resell.......................... -- 2,121
Investment in Bank United............ 608,027 609,178
Intangible assets.................... 2,055 2,563
Deferred tax asset................... 19,527 --
Other assets......................... 5,281 1,287
---------- ----------
TOTAL ASSETS......................... $ 653,680 $ 615,150
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Senior Notes......................... $ 115,000 $ 115,000
Other liabilities.................... 7,637 4,047
---------- ----------
Total liabilities.......... 122,637 119,047
---------- ----------
STOCKHOLDERS' EQUITY
Common stock......................... 316 289
Paid-in capital...................... 129,286 117,722
Retained earnings.................... 403,674 384,739
Unrealized gains (losses) on
subsidiary's securities and
mortgage-backed securities
available for sale, net of tax..... (2,233) (6,647)
---------- ----------
Total stockholders'
equity................... 531,043 496,103
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY............................. $ 653,680 $ 615,150
========== ==========

These condensed financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes thereto.

F-49
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PARENT COMPANY
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS)

FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------
1996 1995 1994
---------- --------- ----------
INCOME
Dividends from the Bank.............. $ 109,011 $ 6,409 $ 11,435
Short-term interest-earning assets... 56 88 21
---------- --------- ----------
Total income............... 109,067 6,497 11,456
---------- --------- ----------
EXPENSE
Interest expense -- Senior Notes..... 10,353 10,407 10,177
Amortization of intangibles.......... 1,000 976 977
Other................................ 196 114 947
---------- --------- ----------
Total expense.............. 11,549 11,497 12,101
---------- --------- ----------
INCOME (LOSS) BEFORE UNDISTRIBUTED
INCOME OF BANK AND INCOME TAXES.... 97,518 (5,000) (645)
Equity in undistributed income of the
Bank............................... 519 45,322 104,316
---------- --------- ----------
INCOME BEFORE INCOME TAXES........... 98,037 40,322 103,671
Income tax benefit................... (20,898) (1,397) (5,299)
---------- --------- ----------
NET INCOME........................... $ 118,935 $ 41,719 $ 108,970
========== ========= ==========

These condensed financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes thereto.

F-50
<PAGE>
BANK UNITED CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

PARENT COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------
1996 1995 1994
---------- ---------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................... $ 118,935 $ 41,719 $ 108,970
Adjustments to reconcile net income
to net cash
(used) provided by operating
activities:
Equity in undistributed income
of the Bank................... (519) (45,322) (104,316)
Deferred tax benefit............ (19,527) -- --
Amortization of intangibles..... 1,000 976 977
Change in other assets.......... (4,486) 4,111 (5,393)
Change in other liabilities..... 3,590 (73) 159
Management Restricted Stock
award......................... 3,709 -- --
---------- ---------- -----------
Net cash provided by
operating activities..... 102,702 1,411 397
---------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in securities
purchased under agreements to
resell........................ 2,121 (1,411) (397)
---------- ---------- -----------
Net cash provided (used) by
investing activities..... 2,121 (1,411) (397)
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common
stock......................... 13,966 -- --
Payment of common stock
dividends..................... (100,000) -- --
---------- ---------- -----------
Net cash used by financing
activities............... (86,034) -- --
---------- ---------- -----------
NET INCREASE IN CASH AND CASH
EQUIVALENTS........................ 18,789 -- --
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR.................. 1 1 1
---------- ---------- -----------
CASH AND CASH EQUIVALENTS AT END OF
YEAR............................... $ 18,790 $ 1 $ 1
========== ========== ===========

These condensed financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes thereto.

F-51
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY SECURITY OTHER THAN THE SHARES OF CLASS A COMMON STOCK OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSONS IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

PAGE
-----
Prospectus Summary...................... 2
Risk Factors............................ 16
The Company............................. 22
Use of Proceeds......................... 25
Dividend Policy......................... 25
Capitalization.......................... 27
Selected Consolidated Financial and
Other Data............................ 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 32
Business................................ 58
Regulation.............................. 79
Properties.............................. 100
Legal Proceedings....................... 100
Management.............................. 103
Selling Stockholders.................... 123
Description of Capital Stock............ 126
Legal Matters........................... 132
Experts................................. 132
Available Information................... 132
Index to Consolidated Financial
Statements............................ F-1
================================================================================

10,208,610 SHARES

[LOGO--BANK UNITED CORP.]

CLASS A COMMON STOCK

---------------------
PROSPECTUS
---------------------

JANUARY 27, 1997
================================================================================
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE U.S. UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

PAGE
-----
PROSPECTUS SUPPLEMENT
Prospectus Supplement................... S-3
Participating Selling Stockholders...... S-7
Underwriting............................ S-8
Legal Matters........................... S-10
PROSPECTUS
Prospectus Summary...................... 2
Risk Factors............................ 16
The Company............................. 22
Use of Proceeds......................... 25
Dividend Policy......................... 25
Capitalization.......................... 27
Selected Consolidated Financial and
Other Data............................ 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 32
Business................................ 58
Regulation.............................. 79
Properties.............................. 100
Legal Proceedings....................... 100
Management.............................. 103
Selling Stockholders.................... 123
Description of Capital Stock............ 126
Legal Matters........................... 132
Experts................................. 132
Available Information................... 132
Index to Consolidated Financial
Statements............................ F-1

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

3,887,920 SHARES

BANK
[LOGO] UNITED CORP.

CLASS A COMMON STOCK

------------------------
PROSPECTUS SUPPLEMENT
FEBRUARY 5, 1997
------------------------

LEHMAN BROTHERS
MERRILL LYNCH & CO.
SMITH BARNEY INC.

================================================================================
<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 27, 1997)

3,887,920 SHARES

[LOGO] BANK
UNITED CORP.

CLASS A COMMON STOCK

The 3,887,920 shares of Class A common stock, par value $0.01 per share
("Class A Common Stock"), of Bank United Corp. (the "Company") offered
hereby (the "Shares") are being sold by certain of the stockholders of the
Company named in this Prospectus Supplement or their transferees, pledges,
donors or successors (collectively, the "Selling Stockholders" and those
selling Shares in the offerings described below the "Participating Selling
Stockholders"). See "Participating Selling Stockholders" herein. Of the
3,887,920 Shares offered hereby, 777,600 are being offered initially outside the
United States and Canada by the International Managers (as defined below) and
3,110,320 are being offered initially in the United States and Canada by the
U.S. Underwriters (as defined below, and together with the International
Managers, the "Underwriters"). Such offerings are referred to collectively as
the "Offerings". The initial public offering price and the underwriting
discount and commission per Share will be identical for each of the Offerings.
See "Underwriting". The Company will not receive any of the proceeds from the
sale of the Shares by the Participating Selling Stockholders.
The Class A Common Stock is traded on the Nasdaq Stock Market's National
Market (the "NASDAQ") under the symbol "BNKU". On February 5, 1997, the last
reported sale price of the Class A Common Stock on the NASDAQ was $29.50 per
share. Prospective purchasers of the Class A Common Stock are urged to obtain
current information as to market prices of the Class A Common Stock.

SEE "RISK FACTORS" BEGINNING ON PAGE 16 OF THE ACCOMPANYING PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
INVESTORS IN THE CLASS A COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), THE FEDERAL DEPOSIT INSURANCE
CORPORATION ("FDIC"), THE OFFICE OF THRIFT SUPERVISION (THE "OTS")
OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION, THE
FDIC, THE OTS OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------
THE SHARES OF CLASS A COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION, AND ARE
NOT INSURED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY.
==============================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PARTICIPATING SELLING
PUBLIC(1) COMMISSIONS(1) STOCKHOLDERS(2)
- ------------------------------------------------------------------------------
Per Share... $29.00 $1.02 $27.98
- ------------------------------------------------------------------------------
Total(3).... $112,749,680 $3,965,678 $108,784,002
==============================================================================
(1) The Company and the Participating Selling Stockholders have severally agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting" herein.

(3) The Participating Selling Stockholders have granted to the U.S. Underwriters
and the International Managers options, exercisable within 30 days after the
date hereof, to purchase up to 311,033 and 77,760 additional shares of Class
A Common Stock, respectively, on the same terms and conditions as set forth
above to cover over-allotments, if any. If such option is exercised in full,
the total Price to Public, Underwriting Discounts and Commissions, and
Proceeds to the Selling Stockholders will be 124,024,677, 4,362,247, and
119,662,430, respectively. See "Underwriting" herein.
------------------------
The shares of Class A Common Stock offered by this Prospectus are offered
by the International Managers subject to prior sale, to withdrawal, cancellation
or modification of the offer without notice, to delivery to and acceptance by
the International Managers and to certain further conditions. It is expected
that delivery of certificates for Shares will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about February 10, 1997.
------------------------
LEHMAN BROTHERS
MERRILL LYNCH INTERNATIONAL
SMITH BARNEY INC.
February 5, 1997
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE INTERNATIONAL MANAGERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

3,887,920 SHARES

BANK
[LOGO] UNITED CORP.

CLASS A COMMON STOCK

------------------------
PROSPECTUS SUPPLEMENT
FEBRUARY 5, 1997
------------------------

LEHMAN BROTHERS
MERRILL LYNCH INTERNATIONAL
SMITH BARNEY INC.

================================================================================
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered hereby, other than
underwriting discounts and commissions. All amounts are estimated except the
Securities and Exchange Commission (the "Commission") registration fee, the
National Association of Securities Dealers, Inc. ("NASD") filing fee and the
NASDAQ listing fee.

PAYABLE
BY THE
REGISTRANT
----------
SEC registration fee................. $ 81,012
NASD filing fee...................... --
NASDAQ listing fee................... --
Blue Sky fees and expenses........... --
Accounting fees and expenses......... 5,000
Legal fees and expenses.............. 30,000
Printing and engraving expenses...... 15,000
Miscellaneous fees and expenses...... 118,988
----------
Total........................... $ 250,000
==========

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by them in connection with specified actions, suits or proceedings, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation, a "derivative action") if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, if they had no reasonable cause to believe their conduct was
unlawful. A similar standard is applicable in the case of derivative actions,
except that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with the defense or settlement of such actions, and the
statute requires court approval before there can be any indemnification where
the person seeking indemnification has been found liable to the corporation. The
statute provides that it is not exclusive of other indemnification that may be
granted by a corporation's bylaws, disinterested director vote, stockholder
vote, agreement or otherwise.

The Restated Certificate of Incorporation of the Company (the
"Certificate") provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, will be indemnified and held harmless by
the Company to the fullest extent authorized by the DGCL, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss reasonably incurred or
suffered by such person in connection therewith. Such right to indemnification
includes the right to have the Company pay the expenses incurred in defending
any such proceeding in advance of its final disposition, subject to the
provisions of the DGCL. Such rights are not

II-1
<PAGE>
exclusive of any other right which any person may have or thereafter acquire
under any statute, provision of the Certificate, By-Laws, agreement, vote of
stockholders or disinterested directors or otherwise. No repeal or modification
of such provision will in any way diminish or adversely affect the rights of any
director, officer, employee or agent of the Company thereunder in respect of any
occurrence or matter arising prior to any such repeal or modification. The
Certificate also specifically authorizes the Company to maintain insurance and
to grant similar indemnification rights to employees or agents of the Company.

The DGCL permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) payments of unlawful dividends or unlawful stock
repurchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.

The Purchase Agreement provides for indemnification by the Underwriters of
the registrant, its Directors and officers, and by the registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Securities Act, and affords certain rights of contribution with respect thereto.

In addition, Lewis S. Ranieri, Salvatore A. Ranieri, and Scott A. Shay, who
are directors of the Company, may be entitled to indemnification from Hyperion
Partners L.P. and Hyperion Ventures L.P., the former upstream affiliates of the
Company. Such former upstream affiliates, at their sole discretion, may elect to
indemnify other persons who serve as directors or officers of the Company.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

During June 1996, the following actions were taken in the order indicated:
(i) Hyperion Holdings exchanged shares of a newly created class of its
non-voting common stock for certain shares of its voting common stock held by
Hyperion Partners; (ii) Hyperion Partners then distributed the Hyperion Holdings
common stock to its limited and general partners in accordance with the limited
partnership agreement of Hyperion Partners (the "Distribution"); and (iii)
following the Distribution, Hyperion Holdings was merged with and into the
Company (the "Merger"), with the result that holders of Hyperion Holdings
voting and non-voting common stock received shares of Class A Common Stock and
Class B Common Stock and the holders of the Company's Class C common stock, par
value $0.01 per share ("Class C Common Stock") received shares of Class B
Common Stock as set forth under "Selling Stockholders". As part of the
Restructuring, the common stock of Hyperion Holdings and the Class C Common
Stock were converted 1,800 to one. Subsequent to the Restructuring, there were
no shares of Class C Common Stock outstanding. In addition, immediately prior to
the August Offering, the FDIC-FRF surrendered to the Bank a portion of the
Warrant to purchase 158,823 shares of Bank Common Stock for a cash payment of
$6.1 million and exercised the remainder of the Warrant. Immediately thereafter,
the FDIC-FRF exchanged the shares of Bank Common Stock for 1,503,560 shares of
Class B Common Stock, all of which are being sold in the August Offering. See
"Business -- The Assistance Agreement" and "Selling Stockholders". In June
1996, the Company granted 318,342 shares of Class B Common Stock to certain
executive officers of the Company pursuant to the executive management
compensation program. See "Management -- Executive Management Compensation
Program".

II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits. The following exhibits are filed as part of this
Registration Statement.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------------------ ------------------------------------------------------------------------------------------
<S> <C> <C>
*1.1 -- U.S. Underwriting Agreement

*1.2 -- International Underwriting Agreement

2.2 -- Merger Agreement, dated as of June 17, 1996, by and between the Company and Hyperion
Holdings related to the Merger. (Exhibit 2.2 to Form S-1 filed on August 7, 1996)

3.1 -- Form of Restated Certificate of Incorporation of the Registrant, as amended. (Exhibit 3.1
to Form S-1 filed on June 18, 1996)

3.2 -- Form of By-Laws of the Registrant. (Exhibit 3.2 to Form S-1 filed on June 18, 1996)

4.1 -- Indenture, dated as of May 15, 1993, between the Registrant and Bank of New York, as
Trustee, relating to the Registrant's 8.05% Senior Notes due May 15, 1998. (Exhibit 4.1 to
Form S-1 filed on June 18, 1996)

4.2 -- Form of 8.05% Senior Note due May 15, 1998 (included in the Indenture filed as Exhibit 4.1
hereto). (Exhibit 4.2 to Form S-1 filed on June 18, 1996)

4.3 -- Exchange and Registration Rights relating to Registrant's 8.05% Senior Notes due May 15,
1998. (Exhibit 4.3 to Form S-1 filed on June 18, 1996)

4.4 -- First Supplemental Indenture, dated as of January 23, 1995, between the Registrant and the
Bank of New York, as Trustee, relating to Registrant's 8.05% Senior Notes due May 15,
1998. (Exhibit 4.4 to Form S-1 filed on June 18, 1996)

4.5 -- Form of Class A common stock Certificate. (Exhibit 4.5 to Form S-1 filed on July 25, 1996)

5 -- Opinion of Wachtell, Lipton, Rosen & Katz as to the validity of the shares of
Class A Common Stock.

10.1 -- Assistance Agreement, dated December 30, 1988, among the Bank, the Registrant, Hyperion
Holdings, Hyperion Partners, and the FSLIC. (Exhibit 10.1 to Form S-1 filed on June 18,
1996)

10.1a -- Settlement and Termination Agreement, dated as of December 23, 1993, among the Bank, the
Registrant, Hyperion Holdings, Hyperion Partners and the FDIC. (Exhibit 10.1a to Form S-1
filed on June 18, 1996)

10.1b -- Tax Benefits Agreement, dated December 28, 1993, among the Bank, the Registrant, Hyperion
Holdings, Hyperion Partners and the FDIC. (Exhibit 10.1b to Form S-1 filed on June 18,
1996)

10.2 -- Acquisition Agreement, dated December 30, 1988, between the Bank and the FSLIC.(Exhibit
10.2 to Form S-1 filed on June 18, 1996)

10.3 -- Warrant Agreement, dated December 30, 1988, between the Bank and the FSLIC. (Exhibit 10.3
to Form S-1 filed on June 18, 1996)

10.3a -- Amended and Restated Warrant Agreement dated December 28, 1993, between the Bank and the
FDIC. (Exhibit 10.3a to Form S-1 filed on June 18, 1996)

10.4 -- Regulatory Capital Maintenance Agreement, dated December 30, 1988 among the Bank, the
Registrant, Hyperion Holdings, Hyperion Partners, and the FSLIC (terminated). (Exhibit
10.4 to Form S-1 filed on June 18, 1996)

10.5 -- Federal Stock Charter of the Bank and First Amendment to charter approved on August 26,
1992. (Exhibit 10.5 to Form S-1 filed on June 18, 1996)

10.6 -- Amended and Restated Federal Stock Charter of the Bank and Second Amendment approved on
October 30, 1992. (Exhibit 10.6 to Form S-1 filed on June 18, 1996)

10.6a -- Third Amendment to the Federal Stock Charter of the Bank approved on April 23, 1996.
(Exhibit 10.6a to Form S-1 filed on June 18, 1996)

10.6b -- Amended and Restated Bylaws of the Bank. (Exhibit 10.6b to Form S-1 filed on June 18,
1996)

10.7 -- Specimen Preferred Stock, Series A, certificate, $25.00 per share stated value of the
Bank. (Exhibit 10.7 to Form S-1 filed on June 18, 1996)

10.7a -- Certificate of Designation of Noncumulative Preferred Stock, Series A, of the Bank.
(Exhibit 10.7a to Form S-1 filed on June 18, 1996)

II-3
<PAGE>
10.7b -- Specimen Preferred Stock, Series B, certificate, $25.00 per share stated value, of the
Bank. (Exhibit 10.7b to Form S-1 filed on June 18, 1996)

10.7c -- Certificate of Designation of Noncumulative Preferred Stock, Series B, of the Bank.
(Exhibit 10.7c to Form S-1 filed on June 18, 1996)

10.8 -- Data Processing Agreement, dated January 1, 1992, between the Bank and Systematics
Financial Services, Inc., and First Amendment (dated October 28, 1992) and Second
Amendment (dated September 1, 1992). (Exhibit 10.8 to Form S-1 filed on June 18, 1996)

10.8a -- Third Amendment, dated December 17, 1993, to the Data Processing Agreement, dated January
1, 1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8a to Form
S-1 filed on June 18, 1996)

10.8b -- Fourth Amendment, dated March 28, 1994, to the Data Processing Agreement, dated January 1,
1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8b to Form S-1
filed on June 18, 1996)

10.8c -- Fifth Amendment, dated April 1, 1994 to the Data Processing Agreement, dated January 1,
1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8c to Form S-1
filed on June 18, 1996)

10.8d -- Sixth Amendment, dated February 26, 1996 to the Data Processing Agreement, dated January
1, 1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8d to Form
S-1 filed on June 18, 1996)

10.9 -- Management and Consulting Services Agreement, dated January 1, 1992, between the Bank and
Systematics Financial Services, Inc., and First Amendment (dated March 18, 1992) and
Second Amendment (dated September 1, 1992). (Exhibit 10.9 to Form S-1 filed on June 18,
1996)

10.10 -- Lease Agreement, dated April 1, 1989, between the Bank and Homart Development Co. (Leased
premises at 3200 Southwest Freeway) and First Amendment thereto dated January 31, 1990.
(Exhibit 10.10 to Form S-1 filed on June 18, 1996)

10.10a -- Second Amendment, dated November 14, 1994 to Lease Agreement dated April 1, 1989, between
the Bank and Homart Development Co. (assigned to HD Delaware Properties, Inc.). (Exhibit
10.10a to Form S-1 filed on June 18, 1996)

10.10b -- Third Amendment, dated January 8, 1996 to Lease Agreement dated April 1, 1989 between the
Bank and Homart Development Co. (predecessor in interest of HMS Office, L.P.). (Exhibit
10.10b to Form S-1 filed on June 18, 1996)

10.11 -- Lease Agreement, dated November 20, 1990, between the Bank and Greenway Plaza, LTD.
(Leased premises at 3800 Buffalo Speedway). (Exhibit 10.11 to Form S-1 filed on June 18,
1996)

10.12 -- Employment Agreement, dated March 18, 1991, between the Bank and Barry C. Burkholder.
(Exhibit 10.12 to Form S-1 filed on June 18, 1996)

10.12a -- Amendment, dated April 10, 1996, to the Employment Agreement between the Bank and Barry C.
Burkholder. (Exhibit 10.12a to Form S-1 filed on June 18, 1996)

10.13 -- Letter Agreement Related to Employment, dated April 4, 1990, between the Bank and Anthony
J. Nocella. (Exhibit 10.13 to Form S-1 filed on June 18, 1996)

10.14 -- Letter Agreement Related to Employment, dated June 18, 1990 between the Bank and George R.
Bender. (Exhibit 10.14 to Form S-1 filed on June 18, 1996)

10.15 -- Letter Agreement Related to Employment, dated April 6, 1990, between the Bank and Jonathon
K. Heffron. (Exhibit 10.15 to Form S-1 filed on June 18, 1996)

10.16 -- Letter Agreement Related to Employment, dated May 10, 1991, between the Bank and Leslie H.
Green. (Exhibit 10.16 to Form S-1 filed on June 18, 1996)

10.17 -- Management Incentive Plan, dated April 20, 1992. (Exhibit 10.17 to Form S-1 filed on June
18, 1996)

10.18 -- Letter Agreement, dated January 5, 1990, between Hyperion Partners and certain
shareholders of the Registrant with respect to the provision of managerial assistance to
the Registrant. (Exhibit 10.18 to Form S-1 filed on June 18, 1996)

10.22 -- Supplemental Executive Savings Plan of the Bank. (Exhibit 10.22 to Form S-1 filed on June
18, 1996)

10.23 -- Directors Supplemental Savings Plan of the Bank. (Exhibit 10.23 to Form S-1 filed on June
18, 1996)

II-4
<PAGE>

10.24 -- Warrant Purchase and Exchange Agreement, dated July 23, 1996, by and among the Company,
the Bank and the Federal Deposit Insurance Corporation. (Exhibit 10.24 to Form S-1 filed
on July 25, 1996)

10.25 -- Tax Sharing Agreement dated as of May 1, 1996, by and between the Company and the Bank.

10.26 -- Form of The Company's 1996 Stock Incentive Plan. (Exhibit 10.26 to Form S-1 filed on July
25, 1996)

10.27 -- Form of The Company's Director Stock Plan. (Exhibit 10.27 to Form S-1 filed on July 25,
1996)

10.28 -- Employment Agreement, dated August 1, 1996, between the Company and Barry C. Burkholder.

10.29 -- Employment Agreement, dated August 1, 1996, between the Company and Anthony J. Nocella.

10.30 -- Employment Agreement, dated August 1, 1996, between the Company and Jonathon K. Heffron.

10.31 -- Employment Agreement, dated August 1, 1996, between the Company and Ronald D. Coben.

10.32 -- Form of Nontransferable Stock Agreement. (Exhibit 10.32 to Form S-1 filed on July 25,
1996)

10.33 -- Form of Stock Option Agreement. (Exhibit 10.33 to Form S-1 filed on July 25, 1996)

10.34 -- Consulting Agreement.

10.35 -- Recovery Agreement.

10.36 -- Stock Purchase Agreement, dated January 15, 1993, between Hyperion Partners and Hyperion
Holdings. (Exhibit 10.36 to Form S-1 filed on July 25, 1996)

21 -- Subsidiaries of the Registrant. (Exhibit 21 to Form S-1 filed on August 7, 1996)

23.1 -- Consent of Deloitte & Touche, LLP, independent auditors.

23.2 -- Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5).

24 -- Power of Attorney.

27 -- Financial Data Schedule.
</TABLE>

- ------------
* Filed herewith.

All other Exhibits have been filed previously.

(b) Financial Statement Schedules.

Schedules to the Consolidated Financial Statements are not required under
the related instructions or are inapplicable, and therefore have been omitted.

ITEM 17. UNDERTAKINGS

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:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");

(ii) 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;

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this 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.

II-5
<PAGE>
(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.

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 such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question 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.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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.

II-6
<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THE REGISTRANT HAS DULY
CAUSED THIS AMENDMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN HOUSTON, TEXAS, ON THE 7TH DAY OF FEBRUARY, 1997.

BANK UNITED CORP.
By: /s/ BARRY C. BURKHOLDER
PRESIDENT AND
CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS AMENDMENT HAS BEEN
SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED ON THE DATES
INDICATED BELOW.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------------------------------------ ----------------------------------- ------------------
<S> <C> <C>
(1) Principal Executive Officer:
/s/BARRY C. BURKHOLDER President and February 7, 1997
BARRY C. BURKHOLDER Chief Executive Officer

(2) Principal Financial and Accounting Officer:
/s/ANTHONY J. NOCELLA Chief Financial Officer February 7, 1997
ANTHONY J. NOCELLA

(3) Directors:
* Director February 7, 1997
LEWIS S. RANIERI
* Director February 7, 1997
SALVATORE A. RANIERI
* Director February 7, 1997
SCOTT A. SHAY
/s/BARRY C. BURKHOLDER Director February 7, 1997
BARRY C. BURKHOLDER
* Director February 7, 1997
LAWRENCE CHIMERINE, PH.D.
* Director February 7, 1997
DAVID M. GOLUSH
* Director February 7, 1997
PAUL M. HORVITZ, PH.D.

II-7

<PAGE>

SIGNATURES TITLE DATE
- ------------------------------------------------------ ----------------------------------- ------------------
* Director February 7, 1997
ALAN E. MASTER
* Director February 7, 1997
ANTHONY J. NOCELLA
* Director February 7, 1997
PATRICIA A. SLOAN
* Director February 7, 1997
KENDRICK R. WILSON III
* Director February 7, 1997
MICHAEL S. STEVENS
</TABLE>

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

* Signed through a Power of Attorney granted to
Barry C. Burkholder and Jonathan K. Heffron.

II-8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
<S> <C> <C>
*1.1 -- U.S. Underwriting Agreement

*1.2 -- International Underwriting Agreement

2.1 -- Form of Letter Agreement, by and among the general and limited partners of Hyperion
Partners, L.P., dated as of June 17, 1996, relating to certain transactions consumated
prior to the Offering. (Exhibit 2.1 to Form S-1 filed on June 18, 1996)
2.2 -- Merger Agreement, dated as of June 17, 1996, by and between the Company and Hyperion
Holdings related to the Merger. (Exhibit 2.2 to Form S-1 filed on August 7, 1996)
3.1 -- Form of Restated Certificate of Incorporation of the Registrant, as amended. (Exhibit 3.1
to Form S-1 filed on June 18, 1996)
3.2 -- Form of By-Laws of the Registrant. (Exhibit 3.2 to Form S-1 filed on June 18, 1996)
4.1 -- Indenture, dated as of May 15, 1993, between the Registrant and Bank of New York, as
Trustee, relating to the Registrant's 8.05% Senior Notes due May 15, 1998. (Exhibit 4.1 to
Form S-1 filed on June 18, 1996)
4.2 -- Form of 8.05% Senior Note due May 15, 1998 (included in the Indenture filed as Exhibit 4.1
hereto). (Exhibit 4.2 to Form S-1 filed on June 18, 1996)
4.3 -- Exchange and Registration Rights relating to Registrant's 8.05% Senior Notes due May 15,
1998. (Exhibit 4.3 to Form S-1 filed on June 18, 1996)
4.4 -- First Supplemental Indenture, dated as of January 23, 1995, between the Registrant and the
Bank of New York, as Trustee, relating to Registrant's 8.05% Senior Notes due May 15, 1998.
(Exhibit 4.4 to Form S-1 filed on June 18, 1996)
4.5 -- Form of Class A common stock Certificate. (Exhibit 4.5 to Form S-1 filed on July 25, 1996)
5 -- Opinion of Wachtell, Lipton, Rosen & Katz as to the validity of the shares of Class
A Common Stock.
10.1 -- Assistance Agreement, dated December 30, 1988, among the Bank, the Registrant, Hyperion
Holdings, Hyperion Partners, and the FSLIC. (Exhibit 10.1 to Form S-1 filed on June 18,
1996)
10.1a -- Settlement and Termination Agreement, dated as of December 23, 1993, among the Bank, the
Registrant, Hyperion Holdings, Hyperion Partners and the FDIC. (Exhibit 10.1a to Form S-1
filed on June 18, 1996)
10.1b -- Tax Benefits Agreement, dated December 28, 1993, among the Bank, the Registrant, Hyperion
Holdings, Hyperion Partners and the FDIC. (Exhibit 10.1b to Form S-1 filed on June 18,
1996)
10.2 -- Acquisition Agreement, dated December 30, 1988, between the Bank and the FSLIC.(Exhibit
10.2 to Form S-1 filed on June 18, 1996)
10.3 -- Warrant Agreement, dated December 30, 1988, between the Bank and the FSLIC. (Exhibit 10.3
to Form S-1 filed on June 18, 1996)
10.3a -- Amended and Restated Warrant Agreement dated December 28, 1993, between the Bank and the
FDIC. (Exhibit 10.3a to Form S-1 filed on June 18, 1996)
10.4 -- Regulatory Capital Maintenance Agreement, dated December 30, 1988 among the Bank, the
Registrant, Hyperion Holdings, Hyperion Partners, and the FSLIC (terminated). (Exhibit 10.4
to Form S-1 filed on June 18, 1996)
10.5 -- Federal Stock Charter of the Bank and First Amendment to charter approved on August 26,
1992. (Exhibit 10.5 to Form S-1 filed on June 18, 1996)
10.6 -- Amended and Restated Federal Stock Charter of the Bank and Second Amendment approved on
October 30, 1992. (Exhibit 10.6 to Form S-1 filed on June 18, 1996)
10.6a -- Third Amendment to the Federal Stock Charter of the Bank approved on April 23, 1996.
(Exhibit 10.6a to Form S-1 filed on June 18, 1996)
10.6b -- Amended and Restated Bylaws of the Bank. (Exhibit 10.6b to Form S-1 filed on June 18, 1996)
10.7 -- Specimen Preferred Stock, Series A, certificate, $25.00 per share stated value of the Bank.
(Exhibit 10.7 to Form S-1 filed on June 18, 1996)
10.7a -- Certificate of Designation of Noncumulative Preferred Stock, Series A, of the Bank.
(Exhibit 10.7a to Form S-1 filed on June 18, 1996)
<PAGE>
10.7b -- Specimen Preferred Stock, Series B, certificate, $25.00 per share stated value, of the
Bank. (Exhibit 10.7b to Form S-1 filed on June 18, 1996)
10.7c -- Certificate of Designation of Noncumulative Preferred Stock, Series B, of the Bank.
(Exhibit 10.7c to Form S-1 filed on June 18, 1996)
10.8 -- Data Processing Agreement, dated January 1, 1992, between the Bank and Systematics
Financial Services, Inc., and First Amendment (dated October 28, 1992) and Second Amendment
(dated September 1, 1992). (Exhibit 10.8 to Form S-1 filed on June 18, 1996)
10.8a -- Third Amendment, dated December 17, 1993, to the Data Processing Agreement, dated January
1, 1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8a to Form
S-1 filed on June 18, 1996)
10.8b -- Fourth Amendment, dated March 28, 1994, to the Data Processing Agreement, dated January 1,
1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8b to Form S-1
filed on June 18, 1996)
10.8c -- Fifth Amendment, dated April 1, 1994 to the Data Processing Agreement, dated January 1,
1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8c to Form S-1
filed on June 18, 1996)
10.8d -- Sixth Amendment, dated February 26, 1996 to the Data Processing Agreement, dated January 1,
1992, between the Bank and Systematics Financial Services, Inc. (Exhibit 10.8d to Form S-1
filed on June 18, 1996)
10.9 -- Management and Consulting Services Agreement, dated January 1, 1992, between the Bank and
Systematics Financial Services, Inc., and First Amendment (dated March 18, 1992) and Second
Amendment (dated September 1, 1992). (Exhibit 10.9 to Form S-1 filed on June 18, 1996)
10.10 -- Lease Agreement, dated April 1, 1989, between the Bank and Homart Development Co. (Leased
premises at 3200 Southwest Freeway) and First Amendment thereto dated January 31, 1990.
(Exhibit 10.10 to Form S-1 filed on June 18, 1996)
10.10a -- Second Amendment, dated November 14, 1994 to Lease Agreement dated April 1, 1989, between
the Bank and Homart Development Co. (assigned to HD Delaware Properties, Inc.). (Exhibit
10.10a to Form S-1 filed on June 18, 1996)
10.10b -- Third Amendment, dated January 8, 1996 to Lease Agreement dated April 1, 1989 between the
Bank and Homart Development Co. (predecessor in interest of HMS Office, L.P.). (Exhibit
10.10b to Form S-1 filed on June 18, 1996)
10.11 -- Lease Agreement, dated November 20, 1990, between the Bank and Greenway Plaza, LTD. (Leased
premises at 3800 Buffalo Speedway). (Exhibit 10.11 to Form S-1 filed on June 18, 1996)
10.12 -- Employment Agreement, dated March 18, 1991, between the Bank and Barry C. Burkholder.
(Exhibit 10.12 to Form S-1 filed on June 18, 1996)
10.12a -- Amendment, dated April 10, 1996, to the Employment Agreement between the Bank and Barry C.
Burkholder. (Exhibit 10.12a to Form S-1 filed on June 18, 1996)
10.13 -- Letter Agreement Related to Employment, dated April 4, 1990, between the Bank and Anthony
J. Nocella. (Exhibit 10.13 to Form S-1 filed on June 18, 1996)
10.14 -- Letter Agreement Related to Employment, dated June 18, 1990 between the Bank and George R.
Bender. (Exhibit 10.14 to Form S-1 filed on June 18, 1996)
10.15 -- Letter Agreement Related to Employment, dated April 6, 1990, between the Bank and Jonathon
K. Heffron. (Exhibit 10.15 to Form S-1 filed on June 18, 1996)
10.16 -- Letter Agreement Related to Employment, dated May 10, 1991, between the Bank and Leslie H.
Green. (Exhibit 10.16 to Form S-1 filed on June 18, 1996)
10.17 -- Management Incentive Plan, dated April 20, 1992. (Exhibit 10.17 to Form S-1 filed on June
18, 1996)
10.18 -- Letter Agreement, dated January 5, 1990, between Hyperion Partners and certain share-
holders of the Registrant with respect to the provision of managerial assistance to the
Registrant. (Exhibit 10.18 to Form S-1 filed on June 18, 1996)
10.22 -- Supplemental Executive Savings Plan of the Bank. (Exhibit 10.22 to Form S-1 filed on June
18, 1996)
10.23 -- Directors Supplemental Savings Plan of the Bank. (Exhibit 10.23 to Form S-1 filed on June
18, 1996)
10.24 -- Warrant Purchase and Exchange Agreement, dated July 23, 1996, by and among the Company, the
Bank and the Federal Deposit Insurance Corporation. (Exhibit 10.24 to Form S-1 filed on
July 25, 1996)
<PAGE>
10.25 -- Tax Sharing Agreement dated as of May 1, 1996, by and between the Company and the Bank.
10.26 -- Form of The Company's 1996 Stock Incentive Plan. (Exhibit 10.26 to Form S-1 filed on July
25, 1996)
10.27 -- Form of The Company's Director Stock Plan. (Exhibit 10.27 to Form S-1 filed on July 25,
1996)
10.28 -- Employment Agreement, dated August 1, 1996, between the Company and Barry C. Burkholder.
10.29 -- Employment Agreement, dated August 1, 1996, between the Company and Anthony J. Nocella.
10.30 -- Employment Agreement, dated August 1, 1996, between the Company and Jonathon K. Heffron.
10.31 -- Employment Agreement, dated August 1, 1996, between the Company and Ronald D. Coben.
10.32 -- Form of Nontransferable Stock Agreement. (Exhibit 10.32 to Form S-1 filed on July 25, 1996)
10.33 -- Form of Stock Option Agreement. (Exhibit 10.33 to Form S-1 filed on July 25, 1996)
10.34 -- Consulting Agreement.
10.35 -- Recovery Agreement.
10.36 -- Stock Purchase Agreement, dated January 15, 1993, between Hyperion Partners and Hyperion
Holdings. (Exhibit 10.36 to Form S-1 filed on July 25, 1996)
21.1 -- Subsidiaries of the Registrant. (Exhibit 21 to Form S-1 filed on August 7, 1996)
23 -- Consent of Deloitte & Touche LLP, independent auditors.
23.2 -- Consent of Wachtell, Lipton, Rosen & Katz (included in Exhibit 5).
24 -- Power of Attorney.
27 -- Financial Data Schedule.
</TABLE>
- ------------
* Filed herewith.
All other Exhibits have been filed previously.

[Execution Copy]
3,110,320 SHARES

BANK UNITED CORP.

CLASS A COMMON STOCK

U.S. UNDERWRITING AGREEMENT

February 5, 1997

LEHMAN BROTHERS INC.,
As Representative of the several
Underwriters named in Schedule 1
Three World Financial Center
New York, New York 10285

Dear Sirs:

Certain stockholders of Bank United Corp., a Delaware corporation
(the "Company"), named in Schedule 2 hereto (the "Participating Selling
Stockholders") propose to sell an aggregate of 3,110,320 shares (the "Firm
Stock") of the Company's Class A common stock, par value $0.01 per share
("Common Stock"). In addition, the Participating Selling Stockholders propose to
grant to the several Underwriters named in Schedule 1 hereto (the "U.S.
Underwriters") an option to purchase up to an additional 311,033 shares of
Common Stock on the terms and for the purposes set forth in Section 3 hereof
(the "Option Stock"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "Stock." This is to confirm the agreement
with you (the "Representative") and the other U.S. Underwriters on whose behalf
you are acting, concerning the purchase of the Stock from the Participating
Selling Stockholders by the U.S. Underwriters.

It is understood by all parties that the Participating Selling
Stockholders are concurrently entering into an agreement dated the date hereof
(the "International Underwriting Agreement") providing for the sale by the
Participating Selling Stockholders of an aggregate of 855,360 shares of Common
Stock (including the over-allotment option thereunder) (the "International
Stock") through arrangements with certain underwriters outside the United States
(the "International Managers"), for whom Lehman Brothers International (Europe)
is acting as lead manager. The U.S. Underwriters and the International Managers
simultaneously are entering into an agreement between the U.S. and international
underwriting syndicates (the "Agreement Between U.S. Underwriters and
International Managers") which provides for, among other things, the transfer of
shares of Common Stock between the two syndicates. Except as used in Sections 3,
4, 5, 11 and 12 hereof, and except as the context may otherwise require,
references herein to the Stock shall include all the shares of Common Stock
which may be sold pursuant to either this Agreement or the International
Underwriting Agreement.

(1) REPRESENTATIONS AND WARRANTIES BY THE COMPANY AND THE BANK. Each
of the Company and its subsidiary Bank United, a federally chartered savings
bank (the "Bank"),
<PAGE>
represents and warrants to each U.S. Underwriter and each Participating Selling
Stockholder, as of each Delivery Date referred to in Section 5 hereof, and
agrees with each U.S. Underwriter, as follows:

(a) Compliance with Registration Requirements. A registration
statement on Form S-1, including a basic prospectus for registration under
the U.S. Securities Act of 1933, as amended (the "Securities Act"), of the
offering and sale of shares of Common Stock, including the Stock, from
time to time in accordance with Rule 415 of the U.S. Securities and
Exchange Commission (the "Commission") under the Securities Act by certain
of the stockholders of the Company listed in such basic prospectus,
including the Participating Selling Stockholders, and an amendment to such
registration statement (i) has been prepared by the Company in conformity
with the requirements of the Securities Act and the rules and regulations
(the "1933 Act Regulations") of the Commission thereunder, (ii) has been
filed with the Commission under the Securities Act and (iii) has become
effective under the Securities Act. Copies of such registration statement
and the amendment thereto have been delivered by the Company to you as
Representative. As used in this Agreement, "Effective Time" means the date
and the time as of which such registration statement, or the most recent
post-effective amendment thereto, if any, became or was declared effective
by the Commission. "Registration Statement" means such registration
statement, including the exhibits and any schedules, as amended at the
Effective Time, and any Rule 430A Information (as defined below).

Two forms of prospectus are to be used in connection with the
offering and sale of the Stock: one relating to the Stock (the "Form of
U.S. Prospectus") and one relating to the International Stock (the "Form
of International Prospectus"). Each of the Form of U.S. Prospectus and the
Form of International Prospectus consists of (a) a "Basic Prospectus",
which is the prospectus included in the Registration Statement, and (b) a
"Prospectus Supplement", relating specifically to the Stock and the
International Stock, in the form first filed with, or transmitted for
filing to, the Commission pursuant to Rule 424 of the Securities Act. For
purposes of offers and sales of the Stock in Canada, the Form of U.S.
Prospectus also consists of an additional front cover and back cover page
which complies in all respects with all applicable laws in each of the
provinces and territories of Canada, the respective regulations under such
laws and the applicable published policy statements of the securities
regulatory authorities in such jurisdiction. The Form of International
Prospectus is identical to the Form of U.S. Prospectus used for offers and
sales in the United States, except for the front cover and back cover
pages. The term "Prospectus", as used herein, shall refer to the Basic
Prospectus as so supplemented by the relevant Prospectus Supplement. The
information included in such prospectuses that was omitted from the
Registration Statement at the Effective Time but that is deemed to be part
of the Registration Statement at the Effective Time pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information". Each Form of
U.S. Prospectus and each Form of International Prospectus, and any
prospectus that omitted Rule 430A Information, that was used after the
Effective Time and prior to the execution and delivery of this Agreement,
is herein called a "Preliminary Prospectus". The Commission has not issued
any order preventing or suspending the use of any Preliminary Prospectus.

2
<PAGE>
Any registration statement filed pursuant to Rule 462(b) of the 1933
Act Regulations is herein referred to as the "Rule 462(b) Registration
Statement", and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectuses in
the forms first furnished to the U.S. Underwriters and the International
Managers for use in connection with the offering of the U.S. Stock or the
International Stock, respectively, are herein called the "U.S. Prospectus"
and the "International Prospectus". For purposes of this Agreement, all
references to the Registration Statement, any Preliminary Prospectus, the
U.S. Prospectus, the International Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy
filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("EDGAR"). The term "Prospectus" shall,
unless the context otherwise requires, hereinafter refer to the U.S.
Prospectus and the International Prospectus.

The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they became or become effective or were or are filed
with the Commission, as the case may be, conformed or will conform in all
respects to the requirements of the Securities Act and the 1933 Act
Regulations and do not and will not, as of the applicable effective date
(as to the Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; PROVIDED that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance upon
and in conformity with written information furnished to the Company
through the Representative by or on behalf of any U.S. Underwriter or
International Manager specifically for inclusion therein.

(b) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the Securities
Act and the 1933 Act Regulations.

(c) Financial Statements. The consolidated financial statements
included in the Registration Statement and the Prospectus, together with
the related schedules and notes, present fairly in all material respects
the consolidated financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved,
except as may be noted therein. The supporting schedules, if any, included
in the Registration Statement present fairly in all material respects in
accordance with GAAP, except as may be noted therein, the information
required to be stated therein. The selected financial data and the summary
financial information included in the Prospectus present fairly in all
material respects the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements

3
<PAGE>
included in the Registration Statement. The pro forma financial
information and the related notes thereto included in the Registration
Statement and the Prospectus present fairly the information shown therein,
have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.

(d) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (i) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, stockholders' equity, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business (a "Material Adverse
Effect"), (ii) there have been no transactions entered into by the Company
or any of its subsidiaries, other than those in the ordinary course of
business, which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (iii) except for regular
quarterly dividends on the Bank Preferred Stock (as defined in the
Prospectus) in amounts per share that are consistent with past practice,
there has been no dividend or distribution of any kind declared, paid or
made by the Bank or the Company on any class of its capital stock.

(e) Good Standing of the Company. Each of the Company, the Bank and
each subsidiary of the Company or the Bank has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.

(f) The Bank; Other Subsidiaries.S

(i) The Bank is the only "significant subsidiary" of the
Company (as such term is defined in Rule 1-02 of Regulation S-X).
The only subsidiaries of the Company other than the Bank are the
wholly-owned subsidiaries of the Bank listed on Schedule E hereto
which, considered in the aggregate as a single subsidiary, do not
constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X. The activities of all of the Bank's subsidiaries are
permitted to subsidiaries of a federally chartered savings bank, the
deposits of which are insured by the Savings Association Insurance
Fund ("SAIF"), which is administered by the Federal Deposit
Insurance Corporation (the "FDIC").

4
<PAGE>
(ii) The Bank has been duly organized and is validly existing
as a federally chartered savings bank in good standing under the
laws of the United States, and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under this Agreement. Each subsidiary of the Bank has
been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation and
has the power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus.

(iii) All of the issued and outstanding capital stock of the
Bank and each subsidiary of the Bank has been duly authorized and
validly issued, is fully paid and non-assessable and, except as
otherwise disclosed in the Registration Statement, is owned by the
Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any
subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such subsidiary.

(g) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus in the column
entitled "Pro Forma" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus or pursuant to the
exercise of convertible securities or options referred to in the
Prospectus). The shares of issued and outstanding capital stock, including
the shares of Common Stock to be purchased by the U.S. Underwriters and
the International Managers from the Participating Selling Stockholders,
have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock, including
the shares of Common Stock to be purchased by the U.S. Underwriters and
the International Managers from the Participating Selling Stockholders,
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.

(h) Authorization of Agreement. This Agreement and the International
Underwriting Agreement have been duly authorized, executed and delivered
by each of the Company and the Bank.

(i) Authorization and Description of Offer Stock. The sale of the
Common Stock to the U.S. Underwriters and the International Managers by
the Participating Selling Stockholders is not subject to the preemptive or
other similar rights of any securityholder of the Company; and the Common
Stock conforms to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth in the
instruments defining the same.

(j) Absence of Defaults and Conflicts. Neither the Company, the
Bank, nor any of their respective subsidiaries is in violation of its
charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained

5
<PAGE>
in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company, the Bank, or any of their respective subsidiaries is a party or
by which it or any of them may be bound, or to which any of the property
or assets of the Company, the Bank, or any of their respective
subsidiaries is subject (collectively, "Agreements and Instruments"),
except for such defaults that would not result in a Material Adverse
Effect; and the execution, delivery and performance of this Agreement and
the International Underwriting Agreement and the consummation of the
transactions contemplated thereby and compliance by each of the Company
and the Bank with its respective obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and do not and will
not result in any violation of the provisions of the charter or by-laws of
the Company, the Bank, or any of their respective subsidiaries or any
applicable law, statute, rule, regulation, judgment, order, writ or decree
of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company, the Bank, or any of their
respective subsidiaries or any of their assets, properties or operations.
As used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company.

(k) Absence of Labor Dispute. No labor dispute with the employees of
the Company or any subsidiary exists or, to the knowledge of the Company,
is imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any subsidiary's
principal suppliers, manufacturers, customers or contractors, which, in
either case, may reasonably be expected to result in a Material Adverse
Effect.

(l) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company or the Bank, as the case may be, threatened, against or
affecting the Company, the Bank, or any of their respective subsidiaries,
which individually or in the aggregate for all such actions, suits,
proceedings, inquiries or investigations is required to be disclosed in
the Registration Statement (other than as disclosed therein), or which
might reasonably be expected to result in a Material Adverse Effect, or
which might reasonably be expected to materially and adversely affect the
consummation of the transactions contemplated in this Agreement and the
International Underwriting Agreement or the performance by the Company or
the Bank of their respective obligations hereunder or thereunder; the
aggregate of all pending legal or governmental proceedings to which the
Company, the Bank, or any of their respective subsidiaries is a party or
of which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary
routine litigation incidental to the business of the Company, the Bank, or
any of their respective subsidiaries, could not reasonably be expected to
result in a Material Adverse Effect. No cease and desist order has been
entered by the Office of Thrift Supervision (the "OTS") or the FDIC
against the Company, the Bank or any of their respective subsidiaries.

6
<PAGE>
(m) Accuracy of Exhibits. There are no contracts or documents which
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.

(n) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.

(o) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency,
including, without limitation, the OTS and the FDIC, is necessary or
required for the performance by the Company of its obligations hereunder
in connection with the offering or sale of the Stock hereunder and under
the International Underwriting Agreement, for the consummation of the
transactions contemplated hereby or thereby or for the other transactions
described in the Registration Statement under the caption "The Company --
Background of the Offering," except such as have been already obtained or
will have been obtained or made prior to the First Delivery Date (as
defined below) or as may be required under the Securities Act or the 1933
Act Regulations or state securities laws.

(p) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company and
its subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.

7
<PAGE>
(q) Title to Property. The Company and its subsidiaries have good
and marketable title to all real, tangible and intangible property
reflected in the most recent balance sheet included in the Prospectus as
owned by the Company and its subsidiaries and good title to all other
properties reflected in the most recent balance sheet included in the
Prospectus as owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (i) are described in the
Prospectus or (ii) do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any of its
subsidiaries; or, with respect to any such real property, render title
unmarketable as to a material part thereof and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any subsidiary has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any subsidiary under any of the
leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of
the leased or subleased premises under any such lease or sublease.

(r) Investment Company Act. The Company is not, and upon the
sale of the Stock as contemplated herein and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the U.S. Investment Company Act
of 1940, as amended (the "1940 Act").

(s) Environmental Laws. Except as described in the Registration
Statement or except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (i) the Company, the Bank and each of their
respective subsidiaries is not in violation of any federal, state, local
or foreign statute, law, rule, regulation, ordinance, code, policy or rule
of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (ii) the
Company, the Bank and each of their respective subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(iii) there are no pending or, to the knowledge of the Company, threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company, the Bank or any of their respective subsidiaries and (iv) to the
knowledge of the Company there are no events or circumstances that might
reasonably be

8
<PAGE>
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting the Company, the Bank or any of their
respective subsidiaries relating to Hazardous Materials or any
Environmental Laws.

(t) Registration Rights. Except as described in the Registration
Statement or as set forth in any document or agreement described in the
Registration Statement as containing such rights, there are no persons
with registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise registered
by the Company or the Bank, under the Securities Act or otherwise.

(u) Accounting. Each of the Company and the Bank maintains a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general
or specific authorization; and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.

(v) Payments To the knowledge of each of the Company and the Bank,
neither the Company, the Bank nor any employee or agent of the Company or
the Bank has made any payment of funds of the Company or the Bank or
received or retained any funds in violation of any law, rule or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.

(w) Taxes Each of the Company and the Bank has filed all tax returns
required to be filed, which returns are complete and correct in all
material respects, and each of the Company and the Bank is not in default
in the payment of any taxes which were payable pursuant to said returns or
any assessments with respect thereto.

(x) Bank Holding Company. In the event the Company shall become
either directly or indirectly a bank holding company for purposes of the
Bank Holding Company Act of 1956, as amended (the "BHC Act") and the rules
and regulations of the Board of Governors of the Federal Reserve System
thereunder (the "BHC Rules"), the current activities of the Company and
its subsidiaries (as defined in the BHC Rules) would be activities
permissible for a bank holding company under the BHC Act and the BHC
Rules.

2. REPRESENTATIONS AND WARRANTIES BY THE PARTICIPATING SELLING
STOCKHOLDERS. Each Participating Selling Stockholder severally represents and
warrants (on behalf of itself and not as to any other Participating Selling
Stockholder or person) to each U.S. Underwriter and the Company as of the date
hereof and as of each Delivery Date, and agrees with each U.S. Underwriter, as
set forth below, except that each of Equitable Deal Flow Fund L.P., Equitable
Capital Partners L.P. and Equitable Capital Partners (Retirement Fund) L.P.
(collectively, "Equitable") is not a party to the Power of Attorney (as defined
below) and accordingly does not

9
<PAGE>
make the following representations and warranties to the extent they relate to
the Power of Attorney:

(a) ACCURACY OF INFORMATION REGARDING PARTICIPATING SELLING
STOCKH(i)ER Accuracy of Information Regarding Selling Stockholder. The
information set forth in the Registration Statement in the chart on page
123 thereof under the caption "Selling Stockholders" which specifically
relates to such Participating Selling Stockholder did not, at the date the
Registration Statement became effective, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
the information set forth in the Basic Prospectus in the chart on page 123
thereof under the caption "Selling Stockholders" and the Prospectus
Supplement under the caption "Participating Selling Stockholders" which
specifically relates to such Participating Selling Stockholder (as to each
Participating Selling Stockholder, the "Participating Selling Stockholder
Information"), at the date hereof and on each Delivery Date, does not and
will not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.

(b) Authorization of Agreements. Such Participating Selling
Stockholder has the full right, power and authority to enter into this
Agreement and the International Underwriting Agreement, a Power of
Attorney (the "Power of Attorney") and a Custody Agreement (as defined
below) and to sell, transfer and deliver the Stock to be sold by such
Participating Selling Stockholder hereunder. The execution and delivery of
this Agreement and the International Underwriting Agreement, the Power of
Attorney and the Custody Agreement and the sale and delivery of the Stock
to be sold by such Participating Selling Stockholder and the consummation
of the transactions contemplated herein and compliance by such
Participating Selling Stockholder with its obligations hereunder do not
and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under,
or result in the creation or imposition of any tax, lien, charge or
encumbrance upon the Stock to be sold by such Participating Selling
Stockholder pursuant to any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, license, lease or other agreement or
instrument to which such Participating Selling Stockholder is a party or
by which such Participating Selling Stockholder may be bound, nor will
such action result in any violation of the provisions of the charter or
by-laws or other organizational instrument of such Participating Selling
Stockholder, if applicable, or (assuming the offering of the Stock is
conducted in accordance with the Securities Act and applicable state
securities laws) any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
such Participating Selling Stockholder or any of its properties.

(c) Good and Valid Title. Such Participating Selling Stockholder
has and will at the First Delivery Date and, if any Option Stock is
purchased, on the Second Delivery Date (as defined below), have good and
valid title to the Stock to be sold by such Participating Selling
Stockholder hereunder, free and clear of any security interest,

10
<PAGE>
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind,
other than pursuant to this Agreement, the International Underwriting
Agreement and the Letter Agreement (as defined in the Prospectus); and
upon delivery of such Stock and payment of the purchase price therefor as
contemplated herein and therein, assuming each U.S. Underwriter and
International Manager has no notice of any adverse claim, each of the U.S.
Underwriters and the International Managers will receive good and valid
title to the Stock purchased by it from such Participating Selling
Stockholder, free and clear of any security interest, mortgage, pledge,
lien, charge, claim, equity or encumbrance of any kind.

(d) Due Execution of Power of Attorney and Custody Agreement. Such
Participating Selling Stockholder has duly executed and delivered, in the
form heretofore furnished to the Representative, the Power of Attorney
appointing Salvatori A. Ranieri, Patricia A. Sloan or either of them, as
attorney(s)-in-fact (the "Attorney(s)-in-Fact") and a Custody Agreement,
with The Bank of New York (the "Custodian") as custodian (the "Custody
Agreement"), and the Custodian is authorized to accept payment for, and,
upon receipt of such payment and written instructions from such
Participating Selling Stockholder or the Attorney-in-Fact, as the case may
be, to deliver, the Stock to be sold by such Participating Selling
Stockholder hereunder; and each Attorney-in-Fact is authorized to execute
and deliver this Agreement and the certificate referred to in Section 9(k)
hereof on behalf of such Participating Selling Stockholder, to sell,
assign and transfer to the U.S. Underwriters and the International
Managers the Stock to be sold by such Participating Selling Stockholder
hereunder and under the International Underwriting Agreement, to determine
the purchase price to be paid by the U.S. Underwriters and the
International Managers to such Participating Selling Stockholder, as
provided in Section 3 hereof, to authorize the delivery of the Stock to be
sold by such Participating Selling Stockholder hereunder and under the
International Underwriting Agreement, to accept payment therefor, and
otherwise to act on behalf of such Participating Selling Stockholder in
connection with this Agreement and the International Underwriting
Agreement.

(e) Absence of Manipulation. Such Participating Selling Stockholder
has not taken, and will not take, directly or indirectly, any action which
is designed to or which has constituted or which might reasonably be
expected to cause or result in stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Stock.

(f) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by each Participating Selling
Stockholder of its obligations hereunder or in the Power of Attorney or
the Custody Agreement, or in connection with the sale and delivery of the
Stock hereunder and under the International Underwriting Agreement or the
consummation of the transactions contemplated hereby and thereby, except
such as may have previously been made or obtained or will have been
obtained or made prior to the

11
<PAGE>
First Delivery Date or as may be required under the Securities Act or the
1933 Act Regulations or state securities laws.

(g) Certificates Suitable for Transfer. Certificates for all of
the Stock to be sold by such Participating Selling Stockholder pursuant to
this Agreement and the International Underwriting Agreement, in suitable
form for transfer by delivery or accompanied by duly executed instruments
of transfer or assignment in blank with signatures guaranteed, have been
placed in custody with the Custodian with irrevocable conditional
instructions to deliver such Stock to the U.S. Underwriters and the
International Managers pursuant to this Agreement and the International
Underwriting Agreement.

(h) NO ASSOCIATION WITH NATIONAL ASSOCIATION OF SECURITIES
DEALER(ix)NCNo Association with NASD. Except as disclosed by such
Participating Selling Stockholder in writing to the Representative,
neither such Participating Selling Stockholder nor any of his, her or its
affiliates directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, or has any
other association with (within the meaning of Article I, (q) of the
By-laws of the National Association of Securities Dealers, Inc. (the
"NASD")), any member firm of the NASD.

3. PURCHASE OF THE STOCK BY THE U.S. UNDERWRITERS. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, each Participating Selling Stockholder, severally
and not jointly, agrees to sell the number of shares of Firm Stock set opposite
its name in Schedule 2 hereto to the several U.S. Underwriters, and each of the
U.S. Underwriters, severally and not jointly, agrees to purchase from each
Participating Selling Stockholder, at a purchase price of 96.5% of the price to
the public thereof, the number of shares of Firm Stock set opposite that U.S.
Underwriter's name in Schedule 1 hereto. Each U.S. Underwriter shall be
obligated to purchase from each Participating Selling Stockholder that number of
shares of Firm Stock which represents the same proportion of the number of
shares of Firm Stock to be sold by each Participating Selling Stockholder as the
number of shares of Firm Stock set forth opposite the name of such U.S.
Underwriter in Schedule 1 represents of the total number of shares of Firm Stock
to be purchased by all of the U.S. Underwriters pursuant to this Agreement. The
respective purchase obligations of the U.S. Underwriters with respect to the
Firm Stock shall be rounded among the U.S. Underwriters to avoid fractional
shares, as the Representative may determine.

In addition, the Participating Selling Stockholders grant to the
U.S. Underwriters an option to purchase up to 311,033 shares of Option Stock.
Such option is granted solely for the purpose of covering over-allotments in the
sale of Firm Stock and is exercisable as provided in Section 5 hereof. Shares of
Option Stock shall be purchased severally for the account of the U.S.
Underwriters in proportion to the number of shares of Firm Stock set opposite
the name of such U.S. Underwriters in Schedule 1 hereto. The respective purchase
obligations of each U.S. Underwriter with respect to the Option Stock shall be
adjusted by the Representative so that no U.S. Underwriter shall be obligated to
purchase Option Stock other than in 100 share amounts. The price to the public
of both the Firm Stock and any Option Stock shall be $29.00 per share.

12
<PAGE>
The Participating Selling Stockholders shall not be obligated to
deliver any of the Stock to be delivered on the First Delivery Date or the
Second Delivery Date, as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein and in the
International Underwriting Agreement.

4. OFFERING OF STOCK BY THE U.S. UNDERWRITERS. Upon
authorization by the Representative of the release of Firm Stock, the several
U.S. Underwriters propose to offer the Firm Stock for sale upon the terms and
conditions set forth in the Prospectus.

Each U.S. Underwriter agrees that, except to the extent permitted by
the Agreement Between U.S. Underwriters and International Managers, it will not
offer or sell any of the Stock outside of the United States.

5. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment
for the Firm Stock shall be made at the office of Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York 10006, at 10:00 A.M., New York
City time, on the third (fourth, if the pricing occurs after 4:30 P.M. New York
City time on any given day) full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
among the Representative, the Company and the Participating Selling
Stockholders. This date and time are sometimes referred to as the "First
Delivery Date." On the First Delivery Date, the Participating Selling
Stockholders shall deliver or cause to be delivered certificates representing
the Firm Stock to the Representative for the account of each U.S. Underwriter
against payment of the purchase price by wire transfer of immediately available
funds to bank accounts designated by the Custodian pursuant to each
Participating Selling Stockholder's Custody Agreement. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each U.S. Underwriter hereunder.
Upon delivery, the Firm Stock shall be registered in such names and in such
denominations as the Representative shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Participating Selling Stockholders shall make the certificates representing
the Firm Stock available for inspection by the Representative in New York, New
York, not later than 2:00 P.M., New York City time, on the business day prior to
the First Delivery Date.

At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 3 hereof may be exercised by written
notice being given to the Participating Selling Stockholders by the
Representative. Such notice shall set forth the aggregate number of shares of
Option Stock as to which the option is being exercised, the names in which the
shares of Option Stock are to be registered, the denominations in which the
shares of Option Stock are to be issued and the date and time, as determined by
the Representative, when the shares of Option Stock are to be delivered;
PROVIDED, HOWEVER, that this date and time shall not be earlier than the First
Delivery Date, nor earlier than the second business day after the date on which
the option shall have been exercised, nor later than the fifth business day
after the date on which the option shall have been exercised. The date and time
the shares of Option Stock are delivered are sometimes referred to as the
"Second Delivery Date" and the First Delivery Date and the Second Delivery Date
are sometimes each referred to as a "Delivery Date").

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<PAGE>
Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the
Representative and the Participating Selling Stockholder) at 10:00 A.M., New
York City time, on the Second Delivery Date. On the Second Delivery Date, the
Participating Selling Stockholders shall deliver or cause to be delivered the
certificates representing the Option Stock to the Representative for the account
of each U.S. Underwriter against payment of the purchase price by wire transfer
of immediately available funds to bank accounts designated by the Custodian
pursuant to each Participating Selling Stockholder's Custody Agreement. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each U.S.
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representative shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Participating Selling
Stockholders shall make the certificates representing the Option Stock available
for inspection by the Representative in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the Second Delivery Date.

6. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:

(a) To prepare a Prospectus including the Rule 430A Information in a
form approved by the Representative and to file such Prospectus pursuant
to Rule 424(b) under the Securities Act not later than the Commission's
close of business on the second business day following the execution and
delivery of this Agreement or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Securities Act; to make no further
amendment or any supplement to the Registration Statement or to the
Prospectus except as permitted herein; to advise the Representative,
promptly after it receives notice thereof, of the time when any amendment
to the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended or supplemented Prospectus has
been filed and to furnish the Representative with copies thereof; to
advise the Representative, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Stock for
offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;

(b) To furnish promptly to the Representative and to counsel for the
U.S. Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed
with the Commission, including all consents and exhibits filed therewith;

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<PAGE>
(c) To deliver promptly to the Representative such number of the
following documents as the Representative shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission and each amendment thereto (in each case excluding exhibits
other than this Agreement and the computation of per share earnings) and
(ii) each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus; and, if the delivery of a prospectus is required
at any time after the Effective Time in connection with the offering or
sale of the Stock or any other securities relating thereto and if at such
time any events shall have occurred as a result of which the Prospectus as
then amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary to amend or supplement the
Prospectus in order to comply with the Securities Act, to notify the
Representative and, upon its request, to prepare and furnish without
charge to each U.S. Underwriter and to any dealer in securities as many
copies as the Representative may from time to time reasonably request of
an amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance;

(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Representative,
be required by the Securities Act or requested by the Commission;

(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the 1933 Act Regulations, to furnish a copy
thereof to the Representative and counsel for the U.S. Underwriters and
obtain the consent of the Representative to the filing;

(f) Timely file such reports pursuant to the U.S. Securities
Exchange Act of 1934, as amended (the "Exchange Act") as are necessary in
order to make generally available to its securityholders as soon as
practicable an earnings statement for the purposes of, and to provide the
benefits contemplated by, the last paragraph of Section 11(a) of the
Securities Act;

(g) For a period of five years following the Effective Time, to
furnish to the Representative copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder; and

(h) Promptly from time to time to take such action as the
Representative may reasonably request to qualify the Stock for offering
and sale under the securities laws of such jurisdictions as the
Representative may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as
long as may

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<PAGE>
be necessary to complete the distribution of the Stock; PROVIDED that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction.

7. FURTHER AGREEMENT OF THE PARTICIPATING SELLING Stockholders. Each
Participating Selling Stockholder agrees to deliver to the Representative prior
to the First Delivery Date a properly completed and executed United States
Treasury Department Form W-9.

8. EXPENSES.

(a) The Company and/or the U.S. Underwriters agree to pay the
following expenses: (i) the costs incident to the authorization, sale and
delivery of the Stock and any taxes payable in that connection; (ii) the
costs incident to the preparation, printing and filing under the
Securities Act of the Registration Statement and any amendments and
exhibits thereto; (iii) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to
the Prospectus, all as provided in this Agreement; (iv) the costs of
producing and distributing this Agreement, the Agreement Between U.S.
Underwriters and International Managers, any Supplemental Agreement Among
U.S. Underwriters and any other related documents in connection with the
offering, purchase, sale and delivery of the Stock; (v) the costs of
delivering and distributing the Powers of Attorney and the Custody
Agreements and the fees and expenses of the Custodian (and any other
Attorney-in-Fact); (vi) the filing fees incident to securing any required
review by the NASD of the terms of sale of the Stock; (vii) the fees and
expenses of qualifying the Stock under the securities laws of the several
jurisdictions as provided in Section 6 hereof and of preparing, printing
and distributing a blue sky application or other document prepared or
executed by the Company (or based upon any written information furnished
by the Company) specifically for the purpose of qualifying any or all of
the Stock under the securities laws of any state or other jurisdiction
(any such application, document or information being hereinafter called a
"Blue Sky Application") (including related fees and expenses of counsel to
the U.S. Underwriters); (viii) the preparation and delivery of the
certificates for the Stock to the U.S. Underwriters and the International
Managers; (ix) the fees and disbursements of the Company's counsel,
accountants and other advisors; and (x) all other costs and expenses
incident to the performance of the obligations of the Company and, except
as set forth in paragraph (b) below, the Participating Selling
Stockholders under this Agreement and the International Underwriting
Agreement. The allocation of the foregoing expenses between the Company
and the U.S. Underwriters will be set forth in a separate agreement
between the Company and the U.S.
Underwriters.

(b) The Participating Selling Stockholders agree to pay (i) any
stamp duties, capital duties and stock transfer taxes, if any, payable
upon the sale of the Stock of such Participating Selling Stockholder to
the U.S. Underwriters and the International Managers and their transfer
between the U.S. Underwriters and the International Managers pursuant to

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<PAGE>
the Agreement Between U.S. Underwriters and International Managers and
(ii) the fees and disbursements of their respective counsel, accountants
and other advisors.

9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective
obligations of the U.S. Underwriters hereunder are subject to the accuracy, when
made and on each Delivery Date, of the representations and warranties of the
Company, the Bank and the Participating Selling Stockholders contained herein or
in certificates of any officer of the Company or any subsidiary of the Company
(including the Bank), or by or on behalf of any Participating Selling
Stockholder delivered pursuant to the provisions hereof, to the performance by
the Company, the Bank and the Participating Selling Stockholders of their
respective covenants and other obligations hereunder, and to each of the
following additional terms and conditions:

(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated
or threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or the
Prospectus or otherwise shall have been complied with.

(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the International
Underwriting Agreement, the Powers of Attorney, the Custody Agreements,
the Stock, the Registration Statement and the Prospectus, and all other
legal matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to the
Representative and counsel for the U.S.
Underwriters.

(c) Wachtell, Lipton, Rosen & Katz shall have furnished to the
Representative their written opinion, as counsel to the Company, addressed
to the U.S. Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representative, to the effect set
forth in Exhibit A hereto, and to such further effect as counsel to the
U.S. Underwriters may reasonably request.

(d) Jonathon K. Heffron, Esq., general counsel of the Company, shall
have furnished to the Representative its written opinion, as counsel to
the Company, addressed to the U.S. Underwriters and dated such Delivery
Date, in form and substance reasonably satisfactory to the Representative,
to the effect set forth in Exhibit B hereto, and to such further effect as
counsel to the U.S. Underwriters may reasonably request.

(e) Counsel for each Participating Selling Stockholder other than
Equitable shall have furnished to the Representative their written
opinion, as counsel to such Participating Selling Stockholder, addressed
to the U.S. Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representative, to the effect set
forth in Exhibit C hereto, and to such further effect as counsel to the
U.S. Underwriters may reasonably request.

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<PAGE>
(f) Counsel for Equitable shall have furnished to the Representative
their written opinion, as counsel to Equitable as a Participating Selling
Stockholder, addressed to the U.S. Underwriters and dated such Delivery
Date, in form and substance reasonably satisfactory to the Representative,
to the effect set forth in Exhibit D hereto, and to such further effect as
counsel to the U.S.
Underwriters may reasonably request.

(g) The Representative shall have received from Cleary, Gottlieb,
Steen & Hamilton, counsel for the U.S. Underwriters, such opinion or
opinions, dated such Delivery Date, with respect to the sale of the Stock,
the Registration Statement, the Prospectus and other related matters as
the Representative may reasonably require, and the Company shall have
furnished to such counsel such documents as they reasonably request for
the purpose of enabling them to pass upon such matters.

(h) At the time of execution of this Agreement, the Representative
shall have received from Deloitte & Touche LLP a letter, in form and
substance satisfactory to the Representative, addressed to the U.S.
Underwriters and dated the date hereof (i) confirming that they are
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information and
other matters ordinarily covered by accountants' "comfort letters" to
underwriters in connection with registered public offerings.

(i) With respect to the letter of Deloitte & Touche LLP referred to
in the preceding paragraph and delivered to the Representative
concurrently with the execution of this Agreement (the "initial letter"),
the Company shall have furnished to the Representative a letter (the
"bring-down letter") of such accountants, addressed to the U.S.
Underwriters and dated such Delivery Date (i) confirming that they are
independent public accountants within the meaning of the Securities Act
and are in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date of
the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.

(j) The Company shall have furnished to the Representative a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that
the representations, warranties and agreements of the Company in Section 1
hereof are true and correct as of such Delivery Date; the Company

18
<PAGE>
has complied with all its agreements contained herein; and the conditions
set forth in Sections 9(a) and 9(l) hereof have been fulfilled.

(k) Each Participating Selling Stockholder (or the Custodian or one
or more Attorneys-in-Fact on behalf of the Participating Selling
Stockholders) shall have furnished to the Representative a certificate,
signed by, or on behalf of, the Participating Selling Stockholder (or the
Custodian or one or more Attorneys-in-Fact) stating that the
representations and warranties of such Participating Selling Stockholder
contained herein are true and correct as of such Delivery Date and that
such Participating Selling Stockholder has complied with all agreements
contained herein to be performed by the Participating Selling Stockholder
at or prior to such Delivery Date.

(l) There shall not have been, since the date hereof or since the
respective dates as of which information is given in the Prospectus, any
Material Adverse Change.

(m) The closing under the International Underwriting Agreement shall
have occurred concurrently with the closing hereunder on the First
Delivery Date.

(n) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii)
a banking moratorium shall have been declared by Federal or state
authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment
of a majority in interest of the several U.S. Underwriters, impracticable
or inadvisable to proceed with the public offering or delivery of the
Stock being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.

All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the U.S. Underwriters.

10. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company and the Bank, jointly and severally, shall indemnify
and hold harmless each Participating Selling Stockholder, each U.S. Underwriter,
their respective officers and employees and each person, if any, who controls
any Participating Selling Stockholder or U.S. Underwriter within the meaning of
the Securities Act, from and against any loss, claim, damage or liability, joint
or several, or any action in respect thereof (including, but not limited to, any
loss,

19
<PAGE>
claim, damage, liability or action relating to purchases and sales of Stock), to
which such U.S. Underwriter, Participating Selling Stockholder, officer,
employee or controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained (A) in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto or (B) in
any Blue Sky Application, or (ii) the omission or alleged omission to state in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any amendment or supplement thereto, or in any Blue Sky Application any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse each Participating Selling Stockholder and
U.S. Underwriter and each such officer, employee or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by that
Participating Selling Stockholder or U.S. Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; PROVIDED, HOWEVER, that the Company and the Bank shall
not be liable under this Section 10(a) in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with the Participating Selling
Stockholder Information or written information concerning such U.S. Underwriter
furnished to the Company through the Representative by or on behalf of any U.S.
Underwriter specifically for inclusion therein. The foregoing indemnity
agreement is in addition to any liability which the Company or the Bank may
otherwise have to any Participating Selling Stockholder or U.S. Underwriter or
to any officer, employee or controlling person of such U.S. Underwriter.

(b) The Participating Selling Stockholders, severally and not
jointly, shall indemnify and hold harmless each U.S. Underwriter, its officers
and employees, and each person, if any, who controls any U.S. Underwriter within
the meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Stock), to which such U.S. Underwriter, officer, employee
or controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, Registration Statement
or the Prospectus, or in any amendment or supplement thereto, any material fact
required to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission is a misstatement in or
omission from the Participating Selling Stockholder Information, and shall
reimburse each U.S. Underwriter, its officers and employees and each such
controlling person for any legal or other expenses reasonably incurred by that
U.S. Underwriter, its officers and employees or controlling person in connection
with investigating or defending or preparing to defend against any such loss,
claim, damage, liability or action as such expenses are incurred; PROVIDED,
HOWEVER, that each Participating Selling Stockholder's aggregate liability under
this Section 10 shall be limited to an amount equal to the net proceeds (after
deducting the underwriting discount, but before deducting expenses) received by
such Participating Selling

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<PAGE>
Stockholders may otherwise have to any U.S. Underwriter or any officer, employee
or controlling person of that U.S. Underwriter. Stockholder from the sale of
Stock pursuant to this Agreement. The foregoing indemnity agreement is in
addition to any liability which the Participating Selling

(c) Each U.S. Underwriter, severally and not jointly, shall
indemnify and hold harmless each Participating Selling Stockholder, the Company,
their respective officers and employees, each of their respective directors and
each person, if any, who controls such Participating Selling Stockholder or the
Company within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which such Participating Selling Stockholder, the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such U.S. Underwriter furnished to the Company through the Representative by or
on behalf of such U.S. Underwriter specifically for inclusion therein, and shall
reimburse such Participating Selling Stockholder, the Company and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by such Participating Selling Stockholder, the Company or
any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any U.S. Underwriter
may otherwise have to the Participating Selling Stockholders, the Company or any
such director, officer, employee or controlling person.

(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying party
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 10 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the

21
<PAGE>
defense thereof other than reasonable costs of investigation; PROVIDED, HOWEVER,
that (i) the Representative shall have the right to employ counsel to represent
jointly the Representative and those other U.S. Underwriters and their
respective officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the U.S. Underwriters against the Company, the Bank or any Participating
Selling Stockholder under this Section 10 if, in the reasonable judgment of the
Representative, it is advisable for the Representative and those U.S.
Underwriters, officers, employees and controlling persons to be jointly
represented by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the Company or the Bank, and (ii)
notwithstanding the indemnifying party's election to appoint counsel to
represent the Participating Selling Stockholders in an action, each
Participating Selling Stockholder shall have the right to employ separate
counsel, and the indemnifying party shall bear the duly documented reasonable
fees, costs and expenses of such separate counsel, if (A) in the reasonable
judgment of such Participating Selling Stockholder, the use of counsel chosen by
the indemnifying party to represent such Participating Selling Stockholder would
present such counsel with a conflict of interest, (B) the actual or potential
defendants in, or targets of, any such action include both such Participating
Selling Stockholder and the indemnifying party and such Participating Selling
Stockholder shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, (C) the indemnifying
party shall not have employed counsel satisfactory to such Participating Selling
Stockholder to represent such Participating Selling Stockholder within a
reasonable time after notice of the institution of such action or (D) the
indemnifying party shall authorize such Participating Selling Stockholder to
employ separate counsel at the expense of the indemnifying party. No
indemnifying party shall (I) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (II) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.

(e) If the indemnification provided for in this Section 10 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or 10(c) hereof in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party
under Section 10(a), 10(b) or 10(c), as the case may be, in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof
referred to in Section 10(a), 10(b) or 10(c), as the case may be, (i) in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company, the Bank and the Participating Selling Stockholders on the one hand
and the U.S. Underwriters on the other from the

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<PAGE>
offering of the Stock or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Bank and the Participating Selling
Stockholders on the one hand and the U.S. Underwriters on the other with respect
to the statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant equitable
considerations. As between the Company and the Bank on the one hand and the
Participating Selling Stockholders on the other, each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, in such proportion as shall be
appropriate to reflect the relative fault of the Company and the Bank on the one
hand and the Participating Selling Stockholders on the other. The relative
benefits received by the Company, the Bank and the Participating Selling
Stockholders on the one hand and the U.S. Underwriters on the other with respect
to such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Stock purchased under this Agreement (before
deducting expenses) received by the Company, the Bank and the Participating
Selling Stockholders, on the one hand, and the total underwriting discounts and
commissions received by the U.S. Underwriters with respect to the shares of the
Stock purchased under this Agreement, on the other hand, bear to the total gross
proceeds from the offering of the shares of the Stock under this Agreement, in
each case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, the Bank, the
Participating Selling Stockholders or the U.S. Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity to
correct or prevent such statement or omission. For purposes of the preceding two
sentences, the net proceeds deemed to be received by the Company shall be deemed
to be also for the benefit of the Bank and information supplied by the Company
shall also be deemed to have been supplied by the Bank. The Company, the Bank,
the Participating Selling Stockholders and the U.S. Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 10(e)
were to be determined by PRO RATA allocation (even if the U.S. Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to in
this Section 10(e). The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10(e) shall be deemed to include, for purposes
of this Section 10(e), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 10(e), (A) no U.S.
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Stock underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise paid or become liable to pay by reason of
any untrue or alleged untrue statement or omission or alleged omission, and (B)
each Participating Selling Stockholder's aggregate liability under this Section
10 shall be limited to an amount equal to the net proceeds (after deducting the
underwriting discount, but before deducting expenses) received by such
Participating Selling Stockholder from the sale of Stock pursuant to this
Agreement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f)

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<PAGE>
of the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The U.S. Underwriters'
obligations to contribute as provided in this Section 10(e) are several in
proportion to their respective underwriting obligations and not joint.

(f) The U.S. Underwriters severally confirm and the Company
acknowledges that the statements with respect to the secondary offering of the
Stock by the U.S. Underwriters set forth on the cover page of, the legend
concerning over-allotments on the inside front cover page of, and the concession
and reallowance figures appearing under the caption "Underwriting" in, the
Prospectus Supplement are correct and constitute the only information concerning
such U.S. Underwriters furnished in writing to the Company by or on behalf of
the U.S. Underwriters specifically for inclusion in the Registration Statement
and the Prospectus.

11. DEFAULTING UNDERWRITERS. If, on either Delivery Date, any U.S.
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting U.S. Underwriters shall be obligated to purchase
the Stock which the defaulting U.S. Underwriter agreed but failed to purchase on
such Delivery Date in the respective proportions which the number of shares of
Firm Stock set opposite the name of each remaining non-defaulting U.S.
Underwriter in Schedule 1 hereto bears to the total number of shares of Firm
Stock set opposite the names of all the remaining non-defaulting U.S.
Underwriters in Schedule 1 hereto; PROVIDED, HOWEVER, that the remaining
non-defaulting U.S. Underwriters shall not be obligated to purchase any of the
Stock on such Delivery Date if the total number of shares of the Stock which the
defaulting U.S. Underwriter or Underwriters agreed but failed to purchase on
such date exceeds 9.09% of the total number of shares of the Stock to be
purchased on such Delivery Date, and any remaining non-defaulting U.S.
Underwriter shall not be obligated to purchase more than 110% of the number of
shares of the Stock which it agreed to purchase on such Delivery Date pursuant
to the terms of Section 3 hereof. If the foregoing maximums are exceeded, the
remaining non-defaulting U.S. Underwriters, or those other underwriters
satisfactory to the Representative who so agree, shall have the right, but shall
not be obligated, to purchase, in such proportion as may be agreed upon among
them, all the Stock to be purchased on such Delivery Date. If the remaining U.S.
Underwriters or other underwriters satisfactory to the Representative do not
elect to purchase the Stock which the defaulting U.S. Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to the Second Delivery Date, the obligation of the U.S.
Underwriters to purchase, and of the Participating Selling Stockholders to sell,
the Option Stock) shall terminate without liability on the part of any
non-defaulting U.S. Underwriter or the Company or the Participating Selling
Stockholders, except that the Company will continue to be liable for the payment
of expenses to the extent set forth in Section 8 hereof. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule 1 hereto
who, pursuant to this Section 11, purchases Firm Stock which a defaulting U.S.
Underwriter agreed but failed to purchase.

Nothing contained herein shall relieve a defaulting U.S. Underwriter
of any liability it may have to the Company and the Participating Selling
Stockholders for damages caused by its default. If other underwriters are
obligated or agree to purchase the Stock of a defaulting or withdrawing U.S.
Underwriter, the Representative, the Company and the Participating Selling
Stockholders may postpone the Delivery Date for up to seven full business days
in order to effect

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<PAGE>
any changes that in the opinion of counsel for the Company or
counsel for the U.S. Underwriters may be necessary in the Registration
Statement, the Prospectus or in any other document or arrangement.

12. TERMINATION. The obligations of the U.S. Underwriters hereunder
may be terminated by the Representative by notice given to and received by the
Company and the Participating Selling Stockholders prior to delivery of and
payment for the Firm Stock if, prior to that time, any of the events described
in Sections 9(l) or 9(n) hereof shall have occurred or if the U.S. Underwriters
shall decline to purchase the Stock for any reason permitted under this
Agreement.

13. NOTICES, ETC. All statements, requests, notices and
agreements hereunder shall be in writing, and:

(a) if to the U.S. Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Fax: 212-526-6588), with a copy, in the case of any notice
pursuant to Section 10(d) hereof, to the Director of Litigation, Office of
the General Counsel, Lehman Brothers Inc., 3 World Financial Center, 10th
Floor, New York, NY 10285;

(b) if to the Company or the Bank, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set
forth in the Registration Statement, Attention: Jonathon K.
Heffron, Esq. (Fax: 713-543-6469);

(c) if to any Participating Selling Stockholders, shall be delivered
or sent by mail, telex or facsimile transmission to such Participating
Selling Stockholder at the address set forth on Schedule 2 hereto;

PROVIDED, HOWEVER, that any notice to a U.S. Underwriter pursuant to Section
10(d) hereof shall be delivered or sent by mail, telex or facsimile transmission
to such U.S. Underwriter at its address set forth in its acceptance telex to the
Representative, which address will be supplied to any other party hereto by the
Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and the
Participating Selling Stockholders shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the U.S.
Underwriters by the Representative and the Company and the U.S. Underwriters
shall be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Participating Selling Stockholders by the
Custodian.

14. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the U.S. Underwriters, the Company,
the Bank, the Participating Selling Stockholders and their respective personal
representatives and successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (a) the
representations, warranties, indemnities and agreements of the Company and the
indemnities of the Participating Selling Stockholders contained in this
Agreement shall also be deemed to be for the benefit of the person or persons,
if any, who control any U.S. Underwriter within the meaning of

25
<PAGE>
Section 15 of the Securities Act and each International Manager (and controlling
persons thereof) who offers or sells any shares of Common Stock in accordance
with the terms of the Agreement Between U.S. Underwriters and International
Managers and (b) the indemnity agreement of the U.S. Underwriters contained in
Section 10(c) hereof shall be deemed to be for the benefit of directors of the
Company and each Participating Selling Stockholder, officers of the Company who
have signed the Registration Statement and any person controlling the Company
and each Participating Selling Stockholder within the meaning of Section 15 of
the Securities Act. Nothing in this Agreement is intended or shall be construed
to give any person, other than the persons referred to in this Section 14, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.

15. SURVIVAL. The respective representations, warranties and
agreements of the Company, the Bank, the Participating Selling Stockholders and
the U.S. Underwriters contained in this Agreement or made by or on behalf on
them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the Stock and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any of them or any person
controlling any of them.

16. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the 1933 Act Regulations.

17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.

18. CONSENT TO JURISDICTION. Each party irrevocably agrees that any
legal suit, action or proceeding arising out of or based upon this Agreement or
the transactions contemplated hereby may be instituted in the federal courts of
the United States of America located in the City of New York or the courts of
the State of New York in each case located in the Borough of Manhattan in the
City of New York (collectively, the "Specified Courts"), and irrevocably submits
to the exclusive jurisdiction (except for proceedings instituted in regard to
the enforcement of a judgment of any such court, as to which such jurisdiction
is non-exclusive) of such courts in any such suit, action or proceeding. The
parties further agree that service of any process, summons, notice or document
by mail to such party's address as set forth in Section 13 hereof shall be
effective service of process for any lawsuit, action or other proceeding brought
in any such court. The parties hereby irrevocably and unconditionally waive any
objection to the laying of venue of any lawsuit, action or other proceeding in
the Specified Courts, and hereby further irrevocably and unconditionally waive
and agree not to plead or claim in any such court that any such lawsuit, action
or other proceeding brought in any such court has been brought in an
inconvenient forum.

19. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

26
<PAGE>
20. HEADINGS. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.

27
<PAGE>
If the foregoing correctly sets forth the agreement among the
Company, the Bank, the Participating Selling Stockholders and the U.S.
Underwriters, please indicate your acceptance in the space provided for that
purpose below.

[FOR ELECTRONIC FILINGS MADE UNDER EDGAR, UNDERWRITERS' COUNSEL IS
REQUESTED TO MAINTAIN ONE SET OF MANUALLY SIGNED SIGNATURE PAGES.]

Very truly yours,

BANK UNITED CORP.

By:
Name:
Title:

BANK UNITED

By:
Name:
Title:

The Participating Selling Stockholders
named in Schedule 2 to this Agreement
other than Equitable

By:
Name:
Attorney-in-Fact

<PAGE>
EQUITABLE DEAL FLOW FUND, L.P.

BY: EQUITABLE MANAGED ASSETS, L.P.,
as General Partner

By: THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES,
as General Partner

By:
Name:
Title: INVESTMENT OFFICER

EQUITABLE CAPITAL PARTNERS, L.P.

BY: ALLIANCE CORPORATE FINANCE
GROUP INCORPORATED,
as Managing General Partner

By:
Name:
Title: SENIOR VICE PRESIDENT
EQUITABLE CAPITAL PARTNERS (RETIREMENT
FUND), L.P.

BY: ALLIANCE CORPORATE FINANCE
GROUP INCORPORATED,
as Managing General Partner

By:
Name:
Title: SENIOR VICE PRESIDENT
Accepted:

LEHMAN BROTHERS INC.,
as Representative

By:
Name:
Title:

2
<PAGE>
SCHEDULE 1

U.S. UNDERWRITERS NUMBER OF SHARES
Lehman Brothers Inc. 710,110
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 710,105
Smith Barney Inc. 710,105
Bear, Stearns & Co. Inc. 44,500
Sanford C. Bernstein & Co., Inc. 44,500
Credit Suisse First Boston Corporation 44,500
A.G. Edwards & Sons, Inc. 44,500
Fox-Pitt, Kelton Inc. 44,500
Goldman, Sachs & Co. 44,500
Keefe, Bruyette & Woods, Inc. 44,500
Montgomery Securities 44,500
Morgan Stanley & Co. Incorporated 44,500
PaineWebber Incorporated 44,500
Principal Financial Securities, Inc. 44,500
Rauscher Pierce Refsnes, Inc. 44,500
Salomon Brothers Inc 44,500
H.C. Wainwright & Co., Inc. 44,500
Advest, Inc. 21,000
Robert W. Baird & Co. Incorporated 21,000
M.R. Beal & Company 21,000
Cowen & Company 21,000
Doft & Co., Inc. 21,000
First of Michigan Corporation 21,000
Friedman, Billings, Ramsey & Co., Inc. 21,000
Furman Selz LLC 21,000
Hoefer & Arnett Inc. 21,000
Legg Mason Wood Walker, Incorporated 21,000
McDonald & Company Securities, Inc. 21,000
Roney & Co., L.L.C. 21,000
Sanders Morris Mundy Inc. 21,000
Southeast Research Partners, Inc. 21,000
Southwest Securities, Inc. 21,000
Stifel, Nicolaus & Company, Incorporated 21,000
William K. Woodruff & Company
Incorporated 21,000

Total........................ 3,110,320
=========

S1-1
<PAGE>
SCHEDULE 2

NAME AND ADDRESS OF
PARTICIPATING SELLING NUMBER OF SHARES OF NUMBER OF SHARES OF
STOCKHOLDERS FIRM STOCK OPTION STOCK

Equitable Deal Flow Fund L.P. 473,879 47,388
Equitable Capital Partners L.P. 566,940 56,694
Equitable Capital Partners
(Retirement Fund) L.P. 279,180 27,918
The Sweater Trust (Leslie
Wexner) 378,842 37,884
Leslie Wexner 87,445 8,745
Institutional Interests (Leslie
Wexner) 194,176 19,418
Marilyn B. Arison 252,562 25,256
The Airlie Group 252,562 25,256
Connie S. Mariatty 3,157 316
CHESED Congregations of America 74,182 7,418
United Congregation Mesorah 265,455 26,545
Ranieri Bros., Shay & Co. 14,172 1,417

SunAmerica Inc. 267,768 26,777
Total................... 3,110,320 311,033

S2-1
<PAGE>
EXHIBIT A-1

FORM OF OPINION OF
WACHTELL, LIPTON, ROSEN & KATZ
TO BE DELIVERED PURSUANT TO SECTION 9(C)

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware.

(ii) The Company has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus, and to enter into and perform its
obligations under the U.S. Underwriting Agreement and the
International Underwriting Agreement. The activities of each of the
Company's subsidiaries are permitted to subsidiaries of a savings
and loan holding company.

(iv) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column entitled
"Pro Forma" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements
or employee benefit plans referred to in the Prospectus or pursuant
to the exercise of convertible securities or options referred to in
the Prospectus); the shares of issued and outstanding capital stock
of the Company, including the shares of Common Stock to be purchased
by the U.S. Underwriters and the International Managers from the
Participating Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; and none of
the outstanding shares of capital stock of the Company, including
the shares of Common Stock to be purchased by the U.S. Underwriters
and the International Managers from the Participating Selling
Stockholders, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.

(v) The sale of the Common Stock to the U.S. Underwriters and
the International Managers by the Participating Selling Stockholders
is not subject to the preemptive or other similar rights of any
securityholder of the Company. The Common Stock conforms to all
statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments
defining the same.
<PAGE>
(vi) The form of certificate used to evidence the Common
Stock to be sold in the Offerings contemplated by the U.S.
Underwriting Agreement and the International Underwriting Agreement
complies in all material respects with all applicable statutory
requirements, with any applicable requirements of the Certificate
and By-Laws of the Company, and with the requirements of the NASDAQ
National Stock Market.

(vii) The Registration Statement has been declared effective
under the Securities Act; each Prospectus as supplemented by a
Prospectus Supplement has been filed pursuant to Rule 424(b) in the
manner and within the time period required by Rule 424(b); and, to
the best of our knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued under
the Securities Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.

(viii) The Registration Statement, the Rule 430A Information,
the Prospectus, and each amendment or supplement to the Registration
Statement and Prospectus, as of their respective effective or issue
dates (other than the financial statements and supporting schedules
included therein or omitted therefrom, as to which we express no
opinion) complied as to form in all material respects with the
requirements of the Securities Act and the 1933 Act Regulations.

(ix) The information in the Prospectus under the captions
"Risk Factors -- Limitations on Use of Tax Losses; Restrictions on
Transfers of Stock," "Risk Factors -- Holding Company Structure;
Ability to Pay Dividends," "Description of Capital Stock," "Business
-- The Assistance Agreement -- Warrant Agreement," "Legal
Proceedings," and in the Registration Statement under "Part II.
Information Not Required in Prospectus -- Item 14. Indemnification
of Directors and Officers," to the extent that such information
constitutes matters of law, summaries of legal matters, the
Certificate or By-laws or legal proceedings, or legal conclusions,
has been reviewed by us and is correct in all material respects.

(x) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the Prospectus that
are not described as required.

(xi) All statements in the Registration Statement about
contracts and other documents to which the Company or its
subsidiaries are a party, insofar as such statements purport to
summarize provisions of such contracts and documents, provide a fair
summary of such provisions, and we do not know of contracts or other
documents of a character required to be described in the
Registration Statement or to be filed as exhibits to the
Registration Statement that are not filed or described as required.

A-2
<PAGE>
(xii) Neither the Company, the Bank nor any of their
respective subsidiaries is in violation of its charter or by-laws
and, to the best of our knowledge, no default by the Company, the
Bank or any of their respective subsidiaries exists in the due
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration
Statement or the Prospectus or filed as an exhibit to the
Registration Statement.

(xiii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court
or governmental authority or agency, domestic or foreign including,
without limitation, the OTS and FDIC (other than under the
Securities Act and the 1933 Act Regulations, which have been
obtained, or as may be required under the securities or blue sky
laws of the various states, as to which we express no opinion) is
necessary or required for the performance by the Company of its
obligations under the U.S. Underwriting Agreement and the
International Underwriting Agreement in connection with the offering
or sale of the Stock by the Participating Selling Stockholders under
the U.S. Underwriting Agreement and the International Underwriting
Agreement, for the consummation by the Company and the Bank of the
transactions contemplated by the U.S. Underwriting Agreement and the
International Underwriting Agreement or the other transactions
described in the Registration Statement under the caption "The
Company -- Background of the Offering."

(xiv) The execution, delivery and performance of the U.S.
Underwriting Agreement and the International Underwriting Agreement
by the Company and the Bank, the consummation of the transactions
contemplated thereby, and compliance by each of the Company and the
Bank with their respective obligations under the U.S. Underwriting
Agreement and the International Underwriting Agreement have been
duly authorized by all necessary corporate action and do not and
will not result in any violation of the provisions of the charter or
by-laws of the Company, the Bank or any of their respective
subsidiaries, or any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to us, of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company. Each of the U.S. Underwriting
Agreement and the International Underwriting Agreement has been duly
authorized, executed and delivered by the Company and the Bank.

(xv) To the best of our knowledge, there are no persons with
registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company or the Bank under the Securities Act,
except as described in Registration Statement or as set forth in any
agreement described therein as containing such rights.

A-3
<PAGE>
(xvi) The Company is not, and upon the sale of the Stock as
contemplated in the U.S. Underwriting Agreement and the
International Underwriting Agreement and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the 1940 Act.

Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the Rule 430A
Information (except for financial statements and schedules and other financial
data included therein or omitted therefrom, as to which we make no statement),
at the time such Registration Statement or any such amendment became effective,
contained an 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
not misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data included
therein or omitted therefrom, as to which we make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued or at either Delivery Date, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

* * * * *

In rendering such opinion, such counsel may rely as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991). All terms used but not defined in this
exhibit should have the meanings ascribed to them in the U.S. Underwriting
Agreement and should be defined accordingly in the form of opinion to be
delivered.

A-4
<PAGE>
EXHIBIT B-1

FORM OF OPINION OF
JONATHON K. HEFFRON,
GENERAL COUNSEL OF THE COMPANY,
TO BE DELIVERED PURSUANT TO SECTION 9(D)

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware.

(iii) The Bank is the only "significant subsidiary" of the
Company (as such term is defined in Rule 1-02 of Regulation S-X).
The only subsidiaries of the Company other than the Bank are the
wholly-owned subsidiaries of the Bank listed on Exhibit __ to the
Registration Statement, which, considered in the aggregate as a
single subsidiary, do not constitute a "significant subsidiary" as
defined in Rule 1-02 of Regulation S-X. The activities of all of the
Bank's subsidiaries are permitted to subsidiaries of a federally
chartered savings bank, the deposits of which are insured by the
SAIF, which is administered by the FDIC.

(iv) The Bank is a federally chartered stock savings bank,
duly incorporated and validly existing under the laws of the United
States, and the Bank's charter is in full force and effect. The Bank
is a member of the Federal Home Loan Bank of Dallas and has been
duly issued a certificate stating that its savings accounts are
insured by the FDIC in accordance with applicable law, and no
proceedings for the termination or revocation of such membership or
insurance are pending or, to the best of my knowledge, threatened.

(v) The Bank has corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Prospectus and to enter into and perform its obligations
under the U.S. Underwriting Agreement and the International
Underwriting Agreement.

(vi) Each subsidiary of the Bank has been duly organized and
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation and has the power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus. The activities
described in the Prospectus of each of the Bank's subsidiaries are
<PAGE>
permitted activities of subsidiaries of a federally chartered
savings bank, the deposits of which are insured by the SAIF, which
is administered by the FDIC.

(vii) The Company, the Bank and each subsidiary of the
Company or the Bank is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.

(viii) All of the issued and outstanding capital stock of the
Bank and each subsidiary of the Bank has been duly authorized and
validly issued, is fully paid and non-assessable and, except as
otherwise disclosed in the Registration Statement, is owned by the
Company, directly or through subsidiaries, to the best of my
knowledge, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any subsidiary was issued in violation of
the preemptive or similar rights of any securityholder of such
subsidiary.

(ix) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus in the column entitled
"Pro Forma" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements
or employee benefit plans referred to in the Prospectus or pursuant
to the exercise of convertible securities or options referred to in
the Prospectus); the shares of issued and outstanding capital stock
of the Company, including the shares of Common Stock to be purchased
by the U.S. Underwriters and the International Managers from the
Participating Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; and none of
the outstanding shares of capital stock of the Company, including
the shares of Common Stock to be purchased by the U.S. Underwriters
and the International Managers from the Participating Selling
Stockholders, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.

(x) The sale of the Common Stock to the U.S. Underwriters and
the International Managers by the Participating Selling Stockholders
is not subject to the preemptive or other similar rights of any
securityholder of the Company. The Common Stock conforms to all
statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments
defining the same.

(xi) There is not pending or, to my knowledge, threatened any
action, suit, proceeding, inquiry or investigation, to which the
Company or the Bank or any of their respective subsidiaries is a
party, or to which the property of the Company or the Bank or any of
their respective subsidiaries is subject, before or

B-2
<PAGE>
brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially
and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in the U.S.
Underwriting Agreement or the International Underwriting Agreement
or the performance by the Company and the Bank of their respective
obligations thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company, the Bank, or any of
their respective subsidiaries is known by me to be a party or of
which any of their respective property or assets is the subject
which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect. No
cease and desist order has been entered by the OTS or the FDIC
against the Company, the Bank or any of their respective
subsidiaries. No labor dispute with the employees of the Company or
any subsidiary exists or, to the knowledge of the Company, is
imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any subsidiary's
principal suppliers, manufacturers, customers or contractors, which,
in either case, may reasonably be expected to result in a Material
Adverse Effect.

(xii) The information in the Prospectus under the captions
"Risk Factors -- Limitations on Use of Tax Losses; Restrictions on
Transfers of Stock," "Risk Factors -- Holding Company Structure;
Ability to Pay Dividends," "Description of Capital Stock," "Business
-- The Assistance Agreement," "Legal Proceedings," and in the
Registration Statement under "Part II. Information Not Required in
Prospectus -- Item 14. Indemnification of Directors and Officers,"
to the extent that such information constitutes matters of law,
summaries of legal matters, the Company's Certificate or Bylaws or
legal proceedings, or legal conclusions, has been reviewed by me and
is correct in all material respects.

(xiii) To the best of my knowledge, there are no statutes or
regulations that are required to be described in the Prospectus that
are not described as required.

(xiv) All descriptions in the Registration Statement of
contracts and other documents to which the Company or its
subsidiaries are a party are accurate in all material respects; to
the best of my knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other than
those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.

(xv) Neither the Company, the Bank nor any of their
respective subsidiaries is in violation of its charter or by-laws
and no default by the

B-3
<PAGE>
Company, the Bank or any of their respective subsidiaries exists in
the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement
or instrument that is described or referred to in the Registration
Statement or the Prospectus or filed as an exhibit to the
Registration Statement.

(xvi) The execution, delivery and performance of the U.S.
Underwriting Agreement and the International Underwriting Agreement
by the Company and the Bank, and the consummation of the
transactions contemplated thereby and compliance by each of the
Company and the Bank with its respective obligations under the U.S.
Underwriting Agreement and the International Underwriting Agreement
has been duly authorized by all necessary corporate action and do
not and will not, whether with or without the giving of notice or
lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(j) of the U.S.
Underwriting Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, known to me, to which
the Company or any subsidiary is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company, the Bank or any of their respective subsidiaries is subject
(except for such conflicts, breaches or defaults or liens, charges
or encumbrances that would not result in a Material Adverse Effect),
nor will such action result in any violation of the provisions of
the charter or by-laws of the Company, the Bank or any of their
respective subsidiaries, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to me, of any
government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company, the Bank, or any of
their respective subsidiaries or any of their respective properties,
assets or operations.

(xvii) There are no persons with registration rights or other
similar rights to have any securities registered pursuant to the
Registration Statement or otherwise registered by the Company or the
Bank under the Securities Act, except as described in Registration
Statement or as set forth in any agreement described therein as
containing such rights.

(xviii) The Company, the Bank and each of its subsidiaries
possess such Governmental Licenses issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them; the Company,
the Bank and each of its subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where
the failure so to comply would not, singly or in the aggregate, have
a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the

B-5
<PAGE>
failure of such Governmental Licenses to be in full force and effect
would not have a Material Adverse Effect; and neither the Company,
the Bank nor any of their respective subsidiaries has received any
notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.

(xix) The Company, the Bank and each of their respective
subsidiaries have good and marketable title to all real, tangible
and intangible property reflected in the most recent balance sheet
included in the Prospectus as owned by the Company, the Bank and its
subsidiaries and good title to all other properties reflected in the
most recent balance sheet included in the Prospectus as owned by
them, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind
except such as (A) are described in the Prospectus or (B) do not,
singly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Company, the Bank or any of their
respective subsidiaries; or, with respect to any such real property,
render title unmarketable as to a material part thereof and all of
the leases and subleases material to the business of the Company,
the Bank and of their respective subsidiaries, considered as one
enterprise, and under which the Company, the Bank or any of their
respective subsidiaries holds properties described in the
Prospectus, are in full force and effect, and neither the Company,
the Bank nor any of their respective subsidiaries has any notice of
any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company, the Bank or any of their
respective subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the
Company, the Bank or such subsidiary to the continued possession of
the leased or subleased premises under any such lease or sublease.

(xx) Except as described in the Registration Statement or
except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) the Company, the Bank and each of their
respective subsidiaries is not in violation of any Environmental
Laws, (B) the Company, the Bank and each of their respective
subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or, to the
knowledge of the Company, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company, the Bank or
any of their respective subsidiaries and (D) to the knowledge of the
Company there are no events or circumstances that might reasonably
be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party
or governmental body or agency, against or affecting the Company,
the Bank or any of their respective subsidiaries relating to
Hazardous Materials or any Environmental Laws.

(xxi) In the event the Company shall become either directly
or indirectly a bank holding company for purposes of the BHC Act and
the BHC Rules, the current activities of the Company and its
subsidiaries (as defined in the BHC Rules) would be activities
permissible for a bank holding company under the BHC Act and the BHC
Rules.

(xxii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court
or governmental authority or agency, domestic or foreign including,
without limitation, the OTS and FDIC is necessary or required by
federal banking laws and regulations for the performance by the
Company of its obligations under the U.S. Underwriting Agreement and
the International Underwriting Agreement in connection with the
offering or sale of the Stock by the Participating Selling
Stockholders under the U.S. Underwriting Agreement and the
International Underwriting Agreement or the consummation by the
Company and the Bank of the transactions contemplated by the U.S.
Underwriting Agreement and the International Underwriting Agreement.

Nothing has come to my attention that would lead me to believe that
the Registration Statement or any amendment thereto, including the information
included in any Prospectus that was omitted from such Registration Statement at
the time it became effective but that is deemed to be part of such Registration
Statement at the time it became effective pursuant to paragraph (b) of Rule 430A
(except for financial statements and schedules and other financial data included
therein or omitted therefrom, as to which I make no statement), at the time such
Registration Statement or any such amendment became effective, contained an
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 not misleading
or that the Prospectus or any amendment or supplement thereto (except for
financial statements and schedules and other financial data included therein or
omitted therefrom, as to which I make no statement), at the time the Prospectus
was issued, at the time any such amended or supplemented Prospectus was issued
or at either Delivery Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

* * * * *

B-6
<PAGE>
Business Law (1991). All terms used but not defined in this exhibit should have
the meanings ascribed to them in the U.S. Underwriting Agreement and should be
defined accordingly in the form of opinion to be delivered.
<PAGE>
EXHIBIT CEXHIBIT C-1

FORM OF OPINION OF COUNSEL
TO PARTICIPATING SELLING STOCKHOLDERS
OTHER THAN EQUITABLE
TO BE DELIVERED PURSUANT TO SECTION 9(E)

[LETTERHEAD OF COUNSEL]

February 5, 1997

LEHMAN BROTHERS INC. ,
as Representative of the several U.S. Underwriters
LEHMAN BROTHERS INTERNATIONAL (EUROPE),
as Lead Manager of the several International Managers
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285

Ladies and Gentlemen:

We have acted as special counsel to [INSERT NAME OF PARTICIPATION
SELLING STOCKHOLDERS(S) REPRESENTED] (the "Represented Stockholder(s)") in
connection with the offering by the Represented Stockholder(s) of up to _____
shares (including shares to be sold upon exercise of over-allotment options) of
Class A common stock, par value $0.01 per share (the "Common Stock"), of Bank
United Corp., a Delaware corporation (the "Company"), offered by the
Participating Selling Stockholders pursuant to a registration statement of the
Company on Form S-1 (No. 333-19237). This opinion letter is furnished pursuant
to Section 9(e) of (i) the underwriting agreement (the "U.S. Underwriting
Agreement"), dated February 5, 1997, among the Company, Bank United, a federally
chartered savings institution (the "Bank"), the persons listed on Schedule 2
thereto (the "Participating Selling Stockholders") and the several underwriters
named in Schedule 1 thereto (the "U.S. Underwriters") and (ii) the underwriting
agreement (the "International Underwriting Agreement" and, together with the
U.S. Underwriting Agreement, the "Underwriting Agreements") dated February 5,
1997, among the Company, the Bank, the Participating Selling Stockholders and
the managers named in Schedule 1 thereto (the "International Managers" and,
together with the U.S. Underwriters, the "Underwriters") in connection with the
closing of the sale by the Represented Stockholder(s) of such shares (the
"Stock"). Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the U.S. Underwriting Agreement.
<PAGE>
In arriving at the opinions expressed below, we have reviewed the
following:

(a) the forms of U.S. Underwriting Agreement and International
Underwriting Agreement;

(b) an executed copy of a power of attorney of each Represented
Stockholder dated January 31, 1997 (the "Power of Attorney"); and

(c) an executed copy of a custody agreement between each
Represented Stockholder, the Company and The Bank of New York, as custodian,
dated as of February 3, 1997 (the "Custody Agreement").

In addition, we have made such investigations of law as we have deemed
appropriate as a basis for the opinions expressed below.

In rendering the opinions expressed below, we have assumed the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified the accuracy as to factual matters of each
document we have reviewed (including, without limitation, the accuracy of the
representations and warranties of the Company and the Participating Selling
Stockholders in the U.S. Underwriting Agreement and the International
Underwriting Agreement). In addition, with respect to Participating Selling
Stockholders who are natural persons, we have assumed the legal capacity of each
such Participating Selling Stockholder.

Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:

(i) Each of the Represented Stockholders has the [corporate]*
power and authority to enter into the U.S. Underwriting Agreement, the
International Underwriting Agreement, the Power of Attorney and the Custody
Agreement and to sell transfer and deliver the Stock to be sold by such
Represented Stockholder under the U.S. Underwriting Agreement and the
International Underwriting Agreement.

(ii) The Power of Attorney and the Custody Agreement have been
duly authorized, executed and delivered by or on behalf of each Represented
Stockholder, and each constitutes the valid and binding obligation of such
Represented Stockholder.

(iii) The execution and delivery of the U.S. Underwriting
Agreement, the International Underwriting Agreement, the Power of Attorney and
the Custody Agreement and the sale of Stock by each Represented Stockholder to
the U.S. Underwriters and the International Managers, and compliance by such
Represented Stockholder with the terms of the U.S. Underwriting Agreement, the
International Underwriting Agreement, the Power of Attorney and the Custody
Agreement [do not and will not result in a violation of the certificate of

C-2
<PAGE>
incorporation and by laws or comparable constitutional documents of such
Represented Stockholder, and]* do not and will not conflict with, or result in a
breach of any of the terms and provision of, or constitute a default under any
statute, rule or regulation applicable to such Represented Stockholder [or its
legal or regulatory status in each case], that in our experience are normally
applicable to transactions of the type provided for in the U.S. Underwriting
Agreement and the International Underwriting Agreement.

(iv) Assuming execution and delivery of each of the U.S.
Underwriting Agreement and the International Underwriting Agreement by one of
the Attorneys (as defined in the Power of Attorney), each of the U.S.
Underwriting Agreement and the International Underwriting Agreement have been
duly authorized, executed and delivered by each of the Represented Stockholders.

(v) No consent, approval, authorization or order of or
qualification by the State of Delaware (as it relates to the General Corporation
Law of the State of Delaware), the State of New York or any federal or foreign
governmental body or agency is required for the performance by any Represented
Stockholder of its obligations under the U.S. Underwriting Agreement, the
International Underwriting Agreement, the Power of Attorney and the Custody
Agreement, except such (i) as may be required by U.S. federal or state or
foreign securities laws and (ii) as are applicable to any Represented
Stockholder solely because of its specific status (including regulatory status)
other than its status as a Participating Selling Stockholder, as to both of
which we express no opinion.

(vi) Assuming that the U.S. Underwriters and the International
Managers purchase the shares of Stock to be delivered by or on behalf of the
Represented Stockholders on the date hereof in good faith and without notice of
any security interests, claims, liens, equities, encumbrances and other adverse
claims, as such term is used in Section 8-302 of the Uniform Commercial Code as
in effect in the State of New York, the delivery of certificates representing
such Stock, duly endorsed to the U.S. Underwriters or the International Managers
or in blank, will pass to the U.S. Underwriters and the International Managers
valid title to such shares of Stock, free and clear of all security interests,
claims, liens, equities, encumbrances and other adverse claims.

Insofar as the foregoing opinions relate to the legality, validity,
binding effect or enforceability of any agreement or obligation of a Represented
Stockholder, we have assumed that each other party to such agreement or
obligation has duly authorized and executed such agreement or obligation and has
satisfied those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable against it. In
addition, the foregoing opinions are subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.

The foregoing opinions are limited to the federal law of the United
States of America and the law of the State of New York.

C-3
<PAGE>
We are furnishing this opinion letter to you, as Representative of
the U.S. Underwriters and as Lead Manager for the International Managers, solely
for the benefit of the U.S. Underwriters and the International Managers in
connection with the offering of the Stock. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.

Very truly yours,

[NAME OF COUNSEL]

<PAGE>
EXHIBIT D

FORM OF OPINION OF COUNSEL
TO EQUITABLE,
AS PARTICIPATING SELLING STOCKHOLDERS,
TO BE DELIVERED PURSUANT TO SECTION 9(F)

[LETTERHEAD OF IN-HOUSE COUNSEL TO EQUITABLE]

February 5, 1997

Ladies and Gentlemen:

We have acted as special counsel to Equitable Deal Flow Fund L.P.,
Equitable Capital Partners L.P., Equitable Capital Partners (Retirement Fund)
L.P. (each, a "Represented Stockholder" and collectively, the "Represented
Stockholders"), as Participating Selling Stockholders (as defined below) in
connection with the offering by the Represented Stockholders of up to _____
shares (including shares to be sold upon exercise of over-allotment options) of
Class A common stock, par value $0.01 per share (the "Common Stock"), of Bank
United Corp., a Delaware corporation (the "Company"), offered by the Represented
Stockholders and certain other stockholders of the Company pursuant to a
registration statement of the Company on Form S-1 (No. 333-19237). This opinion
letter is furnished pursuant to Section 9(f) of (i) the underwriting agreement
(the "U.S. Underwriting Agreement") dated February 5, 1997, among the Company,
Bank United, a federally chartered savings institution (the "Bank"), the persons
listed on Schedule 2 thereto (the "Participating Selling Stockholders") and the
several underwriters named in Schedule 1 thereto (the "U.S. Underwriters") and
(ii) the underwriting agreement (the "International Underwriting Agreement" and,
together with the U.S. Underwriting Agreement, the "Underwriting Agreements")
dated February 5, 1997, among the Company, the Bank, the Participating Selling
Stockholders and the managers named in Schedule 1 thereto (the "International
Managers" and, together with the U.S. Underwriters, the "Underwriters") in
connection with the closing of the sale
<PAGE>
by the Represented Stockholders of such shares (the "Stock"). Capitalized terms
used but not defined herein shall have the meanings ascribed to them in the U.S.
Underwriting Agreement.

In arriving at the opinions expressed below, we have reviewed the
following:

(a) executed copies of the U.S. Underwriting Agreement and the
International Underwriting Agreement; and

(b) an executed copy of a custody agreement between each
Represented Stockholder, the Company and The Bank of New York, as custodian,
dated as of February 3, 1997 (the "Custody Agreement").

In addition, we have made such investigations of law as we have deemed
appropriate as a basis for the opinions expressed below.

In rendering the opinions expressed below, we have assumed the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified the accuracy as to factual matters of each
document we have reviewed (including, without limitation, the accuracy of the
representations and warranties of the Company and each Represented Stockholder
in the U.S. Underwriting Agreement and the International Underwriting
Agreement).

Based on the foregoing, and subject to the further assumptions and
qualifications set forth below, it is our opinion that:

(i) Each Represented Stockholder has the corporate power and
authority to enter into the U.S. Underwriting Agreement, the International
Underwriting Agreement and the Custody Agreement and to sell transfer and
deliver the Stock to be sold by each Represented Stockholder under the U.S.
Underwriting Agreement and the International Underwriting Agreement.

(ii) The Custody Agreement has been duly authorized, executed and
delivered by each Represented Stockholder, and each constitutes the valid and
binding obligation of each Represented Stockholder.

(iii) The execution and delivery of the U.S. Underwriting
Agreement, the International Underwriting Agreement and the Custody Agreement
and the sale of Stock by each Represented Stockholder to the U.S. Underwriters
and the International Managers, and compliance by each Represented Stockholder
with the terms of the U.S. Underwriting Agreement, the International
Underwriting Agreement and the Custody Agreement do not and will not result in a
violation of the certificate of incorporation and by laws or comparable
constitutional documents of such Represented Stockholder, and do not and will
not conflict with, or result in a breach of any of the terms and provision of,
or constitute a default under any statute, rule or regulation applicable to any
Represented Stockholder or its respective legal or regulatory status in each
case, that in our experience are normally applicable to transactions of

D-2
<PAGE>
the type provided for in the U.S. Underwriting Agreement and the International
Underwriting Agreement.

(iv) Each of the U.S. Underwriting Agreement and the
International Underwriting Agreement have been duly authorized, executed and
delivered by each Represented Stockholder.

(v) No consent, approval, authorization or order of or
qualification by the State of Delaware (as it relates to the General Corporation
Law of the State of Delaware), the State of New York or any federal or foreign
governmental body or agency is required for the performance by any Represented
Stockholder of its respective obligations under the U.S. Underwriting Agreement,
the International Underwriting Agreement and the Custody Agreement, except such
(i) as may be required by U.S. federal or state or foreign securities laws and
(ii) as are applicable to any Represented Stockholder solely because of its
specific status (including regulatory status) other than its status as a
Participating Selling Stockholder, as to both of which we express no opinion.

(vi) Assuming that the U.S. Underwriters and the International
Managers purchase the shares of Stock to be delivered by or on behalf of each
Represented Stockholder on the date hereof in good faith and without notice of
any security interests, claims, liens, equities, encumbrances and other adverse
claims, as such term is used in Section 8-302 of the Uniform Commercial Code as
in effect in the State of New York, the delivery of certificates representing
such shares of Stock, duly endorsed to the U.S. Underwriters or the
International Managers or in blank, will pass to the U.S. Underwriters and the
International Managers valid title to such shares of Stock, free and clear of
all security interests, claims, liens, equities, encumbrances and other adverse
claims.

Insofar as the foregoing opinions relate to the legality, validity,
binding effect or enforceability of any agreement or obligation of any
Represented Stockholder, we have assumed that each other party to such agreement
or obligation has duly authorized and executed such agreement or obligation and
has satisfied those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable against it. In
addition, the foregoing opinions are subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.

The foregoing opinions are limited to the federal law of the United
States of America and the law of the State of New York.

D-3
<PAGE>
We are furnishing this opinion letter to you, as Representative of
the U.S. Underwriters and as Lead Manager of the International Managers, solely
for the benefit of the U.S. Underwriters and the International Managers in
connection with the offering of the Stock. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.

Very truly yours,

[NAME OF COUNSEL]

* Insert for corporate entities.

D-4

[Execution Copy]
777,600 SHARES

BANK UNITED CORP.

CLASS A COMMON STOCK

INTERNATIONAL UNDERWRITING AGREEMENT

February 5, 1997

LEHMAN BROTHERS INTERNATIONAL (EUROPE),
As Lead Manager of the several
International Managers named in Schedule 1
One Broadgate, 4th Floor
London EC2M 7HA
England

Dear Sirs:

Certain stockholders of Bank United Corp., a Delaware corporation
(the "Company"), named in Schedule 2 hereto (the "Participating Selling
Stockholders") propose to sell an aggregate of 777,600 shares (the "Firm Stock")
of the Company's Class A common stock, par value $0.01 per share ("Common
Stock"). In addition, the Participating Selling Stockholders propose to grant to
the several Underwriters named in Schedule 1 hereto (the "International
Managers") an option to purchase up to an additional 77,760 shares of Common
Stock on the terms and for the purposes set forth in Section 3 hereof (the
"Option Stock"). The Firm Stock and the Option Stock, if purchased, are
hereinafter collectively called the "Stock." This is to confirm the agreement
with you (the "Lead Manager") and the other International Managers on whose
behalf you are acting, concerning the purchase of the Stock from the
Participating Selling Stockholders by the International Managers.

It is understood by all parties that the Participating Selling
Stockholders are concurrently entering into an agreement dated the date hereof
(the "U.S. Underwriting Agreement") providing for the sale by the Participating
Selling Stockholders of an aggregate of 3,421,352 shares of Common Stock
(including the over-allotment option thereunder) (the "U.S. Stock") through
arrangements with certain underwriters within the United States (the "U.S.
Underwriters"), for whom Lehman Brothers Inc. is acting as representative. The
International Managers and the U.S. Underwriters simultaneously are entering
into an agreement between the U.S. and international underwriting syndicates
(the "Agreement Between U.S. Underwriters and International Managers") which
provides for, among other things, the transfer of shares of Common Stock between
the two syndicates. Except as used in Sections 3, 4, 5, 11 and 12 hereof, and
except as the context may otherwise require, references herein to the Stock
shall include all the shares of Common Stock which may be sold pursuant to
either this Agreement or the U.S. Underwriting Agreement.
<PAGE>
(1) REPRESENTATIONS AND WARRANTIES BY THE COMPANY AND THE BANK.
Each of the Company and its subsidiary Bank United, a federally chartered
savings bank (the "Bank"), represents and warrants to each International Manager
and each Participating Selling Stockholder, as of each Delivery Date referred to
in Section 5 hereof, and agrees with each International Manager, as follows:

(a) Compliance with Registration Requirements. A registration
statement on Form S-1, including a basic prospectus for registration
under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), of the offering and sale of shares of Common Stock, including the
Stock, from time to time in accordance with Rule 415 of the U.S.
Securities and Exchange Commission (the "Commission") under the
Securities Act by certain of the stockholders of the Company listed in
such basic prospectus, including the Participating Selling Stockholders,
and an amendment to such registration statement (i) has been prepared by
the Company in conformity with the requirements of the Securities Act
and the rules and regulations (the "1933 Act Regulations") of the
Commission thereunder, (ii) has been filed with the Commission under the
Securities Act and (iii) has become effective under the Securities Act.
Copies of such registration statement and the amendment thereto have
been delivered by the Company to you as Lead Manager. As used in this
Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, became or was declared effective by the Commission.
"Registration Statement" means such registration statement, including
the exhibits and any schedules, as amended at the Effective Time, and
any Rule 430A Information (as defined below).

Two forms of prospectus are to be used in connection with the
offering and sale of the Stock: one relating to the Stock (the "Form of
International Prospectus") and one relating to the U.S. Stock (the "Form
of U.S. Prospectus"). Each of the Form of U.S. Prospectus and the Form
of International Prospectus consists of (a) a "Basic Prospectus", which
is the prospectus included in the Registration Statement, and (b) a
"Prospectus Supplement", relating specifically to the Stock and the U.S.
Stock, in the form first filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 of the Securities Act. For purposes of
offers and sales of the Stock in Canada, the Form of U.S. Prospectus
also consists of an additional front cover and back cover page which
complies in all respects with all applicable laws in each of the
provinces and territories of Canada, the respective regulations under
such laws and the applicable published policy statements of the
securities regulatory authorities in such jurisdiction. The Form of
International Prospectus is identical to the Form of U.S. Prospectus
used for offers and sales in the United States, except for the front
cover and back cover pages. The term "Prospectus", as used herein, shall
refer to the Basic Prospectus as so supplemented by the relevant
Prospectus Supplement. The information included in such prospectuses
that was omitted from the Registration Statement at the Effective Time
but that is deemed to be part of the Registration Statement at the
Effective Time pursuant to paragraph (b) of Rule 430A is referred to as
"Rule 430A Information". Each Form of U.S. Prospectus and each Form of
International Prospectus, and any prospectus that omitted Rule 430A
Information, that was used after the Effective Time and prior to the
execution and delivery of this Agreement, is herein called a

2
<PAGE>
"Preliminary Prospectus". The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.

Any registration statement filed pursuant to Rule 462(b) of the
1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement", and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The
final prospectuses in the forms first furnished to the International
Managers and the U.S. Underwriters for use in connection with the
offering of the International Stock or the U.S. Stock, respectively, are
herein called the "U.S. Prospectus" and the "International Prospectus".
For purposes of this Agreement, all references to the Registration
Statement, any Preliminary Prospectus, the U.S. Prospectus, the
International Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR"). The term "Prospectus" shall, unless the context otherwise
requires, hereinafter refer to the U.S. Prospectus and the International
Prospectus.

The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they became or become effective or were or are
filed with the Commission, as the case may be, conformed or will conform
in all respects to the requirements of the Securities Act and the 1933
Act Regulations and do not and will not, as of the applicable effective
date (as to the Registration Statement and any amendment thereto) and as
of the applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; PROVIDED that no
representation or warranty is made as to information contained in or
omitted from the Registration Statement or the Prospectus in reliance
upon and in conformity with written information furnished to the Company
through the Lead Manager by or on behalf of any International Manager or
U.S. Underwriter specifically for inclusion therein.

(b) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required by
the Securities Act and the 1933 Act Regulations.

(c) Financial Statements. The consolidated financial statements
included in the Registration Statement and the Prospectus, together with
the related schedules and notes, present fairly in all material respects
the consolidated financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its consolidated
subsidiaries for the periods specified; said financial statements have
been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved, except as may be noted therein. The supporting schedules, if
any, included in the Registration Statement present fairly in all
material respects in accordance with GAAP, except as may be noted
therein, the information required to be

3
<PAGE>
stated therein. The selected financial data and the summary financial
information included in the Prospectus present fairly in all material
respects the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included in the
Registration Statement. The pro forma financial information and the
related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.

(d) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (i) there has been
no material adverse change in the condition, financial or otherwise, or
in the earnings, stockholders' equity, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), (ii) there have been no transactions entered
into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (iii)
except for regular quarterly dividends on the Bank Preferred Stock (as
defined in the Prospectus) in amounts per share that are consistent with
past practice, there has been no dividend or distribution of any kind
declared, paid or made by the Bank or the Company on any class of its
capital stock.

(e) Good Standing of the Company. Each of the Company, the Bank
and each subsidiary of the Company or the Bank has been duly organized
and is validly existing as a corporation in good standing under the laws
of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under this Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.

(f) The Bank; Other Subsidiaries.ES

(i) The Bank is the only "significant subsidiary" of the
Company (as such term is defined in Rule 1-02 of Regulation S-X).
The only subsidiaries of the Company other than the Bank are the
wholly-owned subsidiaries of the Bank listed on Schedule E hereto
which, considered in the aggregate as a single subsidiary, do not
constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X. The activities of all of the Bank's subsidiaries
are permitted to subsidiaries of a federally chartered savings
bank, the deposits of which are insured by the Savings

4
<PAGE>
Association Insurance Fund ("SAIF"), which is administered by the
Federal Deposit Insurance Corporation (the "FDIC").

(ii) The Bank has been duly organized and is validly
existing as a federally chartered savings bank in good standing
under the laws of the United States, and has corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and to enter into and
perform its obligations under this Agreement. Each subsidiary of
the Bank has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction
of its incorporation and has the power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus.

(iii) All of the issued and outstanding capital stock of
the Bank and each subsidiary of the Bank has been duly authorized
and validly issued, is fully paid and non-assessable and, except
as otherwise disclosed in the Registration Statement, is owned by
the Company, directly or through subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim
or equity; none of the outstanding shares of capital stock of any
subsidiary was issued in violation of the preemptive or similar
rights of any securityholder of such subsidiary.

(g) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Pro Forma" under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to reservations, agreements
or employee benefit plans referred to in the Prospectus or pursuant to
the exercise of convertible securities or options referred to in the
Prospectus). The shares of issued and outstanding capital stock,
including the shares of Common Stock to be purchased by the
International Managers and the U.S. Underwriters from the Participating
Selling Stockholders, have been duly authorized and validly issued and
are fully paid and non-assessable; none of the outstanding shares of
capital stock, including the shares of Common Stock to be purchased by
the International Managers and the U.S. Underwriters from the
Participating Selling Stockholders, was issued in violation of the
preemptive or other similar rights of any securityholder of the Company.

(h) Authorization of Agreement. This Agreement and the U.S.
Underwriting Agreement have been duly authorized, executed and delivered
by each of the Company and the Bank.

(i) Authorization and Description of Offer Stock. The sale of the
Common Stock to the International Managers and the U.S. Underwriters by
the Participating Selling Stockholders is not subject to the preemptive
or other similar rights of any securityholder of the Company; and the
Common Stock conforms to all statements relating thereto contained in
the Prospectus and such description conforms to the rights set forth in
the instruments defining the same.

5
<PAGE>
(j) Absence of Defaults and Conflicts. Neither the Company, the
Bank, nor any of their respective subsidiaries is in violation of its
charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company, the Bank,
or any of their respective subsidiaries is a party or by which it or any
of them may be bound, or to which any of the property or assets of the
Company, the Bank, or any of their respective subsidiaries is subject
(collectively, "Agreements and Instruments"), except for such defaults
that would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the U.S. Underwriting
Agreement and the consummation of the transactions contemplated thereby
and compliance by each of the Company and the Bank with its respective
obligations hereunder and thereunder have been duly authorized by all
necessary corporate action and do not and will not result in any
violation of the provisions of the charter or by-laws of the Company,
the Bank, or any of their respective subsidiaries or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company, the Bank, or any of their
respective subsidiaries or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any event or
condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company.

(k) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or
contractors, which, in either case, may reasonably be expected to result
in a Material Adverse Effect.

(l) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge
of the Company or the Bank, as the case may be, threatened, against or
affecting the Company, the Bank, or any of their respective
subsidiaries, which individually or in the aggregate for all such
actions, suits, proceedings, inquiries or investigations is required to
be disclosed in the Registration Statement (other than as disclosed
therein), or which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in
this Agreement and the U.S. Underwriting Agreement or the performance by
the Company or the Bank of their respective obligations hereunder or
thereunder; the aggregate of all pending legal or governmental
proceedings to which the Company, the Bank, or any of their respective
subsidiaries is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business of the Company, the Bank, or any of their respective
subsidiaries, could not reasonably be expected to result in a Material
Adverse Effect. No cease and

6
<PAGE>
desist order has been entered by the Office of Thrift Supervision (the
"OTS") or the FDIC against the Company, the Bank or any of their
respective subsidiaries.

(m) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits thereto which have not been so
described and filed as required.

(n) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or
inadequate to protect the interest of the Company or any of its
subsidiaries therein, and which infringement or conflict (if the subject
of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.

(o) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, including, without limitation, the OTS and the FDIC, is
necessary or required for the performance by the Company of its
obligations hereunder in connection with the offering or sale of the
Stock hereunder and under the U.S. Underwriting Agreement, for the
consummation of the transactions contemplated hereby or thereby or for
the other transactions described in the Registration Statement under the
caption "The Company -- Background of the Offering," except such as have
been already obtained or will have been obtained or made prior to the
First Delivery Date (as defined below) or as may be required under the
Securities Act or the 1933 Act Regulations or state securities laws.

(p) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material
Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such

7
<PAGE>
Governmental Licenses which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.

(q) Title to Property. The Company and its subsidiaries have good
and marketable title to all real, tangible and intangible property
reflected in the most recent balance sheet included in the Prospectus as
owned by the Company and its subsidiaries and good title to all other
properties reflected in the most recent balance sheet included in the
Prospectus as owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (i) are described in the
Prospectus or (ii) do not, singly or in the aggregate, materially affect
the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company or any of its
subsidiaries; or, with respect to any such real property, render title
unmarketable as to a material part thereof and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any subsidiary has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any
of the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such subsidiary to the continued possession
of the leased or subleased premises under any such lease or sublease.

(r) Investment Company Act. The Company is not, and upon the sale
of the Stock as contemplated herein and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the U.S. Investment Company Act of
1940, as amended (the "1940 Act").

(s) Environmental Laws. Except as described in the Registration
Statement or except as would not, singly or in the aggregate, result in
a Material Adverse Effect, (i) the Company, the Bank and each of their
respective subsidiaries is not in violation of any federal, state, local
or foreign statute, law, rule, regulation, ordinance, code, policy or
rule of common law or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent, decree
or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Hazardous Materials (collectively, "Environmental Laws"), (ii) the
Company, the Bank and each of their respective subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(iii) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits,
demands, demand letters, claims, liens, notices of

8
<PAGE>
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company, the Bank or any of their
respective subsidiaries and (iv) to the knowledge of the Company there
are no events or circumstances that might reasonably be expected to form
the basis of an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency, against
or affecting the Company, the Bank or any of their respective
subsidiaries relating to Hazardous Materials or any Environmental Laws.

(t) Registration Rights. Except as described in the Registration
Statement or as set forth in any document or agreement described in the
Registration Statement as containing such rights, there are no persons
with registration rights or other similar rights to have any securities
registered pursuant to the Registration Statement or otherwise
registered by the Company or the Bank, under the Securities Act or
otherwise.

(u) Accounting. Each of the Company and the Bank maintains a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.

(v) Payments To the knowledge of each of the Company and the
Bank, neither the Company, the Bank nor any employee or agent of the
Company or the Bank has made any payment of funds of the Company or the
Bank or received or retained any funds in violation of any law, rule or
regulation, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.

(w) Taxes Each of the Company and the Bank has filed all tax
returns required to be filed, which returns are complete and correct in
all material respects, and each of the Company and the Bank is not in
default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto.

(x) Bank Holding Company. In the event the Company shall become
either directly or indirectly a bank holding company for purposes of the
Bank Holding Company Act of 1956, as amended (the "BHC Act") and the
rules and regulations of the Board of Governors of the Federal Reserve
System thereunder (the "BHC Rules"), the current activities of the
Company and its subsidiaries (as defined in the BHC Rules) would be
activities permissible for a bank holding company under the BHC Act and
the BHC Rules.

2. REPRESENTATIONS AND WARRANTIES BY THE PARTICIPATING SELLING
Stockholders. Each Participating Selling Stockholder severally represents and
warrants (on behalf of itself and not as to any other Participating Selling
Stockholder or person) to each International Manager and the Company as of the
date hereof and as of each Delivery Date, and agrees with each International

9
<PAGE>
Manager, as set forth below, except that each of Equitable Deal Flow Fund L.P.,
Equitable Capital Partners L.P. and Equitable Capital Partners (Retirement Fund)
L.P. (collectively, "Equitable") is not a party to the Power of Attorney (as
defined below) and accordingly does not make the following representations and
warranties to the extent they relate to the Power of Attorney:

(a) Accuracy of Information Regarding Selling Stockholder. The
information set forth in the Registration Statement in the chart on page
123 thereof under the caption "Selling Stockholders" which specifically
relates to such Participating Selling Stockholder did not, at the date
the Registration Statement became effective, contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the information set forth in the Basic Prospectus in the
chart on page 123 thereof under the caption "Selling Stockholders" and
the Prospectus Supplement under the caption "Participating Selling
Stockholders" which specifically relates to such Participating Selling
Stockholder (as to each Participating Selling Stockholder, the
"Participating Selling Stockholder Information"), at the date hereof and
on each Delivery Date, does not and will not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

(b) Authorization of Agreements. Such Participating Selling
Stockholder has the full right, power and authority to enter into this
Agreement and the U.S. Underwriting Agreement, a Power of Attorney (the
"Power of Attorney") and a Custody Agreement (as defined below) and to
sell, transfer and deliver the Stock to be sold by such Participating
Selling Stockholder hereunder. The execution and delivery of this
Agreement and the U.S. Underwriting Agreement, the Power of Attorney and
the Custody Agreement and the sale and delivery of the Stock to be sold
by such Participating Selling Stockholder and the consummation of the
transactions contemplated herein and compliance by such Participating
Selling Stockholder with its obligations hereunder do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any tax, lien, charge or encumbrance upon
the Stock to be sold by such Participating Selling Stockholder pursuant
to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, license, lease or other agreement or instrument to
which such Participating Selling Stockholder is a party or by which such
Participating Selling Stockholder may be bound, nor will such action
result in any violation of the provisions of the charter or by-laws or
other organizational instrument of such Participating Selling
Stockholder, if applicable, or (assuming the offering of the Stock is
conducted in accordance with the Securities Act and applicable state
securities laws) any applicable treaty, law, statute, rule, regulation,
judgment, order, writ or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over
such Participating Selling Stockholder or any of its properties.

(c) Good and Valid Title. Such Participating Selling
Stockholder has and will at the First Delivery Date and, if any Option
Stock is purchased, on the Second Delivery

10
<PAGE>
Date (as defined below), have good and valid title to the Stock to be
sold by such Participating Selling Stockholder hereunder, free and clear
of any security interest, mortgage, pledge, lien, charge, claim, equity
or encumbrance of any kind, other than pursuant to this Agreement, the
U.S. Underwriting Agreement and the Letter Agreement (as defined in the
Prospectus); and upon delivery of such Stock and payment of the purchase
price therefor as contemplated herein and therein, assuming each
International Manager and U.S. Underwriter has no notice of any adverse
claim, each of the International Managers and the U.S. Underwriters will
receive good and valid title to the Stock purchased by it from such
Participating Selling Stockholder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or encumbrance
of any kind.

(d) Due Execution of Power of Attorney and Custody Agreement.
Such Participating Selling Stockholder has duly executed and delivered,
in the form heretofore furnished to the Lead Manager, the Power of
Attorney appointing Salvatori A. Ranieri, Patricia A. Sloan or either of
them, as attorney(s)-in-fact (the "Attorney(s)-in-Fact") and a Custody
Agreement, with The Bank of New York (the "Custodian") as custodian,
(the "Custody Agreement"), and the Custodian is authorized to accept
payment for, and, upon receipt of such payment and written instructions
from such Participating Selling Stockholder or the Attorney-in-Fact, as
the case may be, to deliver, the Stock to be sold by such Participating
Selling Stockholder hereunder; and each Attorney-in-Fact is authorized
to execute and deliver this Agreement and the certificate referred to in
Section 9(k) hereof on behalf of such Participating Selling Stockholder,
to sell, assign and transfer to the International Managers and the U.S.
Underwriters the Stock to be sold by such Participating Selling
Stockholder hereunder and under the U.S. Underwriting Agreement, to
determine the purchase price to be paid by the International Managers
and the U.S. Underwriters to such Participating Selling Stockholder, as
provided in Section 3 hereof, to authorize the delivery of the Stock to
be sold by such Participating Selling Stockholder hereunder and under
the U.S. Underwriting Agreement, to accept payment therefor, and
otherwise to act on behalf of such Participating Selling Stockholder in
connection with this Agreement and the U.S. Underwriting Agreement.

(e) Absence of Manipulation. Such Participating Selling
Stockholder has not taken, and will not take, directly or indirectly,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Stock.

(f) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by each Participating Selling
Stockholder of its obligations hereunder or in the Power of Attorney or
the Custody Agreement, or in connection with the sale and delivery of
the Stock hereunder and under the U.S. Underwriting Agreement or the
consummation of the transactions contemplated hereby and thereby, except
such as may have previously been

11
<PAGE>
made or obtained or will have been obtained or made prior to the First
Delivery Date or as may be required under the Securities Act or the 1933
Act Regulations or state securities laws.

(g) Certificates Suitable for Transfer. Certificates for all
of the Stock to be sold by such Participating Selling Stockholder
pursuant to this Agreement and the U.S. Underwriting Agreement, in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian with
irrevocable conditional instructions to deliver such Stock to the
International Managers and the U.S. Underwriters pursuant to this
Agreement and the U.S.
Underwriting Agreement.

(h) No Association with NASD. Except as disclosed by such
Participating Selling Stockholder in writing to the Lead Manager,
neither such Participating Selling Stockholder nor any of his, her or
its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning of
Article I, (q) of the By-laws of the National Association of Securities
Dealers, Inc. (the "NASD")), any member firm of the NASD.

3. PURCHASE OF THE STOCK BY THE INTERNATIONAL MANAGERS. On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, each Participating Selling Stockholder,
severally and not jointly, agrees to sell the number of shares of Firm Stock set
opposite its name in Schedule 2 hereto to the several International Managers,
and each of the International Managers, severally and not jointly, agrees to
purchase from each Participating Selling Stockholder, at a purchase price of
96.5% of the price to the public thereof, the number of shares of Firm Stock set
opposite that International Manager's name in Schedule 1 hereto. Each
International Manager shall be obligated to purchase from each Participating
Selling Stockholder that number of shares of Firm Stock which represents the
same proportion of the number of shares of Firm Stock to be sold by each
Participating Selling Stockholder as the number of shares of Firm Stock set
forth opposite the name of such International Manager in Schedule 1 represents
of the total number of shares of Firm Stock to be purchased by all of the
International Managers pursuant to this Agreement. The respective purchase
obligations of the International Managers with respect to the Firm Stock shall
be rounded among the International Managers to avoid fractional shares, as the
Lead Manager may determine.

In addition, the Participating Selling Stockholders grant to the
International Managers an option to purchase up to 77,760 shares of Option
Stock. Such option is granted solely for the purpose of covering over-allotments
in the sale of Firm Stock and is exercisable as provided in Section 5 hereof.
Shares of Option Stock shall be purchased severally for the account of the
International Managers in proportion to the number of shares of Firm Stock set
opposite the name of such International Managers in Schedule 1 hereto. The
respective purchase obligations of each International Manager with respect to
the Option Stock shall be adjusted by the Lead Manager so that no International
Manager shall be obligated to purchase Option Stock other than in 100 share

12
<PAGE>
amounts. The price to the public of both the Firm Stock and any Option Stock
shall be $29.00 per share.

The Participating Selling Stockholders shall not be obligated to
deliver any of the Stock to be delivered on the First Delivery Date or the
Second Delivery Date, as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein and in the U.S.
Underwriting Agreement.

4. OFFERING OF STOCK BY THE INTERNATIONAL MANAGERS. Upon
authorization by the Lead Manager of the release of Firm Stock, the several
International Managers propose to offer the Firm Stock for sale upon the terms
and conditions set forth in the Prospectus.

Each International Manager agrees that, except to the extent
permitted by the Agreement Between U.S. Underwriters and International Managers,
it will not offer or sell any of the Stock outside of the United States.

5. DELIVERY OF AND PAYMENT FOR THE STOCK. Delivery of and payment
for the Firm Stock shall be made at the office of Cleary, Gottlieb, Steen &
Hamilton, One Liberty Plaza, New York, New York 10006, at 10:00 A.M., New York
City time, on the third (fourth, if the pricing occurs after 4:30 P.M. New York
City time on any given day) full business day following the date of this
Agreement or at such other date or place as shall be determined by agreement
among the Lead Manager, the Company and the Participating Selling Stockholders.
This date and time are sometimes referred to as the "First Delivery Date." On
the First Delivery Date, the Participating Selling Stockholders shall deliver or
cause to be delivered certificates representing the Firm Stock to the Lead
Manager for the account of each International Manager against payment of the
purchase price by wire transfer of immediately available funds to bank accounts
designated by the Custodian pursuant to each Participating Selling Stockholder's
Custody Agreement. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each International Manager hereunder. Upon delivery, the Firm
Stock shall be registered in such names and in such denominations as the Lead
Manager shall request in writing not less than two full business days prior to
the First Delivery Date. For the purpose of expediting the checking and
packaging of the certificates for the Firm Stock, the Participating Selling
Stockholders shall make the certificates representing the Firm Stock available
for inspection by the Lead Manager in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.

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<PAGE>
been exercised, nor later than the fifth business day after the date on which
the option shall have been exercised. The date and time the shares of Option
Stock are delivered are sometimes referred to as the "Second Delivery Date" and
the First Delivery Date and the Second Delivery Date are sometimes each referred
to as a "Delivery Date").

Delivery of and payment for the Option Stock shall be made at the
place specified in the first sentence of the first paragraph of this Section 5
(or at such other place as shall be determined by agreement between the Lead
Manager and the Participating Selling Stockholder) at 10:00 A.M., New York City
time, on the Second Delivery Date. On the Second Delivery Date, the
Participating Selling Stockholders shall deliver or cause to be delivered the
certificates representing the Option Stock to the Lead Manager for the account
of each International Manager against payment of the purchase price by wire
transfer of immediately available funds to bank accounts designated by the
Custodian pursuant to each Participating Selling Stockholder's Custody
Agreement. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each International Manager hereunder. Upon delivery, the Option Stock shall be
registered in such names and in such denominations as the Lead Manager shall
request in the aforesaid written notice. For the purpose of expediting the
checking and packaging of the certificates for the Option Stock, the
Participating Selling Stockholders shall make the certificates representing the
Option Stock available for inspection by the Lead Manager in New York, New York,
not later than 2:00 P.M., New York City time, on the business day prior to the
Second Delivery Date.

6. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees:

(a) To prepare a Prospectus including the Rule 430A Information
in a form approved by the Lead Manager and to file such Prospectus
pursuant to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Securities Act; to
make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein; to advise the
Lead Manager, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended or
supplemented Prospectus has been filed and to furnish the Lead Manager
with copies thereof; to advise the Lead Manager, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop order or of
any order preventing or suspending the use of any Preliminary Prospectus
or the Prospectus or suspending any such qualification, to use promptly
its best efforts to obtain its withdrawal;

(b) To furnish promptly to the Lead Manager and to counsel for
the International Managers a signed copy of the Registration Statement
as originally filed with the Commission, and each amendment thereto
filed with

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<PAGE>
the Commission, including all consents and exhibits filed therewith;

(c) To deliver promptly to the Lead Manager such number of the
following documents as the Lead Manager shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with
the Commission and each amendment thereto (in each case excluding
exhibits other than this Agreement and the computation of per share
earnings) and (ii) each Preliminary Prospectus, the Prospectus and any
amended or supplemented Prospectus; and, if the delivery of a prospectus
is required at any time after the Effective Time in connection with the
offering or sale of the Stock or any other securities relating thereto
and if at such time any events shall have occurred as a result of which
the Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply with
the Securities Act, to notify the Lead Manager and, upon its request, to
prepare and furnish without charge to each International Manager and to
any dealer in securities as many copies as the Lead Manager may from
time to time reasonably request of an amended or supplemented Prospectus
which will correct such statement or omission or effect such compliance;

(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Lead Manager,
be required by the Securities Act or requested by the Commission;

(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the 1933 Act Regulations, to furnish a copy
thereof to the Lead Manager and counsel for the International Managers
and obtain the consent of the Lead Manager to the filing;

(f) Timely file such reports pursuant to the U.S. Securities
Exchange Act of 1934, as amended (the "Exchange Act") as are necessary
in order to make generally available to its securityholders as soon as
practicable an earnings statement for the purposes of, and to provide
the benefits contemplated by, the last paragraph of Section 11(a) of the
Securities Act;

(g) For a period of five years following the Effective Time, to
furnish to the Lead Manager copies of all materials furnished by the
Company to its stockholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant
to requirements of or agreements with such exchange or to the Commission
pursuant to the Exchange Act or any rule or regulation of the Commission
thereunder; and

15
<PAGE>
(h) Promptly from time to time to take such action as the Lead
Manager may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Lead Manager
may request and to comply with such laws so as to permit the continuance
of sales and dealings therein in such jurisdictions for as long as may
be necessary to complete the distribution of the Stock; PROVIDED that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction.

7. FURTHER AGREEMENT OF THE PARTICIPATING SELLING STOCKHOLDERS.
Each Participating Selling Stockholder agrees to deliver to the Lead Manager
prior to the First Delivery Date a properly completed and executed United States
Treasury Department Form W-9.

8. EXPENSES.

(a) The Company and/or the International Managers agree to pay
the following expenses: (i) the costs incident to the authorization,
sale and delivery of the Stock and any taxes payable in that connection;
(ii) the costs incident to the preparation, printing and filing under
the Securities Act of the Registration Statement and any amendments and
exhibits thereto; (iii) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits),
any Preliminary Prospectus, the Prospectus and any amendment or
supplement to the Prospectus, all as provided in this Agreement; (iv)
the costs of producing and distributing this Agreement, the Agreement
Between U.S. Underwriters and International Managers, the Agreement
Among International Managers and any other related documents in
connection with the offering, purchase, sale and delivery of the Stock;
(v) the costs of delivering and distributing the Powers of Attorney and
the Custody Agreements and the fees and expenses of the Custodian (and
any other Attorney-in-Fact); (vi) the filing fees incident to securing
any required review by the NASD of the terms of sale of the Stock; (vii)
the fees and expenses of qualifying the Stock under the securities laws
of the several jurisdictions as provided in Section 6 hereof and of
preparing, printing and distributing a blue sky application or other
document prepared or executed by the Company (or based upon any written
information furnished by the Company) specifically for the purpose of
qualifying any or all of the Stock under the securities laws of any
state or other jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky Application")
(including related fees and expenses of counsel to the International
Managers); (viii) the preparation and delivery of the certificates for
the Stock to the International Managers and the U.S. Underwriters; (ix)
the fees and disbursements of the Company's counsel, accountants and
other advisors; and (x) all other costs and expenses incident to the
performance of the obligations of the Company and, except as set forth
in paragraph (b) below, the Participating Selling Stockholders under
this Agreement and the U.S. Underwriting Agreement. The allocation of
the foregoing expenses between the Company and the International
Managers will be set forth in a separate agreement between the Company
and the International Managers.

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<PAGE>
(b) The Participating Selling Stockholders agree to pay (i) any
stamp duties, capital duties and stock transfer taxes, if any, payable
upon the sale of the Stock of such Participating Selling Stockholder to
the International Managers and the U.S. Underwriters and their transfer
between the International Managers and the U.S. Underwriters pursuant to
the Agreement Between U.S. Underwriters and International Managers and
(ii) the fees and disbursements of their respective counsel, accountants
and other advisors.

9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The respective
obligations of the International Managers hereunder are subject to the accuracy,
when made and on each Delivery Date, of the representations and warranties of
the Company, the Bank and the Participating Selling Stockholders contained
herein or in certificates of any officer of the Company or any subsidiary of the
Company (including the Bank), or by or on behalf of any Participating Selling
Stockholder delivered pursuant to the provisions hereof, to the performance by
the Company, the Bank and the Participating Selling Stockholders of their
respective covenants and other obligations hereunder, and to each of the
following additional terms and conditions:

(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a) hereof; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and any request of
the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been
complied with.

(b) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the U.S.
Underwriting Agreement, the Powers of Attorney, the Custody Agreements,
the Stock, the Registration Statement and the Prospectus, and all other
legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material
respects to the Lead Manager and counsel for the International Managers.

(c) Wachtell, Lipton, Rosen & Katz shall have furnished to the
Lead Manager their written opinion, as counsel to the Company, addressed
to the International Managers and dated such Delivery Date, in form and
substance reasonably satisfactory to the Lead Manager, to the effect set
forth in Exhibit A hereto, and to such further effect as counsel to the
International Managers may reasonably request.

(d) Jonathon K. Heffron, Esq., general counsel of the Company,
shall have furnished to the Lead Manager its written opinion, as counsel
to the Company, addressed to the International Managers and dated such
Delivery Date, in form and substance reasonably satisfactory to the Lead
Manager, to the effect set forth in Exhibit B hereto, and to such
further effect as counsel to the International Managers may reasonably
request.

(e) Counsel for each Participating Selling Stockholder other than
Equitable shall have furnished to the Lead Manager their written
opinion, as counsel to such Participating Selling Stockholder, addressed
to the International Managers and dated such Delivery Date, in form and
substance reasonably satisfactory to the Lead Manager, to the effect set
forth in Exhibit C hereto, and to such further effect as counsel to the
International Managers may reasonably request.

(f) Counsel for Equitable shall have furnished to the Lead
Manager their written opinion, as counsel to Equitable as a
Participating Selling Stockholder, addressed to the International
Managers and dated such

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<PAGE>
Delivery Date, in form and substance reasonably satisfactory to the Lead
Manager, to the effect set forth in Exhibit D hereto, and to such
further effect as counsel to the International Managers may reasonably
request.

(g) The Lead Manager shall have received from Cleary, Gottlieb,
Steen & Hamilton, counsel for the International Managers, such opinion
or opinions, dated such Delivery Date, with respect to the sale of the
Stock, the Registration Statement, the Prospectus and other related
matters as the Lead Manager may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.

(h) At the time of execution of this Agreement, the Lead Manager
shall have received from Deloitte & Touche LLP a letter, in form and
substance satisfactory to the Lead Manager, addressed to the
International Managers and dated the date hereof (i) confirming that
they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof
(or, with respect to matters involving changes or developments since the
respective dates as of which specified financial information is given in
the Prospectus, as of a date not more than five days prior to the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters in connection with
registered public offerings.

(i) With respect to the letter of Deloitte & Touche LLP referred
to in the preceding paragraph and delivered to the Lead Manager
concurrently with the execution of this Agreement (the "initial
letter"), the Company shall have furnished to the Lead Manager a letter
(the "bring-down letter") of such accountants, addressed to the
International Managers and dated such Delivery Date (i) confirming that
they are independent public accountants within the meaning of the
Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date of the
bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letter), the conclusions and
findings of such firm with respect to the financial information and
other matters covered by the initial letter and (iii) confirming in all
material respects the conclusions and findings set forth in the initial
letter.

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<PAGE>
(j) The Company shall have furnished to the Lead Manager a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating
that the representations, warranties and agreements of the Company in
Section 1 hereof are true and correct as of such Delivery Date; the
Company has complied with all its agreements contained herein; and the
conditions set forth in Sections 9(a) and 9(l) hereof have been
fulfilled.

(k) Each Participating Selling Stockholder (or the Custodian or
one or more Attorneys-in-Fact on behalf of the Participating Selling
Stockholders) shall have furnished to the Lead Manager a certificate,
signed by, or on behalf of, the Participating Selling Stockholder (or
the Custodian or one or more Attorneys-in-Fact) stating that the
representations and warranties of such Participating Selling Stockholder
contained herein are true and correct as of such Delivery Date and that
such Participating Selling Stockholder has complied with all agreements
contained herein to be performed by the Participating Selling
Stockholder at or prior to such Delivery Date.

(l) There shall not have been, since the date hereof or since the
respective dates as of which information is given in the Prospectus, any
Material Adverse Change.

(m) The closing under the U.S. Underwriting Agreement shall have
occurred concurrently with the closing hereunder on the First Delivery
Date.

(n) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by
such exchange or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been declared
by Federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv)
there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of a majority in interest
of the several International Managers, impracticable or inadvisable to
proceed with the public offering or delivery of the Stock being
delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.

All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the International Managers.

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<PAGE>
10. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company and the Bank, jointly and severally, shall
indemnify and hold harmless each Participating Selling Stockholder, each
International Manager, their respective officers and employees and each person,
if any, who controls any Participating Selling Stockholder or International
Manager within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which such International Manager,
Participating Selling Stockholder, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (B) in any Blue Sky Application, or (ii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be stated
therein or necessary to make the statements therein not misleading, and shall
reimburse each Participating Selling Stockholder and International Manager and
each such officer, employee or controlling person promptly upon demand for any
legal or other expenses reasonably incurred by that Participating Selling
Stockholder or International Manager, officer, employee or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred;
PROVIDED, HOWEVER, that the Company and the Bank shall not be liable under this
Section 10(a) in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any such
amendment or supplement, or in any Blue Sky Application, in reliance upon and in
conformity with the Participating Selling Stockholder Information or written
information concerning such International Manager furnished to the Company
through the Lead Manager by or on behalf of any such International Manager
specifically for inclusion therein. The foregoing indemnity agreement is in
addition to any liability which the Company or the Bank may otherwise have to
any Participating Selling Stockholder or International Manager or to any
officer, employee or controlling person of such International Manager.

(b) The Participating Selling Stockholders, severally and not
jointly, shall indemnify and hold harmless each International Manager, its
officers and employees, and each person, if any, who controls any International
Manager within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Stock), to which such International Manager,
officer, employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or

20
<PAGE>
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission is a misstatement in or omission from the Participating
Selling Stockholder Information, and shall reimburse each International Manager,
its officers and employees and each such controlling person for any legal or
other expenses reasonably incurred by that International Manager, its officers
and employees or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; PROVIDED, HOWEVER, that each
Participating Selling Stockholder's aggregate liability under this Section 10
shall be limited to an amount equal to the net proceeds (after deducting the
underwriting discount, but before deducting expenses) received by such
Participating Selling Stockholder from the sale of Stock pursuant to this
Agreement. The foregoing indemnity agreement is in addition to any liability
which the Participating Selling Stockholders may otherwise have to any
International Manager or any officer, employee or controlling person of that
International Manager.

(c) Each International Manager, severally and not jointly, shall
indemnify and hold harmless each Participating Selling Stockholder, the Company,
their respective officers and employees, each of their respective directors and
each person, if any, who controls such Participating Selling Stockholder or the
Company within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which such Participating Selling Stockholder, the Company or any such
director, officer or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information concerning
such International Manager furnished to the Company through the Lead Manager by
or on behalf of such International Manager specifically for inclusion therein,
and shall reimburse such Participating Selling Stockholder, the Company and any
such director, officer or controlling person for any legal or other expenses
reasonably incurred by such Participating Selling Stockholder, the Company or
any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any International
Manager may otherwise have to the Participating Selling Stockholders, the
Company or any such director, officer, employee or controlling person.

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<PAGE>
have under this Section 10 except to the extent it has been materially
prejudiced by such failure. If any such claim or action shall be brought against
an indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 10 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; PROVIDED, HOWEVER, that (i) the Lead Manager shall have
the right to employ counsel to represent jointly the Lead Manager and those
other International Managers and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the International Managers against
the Company, the Bank or any Participating Selling Stockholder under this
Section 10 if, in the reasonable judgment of the Lead Manager, it is advisable
for the Lead Manager and those International Managers, officers, employees and
controlling persons to be jointly represented by separate counsel, and in that
event the fees and expenses of such separate counsel shall be paid by the
Company or the Bank, and (ii) notwithstanding the indemnifying party's election
to appoint counsel to represent the Participating Selling Stockholders in an
action, each Participating Selling Stockholder shall have the right to employ
separate counsel, and the indemnifying party shall bear the duly documented
reasonable fees, costs and expenses of such separate counsel, if (A) in the
reasonable judgment of such Participating Selling Stockholder, the use of
counsel chosen by the indemnifying party to represent such Participating Selling
Stockholder would present such counsel with a conflict of interest, (B) the
actual or potential defendants in, or targets of, any such action include both
such Participating Selling Stockholder and the indemnifying party and such
Participating Selling Stockholder shall have reasonably concluded that there may
be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, (C)
the indemnifying party shall not have employed counsel satisfactory to such
Participating Selling Stockholder to represent such Participating Selling
Stockholder within a reasonable time after notice of the institution of such
action or (D) the indemnifying party shall authorize such Participating Selling
Stockholder to employ separate counsel at the expense of the indemnifying party.
No indemnifying party shall (I) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (II) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.

(e) If the indemnification provided for in this Section 10 shall
for any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or

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<PAGE>
10(c) hereof in respect of any loss, claim, damage or liability, or any action
in respect thereof, referred to therein, then each indemnifying party shall, in
lieu of indemnifying such indemnified party under Section 10(a), 10(b) or 10(c),
as the case may be, in respect of any loss, claim, damage or liability, or any
action in respect thereof, referred to therein, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability, or action in respect thereof, referred to in Section 10(a), 10(b) or
10(c), as the case may be, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, the Bank and the
Participating Selling Stockholders on the one hand and the International
Managers on the other from the offering of the Stock or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company, the Bank and
the Participating Selling Stockholders on the one hand and the International
Managers on the other with respect to the statements or omissions which resulted
in such loss, claim, damage or liability, or action in respect thereof, as well
as any other relevant equitable considerations. As between the Company and the
Bank on the one hand and the Participating Selling Stockholders on the other,
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, in such
proportion as shall be appropriate to reflect the relative fault of the Company
and the Bank on the one hand and the Participating Selling Stockholders on the
other. The relative benefits received by the Company, the Bank and the
Participating Selling Stockholders on the one hand and the International
Managers on the other with respect to such offering shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Stock
purchased under this Agreement (before deducting expenses) received by the
Company, the Bank and the Participating Selling Stockholders, on the one hand,
and the total underwriting discounts and commissions received by the
International Managers with respect to the shares of the Stock purchased under
this Agreement, on the other hand, bear to the total gross proceeds from the
offering of the shares of the Stock under this Agreement, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to whether the untrue or alleged untrue statement of
a material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Bank, the Participating Selling
Stockholders or the International Managers, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. For purposes of the preceding two sentences, the net
proceeds deemed to be received by the Company shall be deemed to be also for the
benefit of the Bank and information supplied by the Company shall also be deemed
to have been supplied by the Bank. The Company, the Bank, the Participating
Selling Stockholders and the International Managers agree that it would not be
just and equitable if contributions pursuant to this Section 10(e) were to be
determined by PRO RATA allocation (even if the International Managers were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to in
this Section 10(e). The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10(e) shall be deemed to include, for purposes
of this Section 10(e), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 10(e), (A) no
International Manager shall be

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<PAGE>
required to contribute any amount in excess of the amount by which the total
price at which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such International
Manager has otherwise paid or become liable to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission, and (B) each
Participating Selling Stockholder's aggregate liability under this Section 10
shall be limited to an amount equal to the net proceeds (after deducting the
underwriting discount, but before deducting expenses) received by such
Participating Selling Stockholder from the sale of Stock pursuant to this
Agreement. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
International Managers' obligations to contribute as provided in this Section
10(e) are several in proportion to their respective underwriting obligations and
not joint.

(f) The International Managers severally confirm and the Company
acknowledges that the statements with respect to the secondary offering of the
Stock by the International Managers set forth on the cover page of, the legend
concerning over-allotments on the inside front cover page of, and the concession
and reallowance figures appearing under the caption "Underwriting" in, the
Prospectus Supplement are correct and constitute the only information concerning
such International Managers furnished in writing to the Company by or on behalf
of the International Managers specifically for inclusion in the Registration
Statement and the Prospectus.

11. DEFAULTING MANAGERS. If, on either Delivery Date, any
International Manager defaults in the performance of its obligations under this
Agreement, the remaining non-defaulting International Managers shall be
obligated to purchase the Stock which the defaulting International Manager
agreed but failed to purchase on such Delivery Date in the respective
proportions which the number of shares of Firm Stock set opposite the name of
each remaining non-defaulting International Manager in Schedule 1 hereto bears
to the total number of shares of Firm Stock set opposite the names of all the
remaining non-defaulting International Managers in Schedule 1 hereto; PROVIDED,
HOWEVER, that the remaining non-defaulting International Managers shall not be
obligated to purchase any of the Stock on such Delivery Date if the total number
of shares of the Stock which the defaulting International Manager or Managers
agreed but failed to purchase on such date exceeds 9.09% of the total number of
shares of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting International Manager shall not be obligated to purchase more
than 110% of the number of shares of the Stock which it agreed to purchase on
such Delivery Date pursuant to the terms of Section 3 hereof. If the foregoing
maximums are exceeded, the remaining non-defaulting International Managers, or
those other managers satisfactory to the Lead Manager who so agree, shall have
the right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Stock to be purchased on such Delivery Date. If
the remaining International Managers or other managers satisfactory to the Lead
Manager do not elect to purchase the Stock which the defaulting International
Manager or Managers agreed but failed to purchase on such Delivery Date, this
Agreement (or, with respect to the Second Delivery Date, the obligation of the
International Managers to purchase, and of the Participating Selling
Stockholders to sell, the Option Stock) shall terminate without liability on the
part of any non-defaulting International Manager or the Company or the
Participating Selling Stockholders, except that the Company will continue to be
liable for the payment of expenses to the

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<PAGE>
extent set forth in Section 8 hereof. As used in this Agreement, the term
"International Manager" includes, for all purposes of this Agreement unless the
context requires otherwise, any party not listed in Schedule 1 hereto who,
pursuant to this Section 11, purchases Firm Stock which a defaulting
International Manager agreed but failed to purchase.

Nothing contained herein shall relieve a defaulting International
Manager of any liability it may have to the Company and the Participating
Selling Stockholders for damages caused by its default. If other managers are
obligated or agree to purchase the Stock of a defaulting or withdrawing
International Manager, the Lead Manager, the Company and the Participating
Selling Stockholders may postpone the Delivery Date for up to seven full
business days in order to effect any changes that in the opinion of counsel for
the Company or counsel for the International Managers may be necessary in the
Registration Statement, the Prospectus or in any other document or arrangement.

12. TERMINATION. The obligations of the International Managers
hereunder may be terminated by the Lead Manager by notice given to and received
by the Company and the Participating Selling Stockholders prior to delivery of
and payment for the Firm Stock if, prior to that time, any of the events
described in Sections 9(l) or 9(n) hereof shall have occurred or if the
International Managers shall decline to purchase the Stock for any reason
permitted under this Agreement.

13. NOTICES, ETC. All statements, requests, notices and
agreements hereunder shall be in writing, and:

(a) if to the International Managers, shall be delivered or sent
by mail, telex or facsimile transmission to Lehman Brothers
International (Europe), Three World Financial Center, New York, New York
10285, Attention: Syndicate Department (Fax: 212-526-6588), with a copy,
in the case of any notice pursuant to Section 10(d) hereof, to the
Director of Litigation, Office of the General Counsel, Lehman Brothers
Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;

(c) if to any Participating Selling Stockholders, shall be
delivered or sent by mail, telex or facsimile transmission to such
Participating Selling Stockholder at the address set forth on Schedule 2
hereto;

PROVIDED, HOWEVER, that any notice to a International Manager pursuant to
Section 10(d) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such International Manager at its address set forth in its
acceptance telex to the Lead Manager, which address will be supplied to any
other party hereto by the Lead Manager upon request. Any such statements,
requests, notices or agreements shall take effect at the time of receipt
thereof. The Company and the Participating Selling Stockholders shall be
entitled to act and rely upon any request, consent, notice or agreement given or
made on behalf of the International Managers by the Lead Manager and the Company
and

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<PAGE>
the International Managers shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Participating
Selling Stockholders by the Custodian.

14. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the International Managers,
the Company, the Bank, the Participating Selling Stockholders and their
respective personal representatives and successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons, except
that (a) the representations, warranties, indemnities and agreements of the
Company and the indemnities of the Participating Selling Stockholders contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any International Manager within the meaning of
Section 15 of the Securities Act and each U.S. Underwriter (and controlling
persons thereof) who offers or sells any shares of Common Stock in accordance
with the terms of the Agreement Between U.S. Underwriters and International
Managers and (b) the indemnity agreement of the International Managers contained
in Section 10(c) hereof shall be deemed to be for the benefit of directors of
the Company and each Participating Selling Stockholder, officers of the Company
who have signed the Registration Statement and any person controlling the
Company and each Participating Selling Stockholder within the meaning of Section
15 of the Securities Act. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
14, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.

15. SURVIVAL. The respective representations, warranties and
agreements of the Company, the Bank, the Participating Selling Stockholders and
the International Managers contained in this Agreement or made by or on behalf
on them, respectively, pursuant to this Agreement, shall survive the delivery of
and payment for the Stock and shall remain in full force and effect, regardless
of any investigation made by or on behalf of any of them or any person
controlling any of them.

17. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.

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<PAGE>
of process for any lawsuit, action or other proceeding brought in any such
court. The parties hereby irrevocably and unconditionally waive any objection to
the laying of venue of any lawsuit, action or other proceeding in the Specified
Courts, and hereby further irrevocably and unconditionally waive and agree not
to plead or claim in any such court that any such lawsuit, action or other
proceeding brought in any such court has been brought in an inconvenient forum.

19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

20. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.

27
<PAGE>
If the foregoing correctly sets forth the agreement among the
Company, the Bank, the Participating Selling Stockholders and the International
Managers, please indicate your acceptance in the space provided for that purpose
below.

[FOR ELECTRONIC FILINGS MADE UNDER EDGAR, UNDERWRITERS' COUNSEL
IS REQUESTED TO MAINTAIN ONE SET OF MANUALLY SIGNED SIGNATURE PAGES.]

Very truly yours,

BANK UNITED CORP.

By:
Name:
Title:

BANK UNITED

By:
Name:
Title:

The Participating Selling Stockholders
named in Schedule 2 to this Agreement
other than Equitable

By:
Name:
Attorney-in-Fact
<PAGE>
EQUITABLE DEAL FLOW FUND, L.P.

BY: EQUITABLE MANAGED ASSETS, L.P.,
as General Partner

By: THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES,
as General Partner

By:
Name:
Title: INVESTMENT OFFICER

EQUITABLE CAPITAL PARTNERS, L.P.

BY: ALLIANCE CORPORATE FINANCE
GROUP INCORPORATED,
as Managing General Partner

By:
Name:
Title: SENIOR VICE PRESIDENT
EQUITABLE CAPITAL PARTNERS (RETIREMENT
FUND), L.P.

BY: ALLIANCE CORPORATE FINANCE
GROUP INCORPORATED,
as Managing General Partner

By:
Name:
Title: SENIOR VICE PRESIDENT
Accepted:

LEHMAN BROTHERS INC.,
as Representative

By:
Name:
Title:

<PAGE>
SCHEDULE 1

INTERNATIONAL MANAGERS NUMBER OF SHARES
- ---------------------- ----------------
Lehman Brothers International (Europe)...... 259,200
Merrill Lynch International................. 259,200
Smith Barney Inc............................ 259,200
Total.............................. 777,600
=======

S1-1
<PAGE>
SCHEDULE 2
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES OF NUMBER OF SHARES OF
PARTICIPATING SELLING STOCKHOLDERS FIRM STOCK OPTION STOCK
<S> <C> <C>
Equitable Deal Flow Fund L.P. 118,471 11,847
Equitable Capital Partners L.P. 141,735 14,174
Equitable Capital Partners (Retirement
Fund) L.P. 69,795 6,979
The Sweater Trust (Leslie Wexner) 94,711 9,471
Leslie Wexner 21,862 2,186
Institutional Interests (Leslie Wexner) 48,545 4,854
Marilyn B. Arison 63,140 6,315
The Airlie Group 63,141 6,314
Connie S. Maniatty 789 79
CHESED Congregations of America 18,545 1,855
United Congregation Mesorah 66,364 6,636
Ranieri Bros., Shay & Co. 3,560 357
SunAmerica Inc. 66,942 6,694
Total........................ 777,600 77,760
======= ======
</TABLE>
S1-2
<PAGE>
EXHIBIT A-1

FORM OF OPINION OF
WACHTELL, LIPTON, ROSEN & KATZ
TO BE DELIVERED PURSUANT TO SECTION 9(C)

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware.

(ii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business
as described in the Prospectus, and to enter into and perform its
obligations under the International Underwriting Agreement and
the U.S. Underwriting Agreement. The activities of each of the
Company's subsidiaries are permitted to subsidiaries of a savings
and loan holding company.

(iv) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus in the column
entitled "Pro Forma" under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to reservations,
agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities
or options referred to in the Prospectus); the shares of issued
and outstanding capital stock of the Company, including the
shares of Common Stock to be purchased by the International
Managers and the U.S. Underwriters from the Participating Selling
Stockholders, have been duly authorized and validly issued and
are fully paid and non-assessable; and none of the outstanding
shares of capital stock of the Company, including the shares of
Common Stock to be purchased by the International Managers and
the U.S. Underwriters from the Participating Selling
Stockholders, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.

(v) The sale of the Common Stock to the International
Managers and the U.S. Underwriters by the Participating Selling
Stockholders is not subject to the preemptive or other similar
rights of any securityholder of the Company. The Common Stock
conforms to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth
in the instruments defining the same.

<PAGE>
(vi) The form of certificate used to evidence the Common
Stock to be sold in the Offerings contemplated by the
International Underwriting Agreement and the U.S. Underwriting
Agreement complies in all material respects with all applicable
statutory requirements, with any applicable requirements of the
Certificate and By-Laws of the Company, and with the requirements
of the NASDAQ National Stock Market.

(vii) The Registration Statement has been declared
effective under the Securities Act; each Prospectus as
supplemented by a Prospectus Supplement has been filed pursuant
to Rule 424(b) in the manner and within the time period required
by Rule 424(b); and, to the best of our knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued under the Securities Act and no proceedings for that
purpose have been instituted or are pending or threatened by the
Commission.

(viii) The Registration Statement, the Rule 430A
Information, the Prospectus, and each amendment or supplement to
the Registration Statement and Prospectus, as of their respective
effective or issue dates (other than the financial statements and
supporting schedules included therein or omitted therefrom, as to
which we express no opinion) complied as to form in all material
respects with the requirements of the Securities Act and the 1933
Act Regulations.

(ix) The information in the Prospectus under the captions
"Risk Factors -- Limitations on Use of Tax Losses; Restrictions
on Transfers of Stock," "Risk Factors -- Holding Company
Structure; Ability to Pay Dividends," "Description of Capital
Stock," "Business -- The Assistance Agreement -- Warrant
Agreement," "Legal Proceedings," and in the Registration
Statement under "Part II. Information Not Required in Prospectus
-- Item 14. Indemnification of Directors and Officers," to the
extent that such information constitutes matters of law,
summaries of legal matters, the Certificate or By-laws or legal
proceedings, or legal conclusions, has been reviewed by us and is
correct in all material respects.

(x) To the best of our knowledge, there are no statutes
or regulations that are required to be described in the
Prospectus that are not described as required.

(xi) All statements in the Registration Statement about
contracts and other documents to which the Company or its
subsidiaries are a party, insofar as such statements purport to
summarize provisions of such contracts and documents, provide a
fair summary of such provisions, and we do not know of contracts
or other documents of a character required to be described in the
Registration Statement or to be filed as exhibits to the
Registration Statement that are not filed or described as
required.

(xiii) No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree
of, any court or governmental authority or agency, domestic or
foreign including, without limitation, the OTS and FDIC (other
than under the Securities Act and the 1933 Act Regulations, which
have been obtained, or as may be required under the securities or
blue sky laws of the various states, as to which we express no
opinion) is necessary or required for the performance by the
Company of its obligations under the International Underwriting
Agreement and the U.S. Underwriting Agreement in connection with
the offering or sale of the Stock by the Participating Selling
Stockholders under the International Underwriting Agreement and
the U.S. Underwriting Agreement, for the consummation by the
Company and the Bank of the transactions contemplated by the
International Underwriting Agreement and the U.S. Underwriting
Agreement or the other transactions described in the Registration
Statement under the caption "The Company -- Background of the
Offering."

(xiv) The execution, delivery and performance of the
International Underwriting Agreement and the U.S. Underwriting
Agreement by the Company and the Bank, the consummation of the
transactions contemplated thereby, and compliance by each of the
Company and the Bank with their respective obligations under the
International Underwriting Agreement and the U.S. Underwriting
Agreement have been duly authorized by all necessary corporate
action and do not and will not result in any violation of the
provisions of the charter or by-laws of the Company, the Bank or
any of their respective subsidiaries, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known
to us, of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company. Each
of the International Underwriting Agreement and the U.S.
Underwriting Agreement has been duly authorized, executed and
delivered by the Company and the Bank.

(xv) To the best of our knowledge, there are no persons
with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Company or the Bank under the
Securities Act, except as described in Registration Statement or
as set forth in any agreement described therein as containing
such rights.

A-3
<PAGE>
(xvi) The Company is not, and upon the sale of the Stock
as contemplated in the International Underwriting Agreement and
the U.S. Underwriting Agreement and the application of the net
proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the 1940 Act.

Nothing has come to our attention that would lead us to believe
that the Registration Statement or any amendment thereto, including the Rule
430A Information (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which we make no
statement), at the time such Registration Statement or any such amendment became
effective, contained an 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 not misleading or that the Prospectus or any amendment or
supplement thereto (except for financial statements and schedules and other
financial data included therein or omitted therefrom, as to which we make no
statement), at the time the Prospectus was issued, at the time any such amended
or supplemented Prospectus was issued or at either Delivery Date, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

* * * * *

In rendering such opinion, such counsel may rely as to matters of
fact (but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991). All terms used but not defined in this
exhibit should have the meanings ascribed to them in the International
Underwriting Agreement and should be defined accordingly in the form of opinion
to be delivered.

A-4
<PAGE>
EXHIBIT B-1

FORM OF OPINION OF
JONATHON K. HEFFRON,
GENERAL COUNSEL OF THE COMPANY,
TO BE DELIVERED PURSUANT TO SECTION 9(D)

(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware.

(ii) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business
as described in the Prospectus, and to enter into and perform its
obligations under the International Underwriting Agreement and
the U.S. Underwriting Agreement. The activities of each of the
Company's subsidiaries are permitted to subsidiaries of a savings
and loan holding company.

(iii) The Bank is the only "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation
S-X). The only subsidiaries of the Company other than the Bank
are the wholly-owned subsidiaries of the Bank listed on Exhibit
__ to the Registration Statement, which, considered in the
aggregate as a single subsidiary, do not constitute a
"significant subsidiary" as defined in Rule 1-02 of Regulation
S-X. The activities of all of the Bank's subsidiaries are
permitted to subsidiaries of a federally chartered savings bank,
the deposits of which are insured by the SAIF, which is
administered by the FDIC.

(iv) The Bank is a federally chartered stock savings
bank, duly incorporated and validly existing under the laws of
the United States, and the Bank's charter is in full force and
effect. The Bank is a member of the Federal Home Loan Bank of
Dallas and has been duly issued a certificate stating that its
savings accounts are insured by the FDIC in accordance with
applicable law, and no proceedings for the termination or
revocation of such membership or insurance are pending or, to the
best of my knowledge, threatened.

(v) The Bank has corporate power and authority to own,
lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the International Underwriting Agreement and
the U.S. Underwriting Agreement.

(vi) Each subsidiary of the Bank has been duly organized
and is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation and has the
power and authority to own, lease and operate its properties and
to conduct its business as described in the Prospectus. The
activities described in the Prospectus of each of the Bank's
subsidiaries are
<PAGE>
permitted activities of subsidiaries of a federally chartered
savings bank, the deposits of which are insured by the SAIF,
which is administered by the FDIC.

(vii) The Company, the Bank and each subsidiary of the
Company or the Bank is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing
would not result in a Material Adverse Effect.

(viii) All of the issued and outstanding capital stock of
the Bank and each subsidiary of the Bank has been duly authorized
and validly issued, is fully paid and non-assessable and, except
as otherwise disclosed in the Registration Statement, is owned by
the Company, directly or through subsidiaries, to the best of my
knowledge, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any subsidiary was issued
in violation of the preemptive or similar rights of any
securityholder of such subsidiary.

(ix) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus in the column
entitled "Pro Forma" under the caption "Capitalization" (except
for subsequent issuances, if any, pursuant to reservations,
agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities
or options referred to in the Prospectus); the shares of issued
and outstanding capital stock of the Company, including the
shares of Common Stock to be purchased by the International
Managers and the U.S. Underwriters from the Participating Selling
Stockholders, have been duly authorized and validly issued and
are fully paid and non-assessable; and none of the outstanding
shares of capital stock of the Company, including the shares of
Common Stock to be purchased by the International Managers and
the U.S. Underwriters from the Participating Selling
Stockholders, was issued in violation of the preemptive or other
similar rights of any securityholder of the Company.

(x) The sale of the Common Stock to the International
Managers and the U.S. Underwriters by the Participating Selling
Stockholders is not subject to the preemptive or other similar
rights of any securityholder of the Company. The Common Stock
conforms to all statements relating thereto contained in the
Prospectus and such description conforms to the rights set forth
in the instruments defining the same.

(xi) There is not pending or, to my knowledge, threatened
any action, suit, proceeding, inquiry or investigation, to which
the Company or the Bank or any of their respective subsidiaries
is a party, or to which the property of the Company or the Bank
or any of their respective subsidiaries is subject, before or

B-2
<PAGE>
brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof
or the consummation of the transactions contemplated in the
International Underwriting Agreement or the U.S. Underwriting
Agreement or the performance by the Company and the Bank of their
respective obligations thereunder. The aggregate of all pending
legal or governmental proceedings to which the Company, the Bank,
or any of their respective subsidiaries is known by me to be a
party or of which any of their respective property or assets is
the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a
Material Adverse Effect. No cease and desist order has been
entered by the OTS or the FDIC against the Company, the Bank or
any of their respective subsidiaries. No labor dispute with the
employees of the Company or any subsidiary exists or, to the
knowledge of the Company, is imminent, and the Company is not
aware of any existing or imminent labor disturbance by the
employees of any of its or any subsidiary's principal suppliers,
manufacturers, customers or contractors, which, in either case,
may reasonably be expected to result in a Material Adverse
Effect.

(xii) The information in the Prospectus under the
captions "Risk Factors -- Limitations on Use of Tax Losses;
Restrictions on Transfers of Stock," "Risk Factors -- Holding
Company Structure; Ability to Pay Dividends," "Description of
Capital Stock," "Business -- The Assistance Agreement," "Legal
Proceedings," and in the Registration Statement under "Part II.
Information Not Required in Prospectus -- Item 14.
Indemnification of Directors and Officers," to the extent that
such information constitutes matters of law, summaries of legal
matters, the Company's Certificate or Bylaws or legal
proceedings, or legal conclusions, has been reviewed by me and is
correct in all material respects.

(xiii) To the best of my knowledge, there are no statutes
or regulations that are required to be described in the
Prospectus that are not described as required.

(xiv) All descriptions in the Registration Statement of
contracts and other documents to which the Company or its
subsidiaries are a party are accurate in all material respects;
to the best of my knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the
Registration Statement or to be filed as exhibits thereto other
than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the
descriptions thereof or references thereto are correct in all
material respects.

(xv) Neither the Company, the Bank nor any of their
respective subsidiaries is in violation of its charter or by-laws
and no default by the

B-3
<PAGE>
Company, the Bank or any of their respective subsidiaries exists
in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the
Registration Statement or the Prospectus or filed as an exhibit
to the Registration Statement.

(xvi) The execution, delivery and performance of the
International Underwriting Agreement and the U.S. Underwriting
Agreement by the Company and the Bank, and the consummation of
the transactions contemplated thereby and compliance by each of
the Company and the Bank with its respective obligations under
the International Underwriting Agreement and the U.S.
Underwriting Agreement has been duly authorized by all necessary
corporate action and do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined
in Section 1(j) of the International Underwriting Agreement)
under or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any
subsidiary pursuant to any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to me, to which the Company or any
subsidiary is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company, the
Bank or any of their respective subsidiaries is subject (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect),
nor will such action result in any violation of the provisions of
the charter or by-laws of the Company, the Bank or any of their
respective subsidiaries, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to me, of any
government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company, the Bank, or any
of their respective subsidiaries or any of their respective
properties, assets or operations.

(xvii) There are no persons with registration rights or
other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the
Company or the Bank under the Securities Act, except as described
in Registration Statement or as set forth in any agreement
described therein as containing such rights.

(xviii) The Company, the Bank and each of its
subsidiaries possess such Governmental Licenses issued by the
appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business now operated by them;
the Company, the Bank and each of its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the

B-4
<PAGE>

failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and neither the
Company, the Bank nor any of their respective subsidiaries has
received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or
in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.

(xix) The Company, the Bank and each of their respective
subsidiaries have good and marketable title to all real, tangible
and intangible property reflected in the most recent balance
sheet included in the Prospectus as owned by the Company, the
Bank and its subsidiaries and good title to all other properties
reflected in the most recent balance sheet included in the
Prospectus as owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (A) are
described in the Prospectus or (B) do not, singly or in the
aggregate, materially affect the value of such property and do
not interfere with the use made and proposed to be made of such
property by the Company, the Bank or any of their respective
subsidiaries; or, with respect to any such real property, render
title unmarketable as to a material part thereof and all of the
leases and subleases material to the business of the Company, the
Bank and of their respective subsidiaries, considered as one
enterprise, and under which the Company, the Bank or any of their
respective subsidiaries holds properties described in the
Prospectus, are in full force and effect, and neither the
Company, the Bank nor any of their respective subsidiaries has
any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company, the Bank
or any of their respective subsidiaries under any of the leases
or subleases mentioned above, or affecting or questioning the
rights of the Company, the Bank or such subsidiary to the
continued possession of the leased or subleased premises under
any such lease or sublease.

(xx) Except as described in the Registration Statement or
except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) the Company, the Bank and each of
their respective subsidiaries is not in violation of any
Environmental Laws, (B) the Company, the Bank and each of their
respective subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and
are each in compliance with their requirements, (C) there are no
pending or, to the knowledge of the Company, threatened
administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any
Environmental Law against the Company, the Bank or any of their
respective subsidiaries and (D) to the knowledge of the Company
there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private
party or governmental body or agency, against or affecting the

B-5
<PAGE>
Company, the Bank or any of their respective subsidiaries
relating to Hazardous Materials or any Environmental Laws.

(xxi) In the event the Company shall become either
directly or indirectly a bank holding company for purposes of the
BHC Act and the BHC Rules, the current activities of the Company
and its subsidiaries (as defined in the BHC Rules) would be
activities permissible for a bank holding company under the BHC
Act and the BHC Rules.

(xxii) No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree
of, any court or governmental authority or agency, domestic or
foreign including, without limitation, the OTS and FDIC is
necessary or required by federal banking laws and regulations for
the performance by the Company of its obligations under the
International Underwriting Agreement and the U.S. Underwriting
Agreement in connection with the offering or sale of the Stock by
the Participating Selling Stockholders under the International
Underwriting Agreement and the U.S. Underwriting Agreement or the
consummation by the Company and the Bank of the transactions
contemplated by the International Underwriting Agreement and the
U.S.
Underwriting Agreement.

Nothing has come to my attention that would lead me to believe
that the Registration Statement or any amendment thereto, including the
information included in any Prospectus that was omitted from such Registration
Statement at the time it became effective but that is deemed to be part of such
Registration Statement at the time it became effective pursuant to paragraph (b)
of Rule 430A (except for financial statements and schedules and other financial
data included therein or omitted therefrom, as to which I make no statement), at
the time such Registration Statement or any such amendment became effective,
contained an 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
not misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial data included
therein or omitted therefrom, as to which I make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued or at either Delivery Date, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

* * * * *

B-6
<PAGE>
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991). All terms used but not defined in this
exhibit should have the meanings ascribed to them in the International
Underwriting Agreement and should be defined accordingly in the form of opinion
to be delivered.

B-7
<PAGE>
EXHIBIT C

FORM OF OPINION OF COUNSEL
TO PARTICIPATING SELLING STOCKHOLDERS
OTHER THAN EQUITABLE
TO BE DELIVERED PURSUANT TO SECTION 9(E)

[LETTERHEAD OF COUNSEL]

February 5, 1997

Ladies and Gentlemen:

We have acted as special counsel to [INSERT NAME OF PARTICIPATION
SELLING STOCKHOLDERS(S) REPRESENTED] (the "Represented Stockholder(s)") in
connection with the offering by the Represented Stockholder(s) of up to ______
shares (including shares to be sold upon exercise of over-allotment options) of
Class A common stock, par value $0.01 per share (the "Common Stock"), of Bank
United Corp., a Delaware corporation (the "Company"), offered by the
Participating Selling Stockholders pursuant to a registration statement of the
Company on Form S-1 (No. 333-19237). This opinion letter is furnished pursuant
to Section 9(e) of (i) the underwriting agreement (the "U.S. Underwriting
Agreement"), dated February 5, 1997, among the Company, Bank United, a federally
chartered savings institution (the "Bank"), the persons listed on Schedule 2
thereto (the "Participating Selling Stockholders") and the several underwriters
named in Schedule 1 thereto (the "U.S. Underwriters") and (ii) the underwriting
agreement (the "International Underwriting Agreement" and, together with the
U.S. Underwriting Agreement, the "Underwriting Agreements") dated February 5,
1997, among the Company, the Bank, the Participating Selling Stockholders and
the managers named in Schedule 1 thereto (the "International Managers" and,
together with the U.S. Underwriters, the "Underwriters") in connection with the
closing of the sale by the Represented Stockholder(s) of such shares (the
"Stock"). Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the U.S. Underwriting Agreement.
<PAGE>
In arriving at the opinions expressed below, we have reviewed the
following:

(a) the forms of U.S. Underwriting Agreement and International
Underwriting Agreement;

(b) an executed copy of a power of attorney of each
Represented Stockholder dated January 31, 1997 (the "Power of Attorney"); and

(c) an executed copy of a custody agreement between each
Represented Stockholder, the Company and The Bank of New York, as custodian,
dated as of February 3, 1997 (the "Custody Agreement").

In addition, we have made such investigations of law as we have deemed
appropriate as a basis for the opinions expressed below.

Based on the foregoing, and subject to the further assumptions
and qualifications set forth below, it is our opinion that:

Insofar as the foregoing opinions relate to the legality,
validity, binding effect or enforceability of any agreement or obligation of a
Represented Stockholder, we have assumed that each other party to such agreement
or obligation has duly authorized and executed such agreement or obligation and
has satisfied those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable against it. In
addition, the foregoing opinions are subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.

The foregoing opinions are limited to the federal law of the
United States of America and the law of the State of New York.

C-3
<PAGE>
We are furnishing this opinion letter to you, as Representative
of the U.S. Underwriters and as Lead Manager for the International Managers,
solely for the benefit of the U.S. Underwriters and the International Managers
in connection with the offering of the Stock. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.

Very truly yours,

[NAME OF COUNSEL]

C-4
<PAGE>
EXHIBIT D

FORM OF OPINION OF COUNSEL
TO EQUITABLE,
AS PARTICIPATING SELLING STOCKHOLDERS,
TO BE DELIVERED PURSUANT TO SECTION 9(F)

[LETTERHEAD OF IN-HOUSE COUNSEL TO EQUITABLE]

February 5, 1997

Ladies and Gentlemen:

We have acted as special counsel to Equitable Deal Flow Fund
L.P., Equitable Capital Partners L.P., Equitable Capital Partners (Retirement
Fund) L.P. (each, a "Represented Stockholder" and collectively, the "Represented
Stockholders"), as Participating Selling Stockholders (as defined below) in
connection with the offering by the Represented Stockholders of up to ______
shares (including shares to be sold upon exercise of over-allotment options) of
Class A common stock, par value $0.01 per share (the "Common Stock"), of Bank
United Corp., a Delaware corporation (the "Company"), offered by the Represented
Stockholders and certain other stockholders of the Company pursuant to a
registration statement of the Company on Form S-1 (No. 333-19237). This opinion
letter is furnished pursuant to Section 9(f) of (i) the underwriting agreement
(the "U.S. Underwriting Agreement") dated February 5, 1997, among the Company,
Bank United, a federally chartered savings institution (the "Bank"), the persons
listed on Schedule 2 thereto (the "Participating Selling Stockholders") and the
several underwriters named in Schedule 1 thereto (the "U.S. Underwriters") and
(ii) the underwriting agreement (the "International Underwriting Agreement" and,
together with the U.S. Underwriting Agreement, the "Underwriting Agreements")
dated February 5, 1997, among the Company, the Bank, the Participating Selling
Stockholders and the managers named in Schedule 1 thereto (the "International
Managers" and, together with the U.S. Underwriters, the "Underwriters") in
connection with the closing of the sale
<PAGE>
by the Represented Stockholders of such shares (the "Stock"). Capitalized terms
used but not defined herein shall have the meanings ascribed to them in the U.S.
Underwriting Agreement.

In arriving at the opinions expressed below, we have reviewed the
following:

(a) executed copies of the U.S. Underwriting Agreement and the
International Underwriting Agreement; and

(b) an executed copy of a custody agreement between each
Represented Stockholder, the Company and The Bank of New York, as custodian,
dated as of February 3, 1997 (the "Custody Agreement").

In addition, we have made such investigations of law as we have deemed
appropriate as a basis for the opinions expressed below.

In rendering the opinions expressed below, we have assumed the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies. In addition, we have
assumed and have not verified the accuracy as to factual matters of each
document we have reviewed (including, without limitation, the accuracy of the
representations and warranties of the Company and each Represented Stockholder
in the U.S. Underwriting Agreement and the International Underwriting
Agreement).

Based on the foregoing, and subject to the further assumptions
and qualifications set forth below, it is our opinion that:

(ii) The Custody Agreement has been duly authorized, executed
and delivered by each Represented Stockholder, and each constitutes the valid
and binding obligation of each Represented Stockholder.

D-2
<PAGE>
the type provided for in the U.S. Underwriting Agreement and the International
Underwriting Agreement.

(iv) Each of the U.S. Underwriting Agreement and the
International Underwriting Agreement have been duly authorized, executed and
delivered by each Represented Stockholder.

(v) No consent, approval, authorization or order of or
qualification by the State of Delaware (as it relates to the General Corporation
Law of the State of Delaware), the State of New York or any federal or foreign
governmental body or agency is required for the performance by any Represented
Stockholder of its respective obligations under the U.S. Underwriting Agreement,
the International Underwriting Agreement and the Custody Agreement, except such
(i) as may be required by U.S. federal or state or foreign securities laws and
(ii) as are applicable to any Represented Stockholder solely because of its
specific status (including regulatory status) other than its status as a
Participating Selling Stockholder, as to both of which we express no opinion.

Insofar as the foregoing opinions relate to the legality,
validity, binding effect or enforceability of any agreement or obligation of any
Represented Stockholder, we have assumed that each other party to such agreement
or obligation has duly authorized and executed such agreement or obligation and
has satisfied those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable against it. In
addition, the foregoing opinions are subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity.

The foregoing opinions are limited to the federal law of the
United States of America and the law of the State of New York.

D-3
<PAGE>
We are furnishing this opinion letter to you, as Representative
of the U.S. Underwriters and as Lead Manager of the International Managers,
solely for the benefit of the U.S. Underwriters and the International Managers
in connection with the offering of the Stock. This opinion letter is not to be
used, circulated, quoted or otherwise referred to for any other purpose.

Very truly yours,

[NAME OF COUNSEL]

* Insert for corporate entities.

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