UNITED COMMUNITY BANCSHARES INC, S-1/A, 1996-12-09

UNITED COMMUNITY BANCSHARES INC
S-1/A, 1996-12-09
NATIONAL COMMERCIAL BANKS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 9, 1996

REGISTRATION NO. 333-14587

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

UNITED COMMUNITY BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
MINNESOTA 6712 41-1380239
- --------------------------- -------------------------- ---------------------
<S> <C> <C>
(State or jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or Industrial Classification Identification
organization) Code) Number)
</TABLE>

UNITED CAPITAL TRUST I

(Exact name of co-registrant as specified in its charter)

<TABLE>
<CAPTION>
DELAWARE 41-1858234
- --------------------------- -------------------------- ---------------------
<S> <C> <C>
(State or jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or Industrial Identification
organization) Classification Code) Number)
</TABLE>

2600 EAGAN WOODS DRIVE, SUITE 155, EAGAN, MINNESOTA 55121
(612) 552-2828
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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

R. SCOTT JONES, CHAIRMAN
GALEN T. PATE, PRESIDENT
UNITED COMMUNITY BANCSHARES, INC.
2600 EAGAN WOODS DRIVE, SUITE 155, EAGAN, MINNESOTA 55121
(612) 552-2828
(Name address, including zip code, and telephone number, including area code, of
agent for service)

------------------------------
COPIES TO:

<TABLE>
<S> <C>
Lynn M. Gardin, Esq. David B. Miller, Esq.
Fredrikson & Byron, P.A. Faegre & Benson, LLP
900 Second Avenue South, Suite 1100 2200 Norwest Center
Minneapolis, Minnesota 55402 Minneapolis, Minnesota 55402
(612) 347-7000 (612) 336-3000
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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: / /
If this Form is filed to register additional securities of 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED BE REGISTERED (1) PER UNIT (1) OFFERING PRICE
<S> <C> <C> <C>
% Cumulative Trust Preferred Securities of United Capital
Trust I................................................... 440,000 $25.00 $11,000,000
% Junior Subordinated Deferrable Interest Debentures of
United Community Bancshares, Inc. (3)..................... (3) -- --
Guaranty of United Community Bancshares, Inc. with respect
to % Cumulative Trust Preferred Securities (4).......... (4) -- --
Total Registration Fee.....................................

<CAPTION>
TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
<S> <C>
% Cumulative Trust Preferred Securities of United Capital
Trust I................................................... $3,334 (2)
% Junior Subordinated Deferrable Interest Debentures of
United Community Bancshares, Inc. (3)..................... --
Guaranty of United Community Bancshares, Inc. with respect
to % Cumulative Trust Preferred Securities (4).......... --
Total Registration Fee..................................... $3,334 (2)
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

(2) Registration fee was previously paid.

(3) The % Junior Subordinated Deferrable Interest Debentures will be purchased
by United Capital Trust I with the proceeds of the sale of the %
Cumulative Trust Preferred Securities. Such securities may later be
distributed for no additional consideration to the holders of the %
Cumulative Trust Preferred Securities of United Capital Trust I upon its
dissolution and the distribution of its assets.

(4) This Registration Statement is deemed to cover the % Junior Subordinated
Deferrable Interest Debentures of United Community Bancshares, Inc., the
rights of holders of % Junior Subordinated Deferrable Interest Debentures
of United Community Bancshares, Inc. under the Indenture, and the rights of
holders of the % Cumulative Trust Preferred Securities under the Trust
Agreement, the Guaranty, the Expense Agreement entered into by United
Community Bancshares, Inc. and certain backup undertakings as described
herein. No separate consideration will be received for the Guaranty or such
backup undertakings.

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

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>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

PROSPECTUS SUBJECT TO COMPLETION DATED DECEMBER 9, 1996

DATED , 1997

440,000 PREFERRED SECURITIES

[UNITED COMMUNITY BANCSHARES LOGO]
UNITED CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY

UNITED COMMUNITY BANCSHARES, INC.

The % Cumulative Trust Preferred Securities ("Preferred Securities") offered
hereby represent beneficial interests in United Capital Trust I, a trust created
under the laws of the State of Delaware ("United Capital"). United Community
Bancshares, Inc., a Minnesota corporation ("United" or the "Company") will be
the owner of all the beneficial interests represented by common securities of
United Capital ("Common Securities") (the Common Securities and the Preferred
Securities are herein referred to the "Trust Securities"). Wilmington Trust
Company is the Property Trustee of United Capital. United Capital exists for the
purpose of issuing the Preferred Securities and investing the proceeds thereof
in % Junior Subordinated Deferrable Interest Debentures ("Junior Subordinated
Debentures") to be issued by the Company. The Company will use the proceeds from
the Junior Subordinated Debentures to provide a portion of the financing for the
Park Acquisition described herein. The Junior Subordinated Debentures will
mature on January 15, 2027, which date may be (1) shortened to a date not
earlier than January 15, 2002, or (2) extended to a date not later than January
15, 2046, in each case if certain conditions are met (including, in the case of
shortening the Stated Maturity (as defined herein), the Company having received
prior approval of the Board of Governors of the Federal Reserve System ("Federal
Reserve") to do so if then required under applicable capital guidelines or
policies of the Federal Reserve). The Preferred Securities will have a
preference under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise over the Common
Securities. See "Description of Preferred Securities -- Subordination of Common
Securities."

(CONTINUED ON FOLLOWING PAGE)

SEE "RISK FACTORS" BEGINNING ON PAGE 12 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

THE ISSUANCE AND SALE OF THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, THE OFFICE
OF THE COMPTROLLER OF THE CURRENCY (THE "OCC"), THE FEDERAL DEPOSIT INSURANCE
CORPORATION (THE "FDIC"), OR THE MINNESOTA DEPARTMENT OF COMMERCE (THE
"DEPARTMENT"), NOR HAS THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, THE
OCC, THE FDIC, OR THE DEPARTMENT, PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. THESE SECURITIES ARE NOT DEPOSITS AND WILL NOT BE INSURED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY.

<TABLE>
<CAPTION>
Proceeds to
Price to Underwriting United Capital
Public Commission (1) (2)(3)
<S> <C> <C> <C>
Per Preferred Security................ $25.00 $(2) $
Total................................. $ $(2) $
</TABLE>

(1) United Capital and United have agreed to indemnify the Underwriter against
certain liabilities, including liabilities under the Securities Act of 1933,
as amended. See "Underwriting."

(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Company has agreed to pay the Underwriter as compensation for its arranging
the investment therein of such proceeds, $ per Preferred Security, or
$ in the aggregate and an advisory fee equal to 1% of the gross proceeds
of the offering to the Underwriter (the "Advisory Fee"). See "Underwriting."

(3) Before deducting expenses payable by United, estimated to be $401,000
excluding the Advisory Fee.

The shares of Preferred Securities are being offered by the Underwriter subject
to prior sale when, as and if delivered to and accepted by the Underwriter. It
is expected that the Preferred Securities will be ready for delivery in book-
entry form only through the facilities of The Depository Trust Company in New
York, New York, on or about January , 1997, against payment therefor in
immediately available funds.

PIPER JAFFRAY INC.

<PAGE>

(CONTINUED FROM PREVIOUS PAGE)

Holders of Preferred Securities will be entitled to receive preferential
cumulative cash distributions accruing from the date of original issuance and
payable quarterly in arrears on the last day of March, June, September and
December in each year, commencing March 31, 1997, at the annual rate of % of
the Liquidation Amount (as defined herein) of $25 per Preferred Securities
("Distributions"). The Company has the right to defer payment of interest on the
Junior Subordinated Debentures at any time or from time to time for a period not
to exceed 20 consecutive quarters with respect to each deferral period (each, an
"Extension Period"), provided that no Extension Period may extend beyond the
Stated Maturity of the Junior Subordinated Debentures. Upon the termination of
any such Extension Period and the payment of all amounts then due, the Company
may elect to begin a new Extension Period subject to the requirements set forth
herein. If interest payments on the Junior Subordinated Debentures are so
deferred, Distributions on the Preferred Securities will also be deferred, and
the Company will not be permitted, subject to certain exceptions described
herein, to declare or pay any cash distributions with respect to its capital
stock or debt securities that rank pari passu with or junior to the Junior
Subordinated Debentures. During an Extension Period, interest on the Junior
Subordinated Debentures will continue to accrue (and the amount of Distributions
to which holders of the Preferred Securities are entitled will accumulate) at
the rate of % per annum, compounded quarterly, and holders of the Preferred
Securities will be required to accrue interest income for United States federal
income tax purposes. See "Description of Junior Subordinated Debentures --
Option to Extend Interest Payment Period," and "Certain Federal Income Tax
Consequences -- Potential Extension of Interest Payment Period and Original
Issue Discount."

The Company has, through the Guaranty, Trust Agreement, Junior Subordinated
Debentures, Indenture and the Expense Agreement (each as defined herein), taken
together, fully, irrevocably and unconditionally guaranteed all of United
Capital's obligations under the Preferred Securities. See "Relationship Among
the Preferred Securities, the Junior Subordinated Debentures and the Guaranty --
Full and Unconditional Guaranty." The Guaranty of the Company guarantees the
payment of Distributions and payments on liquidation or redemption of the
Preferred Securities, but only in each case to the extent of funds held by
United Capital, as described herein. See "Description of Guaranty." If the
Company does not make interest payments on the Junior Subordinated Debentures
held by United Capital, United Capital will have insufficient funds to pay
Distributions on the Preferred Securities. The Guaranty does not cover payments
of Distributions when United Capital does not have sufficient funds to pay such
Distributions. The obligations of the Company under the Guaranty and the Junior
Subordinated Debentures are subordinate and junior in right of payment to all
Senior Indebtedness (as defined in "Description of Junior Subordinated
Debentures -- Subordination") of the Company.

The Preferred Securities are subject to mandatory redemption, in whole or in
part, upon repayment of the Junior Subordinated Debentures at maturity or their
earlier redemption in an amount equal to the amount of Junior Subordinated
Debentures maturing or being redeemed at a redemption price equal to the
aggregate liquidation preference of the Preferred Securities plus accumulated
and unpaid Distributions thereon to the date of redemption. Subject to Federal
Reserve approval, if then required, the Junior Subordinated Debentures are
redeemable prior to maturity at the option of the Company (a) on or after
January 15, 2002, in whole at any time or in part from time to time, or (b) at
any time, in whole (but not in part), upon the occurrence and during the
continuance of a Tax Event or an Investment Company Event (as defined herein),
in each case at a redemption price equal to the accrued and unpaid interest on
the Junior Subordinated Debentures so redeemed to the date fixed for redemption,
plus 100% of the principal amount thereof. See "Description of Preferred
Securities -- Redemption."

The Company will have the right at any time to terminate United Capital and
cause the Junior Subordinated Debentures to be distributed to holders of
Preferred Securities in liquidation of United Capital, subject to the Company
having received prior approval of the Federal Reserve to do so if then required
under applicable capital guidelines or policies of the Federal Reserve. See
"Description of Preferred Securities -- Redemption." As of September 30, 1996,
after giving pro forma effect to the Park Acquisition, the Company had
approximately $40.7 million aggregate principal amount of Senior Indebtedness
outstanding. The terms of the Junior Subordinated Debentures place no limitation
on the amount of Senior Indebtedness that the Company can issue. See
"Description of Junior Subordinated Debentures -- Subordination." The Junior
Subordinated Debentures are unsecured and subordinated to all Senior
Indebtedness.

In the event of the termination of United Capital, after satisfaction of
liabilities to creditors of United Capital as required by applicable law, the
holders of Preferred Securities will be entitled to receive a Liquidation Amount
of $25 per Preferred Security ("Liquidation Amount"), plus accumulated and
unpaid Distributions thereon to the date of payment, which may be in the form of
a distribution of such amount of a Subordinated Debenture, subject to certain
exceptions. See "Description of Preferred Securities -- Liquidation Distribution
Upon Termination."

United does not intend to list the Preferred Securities on any securities
exchange or include them for quotation on the Nasdaq National Market or any
other quotation system. Although the Underwriter has indicated an intention to
make a market in the Preferred Securities, the Underwriter is not obligated to
make a market in the Preferred Securities, and any market making may be
discontinued at any time at the sole discretion of such Underwriter. There can
be no assurance that a market will develop for the Preferred Securities. See
"Risk Factors -- Limited Trading Market" and "Underwriting." Concurrently with
this Offering, United is offering by separate Prospectus up to 72,000 shares of
its Common Stock. See "Description of the Company's Capital Stock -- Common
Stock."

The Preferred Securities will be represented by one or more global certificates
registered in the name of The Depository Trust Company (the "Depositary") or its
nominee. Beneficial interests in the Preferred Securities will be shown on, and
transfers thereof will be effected only through, records maintained by
participants in the Depositary. Except as described herein, Preferred Securities
in certificate form will not be issued in exchange for the global certificates.
See "Book-Entry Issuance."

AS USED HEREIN, THE "INDENTURE" MEANS THE SUBORDINATED INDENTURE, DATED AS OF
JANUARY , 1997, AS AMENDED AND SUPPLEMENTED FROM TIME TO TIME, BETWEEN THE
COMPANY AND WILMINGTON TRUST COMPANY, AS TRUSTEE (THE "INDENTURE TRUSTEE"),
UNDER WHICH THE JUNIOR SUBORDINATED DEBENTURES WILL BE ISSUED.

2
<PAGE>
--------------------------

UNITED COMMUNITY BANCHARES, INC.
OFFICE LOCATIONS

[MAP]

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

The Company intends to furnish to the holders of Preferred Securities annual
reports containing financial statements audited by an independent auditing firm
and quarterly reports for the first three quarters of each fiscal year
containing unaudited financial information.

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

Information in this Prospectus includes "forward looking statements," which can
be identified by the use of forward- looking terminology such as "may," "will,"
"expect," "anticipate," "estimate," or "continue" or the negative thereof or
other variations thereon or comparable terminology. The statements in "Risk
Factors" beginning on page 12 of the Prospectus constitute cautionary statements
identifying important factors, including certain risks and uncertainties, with
respect to such forward-looking statements that could cause actual results to
differ materially from those reflected in such forward-looking statements.

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED SECURITIES AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

3
<PAGE>
SUMMARY

THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN A COMPLETE STATEMENT OF SUCH
INFORMATION OR OF ALL MATERIAL FEATURES OF THE PROPOSED OFFERING AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND SHOULD BE READ IN CONJUNCTION
WITH, THE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO
CONTAINED HEREIN.

THE COMPANY

United Community Bancshares, Inc. ("United" or the "Company"), a bank
holding company with $442 million in assets as of September 30, 1996, operates
Signal Bank, Inc. ("Signal Bank") and The Goodhue County National Bank ("Goodhue
Bank") (collectively, Signal Bank and Goodhue Bank are referred to as the
"Banks"). Signal Bank is a state-chartered bank with offices in Eagan, Savage
and West St. Paul, Minnesota. Goodhue Bank is a national bank with offices in
Red Wing, Lanesboro and Rushford, Minnesota. In addition to the Banks, United
also operates Consumers Credit Corporation ("CCC"), a consumer finance company
with offices in Hastings, Northfield, Red Wing and West St. Paul, Minnesota.

COMMUNITY BANKING PHILOSOPHY. United's operating strategy for the Banks has
emphasized relationship banking for owner-operated small-to-medium-sized
businesses, nonprofit organizations, professionals and consumers in market areas
surrounding the Banks' offices. Management of each Bank believes that a
significant number of its commercial customers prefer to bank with locally
managed institutions which provide a full-service banking relationship covering
the customer's commercial banking business and the personal needs of its
management and employees. United provides its Banks with the advantages of
affiliation with a multi-bank holding company, including services such as data
processing services, credit policy formulation, accounting services, investment
portfolio management and specialized staff support while generally granting
substantial autonomy to management of the Banks with respect to the day-to-day
operations and customer service decisions. The Company believes this autonomy
allows the Banks to better serve customers in their respective communities and
thereby enhances the Banks' business opportunities and operations. The Company
also maintains local bank charters and boards of directors, as well as
encourages all of its personnel to become active in community groups and
projects.

ACQUISITION OF PARK BANK. United has entered into a Merger Agreement, dated
October 7, 1996 (the "Merger Agreement") with Park Financial Corporation
("PFC"), a privately-held bank holding company which owns Park National Bank
("Park Bank"), a national bank with assets of approximately $203 million as of
September 30, 1996 (the "Park Acquisition"). Park Bank operates its principal
office in St. Louis Park, Minnesota and a branch in New Hope, Minnesota. Park
Bank provides a wide range of commercial and consumer services primarily to
owner-operated small-to-medium-sized businesses, professionals and consumers
principally in the western and northwestern portions of the seven-county
Minneapolis-St. Paul metropolitan area. The cash purchase price of approximately
$46 million will be obtained from the proceeds of this Offering, together with
the proceeds from the concurrent sale of United's common stock in the
approximate minimum amount of $5 million (net of estimated offering expenses), a
loan from Firstar Bank Milwaukee, N.A. in the approximate amount of $24 million
and cash on hand of approximately $7 million. The actual purchase price
(currently estimated to be approximately $46 million) is based on the November
30, 1996 book value of PFC plus a premium plus a fixed daily accrual
representing earnings from November 30, 1996 through the closing date of the
Park Acquisition. As of the date of this Prospectus, all conditions precedent to
the consummation of the Park Acquisition have been satisfied or waived, with the
only remaining condition being the consummation of the sale of the Preferred
Securities offered hereby. The Park Acquisition will be accounted for under the
purchase method of accounting and will close concurrently with this Offering.
See "Acquisition of Park."

GROWTH STRATEGIES. United's strategy is to continue to grow by acquiring
other financial institutions and financial service providers, expanding existing
bank and consumer finance businesses internally, and pursuing other financial
service opportunities. United's acquisition strategy is to identify banks with
at least $50 million in assets in Minnesota and Wisconsin communities within a
100 mile radius of the Minneapolis-St. Paul metropolitan area. The Company does
not have any pending arrangements, agreements or understandings regarding
acquisitions other than the Park Acquisition. In assessing acquisitions, United
focuses

4
<PAGE>
on credit quality, past performance of the bank, management strengths and
weaknesses, location, community demographics, relative health of the local
economy, organizational structure of the bank and consideration for and terms of
the acquisition. Management believes there are a number of community banks which
meet United's criteria and whose owners would be interested in selling their
banks to a community-based organization like United. United will continue to
expand its current business operations by identifying products or services which
have been successful in one or more of its offices and expanding these products
or services to other offices. For example, Signal Bank is a "preferred lender"
with the Small Business Administration ("SBA"), and its expertise in making SBA
loans will be utilized by other United subsidiary banks. Similarly, Goodhue
Bank's lease financing experience will allow the United subsidiary banks to
participate in more equipment financing transactions. In addition, United's
strategy is to grow CCC's loan portfolio by building CCC's indirect and direct
consumer finance business and by the acquisition or start-up of new offices.

The Company is a Minnesota corporation and its principal executive offices
are located at 2600 Eagan Woods Drive, Suite 155, Eagan, Minnesota 55121, and
its telephone number is (612) 552-2828. United was formed on January 1, 1994
through the merger of Goodhue County Financial Corporation ("Goodhue"), the
former holding company for Goodhue Bank, into Signal Bancshares, Inc.
("Signal"), the former holding company for Signal Bank. Upon consummation of the
merger, the name of the Company was changed to United Community Bancshares, Inc.
References to United or the Company means United and its subsidiaries unless the
context otherwise requires.

UNITED CAPITAL

United Capital Trust I ("United Capital") is a statutory business trust
formed under Delaware law pursuant to (i) the Trust Agreement executed by the
Company, as Depositor, Wilmington Trust Company, as Property Trustee and as
Delaware Trustee, and the Administrative Trustees named therein ("Trust
Agreement"), and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on December 6 , 1996. United Capital's business and affairs
are conducted by its Property Trustee, Delaware Trustee, and three individual
Administrative Trustees who are officers of the Company. United Capital exists
for the exclusive purposes of (i) issuing and selling the Preferred Securities
and Common Securities, (ii) using the proceeds from the sale of Preferred
Securities and Common Securities to acquire Junior Subordinated Debentures
issued by the Company and (iii) engaging in only those other activities
necessary, advisable or incidental thereto (such as registering the transfer of
the Preferred Securities). Accordingly, the Junior Subordinated Debentures will
be the sole assets of United Capital, and payments under the Junior Subordinated
Debentures will be the sole revenue of United Capital. All of the Common
Securities will be owned by the Company. The Common Securities will rank pari
passu, and payments will be made thereon pro rata, with the Preferred
Securities, except that upon the occurrence and during the continuance of an
event of default under the Trust Agreement resulting from an event of default
under the Indenture, the rights of the Company as holder of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
Preferred Securities. See "Description of Preferred Securities -- Subordination
of Common Securities." The Company will acquire Common Securities in an
aggregate liquidation amount equal to 3% of the total capital of United Capital.
United Capital has a term of 54 years, but may terminate earlier as provided in
the Trust Agreement. The principal executive office of United Capital is located
at 2600 Eagan Woods Drive, Suite 155, Eagan, Minnesota 55121, and its telephone
number is (612) 552-2828.

THE OFFERING

<TABLE>
<S> <C>
Preferred Securities issuer....... United Capital.
Securities offered................ 440,000 Preferred Securities. The Preferred Securities
represent undivided beneficial interests in United
Capital's assets, which will consist solely of the
Junior Subordinated Debentures and payments thereunder.
</TABLE>

5
<PAGE>

<TABLE>
<S> <C>
Distributions..................... The distributions payable on each Preferred Security
will be fixed at a rate per annum of % of the
Liquidation Amount of $25 per Preferred Security, will
be cumulative, will accrue from the date of issuance of
the Preferred Securities, and will be payable quarterly
in arrears, on the last day of March, June, September
and December in each year, commencing March 31, 1997.
See "Description of Preferred Securities --
Distributions."
Option to extend interest payment
period........................... The Company has the right, at any time, to defer
payments of interest on the Junior Subordinated
Debentures for a period not exceeding 20 consecutive
quarters; provided, that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated
Debentures. As a consequence of the Company's extension
of the interest payment period, quarterly Distributions
on the Preferred Securities would be deferred (though
such Distributions would continue to accrue with
interest thereon compounded quarterly, since interest
would continue to accrue and compound on the Junior
Subordinated Debentures, to the extent permitted by
applicable law) during any such Extension Period. During
an Extension Period, the Company will be prohibited,
subject to certain exceptions described herein, from
declaring or paying any cash distributions with respect
to its capital stock or debt securities that rank pari
passu with or junior to the Junior Subordinated
Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the
foregoing requirements. See "Description of Junior
Subordinated Debentures -- Option to Extend Interest
Payment Period."
Should an Extension Period occur, Preferred Security
holders will continue to recognize interest income for
United States federal income tax purposes. See "Certain
Federal Income Tax Consequences -- Potential Extension
of Interest Payment Period and Original Issue Discount."
Redemption........................ Subject to Federal Reserve approval, if then required
under applicable capital guidelines or policies of the
Federal Reserve, the Junior Subordinated Debentures are
redeemable prior to maturity at the option of the
Company (1) on or after January 15, 2002, in whole at
any time or in part from time to time, or (2) at any
time, in whole (but not in part), upon the occurrence
and during the continuance of a Tax Event or an
Investment Company Event, in each case at the redemption
price equal to 100% of the principal amount of the
Junior Subordinated Debentures so redeemed, together
with any accrued but unpaid interest to the date fixed
for redemption. The Preferred Securities are subject to
mandatory redemption, upon repayment of the Junior
Subordinated Debentures at maturity or their earlier
redemption in an amount equal to the amount of Junior
Subordinated Debentures maturing on or being redeemed at
a redemption price equal to the aggregate liquidation
preference of the
</TABLE>

6
<PAGE>

<TABLE>
<S> <C>
Preferred Securities plus accumulated and unpaid
Distributions thereon to the date of redemption. See
"Description of Junior Subordinated Debentures --
Redemption."
Distribution of Junior
Subordinated Debentures.......... The Company has the right at any time to terminate the
Preferred Securities and cause the Junior Subordinated
Debentures to be distributed to holders of Preferred
Securities in liquidation of United Capital, subject to
the Company having received prior approval of the
Federal Reserve to do so if then required under
applicable capital guidelines or policies of the Federal
Reserve. See "Description of Preferred Securities --
Redemption."
Guaranty.......................... Under the terms of its Guaranty, the Company has
guaranteed the payment of Distributions and payments on
liquidation or redemption of the Preferred Securities,
but only in each case to the extent of funds held by
United Capital, as described herein. The Company has,
through the Guaranty, Trust Agreement, Junior
Subordinated Debentures, Indenture, and Expense
Agreement, taken together, fully, irrevocably and
unconditionally guaranteed all of United Capital's
obligations under the Preferred Securities. The
obligations of the Company under the Guaranty and the
Junior Subordinated Debentures are subordinate and
junior in right of payment to all Senior Indebtedness.
See "Description of Guaranty."
Ranking........................... The Preferred Securities will rank pari passu, and
payments thereon will be made pro rata, with the Common
Securities except as described under "Description of
Preferred Securities -- Subordination of Common
Securities." The Junior Subordinated Debentures will be
unsecured and subordinate and junior in right of payment
to all Senior Indebtedness to the extent and in the
manner set forth in the Indenture. See "Description of
Junior Subordinated Debentures." The Guaranty will
constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to
all Senior Indebtedness to the extent and in the manner
set forth in the Guaranty Agreement. See "Description of
Guaranty."
Voting rights..................... Generally, the holders of the Preferred Securities will
not have any voting rights. See "Description of
Preferred Securities -- Voting Rights; Amendment of
Trust Agreement."
Listing........................... United does not intend to list the Preferred Securities
on any securities exchange or include it for quotation
on the Nasdaq National Market or any other quotation
system. See "Risk Factors -- Limited Public Market" and
"Underwriting."
Use of proceeds................... The proceeds from the sale of the Preferred Securities
offered hereby will be used by United Capital to
purchase the Junior Subordinated Debentures issued by
the Company. The net proceeds to the Company from the
sale of the Junior Subordinated Debentures will be used
to provide a portion of the financing for the Park
Acquisition and to increase the Company's qualifying
"Tier 1" capital in order for the Company to have
sufficient capital to consummate the Park Acquisition.
See "Use of Proceeds."
</TABLE>

7
<PAGE>

<TABLE>
<S> <C>
Risk factors...................... Prospective investors should consider certain risk
factors in connection with the purchase of the Preferred
Securities offered hereby. See "Risk Factors."
Underwriting...................... Piper Jaffray Inc. (the "Underwriter"), has agreed,
subject to the terms and conditions of a Purchase
Agreement to be entered into by the Underwriter, United
and United Capital, to purchase from United Capital
440,000 Preferred Securities. The Underwriter is
committed to purchase and pay for all such Preferred
Securities if any are purchased. See "Underwriting."
</TABLE>

8
<PAGE>
SUMMARY FINANCIAL DATA

The summary financial information presented below reflects certain financial
information of United on an historical basis as of and for the periods indicated
and on an unaudited pro forma basis (i) as of and for the year ended December
31, 1993 taking into account the merger of Goodhue and Signal, which was
accounted for using the purchase method of accounting effective January 1, 1994,
as if such transaction had occurred on January 1, 1993, (ii) as of and for the
nine months ended September 30, 1996 giving effect to the Park Acquisition
(including related equity and debt financing transactions), which will be
consummated concurrently with the closing of this Offering and will be accounted
for using the purchase method of accounting, as if such transaction had occurred
on January 1, 1996, and (iii) as of and for the nine months ended September 30,
1995 and the year ended December 31, 1995 giving effect to the Park Acquisition
(including related equity and debt financing transactions), which will be
consummated concurrently with the closing of this Offering and will be accounted
for using the purchase method of accounting, as if such transaction had occurred
on January 1, 1995. This data should be read in conjunction with each of
United's and PFC's Consolidated Financial Statements and related notes included
herein and in conjunction with the unaudited Pro Forma Combined Financial
Statements and related notes included herein. See "Index to Financial
Information," "Selected Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

9
<PAGE>

<TABLE>
<CAPTION>
AS OF AND FOR THE AS OF AND FOR THE
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- ---------------------------------
1996 1995 1995 1994 1993(1)
--------- --------- --------- --------- -----------
(PRO FORMA)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
UNITED
OPERATING DATA
Interest income.......................................... $ 25,001 $ 22,919 $ 31,206 $ 25,516 $ 23,930
Interest expense......................................... 10,445 9,397 12,848 9,159 9,035
--------- --------- --------- --------- -----------
Net interest income...................................... 14,556 13,522 18,358 16,357 14,895
Provision for loan and lease losses...................... 146 41 61 234 605
--------- --------- --------- --------- -----------
Net interest income after provision for loan and lease
losses.................................................. 14,410 13,481 18,297 16,123 14,290
Noninterest income....................................... 3,448 2,886 3,919 3,837 3,947
Noninterest expense...................................... 12,775 12,147 16,531 16,131 14,995
--------- --------- --------- --------- -----------
Income before income taxes and cumulative effect of
change in accounting principle.......................... 5,083 4,220 5,685 3,829 3,242
Income tax expense....................................... 1,678 1,249 2,056 1,396 1,138
--------- --------- --------- --------- -----------
Income before cumulative effect of change in accounting
principle............................................... 3,405 2,971 3,629 2,433 2,104
Cumulative effect of change in accounting principle
(2)..................................................... -- -- -- -- 181
--------- --------- --------- --------- -----------
Net income............................................... $ 3,405 $ 2,971 $ 3,629 $ 2,433 $ 2,285
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Income per common share before cumulative effect of
change in accounting principle.......................... $ 6.20 $ 5.82 $ 6.97 $ 4.82 $ 4.17
Cumulative effect of change in accounting principle...... -- -- -- -- .36
--------- --------- --------- --------- -----------
Net income per common share.............................. $ 6.20 $ 5.82 $ 6.97 $ 4.82 $ 4.53
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
Weighted average common shares outstanding............... 549,079 510,770 520,306 504,686 505,084
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
BALANCE SHEET DATA
Total assets............................................. $ 441,850 $ 411,431 $ 421,841 $ 383,984 $ 347,687
Net loans and leases..................................... 277,345 257,376 263,006 244,125 217,317
Investment securities.................................... 103,453 98,896 101,837 83,434 82,610
Deposits................................................. 351,825 325,027 340,723 312,947 291,590
Securities sold under repurchase agreements.............. 27,556 27,966 23,173 27,747 15,321
Notes payable and other borrowings....................... 16,709 16,813 15,762 12,412 10,549
Total stockholders' equity............................... 39,880 35,751 36,969 27,525 26,745
KEY RATIOS
Return on average assets (3)(4).......................... 1.06% 1.01% 0.91% 0.68% 0.61%
Return on average equity (3)(4).......................... 12.33 13.57 11.65 9.22 8.22
Average stockholders' equity to average assets........... 8.59 7.45 7.79 7.34 7.48
Net interest margin (3).................................. 5.03 5.10 5.13 5.12 5.01
Operating efficiency ratio............................... 70.96 74.03 74.21 79.88 79.58
Nonperforming loans/total loans and leases............... .43 .41 0.28 0.27 0.64
Allowance for loan and lease losses/total loans and
leases.................................................. 1.02 1.12 1.09 1.16 1.24
Allowance for loan and lease losses/nonperforming loans
and leases.............................................. 239.80 269.94 385.51 423.74 192.99
Common stock dividend payout ratio (5)................... 0.00 0.00 0.00 0.00 10.37
Ratio of earnings to fixed charges: (6)
Including interest on deposits......................... 1.48x 1.45x 1.44x 1.42x 1.36x
Excluding interest on deposits......................... 3.83x 3.31x 3.28x 3.27x 3.94x
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
AS OF AND FOR
AS OF AND FOR THE THE
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- ----------------
1996 1995 1995
--------- --------- ----------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
PRO FORMA

OPERATING DATA
Interest income........................................................ $ 36,615 $ 33,685 $ 45,818
Interest expense....................................................... 16,229 14,788 20,207
--------- --------- --------
Net interest income.................................................... 20,386 18,897 25,611
Provision for loan and lease losses.................................... 475 581 781
--------- --------- --------
Net interest income after provision for loan and lease losses.......... 19,911 18,316 24,830
Noninterest income..................................................... 4,686 4,146 5,578
Noninterest expense.................................................... 18,433 17,905 24,255
--------- --------- --------
Income before income taxes and minority interest in preferred
securities dividends of subsidiary.................................... 6,164 4,557 6,153
Income tax expense..................................................... 2,481 1,752 2,747
Minority interest in preferred securities dividends of subsidiary...... (617) (617) (823)
--------- --------- --------
Net income............................................................. $ 3,066 $ 2,188 $ 2,583
--------- --------- --------
--------- --------- --------
Net income per common share............................................ $ 5.14 $ 3.92 $ 4.55
--------- --------- --------
--------- --------- --------
Weighted average common shares outstanding............................. 596,239 557,930 567,466
--------- --------- --------
--------- --------- --------

BALANCE SHEET DATA
Total assets........................................................... $ 665,425 $ 621,228 $ 639,153
Net loans and leases................................................... 391,877 368,172 372,868
Investment securities.................................................. 171,722 157,852 162,882
Deposits............................................................... 516,791 481,361 506,477
Securities sold under repurchase agreements............................ 45,067 40,440 33,839
Notes payable and other borrowings..................................... 40,709 40,813 39,762
Total stockholders' equity............................................. 44,849 40,720 41,938

KEY RATIOS
Return on average assets (3)........................................... 0.64% 0.50% 0.43%
Return on average equity (3)........................................... 9.55 7.96 6.94
Average stockholders' equity to average assets......................... 6.65 6.26 6.17
Net interest margin (3)................................................ 4.87 4.91 4.86
Operating efficiency ratio............................................. 73.52 77.70 77.77
Nonperforming loans/total loans and leases............................. .66 1.22 0.53
Allowance for loan and lease losses/total loans and leases............. 1.25 1.37 1.40
Allowance for loan and lease losses/nonperforming loans and leases..... 189.12 112.22 264.26
Common stock dividend payout ratio (5)................................. 0.00 0.00 0.00
Ratio of earnings to fixed charges: (6)
Including interest on deposits....................................... 1.38x 1.30x 1.30x
Excluding interest on deposits....................................... 2.67x 2.28x 2.26x
</TABLE>

- ------------------------------
(1) Combines the results of operations and financial condition of Signal and
Goodhue.

(2) Cumulative effect of change in accounting principle in 1993 represents the
adoption of Statement of Financial Accounting Standard ("SFAS") No. 109
Accounting for Income Taxes.

(3) Annualized for the nine months ended September 30, 1996 and 1995.

(4) Computed using income before cumulative effect of change in accounting
principle.

(5) Dividends per common share divided by net income per common share.

(6) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of earnings before income taxes and fixed charges. Fixed
charges consist of one-third rent expense and interest expense.

11
<PAGE>
RISK FACTORS

PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE FOLLOWING
FACTORS IN CONNECTION WITH THE DECISION TO PURCHASE SHARES OF PREFERRED
SECURITIES.

DEPENDENCE ON DIVIDENDS FROM SUBSIDIARY BANKS

The ability of United Capital to pay amounts due on the Preferred Securities
is solely dependent upon the Company making payments on the Junior Subordinated
Debentures as and when required. As a holding company without significant assets
other than its equity interest in its subsidiary banks, United's ability to pay
interest on the Junior Subordinated Debentures to United Capital (and
consequently United Capital's ability to pay Distributions on the Preferred
Securities and the Company's ability to pay its obligations under the Guaranty)
depends primarily upon the cash dividends United receives from the subsidiary
banks. Dividend payments from the subsidiary banks are subject to regulatory
limitations, generally based on current and retained earnings, imposed by the
various regulatory agencies with authority over the respective subsidiary banks.
Payment of dividends is also subject to regulatory restrictions if such
dividends would impair the capital of the subsidiary banks. Payment of
subsidiary bank dividends is also subject to the bank's profitability, financial
condition and capital expenditures and other cash flow requirements. No
assurance can be given that the subsidiary banks will be able to pay dividends
at past levels, or at all, in the future. See "Supervision and Regulation."

Following the Park Acquisition, covenants in the Company's loan agreement
with Firstar will require, among other things, that each of Signal Bank, Goodhue
Bank and Park Bank maintains a ratio of total tangible stockholders' equity plus
allowance for loan losses to total assets of 7% or greater. As of September 30,
1996, such ratio was 8.7% at Signal Bank, 8.6% at Goodhue Bank, and, after
giving pro forma effect to the Park Acquisition, 9.0% at Park Bank. In the event
a subsidiary bank fails to maintain its minimum capital level, that bank will be
restricted from paying dividends to United. See "Acquisition of Park --
Financing."

RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTY AND THE JUNIOR
SUBORDINATED DEBENTURES

The obligations of the Company under the Guaranty issued by the Company for
the benefit of the holders of Preferred Securities and the obligations of the
Company under the Junior Subordinated Debentures are unsecured and rank
subordinate and junior in right of payment to all Senior Indebtedness of the
Company. At September 30, 1996, after giving pro forma effect to the Park
Acquisition, the aggregate outstanding Senior Indebtedness of the Company was
approximately $40.7 million. Because the Company is a holding company, the right
of the Company to participate in any distribution of assets of any subsidiary,
including the Banks, upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Preferred Securities to
benefit indirectly from such distribution), is subject to the prior claims of
creditors of that subsidiary, except to the extent that the Company may itself
be recognized as a creditor of that subsidiary. Accordingly, the Junior
Subordinated Debentures will be effectively subordinated to all existing and
future liabilities of the subsidiaries, including the Banks, and holders of
Junior Subordinated Debentures should look only to the assets of the Company for
payments on the Junior Subordinated Debentures. At September 30, 1996, after
giving pro forma effect to the Park Acquisition, United would have outstanding
indebtedness and other liabilities, including deposits, of $610 million. See
"Description of Junior Subordinated Debentures." Neither the Indenture, the
Guaranty nor the Trust Agreement places any limitation on the amount of secured
or unsecured debt, including Senior Indebtedness that may be incurred by the
Company. See "Description of Guaranty -- Status of the Guaranty" and
"Description of Junior Subordinated Debentures -- Subordination."

OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES

The Company has the right under the Indenture to defer the payment of
interest on the Junior Subordinated Debentures at any time or from time to time
for a period not exceeding 20 consecutive quarters with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. As a consequence of any such
deferral, quarterly

12
<PAGE>

Distributions on the Preferred Securities by United Capital will be deferred
(and the amount of Distributions to which holders of the Preferred Securities
are entitled will accumulate additional Distributions thereon at the rate of
% per annum, compounded quarterly from the relevant payment date for such
Distributions, to the extent permitted by applicable law) during any such
Extension Period. During any such Extension Period, the Company may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company's capital
stock, or (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank pari
passu with or junior in interest to the Junior Subordinated Debentures or make
any guaranty payments with respect to any guaranty by the Company of the debt
securities of any subsidiary of the Company if such guaranty ranks pari passu
with or junior in interest to the Junior Subordinated Debentures (other than (a)
dividends or distributions in Common Stock, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guaranty
and (d) purchases of Common Stock related to the rights under any of the
Company's benefit plans for its directors, officers or employees). Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest, provided that no Extension Period may exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the Junior Subordinated
Debentures. Upon the termination of any Extension Period and the payment of all
interest then accrued and unpaid (together with interest thereon at the annual
rate of % compounded quarterly, to the extent permitted by applicable law),
the Company may elect to begin a new Extension Period subject to the above
requirements. There is no limitation on the number of times that the Company may
elect to begin an Extension Period. See "Description of Preferred Securities --
Extension Period" and "Description of Junior Subordinated Debentures -- Option
to Extend Interest Payment Period."

If the Company exercises its right to defer payments of interest, the
holders of Preferred Securities will be required to include their pro rata share
of original issue discount in gross income as it accrues for United States
federal income tax purposes in advance of the receipt of cash. See "Certain
Federal Income Tax Consequences -- Potential Extension of Interest Payment
Period and Original Issue Discount."

The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be adversely affected. A holder that disposes of such holder's Preferred
Securities during an Extension Period, therefore, might not receive the same
return on such holder's investment as a holder that continues to hold the
Preferred Securities. In addition, as a result of the existence of the Company's
right to defer interest payments, the market price of the Preferred Securities
may be more volatile than the market prices of other securities on which
original issue discount accrues that are not subject to such optional deferrals.

TAX EVENT OR INVESTMENT COMPANY EVENT REDEMPTION

Upon the occurrence and during the continuance of a Tax Event or an
Investment Company Event (whether occurring before or after January 15, 2002)
the Company has the right to redeem the Junior Subordinated Debentures in whole
(but not in part) at 100% of the principal amount together with accrued but
unpaid interest to the date fixed for redemption within 90 days following the
occurrence of such Tax Event or Investment Company Event and therefore cause a
mandatory redemption of the Preferred Securities. The exercise of such right is
subject to the Company having received prior approval of the Federal Reserve to
do so if then required under applicable capital guidelines or policies of the
Federal Reserve.

A "Tax Event" means the receipt by the Company and United Capital of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to, or change (including any announced prospective change) in
the laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the

13
<PAGE>

Preferred Securities under the Trust Agreement, or the Junior Subordinated
Debentures under the Indenture, as the case may be, there is more than an
insubstantial risk that (i) United Capital is, or will be within 90 days of the
date of such opinion, subject to United States federal income tax with respect
to income received or accrued on the Junior Subordinated Debentures, (ii)
interest payable by the Company on the Junior Subordinated Debentures is not, or
within 90 days of such opinion will not be, deductible by the Company, in whole
or in part, for United States federal income tax purposes, or (iii) United
Capital is, or will be within 90 days of the date of the opinion, subject to
more than a de minimis amount of other taxes, duties, assessments or other
governmental charges.

An "Investment Company Event" means the receipt by the Company and United
Capital of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, United Capital is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act, which change becomes effective on or after the date of
original issuance of the Preferred Securities.

See "Risk Factors -- Possible Tax Law Changes Affecting the Preferred
Securities" for a discussion of certain legislative proposals that, if adopted,
could give rise to a Tax Event, which may permit the Company to cause a
redemption of the Junior Subordinated Debentures (and therefore the Preferred
Securities) prior to January 15, 2002.

POSSIBLE TAX LAW CHANGES AFFECTING THE PREFERRED SECURITIES

On March 19, 1996, the Revenue Reconciliation Bill of 1996 (the "Bill") was
released which would, among other things, generally deny interest deductions for
interest on an instrument issued by a corporation that has a maximum weighted
average maturity of more than 40 years. The Bill would also generally deny
interest deductions for interest on an instrument, issued by a corporation, that
has a maximum term of more than 20 years and that is not shown as indebtedness
on the separate balance sheet of the issuer or, where the instrument is issued
to a related party (other than a corporation), where the holder or some other
related party issues a related instrument that is not shown as indebtedness on
the issuer's consolidated balance sheet. If either provision were to apply to
the Junior Subordinated Debentures, the Company would be unable to deduct
interest on the Junior Subordinated Debentures. However, on March 29, 1996, the
Chairmen of the Senate Finance and House Ways and Means Committees issued a
joint statement to the effect that it was their intention that the effective
date of the President's legislative proposals, if adopted, will be no earlier
than the date of appropriate Congressional action. There can be no assurance,
however, that current or future legislative proposals or final legislation will
not affect the ability of the Company to deduct interest on the Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which may
permit the Company, upon approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve, to cause a
redemption of the Preferred Securities before, as well as after January 15,
2002. See "Description of Junior Subordinated Debentures -- Redemption" and
"Description of Preferred Securities -- Redemption -- Tax Event Redemption." See
also "Certain Federal Income Tax Consequences -- Possible Tax Law Changes
Affecting the Preferred Securities."

DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDER OF PREFERRED SECURITIES

The Company will have the right at any time to terminate United Capital and
cause the Junior Subordinated Debentures to be distributed to the holders of the
Preferred Securities in liquidation of United Capital. The exercise of such
right is subject to the Company having received prior approval of the Federal
Reserve if then required under applicable capital guidelines or policies of the
Federal Reserve. See "Description of Preferred Securities -- Redemption."

14
<PAGE>

SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES

The Company will have the right at any time to shorten the maturity of the
Junior Subordinated Debentures to a date not earlier than January 15, 2002. The
exercise of such right is subject to the Company having received prior approval
of the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve.

EXTENSION OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES

The Company will also have the right to extend the maturity of the Junior
Subordinated Debentures whether or not United Capital is terminated and the
Junior Subordinated Debentures are distributed to holders of the Preferred
Securities to a date no later than the January 15, 2046, provided that the
Company has received prior approval of the Federal Reserve if then required
under applicable capital guidelines or policies of the Federal Reserve, and only
if at the time such election is made and at the time of such extension (i) the
Company is not in bankruptcy, otherwise insolvent or in liquidation, (ii) the
Company is not in default in the payment of any interest or principal on the
Junior Subordinated Debentures, and (iii) United Capital is not in arrears on
payments of Distributions on the Preferred Securities and no deferred
Distributions are accumulated.

RIGHTS UNDER THE GUARANTY

The Guaranty will be qualified as an indenture under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). Wilmington Trust Company
("Wilmington") will act as the indenture trustee under the Guaranty (the
"Guaranty Trustee") for the purposes of compliance with the Trust Indenture Act
and will hold the Guaranty for the benefit of the holders of the Preferred
Securities. Wilmington will also act as Indenture Trustee for the Junior
Subordinated Debentures and as Property Trustee and as Delaware Trustee under
the Trust Agreement. The Guaranty insures that the holders of the Preferred
Securities will receive the following payments, to the extent not paid by United
Capital: (i) any accumulated and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that United Capital has funds on hand
available therefor at such time, (ii) the Liquidation Amount and all accumulated
and unpaid Distributions to the date of redemption, with respect to any
Preferred Securities called for redemption, to the extent that United Capital
has funds on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding-up or liquidation of United Capital (unless the
Junior Subordinated Debentures are distributed to holders of the Preferred
Securities), the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment to the extent that
United Capital has funds on hand available therefor at such time and (b) the
amount of assets of United Capital remaining available for distribution to
holders of the Preferred Securities in liquidation of United Capital. The
holders of not less than a majority in aggregate Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guaranty Trustee in
respect of the Guaranty or to direct the exercise of any trust power conferred
upon the Guaranty Trustee under the Guaranty. Any holder of the Preferred
Securities may institute a legal proceeding directly against the Company to
enforce such holder's rights under the Guaranty without first instituting a
legal proceeding against United Capital, the Guaranty Trustee or any other
person or entity. If the Company were to default on its obligation to pay
amounts payable under the Junior Subordinated Debentures, United Capital would
lack funds for the payment of Distributions or amounts payable on redemption of
the Preferred Securities or otherwise, and, in such event, holders of Preferred
Securities would not be able to rely upon the Guaranty for such amounts.
Instead, in the event a Debenture Event of Default (as defined herein) shall
have occurred and be continuing and such event is attributable to the failure of
the Company to pay interest on or principal of the Junior Subordinated
Debentures on the payment date on which such payment is due and payable, then a
holder of Preferred Securities may institute a legal proceeding directly against
the Company for enforcement of payment to such holder of the principal of or
interest on such Junior Subordinated Debentures having a principal amount equal
to the aggregate Liquidation Amount of the Preferred Securities of such holder
(a "Direct Action"). In connection with such Direct Action, the Company will
have a right of set-off under the Indenture to the extent of any payment made by
the Company

15
<PAGE>

to such holder of Preferred Securities in the Direct Action. Except as described
herein, holders of Preferred Securities will not be able to exercise directly
any other remedy available to the holders of the Junior Subordinated Debentures
or assert directly any other rights in respect of the Junior Subordinated
Debentures, including the right to accelerate the unpaid amount of the Junior
Subordinated Debentures. See "Description of Junior Subordinated Debentures --
Enforcement of Certain Rights by Holders of Preferred Securities" and "--
Debenture Events of Default" and "Description of Guaranty." The Trust Agreement
provides that each holder of Preferred Securities by acceptance thereof agrees
to the provisions of the Guaranty and the Indenture.

LIMITED COVENANTS

The covenants in the Indenture are limited and there are no covenants in the
Trust Agreement. As a result, neither the Indenture nor the Trust Agreement
protects holders of Junior Subordinated Debentures, or Preferred Securities,
respectively in the event of a material adverse change in the Company's
financial condition or results of operations or limits the ability of the
Company or any subsidiary to incur additional indebtedness. Therefore, the
provisions of these governing instruments should not be considered a significant
factor in evaluating whether the Company will be able to comply with its
obligations under the Junior Subordinated Debentures or the Guaranty.

LIMITED VOTING RIGHTS

Holders of Preferred Securities will generally have limited voting rights
relating only to the modification of the Preferred Securities and the exercise
of United Capital's rights as holder of Junior Subordinated Debentures and the
Guaranty. Holders of Preferred Securities will not be entitled to vote to
appoint, remove or replace the Property Trustee or the Delaware Trustee, and
such voting rights are vested exclusively in the holder of the Common Securities
except upon the occurrence of certain events described herein. The Property
Trustee, the Administrative Trustees and the Company may amend the Trust
Agreement without the consent of holders of Preferred Securities to ensure that
United Capital will be classified for United States federal income tax purposes
as a grantor trust even if such action adversely affects the interests of such
holders. See "Description of Preferred Securities -- Voting Rights; Amendment of
Trust Agreement" and "-- Removal of United Capital Trustees."

LIMITED TRADING MARKET

United does not intend to list the Preferred Securities on any securities
exchange, or include the Preferred Securities for quotation on the Nasdaq
National Market or any other market system. There is no existing public market
for the Preferred Securities, and there can be no assurance that an active or
liquid trading market for the Preferred Securities will develop following the
Offering, or that, if such a market does develop, it will continue. The
Underwriter has indicated an intention to make a market in the Preferred
Securities, although the Underwriter has no obligation to make a market and, if
such a market is made, there can be no assurance that an active trading market
will develop or that any such market making which does take place will not be
discontinued at any time at the sole discretion of the Underwriter. If the
Preferred Securities are traded after their original issuance, they may trade at
a discount to their stated value. See "Underwriting."

MARKET PRICES

There can be no assurance as to the market prices for Preferred Securities
or Junior Subordinated Debentures that may be distributed in exchange for
Preferred Securities if a liquidation of United Capital occurs. Accordingly, the
Preferred Securities that an investor may purchase, whether pursuant to the
offer made hereby or in the secondary market, or the Junior Subordinated
Debentures that a holder of Preferred Securities may receive on liquidation of
United Capital, may trade at a discount to the price that the investor paid to
purchase the Preferred Securities offered hereby. In addition, there can be no
assurance that the Company will not exercise its option to change the maturity
of the Junior Subordinated Debentures as permitted by the terms thereof and of
the Indenture. Because holders of Preferred Securities may receive Junior
Subordinated Debentures on liquidation of United Capital, prospective purchasers
of Preferred

16
<PAGE>

Securities are also making an investment decision with regard to the Junior
Subordinated Debentures and should carefully review all the information
regarding the Junior Subordinated Debentures contained herein. See "Description
of Junior Subordinated Debentures."

TRADING CHARACTERISTICS OF PREFERRED SECURITIES

The Preferred Securities may trade at prices that do not fully reflect the
value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A holder of Preferred Securities that disposes of such
holder's Preferred Securities between record dates for payments of Distributions
(and consequently does not receive a Distribution from United Capital for the
period prior to such disposition) will nevertheless be required to include
accrued but unpaid interest on the Junior Subordinated Debentures through the
date of disposition in income as ordinary income and to add such amount to its
adjusted tax basis in the Preferred Securities disposed. Such holder will
recognize a capital loss to the extent the selling price (which may not fully
reflect the value of accrued but unpaid interest) is less than its adjusted tax
basis (which will include accrued but unpaid interest). Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes. See "Certain Federal Income Tax
Consequences -- Disposition of Preferred Securities."

RISKS INVOLVED IN ACQUISITION STRATEGY

United believes the majority of its growth will come from acquisitions of
banks and other financial institutions. Such acquisitions, including the Park
Acquisition discussed below, involve risks of adversely changing results of
operations, changes in capital structure, including increased reliance on debt,
unforeseen liabilities relating to the acquired institution or arising out of
the acquisition transaction, or asset quality problems of the acquired entity
and other conditions not within the control of United, such as adverse personnel
relations, loss of customers because of change of identity, deterioration in
local economic conditions and other risks affecting the acquired institution.
Acquisition candidates may not be available or available on terms favorable to
United in the future. United must compete with a variety of individuals and
institutions, including major regional bank holding companies, for suitable
acquisition candidates. Such competition could affect United's ability to make
acquisitions and increase the price that United pays for certain acquisitions.

ACQUISITION OF PARK

NO ASSURANCE OF SUCCESSFUL INTEGRATION. Concurrently with the closing of
this Offering, the Company will consummate the Park Acquisition. The Park
Acquisition is the Company's first acquisition since the merger with Goodhue in
1994. Based on September 30, 1996 financial information, the Park Acquisition
would increase the Company's assets by approximately 33.6% to $665 million. The
Company's ability to integrate Park Bank into its current operation without
adversely affecting the level of profitability of the Company as a whole cannot
be assured.

INCREASED DEBT AND DECREASED CAPITAL RATIOS. Available earnings and cash
flow to pay interest on the Junior Subordinated Debentures to United Capital
(and consequently United Capital's ability to pay Distributions on the Preferred
Securities) will be dependent in part on the successful integration of Park Bank
with United. Among other things, the Park Acquisition will involve a significant
increase in the Company's long-term indebtedness and interest expense due to the
addition of approximately $24 million of long-term debt financing in connection
with the Park Acquisition. This indebtedness requires the dedication of an
increased portion of cash flow to the payment of principal and interest, thereby
reducing funds available for interest on the Junior Subordinated Debentures (and
hence Distributions on the Preferred Securities), capital expenditures and other
cash flow requirements. In addition, Park Bank's percentage of nonperforming
loans to total loans is somewhat greater than the Banks' percentage of
nonperforming loans to total loans, and as a result United's overall percentage
of nonperforming loans to total loans will increase over its current level. The
Park Acquisition will also result in a decrease from the historical regulatory
capital ratios of the Company. Following completion of the Park Acquisition, it
is anticipated that United's Tier 1 risk-based capital and leverage ratios would
be only somewhat above regulatory minimums for a "well-

17
<PAGE>
capitalized" institution, and that United's total risk-based capital ratio will
be above the regulatory minimum for an "adequately capitalized" institution but
below the regulatory minimum for a "well-capitalized" institution. Accordingly,
United will be deemed "adequately capitalized" for purposes of various federal
banking regulations applicable to United. These lower capital ratios could
inhibit the Company's ability to effect certain acquisitions in the future or
result in other regulatory limitations, especially if the Company should
experience adverse results of operations or other events causing further
decreases in tangible capital. There can be no assurance that either the
subsidiary banks or United will be able to maintain capital at levels which will
not result in adverse operating or financial restrictions or that access to
adequate capital or capital on terms satisfactory to United will exist in the
event capital restoration is necessary or desirable. See "Acquisition of Park";
"Supervision and Regulation."

GOVERNMENT REGULATION

The banking industry is highly regulated by both federal and state
regulatory authorities. United and its subsidiaries are subject to supervision
and regular examinations by agents of the Federal Reserve Board, the Office of
the Comptroller of the Currency, the Federal Deposit Insurance Corporation or
the Minnesota Department of Commerce. Under federal and state banking law,
United and its subsidiaries are subject to substantial supervision and
limitations with respect to making loans, extending credit, purchasing
securities, paying dividends, making acquisitions, branching and many other
aspects of the banking business. Regulation includes among other things, capital
reserve requirements, dividend limitations, limitations on products and services
offered, geographical limits, consumer credit regulations, community investment
requirements and restrictions on transactions with affiliated parties. Financial
institution regulation has been the subject of significant legislation in recent
years, and may be the subject of further significant legislation in the future,
none of which is within the control of United. This regulation substantially
affects the business and financial results of all financial institutions and
holding companies, including United and the subsidiary banks, and United is not
able to predict the impact of changes in such regulations on United's business
and profitability, some of which may be materially adverse to United. See
"Supervision and Regulation."

INTEREST RATE RISK

United's ability to pay interest on the Junior Subordinated Debentures (and
consequently United Capital's ability to pay Distributions on the Preferred
Securities) is substantially dependent on each subsidiary bank's cash flow and
net income. The net income of each bank depends to a great extent upon its net
interest rate spread, which is the difference between the average interest rate
earned by the bank on its loans, securities and other interest-earning assets,
and the average interest rate it pays on deposits and other interest-bearing
liabilities. Interest rates are highly sensitive to many factors beyond the
control of the banks, including general economic conditions and policies of
various governmental and regulatory authorities. Increases or decreases in
interest rates may cause significant decreases in the net interest income and
net income of the banks. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Asset/Liability Management -- Interest
Rate Sensitivity."

LOCAL ECONOMIC CONDITIONS

The success of United depends to a great extent upon general economic
conditions in the communities it serves, primarily the Minneapolis-St. Paul
metropolitan area and southeastern Minnesota, and particularly conditions
affecting small and medium sized businesses which are a significant portion of
United's borrowers. A decline in the economy of these areas could have an
adverse effect on United's business, including the demand for new loans,
refinancing activity, the ability of borrowers to repay outstanding loans and
the value of loan collateral, and could adversely affect the Banks' and Park
Bank's net income. See "Business -- Banks" and "Business -- Lending and
Investments."

COMPETITION

The financial services industry is rapidly changing and highly competitive.
United competes with the system banks of two large multi-bank holding companies,
as well as numerous other banks, savings and loan associations, credit unions,
securities brokerage firms and other financial services companies. Some of these

18
<PAGE>
competitors have greater financial and other resources than United. No assurance
can be given that United will be able to continue to compete successfully in
these markets. In addition, recent legislation permitting nationwide interstate
banking and branching could increase competition by both in-state and
out-of-state banking or other financial institutions, and as a result could
adversely affect United's business. See "Business -- Competition."

DEPENDENCE UPON KEY PERSONNEL

The continued success of United is substantially dependent upon the efforts
of the directors and executive officers of United, in particular, R. Scott
Jones, Chairman and Galen T. Pate, President. The success of United depends in
large part on the retention of present key management personnel, and upon the
ability to hire and retain additional qualified personnel in the future when
needed. United does not have employment contracts with any management personnel
or any key-person life insurance coverage on any management personnel. See
"Management."

CONCENTRATION OF OWNERSHIP IN MANAGEMENT

Assuming they do not purchase shares in the offering of United's Common
Stock occurring concurrently with this Offering, following completion of such
Common Stock offering, the directors and officers of United, the principal
executive officers of United's subsidiaries and the United Employee Stock
Ownership Plan will hold approximately 43.8% (assuming the minimum number of
shares of Common Stock are sold in the concurrent offering) of the United Common
Stock then outstanding. In addition, senior management has received, and may in
the future receive, stock options under the 1994 Stock Option Plan, which if
exercised would increase the number of shares of United Common Stock held by
management. Because of such share ownership, these individuals may be able to
exercise significant influence in the election of members of United's Board of
Directors and the outcome of other corporate actions. See "Management" and
"Principal Shareholders."

POSSIBLE LACK OF AVAILABLE INFORMATION

The Company anticipates that it will not be required to register the
Preferred Securities or the Junior Subordinated Debentures pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and does not
presently intend voluntarily to effect such a registration. Following the
offering, the Company will be subject to the periodic and other reporting
requirements of the Exchange Act for the 1997 calendar year pursuant to Section
15(d) thereof. Thereafter, provided the Preferred Securities are then held by
less than 300 holders of record at the beginning of any subsequent fiscal year
the Company could cease to be subject to the obligation to file such reports
with respect to such fiscal year. The Company anticipates that the Preferred
Securities will be held by less than 300 holders of record at the end of 1997,
and therefore that it will then cease to be subject to the reporting
requirements of the Exchange Act at that time. The Company intends to provide
quarterly and annual financial information to the holders of the Preferred
Securities even if not required to do so pursuant to the Exchange Act. See
"Additional Information."

ACQUISITION OF PARK

THE INFORMATION CONTAINED IN THIS PROSPECTUS WITH RESPECT TO THE PARK
ACQUISITION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE TEXT OF
THE MERGER AGREEMENT, A COPY OF WHICH HAS BEEN FILED AS AN EXHIBIT TO THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART.

GENERAL

United's wholly-owned subsidiary, PFC Acquisition Corp. ("Newco") and PFC
have entered into the Merger Agreement, pursuant to which Newco will merge into
PFC, with PFC as the surviving corporation (the "Merger"). All conditions to the
Merger, including receipt of applicable regulatory approvals, have been
satisfied or waived, with the only remaining condition being the consummation of
the sale of the Preferred Securities offered hereby. It is expected that the
Merger will be consummated concurrently with the closing of this Offering.
Following the Merger, United expects to continue operations of Park Bank in a
manner substantially consistent with past practice and plans to retain the
existing management of Park Bank.

19
<PAGE>

PFC began operations as a one-bank holding company on October 1, 1975. PFC
owns all of the issued and outstanding capital stock of Park Bank, formerly
known as Park National Bank of St. Louis Park, which was chartered in 1963. Park
Bank, with assets of approximately $203 million as of September 30, 1996,
engages in commercial and consumer banking activities primarily in the western
and northwestern portions of the seven-county Minneapolis-St. Paul metropolitan
area. Management of United believes that the acquisition of Park Bank will (i)
broaden the base of operations for the entire United consolidated group and
could diversify risk that may exist in each market area; (ii) result in
economies of scale due to the combination of resources; (iii) result in a larger
organization that should better enable management to attract well-qualified
employees and provide opportunities to broaden access to capital markets and
acquisition opportunities; and (iv) allow each of United's subsidiary banks to
access the products, services, talents and capabilities of the other subsidiary
banks and their management and employees. See "Business -- Growth Strategies."

BUSINESS OF PARK BANK

Park Bank provides a wide range of commercial and consumer banking products
and services for small-to-medium-sized businesses, consumers and professionals.
Park Bank has a market niche focused on the lending and cash management needs of
owner-operated businesses in light manufacturing, wholesale/ distribution and
service industries with sales of $250,000 to $25 million. At September 30, 1996,
77% of Park Bank's loans were commercial, commercial real estate or commercial
construction loans, with the real estate loans primarily placed on
owner-occupied facilities. The commercial lending activities are principally in
the western and northwestern portions of the seven-county Minneapolis-St. Paul
metropolitan area.

Park Bank provides its consumer customers with a competitive variety of
deposit products and services, installment and home equity line of credit loans,
discount brokerage services, and other customary banking services. A majority of
Park Bank's consumer business is originated within a two-to-three mile radius of
its banking offices in St. Louis Park and New Hope, Minnesota.

Park Bank competes with the system banks of two large multi-bank holding
companies, as well as numerous other banks, savings and loan associations,
credit unions, securities brokerage firms and other financial services
companies. Management believes that the experience and reputation of Park Bank
in the small-to-medium-sized business market is very complementary to that of
Signal Bank, which will enhance the ability of both banks to compete more
effectively through the sharing of resources and expertise, such as SBA loan
programs.

Park Bank presently leases its main office, consisting of approximately
27,000 square feet located at 5353 Wayzata Boulevard, St. Louis Park, Minnesota,
under a lease which expires on October 31, 2004, with several options to renew.
Park Bank operates a branch office in an approximately 5,200 square foot
detached building owned by Park Bank and located at 7001 Bass Lake Road, New
Hope, Minnesota. Management believes that Park Bank's facilities are adequate to
meet its foreseeable needs. As of September 30, 1996, PFC and Park Bank employed
78 persons, 65 on a full-time basis and 13 on a part-time basis.

TERMS OF THE PARK ACQUISITION

In connection with the Merger, the shareholders of PFC will receive
aggregate cash consideration estimated to be approximately $46 million (the
actual consideration will be based on the November 30, 1996 book value of PFC
plus a premium plus a fixed daily accrual representing earnings from November
30, 1996 through the closing date of the Park Acquisition). Following the Park
Acquisition, United will own all of the issued and outstanding stock of PFC
which in turn owns all of the issued and outstanding stock of Park Bank. For
accounting purposes, the Park Acquisition will be accounted for under the
purchase method for business combinations, which requires adjusting the assets
and liabilities of Park Bank to their fair value and the recording of goodwill
at an amount equal to the difference between the aggregate cash payment and the
fair value of the tangible assets and liabilities. The Park Acquisition is
subject to various conditions, including bank regulatory approval, all of which
have been satisfied or waived with the only remaining condition being the
consummation of the sale of the Preferred Securities offered hereby.

20
<PAGE>
In the Merger Agreement, PFC and the Park Financial Corporation Common Stock
Revocable Trust (the "Trust"), a majority shareholder of PFC, have made various
representations and warranties relating to the due organization of PFC and Park
Bank, authorization of PFC to enter into the Merger Agreement, capitalization
and financial statements of PFC and Park Bank and other matters customary in
transactions of this type. The Merger Agreement includes covenants obligating
PFC and Park Bank to conduct their operations pending closing of the Merger in
the ordinary course of business and in compliance with various restrictions
intended to protect the financial condition of PFC and Park Bank and customary
in transactions of this type.

Pursuant to a separate Indemnification Agreement, the Trust and certain
beneficiaries of the Trust (the "Indemnifying Parties") have agreed to indemnify
United, the surviving corporation of the Merger, and Park Bank from and against
any and all claims, losses, damages, liabilities or expenses arising or incurred
within six years after the Merger as a result of any claims, actions or
proceedings made or brought against United, the surviving corporation of the
Merger, and Park Bank by the Indemnifying Parties or the other shareholders of
PFC for any or no reason. There will be no indemnification for claims brought by
third parties, or for claims based upon inaccuracies of the representations and
warranties made by PFC and the Trust in the Merger Agreement.

FINANCING

The aggregate financing for the Park Acquisition will come from the proceeds
from this Offering, the proceeds from the sale of United's Common Stock
occurring concurrently with this Offering in the approximate minimum amount of
$5 million (after deducting offering expenses), cash on hand in the aggregate
amount of $7 million, and a loan from Firstar in the amount of $24 million. In
addition to providing financing for the Park Acquisition, the net proceeds from
the sale of the Junior Subordinated Debentures (purchased with the proceeds from
the Preferred Securities) and the net proceeds from the sale of the Common Stock
will also be used to increase United's qualifying "Tier 1" capital. "Tier 1"
capital is generally defined as (i) the sum of common shareholders' equity,
qualifying perpetual preferred stock (subject to certain limitations) and
minority interests in the equity accounts of consolidated subsidiaries, less
(ii) goodwill and other intangibles.

United and Firstar have entered into a Loan Agreement, under which Firstar
is providing a loan of up to an aggregate amount of $27 million, of which $24
million will enable United to complete the Park Acquisition. The loan is for a
five-year term, with interest payable quarterly and principal (based on a ten-
year amortization) payable annually. Interest will accrue at a rate equal to 140
basis points in excess of the three-month LIBOR Rate. All indebtedness of United
to Firstar under the loan will be secured by a pledge of all of the stock of
Park Bank, Signal Bank and Goodhue Bank. The Loan Agreement with Firstar
contains warranties and covenants customary in loan transactions of this type,
including: (i) the Company is duly organized and has the corporate power to
conduct its business and to execute the Loan Agreement; (ii) the Company and the
Bank will comply with all applicable laws; (iii) the Company and the Banks are
not subject to litigation or regulatory proceedings; (iv) the Company and the
Banks will not incur additional indebtedness; (v) the Company's property will
not be subject to any additional liens; (iv) the Company will pay all taxes and
other liabilities when due; (vi) the Company will provide periodic financial
information to Firstar; and (vii) the Company will cause each Bank to maintain
the following financial covenants: (a) a ratio of total tangible equity plus
loan loss reserves to all assets of at least 7.0%; (b) a ratio of nonperforming
loans plus other real estate to total loans plus other real estate of not
greater than 3.0%; (c) a ratio of nonperforming loans plus other real estate to
total tangible equity plus loan loss reserves of not greater than 24.0%; and (d)
an average return on assets of at least 0.75% for Signal Bank and Goodhue Bank,
and 0.45% for Park Bank. In the event that the Company breaches any of its
representations or agreements under the Loan Agreement, or defaults on any other
indebtedness, or suffers a material adverse change in its business or files
bankruptcy or is otherwise insolvent, Firstar may declare the entire unpaid
principal balance of the loan to be immediately due and payable, and may
foreclose upon the stock of Park Bank, Signal Bank and Goodhue Bank pledged to
Firstar.

21
<PAGE>
USE OF PROCEEDS

All of the proceeds from the sale of Preferred Securities will be invested
by United Capital in the Junior Subordinated Debentures. The net proceeds to the
Company from the sale of Junior Subordinated Debentures are estimated to be
$10,159,000 net of estimated underwriting commission, the Advisory Fee and other
estimated offering expenses. The Company will use the net proceeds from the sale
of Junior Subordinated Debentures, together with the proceeds from the offering
of the Company's Common Stock occurring concurrently with the Offering of the
Preferred Securities, to provide a portion of the financing for the Park
Acquisition and to increase the Company's qualifying "Tier 1" capital in order
for the Company to have sufficient capital to consummate the Park Acquisition.
The Preferred Securities are expected to qualify as Tier 1 capital. See
"Supervision and Regulation."

In addition to the net proceeds from the issuance of the Junior Subordinated
Debentures, United will receive an approximate minimum amount of $5 million from
the sale of its Common Stock occurring concurrently with this Offering and $24
million from the proceeds of a loan from Firstar, and will obtain $7 million
from cash-on-hand, to provide the financing for the Park Acquisition, estimated
to be $46 million in the aggregate. See "Acquisition of Park."

ACCOUNTING TREATMENT

For financial reporting purposes, United Capital will be treated as a
subsidiary of the Company and, accordingly, the accounts of United Capital will
be included in the consolidated financial statements of the Company. The
Preferred Securities will be presented as a separate line item in the
consolidated balance sheet of the Company under the caption "Company Obligated
Mandatorily Redeemable Preferred Securities of Subsidiary Trust Holding Solely
Junior Subordinated Debentures," and appropriate disclosures about the Preferred
Securities, the Guaranty and the Junior Subordinated Debentures will be included
in the notes to consolidated financial statements. For financial reporting
purposes, the Company will record Distributions payable on the Preferred
Securities as minority interest in preferred securities dividends of subsidiary
in the consolidated statements of operations.

22
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of United as of September
30, 1996, and pro forma capitalization of United after giving effect to the Park
Acquisition, the sale of the Preferred Securities offered in this Offering, the
sale of the minimum number of shares of Common Stock offered by United
concurrently with this Offering and the proceeds from the financing from
Firstar. See "Acquisition of Park." In addition, certain capital ratios are also
presented. The table should be read in conjunction with the financial statements
and related notes contained elsewhere herein.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
------------------------
ACTUAL PRO FORMA (1)
--------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt.......................................................................... $ 3,150 $ 27,150
Company obligated mandatorily redeemable preferred securities of subsidiary trust
holding solely junior subordinated debentures (2)...................................... -- 10,159
Stockholders' equity
Common Stock, $.01 par value; 5,000,000 shares authorized; 546,686 shares issued and
outstanding (actual); 593,846 shares issued and outstanding (pro forma).............. 5 6
Additional paid-in capital............................................................ 21,016 25,984
Retained earnings..................................................................... 18,918 18,918
Unrealized loss on securities available for sale...................................... (59) (59)
--------- -------------
Total stockholders' equity.......................................................... 39,880 44,849
--------- -------------
Total capitalization.................................................................... $ 43,030 $ 82,158
--------- -------------
--------- -------------

Regulatory capital ratios (3):
Tier 1 risk-based capital............................................................. 13.4% 7.0%
Total risk-based capital.............................................................. 14.4% 8.2%
Leverage.............................................................................. 8.6% 5.0%
</TABLE>

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

(1) The pro forma information set forth above as of September 30, 1996 may not
be indicative of the financial condition of the Company on the date of the
Park Acquisition which is expected to close in January, 1997.

(2) The subsidiary trust is United Capital which is a wholly-owned subsidiary of
the Company and holds the Junior Subordinated Debentures as its sole asset.

(3) Proforma regulatory capital ratios include as Tier I capital Company
obligated mandatorily redeemable preferred securities of subsidiary trust
holding solely junior subordinated debentures as Tier 1 capital.

23
<PAGE>
SELECTED FINANCIAL DATA

The following tables presented below reflect certain consolidated financial
information of United on an historical basis as of and for the dates indicated
and on an unaudited pro forma basis as of and for the year ended December 31,
1993 giving effect to the merger of Goodhue and Signal which was accounted for
using the purchase method of accounting (appearing in Table 1); certain
financial information of PFC on an historical basis as of and for the dates
indicated (appearing in Table 2); and certain unaudited pro forma consolidated
financial information of United giving effect to the Park Acquisition (including
related debt and equity transactions) using the purchase method of accounting
(appearing in Table 3). For a description of the purchase method of accounting
with respect to the merger with Goodhue and the Park Acquisition and the related
effects on the historical financial statements of United, see unaudited Pro
Forma Consolidated Financial Statements of United included elsewhere herein. The
historical consolidated financial data as of and for the five years ended
December 31, 1995 (except United as of and for the year ended December 31,
1993), are derived from audited consolidated financial statements of United and
PFC. The historical consolidated financial data as of and for the nine months
ended September 30, 1996 and 1995 are derived from the unaudited historical
financial statements of United and PFC and reflect, in the opinions of
management of United and PFC, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of such data. The
results of operations for the nine months ended September 30, 1996 may not be
indicative of results of operations to be obtained for the entire fiscal year.
The selected consolidated financial and other data should be read in conjunction
with each of United's and PFC's Consolidated Financial Statements and related
notes included herein and in conjunction with the unaudited Pro Forma
Consolidated Financial Statements and related notes included herein. See "Index
to Financial Information" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

24
<PAGE>

<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED AS OF AND FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------
1996 1995 1995 1994 1993 (1) 1992 (2) 1991 (2)
--------- --------- --------- --------- ----------- --------- ---------
(PRO FORMA)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
UNITED -- TABLE 1

OPERATING DATA
Interest income................... $ 25,001 $ 22,919 $ 31,206 $ 25,516 $ 23,930 $ 11,276 $ 12,783
Interest expense.................. 10,445 9,397 12,848 9,159 9,035 4,334 6,470
--------- --------- --------- --------- ----------- --------- ---------
Net interest income............... 14,556 13,522 18,358 16,357 14,895 6,942 6,313
Provision for loan and lease
losses........................... 146 41 61 234 605 488 2,000
--------- --------- --------- --------- ----------- --------- ---------
Net interest income after
provision for loan and lease
losses........................... 14,410 13,481 18,297 16,123 14,290 6,454 4,313
Noninterest income................ 3,448 2,886 3,919 3,837 3,947 2,419 1,808
Noninterest expense............... 12,775 12,147 16,531 16,131 14,995 6,537 5,609
--------- --------- --------- --------- ----------- --------- ---------
Income before income taxes and
cumulative effect of change in
accounting principle............. 5,083 4,220 5,685 3,829 3,242 2,336 512
Income tax expense................ 1,678 1,249 2,056 1,396 1,138 725 171
--------- --------- --------- --------- ----------- --------- ---------
Income before cumulative effect of
change in accounting principle... 3,405 2,971 3,629 2,433 2,104 1,611 341
Cumulative effect of change in
accounting principle (3)......... -- -- -- -- 181 -- --
--------- --------- --------- --------- ----------- --------- ---------
Net income........................ $ 3,405 $ 2,971 $ 3,629 $ 2,433 $ 2,285 $ 1,611 $ 341
--------- --------- --------- --------- ----------- --------- ---------
--------- --------- --------- --------- ----------- --------- ---------
Income per common share before
cumulative effect of change in
accounting principle............. $ 6.20 $ 5.82 $ 6.97 $ 4.82 $ 4.17 $ 5.43 $ 1.13
Cumulative effect of change in
accounting principle............. -- -- -- -- .36 -- --
--------- --------- --------- --------- ----------- --------- ---------
Net income per common share....... $ 6.20 $ 5.82 $ 6.97 $ 4.82 $ 4.53 $ 5.43 $ 1.13
--------- --------- --------- --------- ----------- --------- ---------
--------- --------- --------- --------- ----------- --------- ---------
Weighted average common shares
outstanding...................... 549,079 510,770 520,306 504,686 505,084 296,654 301,142
--------- --------- --------- --------- ----------- --------- ---------
--------- --------- --------- --------- ----------- --------- ---------

BALANCE SHEET DATA
Total assets...................... $ 441,850 $ 411,431 $ 421,841 $ 383,984 $ 347,687 $ 155,095 $ 152,370
Net loans and leases.............. 277,345 257,376 263,006 244,125 217,317 92,516 83,262
Investment securities............. 103,453 98,896 101,837 83,434 82,610 40,938 43,886
Deposits.......................... 351,825 325,027 340,723 312,947 291,590 140,446 139,317
Securities sold under repurchase
agreements....................... 27,556 27,966 23,173 27,747 15,321 -- --
Notes payable and other
borrowings....................... 16,709 16,813 15,762 12,412 10,549 1,572 1,144
Total stockholders' equity........ 39,880 35,751 36,969 27,525 26,745 11,943 10,674

KEY RATIOS
Return on average assets (4)(5)... 1.06% 1.01% 0.91% 0.68% 0.61% 1.10% 0.23%
Return on average equity (4)(5)... 12.33 13.57 11.65 9.22 8.22 14.55 3.24
Average stockholders' equity to
average assets................... 8.59 7.45 7.79 7.34 7.48 7.59 7.20
Net interest margin (4)........... 5.03 5.10 5.13 5.12 5.01 5.23 4.72
Operating efficiency ratio........ 70.96 74.03 74.21 79.88 79.58 69.83 69.12
Nonperforming loans/total loans
and leases....................... 0.43 0.41 0.28 0.27 0.64 0.45 2.72
Allowance for loan and lease
losses/total loans and leases.... 1.02 1.12 1.09 1.16 1.24 1.53 2.57
Allowance for loan and lease
losses/ nonperforming loans and
leases........................... 239.80 269.94 385.51 423.74 192.99 336.07 94.32
Common stock dividend payout ratio
(6).............................. 0.00 0.00 0.00 0.00 10.37 0.00 0.00
Ratio of earnings to fixed charges
(7)
Including interest on
deposits....................... 1.48x 1.45x 1.44x 1.42x 1.36x 1.53x 1.08x
Excluding interest on
deposits....................... 3.83x 3.31x 3.28x 3.27x 3.94x 16.68x 3.76x
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED AS OF AND FOR THE
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
PFC -- TABLE 2

OPERATING DATA
Interest income............................... $ 11,857 $ 11,011 $ 14,969 $ 11,663 $ 9,744 $ 10,549 $ 12,907
Interest expense.............................. 4,519 4,126 5,672 3,538 2,927 4,229 6,604
--------- --------- --------- --------- --------- --------- ---------
Net interest income........................... 7,338 6,885 9,297 8,125 6,817 6,320 6,303
Provision for loan and lease losses........... 329 540 720 740 552 678 1,974
--------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for loan
and lease losses............................. 7,009 6,345 8,577 7,385 6,265 5,642 4,329
Noninterest income............................ 1,238 1,260 1,659 1,556 2,102 2,824 2,894
Noninterest expense........................... 4,606 4,723 6,338 6,076 6,234 6,557 6,862
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and cumulative
effect of change in accounting principle..... 3,641 2,882 3,898 2,865 2,133 1,909 361
Income tax expense............................ 1,402 1,096 1,497 1,030 659 579 228
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative effect of change in
accounting principle and extraordinary
credit....................................... 2,239 1,786 2,401 1,835 1,474 1,330 133
Cumulative effect of change in accounting
principle (3)................................ -- -- -- -- 850 -- --
Tax benefit arising from carry forward of
prior year operating loss.................... -- -- -- -- -- 93 62
--------- --------- --------- --------- --------- --------- ---------
Net income.................................... $ 2,239 $ 1,786 $ 2,401 $ 1,835 $ 2,324 $ 1,423 $ 195
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Income per common share before cumulative
effect of change in accounting principle and
extraordinary credit......................... $ 4.74 $ 3.78 $ 5.09 $ 3.89 $ 3.15 $ 2.80 $ .28
Cumulative effect of change in accounting
principle.................................... -- -- -- -- 1.81 -- --
Extraordinary credit.......................... -- -- -- -- -- .20 .13
--------- --------- --------- --------- --------- --------- ---------
Net income per common share................... $ 4.74 $ 3.78 $ 5.09 $ 3.89 $ 4.96 $ 3.00 $ 0.41
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted average common shares outstanding.... 472,710 471,510 471,540 471,931 468,692 473,668 479,441
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------

BALANCE SHEET DATA
Total assets.................................. $ 208,527 $ 193,300 $ 200,570 $ 181,505 $ 157,650 $ 153,524 $ 156,092
Net loans and leases.......................... 116,569 114,474 113,499 102,882 94,368 82,035 87,187
Investment securities......................... 71,780 61,641 63,765 55,632 45,468 46,941 43,510
Deposits...................................... 164,966 156,334 165,754 156,704 135,363 132,037 136,151
Total stockholders' equity.................... 24,592 21,934 22,888 19,237 18,152 15,640 14,557

KEY RATIOS
Return on average assets (4)(5)............... 1.48% 1.26% 1.27% 1.08% 0.99% 0.94% 0.13%
Return on average equity (4)(5)............... 12.58 11.86 11.35 9.72 8.90 9.22 1.35
Average stockholders' equity to average
assets....................................... 11.76 10.61 11.19 11.14 11.13 10.18 9.44
Net interest margin (4)....................... 5.13 5.14 5.24 5.14 4.95 4.68 4.39
Operating efficiency ratio.................... 53.71 57.98 57.85 62.76 69.90 71.71 74.61
Nonperforming loans/total loans and leases.... 1.19 .59 1.07 1.69 1.25 4.38 5.95
Allowance for loan and lease losses/total
loans and leases............................. 1.83 1.98 2.14 1.93 1.61 1.74 1.78
Allowance for loan and lease
losses/nonperforming loans and leases........ 154.36 335.85 199.20 113.93 129.18 39.78 29.85
Common stock dividend payout ratio (6)........ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Ratio of earnings to fixed charges: (7)
Including interest on deposits.............. 1.79x 1.68x 1.66x 1.77x 1.68x 1.43x 1.05x
Excluding interest on deposits.............. 6.81x 7.29x 6.65x 8.76x 7.58x 5.20x 1.51x
</TABLE>

26
<PAGE>

<TABLE>
<CAPTION>
AS OF AND FOR THE AS OF AND FOR
NINE MONTHS ENDED THE
SEPTEMBER 30, YEAR ENDED
-------------------- DECEMBER 31,
1996 1995 1995
--------- --------- ----------------
(DOLLARS IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C> <C>
PRO FORMA -- TABLE 3(8)

KEY RATIOS
Return on average assets (4)........................................... 0.64% 0.50% 0.43%
Return on average equity (4)........................................... 9.55 7.96 6.94
Average stockholders' equity to average assets......................... 6.65 6.26 6.17
Net interest margin (4)................................................ 4.87 4.91 4.86
Operating efficiency ratio............................................. 73.52 77.70 77.77
Nonperforming loans/total loans and leases............................. .66 1.22 0.53
Allowance for loan and lease losses/total loans and leases............. 1.25 1.37 1.40
Allowance for loan and lease losses/nonperforming loans and leases..... 189.12 112.22 264.26
Common stock dividend payout ratio (6)................................. 0.00 0.00 0.00
Ratio of earnings to fixed charges: (7)
Including interest on deposits....................................... 1.38x 1.30x 1.30x
Excluding interest on deposits....................................... 2.67x 2.28x 2.26x
</TABLE>

- ------------------------------
(1) Combines the results of operations and financial condition of Signal and
Goodhue.

(2) Includes the accounts of Signal only.

(3) Cumulative effect of change in accounting principle in 1993 represents the
adoption of Statement of Financial Accounting Standard (SFAS) No. 109
Accounting for Income Taxes.

(4) Annualized for the nine months ended September 30, 1996 and 1995.

(5) Computed using income before cumulative effect of change in accounting
principle.

(6) Dividends per share divided by net income per share.

(7) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of earnings before income taxes and fixed charges. Fixed
charges consist of one-third rent expense and interest expense.

(8) Combines the results of operations and financial condition of United and
PFC.

27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

BASIS OF PRESENTATION

The following discussion and analysis provides information regarding
United's historical results of operations and financial condition for the years
ended December 31, 1995, 1994 and 1993 and for the nine months ended September
30, 1996 and 1995. This discussion and analysis should be read in conjunction
with United's Consolidated Financial Statements and the notes thereto and the
other financial information included herein.

The comparison of 1994 data to 1993 data is substantially affected by the
merger of Goodhue into Signal on January 1, 1994. For comparative purposes, an
unaudited pro forma consolidated balance sheet and statement of income of Signal
and Goodhue as of December 31, 1993 and for the year then ended, prepared as
though the Signal and Goodhue merger had occurred on January 1, 1993, have been
included elsewhere herein. See "Index to Financial Information." Pro forma
results do not purport to represent what United's results of operations or
financial condition would actually have been if the transactions had occurred on
the dates indicated, and do not project United's results or financial condition
for or to any future period or date. For purposes of this Management's
Discussion and Analysis, 1994 financial data will be compared to pro forma 1993
financial data. The financial data for 1992 and 1991 include the financial
information of Signal only.

The Park Acquisition, which will be consummated concurrently with completion
of this Offering, will substantially affect United's future operations and will
have a significant impact on comparisons of income, expense and balance sheet
items for 1997 periods to 1996 periods. United expects the Park Acquisition will
be completed in January, 1997. United intends to account for the Park
Acquisition using the purchase method of accounting. As a result of the Park
Acquisition, among other things, United will incur a substantial increase in
long-term debt and related interest expense and in goodwill and related goodwill
amortization. Although management believes that following the Park Acquisition
the Company will be "adequately capitalized" for purposes of various federal
banking regulations, the recording of the goodwill in connection with the Park
Acquisition will result in a significant decrease in tangible capital and in
regulatory capital ratios from those in existence prior to the Park Acquisition.

OVERVIEW

United's net income for the nine months ended September 30, 1996 increased
$434,000 or 14.6% to $3.4 million from $3.0 million for the nine months ended
September 30, 1995. Net income for the year ended December 31, 1995 increased
$1.2 million or 49.2% to $3.6 million from $2.4 million in 1994. Net income
before the cumulative effect of change in accounting principle in 1994 increased
$329,000 or 15.6% from $2.1 million in 1993.

Total assets at September 30, 1996 increased $20.0 million or 4.7% to $441.8
million from $421.8 million at December 31, 1995. Total assets at December 31,
1995 increased $37.8 million or 9.8% from $384.0 million at December 31, 1994
which was an increase of $36.3 million or 10.4% over the total assets at
December 31, 1993.

The annualized return on average assets was 1.06% for the nine months ended
September 30, 1996 compared with 1.01% for the nine months ended September 30,
1995. The return on average assets using income before the cumulative effect of
change in accounting principle was .91% for the year ended December 31, 1995
compared with .68% and .61% for the years ended December 31, 1994 and pro forma
1993, respectively.

The annualized return on average equity was 12.33% for the nine months ended
September 30, 1996 compared with 13.57% for the nine months ended September 30,
1995. The return on average equity using

28
<PAGE>
income before the cumulative effect of change in accounting principle was 11.65%
for the year ended December 31, 1995 compared with 9.22% and 8.22% for the years
ended December 31, 1994 and pro forma 1993, respectively.

RESULTS OF OPERATIONS

NET INTEREST INCOME

Net interest income is interest earned on loans and other earning assets
less interest paid on deposits and other borrowed funds. Earning assets are
categorized as federal funds sold, investment securities and loans and leases.
Interest-bearing liabilities are categorized as deposits, federal funds
purchased and securities sold under repurchase agreements, Federal Home Loan
Bank ("FHLB") advances, and notes payable.

Net interest income for the nine months ended September 30, 1996 increased
$1.0 million or 7.6% to $14.6 million from $13.5 million for the nine months
ended September 30, 1995. Net interest income was positively impacted by an
increase of $32.5 million or 9.2% in average interest-earning assets to $386.8
million for the nine months ended September 30, 1996 from $354.3 million for the
nine months ended September 30, 1995, offset by a decrease of .02% in average
yields on average interest-earning assets to 8.63% for the nine months ended
September 30, 1996 from 8.65% for the nine months ended September 30, 1995.
Average interest-earning assets were impacted by an 8.4% increase in average
loans and leases due to continued loan demand and a 15.2% increase in average
taxable investment securities resulting from increased deposit growth in excess
of loan demand. The positive impact to net interest income was partially offset
by the increase of $22.5 million or 7.5% in average interest-bearing liabilities
to $322.9 million for the nine months ended September 30, 1996 from $300.4
million for the nine months ended September 30, 1995 and an increase in the rate
paid on average interest-bearing liabilities of .14% to 4.32% for the nine
months ended September 30, 1996 from 4.18% for the nine months ended September
30, 1995. Average interest-bearing liabilities increased due primarily to an
increase of $34.9 million or 49.6% in money market deposit accounts resulting
from marketing a new money market product that the Company featured as its prime
interest-bearing deposit account. The money market deposit increase partially
resulted in a decrease of $12.5 million in the savings and time deposit accounts
between the periods. The Company also utilized increased FHLB advances of $5.0
million to fund a portfolio of fixed-rate residential real estate loans, while
notes payable were reduced by $2.1 million using proceeds from a stock offering.
The net interest spread declined .16% to 4.31% for the nine months ended
September 30, 1996 from 4.47% for the nine months ended September 30, 1995 while
net interest margin declined to 5.03% from 5.10%. United expects its overall
cost of funds to increase after the Park Acquisition due to the additional
interest expense incurred on long-term debt.

Net interest income for 1995 increased $2.0 million or 12.2% to $18.4
million from $16.4 million for 1994. Net interest income was positively impacted
by an increase of $38.4 million or 12.0% in average interest-earning assets to
$357.8 million for the year ended December 31, 1995 from $319.4 for the year
ended December 31, 1994 and by an increase of .73% in average yields on average
interest-earning assets to 8.72% for 1995 compared to 7.99% for 1994. This
increase was due to a general rising rate environment during 1995. Average
interest-earning assets were impacted by a 9.3% increase in average loans and
leases and a 13.4% increase in average taxable investment securities. The
positive impact to net interest income was partially offset by the increase of
$30.9 million or 11.4% in average interest-bearing liabilities to $301.1 million
for the year ended December 31, 1995 from $270.2 million for the year ended
December 31, 1994 and an increase in the rate paid on average interest-bearing
liabilities of .88% to 4.27% for 1995 from 3.39% for 1994. Average
interest-bearing liabilities increased primarily due to an increase of $35.0
million or 86.4% in money market deposit accounts resulting from marketing a new
money market product that the Company featured as its prime interest-bearing
deposit account. This increase partially resulted in a decrease of $12.0 million
in the savings and time deposit accounts between the periods. The Company
utilized increased FHLB advances of $5.4 million to fund a portfolio of
fixed-rate residential real estate loans. Securities sold under repurchase
agreements increased $5.9 million or 24.9% due to commercial customer demand. As
a result of greater increases in the rates paid on average interest-bearing
liabilities than the increase in yields

29
<PAGE>
on average interest-earning assets, the net interest spread was reduced .15% to
4.45% for 1995 from 4.60% for 1994. Net interest margin was not impacted by the
decrease in spread due to the net increase in average interest-earning assets.

Net interest income for 1994 increased $1.5 million or 9.8% to $16.4 million
from $14.9 for pro forma 1993. Net interest income was positively impacted by an
increase of $22.0 million or 7.4% in average interest-earning assets to $319.4
million for the year ended December 31, 1994 from $297.4 million for the pro
forma year ended December 31, 1993 and offset by a decrease of .06% in average
yields on average interest-earning assets to 7.99% for 1994 from 8.05% for pro
forma 1993. Average interest-earning assets were impacted by a 13.3% increase in
average loans and by a 7.4% decrease in average taxable investment securities.
The net positive impact to net interest income was partially offset by the
increase of $8.6 million or 3.3% increase in average interest-bearing
liabilities to $270.2 million at December 31, 1994 from $261.6 for the pro forma
year ended December 31, 1993 and enhanced by a decrease in the rate paid on
average interest-bearing liabilities of .06% to 3.39% for 1994 from 3.45% for
pro forma 1993. Average interest-bearing liabilities increased primarily due to
an increase of $11.0 million or 87.7% in securities sold under repurchase
agreements resulting from increased marketing of this product. Net interest
spread did not change from 1993 to 1994. Net interest margin increased from
5.01% in 1993 to 5.12% in 1994 due to the net increase in average
interest-earning assets.

The following table presents the changes in net interest income by volume
and rate and the total thereof for the periods indicated. Changes in net
interest income due to both volume and rate have been included in changes due to
rate.

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1996 VS. 1995 1995 VS. 1994
--------------------------------------- ---------------------------------------
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO CHANGE IN DUE TO CHANGE IN
--------------------------------------- ---------------------------------------
VOLUME RATE TOTAL VOLUME RATE TOTAL
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Federal funds sold..................... $ (94) $ (49) $ (143) $ 246 $ 190 $ 436
Taxable investment securities.......... 541 99 640 517 589 1,106
Non-taxable investment securities...... 48 (2) 46 69 (7) 62
Loans and leases....................... 1,547 (8) 1,539 1,956 2,130 4,086
----------- ----- ----------- ----------- ----------- -----------
Total interest-earning assets........ $ 2,042 $ 40 $ 2,082 $ 2,788 $ 2,902 $ 5,690
----------- ----- ----------- ----------- ----------- -----------
----------- ----- ----------- ----------- ----------- -----------

INTEREST-BEARING LIABILITIES:
Deposits -- interest-bearing:
Interest-bearing demand deposits..... $ 6 $ (48) $ (42) $ (32) $ 7 $ (25)
Savings.............................. (99) (98) (197) (259) 7 (252)
Money market......................... 1,133 97 1,230 919 1,325 2,244
Time................................. (270) 374 104 (42) 984 942
----------- ----- ----------- ----------- ----------- -----------
Total interest-bearing deposits.... 770 325 1,095 586 2,323 2,909
Federal funds purchased and securities
sold under repurchase agreements...... (126) 25 (101) 210 402 612
FHLB advances.......................... 224 2 226 312 17 329
Notes payable.......................... (83) (89) (172) (36) (125) (161)
----------- ----- ----------- ----------- ----------- -----------
Total interest-bearing liabilities... $ 785 $ 263 $ 1,048 $ 1,072 $ 2,617 $ 3,689
----------- ----- ----------- ----------- ----------- -----------
----------- ----- ----------- ----------- ----------- -----------
CHANGE IN NET INTEREST INCOME............ $ 1,257 $ (223) $ 1,034 $ 1,716 $ 285 $ 2,001
----------- ----- ----------- ----------- ----------- -----------
----------- ----- ----------- ----------- ----------- -----------

<CAPTION>
YEAR ENDED
DECEMBER 31,
1994 VS. 1993 (1)
---------------------------------------

INCREASE (DECREASE)
DUE TO CHANGE IN
---------------------------------------
VOLUME RATE TOTAL
----------- ----------- -----------

<S> <C> <C> <C>
INTEREST-EARNING ASSETS:
Federal funds sold..................... $ (62) $ 19 $ (43)
Taxable investment securities.......... (333) (307) (640)
Non-taxable investment securities...... 135 (75) 60
Loans and leases....................... 2,506 (297) 2,209
----------- ----- -----------
Total interest-earning assets........ $ 2,246 $ (660) $ 1,586
----------- ----- -----------
----------- ----- -----------
INTEREST-BEARING LIABILITIES:
Deposits -- interest-bearing:
Interest-bearing demand deposits..... $ 10 $ (84) $ (74)
Savings.............................. (30) (112) (142)
Money market......................... (152) 12 (140)
Time................................. 189 (257) (68)
----------- ----- -----------
Total interest-bearing deposits.... 17 (441) (424)
Federal funds purchased and securities
sold under repurchase agreements...... 334 130 464
FHLB advances.......................... 25 (2) 23
Notes payable.......................... (47) 108 61
----------- ----- -----------
Total interest-bearing liabilities... $ 329 $ (205) $ 124
----------- ----- -----------
----------- ----- -----------
CHANGE IN NET INTEREST INCOME............ $ 1,917 $ (455) $ 1,462
----------- ----- -----------
----------- ----- -----------
</TABLE>

- --------------------------
(1) Combines Signal and Goodhue.

30
<PAGE>

The following table presents, for the periods and as of the dates indicated,
information regarding United's average balance sheet. Ratio, yield and rate
information are based on average daily balances during the nine months ended
September 30, 1996 and 1995 and the years ended December 31, 1995, 1994 and
1993. Non-accrual loans are included in the average balances for loans and
leases, net, for the periods indicated.

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
----------------------------------------------------------------
1996 1995
------------------------------- -------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Federal funds sold........ $ 10,102 $ 390 5.16% $ 12,255 $ 533 5.81%
Taxable investment
securities............... 92,895 4,195 6.03% 80,627 3,555 5.90%
Non-taxable investment
securities(2)............ 9,245 355 5.13% 8,011 309 5.16%
Loans and leases(3)....... 274,533 20,061 9.76% 253,371 18,522 9.77%
--------- --------- --------- ---------
Total interest-earning
assets................. 386,775 25,001 8.63% 354,264 22,919 8.65%
Noninterest-earning
assets................... 42,759 41,482
--------- ---------
Total assets............ $ 429,534 $ 395,746
--------- ---------
--------- ---------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
liabilities:
Deposits --
interest-bearing:
Interest bearing demand
deposits............... $ 33,809 $ 246 0.97% $ 33,119 $ 288 1.16%
Savings................. 30,006 455 2.03% 35,399 652 2.46%
Money market............ 105,291 3,516 4.46% 70,391 2,286 4.34%
Time.................... 108,133 4,504 5.56% 115,213 4,400 5.11%
--------- --------- --------- ---------
Total interest-bearing
deposits............. 277,239 8,721 4.20% 254,122 7,626 4.01%
Federal funds purchased
and securities sold under
repurchase agreements.... 25,569 957 5.00% 29,011 1,058 4.88%
FHLB advances............. 12,112 546 6.02% 7,121 320 6.01%
Notes payable............. 7,977 221 3.70% 10,109 393 5.20%
--------- --------- --------- ---------
Total interest-bearing
liabilities............ 322,897 10,445 4.32% 300,363 9,397 4.18%
Noninterest-bearing
liabilities.............. 69,739 66,107
--------- ---------
Total liabilities....... 392,636 366,470
Stockholders' equity...... 36,898 29,276
--------- ---------
Total liabilities and
stockholders' equity... $ 429,534 $ 395,746
--------- ---------
--------- ---------
Net interest income....... $ 14,556 $ 13,522
Net interest spread....... 4.31% 4.47%
Net interest margin....... 5.03% 5.10%

<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------

1995 1994 1993(1)
---------------------------- ---------------------------- ----------------------------
AVERAGE AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- -------- -------- -------- -------- -------- -------- --------
(PRO FORMA)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Federal funds sold........ $ 13,011 $ 761 5.85% $ 7,404 $ 325 4.39% $ 8,917 $ 368 4.13%
Taxable investment
securities............... 83,441 4,949 5.93% 73,555 3,843 5.22% 79,450 4,483 5.64%
Non-taxable investment
securities(2)............ 7,924 406 5.12% 6,593 344 5.22% 4,473 284 6.35%
Loans and leases(3)....... 253,398 25,090 9.90% 231,809 21,004 9.06% 204,553 18,795 9.19%
-------- -------- -------- -------- -------- --------
Total interest-earning
assets................. 357,774 31,206 8.72% 319,361 25,516 7.99% 297,393 23,930 8.05%
Noninterest-earning
assets................... 41,798 39,978 44,722
-------- -------- --------
Total assets............ $399,572 $359,339 $342,115
-------- -------- --------
-------- -------- --------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing
liabilities:
Deposits --
interest-bearing:
Interest bearing demand
deposits............... $ 32,679 $ 364 1.11% $ 35,636 $ 389 1.09% $ 34,895 $ 463 1.33%
Savings................. 34,441 818 2.38% 45,436 1,070 2.35% 46,603 1,212 2.60%
Money market............ 75,567 3,307 4.38% 40,538 1,063 2.62% 46,413 1,203 2.59%
Time.................... 113,905 5,949 5.22% 114,863 5,007 4.36% 110,746 5,075 4.58%
-------- -------- -------- -------- -------- --------
Total interest-bearing
deposits............. 256,592 10,438 4.07% 236,473 7,529 3.18% 238,657 7,953 3.33%
Federal funds purchased
and securities sold under
repurchase agreements.... 29,343 1,454 4.96% 23,487 842 3.58% 12,510 378 3.03%
FHLB advances............. 8,351 504 6.04% 3,000 175 5.83% 2,573 152 5.91%
Notes payable............. 6,794 452 6.65% 7,216 613 8.50% 7,893 552 6.99%
-------- -------- -------- -------- -------- --------
Total interest-bearing
liabilities............ 301,080 12,848 4.27% 270,176 9,159 3.39% 261,633 9,035 3.45%
Noninterest-bearing
liabilities.............. 67,354 62,778 54,901
-------- -------- --------
Total liabilities....... 368,434 332,954 316,534
Stockholders' equity...... 31,138 26,385 25,581
-------- -------- --------
Total liabilities and
stockholders' equity... $399,572 $359,339 $342,115
-------- -------- --------
-------- -------- --------
Net interest income....... $18,358 $16,357 $14,895
Net interest spread....... 4.45% 4.60% 4.60%
Net interest margin....... 5.13% 5.12% 5.01%
</TABLE>

- ----------------------------------
(1) Combines Signal and Goodhue.

(2) Yields are calculated using stated rates, not tax-equivalent rates.

(3) Includes loan fees $814,733 and $682,698 for the nine months ended September
30, 1996 and 1995, respectively and $883,416, $806,104 and $807,639 for the
years ended December 31, 1995, 1994 and pro forma 1993, respectively.

31
<PAGE>
PROVISION FOR LOAN AND LEASE LOSSES

The provision for loan and lease losses was $146,000 for the nine months
ended September 30, 1996, an increase of $105,000 over the provision for loan
and lease losses of $41,000 for the nine months ended September 30, 1995. The
provision for loan and lease losses was $61,000 for the year ended December 31,
1995, a decrease of $173,000 or 73.9% from the year ended December 31, 1994
amount. The provision for loan and lease losses was $234,000 for the year ended
December 31, 1994, a decrease of $371,000 or 61.3% from the pro forma provision
for loan and lease losses of $605,000 for the year ended December 31, 1993.
Annual fluctuations in the provision for loan and lease losses result from
management's regular assessment of the adequacy of the allowance for loan and
lease losses. See "Allowance for Loan and Lease Losses" below. The amount of
loan and lease loss provision to be taken in future periods will depend on
management's assessment of the adequacy of the allowance for loan and lease
losses in relation to the entire loan portfolio.

NONINTEREST INCOME

The following table presents the components of noninterest income for the
periods indicated:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- ---------------------------------
1996 1995 1995 1994 1993 (1)
--------- --------- --------- --------- -----------
(PRO FORMA)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Service charges and other fees................... $ 2,442 $ 2,136 $ 2,923 $ 2,963 $ 3,097
Net investment securities gains (losses)......... -- (23) (32) 79 285
Earnings on cash surrender value life
insurance....................................... 297 291 377 462 385
Gain on sale of assets........................... 394 462 599 333 38
Interest on tax refunds.......................... 277 -- -- -- --
Other............................................ 38 20 52 -- 142
--------- --------- --------- --------- -----------
$ 3,448 $ 2,886 $ 3,919 $ 3,837 $ 3,947
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
</TABLE>

- ------------------------
(1) Combines Signal and Goodhue.

Noninterest income consists mainly of service charges on deposit accounts
and other service fees, earnings on cash surrender value of life insurance and
gain on sale of assets. Noninterest income was $3.4 million for the nine months
ended September 30, 1996, an increase of $562,000 or 19.5% over noninterest
income of $2.9 million for the nine months ended September 30, 1995.
Approximately $306,000 of the increase was primarily due to increased service
charges and overdraft fees. The remaining increase was primarily due to $277,000
of interest received on the tax refunds resulting from the favorable
determination of a tax lawsuit for the years 1979 through 1983 and to a decrease
in gain on sale of assets of $68,000 or 14.7% for the nine months ended
September 30, 1996 compared to the nine months ended September 30, 1995.
Noninterest income was $3.9 million for the year ended December 31, 1995, an
increase of $82,000 or 2.1% over the year ended December 31, 1994. This increase
was primarily due to an increase of $266,000 in gain on sales of assets offset
by a reduction of $111,000 in net investment securities gains (losses) from a
gain of $79,000 for the year ended December 31, 1994 to a loss of $32,000 for
the year ended December 31, 1995 and a decrease of $85,000 in earnings on cash
surrender value of life insurance. Noninterest income was $3.8 million for the
year ended December 31, 1994, a decrease of $110,000 or 2.8% from pro forma
noninterest income of $3.9 million for the year ended December 31, 1993. This
decrease was due primarily to the reduction in net investment securities gains
from $285,000 for the pro forma year ended December 31, 1993 to $79,000 for the
year ended December 31, 1994, and a reduction of $134,000 in service charges and
other fees, and offset by an increase of $295,000 in gain on sale of assets.

32
<PAGE>
NONINTEREST EXPENSE

The following table presents the components of noninterest expense for the
periods indicated:

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- ---------------------------------
1996 1995 1995 1994 1993 (1)
--------- --------- --------- --------- -----------
(PRO FORMA)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Salaries and employee benefits............... $ 7,323 $ 6,866 $ 9,292 $ 8,510 $ 7,642
Occupancy.................................... 646 744 1,208 1,060 958
Depreciation................................. 1,141 912 1,253 1,216 899
Amortization of intangibles.................. 576 618 824 562 562
FDIC assessment.............................. 4 320 351 644 690
Professional fees............................ 267 179 297 468 865
Other real estate expenses................... 6 9 9 507 414
Other........................................ 2,812 2,499 3,297 3,164 2,965
--------- --------- --------- --------- -----------
$ 12,775 $ 12,147 $ 16,531 $ 16,131 $ 14,995
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
</TABLE>

- ------------------------
(1) Combines Signal and Goodhue.

Noninterest expense was $12.8 million for the nine months ended September
30, 1996, an increase of $628,000 or 5.2% over noninterest expense of $12.1
million for the nine months ended September 30, 1995. Noninterest expense was
$16.5 million for the year ended December 31, 1995, an increase of $400,000 or
2.5% over noninterest expense of $16.1 million for the year ended December
31,1994. Noninterest expense was $16.1 million for the year ended December
31,1994, an increase of $1.1 million or 7.6% over noninterest expense of $15.0
million for the pro forma year ended December 31, 1993.

Salaries and employee benefits expense was $7.3 million for the nine months
ended September 30, 1996, an increase of $457,000 or 6.7% over salaries and
employee benefits expense of $6.9 million for the nine months ended September
30, 1995. This increase was due primarily to increased staffing and scheduled
salary adjustments as well as an increased bonus accrual.

Salaries and employee benefits expense was $9.3 million for the year ended
December 31, 1995, an increase of $782,000 or 9.2% over salaries and employee
benefits expense of $8.5 million for the year ended December 31, 1994. This
increase was due to increased staffing and scheduled salary adjustments.
Salaries and employee benefits expense was $8.5 million for the year ended
December 31, 1994, an increase of $868,000 or 11.4% over salaries and employee
benefits expense of $7.6 million for the pro forma year ended December 31, 1993.
This increase was due primarily to the installation of a formula based incentive
plan and scheduled salary adjustments.

Occupancy expense was $646,000 for the nine months ended September 30, 1996,
a decrease of $98,000 or 13.2% from occupancy expense of $744,000 for the nine
months ended September 30, 1995. This decrease was due to the receipt of
property tax refunds for certain property tax valuations that had been
contested. Occupancy expense was $1.2 million for the year ended December 31,
1995, an increase of $148,000 or 14.0% over occupancy expense of $1.1 million
for the year ended December 31, 1994. This increase was due to additional space
leased in 1995 to house the operations of the data processing subsidiary,
Unitech. Occupancy expense was $1.1 million for the year ended December 31,
1994, an increase of $102,000 or 10.6% over occupancy expense of $1.0 million
for the pro forma year ended December 31, 1993. This increase was due to
additional space leased in 1994 to house the operations of the holding company.

Depreciation expense was $1.1 million for the nine months ended September
30, 1996, an increase of $229,000 or 25.1% over depreciation expense of $912,000
for the nine months ended September 30, 1995. This increase was due to the
acceleration of the amortization of leasehold improvements resulting from
terminating a lease for Signal Bank's operations center in the Signal Hills
Center effective January 31, 1997.

33
<PAGE>

Depreciation expense was $1.3 million for the year ended December 31, 1995, an
increase of $37,000 or 3.0% over depreciation expense of $1.2 million for the
year ended December 31, 1994. This increase was due to the amortization of
leasehold improvements relating to additional space leased and depreciation of
equipment purchased. Depreciation expense was $1.2 million for the year ended
December 31, 1994, an increase of $317,000 or 35.3% over depreciation expense of
$899,000 for the pro forma year ended December 31, 1993. This increase was due
primarily to additional computer equipment purchased in 1994 to process data for
both Banks.

Historically, intangible amortization has related to goodwill and other
intangibles resulting from the merger of Signal with Goodhue. Amortization of
intangibles expense was $576,000 for the nine months ended September 30, 1996, a
decrease of $42,000 or 6.8% from amortization of intangibles expense of $618,000
for the nine months ended September 30, 1995. Amortization of intangibles
expense was $824,000 for the year ended December 31, 1995, an increase of
$262,000 or 46.6% over amortization of intangibles expense of $562,000 for the
year ended December 31, 1994. The fluctuation between the nine month and twelve
month periods is due to the difference in amortization periods assigned to
various assets and liabilities which were adjusted to fair market value at the
time of the merger. Amortization of intangibles expense was $562,000 for the
year ended December 31, 1994 equal to the amortization of intangibles expense of
$562,000 for the pro forma year ended December 31, 1993. Due to purchase
accounting and resulting goodwill, United expects amortization of intangible
expense to increase after the Park Acquisition by approximately $1.4 million
annually.

FDIC assessment expense was $4,000 for the nine months ended September 30,
1996, a decrease of $316,000 or 98.8% from FDIC assessment expense of $320,000
for the nine months ended September 30, 1995. This reduction was due to the FDIC
lowering the assessment rate to $750 per Bank per quarter from 4 cents per $100
of deposits. FDIC assessment expense was $351,000 for the year ended December
31, 1995, a decrease of $293,000 or 45.5% from FDIC assessment expense of
$644,000 for the year ended December 31, 1994. This decrease was due to the FDIC
lowering the assessment rate from 23 cents per $100 of deposits to 4 cents per
$100 of deposits. FDIC assessment expense was $644,000 for the year ended
December 31, 1994, a decrease of $46,000 or 6.7% from FDIC assessment expense of
$690,000 for the pro forma year ended December 31, 1993. This decrease was due
to a reduction in the FDIC assessment rate from 26 cents per $100 of deposits to
23 cents per $100 of deposits in 1994. The increase in the FDIC assessment rate
resulting from the merger of the Bank Insurance Fund and the Savings Association
Insurance Fund in the amount of 1.29 cents per $100 of deposits for each of the
years in the 3-year period commencing in 1997, will not have a material impact
on United's financial results.

Professional fees expense was $267,000 for the nine months ended September
30, 1996, an increase of $88,000 or 49.2% over professional fees expense of
$179,000 for the nine months ended September 30, 1995. This increase is
primarily due to costs associated with the Park Acquisition. Professional fees
expense was $297,000 for the year ended December 31, 1995, a decrease of
$171,000 or 36.5% from professional fees expense of $468,000 for the year ended
December 31, 1994. This decrease was primarily due to the decrease in
nonrecurring merger expenses associated with the Goodhue merger. Professional
fees expense was $468,000 for the year ended December 31, 1994, a decrease of
$397,000 or 45.9% from professional fees expense of $865,000 for the pro forma
year ended December 31, 1993. This decrease was due to the decreased use of
outside consultants in Goodhue Bank and the decrease in nonrecurring merger
related expenses associated with the Goodhue merger.

Other real estate expenses are immaterial for the nine months ended
September 30, 1996 and 1995 and the year ended December 31, 1995 due to little
activity with respect to other real estate owned. Other real estate expenses for
the years ended December 31, 1994 and pro forma 1993 reflect loss on disposal of
the other real estate owned and associated expenses.

34
<PAGE>
INCOME TAX EXPENSE

Income tax expense was $1.7 million for the nine months ended September 30,
1996, an increase of $429,000 or 34.3% over income tax expense of $1.2 million
for the nine months ended September 30, 1995. The effective tax rate increased
from 29.6% for the nine months ended September 30, 1995 to 33.0% for the nine
months ended September 30, 1996. Income tax expense was $2.1 million for the
year ended December 31, 1995, an increase of $660,000 or 47.3% over income tax
expense of $1.4 million for the year ended December 31, 1994. The effective tax
rate decreased from 36.5% for the year ended December 31, 1994 to 36.2% for the
year ended December 31, 1995. Income tax expense was $1.4 million for the year
ended December 31, 1994, an increase of $258,000 or 22.7% over income tax
expense of $1.1 million for the pro forma year ended December 31, 1993. The
effective tax rate increased from the 1993 pro forma ratio of 35.1% to 36.5% for
the year ended December 31, 1994. United expects its effective tax rate to
increase after the Park Acquisition due primarily to the nondeductibility of the
goodwill amortization. The effective tax rate for the pro forma December 31,
1995 statement of income was 44.6%. The effective tax rate for the pro forma
September 30, 1996 statement of income was 40.2%. This decrease was due to the
favorable determination of a tax lawsuit for the years 1979 through 1983 and
resulting non-taxable income.

FINANCIAL CONDITION

LOANS AND LEASES

United's lending activities are presently guided by the general loan
policies established by the subsidiaries' Boards of Directors. United is
establishing a system-wide credit policy to assist local management and to
maintain system-wide credit standards. United has continued its strategy to seek
out small business and leasing opportunities to expand its loan portfolio. Total
loans were $280.2 million at September 30, 1996, an increase of $14.3 million or
5.4% over the December 31, 1995 amount. Total loans were $265.9 million at
December 31, 1995, an increase of $18.9 million or 7.7% over the December 31,
1994 amount. Total loans were $247.0 million at December 31, 1994, an increase
of $27.0 million or 12.3% over the pro forma December 31, 1993 amount of $220.0
million.

The following table presents a summary of United's loan portfolio as of
September 30, 1996 and December 31, 1995, 1994, pro forma 1993 and historical
1992 and 1991:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
----------------
AMOUNT PERCENT
------- --------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Commercial and
agricultural............ $166,013 59.2%
Residential real
estate.................. 66,139 23.6
Consumer................. 36,274 13.0
Leases................... 11,787 4.2
------- --------
Totals loans and
leases................ $280,213 100.0%
------- --------
------- --------

<CAPTION>
DECEMBER 31,
---------------------------------------------------------------------------------------------------

1995 1994 1993 (1) 1992 (2) 1991 (2)
------------------- ------------------ ------------------ ------------------ ------------------

AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT

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

(PRO FORMA)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and
agricultural............ $ 149,859 56.3% $143,227 58.0% $112,790 51.3% $ 67,831 72.2% $ 57,997 67.9%

Residential real
estate.................. 69,577 26.2 58,828 23.8 66,834 30.4 13,539 14.4 14,373 16.8

Consumer................. 35,897 13.5 35,655 14.4 33,920 15.4 12,581 13.4 13,085 15.3

Leases................... 10,572 4.0 9,271 3.8 6,498 2.9 -- -- -- --

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

Totals loans and
leases................ $ 265,905 100.0% $246,981 100.0% $220,042 100.0% $ 93,951 100.0% $ 85,455 100.0%

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

</TABLE>

- ----------------------------------
(1) Combines Signal and Goodhue

(2) Includes the financial information of Signal only

The loan mix in United's portfolio indicates the trend toward commercial and
agricultural loans. This trend has resulted from a focus on growing the
commercial loan portfolio. United expects this trend to continue with the
addition of Park Bank.

COMMERCIAL AND AGRICULTURAL LOANS

Commercial and agricultural loans principally include loans to
manufacturing, wholesale, retail and agricultural businesses, including loans
secured by commercial real estate. Commercial loans are made on

35
<PAGE>

the financial strength and repayment ability of the borrower as well as the
collateral securing the loans. As of September 30, 1996, commercial loans
represented the largest class of loans at $166.0 million or 59.2% of total loans
up from $149.9 million or 56.3% of total loans at December 31, 1995.

RESIDENTIAL REAL ESTATE LOANS

Residential real estate loans principally include residential real estate
first mortgages and home equity lines of credit. As of September 30, 1996,
residential real estate loans were $66.1 million or 23.6% of total loans down
from $69.6 million or 26.2% of total loans at December 31, 1995.

CONSUMER

Consumer loans include automobile and home improvement loans, personal lines
of credit and overdrafts. As of September 30, 1996, consumer loans were $36.3
million or 13.0% of total loans up from $35.9 million or 13.5% of total loans at
December 31, 1995.

LEASES

Leases principally include leases on equipment to manufacturing, retail and
wholesale businesses. As of September 30, 1996, leases were $11.8 million or
4.2% of total loans up from $10.6 million or 4.0% of total loans at December 31,
1995.

MATURITY DISTRIBUTION AND INTEREST RATE SENSITIVITY OF LOANS

The following table presents a distribution of the maturity of loans and,
for those loans due after one year, the sensitivity of loans to interest rate
changes as of September 30, 1996. The amounts exclude residential real estate
loans, consumer loans and leases.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996, MATURING IN
------------------------------------------------
ONE YEAR ONE TO OVER
OR LESS FIVE YEARS FIVE YEARS TOTAL
---------- ----------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial and agricultural....................................... $ 130,405 $ 28,256 $ 7,352 $ 166,013
---------- ----------- ----------- ----------
---------- ----------- ----------- ----------
</TABLE>

<TABLE>
<CAPTION>
INTEREST SENSITIVITY
--------------------------
FIXED RATE VARIABLE RATE
----------- -------------
(IN THOUSANDS)
<S> <C> <C>
Commercial and agricultural loans due
after one year with:.................................................................. $ 28,015 $ 7,593
----------- ------
----------- ------
</TABLE>

36
<PAGE>
NONPERFORMING ASSETS

United reports all loans which are 90 days or more past due as nonaccrual
loans, excluding those loans which in management's opinion are well
collateralized or exhibit other characteristics which make them fully
collectible. United does not return a loan to accrual status until it is brought
current with respect to both principal and interest and future principal
payments are no longer in doubt. When a loan is placed on nonaccrual status, any
previously accrued and uncollected interest is reversed. United adopted FASB
Statement No. 114, Accounting by Creditors for Impairment of a Loan on January
1, 1995. United defines a loan as impaired when it is probable that United will
be unable to collect all principal and interest payments due in accordance with
the terms of the loan agreement. The effect of adopting Statement No. 114 was
not significant to United.

The following table presents the nonperforming assets as of September 30,
1996 and December 31, 1995, 1994, pro forma 1993, and historical 1992 and 1991:

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -----------------------------------------------------
1996 1995 1994 1993(1) 1992(2) 1991(2)
------------- --------- --------- --------- --------- ---------
(PRO FORMA)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Nonaccrual loans.................................... $ 722 $ 403 $ 459 $ 722 $ 61 $ 1,482
Accrual loans which are past due 90 days or more as
to principal or interest........................... 342 249 104 573 102 364
Troubled debt restructurings........................ 132 100 111 117 264 479
------ --------- --------- --------- --------- ---------
Total nonperforming loans and leases.............. 1,196 752 674 1,412 427 2,325
Other real estate owned............................. -- -- 355 1,182 1,223 810
------ --------- --------- --------- --------- ---------
Total nonperforming assets.......................... $ 1,196 $ 752 $ 1,029 $ 2,594 $ 1,650 $ 3,135
------ --------- --------- --------- --------- ---------
------ --------- --------- --------- --------- ---------
Total nonperforming loans and leases/total loans and
leases............................................. .43% .28% .27% .64% .45% 2.72%
Total nonperforming assets/total assets............. .27% .18% .27% .75% 1.06% 2.06%
</TABLE>

- ------------------------
(1) Combines Signal and Goodhue

(2) Includes the financial information of Signal only

Nonperforming loans as a percentage of total loans and leases outstanding
increased as of September 30, 1996 to .43% compared with .28% and .27% as of
December 31, 1995 and 1994, respectively. This increase was primarily due to an
increase in nonaccrual loans of $319,000 as of September 30, 1996. This increase
was largely the result of one new loan of $201,000 being placed on nonaccrual
status. The substantial majority of the increase in nonperforming loans and
leases in 1993 relates to the pro forma inclusion of the Goodhue Bank. The
overall improvement over the periods presented is largely due to the Banks'
increased monitoring of the loan portfolios and collection efforts as well as
the strengthening of the economy. The effect of the nonaccrual of interest on
these nonperforming loans and leases was not significant to the results of
operations during the periods. The combined nonperforming loans of United and
Park Bank approximate $2.6 million as of September 30, 1996. The pro forma total
nonperforming loans and leases/total loans and leases would be .66% and the pro
forma total nonperforming assets/total assets would be .40% as of September 30,
1996 on a pro forma basis combining the nonperforming loans and assets of United
and Park Bank.

37
<PAGE>
ALLOWANCE FOR LOAN AND LEASE LOSSES

The current level of the allowance for loan and lease losses is a result of
management's assessment of the risks within the portfolio based on the
information revealed in the credit review processes. United utilizes a
risk-rating system on all loans and a quarterly review and reporting process
which results in the calculation of the guideline reserves based on the risk
within the portfolio. This assessment of risk takes into account the composition
of the loan portfolio, previous loan loss experience, current economic
conditions and other factors that in management's opinion deserve special
recognition.

The following table presents a summary of United's allowance for loan and
lease losses for the periods shown:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------------
1996 1995 1995 1994 1993 (1) 1992 (2) 1991 (2)
--------- --------- --------- --------- ----------- ----------- -----------
(PRO FORMA)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, beginning of period.... $ 2,899 $ 2,856 $ 2,856 $ 2,725 $ 2,766 $ 2,193 $ 1,195

Charge-offs:
Commercial and agricultural... 286 119 167 176 810 1,578 943
Residential real estate....... -- -- -- 15 25 -- 6
Consumer...................... 262 90 135 196 109 83 162
Leases........................ 22 30 35 61 26 -- --
--------- --------- --------- --------- ----------- ----------- -----------
Total charge-offs........... 570 239 337 448 970 1,661 1,111
--------- --------- --------- --------- ----------- ----------- -----------

Recoveries:
Commercial and agricultural... 255 172 214 212 215 342 68
Residential real estate....... -- 1 1 5 5 32 12
Consumer...................... 138 55 77 127 104 41 29
Leases........................ -- 24 27 1 -- -- --
--------- --------- --------- --------- ----------- ----------- -----------
Total recoveries............ 393 252 319 345 324 415 109
--------- --------- --------- --------- ----------- ----------- -----------
Net charge-offs (recoveries).... 177 (13) 18 103 646 1,246 1,002
Provision for loan and lease
losses......................... 146 41 61 234 605 488 2,000
--------- --------- --------- --------- ----------- ----------- -----------
Balance, end of period.......... $ 2,868 $ 2,910 $ 2,899 $ 2,856 $ 2,725 $ 1,435 $ 2,193
--------- --------- --------- --------- ----------- ----------- -----------
--------- --------- --------- --------- ----------- ----------- -----------
Net charge-offs
(recoveries)/average loans
outstanding.................... 0.06% (0.01%) 0.01% 0.04% 0.32 % 1.42 % 1.12 %
Allowance for loan and lease
losses/total loans and
leases......................... 1.02% 1.12% 1.09% 1.16% 1.24 % 1.53 % 2.57 %
Nonperforming loans and
leases/total loans and
leases......................... 0.43% 0.41% 0.28% 0.27% 0.64 % 0.45 % 2.72 %
Allowance for loan and lease
losses/ nonperforming loans and
leases......................... 239.80% 269.94% 385.51% 423.74% 192.99 % 336.07 % 94.32 %
</TABLE>

- ------------------------------
(1) Combines Signal and Goodhue.

(2) Includes the financial information of Signal only.

38
<PAGE>
ALLOCATED ALLOWANCE FOR LOAN AND LEASE LOSSES

While the allowance for loan and lease losses is available to absorb credit
losses in the entire portfolio, the table below presents an estimate of the
allowance for loan and lease losses allocated by loan type. The unallocated
portion of the allowance for loan or lease losses represents allowance available
for the entire portfolio as well as reserves identified for qualitative factors,
unfunded commitments, and letters of credit. In 1993, management changed the
methodology of allocating the allowance for loan and lease losses. Prior to
1993, the allowance was allocated primarily based on the percentage of loan type
to total loans applied to the calculated allowance for loan and lease losses. In
1993, management enhanced the analysis of the adequacy of the allowance for loan
and lease losses by allocating specific reserves to specific criticized loans,
an allocation to the remaining criticized loans, an allocation based on
historical loss experience and a specific allocation to the lease portfolio.
This change in allocation reflects the decrease in allocation to residential
real estate loans and the increase in the unallocated portion of the allowance.
Although the residential real estate loans approximate twenty-five percent of
the loan portfolio, actual net charge-offs have been minimal, hence a minimal
allocation to the residential real estate portfolio. A significant portion of
the allowance for loan and lease losses is allocated to the commercial and
agriculture loan portfolios due to their higher degree of risk as well as their
historical loan loss experience.

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------------------------------------------------------------------------------
1996 1995 1994 1993 (1) 1992 (2) 1991 (2)
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
PERCENT PERCENT PERCENT PERCENT PERCENT PERCENT
OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS OF LOANS
TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
(PRO FORMA)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and
agricultural... $1,493 59.2% $1,718 56.3% $1,786 58.0% $1,263 51.3% $ 997 72.2% $1,650 67.9%
Residential
real estate... 9 23.6 14 26.2 15 23.8 272 30.4 236 14.4 239 16.8
Consumer....... 235 13.0 212 13.5 185 14.4 333 15.4 191 13.4 275 15.3
Leases......... 223 4.2 230 4.0 190 3.8 199 2.9 -- -- -- --
Unallocated.... 908 -- 725 -- 680 -- 658 -- 11 -- 29 --
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
Total........ $2,868 100.0% $2,899 100.0% $2,856 100.0% $2,725 100.0% $1,435 100.0% $2,193 100.0%
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
------ -------- ------ -------- ------ -------- ------ -------- ------ -------- ------ --------
</TABLE>

- ------------------------------
(1) Combines Signal and Goodhue.

(2) Includes the financial information of Signal only.

39
<PAGE>
INVESTMENT SECURITIES

United's investment portfolio is managed to meet United's liquidity needs
while maximizing investment income. Additionally, management augments the
quality of the loan portfolio by maintaining a high quality investment portfolio
oriented toward U.S. Treasury securities and U.S. government agency securities.
The portfolio also provides the opportunity to structure maturities and
repricing time tables in a flexible manner and to meet applicable requirements
for pledging securities in connection with deposits of states and political
subdivisions and securities sold under repurchase agreements. The portfolio is
comprised of U.S. Treasury securities, U.S. government agency instruments,
mortgage-backed securities, obligations of states and political subdivisions and
a modest amount of equity securities including Federal Reserve Stock and FHLB
stock. Federal funds sold are additional investments which are not classified as
investment securities. All investment securities are classified as available for
sale and recorded at fair value. Unrealized gains or losses, net of the deferred
tax effect, are reported as increases or decreases in stockholders' equity.

The following table presents a summary of United's investment portfolio as
of September 30, 1996 and December 31, 1995, 1994 and pro forma 1993:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------------
SEPTEMBER 30, 1996
1995 1994 1993 (1)
---------------------- ---------------------- ------------------------ ------------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ----------- --------- ----------- ----------- ----------- ----------- -----------
(PRO FORMA)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S.
government agencies......... $ 57,315 55.4% $ 60,135 59.0% $ 49,122 58.9% $ 40,397 48.9%
Obligations of states and
political subdivisions...... 12,667 12.2 7,757 7.6 8,023 9.6 5,490 6.7
Mortgage-backed securities... 31,397 30.4 31,956 31.4 23,796 28.5 30,682 37.1
Equity securities............ 2,074 2.0 1,989 2.0 2,493 3.0 6,041 7.3
--------- ----- --------- ----- ----------- ----- ----------- -----
Total investment
securities................ $ 103,453 100.0% $ 101,837 100.0% $ 83,434 100.0% $ 82,610 100.0%
--------- ----- --------- ----- ----------- ----- ----------- -----
--------- ----- --------- ----- ----------- ----- ----------- -----
</TABLE>

- ------------------------------
(1) Combines Signal and Goodhue.

Investment securities were $103.5 million at September 30, 1996, an increase
of $1.7 million or 1.6% over the December 31, 1995 amount. During 1996,
management placed greater emphasis on the purchase of nontaxable municipal
securities due to the favorable tax treatment of these securities, making their
tax-equivalent yields more attractive than the yield on taxable U.S. government
securities. Investment securities were $101.8 million at December 31, 1995, an
increase of $18.4 million or 22.1% over the December 31, 1994 amount. During
1995, management was faced with excess deposits to invest over loan demand.
Management invested amounts in U.S. government securities necessary to maintain
sufficient pledgeable securities for the securities sold under repurchase
agreements and invested the remaining funds into mortgage-backed securities to
increase yield. Investment securities were $83.4 million at December 31, 1994,
an increase of $824,000 or 1.0% over the pro forma December 31, 1993 amount of
$82.6 million. During 1994, management altered the mix of the investment
portfolio, decreasing the mortgage-backed securities portfolio and increasing
the U.S. government securities portfolio to achieve the desired asset/liability
structure. The investment portfolio as a percent of total assets has remained
fairly stable at approximately 24%, except for 1994 when it fell to
approximately 22% due to high loan demand.

40
<PAGE>
MATURITY OF DEBT INVESTMENT SECURITIES

As of September 30, 1996, debt investment securities had the following
maturity and yield characteristics:

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996 MATURING IN
-------------------------------------------------------------------------------------------------------
OVER ONE YEAR OVER 5 YEARS
ONE YEAR OR LESS THROUGH 5 YEARS THROUGH 10 YEARS OVER 10 YEARS TOTAL
------------------- ------------------- ------------------- ------------------- -------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD AMOUNT YIELD
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S.
government agencies........ $20,979 5.07% $33,326 6.71% $ 3,010 8.03% $ -- -- % $ 57,315 6.18%
Obligations of states and
political subdivisions
(1)........................ 481 6.67 2,105 7.64 6,889 7.64 3,192 7.98 12,667 7.69
Mortgage-backed securities
(2)........................ -- -- -- -- -- -- -- -- 31,397 6.15
Equity securities (2)....... -- -- -- -- -- -- -- -- 2,074 --
-------- --- -------- --- -------- --- -------- --- -------- ---
Total Investment
Securities............... $21,460 5.11% $35,431 6.77% $ 9,899 7.76% $ 3,192 7.98% $103,453 6.23%
-------- --- -------- --- -------- --- -------- --- -------- ---
-------- --- -------- --- -------- --- -------- --- -------- ---
</TABLE>

- ------------------------------
(1) Yields are presented on a tax-equivalent basis to reflect the tax-exempt
nature of these securities. The incremental tax rate applied is 34%.

(2) Anticipated maturities on mortgage-backed securities are not readily
determinable since they may be prepaid without penalty and equity securities
do not have stated maturity dates.

DEPOSITS

United emphasizes developing relationships with individuals and business
customers in order to increase its core deposit base. United has numerous
deposit products, including checking accounts, money market accounts, savings
accounts and certificates of deposit, designed to meet the individual needs of
its customers. The following table sets forth the distribution of United's
deposits by type as of September 30, 1996 and December 31, 1995, 1994 and pro
forma 1993:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------
SEPTEMBER 30, 1996
1995 1994 1993 (1)
---------------------- ---------------------- ---------------------- ----------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
--------- ----------- --------- ----------- --------- ----------- --------- -----------
(PRO FORMA)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest-bearing
demand..................... $ 70,444 20.0% $ 70,872 20.8% $ 69,261 22.1% $ 61,962 21.3%
Interest-bearing demand..... 33,700 9.6 34,032 10.0 35,499 11.3 35,854 12.3
Money market accounts....... 111,269 31.6 80,034 23.5 47,109 15.1 39,408 13.5
Savings deposits............ 29,710 8.5 47,735 14.0 42,956 13.7 50,205 17.2

Time certificates of
deposit:
Less than $100,000........ 93,215 26.5 93,960 27.6 100,321 32.1 89,893 30.8
Over $100,000............. 13,487 3.8 14,090 4.1 17,801 5.7 14,268 4.9
--------- ----- --------- ----- --------- ----- --------- -----
$ 351,825 100.0% $ 340,723 100.0% $ 312,947 100.0% $ 291,590 100.0%
--------- ----- --------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- ----- --------- -----
</TABLE>

- ------------------------------
(1) Combines Signal and Goodhue.

Total deposits were $351.8 million as of September 30, 1996, an increase of
$11.1 million or 3.3% from the December 31, 1995 amount. Deposits were $340.7
million as of December 31, 1995, an increase of $27.8 million or 8.9% over the
December 31, 1994 amount. Deposits were $312.9 million as of December 31, 1994,
an increase of $21.3 million or 7.3% over the December 31, 1993 pro forma amount
of $291.6 million. Money market accounts have increased due to the Banks'
introduction of a new money market account product, which has caused some
customers to move their deposits from savings and time deposit accounts to the
new money market account.

41
<PAGE>

The following table presents a maturity distribution of time certificates of
deposit of $100,000 or more at September 30, 1996:

<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
--------------
(IN THOUSANDS)
<S> <C>
Time Certificates of Deposits of $100,000 or more
Three months or less................................................ $ 2,473
Over three months to six months..................................... 1,246
Over six months to twelve months.................................... 2,706
Over twelve months.................................................. 7,062
-------
Total............................................................. $ 13,487
-------
-------
</TABLE>

SHORT-TERM BORROWINGS

Borrowings with original maturities of one year or less are classified as
short-term. The following table presents a summary of United's short-term
borrowings for the nine months ended September 30, 1996 and the years ended
December 31, 1995, 1994 and pro forma 1993:

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER ---------------------------------
30, 1996 1995 1994 1993 (1)
----------- --------- --------- -----------
(PRO FORMA)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Securities sold under repurchase
agreements outstanding at period end... $ 27,556 $ 23,173 $ 27,747 $ 15,321
Weighted average rate at period end..... 4.84% 5.17% 4.22% 2.63%
Daily average outstanding for the
period................................. $ 24,435 $ 29,343 $ 22,854 $ 11,827
Weighted average rate for the period.... 4.96% 4.96% 3.56% 3.01%
Highest outstanding at any month end.... $ 28,324 $ 34,268 $ 31,343 $ 18,809
</TABLE>

- ------------------------
(1) Combines Signal and Goodhue.

NOTES PAYABLE AND OTHER BORROWINGS

Notes payable and other borrowings consist primarily of a term note payable
to a bank due January 3, 1999 with annual installments of $500,000 and interest
at LIBOR plus 1.80% (7.43% at September 30, 1996) and four advances from the
Federal Home Loan Bank of Des Moines due between May 12, 1997 and June 5, 1998
with interest rates between 5.67% and 6.61%. The following table presents a
summary of United's notes payable and other borrowings as of September 30, 1996
and December 31, 1995, 1994 and pro forma 1993:

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER ---------------------------------
30, 1996 1995 1994 1993 (1)
----------- --------- --------- -----------
(PRO FORMA)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Line of credit to bank..................... $ 1,000 $ -- $ 500 $ --
Term note payable to bank.................. 3,150 3,400 8,550 7,182
FHLB advances.............................. 12,000 12,000 3,000 3,000
Unsecured term notes payable to certain
individuals............................... 371 362 362 367
Note payable to Minnesota Department of
Agriculture............................... 188 -- -- --
----------- --------- --------- -----------
$ 16,709 $ 15,762 $ 12,412 $ 10,549
----------- --------- --------- -----------
----------- --------- --------- -----------
</TABLE>

- ------------------------
(1) Combines Signal and Goodhue.

42
<PAGE>
The advances from the FHLB were obtained to match fund certain pools of
fixed rate residential mortgage loans held in United's portfolio, and to provide
asset/liability management tools to the affiliate Banks. See "Asset/Liability
Management."

Principal reduction on the term note payable to bank has been accelerated
due to the proceeds of two stock offerings in 1994 and 1995. The term note
payable is with Firstar. United intends to refinance this note with Firstar at a
reduced rate, at the same time financing is obtained from Firstar in connection
with the Park Acquisition. United will incur additional indebtedness of
approximately $24 million to finance the Park Acquisition. See "Acquisition of
Park."

Advances on the line of credit and the unsecured term notes payable to
certain individuals were primarily obtained to fund the working capital of CCC.

CAPITAL MANAGEMENT

Stockholders' equity as of September 30, 1996 increased $4.1 million or
11.5% to $39.9 million from $35.8 million as of September 30, 1995. This
increase was due primarily to the retention of current period earnings.

Stockholders' equity as of December 31, 1995 increased $9.5 million or 34.3%
to $37.0 million from $27.5 million as of December 31, 1994. This increase was
due to the retention of current year earnings, a $3.7 million common stock
offering and the net change in unrealized gains on securities available for
sale.

Stockholders' equity as of December 31, 1994 increased $780,000 or 2.9% to
$27.5 million from $26.7 million as of pro forma December 31, 1993. This
increase was due to the retention of current year earnings offset by the net
change in unrealized loss on securities available for sale.

Risk-based capital guidelines established by regulatory agencies set minimum
capital standards based on the risk associated with a financial institution's
assets. See "Supervision and Regulation -- Regulatory Capital Requirements." The
primary component of such capital standards is Tier 1 capital which is defined
as stockholders' equity less intangible assets. United has increased its Tier 1
capital since its merger with Goodhue through earnings and two common stock
offerings totaling $8.1 million. Below is a comparison of United's September 30,
1996 risk-based capital ratios on an historical basis and on a pro forma basis
giving effect to the Park Acquisition and the related equity and debt financing
with the minimum requirements for well capitalized and adequately capitalized
banks, as defined by the federal regulatory agencies' Prompt Corrective Action
Rules:

<TABLE>
<CAPTION>
MINIMUM REQUIREMENTS
SEPTEMBER 30, 1996 ------------------------------
---------------------------- WELL ADEQUATELY
CAPITAL CATEGORY ACTUAL PRO FORMA CAPITALIZED CAPITALIZED
- ------------------------------------------- ----------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
Tier 1 risk-based capital.................. 13.4% 7.0% 6.0% 4.0%
Total risk-based capital................... 14.4% 8.2% 10.0% 8.0%
Leverage ratio............................. 8.6% 5.0% 5.0% 4.0%
</TABLE>

Although substantially reduced from historical levels due to additional debt
and goodwill incurred in connection with the Park Acquisition, Tier 1 risk-based
capital and leverage ratios of United immediately following the Park Acquisition
are anticipated to be above pro forma September 30, 1996 levels and at or above
"well capitalized" minimums, while United's total risk-based capital ratio is
anticipated to be above the "adequately capitalized" minimum. As a result,
United would be deemed "adequately capitalized" for purposes of federal banking
regulations.

43
<PAGE>
ASSET/LIABILITY MANAGEMENT

LIQUIDITY MANAGEMENT

Liquidity management is an effort of management to provide a continuing flow
of funds to meet its financial commitments, customer borrowing needs and deposit
withdrawal requirements. The liquidity position of United and its subsidiary
banks is monitored by Asset/Liability Committees of each of the Banks in
consultation with United's staff. United adjusts its investments in liquid
assets based upon management's assessment of (i) expected loan demand, (ii)
expected deposit flows, (iii) yields available on interest-bearing deposits and
(iv) the objective of its asset/liability management program. The largest
category of assets representing a ready source of liquidity for United is its
short-term financial instruments which include federal funds sold and investment
securities maturing within one year. Liquidity is also provided through the
regularly scheduled maturities of assets. The liquidity position of United is
also greatly enhanced by its significant base of core deposits. United also
maintains available lines of Federal funds borrowing from non-affiliated
financial institutions, and is a member of the FHLB. Excess liquidity is
generally invested in interest-bearing overnight deposits and other short-term
government and agency obligations. United anticipates it will have sufficient
funds available to meet its current loan commitments. At September 30, 1996,
United had outstanding commitments to extend credit amounting to $35 million.

INTEREST RATE SENSITIVITY

Effective asset/liability management also includes minimizing the impact of
future interest rate changes on net interest income. Management of interest rate
sensitivity is accomplished through the composition of loans and investments,
and by adjusting the maturities on interest-earning assets and interest-bearing
liabilities. Interest rate sensitivity indicates a financial institution's
potential earnings exposure to fluctuating interest rates. Rate sensitivity and
liquidity are related since both are affected by maturing assets and
liabilities. However, interest rate sensitivity also takes into consideration
those assets and liabilities with interest rates that are subject to change
prior to maturity. While no single measure can completely identify the impact of
changes in interest rates on net interest income, one traditional gauge of
interest rate sensitivity is to measure, over a variety of time periods, the
differences in the amounts of United's rate sensitive assets and rate sensitive
liabilities. These differences, or "gaps," provide an indication of the extent
that net interest income may be affected by future changes in interest rates.

A positive gap exists when rate sensitive assets exceed rate sensitive
liabilities and indicates that a greater volume of assets than liabilities will
reprice during a given time period. This mismatch may enhance earnings in a
rising rate environment and may inhibit earnings when interest rates decline.
Conversely, when rate sensitive liabilities exceed rate sensitive assets, a
negative gap results, indicating that a greater volume of liabilities than
assets will reprice during the period. In this case, a rising rate environment
may inhibit earnings and declining rates may enhance earnings.

The following table presents United's interest rate gap analysis as of
September 30, 1996. The table also presents the gap between interest rate
sensitive assets and liabilities as a percentage of total assets as of September
30, 1996. In calculating the gap values, amortization flows are based on
contractual characteristics of the loans and investment securities, as well as
the anticipated prepayment characteristics. Prepayment rates for mortgages and
mortgage-related investments reflect expectations based on national assumptions,

44
<PAGE>
and prepayments on consumer loans reflect United's historical experience.
Non-maturity deposit balances are positioned in the one year or less category
based on expected repricing behavior given historical experience and
management's expectations.

<TABLE>
<CAPTION>
REPRICING IN OR MATURING IN:
-----------------------------------------------------
ONE YEAR ONE TO FIVE OVER FIVE
OR LESS YEARS YEARS TOTAL
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Federal funds sold............................................ $ 7,875 $ -- $ -- $ 7,875
Investment securities......................................... 39,760 52,494 11,199 103,453
Loans and leases.............................................. 184,893 68,712 26,608 280,213
----------- ----------- ----------- -----------
Total rate sensitive assets................................. $ 232,528 $ 121,206 $ 37,807 $ 391,541
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Savings, money market and interest-bearing checking........... $ 174,679 $ -- $ -- $ 174,679
Time deposits................................................. 60,872 44,286 1,544 106,702
Short-term borrowings......................................... 23,812 3,744 -- 27,556
Notes payable and other borrowings............................ 7,256 9,453 -- 16,709
----------- ----------- ----------- -----------
Total rate sensitive liabilities............................ $ 266,619 $ 57,483 $ 1,544 $ 325,646
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Rate sensitive gap............................................ $ (34,091) $ 63,723 $ 36,263 $ 65,895
Cumulative rate sensitive gap................................. $ (34,091) $ 29,632 $ 65,895
Rate sensitive gap % to total assets.......................... (7.7)% 14.4% 8.2% 14.9%
Cumulative rate sensitive gap % to total assets............... (7.7)% 6.7% 14.9%
</TABLE>

Gap analysis attempts to capture interest rate risk which is attributable to
the mismatching of interest rate sensitive assets and liabilities. However,
varying interest rate environments often create unexpected changes in interest
rate sensitivity, for example changing loan prepayments. These unexpected
changes are not captured very well in most gap analyses and, as a result, a gap
report may not provide a complete assessment of United's interest rate risk.
Therefore, United primarily utilizes simulation software and duration analyses
under rising, falling and the most likely interest rate forecasts to model net
interest income and the market value of portfolio equity at the subsidiary bank
levels. The modeling estimates changes in net interest income in response to
increases or decreases in market interest rates. The model uses the rates and
maturities of the Banks' existing portfolios of interest-earning assets and
interest-bearing liabilities and revises each portfolio based on how the market
interest rates move and how the specific Bank products would respond to changes
in rates. The structuring of the Banks' balance sheets are targeted to ensure
that earnings do not exhibit large variations. At September 30, 1996, the Banks'
computer simulations under the most likely interest rate scenario provided by an
independent forecaster indicate that the projected earnings are within
acceptable parameters. Given the Banks' current interest rate risk profile,
management's response to increase in interest rates is to promote variable rate
deposit products and loans.

CASH FLOW

United's principal sources of funds are deposits, scheduled loan repayments
and prepayments of loan principal, borrowings, maturities of investment
securities, mortgage-backed securities and short-term investments and
operations. While scheduled loan repayments and maturing investments are
relatively predictable, deposit flows and early loan repayments are more
influenced by interest rates, general economic conditions, and competition.
United generally manages the pricing of its deposits to maintain a steady
deposit balance.

The primary source of cash from operating activities is net income.

The primary investing activities of United are lending and purchasing
investment securities. For the nine months ended September 30, 1996, investment
activities used a net $17 million. Loan originations, net of principal
repayments and purchases of investment securities accounted primarily for this
use. If general interest rates decline, United would expect to experience an
increase in prepayments, particularly in its fixed

45
<PAGE>
rate loans. The increased funds from this source could not necessarily be
re-invested at yields and terms to maintain the net interest margins United has
experienced during the last three fiscal years. For the year ended December 31,
1995, investment activities used a net $35 million. Loan originations and
purchases of investment securities accounted primarily for this use.

For the nine months ended September 30, 1996, financing activities provided
a net $17 million. Historically, the primary financing activity of United has
been deposits and securities sold under repurchase agreements. Deposits
increased $11.1 million for the nine months ended September 30, 1996 and
securities sold under repurchase agreements increased $4.3 million for the nine
months ended September 30, 1996. For the year ended December 31, 1995, financing
activities provided a net $30 million. Deposits increased $27.9 million,
securities sold under repurchase agreements decreased $4.6 million, net proceeds
from notes payable provided $3.3 million and a common stock offering provided
$3.5 million.

EMERGING ACCOUNTING STANDARDS

TRANSFER AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENT OF
LIABILITIES: FASB Statement No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF
FINANCIAL ASSETS AND EXTINGUISHMENT OF LIABILITIES, establishes new standards
for transfers and servicing of financial assets and extinguishments of
liabilities. The new standard will require the Company to recognize the
servicing of assets it controls and liabilities incurred after a transfer of
financial assets. This statement will require, among other things, that the
Company record an asset or liability for servicing rights when it sells loans
and retains the servicing and then amortize the asset or liability over the
period during which servicing income is expected to be received. This statement
is effective for transactions occurring after December 31, 1996. In management's
opinion, the adoption of this statement will not have a material effect on
United's financial statements.

LONG-LIVED ASSETS: FASB Statement No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF, establishes new
accounting standards for the impairment of long-lived assets, certain
intangibles, and goodwill related to those assets to be held and used and for
long-lived assets and certain identified intangibles to be disposed of. This
statement is effective for United's year ending December 31, 1996. In
management's opinion, the adoption of this statement will not have a material
effect on United's financial statements.

STOCK-BASED COMPENSATION: FASB Statement No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION, provides a choice of accounting methods for valuing
stock-based compensation plans and requires certain disclosures about the effect
on net income and earnings per share regardless of the method used to account
for them. This statement is effective for United's year ending December 31,
1996. In management's opinion, the adoption of this statement will not have a
material effect on United's financial statements.

IMPACT OF INFLATION AND CHANGING PRICES

The consolidated financial statements and related data presented herein have
been prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation.

Substantially all of the assets and liabilities of United are monetary in
nature. As a result, interest rates have more impact on United's performance
than the effects of general levels of inflation. Interest rates do not
necessarily move in the same direction or in the same magnitude as the prices of
goods and services. The liquidity and the maturity structure of United's assets
and liabilities are important to the maintenance of acceptable performance
levels. United discloses the estimated fair values of its financial instruments
in accordance with FASB Statement No. 107.

46
<PAGE>
BUSINESS

GENERAL

United is a bank holding company with $442 million in assets as of September
30, 1996, which operates Signal Bank and Goodhue Bank. Signal Bank is a
state-chartered bank with offices in Eagan, Savage and West St. Paul, Minnesota.
Goodhue Bank is a national bank with offices in Red Wing, Lanesboro and
Rushford, Minnesota. In addition to the Banks, United also operates Consumers
Credit Corporation ("CCC"), a consumer finance company with offices in Hastings,
Northfield, Red Wing and West St. Paul, Minnesota. United has entered into a
Merger Agreement, dated October 7, 1996 with PFC, a bank holding company which
owns Park Bank, a national bank with assets of approximately $203 million as of
September 30, 1996. The Park Acquisition will close concurrently with this
Offering.

United Capital, a wholly-owned subsidiary of the Company, exists for the
purpose of issuing the Preferred Securities and purchasing the Junior
Subordinated Debentures from the Company, and has no independent operations.

HISTORY

United is the product of a merger, effective January 1, 1994, of Signal and
Goodhue. Signal, formed in 1980, was the holding company for Signal Bank, a
Minnesota state bank organized and chartered in 1963. Goodhue, formed in 1983,
was the holding company for Goodhue Bank, a national bank organized and
chartered in 1874. United was formed with a view to developing a multi-bank
holding company owning banks rooted in their communities, each sharing its
particular strengths with other banks in the group. United believes that the
advantages of holding company affiliation can be combined with a high-level of
customer service by allowing each bank to manage on an autonomous basis, the
day-to-day business of the bank and service to its customers. Total assets of
the Company were $348 million as of the date of the merger of Signal and
Goodhue. Total assets of United have increased $94 million since January 1, 1994
to $442 million at September 30, 1996. At December 31, 1995, United ranked ninth
in total assets among all Minnesota-based bank holding companies owning banks in
Minnesota.

COMMUNITY BANKING PHILOSOPHY

United's Banks operate a total of four offices in the Minneapolis/St. Paul
metropolitan area as well as five offices in rural southeastern Minnesota. The
Company believes that this diversity of markets brings strength to the Company's
overall balance sheet. The Banks are community banks which provide a full range
of services to consumers and businesses in all of the communities which United
serves. The Banks generally operate with significant local autonomy, with
general oversight and support from United. The Company believes this autonomy
allows the Banks to better serve the customers in their respective communities,
and thus enhances the Banks' business opportunities and operations. The Company
has maintained, and in connection with future acquisitions intends to generally
maintain, local charters, existing management and boards of directors.
Generally, Banks' management operates independently of the Company when making
human resource, credit, pricing, new product development, and other decisions
relative to how the Bank operates in its market. United fosters an environment
of cooperation and collaboration among its Banks and CCC. Affiliates are
encouraged to share expertise in order to bring a broader array of products and
services to the Company's customers. The individual Banks have strengths which
are leveraged throughout the Company in areas such as SBA lending and leasing
products which do not need to be replicated in each subsidiary bank because of
this sharing philosophy.

United believes strongly that the community banks which it owns should
invest a portion of their financial and human resources back into the
communities within which they operate. The Banks of United are consistent
winners of the "Keystone Award" which is given to corporations in the state of
Minnesota that contribute at least two percent of their pre-tax income to
charitable organizations and community activities. United also believes that
community banks benefit from strong boards of directors consisting of
individuals

47
<PAGE>
who are also actively involved in their communities. The Banks' directors not
only represent the community interests but also serve to increase the Banks'
visibility in the community thereby enhancing the Banks' marketing efforts and
growth strategies.

BANKS

Signal Bank had total assets of $227 million as of September 30, 1996 and
offices located in the southern and southeastern portions of the Minneapolis-St.
Paul metropolitan area. This area is home to a wide variety of commercial,
nonprofit, cultural and entertainment enterprises, including a significant
number of small-to-medium-sized businesses. The extensive small-to-medium-sized
business experience of Signal Bank permits it to develop its commercial
customers throughout this entire area. Signal Bank's status as a preferred
lender with the SBA (see "Business -- Lending and Investments") enables it to
provide expedited service to its customers when making loans guaranteed under
the SBA programs and because of this, it obtains referrals throughout the
seven-county metropolitan area.

Signal Bank offers a full range of financial services to its commercial
customers, including short- and medium-term loans, revolving credit facilities,
inventory and accounts receivable financing, equipment financing, commercial
mortgage lending, installment loans, safe deposit box services, cash management
services, and various savings accounts, money market accounts, time certificates
of deposit and checking accounts. Since 1991, Signal has increasingly emphasized
the origination of SBA loans. Other services provided include night depository
services, automated teller machines and brokerage services through an
affiliation with a brokerage service provider.

Signal Bank serves the banking needs of its consumer customers located
primarily in the rapidly growing communities of Savage, Eagan, Inver Grove
Heights and Burnsville and the more mature communities of West St. Paul, Mendota
Heights and South St. Paul by providing a complete range of retail products.
These products include checking and savings accounts, money market accounts,
certificates of deposit, personal installment loans, home improvement loans,
home equity lines of credit, loans for the purchase or refinancing of principal
residences or second homes, safe deposit box services, and brokerage services
through an affiliation with a brokerage service provider.

Goodhue Bank (with total assets of $208 million as of September 30, 1996) is
the largest bank in Red Wing, Minnesota. Red Wing is a community of
approximately 15,500 and is the county seat of Goodhue County (population
approximately 41,600), located approximately fifty miles from the
Minneapolis-St. Paul metropolitan area. Over 30 industries provide jobs in this
area, including the Treasure Island Casino, Red Wing Shoe Company, Northern
States Power Company, Jostens, and Reidell Shoes, Inc. Tourism has also
developed into a major sector of the area's economy in recent years.

Goodhue Bank provides a complete range of commercial and consumer banking
services from its two offices within the community. These services include
checking, savings, money market deposit accounts, and time certificates of
deposit, safe deposit box services, cash management services and brokerage
services through an affiliation with a brokerage service provider. The Bank
makes a full range of loans to its commercial and consumer customers. Goodhue's
leasing department provides equipment financing alternatives to a variety of
industries. Its location in an agricultural section of southeastern Minnesota
involves the Bank in agricultural lending, including livestock loans, dairy
production, crop loans and loans for buildings and equipment. The Bank has
offices in the communities of Rushford and Lanesboro, which are located in
Filmore County in the extreme southern part of Minnesota. This market is
primarily an agricultural area which is also developing a strong tourism
industry. The banking services provided by the Rushford and Lanesboro offices
parallel those of the other offices of the Bank.

See also "Acquisition of Park" for a description of Park Bank, its market
area and business.

ADMINISTRATION OF THE BANKS

United administers its Banks under a philosophy called "Earned Autonomy."
"Earned Autonomy" means that the Company cedes operating authority to the
individual member Banks. Ongoing financial

48
<PAGE>
performance and asset quality targets are set in a collaborative process between
the Banks and the staff of United. Provided that the Banks perform within these
targets, the Banks are free to operate in their markets as they choose (with
assistance from the Company as needed). United believes that the Banks know
their markets better than United's staff and therefore know best how to deploy
human and financial resources in an effort to increase their market share.

Although each of the Banks operates with a significant level of autonomy and
independence, United has centralized operations for certain functions, and makes
available its corporate staff and centralized resources for other functions upon
request. United's Strategic Plan calls for continuing emphasis to be placed on
improving the Company's efficiency ratio. The Company continues to emphasize the
consolidation of certain functions where economies of scale can be achieved such
as:

DATA PROCESSING. United's wholly-owned subsidiary, Unitech Services, Inc.
("Unitech"), provides all of United's and the Banks' data processing
requirements. Unitech performs such data processing services through the use of
computer hardware it owns and maintains and software it licenses.

ACCOUNTING. United provides all accounting services, including general
ledger administration, budgeting, internal and external reporting, and accounts
payable processing.

INVESTMENTS. Although each Bank makes its own investment decisions, United
provides administrative and analytical support to the Banks in the management of
their investment portfolios in order to increase efficiencies and consistency.

CREDIT POLICY FORMULATION. Customer credit decisions are made by the local
management of each Bank under comprehensive credit policies approved by the
Board of Directors of each Bank. To assist local management and to maintain
system-wide credit standards, United is establishing a system-wide credit
policy. See "Lending and Investments" below. In addition, United's corporate
staff will provide individual Banks with assistance on credit review and
collection upon request.

SPECIALIZED STAFF SUPPORT. United provides the Banks with legal and
compliance services, internal auditing, asset/liability modeling, and retirement
plan administration. In addition, United is planning to provide other services
for the benefit of the Banks such as marketing assistance, human resource
services and benefits administration, and centralized purchasing of supplies.
United believes that centralizing these services promotes efficiency and cost
savings for the Banks without interfering with their community-oriented
management.

LENDING AND INVESTMENTS

The Banks offer short-term and long-term loans for business and personal
purposes. The Banks focus their lending activities on individuals and
small-to-medium-sized businesses in their market areas. Lending has been
primarily focused within the seven-county Minneapolis-St. Paul metropolitan area
and southeastern Minnesota, with the leasing operations at Goodhue Bank covering
a broader geographical area. The markets of the Banks include a wide variety of
businesses; therefore, United does not believe it is unduly exposed to problems
in any particular industry group.

United believes that it can best serve its customers, and thereby enhance
United's business, operations and profitability, by maximizing local autonomy in
credit decisions. Generally, each Bank's management operates independently of
the Company in making credit decisions within comprehensive credit policies
approved by the Bank's Board of Directors. These separate credit policies are
each intended to maximize the safety and soundness of the Banks and still be
responsive to the particular credit needs of the communities which the Banks
serve. The policies both provide specific lending authorities to Bank officers,
reflecting their individual experience and level of authority, type of loan and
collateral, and establish thresholds at which loan requests must be approved by
a committee comprised of officers or Board members. United is currently
developing a uniform credit policy, to be implemented in 1997, which will retain
the flexibility of

49
<PAGE>
local Bank management to respond to local market conditions, while at the same
time providing for uniformity of basic lending policies among all of United's
subsidiary banks and facilitating overline lending among the banks.

Signal Bank participates in many of the SBA programs and is one of six bank
"preferred lenders" in Minnesota. Preferred lender status is granted to a lender
which has made a certain number of SBA loans, and which in the opinion of the
SBA has staff who are qualified and experienced in this area. As a preferred
lender, Signal Bank has the authority to authorize, on behalf of the SBA, the
SBA guaranty on loans under the 7A program. This can represent a substantial
time savings in serving a customer's needs. Signal Bank has experienced
significant growth in its SBA lending division since its inception in 1991. The
Bank utilizes both the 504 program, which is focused toward longer-term
financing of buildings, and other long-term assets, and the 7A program which is
primarily used for financing of the equipment, inventory and working capital
needs of eligible businesses generally over a three- to seven-year term. The
Bank's collateral position in the SBA loans is enhanced by the SBA guaranty in
the case of 7A loans, and by lower loan-to-value ratios under the 504 program.

COMMERCIAL AND AGRICULTURAL LOANS. Loans in this category principally
include loans to manufacturing, wholesale, retail and agricultural businesses
including loans secured by commercial real estate. At September 30, 1996,
approximately 59.2% of loans outstanding were in this category, of which 88.0%
were classified as commercial and 12.0% were classified as agricultural. The
Banks provide loans and lines of credit for the operations and expansion needs
of local businesses. These loans generally have prime-based adjustable interest
rates and maturities of seven years or less. While the Banks look to a
borrower's business operations as the principal source of repayment, they also
generally obtain mortgages on real estate, security interests in inventory,
accounts receivable and other personal property, and personal guaranties as
collateral support for the loans. Goodhue Bank provides loans to the
agricultural industry in many of the communities it serves. Goodhue Bank's
agricultural loans relate to a variety of agricultural credit needs, including
crop loans, livestock loans, dairy production loans, and building and equipment
loans.

RESIDENTIAL REAL ESTATE LOANS. These loans include residential real estate
first mortgages and home equity lines of credit. At September 30, 1996, these
loans represented approximately 23.6% of loans outstanding. The Banks originate
variable and fixed rate first real estate mortgages, in accordance with the
guidelines of the Federal National Mortgage Association ("FNMA") and the Federal
Home Loan Mortgage Corporation ("FHLMC"), which are most often sold servicing
retained into the secondary market. The Banks also originate first and second
real estate mortgages which are retained in the Banks' portfolios. Generally
these loans are underwritten in accordance with the FNMA and FHLMC guidelines,
with the exception of being shorter in term and having variable rates. Loan to
values reflect industry standards of 80% or less and up to 95% with mortgage
insurance. The Banks continue to experience increases in home equity lines of
credit, which are made on both a fixed-rate and variable-rate basis and
generally have maturities of five to seven years and are generally secured by
second mortgages on the borrower's home.

CONSUMER LOANS. Loans in this category include automobile loans, home
improvement loans and personal lines of credit. At September 30, 1996,
approximately 13.0% of total loans were consumer loans, which generally are on
an installment basis, carry an adjustable-rate of interest, and have maturities
of three to five years, and are secured by automobiles, boats, and other types
of personal property.

LEASES. Leases are made on equipment to manufacturing, retail and wholesale
businesses on a fixed rate basis, having maturities of three to five years. At
September 30, 1996, approximately 4.2% of total loans were leases made by
Goodhue Bank.

OTHER INVESTMENTS. United maintains a diversified portfolio of investments,
primarily consisting of U.S. Treasury securities, obligations of U.S. government
corporations and agencies, and obligations of states and their political
subdivisions. United attempts to balance its portfolio to meet its liquidity
needs while

50
<PAGE>
endeavoring to maximize investment income. United also attempts to maximize tax
advantages in balancing its portfolio. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Investment Securities."

DEPOSITS

Each of the Banks offers the usual and customary range of depository
products provided by commercial banks, including checking, savings and money
market accounts, and certificates of deposit. Deposits at each Bank are insured
by the Federal Deposit Insurance Corporation up to statutory limits. Local
managements of the Banks determine the type, mix and pricing of the depository
products offered to best compete in a Bank's particular marketplace.

OTHER CUSTOMER SERVICES AND PRODUCTS

Other aspects of the business of the Banks include cash management services
such as payroll processing, ACH originations and lock box services, safe deposit
box services, night depository services, wire transfers and automated teller
machines. The Banks have established "Investment Centers" which offer securities
brokerage services, annuities and mutual funds through an affiliation with a
brokerage service provider.

CONSUMER FINANCE BUSINESS

CCC, a wholly-owned subsidiary of United, engages in consumer credit
activities, and offers loans to consumers who are not traditional bank customers
for a variety of reasons including personal preferences, inability to obtain
small loans from traditional banks, blemished credit history, inability to
provide income verification data or lack of established credit history. CCC's
loan portfolio has grown from approximately $2.1 million as of December 31, 1993
to $6.4 million at September 30, 1996. Loans originated by CCC primarily range
in size from $500 to $5,000 with terms of two to five years and various rates of
interest generally ranging from 15% to 21%. Most loans are secured by
automobiles, recreational vehicles or other personal property and are originated
directly by CCC. CCC operates from four leased offices located in Red Wing
(since 1985), Hastings (since 1994), Northfield (since 1995) and West St. Paul
(since 1996).

GROWTH STRATEGIES

United's strategy is to continue to grow by acquiring other financial
institutions and financial product and service providers, expanding existing
bank and consumer finance businesses internally, and pursuing other financial
service opportunities.

INTERNAL GROWTH. United intends to continue to grow its existing
businesses, in large part by identifying products or services which have been
successful in one or more subsidiary banks and expanding these products and
services to other subsidiary banks. Goodhue Bank and Park Bank will utilize
Signal Bank's status as a "preferred lender" with the SBA to increase their SBA
lending. Signal Bank's mortgage department will enable the subsidiary banks to
increase their mortgage lending. Goodhue Bank's lease financing experience will
allow the subsidiary banks to increase lease financing transactions. In
addition, the subsidiary banks are constantly developing and evaluating
different deposit products to meet the needs of their customers. The subsidiary
banks, with the assistance of United, will evaluate the needs of their
respective customers to determine which of the many delivery systems they will
use, including personal computers and automated teller machines. United intends
to expand CCC's lending activity by building a referral network among
automobile, boat and other recreational vehicle dealerships, and by the
acquisition and start-up of new offices.

ACQUISITIONS. An equally important strategy is to continue to grow by
acquiring other financial institutions and financial service providers. United's
acquisition strategy is to identify banks with at least $50 million in assets in
Minnesota and Wisconsin communities within a 100-mile radius of the
Minneapolis-St. Paul metropolitan area. The Company does not have any pending
arrangements, agreements or understandings regarding acquisitions other than the
Park Acquisition. In assessing acquisitions, United focuses on credit quality,
past performance of the bank, management strengths and weaknesses, location,
community demographics, relative health of the local economy, organizational
structure of the entity, and consideration

51
<PAGE>
for and terms of the acquisition. Management believes there are a number of
community banks which meet United's criteria and whose owners would be
interested in selling their banks to a community-based organization like United.
The Company believes that the reputation of its principal officers, its
community banking experience and its philosophy of permitting significant
autonomy and independence in management of its Banks, position United well to
take advantage of future expansion opportunities. Management believes that by
standardizing certain products, services and systems and providing appropriate
holding company services, the bank officers and personnel can concentrate on
individual customer service and community relations. Management also believes
services provided by United should benefit the individual banks by lowering
expenses through centralization of administration and data processing services,
by streamlining credit policy formation and supervision and by facilitating
compliance with the requirements of multiple-layered banking regulations.
Ultimately, such standardization and centralization is intended to contribute to
United's acquisition strategy by improving the results of operations of acquired
banks.

Concurrently with the closing of this offering, United will close the Park
Acquisition and acquire 100% ownership of Park Bank. See "Acquisition of Park."

COMPETITION

United's Banks and CCC face significant competition from providers of
financial services throughout the Minneapolis-St. Paul metropolitan area and in
out-state Minnesota in all aspects of their business. The local financial
services industry is rapidly changing and highly competitive, dominated by
numerous banks of First Bank System and Norwest Corporation, and by TCF, fsb. In
addition, United competes with numerous banks, savings and loan associations,
securities brokerage firms and other financial services companies. Commercial
credit and leasing firms, consumer and commercial finance companies, factors,
and mortgage banks, also have some competitive effect on United. Some of these
entities and institutions are not subject to the same regulatory restrictions as
United. Many competitors of United have much greater financial resources,
greater name recognition and more offices with attendant personnel.

Management believes that each of United's Banks and CCC will be able to
continue to compete successfully in its respective communities. United believes
its competitive strengths include the reputation it has for developing and
continuing banking relationships, responsiveness to customer needs and
individualized customer service, and skilled and resourceful personnel. The
factors affecting competition include banking and financial services provided,
customer convenience and office location. United further believes that the
community commitment and involvement of its personnel and its commitment to
providing quality banking and financial services are factors that should allow
it to continue to maintain and improve its competitive position.

Legislation permitting full nationwide interstate banking and branching was
recently enacted by Congress. The Minnesota legislature has passed a law
permitting interstate branching (the acquisition of a bank in Minnesota by an
out-of-state bank without the requirement of maintaining a Minnesota banking
charter) as of June 1, 1997. These new laws may offer out-of-state banks an
enhanced opportunity to compete in United's markets. See "Supervision and
Regulation -- Recent Legislation."

United also faces competition in acquiring institutions. Minnesota has
recently experienced a significant consolidation of its banking industry, and
many large holding companies with greater resources than United (including
several out-of-state holding companies) are actively pursuing acquisitions in
Minnesota. This competition affects the acquisition opportunities for United and
can affect the cost of such acquisitions.

FACILITIES

United presently leases its principal office, consisting of approximately
3,860 square feet located at 2600 Eagan Woods Drive, Suite 155, Eagan,
Minnesota. The lease will expire July 31, 1999.

Signal Bank presently leases (i) its main office, consisting of
approximately 9,150 square feet plus an approximately 2,400 square foot
leasehold improvement, located at 100 Signal Hills, West St. Paul, Minnesota,
under a lease which will expire December 31, 2000; and (ii) two areas in the
Signal Hills Center which is

52
<PAGE>
located adjacent to Signal Bank's main office under a lease which Signal Bank
has terminated effective January 31, 1997, at which time those employees will
move to Signal Bank's main office. In addition, Signal Bank operates branch
offices in West St. Paul, Eagan and Savage, Minnesota. The West St. Paul branch
office is located in an approximately 4,000 square foot detached building owned
by Signal Bank and located at 2060 South Robert Street. The Eagan branch office
is located in an approximately 16,000 square foot detached building owned by
Signal Bank and located at 1270 Yankee Doodle Road, Eagan, Minnesota. The Savage
branch office is located in an approximately 6,000 square foot detached building
owned by Signal Bank and located at 12302 Princeton Avenue South.

Goodhue Bank owns (i) its main office, consisting of approximately 38,000
square feet, located at 222 Bush Street, Red Wing, Minnesota (approximately
6,700 square feet are leased to non-bank tenants); (ii) a detached drive-up
facility, located at Bush and Fourth Street, Red Wing, Minnesota, consisting of
an auto bank with open office area, teller area and 7 drive-up lanes covered by
a canopy on a lot totalling 27,360 square feet; and (iii) a 5,250 square foot
office building, located at 421 West 4th Street, Red Wing, Minnesota, which is
currently occupied by non-bank tenants. In addition, Goodhue Bank owns three
branches in Rushford and Lanesboro, Minnesota. The Rushford Branches consist of
a 9,800 square foot bank building located at 101 West Jessie Street and a
drive-up facility located on Mill Street in Rushford. The Lanesboro Branch
consists of a 3,200 square foot building on the corner of 2nd and E Streets in
Lanesboro.

CCC leases a 1,200 square foot office at 432 West Third Street in Red Wing,
under a lease which expires December 31, 1998; a 1,400 square foot office in the
County Crossroads Center in Hastings, Minnesota, under a lease which expires
September 30, 1998; and a 1,700 square foot office located at 1014 South Highway
3, Northfield, Minnesota, under a lease which expires July 31, 1999.

Unitech leases a 6,120-square foot office located in 5400 Babcock Trail,
Inver Grove Heights, Minnesota, under a lease which expires September 30, 1999
(with an option to renew the lease for an additional five-year period).

EMPLOYEES

As of September 30, 1996, United and its subsidiaries employed 224 persons,
184 on a full-time basis and 40 on a part-time basis. Following the Park
Acquisition, United and its subsidiaries will employ approximately 302 persons,
249 on a full-time basis and 53 on a part-time basis.

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<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The names, ages and positions of the executive officers and directors of
United, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
R. Scott Jones 52 Director and Chairman of the Board

Galen T. Pate 57 Director and President

Marcia L. O'Brien 40 Executive Vice President and Chief Financial Officer

John H. LeMay 57 Executive Vice President and Corporate Counsel

Donald M. Davies 50 Executive Vice President

Arlin A. Albrecht 59 Director

Larry C. Barenbaum 49 Director

Spencer A. Broughton 68 Director

James P. Fritz 56 Director

John W. Johnson 65 Director

Ora G. Jones 79 Director

Louis J. Langer 71 Director

John C. Dorsey 57 President of Signal Bank

Thomas W. Longlet 45 President of Goodhue Bank
</TABLE>

R. SCOTT JONES has served as Chairman of the Board and a director of United
since January 1, 1994. Mr. Jones had served as a director and Chief Executive
Officer of Goodhue from 1983 until the merger with Signal. Mr. Jones has been a
director (since 1975), Chairman (since 1993), Chief Executive Officer (since
1983) and President (from 1983 to 1993) of Goodhue Bank. Mr. Jones has been a
director of Signal Bank since July, 1992. Mr. Jones has been a director of CCC
since 1986. Mr. Jones has held various positions with the American Bankers
Association, a national trade association located in Washington, D.C., and was
recently elected First Vice President, from which office he is expected to
advance to President in October of 1998. R. Scott Jones is the son of Ora G.
Jones (see below) and is the spouse of Anne E. Jones, a director of Goodhue
Bank.

GALEN T. PATE has served as President and a director of United since January
1, 1994. Mr. Pate, a founder of Signal, had served as a director of Signal from
its inception in 1980 until the merger with Goodhue and had been Chairman and
President of Signal from 1989 until the merger with Goodhue. Mr. Pate has been
Chairman (since 1988) and Chief Executive Officer (from 1988 to 1995) and
President (from 1975 to 1988) of Signal Bank. Mr. Pate has been a director of
Goodhue Bank since 1992. Mr. Pate has been a director of CCC since 1994. Mr.
Pate is currently the Chairman and President of BancInsure, Inc., a captive
insurance company insuring banks in 26 states. Mr. Pate is also a director of
the Bank Marketing Association, a national trade association located in
Washington, D.C.

MARCIA L. O'BRIEN has served as Executive Vice President and Chief Financial
Officer of United since January 1, 1994. She has been Chief Financial Officer of
Signal Bank since 1986 and Senior Vice President of Signal Bank since 1988. Ms.
O'Brien was employed by KPMG Peat Marwick as a Senior Manager from 1983 to 1986.

54
<PAGE>
JOHN H. LEMAY has served as Executive Vice President and Corporate Counsel
of United since 1995. He has been Corporate Counsel of Signal Bank since 1985
and Senior Vice President since 1990. Mr. LeMay was a partner in the law firm of
Sweeney, O'Connor & LeMay from 1976 to 1985.

DONALD M. DAVIES has served as Executive Vice President of United since
January 1, 1994. From 1992 to 1994 Mr. Davies served as Chief Financial Officer
and Treasurer of Goodhue. From 1992, Mr. Davies has been Treasurer and Secretary
of CCC. From 1990 to 1992, Mr. Davies was self-employed as a consultant to
various community banks in Minnesota. From 1989 to 1990, Mr. Davies held various
positions with Norwest Corporation, including Vice President -- Community Bank
Acquisitions, and Chief Administrative Officer of the Greater Minnesota
Community Banks. From 1976 to 1989, Mr. Davies was the Chief Financial Officer
of The Bank Group, Inc., a $350 million community banking organization located
in Wayzata, Minnesota.

ARLIN A. ALBRECHT has served as a director of United since January 1, 1994
and was director of Goodhue from 1986 until the merger with Signal. Mr. Albrecht
has been a director of Goodhue Bank since 1986. Since 1960, Mr. Albrecht has
held various positions with Red Wing Publishing Company and has been President
and Chief Executive Officer since 1992. Red Wing Publishing owns 16 newspapers
throughout the states of Minnesota and Wisconsin. Mr. Albrecht is a director and
the Chairman of River Region Health Services, a health services company located
in Red Wing, Minnesota.

LARRY C. BARENBAUM has served as a director of United since January 1, 1994
and has been a director of Signal Bank since 1980. Since 1992, Mr. Barenbaum has
been the owner and President of LCB Enterprises, Inc., a company located in
Minneapolis, Minnesota engaged in sales representation and acquisitions of small
businesses. Since 1994, Mr. Barenbaum has been President and a director of ACII
Corp., a jewelry wholesaler. In addition, Mr. Barenbaum is a director of Brauns,
a ready-wear retail store in Minneapolis, Minnesota.

SPENCER A. BROUGHTON has served as a director of United since January 1,
1994 and was a director of Goodhue from 1983 until the merger with Signal. Mr.
Broughton has been a director of Goodhue Bank since 1969. From 1962 to 1996, Mr.
Broughton held various positions with Citizens Security Group, a property and
casualty insurance company located in Red Wing, Minnesota including Chairman and
Chief Executive Officer from 1970 to 1996 and was a director from 1963 to 1996.
He now serves as a consultant to the Meridian Insurance Group of Indianapolis,
Indiana. In addition, Mr. Broughton is a director of Alliance of American
Insurers, a national trade association; and a director of Insurance Federation
of Minnesota, a state trade association.

JAMES P. FRITZ has served as a director of United since January 1, 1994. Mr.
Fritz, a founder of Signal, had served as a director of Signal from its
inception in 1980 until the merger with Goodhue. Mr. Fritz also has been a
director of Signal Bank since 1980. Mr. Fritz has been President and Chairman of
Fritz Company, Inc., a candy and tobacco distributor in Newport, Minnesota,
since 1982.

JOHN W. JOHNSON has served as a director of United since 1995. Mr. Johnson
has been President and Chief Executive Officer of Community Bank Spring Green,
Spring Green, Wisconsin, since its formation in 1996. Mr. Johnson was Chairman
of M & I Bank Southwest from June 1994 until 1995 and President and Chief
Executive Officer of Valley Bank Southwest from 1986 until 1994. Mr. Johnson was
also Senior Vice President -- West Region and a director of Valley
Bancorporation from 1986 to 1994. Mr. Johnson is Secretary/Treasurer and a
director of BancInsure, Inc., a captive insurance company insuring banks in 26
states.

ORA G. JONES has served as a director of United since January 1, 1994 and
was a director of Goodhue from 1983 until the merger with Signal. Since 1943,
Mr. Jones has been a director of Goodhue Bank and was the Chairman from 1958 to
1993. Mr. Jones has been a director of CCC since 1986. Ora G. Jones is the
father of R. Scott Jones (see above).

LOUIS J. LANGER has served as a director of United since January 1, 1994.
Mr. Langer, a founder of Signal, had served as a director of Signal from its
inception in 1980 until the merger with Goodhue. Mr. Langer has

55
<PAGE>
served as a director of Signal Bank from 1967 to 1996. From 1946 until 1995 Mr.
Langer was Chairman of Langer Construction Co., a general building contractor in
West St. Paul, Minnesota and was President from 1946 to 1991.

JOHN C. DORSEY has served as Chief Executive Officer of Signal Bank since
January, 1996 and as President and a director since 1988. From 1983 to 1987 he
was Executive Vice President of Signal Bank.

THOMAS W. LONGLET has served as President, Chief Operating Officer and a
director of Goodhue Bank since 1995. Mr. Longlet was President of the Highland
Bank, St. Paul, Minnesota from 1991 until 1995. Mr. Longlet was Senior Vice
President of Norwest Commercial Insurance Services, Minneapolis, Minnesota from
1990 until 1991. Mr. Longlet was President and Managing Officer of two Norwest
Banks from 1986 until 1990.

Each of the directors of United named above serve terms of varying length as
determined by United's shareholders. Mr. S. Jones and Mr. Pate each serve four
year terms, Mr. Albrecht and Mr. Fritz each serve three year terms, Mr.
Barenbaum and Mr. Broughton each serve two year terms, and Mr. O. Jones and Mr.
Langer each serve one year terms.

United's Board has an Audit Committee consisting of Spencer A. Broughton,
James P. Fritz, Ora G. Jones and Louis J. Langer. The responsibilities of the
Audit Committee are to review the results and scope of the audits and other
services provided by the Company's independent auditors, as well as the
Company's accounting principles and its system of internal controls, and report
the results of its review to the Board.

United's Board has a Compensation Committee consisting of Arlin A. Albrecht,
Larry C. Barenbaum and James P. Fritz. The responsibilities of the Compensation
Committee are to make recommendations concerning executive compensation and
incentive compensation, subject to ratification by the Board, and administer the
Company's 1994 Stock Option Plan.

OFFICER AND DIRECTOR COMPENSATION

The following table sets forth certain information regarding compensation
paid for services performed in 1995 to United's chief executive officers, and
the four highest paid executive officers of United and its subsidiaries whose
total salary and bonuses earned during 1995 exceeded $100,000.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
----------------------------------------- AWARDS/SHARES UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OTHER (1) OPTIONS (# OF SHARES) (2)
- --------------------------------------------- ---------- ---------- ----------------- -------------------------
<S> <C> <C> <C> <C>
R. Scott Jones, Chairman..................... $ 192,400 $ 185,000 $ 9,373 3,000

Galen T. Pate, President..................... $ 192,400 $ 185,000 $ 8,407 3,000

Marcia L. O'Brien, Executive
Vice President and Chief Financial
Officer..................................... $ 83,200 $ 70,000 $ 8,053 2,000

John H. LeMay, Executive Vice President and
Corporate Counsel........................... $ 94,120 $ 55,000 $ 7,435 2,000

Donald M. Davies, Executive Vice President... $ 83,200 $ 55,000 $ 7,276 2,000

John C. Dorsey, President of Signal Bank..... $ 135,200 $ 82,000 $ 6,516 1,500
</TABLE>

- ------------------------
(1) Represents noncash value attributed to personal use of Company automobiles.

(2) See "Management -- 1994 Stock Option Plan."

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<PAGE>
Directors of United receive an annual fee of $5,000 for their services. In
1995, directors of United were each granted an option to acquire 333 1/3 shares
of United's Common Stock, which becomes exercisable as to twenty percent (20%)
of the shares on each of the first five anniversaries of the date of grant.

Signal Bank has entered into Executive Salary Continuation Agreements with
each of Galen T. Pate, Marcia L. O'Brien, John H. LeMay, and John C. Dorsey and
United has entered into an Executive Salary Continuation Agreement with Donald
M. Davies, pursuant to which each such officer, or a designated beneficiary,
will receive $40,000 annually upon such officer's retirement at age 65 for a
period of 13 years. Under the agreement, the companies indicate they intend to
adjust the amount payable under the agreements to reflect 50% of each such
officer's then current salary, however, the companies are not obligated to make
any such adjustment. In the event of such officer's death before retirement at
age 65, the companies will pay to the officer's beneficiary $40,000 per year for
10 years. In the event of such officer's disability before retirement at age 65,
the companies will pay the officer a lump sum ranging from $12,611 to $290,398
as provided on a vesting schedule attached to each agreement.

1994 STOCK OPTION PLAN

United's Board of Directors adopted the 1994 Stock Option Plan (the "1994
Stock Plan") in April, 1994, which was approved by United's stockholders in
April, 1995. The purpose of the 1994 Stock Plan is to attract and retain
officers and directors, and to motivate them to produce a superior return to the
shareholders of United by offering such persons an opportunity to realize stock
appreciation, by facilitating stock ownership, and by rewarding them for
achieving a high level of corporate financial performance.

The 1994 Stock Plan is administered by the Compensation Committee (the
"Committee"), which is appointed by the Board of Directors. Subject to the
provisions of the 1994 Stock Plan, the Committee has the exclusive power to make
awards under the 1994 Stock Plan, to determine when and to whom awards will be
granted, and the form, amount and other terms and conditions of each award. The
types of awards that may be granted under the 1994 Stock Plan include incentive
and non-qualified stock options. Subject to certain restrictions applicable to
incentive stock options, awards will be exercisable by the recipients at such
times as are determined by the Committee.

Options may be granted to recipients at such exercise prices as the
Committee may determine but not less than their fair market value as of the date
the option is granted. Stock options may be granted and exercised at such times
as the Committee may determine, except that, unless applicable federal tax laws
are modified, (1) no incentive stock option may be granted at less than fair
market value, (2) no incentive stock option may be granted more than ten years
after the effective date of the 1994 Stock Plan, (3) an incentive stock option
shall not be exercisable more than ten years after the date of grant, and (4)
the aggregate fair market value of the shares of Common Stock with respect to
which incentive stock options may first become exercisable in any calendar year
for any employee may not exceed $100,000 under the 1994 Stock Plan or any other
plan of United. Additional restrictions apply to an incentive stock option
granted to an individual who beneficially owns more than ten percent of the
combined voting power of all classes of stock of United.

As of May 1, 1994, the effective date of the 1994 Stock Plan, the total
number of shares of United Common Stock available for distribution under the
1994 Stock Plan was 100,000 (subject to adjustment for future stock splits,
stock dividends and similar changes in the capitalization of United). As of the
date of this Prospectus, options to purchase an aggregate of 69,367 shares of
Common Stock were outstanding and an aggregate of 30,473 shares of Common Stock
were available for future grants of awards under the 1994 Stock Plan. Options
granted pursuant to United's 1994 Stock Plan are exercisable at an exercise
price equal to the fair market value as determined by the Board of Directors on
the date of grant. Options outstanding have a per share exercise price ranging
from $73.46 to $94.20, and expire ten years from the date of grant of the option
(unless exercised prior to that time).

The 1994 Stock Plan will remain in effect until all stock subject to it is
distributed or all awards have expired or lapsed, whichever occurs later. The
1994 Stock Plan also gives the Board the right to terminate, suspend or modify
the 1994 Stock Plan, except that amendments to the 1994 Stock Plan are subject
to

57
<PAGE>
shareholder approval if needed to comply with Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, the incentive stock option provisions of the
Internal Revenue Code of 1986, as amended, their successor provisions, or any
other applicable law or regulation.

The following table summarizes option grants made during 1995 to the
executive officers of United and its subsidiaries:

<TABLE>
<CAPTION>
NUMBER OF PERCENT OF POTENTIAL REALIZABLE
SHARES TOTAL OPTIONS VALUE AT ASSUMED
UNDERLYING GRANTED TO ALL EXERCISE ANNUAL RATES (2)
THE EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME OPTIONS (1) 1995 SHARE DATE 5% 10%
- ----------------------------- ------------- ----------------- ----------- ------------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Jones............... 3,000 14.1% $ 79.80 January 31, 2005 $ 150,570 $ 381,540
Galen T. Pate................ 3,000 14.1% 79.80 January 31, 2005 150,570 381,540
Marcia L. O'Brien............ 2,000 9.4% 79.80 January 31, 2005 100,380 254,360
John H. LeMay................ 2,000 9.4% 79.80 January 31, 2005 100,380 254,360
Donald M. Davies............. 2,000 9.4% 79.80 January 31, 2005 100,380 254,360
John C. Dorsey............... 1,500 7.0% 79.80 January 31, 2005 75,285 190,770
</TABLE>

- ------------------------
(1) Each option becomes exercisable as to twenty percent of the shares on each
of the first five anniversaries of the date of grant. Each option has a term
of ten years, subject to earlier termination in the event of the optionee's
cessation of service with United.

(2) The potential realizable value is based on a 10-year term of each option at
the time of grant. Assumed stock price appreciation of 5% and 10% is
mandated by rules of the Securities and Exchange Commission and is not
intended to forecast actual future financial performance or possible future
appreciation. The potential realizable value is calculated by assuming that
the deemed fair value of United's Common Stock for financial statement
presentation purposes on the date of grant appreciates at the indicated rate
for the entire term of the option and that the option is exercised at the
exercise price and sold on the last day of its term at the appreciated
price.

The following table provides information related to the number and value of
options held at December 31, 1995 by the named executive officers. No options
were exercised during 1995. The Company does not have any outstanding stock
appreciation rights ("SARs").

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END ($) (1)
---------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
R. Scott Jones............................................ 1,800 4,200 $ 31,476 $ 67,104
Galen T. Pate............................................. 5,800 10,200 $ 109,876 $ 184,704
Marcia L. O'Brien......................................... 1,200 2,800 $ 20,984 $ 44,736
John H. LeMay............................................. 720 2,080 $ 11,576 $ 30,624
Donald M. Davies.......................................... 1,200 2,800 $ 20,984 $ 44,736
John C. Dorsey............................................ 900 2,100 $ 15,738 $ 33,552
</TABLE>

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

(1) Article 7 of United's Bylaws establishes a formula to determine the price at
which United is entitled to exercise its right of first refusal relating to
proposed transfers by United shareholders. As of December 31, 1995 the price
determined by the formula was $93.06. Value is calculated on the basis of
$93.06 minus the option exercise price and multiplying the result by the
number of shares of common stock underlying the option.

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<PAGE>

RELATED PARTY TRANSACTIONS

Total loans to all directors and executive officers of United, the principal
executive officers of Signal Bank and Goodhue Bank and principal holders of
United Common Stock (including their affiliates) as a group (14 individuals) at
September 30, 1996 and at December 31, 1995 were $4,158,133 and $5,244,845,
respectively. United believes that such loans are made in the ordinary course of
business with normal credit terms, including interest rate and
collateralization, and do not represent more than a normal risk of collection.

United owns 5% of the issued and outstanding stock of Community Bank Spring
Green, and John W. Johnson (a director of United) is a director, the President,
and a minority shareholder of Community Bank Spring Green.

Galen T. Pate (the President and a director of United) is Chairman and
President of BancInsure, Inc., and John W. Johnson (a director of United) is a
director and the Secretary/Treasurer of BancInsure, Inc. The Company paid
approximately $117,000 in premiums to BancInsure, Inc. during 1995 and
anticipates that premiums to be paid in 1996 will be approximately the same.

In March 1996, United Community Bancshares, Inc. Employee Stock Ownership
Plan (the "United ESOP") purchased 2,150 shares of common stock for an aggregate
purchase price of $200,079. Trustees of the ESOP include: R. Scott Jones, a
director and Chairman of the Board of United, Galen T. Pate, a director and
President of United, Marcia L. O'Brien, Executive Vice President and Chief
Financial Officer of United, John H. LeMay, an Executive Vice President and
Corporate Counsel of United, and Donald M. Davies, an Executive Vice President
of United.

UNITED EMPLOYEE STOCK OWNERSHIP PLAN AND UNITED 401(K) PROFIT SHARING PLAN

United sponsors an employee stock ownership plan for the benefit of certain
of its employees, called the "United Community Bancshares, Inc. Employee Stock
Ownership Plan" (the "United ESOP"). The United ESOP is a qualified retirement
plan designed to invest primarily in United capital stock. The United ESOP
currently holds 67,948 shares of United Common Stock, or 12.4% of the United
Common Stock outstanding, which has been allocated to individual participant
accounts in the United ESOP. The trustees of the United ESOP are R. Scott Jones,
Galen T. Pate, Marcia L. O'Brien, John H. LeMay and Donald M. Davies, and the
trustees are entitled to vote the shares of United Common Stock held by the ESOP
in connection with most matters brought before the United shareholders. These
individuals also serve as trustees of the United Community Bancshares, Inc.
401(k) Profit Sharing Plan.

United also sponsors a 401(k) plan, called the "United Community Bancshares,
Inc. 401(k) Profit Sharing Plan" (the "United 401(k) Plan"), a qualified
retirement plan maintained for the benefit of certain of its employees.
Contributions to the United 401(k) Plan are made by participants through pre-tax
salary deductions. United may make matching contributions in such amount as
determined by United's Board of Directors. Participants may direct the
investment of their contributions in one or more investment funds under the
401(k) Plan, which include a choice of seven mutual funds. The United 401(k)
Plan does not presently invest in United stock.

The United ESOP and United 401(k) Plan cover all eligible employees of
United and its subsidiaries. The provisions of the United ESOP are as follows.
New employees enter the ESOP on the first entry date after completing one year
of service. United's Board of Directors may, in its discretion, elect to make a
contribution to the ESOP for a year, in such amount as the Board determines. The
ESOP contribution for a year, if any, will be allocated pro rata on the basis of
compensation to the accounts of those participants who have completed 1,000
hours of service with United and are employed on the last day of the plan year,
December 31. It is anticipated that the Trustees of the ESOP will continue to
invest contributions primarily in United Common Stock. Participants will become
vested in the amounts in their accounts under a graduated vesting schedule (100%
vested upon completing 6 years of vesting service, 80% vested after 5

59
<PAGE>
years, 60% vested after 4 years, 40% vested after 3 years, 20% vested after 2
years, and 0% vested prior to completing 2 years of service). A participant who
terminates employment before completing the number of years of vesting service
to become 100% vested will forfeit the portion of his or her account that is not
vested.

The United 401(k) Plan provisions are as follows. New employees enter the
United 401(k) Plan on the first entry date after completing one year of service.
Three types of contributions are permitted. First, participants may make 401(k)
contributions through pre-tax salary deductions of up to 15% of their qualifying
compensation. Second, United will match 50% of up to the first 5% of pay which
is contributed as a 401(k) contribution made by each participant. Third,
United's Board of Directors may, in its discretion, elect to make a profit
sharing contribution to the United 401(k) Plan for a year, in such amount as the
Board determines. The profit sharing contribution for a year, if any, will be
allocated pro rata on the basis of compensation to the accounts of those
participants who have completed 1,000 hours of service with United and are
employed on the last day of the plan year, December 31. Participants will become
vested in the amounts in their accounts under a graduated vesting schedule (100%
vested upon completing 6 years of vesting service, 80% vested after 5 years, 60%
vested after 4 years, 40% vested after 3 years, 20% vested after 2 years, and 0%
vested prior to completing 2 years of service). A participant who terminates
employment before completing the number of years of vesting service to become
100% vested will forfeit the portion of his or her account that is not vested.

PRINCIPAL SHAREHOLDERS

The following table sets forth information regarding the beneficial
ownership of United's Common Stock, as of October 1, 1996 and as adjusted to
give effect to the offering of United's Common Stock occurring concurrently with
this Offering, by each shareholder known to United to own beneficially more than
5% of the outstanding United Common Stock, by each director or executive officer
of United, and by all such directors and officers (14 individuals) as a group
(unless otherwise indicated, each named person has sole voting and investment
power):

<TABLE>
<CAPTION>
PERCENTAGE OF UNITED
COMMON STOCK OWNED
NUMBER OF PERCENTAGE OF UNITED AFTER OFFERING (1)
NAME AND ADDRESS UNITED SHARES OWNED PRIOR --------------------------
OF BENEFICIAL OWNER OWNED TO OFFERING MINIMUM MAXIMUM
- ------------------------------------------------------ ------------- --------------------- ------------ ------------
<S> <C> <C> <C> <C>
Arlin A. Albrecht (2) 9,775 1.79% 1.65% 1.62%
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Larry C. Barenbaum (2) 15,507 2.84% 2.61% 2.57%
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Spencer A. Broughton (2) 1,725 * * *
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Donald M. Davies (3) 1,800 * * *
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
John C. Dorsey (4) 2,900 * * *
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
James P. Fritz (2) 50,213 9.18% 8.45% 8.32%
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
</TABLE>

60
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF UNITED
COMMON STOCK OWNED
NUMBER OF PERCENTAGE OF UNITED AFTER OFFERING (1)
NAME AND ADDRESS UNITED SHARES OWNED PRIOR --------------------------
OF BENEFICIAL OWNER OWNED TO OFFERING MINIMUM MAXIMUM
- ------------------------------------------------------ ------------- --------------------- ------------ ------------
<S> <C> <C> <C> <C>
John W. Johnson (5) 67 * * *
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Ora G. Jones, Jr. (2) 15,509 2.84% 2.61% 2.57%
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
R. Scott Jones (6) 58,860 10.73% 9.88% 9.73%
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Louis J. Langer (2) 21,379 3.91% 3.60% 3.54%
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
John H. LeMay (7) 1,966 * * *
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Marcia L. O'Brien (3) 2,180 * * *
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Galen T. Pate (8) 15,800 2.86% 2.66% 2.62%
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
United ESOP
2600 Eagan Woods Drive, Suite 155 67,948 12.43% 11.44% 11.26%
Eagan, MN 55121 (9)
All executive officers and directors as a group (14 198,138 35.36% 32.61% 32.12%
individuals) (10)
</TABLE>

- ------------------------
* Less than 1.0%.

(1) Assuming that none of such individuals purchases any shares of Common Stock
in the offering; to the extent such individuals purchase shares of Common
Stock in the offering, the number of shares and percentage owned by such
individual, and by all executive officers and directors as a group, will
exceed the amounts and percentages stated.

(2) Includes 200 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

(3) Includes 1,200 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

(4) Includes 900 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

(5) Includes 67 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

(6) Includes 1,800 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

(7) Includes 720 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

(8) Includes 5,800 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

(9) Trustees of the United ESOP are: R. Scott Jones, Galen T. Pate, Marcia L.
O'Brien, John H. LeMay and Donald M. Davies.

(10) Includes 13,667 shares of Common Stock issuable upon exercise of currently
exercisable stock options.

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<PAGE>
SUPERVISION AND REGULATION

THE FOLLOWING DISCUSSION OF STATUTES AND REGULATIONS AFFECTING BANK HOLDING
COMPANIES AND BANKS IS A SUMMARY THEREOF AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH STATUTES AND REGULATIONS.

GENERAL

Commercial banking is highly regulated at both the federal and state level.
Deposits, reserves, investments, loans, consumer law compliance, issuance of
securities, payment of dividends, mergers and consolidations, electronic funds
transfers, management practices and other aspects of a holding company's and a
bank's operations are subject to regulation. This regulation is designed
primarily to protect depositors and not to benefit holders of securities of the
holding company or the bank. The highly regulated environment in which
commercial banks operate is subject to frequent change. Federal banking bills
are currently under consideration in Congress which, if enacted, could have a
variety of effects on this regulatory environment. In general, pending
legislation would repeal portions of the Glass-Steagall Act and would broaden
the permissible range of affiliations between commercial banks and investment
banks. In addition, these bills could limit the authority of the Office of the
Comptroller of the Currency to authorize new insurance activities for banks, and
could provide relief from a variety of federal banking regulations. United
cannot fully predict the nature or the extent of any effects which these
proposed regulatory changes or other possible regulatory changes may have on its
business and earnings. Such changes may have the effect of increasing or
decreasing the cost of doing business, modifying permissible activities, or
enhancing the competitive position of other financial institutions.

BANK HOLDING COMPANY REGULATION

In addition to a variety of generally applicable state and federal laws
governing businesses and employers, United is extensively regulated by special
laws applicable only to financial institutions. Virtually all aspects of
United's operations are subject to specific requirements or restrictions and
general regulatory oversight. With few exceptions, state and federal banking
laws have as their principal objective either the maintenance of the safety and
soundness of the financial institution and the federal deposit insurance system
or the protection of consumers or classes of consumers, rather than the specific
protection of shareholders of United.

SUPERVISION. As a bank holding company, United is subject to regulation by
the Federal Reserve Board under the BHC Act and various regulations adopted by
the Federal Reserve Board. United is required to file with the Federal Reserve
Board quarterly and annual reports and such additional information as the
Federal Reserve Board may require pursuant to the BHC Act. The Federal Reserve
Board also may examine United. United was examined most recently in August,
1996. United is not subject to any formal or informal enforcement actions by any
bank regulatory office as a result of such examination or for any other reason.
The Federal Reserve Board also has authority, in certain circumstances, to
approve or disapprove stock redemptions, changes in ownership or control, and
dividend payments. The Federal Reserve Board may also require that United
terminate an activity or terminate control of or liquidate or divest certain
non-bank subsidiaries or affiliates when the Federal Reserve Board believes the
activity or the control of the subsidiary or affiliate constitutes a significant
risk to the financial safety, soundness or stability of any of its banking
subsidiaries. Under the BHC Act and regulations adopted by the Federal Reserve
Board, a bank holding company and its non-banking subsidiaries are prohibited
from requiring certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services. Further, United is
required by the Federal Reserve Board to maintain certain levels of capital.

PAYMENT OF DIVIDENDS BY UNITED. The Federal Reserve Board has indicated
that banking organizations should generally pay cash dividends out of current
operating earnings and the current rate of earnings retention should be
consistent with the organization's capital needs, asset quality and overall
financial condition. The Federal Reserve Board policy strongly discourages a
bank holding company from declaring or paying a cash dividend which would impose
undue pressure on the capital of subsidiary banks or would be funded only
through borrowings or other arrangements that might adversely affect the holding
company's

62
<PAGE>

financial position. The Federal Reserve may, and in certain circumstances must,
prohibit a bank holding company from making any capital distributions without
prior approval of the Federal Reserve Board, if the subsidiary institution is
undercapitalized. The Federal Reserve Board also may impose limitations on the
payment of dividends as a condition to its approval of certain applications,
including applications for approval of mergers or acquisitions.

REGULATORY CAPITAL REQUIREMENTS. The Federal Reserve Board's capital
guidelines establish the following minimum regulatory capital requirements for
bank holding companies: (i) a capital leverage requirements expressed as a
percentage of total assets, (ii) a risk-based requirement expressed as a
percentage of total risk-weighted assets, and (iii) a Tier 1 leverage
requirement expressed as a percentage of total assets. Tier 1 capital consists
of common stockholders' equity, qualifying preferred stock, and minority
interests in the equity accounts of consolidated subsidiaries. On October 21,
1996, the Federal Reserve Board approved the use of certain cumulative preferred
stock instruments in Tier 1 capital as minority interest in the equity accounts
of consolidated subsidiaries. The Federal Reserve Board has approved the
Preferred Securities as Tier 1 capital. The failure of a bank holding company to
meet its risk-weighted capital ratios may result in supervisory action, as well
as an inability to obtain approval of any regulatory applications and,
potentially, increased frequency of examination. The federal bank regulators
have previously indicated a desire to raise minimum capital requirements for
banking organizations and have suggested that revisions to the risk-based
capital requirements should be made. The effect of any future change in the
required capital ratios of the Company cannot be determined at this time.

ACTIVITY LIMITATIONS. The BHC Act, in general, limits the activities that
may be engaged in by a bank holding company and its subsidiaries to those so
closely related to banking, managing or controlling banks as to be a proper
incident thereto. The Federal Reserve Board, in making such determinations,
considers whether performance of the activities by a bank holding company can
reasonably be expected to produce benefits to the public without any adverse
effects such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices. A bank holding
company may engage, subject to Federal Reserve Board guidelines and approvals,
in such closely-related activities as: (1) making or acquiring loans and other
extensions of credit of the type made by mortgage, finance, credit card, or
factoring companies; (2) operating an industrial bank; (3) servicing loans and
other extensions of credit; (4) performing the functions of a trust company; (5)
acting as an investment or financial advisor; (6) leasing certain real estate or
personal property; (7) making investments to promote community welfare; (8)
providing data processing and data transmission services; (9) acting as an
underwriter for credit life insurance and credit health and accident insurance
directly related to extensions of credit by the holding company system; (10)
providing courier services for checks and certain other instrument exchanges
among banks and for audit and accounting media of a banking or financial nature;
(11) providing certain kinds of management consulting advice; (12) selling, at
retail, money orders, travelers' checks and U.S. savings bonds; (13) performing
real estate appraisals; (14) arranging commercial real estate equity financing;
(15) providing securities brokerage services; (16) underwriting or dealing in
government obligations and money market instruments; (17) engaging in foreign
exchange advisory and transnational services; and (18) acting as a futures
commission merchant. Recently enacted legislation allows well capitalized bank
holding companies to engage in certain activities without the advance approval
of the Federal Reserve Board. Well capitalized bank holding companies are
required merely to notify the Federal Reserve Board within ten business days of
engaging in such activity. The Federal Reserve Board recently proposed
amendments to its regulations defining the scope of permissible bank holding
company activities which will, if adopted, broaden the scope of such activities.
United may, in the future, if appropriate opportunities arise, engage in the
acquisition of additional banks, subject to the approval of the Federal Reserve
Board. See "Business -- Growth Strategies -- Acquisitions." For the near future,
the business of United will essentially be the operation of Signal Bank, Goodhue
Bank, CCC and Unitech, and, following completion of the Park Acquisition, Park
Bank.

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<PAGE>

The recent enactment of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 ("EGRPRA") streamlines the nonbanking activities
application process for well capitalized and well managed bank holding
companies. See "-- Recent Regulatory Developments." Under EGRPRA, qualified bank
holding companies may commence a regulatory approved nonbanking activity without
prior notice to the Federal Reserve Board; written notice is merely required
within ten days after commencing the activity. Also, under EGRPRA, the prior
notice period is reduced to 12 business days in the event of any nonbanking
acquisition or share purchase, assuming the size of the acquisition does not
exceed 10% of risk-weighted assets of the acquiring bank holding company and the
consideration does not exceed 15% in Tier 1 capital. This prior notice
requirement also applies to commencing a nonbanking activity de novo which has
been previously approved by order of the Federal Reserve, but not yet
implemented by regulations.

Under the BHC Act, United must obtain prior Federal Reserve approval before
it acquires direct or indirect ownership or control of any voting shares of any
bank or other bank holding company if, after such acquisition, it will own or
control directly or indirectly more than 5% of the voting stock of the entity,
unless it already owns a majority of the voting stock of the entity. United also
must obtain prior Federal Reserve approval before it acquires all or
substantially all of the assets of a bank or merges or consolidates with another
bank holding company. United will be, with limited exceptions, prohibited from
acquiring direct or indirect ownership or control of a company which is not a
bank or a bank holding company, and must engage in the business of banking or
managing or controlling banks or furnishing services to or performing services
for its subsidiary Banks. The Federal Reserve, by order or regulation, may
authorize United to engage in or acquire stock in a company engaged in
activities so closely related to banking or managing or controlling banks as to
be a proper incident thereto. In reviewing any application or proposal by
United, the Federal Reserve is required to consider the financial and managerial
resources and future prospects of United and the banks concerned, the
convenience and needs of the community to be served, as well as the probable
effect of the transaction upon competition. Recent decisions by the Federal
Reserve under the BHC Act have underscored the importance placed by the Federal
Reserve upon the record of the applicant and its subsidiary banks in meeting the
credit needs of its community in accordance with the Community Reinvestment Act
of 1977. See "Community Reinvestment Act and Other Consumer Protection Statutes"
below.

BANK REGULATION

The continued earnings and growth of United's Banks will be influenced by
general economic conditions, the monetary and fiscal policies of the federal
government and the policies of regulatory agencies, particularly the Federal
Reserve Board. The Federal Reserve Board implements national monetary policies
by its open-market operations in United States Government securities, by
adjusting the required level of reserves for financial institutions subject to
its reserve requirement and by varying the discount rate applicable to
borrowings by banks which are members of the Federal Reserve System. The actions
of the Federal Reserve Board in these areas influence the growth of bank loans,
investments and deposits and also affect interest rates charged on loans and
deposits. The nature and impact of any future changes in monetary policies
cannot be predicted.

SUPERVISION. Signal Bank, as a state chartered banking corporation, is
subject to primary supervision, examination and regulation by the Minnesota
Department of Commerce and the Federal Deposit Insurance Corporation. Each of
Goodhue Bank and Park Bank, as a national chartered banking corporation, is
subject to primary supervision, examination and regulation by the Office of the
Comptroller of the Currency (the "OCC"). Various requirements and restrictions
under the laws of the State of Minnesota and the United States also affect the
operation of United's subsidiary banks. These statutes and regulations relate to
many aspects of the operations of United's subsidiary banks, including reserves
against deposits, loans, investments, mergers and acquisitions, borrowings,
dividends and locations of branch offices. Some of these statutes and
regulations and their effect on United's subsidiary banks are discussed below.
Moreover, from time to time, legislation is enacted which has the effect of
increasing the cost of doing business, limiting or expanding permissible
activities or affecting the competitive balance between banks and other
financial

64
<PAGE>
intermediaries. Proposals to change the laws and regulations governing the
operations and taxation of banks, bank holding companies and other financial
intermediaries are frequently made. The likelihood of any major changes and the
impact of such changes are impossible to predict.

PAYMENT OF DIVIDENDS BY THE BANKS. There are state and federal statutory
and regulatory requirements limiting the amount of dividends which may be paid
to United by its subsidiary banks. Generally, a bank may pay cash dividends out
of current operating earnings to the extent that the current rate of earnings
retention is consistent with the bank's capital needs, asset quality and overall
financial condition. The governing regulatory agency has the authority to
prohibit a bank from engaging in business practices which the governing
regulatory agency considers to be unsafe or unsound. It is possible, depending
upon the financial condition of United's subsidiary banks, that the governing
regulatory agency may assert that the payment of dividends to United by any one
or more of the banks might, under some circumstances, be such an unsafe and
unsound practice.

COMMON LIABILITY. Under federal law, a depository institution insured by
the FDIC can be held liable for any loss incurred by, or reasonably expected to
be incurred by, the FDIC in connection with the default of a commonly controlled
FDIC-insured depository institution or any assistance provided by the FDIC to a
commonly controlled FDIC-insured institution in danger of default. These
provisions can have the effect of making subsidiary banks of United responsible
for FDIC-insured losses at another subsidiary bank.

AFFILIATE TRANSACTION LIMITATIONS. Financial institutions are subject to
certain restrictions imposed by federal law on any extensions of credit to, or
the issuance of a guarantee or letter of credit on behalf of, United or other
affiliates, the purchase of or investment in stock or other securities thereof,
the taking of such securities as collateral for loans and the purchase of assets
from United or other affiliates. Such restrictions prevent United and such other
affiliates from borrowing from Signal Bank, Goodhue Bank and any other
subsequently acquired bank unless the loans are secured by marketable
obligations of specified amounts. Further, such secured loans, investments and
other transactions between any of the subsidiary banks and United or any other
affiliate are limited to 10% of any subsidiary bank's capital and surplus (as
defined by federal regulations) and such secured loans, investments and other
transactions are limited, in the aggregate, to 20% of any subsidiary bank's
capital and surplus (as defined by federal regulations). Such transactions must
also comply with regulations prohibiting terms that would be preferential to
United or other affiliates of the banks. All affiliate transactions are in
compliance with these provisions.

REGULATORY CAPITAL REQUIREMENTS.

Each of United's subsidiary banks is required to comply with capital
adequacy standards set by the respective primary federal regulatory agency. The
regulations may establish higher minimum requirements if, for example, a bank
has previously received special attention or has a high susceptibility to
interest rate risk. Banks with capital ratios below the required minimum are
subject to certain administrative actions. More than one capital adequacy
standard applies, and all applicable standards must be satisfied for an
institution to be considered to be in compliance. There are two basic measures
of capital adequacy: a risk-based capital measure, and a Tier 1 leverage
measure.

The risk-based capital measure was adopted to assist in the assessment of
capital adequacy of financial institutions by, (i) making regulatory capital
requirements more sensitive to differences in risk profiles among organizations;
(ii) introducing off-balance-sheet items into the assessment of capital
adequacy; (iii) reducing the disincentive to holding liquid, low-risk assets;
and (iv) achieving greater consistency in evaluation of capital adequacy of
major banking organizations throughout the world. The risk-based guidelines
include both a definition of capital and a framework for calculating
risk-weighted assets by assigning assets and off-balance-sheet items to broad
risk categories. An institution's risk-based capital ratios are calculated by
dividing its qualifying capital by its risk-weighted assets.

Qualifying capital consists of two types of capital components: "core
capital elements" ("Tier 1" capital) and "supplementary capital elements" ("Tier
2" capital). Tier 1 capital is generally defined as the sum of core capital
elements less goodwill and other intangibles. Core capital elements consist of

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(i) common shareholders' equity, (ii) qualifying perpetual preferred stock,
subject to certain limitations, and (iii) minority interests in the equity
accounts of consolidated subsidiaries. Supplementary capital ("Tier 2" capital)
consists of such additional capital elements as (i) allowance for loan and lease
losses (subject to limitations); (ii) perpetual preferred stock which does not
qualify as Tier 1 capital (subject to certain conditions); (iii) hybrid capital
instruments, perpetual debt and mandatory convertible debt securities; and (iv)
term subordinated debt and intermediate-term preferred stock (subject to
limitations). The maximum amount of Tier 2 capital that may be included in
qualifying total capital is limited to 100% of Tier 1 capital (net of goodwill).

Under current capital adequacy standards, financial institutions must meet a
minimum ratio of qualifying capital to risk-weighted assets of 8%. Of that
ratio, at least half, or 4%, must be in the form of Tier 1 capital. At September
30, 1996, Signal Bank had a Tier 1 risk-based capital ratio of 13.6%, Goodhue
Bank had a Tier 1 risk-based capital ratio of 12.6%, and Park Bank had a Tier 1
risk-based capital ratio of 11.7%.

The Banks also must maintain an allowable leverage ratio. The leverage ratio
is defined as the ratio of Tier 1 capital to average total assets. Under current
capital adequacy standards, financial institutions must meet a minimum leverage
ratio of 4%. Each of Signal Bank, Goodhue Bank and Park Bank is in compliance
with all capital standards currently applicable.

As a result of the FDIC Improvement Act of 1991, the federal bank regulatory
agencies are directed to adopt regulations defining banks as "well capitalized,"
"adequately capitalized," "undercapitalized," "significantly undercapitalized"
and "critically undercapitalized." Under the law, depending upon the bank's
classification, a bank may be directed to prepare and implement a capital
restoration plan, to be guaranteed by its parent bank holding company. Further,
banks are subject to increased restrictions upon activities and heightened
regulatory management as capital classifications decline.

Generally, under regulations adopted by all of the bank federal regulatory
agencies, "well capitalized" has been defined as an institution with a total
capital to risk-based asset ratio of 10%, a Tier 1 capital to risk-based asset
ratio of 6% and a Tier 1 leverage ratio of 5%. The regulations further provide
that an "adequately capitalized" institution must have a total capital to
risk-based asset ratio of at least 8%, a Tier 1 capital to risk-based asset
ratio of 4% and a Tier 1 leverage ratio of 4%. Institutions not satisfying the
requirements for "adequately capitalized" will be deemed "undercapitalized."
Institutions with a total capital to risk-based asset ratio of 6% or less, a
Tier 1 capital to risk-based asset ratio of 3% or less, or a Tier 1 leverage
ratio of 3% or less will be deemed "significantly undercapitalized." Finally,
the regulations provide that an institution with a Tier 1 leverage ratio of less
than 2% will be deemed "critically undercapitalized." Federal bank regulatory
agencies, including the FDIC, are authorized to down-grade a financial
institution from one capital category to the next if an examination reveals that
the asset quality, management, earnings or liquidity of that institution are
less than satisfactory. Under the regulations, each of Signal Bank, Goodhue Bank
and Park Bank would be deemed a "well capitalized" institution based upon its
equity capital as of September 30, 1996.

Signal Bank was examined most recently in April 1996. Goodhue Bank was
examined most recently in August 1996. Park Bank was examined most recently in
January 1996. Such regulatory examinations by the OCC, the FDIC or Minnesota
Department of Commerce, as the case may be, are not audits and are conducted
solely for the benefit of the bank regulators in the discharge of their
supervisory responsibilities. Neither Signal Bank nor Goodhue Bank nor Park Bank
is subject to any formal or informal enforcement actions by any bank regulatory
office as a result of such examinations or for any other reason.

ACQUISITIONS AND BRANCHING. On September 29, 1994, the Riegle-Neal
Interstate Banking and Branching Act of 1994 (the "RNA") became effective,
creating a federal scheme for interstate banking and branching. The RNA
authorizes, for "well-capitalized" institutions, bank holding company
acquisitions of banks anywhere in the nation. The RNA will also permit
subsidiaries of the same bank holding company to act as agents for one another
in receiving and renewing deposits, closing and servicing loans, and accepting
loan payments. RNA will permit nationwide branching through acquisition or
consolidation no later than

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June 1997. States, through legislative action taken prior to June 1997, may opt
out of the interstate branching provisions of the RNA or opt in to allow
interstate branching prior to June 1997. Banking organizations located in states
which opt out of this portion of the RNA will not be able to branch interstate.
Of those states that have considered and acted upon the state branching
provisions of the RNA to date, the vast majority have opted in. The Minnesota
legislature has taken action to opt in and has authorized interstate branching
effective June 1, 1997. The RNA could present acquisition and branching
opportunities to United, and could allow out-of-state banks easy access to
markets currently served by United thereby increasing competition. See "Business
- -- Competition."

COMMUNITY REINVESTMENT ACT AND OTHER CONSUMER PROTECTION STATUTES

The Community Reinvestment Act of 1977 ("CRA") requires a financial
institution to help meet the credit needs of its entire community, including
low-income and moderate-income areas. On May 3, 1995, the federal banking
agencies issued final regulations which change the manner in which they measure
a bank's compliance with its CRA obligations. The final regulations adopt a
performance-based evaluation system which bases CRA ratings on an institution's
actual lending, service and investment performance, rather than the extent to
which the institution conducts needs assessments, documents community outreach
or complies with other procedural requirements. Federal banking agencies may
take CRA compliance into account when regulating and supervising bank and
holding company activities; for example, CRA performance may be considered in
approving proposed bank acquisitions. The Banks are also subject to a variety of
consumer protection laws and fair lending laws. Violations of these laws may
cause regulators to impose substantial penalties or take other administrative
action. Goodhue Bank has received an "outstanding" CRA rating, and each of
Signal Bank and Park Bank have received a "satisfactory" CRA rating.

RECENT LEGISLATION

The deposits of Signal Bank, Goodhue Bank and Park Bank are insured by the
Bank Insurance Fund ("BIF") which is administered by the FDIC. The FDIC also
administers the Savings Association Insurance Fund ("SAIF"). Each insurance fund
has the same designated reserve ratio; however, the BIF has met its designated
reserve ratio and the SAIF has not, resulting in a significant deposit insurance
premium disparity between financial institutions insured by SAIF and BIF.
Recently passed legislation has provided for a merger of the two funds and
clarified responsibility for financial obligations resulting from the failure of
savings and loan associations. The financial impact on United of the assessments
mandated by this legislation is not material.

On September 30, 1996, EGRPRA was signed into law, which provides for the
recapitalization of SAIF and includes approximately 40 regulatory relief
initiatives. Among other matters, this legislation provides for expedited
application procedures for nonbanking activities by well capitalized and well
managed bank holding companies, provides reforms to the Fair Credit Reporting
Act, and provides other forms of regulatory relief to the financial services
industry.

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DESCRIPTION OF PREFERRED SECURITIES

The Preferred Securities and the Common Securities will be issued pursuant
to the terms of the Trust Agreement. The Trust Agreement will be qualified as an
indenture under the Trust Indenture Act. Initially, Wilmington Trust Company
will be the Delaware Trustee and the Property Trustee and will act as trustee
for the purpose of complying with the Trust Indenture Act. The terms of the
Preferred Securities will include those stated in the Trust Agreement and those
made part of the Trust Agreement by the Trust Indenture Act. This summary of
certain terms and provisions of the Preferred Securities and the Trust Agreement
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Trust Agreement, including
the definitions therein of certain terms, and the Trust Indenture Act. Wherever
particular defined terms of the Trust Agreement (as amended or supplemented from
time to time) are referred to herein, such defined terms are incorporated
herein. The form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.

GENERAL

Pursuant to the terms of the Trust Agreement, the Trustees on behalf of
United Capital will issue the Preferred Securities and the Common Securities
(collectively, the "Trust Securities"). The Preferred Securities will represent
preferred beneficial interests in United Capital and the holders thereof will be
entitled to a preference in certain circumstances with respect to Distributions
and amounts payable on redemption or liquidation over the Common Securities of
United Capital, as well as other benefits as described in the Trust Agreement.

The Preferred Securities will rank pari passu, and payments will be made
thereon pro rata, with the Common Securities of United Capital except as
described under "-- Subordination of Common Securities."

Legal title to the Junior Subordinated Debentures will be held by the
Property Trustee in trust for the benefit of the holders of the Preferred
Securities and Common Securities. The Guaranty executed by the Company for the
benefit of the holders of the Preferred Securities will be a guaranty on a
subordinated basis with respect to the Preferred Securities but will not
guaranty payment of Distributions or amounts payable on redemption or
liquidation of such Preferred Securities when United Capital does not have funds
on hand available to make such payments. See "Description of Guaranty."

DISTRIBUTIONS

PAYMENT OF DISTRIBUTIONS. The Preferred Securities represent beneficial
interests in United Capital, and Distributions on each Preferred Security will
be payable at the annual rate of % of the stated Liquidation Amount of $25,
payable quarterly in arrears on the last day of March, June, September and
December in each year, to the holders of the Preferred Securities on the
relevant record dates (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). Distributions on the
Preferred Securities will be payable to the holders thereof as they appear on
the register of United Capital or the relevant record date which, for so long as
the Preferred Securities remain in book-entry form, will be one Business Day
prior to the relevant Distribution Date and, in the event the Preferred
Securities are not in book-entry form, will be the 15th day of the month in
which the relevant Distribution Date occurs. Distributions will accumulate from
the date of original issuance. The first Distribution Date for the Preferred
Securities will be March 31, 1997. The amount of Distributions payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which Distributions are payable on the Preferred
Securities is not a Business Day, then payment of the Distributions payable on
such date will be made on the next succeeding day that is a Business Day (and
without any additional Distributions, interest or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. As used in this Prospectus, a "Business Day"
shall mean any day other than a Saturday or a Sunday,

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or a day on which banking institutions in the State of Minnesota are authorized
or required by law or executive order to remain closed or a day on which the
corporate trust office of the Property Trustee or the Delaware Trustee is closed
for business.

The funds of United Capital available for distribution to holders of its
Preferred Securities will be limited to payments under the Junior Subordinated
Debentures in which United Capital will invest the proceeds from the issuance
and sale of its Preferred Securities. See "Description of Junior Subordinated
Debentures." If the Company does not make interest payments on the Junior
Subordinated Debentures, the Property Trustee will not have funds available to
pay Distributions on the Preferred Securities. The payment of Distributions (if
and to the extent United Capital has funds legally available for the payment of
such Distributions and cash sufficient to make such payments) is guaranteed by
the Company. See "Description of Guaranty."

EXTENSION PERIOD. The Company has the right under the Indenture to defer
the payment of interest on the Junior Subordinated Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarters with
respect to each such period (each, an "Extension Period"), provided that no
Extension Period may extend beyond the Stated Maturity of the Junior
Subordinated Debentures. As a consequence of any such election, quarterly
Distributions on the Preferred Securities will be deferred by United Capital
during any such Extension Period. Distributions to which holders of the
Preferred Securities are entitled will accumulate additional Distributions
thereon at the rate per annum of % thereof, compounded quarterly from the
relevant Distribution Date, to the extent permitted under applicable law. The
term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, the Company may not (i) declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu
with or junior in interest to the Junior Subordinated Debentures or make any
guaranty payments with respect to any guaranty by the Company of the debt
securities of any subsidiary of the Company if such guaranty ranks pari passu
with or junior in interest to the Junior Subordinated Debentures (other than (a)
dividends or distributions in Common Stock, (b) any declaration of a dividend in
connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (c) payments under the Guaranty
and (d) purchases of Common Stock under any of the Company's benefit plans for
its directors, officers or employees). Prior to the termination of any such
Extension Period, the Company may further defer the payment of interest,
provided that no Extension Period may exceed 20 consecutive quarters, or extend
beyond the Stated Maturity of the Junior Subordinated Debentures. Upon the
termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. Subject to the
foregoing, there is no limitation on the number of times that the Company may
elect to begin an Extension Period.

The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.

REDEMPTION

MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in
part, of any Junior Subordinated Debentures, whether at Stated Maturity or upon
earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be applied by the Property Trustee to redeem a
Like Amount (as defined below) of the Trust Securities, upon not less than 30
nor more than 60 days notice, at the Redemption Price (as defined below) on the
date of redemption (the "Redemption Date"). See "Description of Junior
Subordinated Debentures -- Redemption." If less than all of the Junior
Subordinated Debentures are to be repaid or redeemed on a Redemption Date, then
the proceeds from such repayment or redemption shall be allocated to the
redemption of the Preferred Securities and the Common Securities pro rata.

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The Company will have the right to redeem the Junior Subordinated Debentures
(i) on or after January 15, 2002, in whole at any time or in part from time to
time at a redemption price equal to the accrued and unpaid interest in the
Subordinated Debentures so redeemed to the date fixed for redemption, plus 100%
of the principal amount thereof, or (ii) at any time, in whole (but not in
part), upon the occurrence of a Tax Event or an Investment Company Event at a
redemption price equal to the accrued and unpaid interest in the Junior
Subordinated Debentures so redeemed to the date fixed for redemption, plus 100%
of the principal amount thereof, in each case subject to receipt of prior
approval by the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. See "Description of Subordinated
Debentures -- Redemption."

TAX EVENT REDEMPTION, INVESTMENT COMPANY EVENT REDEMPTION OR DISTRIBUTION OF
JUNIOR SUBORDINATED DEBENTURES. If a Tax Event or an Investment Company Event
shall occur and be continuing, the Company has the right to redeem the Junior
Subordinated Debentures in whole (but not in part) and thereby cause a mandatory
redemption of the Preferred Securities and Common Securities in whole (but not
in part) at the Redemption Price within 90 days following the occurrence of such
Tax Event or Investment Company Event. In the event a Tax Event or an Investment
Company Event has occurred and is continuing and the Company does not elect to
redeem the Junior Subordinated Debentures and thereby cause a mandatory
redemption of the Preferred Securities and Common Securities or to liquidate
United Capital and cause the Junior Subordinated Debentures to be distributed to
holders of the Preferred Securities and Common Securities in liquidation of
United Capital as described below, such Preferred Securities and Common
Securities will remain outstanding and Additional Sums (as defined below) may be
payable on the Junior Subordinated Debentures.

"Additional Sums" means the additional amounts as may be necessary to be
paid by the Company with respect to the Junior Subordinated Debentures in order
that the amount of Distributions then due and payable by United Capital on the
outstanding Preferred Securities and Common Securities of United Capital shall
not be reduced as a result of any additional taxes, duties and other
governmental charges to which United Capital has become subject as a result of a
Tax Event or an Investment Company Event.

"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Preferred Securities based upon the relative
Liquidation Amounts of such classes and the proceeds of which will be used to
pay the Redemption Price of such Trust Securities, and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of United Capital, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Junior Subordinated
Debentures are distributed.

"Liquidation Amount" means the stated amount of $25 per Trust Security.

"Redemption Price" means, with respect to any Trust Security, the
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the Trust Securities.

DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES. Subject to the Company
having received prior approval of the Federal Reserve if so required under
applicable capital guidelines or policies of the Federal Reserve, the Company
will have the right at any time to liquidate United Capital and, after
satisfaction of the liabilities of creditors of United Capital as provided by
applicable law, cause the Junior Subordinated Debentures to be distributed to
the holders of Preferred Securities and Common Securities in liquidation of
United Capital.

After the liquidation date fixed for any distribution of Junior Subordinated
Debentures for Preferred Securities (i) such Preferred Securities will no longer
be deemed to be outstanding, (ii) the Depositary or its

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nominee, as the record holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution and (iii) any
certificates representing Preferred Securities not held by the Depositary or its
nominee will be deemed to represent the Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of such Preferred Securities,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on the Preferred Securities until such certificates are
presented to the Administrative Trustees or their agent for transfer or
reissuance.

There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of United
Capital were to occur. Accordingly, the Preferred Securities that an investor
may purchase, or the Junior Subordinated Debentures that the investor may
receive on dissolution and liquidation of United Capital, may trade at a
discount to the price that the investor paid to purchase the Preferred
Securities offered hereby.

REDEMPTION PROCEDURES

Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that United Capital has funds on hand
available for the payment of such Redemption Price. See "-- Subordination of
Common Securities."

If United Capital gives a notice of redemption in respect of its Preferred
Securities, then, by 12:00 noon, Minneapolis time, on the Redemption Date, to
the extent funds are available, the Property Trustee will deposit with the
Depositary funds sufficient to pay the aggregate Redemption Price and will give
the Depositary irrevocable instructions and authority to pay the Redemption
Price to the holders of such Preferred Securities. See "Book-Entry Issuance." If
such Preferred Securities are no longer in book-entry form, the Property
Trustee, to the extent funds are available, will deposit with the paying agent
for such Preferred Securities funds sufficient to pay the aggregate Redemption
Price and will give such paying agent irrevocable instructions and authority to
pay the Redemption Price to the holders thereof upon surrender of their
certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease, except
the right of the holders of such Preferred Securities to receive the Redemption
Price, but without interest on such Redemption Price, and such Preferred
Securities will cease to be outstanding. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
which is a Business Day (and without any additional Distribution, interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date. In the event that payment of the Redemption Price in respect of
Preferred Securities called for redemption is improperly withheld or refused and
not paid either by United Capital or by the Company pursuant to the Guaranty,
Distributions on such Preferred Securities will continue to accrue, at the then
applicable rate, from the Redemption Date originally established by United
Capital for such Preferred Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price. See "Description of
Guaranty."

Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.

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Payment of the Redemption Price on the Preferred Securities and any
distribution of Junior Subordinated Debentures to holders of Preferred
Securities shall be made to the applicable recordholders thereof as they appear
on the register for such Preferred Securities on the relevant record date, which
date shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be a date at least 15 days prior to the
Redemption Date or liquidation date, as applicable. In the case of a
liquidation, the record date shall be no more than 45 days before the
liquidation date.

If less than all of the Preferred Securities and Common Securities issued by
United Capital are to be redeemed on a Redemption Date, then the aggregate
Redemption Price for such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata to the Preferred Securities and the Common
Securities based upon the relative Liquidation Amounts of such classes. The
particular Preferred Securities to be redeemed shall be selected by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple thereof) of the Liquidation Amount of
Preferred Securities. The Property Trustee shall promptly notify the Trust
Securities registrar in writing of the Preferred Securities selected for
redemption and, in the case of any Preferred Securities selected for partial
redemption, the Liquidation Amount thereof to be redeemed. For all purposes of
the Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Preferred Securities shall relate to the portion
of the aggregate Liquidation Amount of Preferred Securities which has been or is
to be redeemed.

Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each Holder of Trust Securities to be
redeemed at such Holder's registered address. Unless United Capital defaults in
payment of the Redemption Price, on and after the Redemption Date Distributions
will cease to accrue on such Preferred Securities or portions thereof called for
redemption.

SUBORDINATION OF COMMON SECURITIES

Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, shall be made pro rata based on
the Liquidation Amount of the Preferred Securities and Common Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution on, or Redemption Price of, any of
the Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the outstanding Preferred Securities for all Distribution periods terminating on
or prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all of the outstanding Preferred Securities
then called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or Redemption Price of, the Preferred
Securities then due and payable.

In the case of any Event of Default under the Trust Agreement resulting from
a Debenture Event of Default, the Company as holder of the Common Securities
will be deemed to have waived any right to act with respect to any such Event of
Default under the Trust Agreement until the effect of all such Events of Default
with respect to such Preferred Securities have been cured, waived or otherwise
eliminated. Until any such Events of Default under the Trust Agreement with
respect to the Preferred Securities have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders of
the Preferred Securities and not on behalf of the Company as holder of the
Common Securities, and only the Holders of the Preferred Securities will have
the right to direct the Property Trustee to act on their behalf.

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LIQUIDATION DISTRIBUTION UPON TERMINATION

The Company will have the right at any time to terminate United Capital and
cause the Junior Subordinated Debentures to be distributed to the holders of the
Preferred Securities. Such right is subject to the Company having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve.

In addition, pursuant to the Trust Agreement, United Capital shall
automatically terminate upon expiration of its term and shall earlier terminate
on the first to occur of: (i) certain events of bankruptcy, dissolution or
liquidation of the Company; (ii) delivery by the Company of written direction to
the Property Trustee to terminate United Capital (which direction is optional
and wholly within the discretion of the Company); (iii) redemption of all of the
Preferred Securities as described under "Description of Preferred Securities --
Redemption -- Mandatory Redemption;" and (iv) the entry of an order for the
dissolution of United Capital by a court of competent jurisdiction.

If an early termination occurs as described in clause (i), (ii) or (iv)
above, United Capital shall be liquidated by the Trustees as expeditiously as
the Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of United Capital as provided by applicable law, to the
holders of such Trust Securities a Like Amount of the Junior Subordinated
Debentures, unless such distribution is determined by the Property Trustee not
to be practical, in which event such holders will be entitled to receive out of
the assets of United Capital available for distribution to holders, after
satisfaction of liabilities to creditors of United Capital as provided by
applicable law, an amount equal to, in the case of holders of Preferred
Securities, the aggregate of the Liquidation Amount plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"). If such Liquidation Distribution can be paid only in part
because United Capital has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by United
Capital on the Preferred Securities shall be paid on a pro rata basis. The
holder(s) of the Common Securities will be entitled to receive distributions
upon any such liquidation pro rata with the holders of the Preferred Securities,
except that if a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common Securities.

Under current United States federal income tax law and interpretations and
assuming, as expected, United Capital is treated as a grantor trust, a
distribution of the Junior Subordinated Debentures should not be a taxable event
to holders of the Preferred Securities. Should there be a change in law, a
change in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences." If the Company elects neither to
redeem the Junior Subordinated Debentures prior to maturity nor to liquidate
United Capital and distribute the Junior Subordinated Debentures to holders of
the Preferred Securities, the Preferred Securities will remain outstanding until
the repayment of the Junior Subordinated Debentures.

If the Company elects to liquidate United Capital and thereby causes the
Junior Subordinated Debentures to be distributed to holders of the Preferred
Securities in liquidation of United Capital, the Company shall continue to have
the right to shorten or extend the maturity of such Junior Subordinated
Debentures, subject to certain conditions. See "Description of Junior
Subordinated Debentures -- General."

LIQUIDATION AMOUNT

The amount payable on the Preferred Securities in the event of any
liquidation of United Capital is $25 per Preferred Security plus accrued and
unpaid Distributions thereon to the date of payment, which may be in the form of
a distribution of such amount in Junior Subordinated Debentures, subject to
certain exceptions. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination."

EVENTS OF DEFAULT; NOTICE

Any one of the following events that has occurred and is continuing
constitutes an "Event of Default" under the Trust Agreement (an "Event of
Default") with respect to the Preferred Securities (whatever the

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reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):

(i) the occurrence of a Debenture Event of Default under the Indenture
(see "Description of Junior Subordinated Debentures -- Debenture Events of
Default"); or

(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or

(iii) default by the Property Trustee in the payment of any Redemption
Price of any Trust Security when it becomes due and payable; or

(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Trust Agreement (other than
a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clauses (ii) or (iii) above), and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the defaulting Trustee or Trustees by
the holders of at least 25% in aggregate Liquidation Amount of the
outstanding Preferred Securities, a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" under the Trust Agreement; or

(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by the Company to appoint a
successor Property Trustee within 60 days thereof.

Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Event of Default to the holders of the Preferred Securities, the
Administrative Trustees and the Company unless such Event of Default shall have
been cured or waived. The Company and the Administrative Trustees are required
to file annually with the Property Trustee a certificate as to whether or not
they are in compliance with all the conditions and covenants applicable to them
under the Trust Agreement.

If a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
termination of United Capital as described above. See "-- Liquidation
Distribution Upon Termination." The existence of an Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.

REMOVAL OF UNITED CAPITAL TRUSTEES

Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the holder of the Common Securities.
If a Debenture Event of Default has occurred and is continuing, the Property
Trustee and the Delaware Trustee may be removed at such time by the holders of a
majority in Liquidation Amount of the outstanding Preferred Securities. In no
event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace the Administrative Trustees, which voting rights are
vested exclusively in the Company as the holder of the Common Securities. No
resignation or removal of a Trustee and no appointment of a successor trustee
shall be effective until the acceptance of appointment by the successor trustee
in accordance with the provisions of the Trust Agreement.

CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE

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such person or persons in such capacity any property, title, right or power
deemed necessary or desirable, subject to the provisions of the Trust Agreement.
In case a Debenture Event of Default has occurred and is continuing, the
Property Trustee alone shall have power to make such appointment.

MERGER OR CONSOLIDATION OF TRUSTEES

Any person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any person resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
person succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under the Trust Agreement,
provided such person shall be otherwise qualified and eligible.

MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF UNITED CAPITAL

United Capital may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. United Capital may, at the request of the Company, with the
consent of the Administrative Trustees and without the consent of the holders of
the Preferred Securities, merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to a trust organized as such under the laws of any State;
provided, that (i) such successor entity either (a) expressly assumes all of the
obligations of United Capital with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred Securities rank in
priority with respect to Distributions and payments upon liquidation, redemption
and otherwise, (ii) the Company expressly appoints a trustee of such successor
entity possessing substantially the same powers and duties as the Property
Trustee in its capacity as the holder of the Junior Subordinated Debentures,
(iii) such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease does not adversely affect the rights, preferences and
privileges of the holders of the Preferred Securities (including any Successor
Securities) in any material respect, (iv) such successor entity has a purpose
identical to that of United Capital, (v) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Company has
received an opinion from independent counsel to United Capital experienced in
such matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect, and (b) following such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
neither United Capital nor such successor entity will be required to register as
an "investment company" under the Investment Company Act and (vi) the Company or
any permitted successor or assignee owns all of the common securities of such
successor entity and guarantees the obligations of such successor entity under
the Successor Securities at least to the extent provided by the Guaranty.
Notwithstanding the foregoing, United Capital shall not, except with the consent
of holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause United Capital or the successor entity
to be classified as other than a grantor trust for United States federal income
tax purposes.

VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT

Except as provided below and under "Description of Guaranty -- Amendments
and Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.

The Trust Agreement may be amended from time to time by the Company, the
Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Trust Agreement that may be inconsistent with
any

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other provision, or to make any other provisions with respect to matters or
questions arising under the Trust Agreement, which shall not be inconsistent
with the other provisions of the Trust Agreement, or (ii) to modify, eliminate
or add to any provisions of the Trust Agreement to such extent as shall be
necessary to ensure that United Capital will be classified for United States
federal income tax purposes as a grantor trust at all times that any Trust
Securities are outstanding or to ensure that United Capital will not be required
to register as an "investment company" under the Investment Company Act;
provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of any holder of Trust
Securities, and any amendments of such Trust Agreement shall become effective
when notice thereof is given to the holders of Trust Securities. The Trust
Agreement may be amended by the Trustees and the Company with (i) the consent of
holders representing not less than a majority in the aggregate Liquidation
Amount of the outstanding Trust Securities, and (ii) receipt by the Trustees of
an opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment will not affect
United Capital's status as a grantor trust for United States federal income tax
purposes or United Capital's exemption from status as an "investment company"
under the Investment Company Act, provided that without the consent of each
holder of Trust Securities, such Trust Agreement may not be amended to (i)
change the amount or timing of any Distribution on the Trust Securities or
otherwise adversely affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.

So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee, or
executing any trust or power conferred on the Property Trustee with respect to
the Junior Subordinated Debentures, (ii) waive any past default that is waivable
under the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the Junior Subordinated Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Junior Subordinated Debentures, where such consent shall be
required, without, in each case, obtaining the prior approval of the holders of
a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities; provided, however, that where a consent under the Indenture would
require the consent of each holder of Junior Subordinated Debentures affected
thereby, no such consent shall be given by the Property Trustee without the
prior consent of each holder of the Preferred Securities. The Trustees shall not
revoke any action previously authorized or approved by a vote of the holders of
the Preferred Securities except by subsequent vote of the holders of the
Preferred Securities. The Property Trustee shall notify each holder of Preferred
Securities of any notice of default with respect to the Junior Subordinated
Debentures. In addition to obtaining the foregoing approvals of the holders of
the Preferred Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an opinion of counsel experienced in such matters to the
effect that United Capital will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.

Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each holder of record of Preferred Securities in the manner set forth in the
Trust Agreement.

No vote or consent of the holders of Preferred Securities will be required
for United Capital to redeem and cancel its Preferred Securities in accordance
with the Trust Agreement.

Notwithstanding the fact that holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Trustees or any
affiliate of the Company or any Trustee, shall, for purposes of such vote or
consent, be treated as if they were not outstanding.

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GLOBAL PREFERRED SECURITIES

The Preferred Securities will be represented by one or more global
certificates registered in the name of the Depositary or its nominee ("Global
Preferred Security"). Beneficial interests in the Preferred Securities will be
shown on, and transfers thereof will be effected only through, records
maintained by participants in the Depositary. Except as described below,
Preferred Securities in certificated form will not be issued in exchange for the
global certificates. See "Book-Entry Issuance."

A global security shall be exchangeable for Preferred Securities registered
in the names of persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as a
depositary for such global security and no successor depositary shall have been
appointed, or if at any time the Depositary ceases to be a clearing agency
registered under the Securities Exchange Act of 1934, as amended, at a time when
the Depositary is required to be so registered to act as such depositary, (ii)
the Company in its sole discretion determines that such global security shall be
so exchangeable, or (iii) there shall have occurred and be continuing an Event
of Default under the Indenture. Any global security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for definitive
certificates registered in such names as the Depositary shall direct. It is
expected that such instructions will be based upon directions received by the
Depositary with respect to ownership of beneficial interests in such global
security. In the event that Preferred Securities are issued in definitive form,
such Preferred Securities will be in denominations of $25 and integral multiples
thereof and may be transferred or exchanged at the offices described below.

Unless and until it is exchanged in whole or in part for the individual
Preferred Securities represented thereby, a Global Preferred Security may not be
transferred except as a whole by the Depositary to a nominee of such Depositary
or by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor Depositary or any
nominee of such successor.

Payments on Preferred Securities represented by a global security will be
made to the Depositary, as the depositary for the Preferred Securities. In the
event the Preferred Securities are issued in definitive form, Distributions will
be payable, the transfer of the Preferred Securities will be registrable, and
Preferred Securities will be exchangeable for Preferred Securities of other
denominations of a like aggregate Liquidation Amount, at the corporate office of
the Property Trustee, or at the offices of any paying agent or transfer agent
appointed by the Administrative Trustees, provided that payment of any
Distribution may be made at the option of the Administrative Trustees by check
mailed to the address of the persons entitled thereto or by wire transfer. In
addition, if the Preferred Securities are issued in certificated form, the
record dates for payment of Distributions will be the 15th day of the month in
which the relevant Distribution Date occurs. For a description of the terms of
the depositary arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry Issuance."

Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the Depositary, the Depositary
for such Global Preferred Security or its nominee will credit, on its book-entry
registration and transfer system, the respective aggregate Liquidation Amounts
of the individual Preferred Securities represented by such Global Preferred
Securities to the accounts of Participants. Such accounts shall be designated by
the dealers, underwriters or agents with respect to such Preferred Securities.
Ownership of beneficial interests in a Global Preferred Security will be limited
to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Preferred Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depositary or its nominee (with respect to
interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to transfer beneficial interests in a Global Preferred Security.

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So long as the Depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the Trust Agreement governing such Preferred Securities. Except
as provided below, owners of beneficial interests in a Global Preferred Security
will not be entitled to have any of the individual Preferred Securities
represented by such Global Preferred Security registered in their names, will
not receive or be entitled to receive physical delivery of any such Preferred
Securities in definitive form and will not be considered the owners or holders
thereof under the Trust Agreement.

None of the Company, the Property Trustee, any Paying Agent, or the
Securities Registrar (defined below) for such Preferred Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Global
Preferred Security representing such Preferred Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.

The Company expects that the Depositary for Preferred Securities or its
nominee, upon receipt of any payment of the Liquidation Amount or Distributions
in respect of a permanent Global Preferred Security immediately will credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate Liquidation Amount of such
Global Preferred Security as shown on the records of such Depositary or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interests in such Global Preferred Security held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.

If the Depositary for the Preferred Securities is at any time unwilling,
unable or ineligible to continue as depositary and a successor depositary is not
appointed by the Company within 90 days, United Capital will issue individual
Preferred Securities in exchange for the Global Preferred Security. In addition,
United Capital may at any time and in its sole discretion, subject to any
limitations described herein relating to such Preferred Securities, determine
not to have any Preferred Securities represented by one or more Global Preferred
Securities and, in such event, will issue individual Preferred Securities in
exchange for the Global Preferred Security or Securities representing the
Preferred Securities. Further, if United Capital so specifies with respect to
the Preferred Securities, an owner of a beneficial interest in a Global
Preferred Security representing Preferred Securities may, on terms acceptable to
the Company, the Property Trustee and the Depositary for such Global Preferred
Security, receive individual Preferred Securities in exchange for such
beneficial interests, subject to any limitations described herein. In any such
instance, an owner of a beneficial interest in a Global Preferred Security will
be entitled to physical delivery of individual Preferred Securities represented
by such Global Preferred Security equal in Liquidation Amount to such beneficial
interest and to have such Preferred Securities registered in its name.
Individual Preferred Securities so issued will be issued in denominations,
unless otherwise specified by United Capital, of $25 and integral multiples
thereof.

PAYMENT AND PAYING AGENCY

Payments in respect of the Preferred Securities shall be made to the
Depositary, which shall credit the relevant accounts at the Depositary on the
applicable Distribution Dates or, if any Preferred Securities are not held by
the Depositary, such payments shall be made by check mailed to the address of
the holder entitled thereto as such address shall appear on the Register. The
paying agent ("Paying Agent") shall initially be the Property Trustee and any
copaying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Company. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Property Trustee and
the Company. In the event that the Property Trustee shall no longer be the
Paying Agent, the Administrative Trustees shall appoint a successor (which shall
be a bank or trust company acceptable to the Administrative Trustees and the
Company) to act as Paying Agent.

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REGISTRAR AND TRANSFER AGENT

The Property Trustee will act as registrar and transfer agent for the
Preferred Securities. Registration of transfers of Preferred Securities will be
effected without charge by or on behalf of United Capital, but upon payment of
any tax or other governmental charges that may be imposed in connection with any
transfer or exchange. United Capital will not be required to register or cause
to be registered the transfer of Preferred Securities after such Preferred
Securities have been called for redemption.

INFORMATION CONCERNING THE PROPERTY TRUSTEE

The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Property Trustee is required to
decide between alternative causes of action or to construe ambiguous provisions
in the applicable Trust Agreement or is unsure of the application of any
provision of the Trust Agreement, and the matter is not one on which holders of
Preferred Securities are entitled under the Trust Agreement to vote, then the
Property Trustee shall take such action as is directed by the Company and if not
so directed, may take such action as it deems advisable and in the best
interests of the holders of the Trust Securities and will have no liability
except for its own bad faith, negligence or willful misconduct.

MISCELLANEOUS

The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate United Capital in such a way that United Capital will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the Company for
United States federal income tax purposes. In this connection, the Company and
the Administrative Trustees are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of United Capital or the Trust
Agreement, that the Company and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes, as long as such
action does not materially adversely affect the interests of the holders of the
related Preferred Securities.

Holders of the Preferred Securities have no preemptive or similar rights.

United Capital may not borrow money, or issue debt or mortgage or pledge any
of its assets.

DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES

The Junior Subordinated Debentures will be issued under the Subordinated
Indenture, dated as of January , 1997 ("Indenture"), between the Company and
Wilmington Trust Company, as trustee ("Indenture Trustee"). The following
summary of the terms and provisions of the Junior Subordinated Debentures and
the Indenture does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Indenture, which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, and to the Trust Indenture Act. The Indenture is qualified under the Trust
Indenture Act. Whenever particular defined terms of the Indenture are referred
to herein, such defined terms are incorporated herein or therein by reference.

Concurrently with the issuance of the Preferred Securities, United Capital
will invest the proceeds thereof, together with the consideration paid by the
Company for the Common Securities, in the Junior Subordinated Debentures issued
by the Company. The Junior Subordinated Debentures will be issued as unsecured
debt under the Indenture.

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GENERAL

The Junior Subordinated Debentures will bear interest at the annual rate of
% of the principal amount thereof, payable quarterly in arrears on the last
day of March, June, September and December in each year (each, an "Interest
Payment Date") beginning March 31, 1997, to the person in whose name each Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
It is anticipated that, until the liquidation, if any, of United Capital, the
Junior Subordinated Debentures will be held in the name of the Property Trustee
in trust for the benefit of the holders of the Preferred Securities. The amount
of interest payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months. In the event that any date on which interest is
payable on the Junior Subordinated Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on the date such
payment was originally payable. Accrued interest that is not paid on the
applicable Interest Payment Date will bear additional interest on the amount
thereof (to the extent permitted by law) at the rate per annum of % thereof,
compounded quarterly. The term "interest" as used herein shall include quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.

The Junior Subordinated Debentures will mature on January 15, 2027 (such
date, as it may be shortened or extended as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Company to any date
not earlier than January 15, 2002, subject to the Company having received prior
approval of the Federal Reserve if then required under applicable capital
guidelines or policies of the Federal Reserve. Such date may also be extended at
any time at the election of the Company but in no event to a date later than
January 15, 2046, provided that at the time such election is made and at the
time of extension (i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation, (ii) the Company is not in default in the payment of any
interest or principal on the Junior Subordinated Debentures, and (iii) United
Capital is not in arrears on payments of Distributions on the Preferred
Securities and no deferred Distributions are accumulated. In the event that the
Company elects to shorten or extend the Stated Maturity of the Junior
Subordinated Debentures, it shall give notice to the Debenture Trustee, and the
Debenture Trustee shall give notice of such shortening or extension to the
holders of the Junior Subordinated Debentures no less than 90 days prior to the
effectiveness thereof.

The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Company. See "Description of Junior Subordinated Debentures -- Subordination."
Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any of the subsidiaries, including
the Banks, upon any such subsidiaries' liquidation or reorganization or
otherwise (and thus the ability of holders of the Preferred Securities to
benefit indirectly from such distribution), is subject to the prior claim of
creditors of that Bank, except to the extent that the Company may itself be
recognized as a creditor of such Bank. Accordingly, the Junior Subordinated
Debentures will be effectively subordinated to all existing and future
liabilities of the Banks, and holders of Junior Subordinated Debentures should
look only to the assets of the Company for payments on the Junior Subordinated
Debentures. The Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness, whether
under the Indenture or any existing indenture or other indenture that the
Company may enter into in the future or otherwise. See "Description of Junior
Subordinated Debentures -- Subordination."

OPTION TO EXTEND INTEREST PAYMENT PERIOD

The Company has the right under the Indenture at any time during the term of
the Junior Subordinated Debentures to defer the payment of interest at any time
or from time to time for a period not exceeding 20 consecutive quarters (each
such period an "Extension Period"), provided that no Extension Period may

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extend beyond the Stated Maturity of the Junior Subordinated Debentures. At the
end of such Extension Period, the Company must pay all interest then accrued and
unpaid (together with interest thereon at the annual rate of %, compounded
quarterly, to the extent permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of Junior Subordinated
Debentures will be required to accrue interest income for United States federal
income tax purposes. See "Certain Federal Income Tax Consequences -- Potential
Extension of Interest Payment Period and Original Issue Discount."

During any such Extension Period, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company (including other Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guaranty payments with respect to any
guaranty by the Company of the debt securities of any subsidiary of the Company
if such guaranty ranks pari passu or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in Common
Stock, (b) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guaranty, and (d) purchases of Common Stock related to
rights under any of the Company's benefit plans for its directors, officers or
employees). Prior to the termination of any such Extension Period, the Company
may further extend the interest payment period, provided that no Extension
Period may exceed 20 consecutive quarters or extend beyond the Stated Maturity
of the Junior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period subject to the above
requirements. No interest shall be due and payable during an Extension Period,
except at the end thereof. The Company must give the Property Trustee, the
Administrative Trustees and the Debenture Trustee notice of its election of such
Extension Period at least one Business Day prior to the earlier of (i) the date
the Distributions on the Preferred Securities would have been payable except for
the election to begin such Extension Period or (ii) the date the Administrative
Trustees are required to give notice to the holders of such Preferred Securities
of the record date for the date such Distributions are payable, but in any event
not less than one Business Day prior to such record date. The Debenture Trustee
shall give notice of the Company's election to begin a new Extension Period to
the holders of the Preferred Securities. There is no limitation on the number of
times that the Company may elect to begin an Extension Period.

ADDITIONAL SUMS

If United Capital is required to pay any additional taxes, duties or other
governmental charges as a result of a Tax Event, the Company will pay as
additional amounts on the Junior Subordinated Debentures such amounts
("Additional Sums") as shall be required so that the Distributions payable by
United Capital shall not be reduced as a result of any such additional taxes,
duties or other governmental charges.

REDEMPTION

Subject to the Company having received prior approval of the Federal
Reserve, if then required under applicable capital guidelines or policies of the
Federal Reserve, the Junior Subordinated Debentures are redeemable prior to
maturity at the option of the Company (i) on or after January 15, 2002, in whole
at any time or in part from time to time, or (ii) at any time in whole (but not
in part), upon the occurrence and during the continuance of a Tax Event or an
Investment Company Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Junior Subordinated Debentures so redeemed to
the date fixed for redemption, plus 100% of the principal amount thereof.

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Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Junior Subordinated
Debentures to be redeemed at such holder's registered address. Unless the
Company defaults in payment of the redemption price, on and after the redemption
date interest ceases to accrue on such Junior Subordinated Debentures or
portions thereof called for redemption.

The Junior Subordinated Debentures will not be subject to any sinking fund.

DISTRIBUTION UPON LIQUIDATION

As described under "Description of Preferred Securities--Liquidation
Distribution Upon Termination," under certain circumstances involving the
termination of United Capital, the Junior Subordinated Debentures may be
distributed to the holders of the Preferred Securities in liquidation of United
Capital after satisfaction of liabilities to creditors of United Capital as
provided by applicable law. If distributed to holders of Preferred Securities in
liquidation, the Junior Subordinated Debentures will initially be issued in the
form of one or more global securities and the Depositary, or any successor
depositary for the Preferred Securities, will act as depositary for the Junior
Subordinated Debentures. It is anticipated that the depositary arrangements for
the Junior Subordinated Debentures would be substantially identical to those in
effect for the Preferred Securities. If the Junior Subordinated Debentures are
distributed to the holders of Preferred Securities upon the liquidation of
United Capital, there can be no assurance as to the market price of any Junior
Subordinated Debentures that may be distributed to the holders of Preferred
Securities.

RESTRICTIONS ON CERTAIN PAYMENTS

If at any time (i) there shall have occurred any event of which the Company
has actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute a Debenture Event of Default and (b) in respect of which
the Company shall not have taken reasonable steps to cure, or (ii) the Company
shall have given notice of its election of an Extension Period as provided in
the Indenture with respect to the Junior Subordinated Debentures and shall not
have rescinded such notice, or such Extension Period, or any extension thereof,
shall be continuing, or (iii) while the Junior Subordinated Debentures are held
by United Capital, the Company shall be in default with respect to its payment
of any obligation under the Guaranty, then the Company will not (1) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (2)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company (including other Junior
Subordinated Debt) that rank pari passu with or junior in interest to the Junior
Subordinated Debentures or make any guaranty payments with respect to any
guaranty by the Company of the debt securities of any subsidiary of the Company
if such guaranty ranks pari passu or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in Common
Stock, (b) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Guaranty and (d) purchases of Common Stock related to
rights under any of the Company's benefit plans for its directors, officers or
employees).

SUBORDINATION

In the Indenture, the Company has covenanted and agreed that any Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Indebtedness to the extent provided in the
Indenture. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Indebtedness will
first be entitled to receive payment in full of principal of (and premium, if
any) and interest, if any, on such Senior Indebtedness before the holders of
Junior Subordinated Debentures will be entitled to receive or retain any payment
in respect of the principal of or interest, if any, on the Junior Subordinated
Debentures.

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In the event of the acceleration of the maturity of any Junior Subordinated
Debentures, the holders of all Senior Indebtedness outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due thereon (including any amounts due upon acceleration) before the
holders of Junior Subordinated Debentures will be entitled to receive or retain
any payment in respect of the principal of or interest, if any, on the Junior
Subordinated Debentures; provided, however, that holders of Subordinated Debt
shall not be entitled to receive payment of any such amounts to the extent that
such Subordinated Debt is by its terms subordinated to trade creditors.

No payments on account of principal or interest, if any, in respect of the
Junior Subordinated Debentures may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Indebtedness or an
event of default with respect to any Senior Indebtedness resulting in the
acceleration of the maturity thereof, or if any judicial proceeding shall be
pending with respect to any such default.

"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent, (i) every
obligation of such person for money borrowed; (ii) every obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another person
and all dividends of another person the payment of which, in either case, such
person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.

"Senior Indebtedness" means Senior Debt and/or Subordinated Debt.

"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Junior Subordinated Debentures or to other
Debt which is pari passu with, or subordinated to, the Junior Subordinated
Debentures; provided, however, that Senior Debt shall not be deemed to include
(i) any Debt of the Company which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv) any
Debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Junior
Subordinated Debentures as a result of the subordination provisions of the
Indenture would be greater than they otherwise would have been as a result of
any obligation of such holders to pay amounts over to the obligees on such trade
accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is subject,
(v) any Debt which constitutes Subordinated Debt, and (vi) any other debt
securities issued pursuant to the Indenture.

"Subordinated Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of the Indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to other Debt of the Company (other than the Junior Subordinated Debentures).

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The Indenture places no limitation on the amount of additional Senior
Indebtedness that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Indebtedness.

DENOMINATIONS, REGISTRATION AND TRANSFER

The Junior Subordinated Debentures will be represented by global
certificates registered in the name of the Depositary or its nominee ("Global
Subordinated Debenture"). Beneficial interests in the Junior Subordinated
Debentures will be shown on, and transfers thereof will be effected only
through, records maintained by the Depositary. Except as described below, Junior
Subordinated Debentures in certificated form will not be issued in exchange for
the global certificates. See "Book-Entry Issuance."

Unless and until a Global Subordinated Debenture is exchanged in whole or in
part for the individual Junior Subordinated Debentures represented thereby, it
may not be transferred except as a whole by the Depositary for such Global
Subordinated Debenture to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any nominee to a successor Depositary or any nominee of such
successor.

A global security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such global security and no successor depositary
shall have been appointed, or if at any time the Depositary ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, at a time when the Depositary is required to be so registered to act as
such depositary, (ii) the Company in its sole discretion determines that such
global security shall be so exchangeable or (iii) there shall have occurred and
be continuing an Event of Default under the Indenture with respect to such
global security. Any global security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for definitive certificates registered
in such names as the Depositary shall direct. It is expected that such
instructions will be based upon directions received by the Depositary from its
Participants with respect to ownership of beneficial interests in such global
security. In the event that Junior Subordinated Debentures are issued in
definitive form, such Junior Subordinated Debentures will be in denominations of
$25 and integral multiples thereof and may be transferred or exchanged at the
offices described below.

Payments on Junior Subordinated Debentures represented by a global security
will be made to the Depositary, as the depositary for the Junior Subordinated
Debentures. In the event Junior Subordinated Debentures are issued in definitive
form, principal and interest will be payable, the transfer of the Junior
Subordinated Debentures will be registrable, and Junior Subordinated Debentures
will be exchangeable for Junior Subordinated Debentures of other denominations
of a like aggregate principal amount, at the corporate office of the Indenture
Trustee, or at the offices of any paying agent or transfer agent appointed by
the Company, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto or by
wire transfer. In addition, if the Junior Subordinated Debentures are issued in
certificated form, the record dates for payment of interest will be the 15th day
of the month in which such payment is to be made. For a description of the
Depositary and the terms of the depositary arrangements relating to payments,
transfers, voting rights, redemptions and other notices and other matters, see
"Book-Entry Issuance."

The Company will appoint the Indenture Trustee as securities registrar under
the Indenture (the "Securities Registrar"). Junior Subordinated Debentures may
be presented for exchange as provided above, and may be presented for
registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the Securities Registrar. The Company may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts, provided that the Company maintains a transfer agent
in the place of payment. The Company may at any time designate additional
transfer agents with respect to the Junior Subordinated Debentures.

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In the event of any redemption, neither the Company nor the Indenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of Junior
Subordinated Debentures and ending at the close of business on the day of
mailing of the relevant notice of redemption or (ii) transfer or exchange any
Junior Subordinated Debentures so selected for redemption, except, in the case
of any Junior Subordinated Debentures being redeemed in part, any portion
thereof not to be redeemed.

GLOBAL JUNIOR SUBORDINATED DEBENTURES

Upon the issuance of the Global Subordinated Debenture, and the deposit of
such Global Subordinated Debenture with or on behalf of the Depositary, the
Depositary for such Global Subordinated Debenture or its nominee will credit, on
its book-entry registration and transfer system, the respective principal
amounts of the individual Junior Subordinated Debentures represented by such
Global Subordinated Debenture to the accounts of persons that have accounts with
such Depositary ("Participants"). Ownership of beneficial interests in a Global
Subordinated Debenture will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Subordinated Debenture will be shown on, and the transfer of that ownership will
be effected only through, records maintained by the applicable Depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Subordinated Debenture.

So long as the Depositary for a Global Subordinated Debenture, or its
nominee, is the registered owner of such Global Subordinated Debenture, such
Depositary or such nominee, as the case may be, will be considered the sole
owner or holder of the Junior Subordinated Debentures represented by such Global
Subordinated Debenture for all purposes under the Indenture governing such
Junior Subordinated Debentures. Except as provided below, owners of beneficial
interests in a Global Subordinated Debenture will not be entitled to have any of
the individual Junior Subordinated Debentures represented by such Global
Subordinated Debenture registered in their names, will not receive or be
entitled to receive physical delivery of any such Junior Subordinated Debentures
in definitive form and will not be considered the owners or holders thereof
under the Indenture.

Payments of principal of and interest on individual Junior Subordinated
Debentures represented by a Global Subordinated Debenture registered in the name
of the Depositary or its nominee will be made to the Depositary or its nominee,
as the case may be, as the registered owner of the Global Subordinated Debenture
representing such Junior Subordinated Debentures. None of the Company, the
Indenture Trustee, any Paying Agent, or the Securities Registrar for such Junior
Subordinated Debentures will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Global Subordinated Debenture representing such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.

The Company expects that the Depositary or its nominee, upon receipt of any
payment of principal or interest in respect of a permanent Global Subordinated
Debenture representing the Junior Subordinated Debentures, immediately will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of the Global
Subordinated Debenture as shown on the records of such Depositary or its
nominee. The Company also expects that payments by Participants to owners of
beneficial interests in such Global Subordinated Debenture held through such
Participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers in bearer
form or registered in "street name." Such payments will be the responsibility of
such Participants.

If the Depositary is at any time unwilling, unable or ineligible to continue
as depositary and a successor depositary is not appointed by the Company within
90 days, the Company will issue individual Junior

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Subordinated Debentures in exchange for the Global Subordinated Debenture. In
addition, the Company may at any time and in its sole discretion, determine not
to have the Junior Subordinated Debentures represented by one or more Global
Subordinated Debentures and, in such event, will issue individual Junior
Subordinated Debentures in exchange for the Global Subordinated Debenture.
Further, if the Company so specifies with respect to the Junior Subordinated
Debentures, an owner of a beneficial interest in a Global Subordinated Debenture
representing Junior Subordinated Debentures may, on terms acceptable to the
Company, the Indenture Trustee and the Depositary for such Global Subordinated
Debenture, receive individual Junior Subordinated Debentures in exchange for
such beneficial interests. In any such instance, an owner of a beneficial
interest in a Global Subordinated Debenture will be entitled to physical
delivery of individual Junior Subordinated Debentures equal in principal amount
to such beneficial interest and to have such Junior Subordinated Debentures
registered in its name. Individual Junior Subordinated Debentures so issued will
be issued in denominations, unless otherwise specified by the Company, of $25
and integral multiples thereof.

PAYMENT AND PAYING AGENTS

Payment of principal of and any interest on the Junior Subordinated
Debentures will be made at the office of the Indenture Trustee, except that at
the option of the Company payment of any interest may be made (i) except in the
case of Global Subordinated Debentures, by check mailed to the address of the
person entitled thereto as such address shall appear in the securities register
or (ii) by transfer to an account maintained by the person entitled thereto as
specified in the securities register, provided that proper transfer instructions
have been received by the regular record date. Payment of any interest on Junior
Subordinated Debentures will be made to the person in whose name such
Subordinated Debenture is registered at the close of business on the regular
record date for such interest. The Company may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent; however the
Company will at all times be required to maintain a Paying Agent in each place
of payment for the Junior Subordinated Debentures.

Any moneys deposited with the Indenture Trustee or any Paying Agent, or then
held by the Company in trust, for the payment of the principal of or interest on
the Junior Subordinated Debentures and remaining unclaimed for two years after
such principal or interest has become due and payable shall, at the request of
the Company, be repaid to the Company and the holder of such Junior Subordinated
Debenture shall thereafter look, as a general unsecured creditor, only to the
Company for payment thereof.

MODIFICATION OF INDENTURE

From time to time the Company and the Indenture Trustee may, without the
consent of the holders of the Junior Subordinated Debentures, amend, waive or
supplement the Indenture for specified purposes, including, among other things,
curing ambiguities, defects or inconsistencies (provided that any such action
does not materially adversely affect the interests of the holders of the Junior
Subordinated Debentures or the Preferred Securities so long as they remain
outstanding) and qualifying, or maintaining the qualification of, the Indenture
under the Trust Indenture Act. The Indenture contains provisions permitting the
Company and the Indenture Trustee, with the consent of the holders of not less
than a majority in principal amount of the outstanding Junior Subordinated
Debentures, to modify the Indenture in a manner affecting the rights of the
holders of the Junior Subordinated Debentures; provided, that no such
modification may, without the consent of the holder of each outstanding Junior
Subordinated Debenture, (i) change the Stated Maturity of the Junior
Subordinated Debentures, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon or (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures, the holders of
which are required to consent to any such modification of the Indenture,
provided that so long as any of the Preferred Securities remain outstanding, no
such modification may be made that adversely affects the holders of such
Preferred Securities in any material respect, and no termination of the
Indenture may occur, and no waiver of any Debenture Event of Default or
compliance with any covenant under the Indenture may be effective, without the
prior consent of the holders of at least a

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majority of the aggregate Liquidation Amount of the Preferred Securities unless
and until the principal of the Junior Subordinated Debentures and all accrued
and unpaid interest thereon have been paid in full and certain other conditions
are satisfied.

DEBENTURE EVENTS OF DEFAULT

The Indenture provides that any one or more of the following described
events with respect to the Junior Subordinated Debentures that has occurred and
is continuing constitutes a "Debenture Event of Default" with respect to the
Junior Subordinated Debentures:

(i) failure for 30 days to pay any interest on the Junior Subordinated
Debentures, when due (subject to the deferral of any due date in the case of
an Extension Period); or

(ii) failure to pay any principal on the Junior Subordinated Debentures
when due whether at maturity, upon redemption by declaration or otherwise;
or

(iii) failure to observe or perform in any material respect certain other
covenants contained in the Indenture for 90 days after written notice to the
Company from the Indenture Trustee or to the Company and the Indenture
Trustee by the holders of at least 25% in aggregate outstanding principal
amount of the Junior Subordinated Debentures; or

(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.

The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. The Indenture Trustee or the holders of not less than 25% in aggregate
outstanding principal amount of the Junior Subordinated Debentures may declare
the principal due and payable immediately upon a Debenture Event of Default. The
holders of a majority in aggregate outstanding principal amount of the Junior
Subordinated Debentures may annul such declaration and waive the default if the
default (other than the non-payment of the principal of the Junior Subordinated
Debentures which has become due solely by such acceleration) has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee.
Should the holders of the Junior Subordinated Debentures fail to annul such
declaration and waive such default, the holders of a majority in aggregate
Liquidation Amount of the Preferred Securities shall have such right.

In case a Debenture Event of Default shall occur and be continuing as to the
Junior Subordinated Debentures, the Property Trustee will have the right to
declare the principal of and the interest on such Junior Subordinated
Debentures, and any other amounts payable under the Indenture, to be forthwith
due and payable and to enforce its other rights as a creditor with respect to
such Junior Subordinated Debentures.

The Company is required to file annually with the Indenture Trustee a
certificate as to whether or not the Company is in compliance with all the
conditions and covenants applicable to it under the Indenture.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES

If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable, a holder of Preferred Securities may institute a legal
proceeding directly against the Company for enforcement of payment to such
holder of the principal of or interest on such Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder ("Direct Action"). The Company may not amend
the Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Preferred Securities. If the
right to bring a Direct Action is removed, United Capital may

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become subject to the reporting obligations under the Securities Exchange Act of
1934, as amended. The Company shall have the right under the Indenture to
set-off any payment made to such holder of Preferred Securities by the Company
in connection with a Direct Action.

The holders of the Preferred Securities would not be able to exercise
directly any remedies other than those set forth in the preceding paragraph
available to the holders of the Junior Subordinated Debentures unless there
shall have been an Event of Default under the Trust Agreement. See "Description
of Preferred Securities -- Events of Default; Notice."

CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS

The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company, unless (i) in case the Company
consolidates with or merges into another Person or conveys or transfers its
properties and assets substantially as an entirety to any Person, the successor
Person is organized under the laws of the United States or any state or the
District of Columbia, and such successor Person expressly assumes the Company's
obligations on the Junior Subordinated Debentures issued under the Indenture;
(ii) immediately after giving effect thereto, no Debenture Event of Default, and
no event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have occurred and be continuing; and (iii) certain other
conditions as prescribed in the Indenture are met.

The general provisions of the Indenture do not afford holders of the Junior
Subordinated Debentures protection in the event of a highly leveraged or other
transaction involving the Company that may adversely affect holders of the
Junior Subordinated Debentures.

SATISFACTION AND DISCHARGE

The Indenture provides that when, among other things, all Junior
Subordinated Debentures not previously delivered to the Indenture Trustee for
cancellation (i) have become due and payable or (ii) will become due and payable
at their Stated Maturity within one year, and the Company deposits or causes to
be deposited with the Indenture Trustee trust funds, in trust, for the purpose
and in an amount in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Indenture
Trustee for cancellation, for the principal and interest to the date of the
deposit or to the Stated Maturity, as the case may be, then the Indenture will
cease to be of further effect (except as to the Company's obligations to pay all
other sums due pursuant to the Indenture and to provide the officers'
certificates and opinions of counsel described therein), and the Company will be
deemed to have satisfied and discharged the Indenture.

GOVERNING LAW

The Indenture and the Junior Subordinated Debentures will be governed by and
construed in accordance with the laws of the State of Minnesota.

INFORMATION CONCERNING THE INDENTURE TRUSTEE

The Indenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Indenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Junior Subordinated Debentures, unless offered
reasonable indemnity by such holder against the costs, expenses and liabilities
which might be incurred thereby. The Indenture Trustee is not required to expend
or risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Indenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.

The Company will covenant in the Indenture, as to the Junior Subordinated
Debentures, that if and so long as (i) United Capital is the holder of all such
Junior Subordinated Debentures, (ii) a Tax Event in

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respect of United Capital has occurred and is continuing and (iii) the Company
has elected, and has not revoked such election, to pay Additional Sums (as
defined under "Description of Preferred Securities -- Redemption") in respect of
the Preferred Securities, the Company will pay to United Capital such Additional
Sums. The Company will also covenant, as to the Junior Subordinated Debentures,
(i) to maintain directly or indirectly 100% ownership of the Common Securities
of United Capital to which Junior Subordinated Debentures have been issued,
provided that certain successors which are permitted pursuant to the Indenture
may succeed to the Company's ownership of the Common Securities, (ii) not to
voluntarily terminate, wind up or liquidate United Capital, except upon prior
approval of the Federal Reserve if then so required under applicable capital
guidelines or policies of the Federal Reserve, and except (a) in connection with
a distribution of Junior Subordinated Debentures to the holders of the Preferred
Securities in liquidation of United Capital, or (b) in connection with certain
mergers, consolidations or amalgamations permitted by the Trust Agreement and
(iii) to use its reasonable efforts, consistent with the terms and provisions of
the Trust Agreement, to cause United Capital to remain classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes.

BOOK-ENTRY ISSUANCE

The Depositary will act as securities depositary for all of the Preferred
Securities and the Junior Subordinated Debentures. The Preferred Securities and
the Junior Subordinated Debentures will be issued only as fully-registered
securities registered in the name of Cede & Co. (the Depositary's nominee). One
or more fully-registered global certificates will be issued for the Preferred
Securities and the Junior Subordinated Debentures and will be deposited with the
Depositary.

The Depositary is a limited purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The Depositary holds securities that its Participants deposit with the
Depositary. The Depositary also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
"Direct Participants" include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. The Depositary
is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain custodial relationships with Direct Participants,
either directly or indirectly ("Indirect Participants"). The rules applicable to
the Depositary and its Participants are on file with the Commission.

Purchases of Preferred Securities or Junior Subordinated Debentures within
the Depositary system must be made by or through Direct Participants, which will
receive a credit for the Preferred Securities or Junior Subordinated Debentures
on the Depositary's records. The ownership interest of each actual purchaser of
each Preferred Security and each Junior Subordinated Debenture ("Beneficial
Owner") is in turn to be recorded on the Direct and Indirect Participants'
records. Beneficial Owners will not receive written confirmation from the
Depositary of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Preferred Securities or Junior
Subordinated Debentures. Transfers of ownership interests in the Preferred
Securities or Junior Subordinated Debentures are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Preferred Securities or Junior Subordinated Debentures, except in
the event that use of the book-entry system for the Preferred Securities or
Junior Subordinated Debentures is discontinued.

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The Depositary has no knowledge of the actual Beneficial Owners of the
Preferred Securities or Junior Subordinated Debentures; the Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Preferred Securities or Junior Subordinated Debentures are credited, which may
or may not be the Beneficial Owners. The Participants will remain responsible
for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners and the voting
rights of Direct Participants, Indirect Participants and Beneficial Owners will
be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.

Redemption notices will be sent to Cede & Co. as the registered holder of
the Preferred Securities or Junior Subordinated Debentures. If less than all of
the Preferred Securities or the Junior Subordinated Debentures are being
redeemed, the Depositary will determine by lot or pro rata the amount of the
Preferred Securities of each Direct Participant to be redeemed.

Although voting with respect to the Preferred Securities or the Junior
Subordinated Debentures is limited to the holders of record of the Preferred
Securities or Junior Subordinated Debentures, in those instances in which a vote
is required, neither the Depositary nor Cede & Co. will itself consent or vote
with respect to Preferred Securities or Junior Subordinated Debentures. Under
its usual procedures, the Depositary would mail an omnibus proxy (the "Omnibus
Proxy") to the relevant Trustee as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts such Preferred Securities or Junior Subordinated
Debentures are credited on the record date (identified in a listing attached to
the Omnibus Proxy).

Distribution payments on the Preferred Securities or the Junior Subordinated
Debentures will be made by the relevant Trustee to the Depositary. The
Depositary's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payments on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices and will be the responsibility of such Participant and not of the
Depositary, the relevant Trustee, United Capital or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of Distributions to the Depositary is the responsibility of the relevant
Trustee, disbursement of such payments to Direct Participants is the
responsibility of the Depositary, and disbursements of such payments to the
Beneficial Owners is the responsibility of Direct and Indirect Participants.

The Depositary may discontinue providing its services as securities
depositary with respect to any of the Preferred Securities or the Junior
Subordinated Debentures at any time by giving reasonable notice to the relevant
Trustee and the Company. In the event that a successor securities depositary is
not obtained, definitive Preferred Security or Junior Subordinated Debenture
certificates representing such Preferred Securities or Junior Subordinated
Debentures are required to be printed and delivered. The Company, at its option,
may decide to discontinue use of the system of book-entry transfers through the
Depositary (or a successor depositary). After a Debenture Event of Default, the
holders of a majority in liquidation preference of Preferred Securities or
aggregate principal amount of Junior Subordinated Debentures may determine to
discontinue the system of book-entry transfers through the Depositary. In any
such event, definitive certificates for such Preferred Securities or Junior
Subordinated Debentures will be printed and delivered.

The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that United
Capital and the Company believe to be accurate, but United Capital and the
Company assume no responsibility for the accuracy thereof. Neither United
Capital nor the Company has any responsibility for the performance by the
Depositary or its Participants of their respective obligations as described
herein or under the rules and procedures governing their respective operations.

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DESCRIPTION OF GUARANTY

The Preferred Securities Guaranty Agreement (the "Guaranty") will be
executed and delivered by the Company concurrently with the issuance of the
Preferred Securities for the benefit of the holders of the Preferred Securities.
Wilmington Trust Company will act as indenture trustee ("Guaranty Trustee")
under the Guaranty for the purposes of compliance with the Trust Indenture Act,
and the Guaranty will be qualified as an Indenture under the Trust Indenture
Act. The following summary of certain provisions of the Guaranty does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Guaranty Agreement, including the
definitions therein of certain terms, and the Trust Indenture Act. The form of
the Guaranty has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The Guaranty Trustee will hold the Guaranty for
the benefit of the holders of the Preferred Securities.

GENERAL

The Guaranty will be an irrevocable guaranty on a subordinated basis of
United Capital's obligations under the Preferred Securities, but will apply only
to the extent that United Capital has funds sufficient to make such payments,
and is not a guaranty of collection.

The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guaranty Payments (as defined below) to the
holders of the Preferred Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that United Capital may have or assert other
than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of United Capital
(the "Guaranty Payments"), will be subject to the Guaranty: (i) any accumulated
and unpaid Distributions required to be paid on the Preferred Securities, to the
extent that United Capital has funds on hand available therefor at such time,
(ii) the Redemption Price with respect to any Preferred Securities called for
redemption to the extent that United Capital has funds on hand available
therefor at such time, and (iii) upon a voluntary or involuntary dissolution,
winding up or liquidation of United Capital (unless the Junior Subordinated
Debentures are distributed to holders of the Preferred Securities), the lesser
of (a) the Liquidation Distribution and (b) the amount of assets of United
Capital remaining available for distribution to holders of Preferred Securities.
The Company's obligation to make a Guaranty Payment may be satisfied by direct
payment of the required amounts by the Company to the holders of the Preferred
Securities or by causing United Capital to pay such amounts to such holders.

If the Company does not make interest payments on the Junior Subordinated
Debentures held by United Capital, United Capital will not be able to pay
Distributions on the Preferred Securities and will not have funds legally
available therefor. The Guaranty will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Company. See "-- Status of the
Guaranty." Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary upon such
subsidiary's liquidation or reorganization or otherwise, is subject to the prior
claims of creditors of that subsidiary, except to the extent the Company may
itself be recognized as a creditor of that subsidiary. Accordingly, the
Company's obligations under the Guaranty will be effectively subordinated to all
existing and future liabilities of the Company's subsidiaries, and claimants
should look only to the assets of the Company for payments thereunder. Except as
otherwise described herein, the Guaranty does not limit the incurrence or
issuance of other secured or unsecured debt of the Company, including Senior
Indebtedness, whether under the Indenture, any other indenture that the Company
may enter into in the future, or otherwise.

The Company has, through the Guaranty, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of United
Capital's obligations under the Preferred Securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes such guaranty. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guaranty of United Capital's obligations under the Preferred Securities. See
"Relationship Among the Preferred Securities, the Junior Subordinated Debentures
and the Guaranty."

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STATUS OF THE GUARANTY

The Guaranty will constitute an unsecured obligation of the Company and will
rank subordinate and junior in right of payment to all Senior Indebtedness of
the Company in the same manner as the Junior Subordinated Debentures.

The Guaranty will constitute a guaranty of payment and not of collection.
For example, the guaranteed party may institute a legal proceeding directly
against the Company to enforce its rights under the Guaranty without first
instituting a legal proceeding against any other person or entity. The Guaranty
will be held for the benefit of the holders of the Preferred Securities. The
Guaranty will not be discharged except by payment of the Guaranty Payments in
full to the extent not paid by United Capital or upon distribution of the Junior
Subordinated Debentures to the holders of the Preferred Securities. The Guaranty
does not place a limitation on the amount of additional Senior Indebtedness that
may be incurred by the Company. The Company expects from time to time to incur
additional indebtedness constituting Senior Indebtedness.

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will be
required), the Guaranty may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of such
outstanding Preferred Securities. See "Description of Preferred Securities --
Voting Rights; Amendment of Trust Agreement." All guarantees and agreements
contained in the Guaranty shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities then outstanding.

EVENTS OF DEFAULT

An event of default under the Guaranty will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guaranty Trustee in
respect of the Guaranty or to direct the exercise of any trust or power
conferred upon the Guaranty Trustee under the Guaranty.

Any holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guaranty without first
instituting a legal proceeding against United Capital, the Guaranty Trustee or
any other person or entity.

The Company, as guarantor, is required to file annually with the Guaranty
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guaranty.

INFORMATION CONCERNING THE GUARANTY TRUSTEE

The Guaranty Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guaranty, undertakes to perform
only such duties as are specifically set forth in the Guaranty and, after
default with respect to the Guaranty, must exercise the same degree of care and
skill as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Guaranty Trustee is under no obligation
to exercise any of the powers vested in it by the Guaranty at the request of any
holder of any Preferred Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby.

TERMINATION OF THE GUARANTY

The Guaranty will terminate and be of no further force and effect upon full
payment of the Redemption Price of the Preferred Securities, upon full payment
of the amounts payable upon liquidation of United Capital or upon distribution
of the Junior Subordinated Debentures to the holders of the Preferred
Securities. The Guaranty will continue to be effective or will be reinstated, as
the case may be, if at any time any holder of the Preferred Securities must
restore payment of any sums paid under such Preferred Securities or the
Guaranty.

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GOVERNING LAW

The Guaranty will be governed by and construed in accordance with the laws
of the State of Minnesota.

THE EXPENSE AGREEMENT

Pursuant to the Expense Agreement entered into by the Company under the
Trust Agreement (the "Expense Agreement"), the Company will irrevocably and
unconditionally guaranty to each person or entity to whom United Capital becomes
indebted or liable, the full payment of any costs, expenses or liabilities of
United Capital, other than obligations of United Capital to pay to the holders
of the Preferred Securities or other similar interests in United Capital of the
amounts due such holders pursuant to the terms of the Preferred Securities or
such other similar interests, as the case may be.

RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTY

FULL AND UNCONDITIONAL GUARANTY

Payments of Distributions and other amounts due on the Preferred Securities
(to the extent United Capital has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of Guaranty." Taken together, the Company's
obligations under the Junior Subordinated Debentures, the Indenture, the Trust
Agreement, the Expense Agreement, and the Guaranty provide, in the aggregate, a
full, irrevocable and unconditional guaranty of payment of distributions and
other amounts due on the Preferred Securities. No single document standing alone
or operating in conjunction with fewer than all of the other documents
constitutes such guaranty. It is only the combined operation of these documents
that has the effect of providing a full, irrevocable and unconditional guaranty
of United Capital's obligations under the Preferred Securities. If and to the
extent that the Company does not make payments on the Junior Subordinated
Debentures, United Capital will not pay Distributions or other amounts due on
the Preferred Securities. The Guaranty does not cover payment of Distributions
when United Capital does not have sufficient funds to pay such Distributions. In
such event, the remedy of a holder of Preferred Securities is to institute a
legal proceeding directly against the Company for enforcement of payment of such
Distributions to such holder. The obligations of the Company under the Guaranty
are subordinate and junior in right of payment to all Senior Indebtedness of the
Company.

SUFFICIENCY OF PAYMENTS

As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
Distributions and other payments due on the Preferred Securities, primarily
because (i) the aggregate principal amount of the Junior Subordinated Debentures
will be equal to the sum of the aggregate stated Liquidation Amount of the
Preferred Securities and Common Securities; (ii) the interest rate and interest
and other payment dates on the Junior Subordinated Debentures will match the
Distribution rate and Distribution and other payment dates for the Preferred
Securities; (iii) the Company shall pay for all and any costs, expenses and
liabilities of United Capital except United Capital's obligations to holders of
the Preferred Securities; and (iv) the Trust Agreement further provides that
United Capital will not engage in any activity that is not consistent with the
limited purposes of United Capital.

Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guaranty.

ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES

A holder of any Preferred Security may institute a legal proceeding directly
against the Company to enforce its rights under the Guaranty without first
instituting a legal proceeding against the Guaranty Trustee, United Capital or
any other person or entity.

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A default or event of default under any Senior Indebtedness of the Company
would not constitute a default or Event of Default. However, in the event of
payment defaults under, or acceleration of, Senior Indebtedness of the Company,
the subordination provisions of the Indenture provide that no payments may be
made in respect of the Junior Subordinated Debentures until such Senior
Indebtedness has been paid in full or any payment default thereunder has been
cured or waived. Failure to make required payments on the Junior Subordinated
Debentures would constitute an Event of Default.

LIMITED PURPOSE OF UNITED CAPITAL

The Preferred Securities evidence a beneficial interest in United Capital,
and United Capital exists for the sole purpose of issuing its Preferred
Securities and Common Securities and investing the proceeds thereof in Junior
Subordinated Debentures. A principal difference between the rights of a holder
of a Preferred Security and a holder of a Junior Subordinated Debenture is that
a holder of a Junior Subordinated Debenture is entitled to receive from the
Company the principal amount of and interest accrued on Junior Subordinated
Debentures held, while a holder of Preferred Securities is entitled to receive
Distributions from United Capital (or from the Company under the Guaranty) if
and to the extent United Capital has funds available for the payment of such
Distributions.

RIGHTS UPON TERMINATION

Upon any voluntary or involuntary termination, winding-up or liquidation of
United Capital involving the liquidation of the Junior Subordinated Debentures,
the holders of the Preferred Securities will be entitled to receive, out of
assets held by United Capital, the Liquidation Distribution in cash. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Termination." Upon any voluntary or involuntary liquidation or bankruptcy of the
Company, the Property Trustee, as holder of the Junior Subordinated Debentures,
would be a subordinated creditor of the Company, subordinated in right of
payment to all Senior Indebtedness as set forth in the Indenture, but entitled
to receive payment in full of principal and interest before any stockholders of
the Company receive payments or distributions. Since the Company is the
guarantor under the Guaranty and has agreed to pay for all costs, expenses and
liabilities of United Capital (other than United Capital's obligations to the
holders of its Preferred Securities), the positions of a holder of the Preferred
Securities and a holder of the Junior Subordinated Debentures relative to other
creditors and to stockholders of the Company in the event of liquidation or
bankruptcy of the Company are expected to be substantially the same.

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DESCRIPTION OF THE COMPANY'S CAPITAL STOCK

GENERAL

The Company's Restated Articles of Incorporation, as amended (the "Restated
Articles") authorize the issuance of 6,000,000 shares of which 5,000,000 are
designated Common Stock, par value $.01 per share solely for the purpose of a
statute or regulation imposing a tax or fee based upon the capitalization of the
Company, and 1,000,000 are undesignated. As of September 30, 1996, 546,686
shares of Common Stock were issued and outstanding.

The Restated Articles authorize the Board to provide, without further
shareholder action, for the issuance of one or more classes or series from the
undesignated shares as it may determine from time to time by a resolution
setting forth the designation of the class or series and fixing the relative
rights and preferences of the class or series; provided however, that the common
shares of the corporation shall be the only class or series of stock of the
corporation entitled to vote, and the right to vote shall not accrue to any
other class or series of stock except as otherwise required by law.

COMMON STOCK

GENERAL. United is currently authorized to issue 5,000,000 shares of Common
Stock, $.01 par value solely for the purpose of a statute or regulation imposing
a tax or fee based on the capitalization of the Company. As of September 30,
1996, 546,686 shares of Common Stock were issued and outstanding. No share of
Common Stock is entitled to preference over any other share and each such share
is equal to other shares of Common Stock in all respects. In any distribution of
capital assets, whether voluntary or involuntary, holders of Common Stock are
entitled to receive pro rata the assets remaining after creditors and holders,
if any, of stock with a liquidation preference have been paid in full.

VOTING. Common shareholders are entitled to one vote for each share held of
record on each matter submitted to a vote of the common shareholders.

DIVIDENDS, DISTRIBUTIONS AND REDEMPTIONS. Subject to the preferential
dividend rights of any subsequent classes or series of stock with such rights
and preferences superior to the Common Stock as the Board of Directors may
designate, and the restrictions described below with respect to United's
creditors, the Common Stock shareholders are entitled to receive dividends as
and when declared by the Board of Directors of United. However, dividends on
United's Common Stock are not contemplated in the foreseeable future. Under the
Minnesota Business Corporation Act (the "MBCA"), United may declare and pay
dividends on the Common Stock only if United will be able to pay its debts in
the ordinary course of business after making the distribution. In addition,
United's primary source of cash to make dividend payments is dividends that
United receives from its subsidiary banks, which may be unable to make payments
to United under various applicable regulations. See "-- Dividend Policy" and
"Supervision and Regulation."

Federal and state banking laws regulate United's ability to pay dividends
and redeem its equity securities. No redemptions of any equity securities are
permitted without the approval of the Federal Reserve Board if the aggregate
amount of such redemptions exceeds 10% of the net worth of United over a
12-month period. In addition, no redemption of or dividend on the Common Stock
is permitted if it would constitute an unsafe or unsound practice according to
the Federal Reserve Board.

If United were liquidated, the common stockholders would be entitled to
receive, pro rata, all assets available for distribution to them after
satisfaction of United's liabilities and any payment applicable to any preferred
stock then outstanding.

RIGHT OF FIRST REFUSAL. Article 7 of the Company's Bylaws grants the
Company the option to purchase the shares of Common Stock held by a stockholder
or such stockholder's estate in the event of the stockholder's death,
insolvency, or desire to sell or transfer shares. If the Company does not
exercise its

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option to purchase the available shares within 60 days, the other stockholders
may acquire the shares in proportion to their ownership of the Company. The
Company's ESOP may acquire all remaining shares of stock not purchased by other
stockholders.

NO CUMULATIVE VOTING

The Restated Articles of Incorporation of United provide that United
shareholders will not have cumulative voting rights in the electing of
directors. Under cumulative voting, a shareholder could cast that number of
votes equal to such shareholder's shares multiplied by the number of directors
to be elected in favor of one candidate or among several candidates. Cumulative
voting makes it possible for less than a majority of the shareholders to elect
one or more members of the board of directors. Under non-cumulative voting, a
majority of the shareholders can elect the entire board of directors.

NO PREEMPTIVE RIGHTS

The Restated Articles of Incorporation of United provide that United
shareholders will not have any preemptive rights to subscribe for or purchase
additional shares of United capital stock. This means that a United shareholder
will not be entitled to acquire a certain fraction of the unissued securities or
rights to purchase securities of United before United may offer them to other
persons. Preemptive rights enable a shareholder to maintain the shareholder's
proportional voting power and proportional rights to receive dividends and other
distributions by the company.

LIMITATION OF DIRECTOR LIABILITY; INDEMNIFICATION

The MBCA permits Minnesota corporations, in their Articles of Incorporation,
to limit or eliminate the personal liability of directors to corporations and
their shareholders for monetary damages for breach of directors' fiduciary duty
of care. The duty of care requires that, when acting on behalf of a corporation,
directors must exercise an informed business judgment based on all material
information reasonably available to them. Absent the limitations authorized by
the MBCA, directors are accountable to corporations and their shareholders for
monetary damages for conduct constituting gross negligence in the exercise of
their duty of care. Although the MBCA provision does not change directors' duty
of care, it enables corporations to limit available relief to equitable remedies
such as injunction or rescission.

United's Restated Articles of Incorporation limit the liability of the
directors to the fullest extent permitted by the MBCA. Specifically, directors
of United will not be personally liable for monetary damages for breach of their
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to United or its shareholders, (ii) acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) corporate distributions which are in contravention of restrictions
in the MBCA, United's Restated Articles of Incorporation or Bylaws, or any
agreement to which United is a party, (iv) violations of the Minnesota
securities laws, (v) any transaction from which the director derives an improper
personal benefit, or (vi) any act or omission occurring prior to the effective
date of the provision in United's Restated Articles of Incorporation eliminating
or limiting liability. This provision will not change the liability of United's
directors under the federal securities laws. United's Restated Articles of
Incorporation also provide that if the MBCA is later amended, then the liability
of the directors of United will be eliminated or limited to the fullest extent
permitted by the MBCA, as so amended. The inclusion of this provision in the
Restated Articles of Incorporation may have the effect of reducing the
likelihood of derivative litigation against directors and may discourage or
deter shareholders or management from bringing a lawsuit against directors for
breach of their duty of care, even though such an action, if successful, might
otherwise have benefitted United and its shareholders.

Minnesota Statutes Section 302A.521 provides that officers and directors of
United have the right to indemnification from United for liability arising out
of certain actions. United has included in its Bylaws a provision to indemnify
its directors and officers for expenses and liabilities to the fullest extent
permitted by Minnesota law.

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ANTI-TAKEOVER PROVISIONS

Certain provisions of Minnesota law and United's Restated Articles of
Incorporation described below could have an anti-takeover effect. These
provisions are intended to provide management flexibility to enhance United
shareholder value, the likelihood of continuity and stability in the composition
of United's Board of Directors and in the policies formulated by the Board and
to discourage an unsolicited takeover of United, if the Board determines that
such a takeover is not in the best interests of United and its shareholders.
However, these provisions could have the effect of discouraging certain attempts
to acquire United which could deprive United's shareholders of opportunities to
sell their shares of Common Stock at prices higher than prevailing market
prices.

Section 302A.671 of the Minnesota Statutes applies, with certain exceptions,
to any acquisitions of voting stock of United (from a person other than United,
and other than in connection with certain mergers and exchanges to which United
is a party) resulting in the beneficial ownership of 20% or more of the voting
stock then outstanding. Section 302A.671 requires approval of the granting of
voting rights for the shares received pursuant to any such acquisition by a
majority vote of the shareholders of United. In general, shares acquired without
such approval are denied voting rights and are redeemable at their then fair
market value by United within 30 days after the acquiring person has failed to
deliver a timely information statement to United or the date the shareholders
voted not to grant voting rights to the acquiring person's shares.

Section 302A.673 of the Minnesota Statutes generally prohibits any business
combination by United, or any subsidiary of United, with any shareholder who
purchases 10% or more of United's voting shares (an "interested shareholder")
within four years following such interested shareholder's share acquisition
date, unless the business combination is approved by a committee of all of the
disinterested members of the Board of Directors of United before the interested
shareholder's share acquisition date.

In addition, the existence of undesignated stock in the Restated Articles of
Incorporation allows the Board of Directors of United, without further
shareholder action, to issue preferred stock in amounts that could have the
effect of making it more difficult for a third party to acquire, or of
discouraging a third party from acquiring, control of United.

DIVIDEND POLICY

Funds available to United for the payment of dividends, redemption of stock
and operating expenses will consist principally of tax benefit payments and
dividends received by United from Signal Bank and Goodhue Bank, and, following
the Park Acquisition, Park Bank. See "Supervision and Regulation." Payment of
dividends on United's Common Stock is also subject to certain regulatory
restrictions and will be at the discretion of United's Board of Directors;
however, dividends on United's Common Stock are not contemplated in the
foreseeable future and, if ever declared, would be subject to the prior payment
of all accrued and unpaid dividends on any class or series of stock having
preferential dividend rights.

97
<PAGE>

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

GENERAL

This section is a summary of the material United States federal income tax
considerations that may be relevant to the purchasers of Preferred Securities
and is based upon the formal opinion of Fredrikson & Byron, P.A., counsel to the
Company and United Capital, insofar as it relates to matters of law and legal
conclusions. The conclusions expressed herein are based upon current provisions
of the Internal Revenue Code of 1986, as amended ("Code"), regulations
thereunder and current administrative rulings and court decisions, all of which
are subject to change at any time, with possible retroactive effects. Subsequent
changes may cause tax consequences to vary substantially from the consequences
described below. Furthermore, the authorities on which this summary is based are
subject to various interpretations, and it is therefore possible that the
federal income tax treatment of the purchase, ownership, and disposition of
Preferred Securities may differ from the treatment described below.

No attempt has been made in the following discussion to comment on all
United States federal income tax matters affecting purchasers of Preferred
Securities. Moreover, the discussion generally focuses on holders of Preferred
Securities who are individual citizens or residents of the United States and who
acquire Preferred Securities on their original issue at their offering price and
hold Preferred Securities as capital assets. The discussion has only limited
application to dealers in securities, corporations, estates, trusts or
nonresident aliens and does not address all the tax consequences that may be
relevant to holders who may be subject to special tax treatment, such as, for
example, banks, thrifts, real estate investment trusts, regulated investment
companies, insurance companies, dealers in securities or currencies, tax-exempt
investors, or persons that will hold the Preferred Securities as a position in a
"straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. This summary also does not address the tax consequences to
persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of Preferred
Securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the Preferred Securities.
Accordingly, each prospective investor should consult, and should rely
exclusively on, the investor's own tax advisors in analyzing the federal, state,
local and foreign tax consequences of the purchase, ownership or disposition of
Preferred Securities.

CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES

The Company intends to take the position that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company under current law, and, by acceptance of a Preferred
Security, each holder covenants to treat the Junior Subordinated Debentures as
indebtedness and the Preferred Securities as evidence of an indirect beneficial
ownership interest in the Junior Subordinated Debentures. No assurance can be
given, however, that such position of the Company will not be challenged by the
Internal Revenue Service or, if challenged, that such a challenge will not be
successful. The remainder of this discussion assumes that the Junior
Subordinated Debentures will be classified for United States federal income tax
purposes as indebtedness of the Company.

CLASSIFICATION OF UNITED CAPITAL

With respect to the Preferred Securities, Fredrikson & Byron, P.A., counsel
to the Company and United Capital, has rendered its opinion generally to the
effect that, under then current law and assuming full compliance with the terms
of the Trust Agreement and Indenture, United Capital will be classified for
United States federal income tax purposes as a grantor trust and not as an
association taxable as a corporation. Accordingly, for United States federal
income tax purposes, each holder of Preferred Securities generally will be
treated as owning an undivided beneficial interest in the Junior Subordinated
Debentures, and each holder will be required to include in such holder's gross
income any original issue discount ("OID") accrued with respect to such holder's
allocable share of the Junior Subordinated Debentures whether or not cash is
actually distributed to such holder.

98
<PAGE>

POTENTIAL EXTENSION OF INTEREST PAYMENT PERIOD AND ORIGINAL ISSUE DISCOUNT

Because the Company has the option, under the terms of the Junior
Subordinated Debentures, to defer payments of interest by extending interest
payment periods for up to 20 consecutive quarters, all of the stated interest
payments on the Junior Subordinated Debentures will be treated as OID. Holders
of debt instruments issued with OID must include that discount in income on an
economic accrual basis before the receipt of cash attributable to the interest,
regardless of their method of tax accounting. Generally, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures will
be accounted for as OID. Actual payments and distributions of stated interest
will not, however, be separately reported as taxable income. The amount of OID
that accrues in any quarter will approximately equal the amount of the interest
that accrues on the Junior Subordinated Debentures in that quarter at the stated
interest rate. In the event that the interest payment period is extended,
holders will continue to accrue OID approximately equal to the amount of the
interest payment due at the end of the extended interest payment period on an
economic accrual basis over the length of the extended interest payment period.

Because income on the Preferred Securities will constitute OID, corporate
holders of Preferred Securities will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Preferred
Securities.

MARKET DISCOUNT AND ACQUISITION PREMIUM

Holders of Preferred Securities other than a holder who purchased the
Preferred Securities upon original issuance may be considered to have acquired
their undivided interests in the Junior Subordinated Debentures with "market
discount" or "acquisition premium" as such phrases are defined for United States
federal income tax purposes. Such holders are advised to consult their tax
advisors as to the income tax consequences of the acquisition, ownership and
disposition of the Preferred Securities.

RECEIPT OF JUNIOR SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION OF UNITED
CAPITAL

Under certain circumstances, as described under "Description of the
Preferred Securities -- Redemption," the Junior Subordinated Debentures may be
distributed to holders of Preferred Securities upon a liquidation of United
Capital. Under current United States federal income tax law, such a distribution
would be treated as a nontaxable exchange to each such holder and would result
in such holder having an aggregate tax basis in the Junior Subordinated
Debentures received in the liquidation equal to such holder's aggregate tax
basis in the Preferred Securities immediately before the distribution. A
holder's holding period in the Junior Subordinated Debentures so received in
liquidation of United Capital would include the period for which such holder
held the Preferred Securities.

If, however, a Tax Event occurs which results in United Capital being
treated as an association taxable as a corporation, the distribution would
likely constitute a taxable event to holders of the Preferred Securities. Under
certain circumstances described herein, the Junior Subordinated Debentures may
be redeemed for cash and the proceeds of such redemption distributed to holders
in redemption of their Preferred Securities. Under current law, such a
redemption would, for United States federal income tax purposes, constitute a
taxable disposition of the redeemed Preferred Securities, and a holder would
recognize gain or loss as if the holder sold such Preferred Securities for cash.
See "Description of Preferred Securities -- Redemption."

DISPOSITION OF PREFERRED SECURITIES

A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the Preferred
Securities and the holder's adjusted tax basis in such Preferred Securities. A
holder's adjusted tax basis in the Preferred Securities generally will be its
initial purchase price increased by OID previously includible in such holder's
gross income to the date of disposition and decreased by payments received on
the Preferred Securities to the date of disposition. The character of such gain
or loss is uncertain under recently issued tax regulations and holders should
consult their own tax advisors as to the consequences of the sale of the
Preferred Securities.

99
<PAGE>

The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Junior Subordinated Debentures. A holder that disposes of such holder's
Preferred Securities between record dates for payments of distributions thereon
will be required to include accrued but unpaid interest on the Junior
Subordinated Debentures through the date of disposition in income as ordinary
income, and to add such amount to such holder's adjusted tax basis in such
holder's pro rata share of the underlying Junior Subordinated Debentures deemed
disposed of. To the extent the selling price is less than the holder's adjusted
tax basis (which basis will include, in the form of OID, all accrued but unpaid
interest), a holder will recognize a loss.

POSSIBLE TAX LAW CHANGES AFFECTING THE PREFERRED SECURITIES

BACKUP WITHHOLDING AND INFORMATION REPORTING

The amount of OID accrued on the Preferred Securities held of record by
individual citizens or residents of the United States, or certain trusts,
estates, and partnerships, will be reported to the Internal Revenue Service on
Forms 1099, which forms should be mailed to such holders of Preferred Securities
by January 31 following each calendar year. Payments made on, and proceeds from
the sale of, the Preferred Securities may be subject to a "backup" withholding
tax (currently at 31%) unless the holder complies with certain identification
and other requirements. Any amounts withheld under the backup withholding rules
will be allowed as a credit against the holder's United States federal income
tax liability, provided the required information is provided to the Internal
Revenue Service.

THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON THE
PARTICULAR SITUATION OF A HOLDER OF PREFERRED SECURITIES. HOLDERS OF PREFERRED
SECURITIES SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS.

100
<PAGE>
UNDERWRITING

Piper Jaffray Inc. (the "Underwriter"), has agreed, subject to the terms and
conditions of a Purchase Agreement to be entered into by the Underwriter, United
and United Capital, to purchase from United Capital 440,000 Preferred
Securities. The Underwriter is committed to purchase and pay for all such
Preferred Securities if any are purchased.

The Underwriter has advised United and United Captial that it proposes to
offer the Preferred Securities directly to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per Preferred
Security. The Underwriter may allow and such dealers may reallow a concession
not in excess of $ per Preferred Security to certain other brokers and
dealers. After the public offering, the public offering price, concession and
reallowance, and other selling terms may be changed by the Underwriter.

In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Company, the Purchase Agreement provides that the Company will pay as
compensation for the Underwriter's arranging the investment therein of such
proceeds an amount of $ per Preferred Security and for advising services
$ per Preferred Security. In addition, the Company has agreed to reimburse
the Underwriter for up to $ of the Underwriter's legal fees relating to the
offering of the Preferred Securities.

United does not intend to list the Preferred Securities on any securities
exchange or include it for quotation on the Nasdaq National Market or any other
quotation system, and no active trading market is expected to develop. Although
the Underwriter has indicated an intention to make a market in the Preferred
Securities, the Underwriter is not obligated to make a market in the Preferred
Securities, and any market making may be discontinued at any time in the sole
discretion of the Underwriter. If the Preferred Securities is traded after the
original issuance, it may trade at a discount to its issue price.

Each of United and United Captial has agreed to indemnify the Underwriter
and its controlling persons against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, or to contribute to payments the
Underwriter may be required to make in respect thereof.

The Underwriter has advised United that it does not intend to confirm sales
to any account over which it exercises discretionary authority in excess of 5%
of the number of Preferred Securities offered hereby.

LEGAL MATTERS

Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the formation of
United Capital will be passed upon by Richards, Layton & Finger, P.A.,
Wilmington, Delaware, special Delaware counsel to the Company and United
Capital. The validity of the Guaranty and the Junior Subordinated Debentures
will be passed upon for the Company by Fredrikson & Byron, P.A., Minneapolis,
Minnesota, counsel to the Company. Certain legal matters in connection with this
Offering will be passed upon for the Underwriter by Faegre & Benson LLP,
Minneapolis, Minnesota. Fredrikson & Byron, P.A. and Faegre & Benson LLP will
rely on the opinions of Richards, Layton & Finger as to matters of Delaware law.
Certain matters relating to United States federal income tax considerations will
be passed upon for the Company by Fredrikson & Byron, P.A.

EXPERTS

The consolidated financial statements of United as of December 31, 1995 and
1994 and for the years then ended included in this Prospectus have been audited
by McGladrey & Pullen, LLP, independent auditors, as stated in their report
appearing herein, and such financial statements are included in reliance upon
such report given upon the authority of said firm as experts in accounting and
auditing.

101
<PAGE>

The consolidated statements of income, stockholders' equity and cash flows
of United for the year ended December 31, 1993 included in this Prospectus have
been audited by Leininger & Leininger, Ltd., independent auditors, as stated in
their report appearing herein, and such financial statements are included in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing.

The consolidated financial statements of PFC as of December 31, 1995, 1994
and 1993 and for the years then ended included in this Prospectus have been
audited by Larson, Allen, & Weishair & Co., LLP, independent auditors, as stated
in their report appearing herein, and such financial statements are included in
reliance upon such report given upon the authority of said firm as experts in
accounting and auditing.

Following the merger of Signal and Goodhue on January 1, 1994, the Company
elected to retain an accounting firm not previously engaged by either Signal or
Goodhue. Accordingly, on July 19, 1994, the accounting firm of Leininger &
Leininger, Ltd. was dismissed as United's principal accountant. Leininger &
Leininger, Ltd.'s report on the consolidated financial statements of United as
of and for the year ended December 31, 1993 did not contain an adverse opinion
or a disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope, or accounting principles. The decision to change accountants was
recommended by the Audit Committee of the Board of Directors and approved by the
Board of Directors on October 25, 1994.

There have been no disagreements with Leininger & Leininger, Ltd. on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope of procedure. There have been no reportable events.

The accounting firm of McGladrey & Pullen, LLP was engaged on October 25,
1994. McGladrey & Pullen was not consulted regarding any matter prior to being
engaged.

ADDITIONAL INFORMATION

United has filed with the Securities and Exchange Commission, Washington,
D.C. 20549, a Registration Statement (the "Registration Statement") under the
Securities Act of 1933, as amended, with respect to the stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to United and such stock, reference is made to the
Registration Statement and the schedules and exhibits filed as a part thereof.
Statements contained in this Prospectus regarding the contents of any contract
or any other document are not necessarily complete and, in each instance,
reference is hereby made to the copy of such contract or document filed as an
exhibit to the Registration Statement, and the full text of each such statement
is qualified in its entirety by reference to such contract or document. The
Registration Statement, including exhibits thereto, may be inspected without
charge at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices at Northwestern Atrium Center, 500 West
Madison Street, Room 1400, Chicago, IL 60661, and 7 World Trade Center, Suite
1300, New York, NY 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web site
that contains reports, proxy statements and other information filed by the
Company at (http://www.sec.gov).

102
<PAGE>
INDEX TO FINANCIAL INFORMATION

UNITED COMMUNITY BANCSHARES, INC.
Independent Auditor's Reports............................................. F-2
Consolidated Balance Sheets as of September 30, 1996 (unaudited) and
December 31, 1995 and 1994............................................... F-4
Consolidated Statements of Income for the Nine Months Ended September 30,
1996 and 1995 (unaudited) and for the Years Ended December 31, 1995, 1994
and 1993................................................................. F-5
Consolidated Statements of Stockholders' Equity for the Nine Months Ended
September 30, 1996 (unaudited) and for the Years Ended December 31, 1995,
1994 and 1993............................................................ F-6
Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 1996 and 1995 (unaudited) and for the Years Ended December 31, 1995,
1994 and 1993............................................................ F-7
Notes to Consolidated Financial Statements................................ F-8

PARK FINANCIAL CORPORATION
Independent Auditor's Report.............................................. F-33
Consolidated Balance Sheets as of September 30, 1996 (unaudited) and
December 31, 1995 and 1994............................................... F-34
Consolidated Statements of Income for the Nine Months Ended September 30,
1996 and 1995 (unaudited) and for the Years Ended December 31, 1995, 1994
and 1993................................................................. F-35
Consolidated Statements of Stockholders' Equity for the Nine Months Ended
September 30, 1996 (unaudited) and for the Years Ended December 31, 1995,
1994 and 1993............................................................ F-36
Consolidated Statements of Cash Flows for the Nine Months Ended September
30, 1996 and 1995 (unaudited) and for the Years Ended December 31, 1995,
1994 and 1993............................................................ F-37
Notes to Consolidated Financial Statements................................ F-38

UNAUDITED PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Consolidated Financial Statements of United and PFC... F-51
Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1996... F-52
Unaudited Pro Forma Consolidated Statement of Income for the Year Ended
December 31, 1995........................................................ F-53
Unaudited Pro Forma Consolidated Statement of Income for the Nine Months
Ended September 30, 1996................................................. F-54
Unaudited Pro Forma Consolidated Statement of Income for the Nine Months
Ended September 30, 1995................................................. F-55
Note to the Unaudited Pro Forma Consolidated Financial Statements......... F-56
Unaudited Pro Forma Consolidated Financial Statements of United and
Goodhue.................................................................. F-58
Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1993.... F-59
Unaudited Pro Forma Consolidated Statement of Income for the Year Ended
December 31, 1993........................................................ F-60
Note to the Unaudited Pro Forma Consolidated Financial Statements......... F-61

F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
United Community Bancshares, Inc.
and Subsidiaries
Eagan, Minnesota

We have audited the accompanying consolidated balance sheets of United
Community Bancshares, Inc. and Subsidiaries as of December 31, 1995 and 1994,
and the related consolidated statements of income, stockholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of United
Community Bancshares, Inc. and Subsidiaries as of December 31, 1995 and 1994,
and the results of their operations and their cash flows for the years then
ended, in conformity with generally accepted accounting principles.

McGLADREY & PULLEN, LLP

St. Paul, Minnesota
February 23, 1996

F-2
<PAGE>
INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
United Community Bancshares, Inc.
and Subsidiary
Eagan, Minnesota

We have audited the accompanying consolidated statements of income,
stockholders' equity, and cash flows for United Community Bancshares, Inc. and
Subsidiary (formerly Signal Bancshares, Inc. and Subsidiary) for the year ended
December 31, 1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of United Community
Bancshares, Inc. and Subsidiary's operations and their cash flows for the year
ended December 31, 1993, in conformity with generally accepted accounting
principles.

LEININGER & LEININGER, LTD.

Minneapolis, Minnesota
February 18, 1994

F-3
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
SEPTEMBER 30, -------------------------------
1996 1995 1994
-------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C>

ASSETS
Cash and due from banks............................ $ 24,001,941 $ 20,513,154 $ 19,351,643
Federal funds sold................................. 7,875,000 8,725,000 7,975,000
-------------- -------------- --------------
Investment securities available for sale........... 103,453,335 101,836,962 70,278,070
Investment securities held to maturity............. -- -- 13,156,388
-------------- -------------- --------------
Total investment securities.................... 103,453,335 101,836,962 83,434,458
-------------- -------------- --------------
Loans and leases................................... 280,212,723 265,904,636 246,981,259
Allowance for loan and lease losses................ (2,867,523) (2,899,165) (2,856,288)
-------------- -------------- --------------
Net loans and leases........................... 277,345,200 263,005,471 244,124,971
-------------- -------------- --------------
Property and equipment, net........................ 10,887,181 10,654,578 10,991,515
Accrued interest receivable........................ 3,431,399 3,180,346 2,742,358
Cash surrender value of life insurance............. 9,421,321 9,116,888 8,485,485
Intangible assets, net............................. 3,684,285 4,188,801 4,861,489
Other assets....................................... 1,750,314 619,375 2,016,584
-------------- -------------- --------------
Total assets................................... $ 441,849,976 $ 421,840,575 $ 383,983,503
-------------- -------------- --------------
-------------- -------------- --------------

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits......................................... $ 351,825,044 $ 340,723,249 $ 312,946,989
Securities sold under repurchase agreements...... 27,556,398 23,173,292 27,746,565
Accrued expenses and other liabilities........... 5,880,339 5,213,321 3,352,717
Notes payable and other borrowings............... 16,708,565 15,762,119 12,412,281
-------------- -------------- --------------
Total liabilities.............................. 401,970,346 384,871,981 356,458,552
-------------- -------------- --------------
COMMITMENTS, CONTINGENCIES, AND CREDIT RISK
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share;
5,000,000 shares authorized; 546,686, 544,750,
and 502,317, shares issued...................... 5,466 5,448 5,023
Additional paid-in capital....................... 21,015,602 20,837,567 17,288,552
Retained earnings................................ 18,917,959 15,513,033 11,884,002
Unrealized gain (loss) on securities available
for sale........................................ (59,397) 612,546 (1,652,626)
-------------- -------------- --------------
Total stockholders' equity..................... 39,879,630 36,968,594 27,524,951
-------------- -------------- --------------
Total liabilities and stockholders' equity..... $ 441,849,976 $ 421,840,575 $ 383,983,503
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-4
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
----------------------------- ---------------------------------------------
1996 1995 1995 1994 1993
------------- ------------- ------------- ------------- -------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INTEREST INCOME:
Loans and leases................................ $ 20,061,287 $ 18,522,558 $ 25,089,584 $ 21,004,079 $ 9,069,781
Investment securities -- taxable................ 4,194,890 3,554,566 4,949,453 3,843,603 2,098,870
Investment securities -- tax exempt............. 354,488 309,161 405,726 343,892 139,757
Federal funds sold.............................. 389,775 532,775 760,820 324,871 115,164
------------- ------------- ------------- ------------- -------------
Total interest income......................... 25,000,440 22,919,060 31,205,583 25,516,445 11,423,572
------------- ------------- ------------- ------------- -------------
INTEREST EXPENSE:
Deposits........................................ 8,721,275 7,626,718 10,438,601 7,529,696 3,367,221
Federal funds purchased and securities sold
under repurchase agreements.................... 956,487 1,057,758 1,453,699 841,693 106,567
Notes payable and other borrowings.............. 767,214 712,785 955,752 788,064 197,037
------------- ------------- ------------- ------------- -------------
Total interest expense........................ 10,444,976 9,397,261 12,848,052 9,159,453 3,670,825
------------- ------------- ------------- ------------- -------------
Net interest income........................... 14,555,464 13,521,799 18,357,531 16,356,992 7,752,747
PROVISION FOR LOAN AND LEASE LOSSES............... 145,823 41,215 60,999 234,454 300,000
------------- ------------- ------------- ------------- -------------
Net interest income after provision for loan
and lease losses............................. 14,409,641 13,480,584 18,296,532 16,122,538 7,452,747
------------- ------------- ------------- ------------- -------------
NONINTEREST INCOME:
Service charges and other fees.................. 2,442,366 2,135,645 2,922,664 2,962,662 1,770,532
Net investment securities gains (losses)........ -- (22,869) (32,329) 79,351 75,194
Other........................................... 1,005,623 773,744 1,028,650 795,321 302,721
------------- ------------- ------------- ------------- -------------
Total noninterest income...................... 3,447,989 2,886,520 3,918,985 3,837,334 2,148,447
------------- ------------- ------------- ------------- -------------
NONINTEREST EXPENSE:
Salaries and employee benefits.................. 7,323,248 6,865,658 9,291,893 8,510,365 3,687,963
Occupancy....................................... 645,535 743,539 1,208,300 1,060,089 436,175
Depreciation.................................... 1,141,406 911,640 1,252,682 1,215,848 490,090
Amortization of intangibles..................... 576,460 617,700 824,140 561,882 83,196
FDIC assessment................................. 3,500 320,157 350,856 643,845 352,542
Other........................................... 3,084,568 2,688,716 3,603,063 4,139,114 2,366,160
------------- ------------- ------------- ------------- -------------
Total noninterest expense..................... 12,774,717 12,147,410 16,530,934 16,131,143 7,416,126
------------- ------------- ------------- ------------- -------------
Income before income taxes and cumulative
effect of change in accounting principle..... 5,082,913 4,219,694 5,684,583 3,828,729 2,185,068
INCOME TAX EXPENSE................................ 1,677,987 1,249,086 2,055,552 1,395,772 725,224
------------- ------------- ------------- ------------- -------------
Income before cumulative effect of change in
accounting principle......................... 3,404,926 2,970,608 3,629,031 2,432,957 1,459,844
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE........................................ -- -- -- -- 106,168
------------- ------------- ------------- ------------- -------------
Net income.................................... $ 3,404,926 $ 2,970,608 $ 3,629,031 $ 2,432,957 $ 1,566,012
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
AVERAGE SHARES OUTSTANDING........................ 549,079 510,770 520,306 504,686 305,513
------------- ------------- ------------- ------------- -------------
EARNINGS PER SHARE BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE................... $ 6.20 $ 5.82 $ 6.97 $ 4.82 $ 4.78
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE........................................ -- -- -- -- 0.35
------------- ------------- ------------- ------------- -------------
Earnings per share after cumulative effect of
change in accounting principle............... $ 6.20 $ 5.82 $ 6.97 $ 4.82 $ 5.13
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
DIVIDENDS PER SHARE............................... $ -- $ -- $ -- $ -- $ 0.46
</TABLE>

See Notes to Consolidated Financial Statements.

F-5
<PAGE>

UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended December 31, 1995, 1994, and 1993 and Nine Months Ended September
30, 1996

<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
COMMON STOCK ADDITIONAL ON SECURITIES
--------------------- PAID-IN RETAINED AVAILABLE
SHARES PAR VALUE CAPITAL EARNINGS FOR SALE TOTAL
--------- ---------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992............ 296,383 $ 296,383 $ 3,620,194 $ 8,026,171 $ -- $ 11,942,748
Net income.......................... -- -- -- 1,566,012 -- 1,566,012
Common stock issued................. 7,126 7,126 377,678 -- -- 384,804
Common stock repurchased............ (763) (763) (42,171) -- -- (42,934)
Dividends........................... -- -- -- (141,138) -- (141,138)
--------- ---------- ------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1993............ 302,746 302,746 3,955,701 9,451,045 -- 13,709,492
Change in par value from $1.00 to
$0.01 per share.................... -- (299,719) 299,719 -- -- --
Net income.......................... -- -- -- 2,432,957 -- 2,432,957
Common stock issued:
For acquisition of GCFC........... 138,067 1,381 8,851,475 -- -- 8,852,856
In stock offering................. 61,504 615 4,181,657 -- -- 4,182,272
Net change in unrealized loss on
securities available for sale...... -- -- -- -- (1,652,626) (1,652,626)
--------- ---------- ------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1994............ 502,317 5,023 17,288,552 11,884,002 (1,652,626) 27,524,951
Net income.......................... -- -- -- 3,629,031 -- 3,629,031
Common stock issued................. 44,010 440 3,692,229 -- -- 3,692,669
Common stock repurchased............ (1,577) (15) (143,214) -- -- (143,229)
Net change in unrealized gain on
securities available for sale...... -- -- -- -- 2,265,172 2,265,172
--------- ---------- ------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1995............ 544,750 5,448 20,837,567 15,513,033 612,546 36,968,594
Net income (unaudited).............. -- -- -- 3,404,926 -- 3,404,926
Common stock issued (unaudited)..... 2,467 24 226,419 -- -- 226,443
Common stock repurchased
(unaudited)........................ (531) (6) (49,653) -- -- (49,659)
Net change in unrealized loss on
securities available for sale
(unaudited)........................ -- -- -- -- (671,943) (671,943)
Tax effect of stock options
exercised (unaudited).............. -- -- 1,269 -- -- 1,269
--------- ---------- ------------- ------------- ------------- -------------
BALANCE, SEPTEMBER 30, 1996
(UNAUDITED).......................... 546,686 $ 5,466 $ 21,015,602 $ 18,917,959 $ (59,397) $ 39,879,630
--------- ---------- ------------- ------------- ------------- -------------
--------- ---------- ------------- ------------- ------------- -------------
</TABLE>

See Notes to Consolidated Financial Statements.

F-6
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
----------------------- -------------------------------------
1996 1995 1995 1994 1993
---------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.................................. $3,404,926 $ 2,970,608 $ 3,629,031 $ 2,432,957 $ 1,566,012
Adjustments to reconcile net income to net
cash flows from operating activities:
Cumulative effect of accounting change.... -- -- -- -- (106,168)
Net investment securities (gains)
losses................................... -- 22,869 32,329 (79,351) (75,194)
Net amortization and accretion of bond
premiums and discounts................... (168,125) (197,926) (310,582) 222,538 101,403
Provision for loan and lease losses....... 145,823 41,215 60,999 234,454 300,000
Depreciation.............................. 1,141,406 911,640 1,252,682 1,215,848 490,090
Amortization of intangibles............... 576,460 617,700 824,140 561,882 83,196
Earnings on cash surrender value of life
insurance................................ (297,168) (291,086) (377,103) (462,453) (249,871)
Net (gain) on sale of loans............... (326,651) (366,401) (485,626) (195,048) --
Net (gain) loss on sale of other real
estate................................... (49,657) (53,934) (63,247) (67,674) 9,951
Net (gain) loss on sale of property and
equipment................................ 25,424 (41,532) (49,923) (70,718) --
Provision for deferred income taxes....... (272,000) 18,713 24,950 (232,134) (97,572)
Other, net................................ 57,486 1,126,722 912,636 (244,419) 885,553
---------- ----------- ----------- ----------- -----------
Net cash flows from operating
activities............................. 4,237,924 4,758,588 5,450,286 3,315,882 2,907,400
---------- ----------- ----------- ----------- -----------
CASH FLOWS USED FOR INVESTING ACTIVITIES
Net (increase) decrease in federal funds
sold....................................... 850,000 650,000 (750,000) (2,525,000) (500,000)
Net cash flows (used for) from investment
securities................................. (2,579,317) (12,613,185) (14,396,539) (3,859,963) 1,315,307
Net increase in loans and leases............ (14,253,158) (12,946,229) (18,513,417) (26,999,676) (20,366,731)
Purchases of property and equipment......... (1,463,038) (858,912) (1,028,111) (2,350,262) (402,918)
Proceeds from sales of property and
equipment.................................. 29,900 75,791 117,349 409,934 --
Proceeds from sales of other real estate
owned...................................... 49,657 202,847 327,160 1,116,100 263,801
Purchase of cash surrender value of life
insurance.................................. (7,265) -- (254,300) (156,450) --
Acquisition of other assets................. -- -- -- (1,500,000) --
Cash paid, net of cash acquired upon
purchase of subsidiaries................... -- -- -- (3,032,859) --
---------- ----------- ----------- ----------- -----------
Net cash flows used for investing
activities............................. (17,373,221) (25,489,688) (34,497,858) (38,898,176) (19,690,541)
---------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits.................... 11,116,159 12,158,121 27,879,916 21,791,336 7,071,058
Net increase (decrease) in securities sold
under repurchase agreements................ 4,383,106 219,402 (4,573,273) 12,421,478 6,766,347
Proceeds from notes payable and other
borrowings................................. 1,948,035 9,003,000 9,003,000 9,532,420 3,242,000
Payments made on notes payable and other
borrowings................................. (1,000,000) (4,600,000) (5,650,000) (1,084,420) (1,211,721)
Net proceeds from issuance of common
stock...................................... 176,784 3,629,604 3,549,440 4,182,272 341,870
Dividends paid.............................. -- -- -- -- (141,138)
---------- ----------- ----------- ----------- -----------
Net cash flows from financing
activities............................. 16,624,084 20,410,127 30,209,083 46,843,086 16,068,416
---------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................ 3,488,787 (320,973) 1,161,511 11,260,792 (714,725)
CASH AND CASH EQUIVALENTS
Beginning................................... 20,513,154 19,351,643 19,351,643 8,090,851 8,805,576
---------- ----------- ----------- ----------- -----------
Ending...................................... $24,001,941 $19,030,670 $20,513,154 $19,351,643 $ 8,090,851
---------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- -----------
</TABLE>

See Notes to Consolidated Financial Statements
(Additional Cash Flow Information -- Note 18).

F-7
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION:

United Community Bancshares, Inc. (United) was formerly known as Signal
Bancshares, Inc. On January 1, 1994, Signal Bancshares, Inc. amended and
restated its Articles of Incorporation to change its name to United Community
Bancshares, Inc. Also on January 1, 1994, United acquired Goodhue County
Financial Corporation (GCFC) and its wholly-owned subsidiaries, Goodhue County
National Bank and Consumers Credit Corporation.

United Community Bancshares, Inc. and its subsidiaries provide a full range
of financial services. The accompanying consolidated financial statements for
1995 and 1994 include the accounts of United Community Bancshares, Inc. and its
wholly-owned subsidiaries, Signal Bank, Inc. (Signal), Goodhue County National
Bank (GCNB), Consumers Credit Corporation (CCC), and Unitech Services, Inc.
(Unitech). The accompanying consolidated financial statements for 1993 include
the accounts of Signal Bancshares, Inc. and its wholly-owned subsidiary, Signal
Bank, Inc. These entities are collectively referred to herein as the Company.
All significant intercompany balances and transactions have been eliminated in
consolidation.

BASIS OF FINANCIAL STATEMENT PRESENTATION AND ACCOUNTING ESTIMATES:

The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the financial statements,
management is required to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of the dates of the balance sheet
and revenues and expenses for the years then ended. Actual results could differ
from those estimates.

CASH, CASH EQUIVALENTS, AND CASH FLOWS:

For purposes of reporting cash flows, cash and cash equivalents includes
cash on hand and amounts due from banks. Cash flows from loans, federal funds
purchased and sold, deposits, and securities sold under repurchase agreements
are reported net.

INVESTMENT SECURITIES:

The Company accounts for debt and marketable equity securities in accordance
with Financial Accounting Standards Board (FASB) Statement No. 115. This
statement requires that management determine the appropriate classification of
securities at the date of adoption and thereafter as each individual security is
acquired. In addition, the appropriateness of such classification is reassessed
at each balance sheet date. The classifications and related accounting policies
under FASB Statement No. 115 are as follows:

HELD-TO-MATURITY SECURITIES: Securities classified as held-to-maturity are
those debt securities the Company has both the intent and ability to hold to
maturity regardless of changes in market conditions, liquidity needs, or changes
in general economic conditions. These securities are carried at cost adjusted
for amortization of premiums and accretion of discounts, computed by the
interest method over their contractual lives.

AVAILABLE-FOR-SALE SECURITIES: Securities classified as available-for-sale
are those debt securities that the Company intends to hold for an indefinite
period of time, but not necessarily to maturity. Any decision to sell a security
classified as available-for-sale would be based on various factors, including
significant movements in interest rates, changes in the maturity mix of the
Company's assets and liabilities, liquidity needs, regulatory capital
considerations, and other similar factors. Securities available for sale are
carried at fair value. Unrealized gains or losses, net of the related deferred
tax effect, are reported as increases or decreases in stockholders' equity.
Realized gains or losses, determined on the basis of the cost of specific
securities sold, are included in earnings.

LOANS AND ALLOWANCE FOR LOAN LOSSES:

Loans are stated at the amount of unpaid principal, reduced by an allowance
for loan losses.

F-8
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes that collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb estimated losses on existing loans that may become uncollectible,
based on evaluation of the collectibility of loans and prior loan loss
experience. This evaluation also takes into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans, and current economic conditions that
may affect the borrower's ability to pay. While management uses the best
information available to make its evaluation, future adjustments to the
allowance may be necessary if there are significant changes in economic
conditions.

On January 1, 1995, the Company adopted FASB Statement No. 114, ACCOUNTING
BY CREDITORS FOR IMPAIRMENT OF A LOAN. Statement No. 114 has been amended by
FASB Statement No. 118, ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF A LOAN--INCOME
RECOGNITION AND DISCLOSURES. Statement No. 114, as amended, defines a loan as
impaired when it is probable the Company will be unable to collect all principal
and interest payments due in accordance with the terms of the loan agreement.
The statement further requires that the impairment of loans that have been
separately identified for evaluation be measured based on the present value of
expected future cash flows or, alternatively, the observable market price of the
loans or the fair value of the collateral. However, for those loans that are
collateral dependent (that is, if repayment of those loans is expected to be
provided solely by the underlying collateral) and for which management has
determined foreclosure is probable, the measure of impairment of those loans is
to be based on the fair value of the collateral. The effect of adopting
Statement No. 114 was not significant to the Company.

Interest on loans is recognized over the terms of the loans and is
calculated using the simple-interest method on principal amounts outstanding.
For impaired loans, accrual of interest is discontinued on a loan when
management believes, after considering collection efforts and other factors,
that the borrower's financial condition is such that collection of interest is
doubtful. Cash collections on impaired loans are credited to the loan receivable
balance, and no interest income is recognized on those loans until the principal
balance has been collected.

Loan origination, commitment, and other fees and costs incurred to extend
credit are not significant and are recorded in the income statement when
received or incurred.

PROPERTY AND EQUIPMENT:

Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is provided principally by the straight-line method
over the estimated useful lives of the assets. Leasehold improvements are
amortized over the terms of the respective leases.

CASH SURRENDER VALUE OF LIFE INSURANCE:

The Company maintains life insurance contracts which are informally related
to certain deferred compensation, salary continuation, and key executive life
insurance agreements with officers and directors of the Company. The Company's
investment in cash surrender value of life insurance is recorded at the amount
that can be realized under the insurance contracts.

INTANGIBLE ASSETS:

Intangible assets include costs in excess of net assets acquired and certain
covenants not to compete, resulting from the acquisition of Goodhue County
Financial Corporation (GCFC) on January 1, 1994, and a deposit base premium
resulting from the acquisition of certain branches in 1988. These intangible
assets are being amortized over the expected period of benefit from 3 to 15
years.

F-9
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER REAL ESTATE OWNED:

Real estate acquired through foreclosure or insubstance foreclosure is
recorded in other assets at the lower of cost or fair value of the asset less
the estimated costs to sell the asset. When a property is acquired, any excess
of the recorded loan balance over its estimated fair value is charged against
the allowance for loan losses. Any subsequent declines in fair value and
operating expenses are recorded in other expenses. Property is evaluated
regularly to ensure that the recorded amount is supported by its current fair
value.

INCOME TAXES:

The Company files a consolidated federal and a unitary state income tax
return. Deferred taxes are provided on an asset and liability method whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss or tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the amounts of assets and liabilities recorded for income
tax and financial reporting purposes. Deferred tax assets are reduced by a
valuation allowance when management determines that it is more likely than not
that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.

During 1993, the Company adopted the provisions of FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES, which supersedes Accounting Principles Board
Opinion No. 11, the basis of the Company's accounting for income taxes prior to
the change. The effect of the adjustments as of January 1, 1993, to adopt FASB
Statement No. 109 has been reflected in the consolidated statements of income as
a cumulative effect of change in accounting principle.

EARNINGS PER SHARE:

Earnings per share data is computed based on the weighted average number of
shares outstanding. Pursuant to Securities and Exchange Commission Staff
Accounting Bulletin No. 83, stock issued and to be issued for consideration
below the initial public offering price during the 12-month period preceding the
date of the initial filing of the registration statement has been included in
the calculation of shares outstanding, as if they were outstanding for all
periods presented up through the date of the initial public offering.

EMPLOYEE BENEFIT PLANS:

EMPLOYEE STOCK OWNERSHIP PLAN: The Company provides a noncontributory
employee stock ownership plan (ESOP) covering substantially all employees
eligible as to age and length of service. The amount of the contribution to the
ESOP trust is determined annually at the discretion of the Board of Directors
and complies with the requirements of the plan agreement.

401(K) PROFIT SHARING PLAN: The Company also provides a 401(k) profit
sharing plan beginning January 1, 1994, which covers substantially all of the
Company's employees who are eligible as to age and length of service. A
participant may elect to make contributions of up to 15 percent of the
participant's annual compensation. The Company makes a matching contribution of
50 percent of each participant's contribution, up to a maximum matching
contribution of 2 1/2 percent of compensation. The Company also may make a
discretionary profit sharing contribution determined annually by the Board of
Directors.

INTEREST SWAP:

The Company engages in interest rate swap transactions to manage its
interest rate risk. Income or expense on swaps is recorded as an adjustment to
interest income or expense.

F-10
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:

FASB Statement No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL
INSTRUMENTS, requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it is
practicable to estimate that value. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Fair value estimates are made at a specific point in time,
based on relevant market information and information about the financial
instruments. These estimates do not reflect any premium or discount that could
result from offering for sale at one time the Company's entire holdings of a
particular financial instrument. Because no market exists for a significant
portion of the Company's financial instruments, fair value estimates are based
on judgments regarding future expected loss experience, current economic
conditions, risk characteristics of various financial instruments, and other
factors. These estimates are subjective in nature and involve uncertainties and
matters of significant judgment and, therefore, cannot be determined with
precision. Changes in assumptions could significantly affect the estimates. In
addition, the tax ramifications related to the realization of the unrealized
gains can have a significant effect on market value estimates and have not been
considered in the estimates. The derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many cases, could not
be realized in immediate settlement of the instruments. Statement No. 107
excludes certain financial instruments and all nonfinancial instruments from its
disclosure requirements.

Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.

The following methods and assumptions were used by the Company in estimating
the fair value of its financial instruments:

CASH AND DUE FROM BANKS: Fair value of cash and due from banks is based on
the carrying value reported on the consolidated balance sheets.

FEDERAL FUNDS SOLD: Fair value of federal funds sold is based on the
carrying value reported on the consolidated balance sheets.

INVESTMENT SECURITIES: Fair values for all securities are based on quoted
market prices, where available. If quoted market prices are not available, fair
values are based on quoted market prices of comparable instruments.

LOANS: For variable-rate loans that reprice frequently and that have
experienced no significant change in credit risk, fair values are based on
carrying values. Fair values for all other loans are estimated based on
discounted cash flows, using interest rates currently being offered for loans
with similar terms to borrowers with similar credit quality.

CASH SURRENDER VALUE OF LIFE INSURANCE: Fair value of cash surrender value
of life insurance is based on the carrying value reported on the consolidated
balance sheets.

DEPOSITS: Fair values of demand, savings, and NOW accounts are based on the
carrying values reported on the consolidated balance sheets. Fair values for
fixed-rate certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on certificates
of deposit of similar remaining maturities.

SECURITIES SOLD UNDER REPURCHASE AGREEMENTS: Fair value of securities sold
under repurchase agreements is based on the carrying value reported on the
consolidated balance sheets.

F-11
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NOTES PAYABLE AND OTHER BORROWINGS: Fair values of variable-rate, long-term
borrowings are based on carrying values. Fair value of fixed-rate long-term debt
is estimated by discounting the future cash flows using interest rates currently
being offered on debt of similar remaining maturity.

ACCRUED INTEREST RECEIVABLE AND PAYABLE: Fair values of both accrued
interest receivable and payable are based on the carrying values reported on the
consolidated balance sheets.

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS: Fair value of interest rate swaps
are based on quoted market prices. Loan commitments and standby letter of credit
fees are not material. As such, there are no carrying amounts or fair value
disclosures related to these financial instruments.

MORTGAGE SERVICING RIGHTS: FASB Statement No. 122, ACCOUNTING FOR MORTGAGE
SERVICING RIGHTS, establishes a new standard for capitalizing mortgage servicing
rights. This standard will require the Company to record an asset for mortgage
servicing rights when it sells mortgages and retains the servicing, and then
amortize this asset over the period during which servicing income is expected to
be received. This statement is effective for the Company's year ending December
31, 1996. In management's opinion, this statement will not have a material
effect on the Company's financial statements.

LONG-LIVED ASSETS: FASB Statement No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, establishes new
accounting standards for the impairment of long-lived assets, certain
intangibles, and goodwill related to those assets to be held and used and for
long-lived assets and certain identified intangibles to be disposed of. This
statement is effective for the Company's year ending December 31, 1996. In
management's opinion, the adoption of this statement will not have a material
effect on the Company's financial statements.

STOCK-BASED COMPENSATION: In October 1995, the FASB issued Statement No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATION. FASB Statement No. 123 provides a
choice of accounting methods for valuing stock-based compensation plans and
requires certain disclosures about the effect on net income and earnings per
share regardless of the method used to account for them. This statement is
effective for the Company's year ending December 31, 1996. In management's
opinion, this statement will not have a material effect on the Company's
financial statements.

RECLASSIFICATIONS:

Certain of the 1994 and 1993 amounts have been reclassified to conform with
the 1995 presentation. These reclassifications had no effect on net income or
stockholders' equity.

INTERIM FINANCIAL INFORMATION (UNAUDITED):

The accompanying consolidated financial statements as of September 30, 1996,
and for the nine-month periods ended September 30, 1996 and 1995, are unaudited
but, in the opinion of management, include all adjustments, consisting only of
normal recurring adjustments, necessary for fair presentation of the financial
position and results of operations. The operating results for the interim
periods are not necessarily indicative of the operating results to be expected
for a full year or for other interim periods.

NOTE 2. ACQUISITION
On January 1, 1994, the Company acquired Goodhue County Financial
Corporation (GCFC), a bank holding company headquartered in Red Wing, Minnesota.

F-12
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. ACQUISITION (CONTINUED)
A summary of the assets acquired, liabilities assumed, and purchase price
paid in connection with the acquisition are as follows:

<TABLE>
<S> <C>
Assets acquired:
Cash and cash equivalents................................. $ 6,231,125
Loans, net of allowance for loan losses of $1,223,931..... 104,734,005
Federal funds sold........................................ 4,950,000
Investments............................................... 43,013,653
Property and equipment.................................... 5,938,643
Other assets.............................................. 4,834,005
Cost in excess of net assets acquired....................... 3,292,310
--------------
Total assets................................................ $ 172,993,741
--------------
--------------
Liabilities assumed:
Deposits.................................................. $ 144,069,164
Other liabilities......................................... 1,882,552
Securities sold under repurchase agreements............... 8,558,740
Notes payable............................................. 366,445
--------------
Total liabilities........................................... 154,876,901
--------------
Purchase price:
Issuance of common stock by United........................ 8,852,856
Cash paid by United....................................... 9,263,984
--------------
Total purchase price........................................ 18,116,840
--------------
$ 172,993,741
--------------
--------------
</TABLE>

The acquisition was accounted for as a purchase and, accordingly, the
results of operations of GCFC are included in the accompanying consolidated
financial statements for periods subsequent to the acquisition date.

To facilitate this transaction, and provide operating funds, the Company
issued 61,504 additional shares of its common stock for cash proceeds totaling
$4,182,272 and incurred acquisition indebtedness of $6.8 million. United also
issued 138,067 shares of its common stock totaling $8.8 million and paid cash
totaling $9.3 million to the shareholders of GCFC in exchange for their shares
of GCFC common and preferred stock.

The Company also entered into two noncompete agreements with management of
GCFC totaling $1,500,000, which were paid in full during 1994, recorded as a
prepaid expense, and are being amortized over a three- to five-year period.

F-13
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2. ACQUISITION (CONTINUED)
The unaudited pro forma consolidated results of operations for the year
ended December 31, 1993, as though the acquisition of GCFC had occurred on
January 1, 1993, is as follows:

<TABLE>
<S> <C>
Net interest income......................................... $ 14,894,908
Provision for loan and lease losses......................... 604,628
--------------
Net interest income after provision for loan and lease
losses..................................................... 14,290,280
Noninterest income.......................................... 3,947,242
Noninterest expense......................................... 14,994,719
--------------
Income before income taxes and cumulative effect of change
in accounting principle.................................... 3,242,803
Income tax expense.......................................... 1,138,533
--------------
Income before cumulative effect of change in accounting
principle.................................................. 2,104,270
Cumulative effect of change in accounting principle......... 181,168
--------------
Net income.................................................. $ 2,285,438
--------------
--------------
Average shares outstanding.................................. 505,084
--------------
Earnings per share before cumulative effect of change in
accounting principle....................................... $ 4.17
Cumulative effect of change in accounting principle......... 0.36
--------------
Earnings per share after cumulative effect of change in
accounting principle....................................... $ 4.53
--------------
--------------
</TABLE>

NOTE 3. RESTRICTIONS ON CASH AND CASH EQUIVALENTS

The subsidiary banks are required to maintain reserve balances, in cash or
on deposit with the Federal Reserve Bank, based upon a percentage of deposits.
The total required reserve balances as of September 30, 1996 and December 31,
1995 and 1994, were approximately $2,719,000 (unaudited), $3,092,000, and
$2,534,000, respectively.

F-14
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. INVESTMENT SECURITIES AVAILABLE FOR SALE

SUMMARY OF SECURITIES:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- ----------- ----------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
U.S. Treasury securities............................... $ 23,547,218 $ 58,022 $ (70,162) $ 23,535,078
U.S. government corporations and agencies.............. 33,869,354 168,331 (257,422) 33,780,263
Obligations of states and political subdivisions....... 12,469,183 226,734 (29,405) 12,666,512
Mortgage-backed securities............................. 31,592,077 97,958 (293,303) 31,396,732
Corporate equity securities............................ 2,074,750 -- -- 2,074,750
-------------- ----------- ----------- --------------
$ 103,552,582 $ 551,045 $ (650,292) $ 103,453,335
-------------- ----------- ----------- --------------
-------------- ----------- ----------- --------------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
---------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
-------------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury securities............................. $ 29,648,393 $ 293,400 $ (100,502) $ 29,841,291
U.S. government corporations and agencies............ 29,745,481 548,338 -- 30,293,819
Obligations of states and political subdivisions..... 7,592,217 184,799 (20,400) 7,756,616
Mortgage-backed securities........................... 31,836,062 209,427 (88,903) 31,956,586
Corporate equity securities.......................... 1,988,650 -- -- 1,988,650
-------------- ------------ ----------- --------------
$ 100,810,803 $ 1,235,964 $ (209,805) $ 101,836,962
-------------- ------------ ----------- --------------
-------------- ------------ ----------- --------------
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1994
--------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
U.S. Treasury securities................................ $ 43,038,726 $ 1,468 $ (1,291,575) $ 41,748,619
U.S. government corporations and agencies............... 7,425,437 -- (52,042) 7,373,395
Mortgage-backed securities.............................. 20,024,787 3,754 (1,365,759) 18,662,782
Corporate equity securities............................. 2,555,017 -- (61,743) 2,493,274
------------- ----------- ------------- -------------
$ 73,043,967 $ 5,222 $ (2,771,119) $ 70,278,070
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
</TABLE>

F-15
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. INVESTMENT SECURITIES AVAILABLE FOR SALE (CONTINUED)
CONTRACTUAL MATURITIES:

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------------------ ------------------------------
AMORTIZED COST FAIR VALUE AMORTIZED COST FAIR VALUE
-------------- -------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Due in one year or less........................ $ 21,515,838 $ 21,459,774 $ 20,366,550 $ 20,328,311
Due after one year through five years.......... 35,048,068 35,430,715 41,660,447 42,362,872
Due after five years through ten years......... 9,965,877 9,899,283 3,856,410 4,049,502
Due after ten years............................ 3,355,972 3,192,081 1,102,684 1,151,041
-------------- -------------- -------------- --------------
69,885,755 69,981,853 66,986,091 67,891,726

Mortgage-backed securities..................... 31,592,077 31,396,732 31,836,062 31,956,586
Corporate equity securities.................... 2,074,750 2,074,750 1,988,650 1,988,650
-------------- -------------- -------------- --------------
$ 103,552,582 $ 103,453,335 $ 100,810,803 $ 101,836,962
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

Anticipated maturities on mortgage-backed securities are not readily
determinable since they may be prepaid without penalty, and corporate equity
securities do not have stated maturity dates.

REALIZED GAINS AND LOSSES:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31
---------------------- ---------------------------------
1996 1995 1995 1994 1993
---------- ---------- ---------- ---------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross gains............................................ $ -- $ 40,963 $ 40,980 $ 88,146 $ 75,194
Gross losses........................................... -- (63,832) (73,309) (8,795) --
---------- ---------- ---------- ---------- ---------
$ -- $ (22,869) $ (32,329) $ 79,351 $ 75,194
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
</TABLE>

PLEDGED SECURITIES:

Investment securities available for sale with a carrying value of
$61,344,309 (unaudited), $74,161,604 and $56,422,299 at September 30, 1996 and
December 31, 1995 and 1994, respectively, were pledged to secure public deposits
and for other purposes as required or permitted by law.

CHANGES IN THE NET UNREALIZED GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE
INCLUDED IN EQUITY:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1995 1994 1993
NINE MONTHS ENDED ------------- ------------- -------------
SEPTEMBER 30, 1996
------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Balance, beginning.............................. $ 612,546 $ (1,652,626) $ -- $ --
Initial unrealized gain on date of adoption of
Statement No. 115, net of related deferred
tax effect................................... -- -- 121,767 --
Unrealized gain (loss) during the period,
net.......................................... (1,125,406) 3,792,056 (2,970,444) --
Deferred tax effect related to unrealized gain
(loss)....................................... 453,463 (1,526,884) 1,196,051 --
------------------ ------------- ------------- -------------
Balance, ending................................. $ (59,397) $ 612,546 $ (1,652,626) $ --
------------------ ------------- ------------- -------------
------------------ ------------- ------------- -------------
</TABLE>

F-16
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 5. INVESTMENT SECURITIES HELD TO MATURITY

SUMMARY OF SECURITIES:

<TABLE>
<CAPTION>
DECEMBER 31, 1994
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Mortgage-backed securities................................ $ 5,133,212 $ 2,684 $ (225,274) $ 4,910,622
Obligations of states and political subdivisions.......... 8,023,176 16,463 (269,113) 7,770,526
------------- ----------- ----------- -------------
$ 13,156,388 $ 19,147 $ (494,387) $ 12,681,148
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

RECLASSIFICATIONS:

Upon adoption of FASB Statement No. 115, certain securities were initially
classified as held-to-maturity due to uncertainty as to the regulatory treatment
of unrealized gains and losses. This uncertainty was resolved in 1994, and as
permitted by Financial Accounting Standards Board Special Report -- A GUIDE TO
IMPLEMENTATION OF STATEMENT NO. 115 ON ACCOUNTING FOR CERTAIN INVESTMENTS IN
DEBT AND EQUITY SECURITIES, held-to-maturity securities with an amortized cost
of $11,972,456 and a fair value of $12,295,565 were reclassified as
available-for-sale on December 31, 1995. These securities were transferred to
allow more flexibility in managing the Company's assets.

The reclassification was made at fair value, and the difference between the
amortized cost and fair value on the date of transfer, net of the related
deferred tax effect, was recognized as an increase in the unrealized gain on
available-for-sale securities in stockholders' equity.

PLEDGED SECURITIES:

Investment securities held to maturity with a carrying value of $2,995,814
at December 31, 1994, were pledged to secure public deposits and for other
purposes as required or permitted by law.

NOTE 6. SECURITIES HELD FOR INVESTMENT AND ACCOUNTING CHANGE
As of January 1, 1994, the Company changed its method of accounting for debt
and equity securities in accordance with FASB Statement No. 115. The January 1,
1994, balance of stockholders' equity was increased by $204,547, net of the
$82,780 related deferred tax effect, to recognize the net unrealized holding
gain on securities available for sale at that date.

F-17
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7. LOANS AND LEASES

COMPOSITION OF LOANS AND LEASES:

<TABLE>
<CAPTION>
DECEMBER 31
------------------------------
1995 1994
SEPTEMBER 30, -------------- --------------
1996
--------------
(UNAUDITED)
<S> <C> <C> <C>
Commercial...................................................... $ 73,684,777 $ 70,543,465 $ 70,360,974
Commercial real estate.......................................... 71,436,790 62,730,992 58,782,276
Agricultural.................................................... 11,590,971 10,582,438 11,025,108
Agricultural real estate........................................ 9,300,890 6,002,566 3,058,571
-------------- -------------- --------------
Total commercial and agricultural............................... 166,013,428 149,859,461 143,226,929

Residential real estate......................................... 66,138,736 69,576,597 58,828,211
Consumer........................................................ 36,292,399 35,896,609 35,654,852
Leases.......................................................... 13,453,970 12,119,437 10,737,398
Less unearned income............................................ (1,685,810) (1,547,468) (1,466,131)
-------------- -------------- --------------
280,212,723 265,904,636 246,981,259

Less allowance for loan and lease losses........................ (2,867,523) (2,899,165) (2,856,288)
-------------- -------------- --------------
Net loans and leases............................................ $ 277,345,200 $ 263,005,471 $ 244,124,971
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

ALLOWANCE FOR LOAN AND LEASE LOSSES:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30 YEAR ENDED DECEMBER 31
-------------------------- ----------------------------------------
1996 1995 1995 1994 1993
------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance, beginning........................ $ 2,899,165 $ 2,856,288 $ 2,856,288 $ 1,500,870 $ 1,435,374
Provision charged to operations......... 145,823 41,215 60,999 234,454 300,000
Loans charged off....................... (569,684) (239,241) (337,079) (447,987) (475,424)
Recoveries.............................. 392,219 252,218 318,957 345,020 240,920
Allowance for loan losses acquired...... -- -- -- 1,223,931 --
------------ ------------ ------------ ------------ ------------
Balance, ending........................... $ 2,867,523 $ 2,910,480 $ 2,899,165 $ 2,856,288 $ 1,500,870
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
</TABLE>

IMPAIRED LOANS:

The Company had no impaired loans at September 30, 1996 (unaudited) and
December 31, 1995.

NONACCRUAL LOANS:

Nonaccrual loans totaled $459,388 at December 31, 1994. The effect of
nonaccrual loans was not significant to the results of operations.

F-18
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1995 1994
SEPTEMBER 30, ------------- -------------
1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
Land................................................................ $ 1,474,391 $ 1,474,391 $ 1,474,391
Buildings and improvements.......................................... 8,833,665 8,080,458 8,065,593
Equipment........................................................... 9,511,313 8,924,949 8,563,263
Leasehold improvements.............................................. 1,433,718 1,458,058 1,407,587
------------- ------------- -------------
21,253,087 19,937,856 19,510,834

Less accumulated depreciation and amortization...................... 10,365,906 9,283,278 8,519,319
------------- ------------- -------------
Property and equipment, net......................................... $ 10,887,181 $ 10,654,578 $ 10,991,515
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

NOTE 9. DEPOSITS

<TABLE>
<CAPTION>
DECEMBER 31
------------------------------
1995 1994
SEPTEMBER 30, -------------- --------------
1996
--------------
(UNAUDITED)
<S> <C> <C> <C>
Noninterest-bearing demand deposits............................. $ 70,443,833 $ 70,871,849 $ 69,261,369
NOW and money market accounts................................... 144,968,933 114,066,189 82,607,658
Savings deposits................................................ 29,709,643 47,735,468 42,955,654
Time certificates, $100,000 or more............................. 13,487,127 14,090,029 17,801,590
Other time deposits............................................. 93,215,508 93,959,714 100,320,718
-------------- -------------- --------------
Total........................................................... $ 351,825,044 $ 340,723,249 $ 312,946,989
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

NOTE 10. NOTES PAYABLE AND OTHER BORROWINGS

NOTES PAYABLE:

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1995 1994
SEPTEMBER 30, ------------- -------------
1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
Term note payable to a bank, interest at LIBOR plus 1.8% (7.75% at
December 31, 1995), due January 3, 1999, with annual installments
of $500,000, secured by all the common stock of Signal, GCNB, and
CCC................................................................ $ 3,150,000 $ 3,400,000 $ 8,550,000
Advances from the Federal Home Loan Bank of Des Moines, principal
due between May 12, 1997 and June 5, 1998, plus interest payable
monthly at rates between 5.67% and 6.61%, secured by blanket pledge
agreements totaling $46,167,000 of residential real estate mortgage
loans.............................................................. 12,000,000 12,000,000 3,000,000
Unsecured term notes payable to certain individuals, interest varies
from 6.0% to 10.0%, payable semiannually, notes had original
maturities of three to five years.................................. 370,530 362,119 362,281
Unsecured note payable to Minnesota Department of Agriculture,
noninterest-bearing, due November 30, 2015......................... 188,035 -- --
------------- ------------- -------------
Total............................................................... $ 15,708,565 $ 15,762,119 $ 11,912,281
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

F-19
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 10. NOTES PAYABLE AND OTHER BORROWINGS (CONTINUED)
The term note payable to a bank includes certain covenants including
maintenance of certain ratios, including capital to assets and average return on
assets.

FUTURE ANNUAL MATURITIES:

<TABLE>
<S> <C>
Years ending December 31:
1996...................................................... $ 573,119
1997...................................................... 6,673,000
1998...................................................... 6,616,000
1999...................................................... 1,900,000
--------------
$ 15,762,119
--------------
--------------
</TABLE>

LINE OF CREDIT:

The Company has an open line of credit with a bank for $2,000,000. The
agreement has an expiration date of April 3, 1997. The line of credit has a
balance of $1,000,000 (unaudited) as of September 30, 1996 and was unused at
December 31, 1995. Borrowings under this line of credit are secured by all the
common stock of Signal, GCNB, and CCC.

NOTE 11. INCOME TAXES AND CHANGE IN ACCOUNTING PRINCIPLE
The cumulative tax effects of the primary temporary differences are shown in
the following table:

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Deferred tax assets:
Loan loss allowances.............................................................. $ 666,351 $ 684,118
Deferred compensation accruals.................................................... 403,326 322,159
Unrealized loss on securities available for sale.................................. -- 1,113,271
Amortization of intangible assets................................................. 47,061 --
Other............................................................................. -- 23,732
------------- -------------
Total deferred tax assets........................................................... 1,116,738 2,143,280
------------- -------------

Deferred tax liabilities:
Property and equipment............................................................ (233,031) (218,664)
Acquisition adjustment............................................................ (808,250) (869,582)
Amortization of intangible assets................................................. -- (96,659)
Unrealized gain on securities available for sale.................................. (413,613) --
Other............................................................................. (400,758) (145,455)
------------- -------------
Total deferred tax liabilities...................................................... (1,855,652) (1,330,360)
------------- -------------
Net deferred tax assets (liabilities)............................................... $ (738,914) $ 812,920
------------- -------------
------------- -------------
</TABLE>

The Company evaluated the available evidence supporting the realization of
its deferred tax assets and determined it is more likely than not that the
assets will be realized.

F-20
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11. INCOME TAXES AND CHANGE IN ACCOUNTING PRINCIPLE (CONTINUED)
The provision for income taxes charged to operations consists of the
following:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------------
1995 1994 1993
------------ ------------ ----------
<S> <C> <C> <C>
Current tax expense....................................................... $ 2,030,602 $ 1,627,906 $ 822,796
Deferred tax expense (benefit)............................................ 24,950 (232,134) (97,572)
------------ ------------ ----------
$ 2,055,552 $ 1,395,772 $ 725,224
------------ ------------ ----------
------------ ------------ ----------
</TABLE>

The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate to pretax income as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------------
1995 1994 1993
------------ ------------ -----------
<S> <C> <C> <C>
Computed "expected" tax expense.......................................... $ 1,989,604 $ 1,340,055 $ 742,923
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal tax benefit......................... 355,473 245,489 125,192
Tax-exempt interest income (net of disallowed expenses)................ (354,330) (324,612) (160,485)
Intangible asset amortization.......................................... 76,821 76,821 --
Other.................................................................. (12,016) 58,019 17,594
------------ ------------ -----------
$ 2,055,552 $ 1,395,772 $ 725,224
------------ ------------ -----------
------------ ------------ -----------
</TABLE>

As discussed in Note 1, effective January 1, 1993, the Company adopted the
provisions of FASB Statement No. 109. This resulted in the recognition of
$106,168 of deferred tax assets at January 1, 1993, which was included in the
consolidated statement of income as a cumulative effect of a change in
accounting principle.

NOTE 12. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK:

The Company is party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. They involve, to varying degrees, elements of credit risk in
excess of amounts recognized on the consolidated balance sheets.

The Company's exposure to credit loss in the event of nonperformance by the
other parties to the financial instruments for these commitments is represented
by the contractual amounts of the instruments. The Company uses the same credit
policies in making commitments as it does for on-balance sheet instruments.
These commitments were as follows:

<TABLE>
<CAPTION>
DECEMBER 31
----------------------------
1995 1994
SEPTEMBER 30, ------------- -------------
1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
Commitments to extend credit........................................ $ 35,038,000 $ 21,224,000 $ 20,860,000
Standby letters of credit........................................... 2,860,000 2,976,000 2,468,000
------------- ------------- -------------
$ 37,898,000 $ 24,200,000 $ 23,328,000
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

COMMITMENTS TO EXTEND CREDIT: Commitments to extend credit are agreements
to lend to a customer as long as there is no violation of any condition
established in the contract. Since many of the commitments are

F-21
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (CONTINUED)
expected to expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Company evaluates each
customer's creditworthiness on a case-by-case basis. If deemed necessary upon
extension of credit, the amount of collateral obtained is based on management's
credit evaluation of the party. Collateral held varies, but may include accounts
receivable, inventory, equipment, and real estate.

STANDBY LETTERS OF CREDIT: Standby letters of credit are conditional
commitments issued by the Company to guarantee the performance of a customer to
a third party. Those guarantees are primarily issued to support public and
private borrowing arrangements. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. Collateral held varies as specified above and is required in
instances which the Company deems necessary.

INTEREST RATE SWAPS: Interest rate swaps involve the contractual exchange
of fixed and floating rate interest payment obligations based on a notional
principal amount. The Company enters into interest rate swap contracts to manage
interest rate risk caused by fluctuations in interest rates. At September 30,
1996 (unaudited) and December 31, 1995, interest rate swaps totaling $4,480,000
hedged the note payable to a bank and a commercial loan. At December 31, 1994,
the interest rate swap totaling $7,000,000 hedged the note payable to a bank.
Activity with respect to interest rate swap contracts was as follows:

<TABLE>
<CAPTION>
DECEMBER 31
--------------------------
1995 1994
SEPTEMBER 30, ------------ ------------
1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
Notional amount outstanding at beginning of period:.................... $ 4,480,000 $ 7,000,000 $ --
Additions............................................................ -- 1,480,000 7,000,000
Terminations......................................................... -- (4,000,000) --
------------- ------------ ------------
Notional amount outstanding at end of period........................... $ 4,480,000 $ 4,480,000 $ 7,000,000
------------- ------------ ------------
------------- ------------ ------------

Unrealized gain (loss)................................................. $ 56,239 $ (30,172) $ 605,000
------------- ------------ ------------
------------- ------------ ------------
</TABLE>

The Company is a receiver of floating-rate interest and a payer of
fixed-rate interest. The weighted average interest rate paid was 5.45 and 5.32
percent and the weighted average interest rate received was 6.13 and 4.39
percent, during 1995 and 1994, respectively. The swaps terminate in January,
1999.

Interest rate swap contracts will result in gains and losses subsequent to
the date of the contract, due to interest rate movements. The Company amortizes
the gain or loss on terminated contracts over the original life of the hedge if
the hedged item remains outstanding. There were no unamortized gains or losses
at September 30, 1996 (unaudited) and December 31, 1995.

F-22
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12. COMMITMENTS, CONTINGENCIES, AND CREDIT RISK (CONTINUED)
LEASE COMMITMENTS:

At December 31, 1995, the Company was obligated under noncancelable leases
for office space, with terms including renewal options from three to five years.
The following is a schedule of future minimum rental payments under the
noncancelable operating leases:

<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
<S> <C>
1996............................................................ $ 239,161
1997............................................................ 206,129
1998............................................................ 207,565
1999............................................................ 167,527
2000............................................................ 85,000
---------
$ 905,382
---------
---------
</TABLE>

Total rent expense under these leases for the years ended December 31, 1995,
1994, and 1993, was $241,527, $184,384, and $59,424, respectively.

FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK:

The Banks originate loans to customers who are primarily located in the
Minneapolis-St. Paul seven-county metropolitan area and Goodhue County. Although
the Banks' loan portfolios are diversified, a substantial portion of their
borrowers' ability to repay their loans is dependent on the economic strength of
these areas.

NOTE 13. BENEFIT PLANS

EMPLOYEE STOCK OWNERSHIP PLAN:

Contributions to the plan were $309,362, $199,208, and $269,296 in 1995,
1994, and 1993, respectively.

401(K) PROFIT SHARING PLAN:

Contributions to the plan were $127,143, $311,726, and $-0- in 1995, 1994,
and 1993, respectively.

NOTE 14. STOCK OPTION PLAN
In April 1994, the Company's Board of Directors approved the 1994 Stock
Option Plan, which authorizes the issuance of up to 100,000 shares of the
Company's common stock to key employees and directors of the Company. The plan
extends through April 30, 2004. The plan provides for the granting of
nonqualified stock options and incentive stock options to purchase common stock
of the Company at 100 percent of the repurchase price on the dates of grant.

F-23
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 14. STOCK OPTION PLAN (CONTINUED)

Under the plan, options become exercisable over a five-year period beginning
one year after date of grant and expire ten years from date of grant. There are
no charges or credits to income in connection with the grant or exercise of
options. The number and exercise price of options under this plan were as
follows:

<TABLE>
<CAPTION>
OUTSTANDING EXERCISABLE EXERCISE PRICE
OPTIONS OPTIONS PER SHARE
----------- ----------- ----------------
<S> <C> <C> <C>
December 31, 1993................................. 0 0 $ 0
-----------
-----------
Options granted May 1, 1994..................... 27,500 73.46
----------- ----------------
December 31, 1994................................. 27,500 0 73.46
-----------
-----------
Options granted February 1, 1995................ 21,333 79.80
Options Canceled................................ (1,440) 73.46 - 79.80
----------- ----------------
December 31, 1995................................. 47,393 5,500 73.46 - 79.80
-----------
-----------
Options granted (unaudited)..................... 22,134 94.20
Options exercised (unaudited)................... (160) 73.46
----------- ----------------
September 30, 1996 (unaudited).................... 69,367 14,787 $ 73.46 - 94.20
----------- ----------- ----------------
----------- ----------- ----------------
</TABLE>

NOTE 15. COMMON STOCK REPURCHASE AGREEMENT
Article 7 of the Company's bylaws grants the Company the option to purchase
the shares of common stock held by a stockholder or his estate in the event of
the stockholder's death, insolvency, or desire to sell or transfer shares. If
the Company does not exercise its option to purchase the available shares within
60 days, the other stockholders may acquire the shares in proportion to their
ownership of the Company. The Company's Employee Stock Ownership Plan may
acquire all remaining shares of stock not purchased by other stockholders.

The repurchase price of common stock shall be equal to one hundred fifty
percent (150%) of the adjusted consolidated tangible book value of the Company.
This is defined to include all equity accounts of the Company but shall not
include any cumulative unrealized gain or loss on investment securities
available for sale, less the adjusted intangible assets recorded, divided by the
number of shares outstanding. The per share repurchase price as of September 30,
1996 and December 31, 1995, was $105.62 (unaudited) and $93.06, respectively.

NOTE 16. LOANS AND OTHER TRANSACTIONS WITH RELATED PARTIES
Stockholders of the Company, and officers and directors, including their
families and companies of which they are principal owners, are considered to be
related parties. These related parties were loan customers of, and had other
transactions with, the Company in the ordinary course of business. In
management's opinion, these loans and transactions were on the same terms as
those for comparable loans and transactions with nonrelated parties. Total loans
to related parties were approximately $11,902,788 and $9,693,885 at December 31,
1995 and 1994, respectively. Activity with respect to related-party loans was as
follows:

<TABLE>
<S> <C>
Balance, December 31, 1994.................................. $ 9,693,885
New loans advanced........................................ 4,757,846
Repayments................................................ (2,548,943)
--------------
Balance, December 31, 1995.................................. $ 11,902,788
--------------
--------------
</TABLE>

F-24
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTES 17. REGULATORY CAPITAL REQUIREMENTS
The Federal Reserve Board and other bank regulatory agencies have adopted
risk-based capital guidelines for banks and bank holding companies. The main
objectives of the risk-based capital framework are to provide a more consistent
system for comparing capital positions of banking organizations and to take into
account the different risks among banking organizations' assets and off-balance
sheet items. Bank regulatory agencies have supplemented the risk-based capital
standard with a leverage ratio for Tier 1 capital to total reported assets. The
minimum leverage ratio standard is 3 percent. Depending upon the judgment of the
various regulatory agencies, a greater leverage ratio may be required based upon
the relative risk of the organization.

Below is a comparison of the Company's 1995 actual with the minimum
requirements for well capitalized and adequately capitalized banks, as defined
by the federal regulatory agencies' Prompt Corrective Action Rules:

<TABLE>
<CAPTION>
MINIMUM REQUIREMENTS
------------------------------
1995 WELL ADEQUATELY
ACTUAL CAPITALIZED CAPITALIZED
----------- ------------- ---------------
<S> <C> <C> <C>
Tier 1 risk-based capital........................................... 12.63% 6.0% 4.0%
Total risk-based capital............................................ 13.75 10.0 8.0
Leverage ratio...................................................... 8.15 5.0 4.0
</TABLE>

Banking regulations restrict the amount of dividends that may be paid by the
Banks without prior approval of bank supervisory authorities.

NOTE 18. ADDITIONAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
YEAR ENDED DECEMBER 31
------------------------------ ----------------------------------------------
1996 1995 1995 1994 1993
-------------- -------------- -------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET CASH FLOWS USED FOR
INVESTMENT SECURITIES:
Available-for-sale securities:
Maturities.................. $ 27,070,132 $ 18,199,599 $ 47,854,796 $ 13,974,815 $ --
Sales....................... -- 7,666,148 7,666,148 7,985,749 --
Purchases................... (29,649,449) (39,494,763) (70,933,314) (24,072,986) --
Held-to-maturity securities:
Maturities.................. -- 1,232,302 1,232,302 3,484,667 --
Purchases................... -- (216,471) (216,471) (5,232,208) --
Investment securities:
Maturities.................. -- -- -- -- 24,501,156
Sales....................... -- -- -- -- 1,972,318
Purchases................... -- -- -- -- (25,158,167)
-------------- -------------- -------------- -------------- --------------
Net cash flows (used for) from
investment securities.......... $ (2,579,317) $ (12,613,185) $ (14,396,539) $ (3,859,963) $ 1,315,307
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>

F-25
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 18. ADDITIONAL CASH FLOW INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER
30 YEAR ENDED DECEMBER 31
--------------------------- --------------------------------------------
1996 1995 1995 1994 1993
------------- ------------ ------------- --------------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash payments for interest......... $ 10,461,677 $ 8,840,436 $ 12,260,709 $ 8,753,626 $ 3,765,777
Cash payments for income taxes..... 2,149,000 1,150,000 1,884,820 2,216,337 398,472
------------- ------------ ------------- --------------- ------------
------------- ------------ ------------- --------------- ------------
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Securities held for investment
reclassified to:
Held-to-maturity securities...... $ -- $ -- $ -- $ 11,447,407 $ --
Available-for-sale securities.... -- -- -- 71,162,630 --
Held-to-maturity securities
transferred to available-for-sale
(Note 5).......................... -- -- 11,972,456 -- --
Net change in unrealized gain
(loss) on securities available-
for-sale.......................... (671,943) 1,625,670 2,265,172 (1,652,626) --
Other real estate acquired in
settlement of loans............... -- -- -- 221,258 --
------------- ------------ ------------- --------------- ------------
------------- ------------ ------------- --------------- ------------
ACQUISITION OF SUBSIDIARIES:
Fair value of assets acquired,
principally customer loans,
investments, property and
equipment, and cost in excess of
net assets acquired, excluding net
cash acquired $ -- $ -- $ -- $ 166,762,616 $ --
Fair value of deposits and other
liabilities assumed............... -- -- -- (154,876,901) --
Common stock issued for acquisition
of GCFC........................... -- -- -- (8,852,856) --
------------- ------------ ------------- --------------- ------------
Net cash paid........................ -- -- -- 3,032,859 --
Cash acquired........................ -- -- -- 6,231,125 --
------------- ------------ ------------- --------------- ------------
Cash paid............................ $ -- $ -- $ -- $ 9,263,984 $ --
------------- ------------ ------------- --------------- ------------
------------- ------------ ------------- --------------- ------------
</TABLE>

F-26
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 19. FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments are as
follows:

<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------------------------------------
1995 1994
------------------------------ ------------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks...................... $ 20,513,154 $ 20,513,154 $ 19,351,643 $ 19,351,643
Federal funds sold........................... 8,725,000 8,725,000 7,975,000 7,975,000
Investment securities available for sale..... 101,836,962 101,836,962 70,278,070 70,278,070
Investment securities held to maturity....... -- -- 13,156,388 12,681,148
Loans and leases............................. 265,904,636 265,669,636 246,981,259 240,395,330
Less allowance for loan and lease losses..... (2,899,165) -- (2,856,288) --
Accrued interest receivable.................. 3,180,346 3,180,346 2,742,358 2,742,358
Cash surrender value of life insurance....... 9,116,888 9,116,888 8,485,485 8,485,485
Financial liabilities:
Deposits..................................... 340,723,249 341,692,249 312,946,989 312,523,082
Securities sold under repurchase
agreements.................................. 23,173,292 23,173,292 27,746,565 27,746,565
Accrued interest payable..................... 2,163,556 2,163,556 1,576,213 1,576,213
Notes payable and other borrowings........... 15,762,119 15,801,470 12,412,281 12,182,983
Off-balance sheet financial instruments:
Interest rate swaps in a net gain (loss)
position.................................... -- (30,172) -- 605,000
</TABLE>

F-27
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 20. PARENT COMPANY FINANCIAL INFORMATION
Condensed financial information for United Community Bancshares, Inc.
(parent company only) follows:

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
SEPTEMBER 30, -------------------------------
1996 1995 1994
-------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
Assets:
Cash and due from banks............................. $ 118,201 $ 112,503 $ 36,869
Advances to nonbank subsidiaries.................... 1,590,000 600,000 --
Property and equipment, net......................... 199,135 215,098 1,257,782
Accrued interest receivable......................... 9,510 3,548 --
Cash surrender value of life insurance.............. 720,886 696,709 1,433,883
Intangible assets, net.............................. 482,500 760,000 1,130,000
Other assets........................................ 605,541 231,521 1,141,876
Investment in bank subsidiaries..................... 38,047,910 35,672,594 30,696,843
Investment in nonbank subsidiaries.................. 2,932,700 2,723,190 1,531,224
-------------- -------------- --------------
Total assets.......................................... $ 44,706,383 $ 41,015,163 $ 37,228,477
-------------- -------------- --------------
-------------- -------------- --------------
Liabilities and stockholders' equity:
Accrued expenses and other liabilities.............. $ 676,753 $ 646,569 $ 653,526
Notes payable....................................... 4,150,000 3,400,000 9,050,000
-------------- -------------- --------------
Total liabilities..................................... 4,826,753 4,046,569 9,703,526
Stockholders' equity.................................. 39,879,630 36,968,594 27,524,951
-------------- -------------- --------------
Total liabilities and stockholders' equity............ $ 44,706,383 $ 41,015,163 $ 37,228,477
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

F-28
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 20. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

CONDENSED STATEMENTS OF INCOME

F-29
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 20. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)

CONDENSED STATEMENTS OF CASH FLOWS

Federal law prevents United from borrowing from its subsidiary banks unless
the loans are secured by specific assets. Such secured loans by any subsidiary
bank are generally limited to 10 percent of the subsidiary banks' capital and
surplus, and aggregate loans to United and its nonbank subsidiaries are limited
to 20 percent of the subsidiary banks' capital and surplus.

The payment of dividends to United by the subsidiary banks is subject to
various federal and state regulatory limitations. A national bank must obtain
the approval of the Comptroller of the Currency if the total of all dividends
declared in any calendar year exceeds that bank's net profits for that year
combined with its retained net profits for the preceding two calendar years. A
Minnesota state-chartered bank must obtain the approval of the Minnesota
Department of Commerce if the total of all dividends declared in any calendar
year exceeds 50 percent of the bank's net profits for the preceding year.

F-30
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 21. ACQUISITION (UNAUDITED)
On October 7, 1996, United entered into an agreement with Park Financial
Corporation (PFC), a bank holding company headquartered in St. Louis Park,
Minnesota, to merge PFC and PFC Acquisition Corp., a wholly-owned subsidiary of
United. The merger is subject to the receipt of regulatory approvals and the
absence of any material adverse change in the condition of PFC or Park National
Bank. United anticipates that the necessary regulatory approvals will be
received and the merger will occur in January 1997.

The aggregate estimated purchase price of $46 million will be obtained from
the net proceeds of an $11 million preferred stock offering, the proceeds of a
$5 million common stock offering, additional debt financing of $24 million, and
cash on hand of $7 million.

The merger will be accounted for under the purchase method of accounting
and, accordingly, the assets and liabilities of Park National Bank will be
recorded at their fair values, with any remaining purchase price being allocated
to goodwill.

The purchase price of PFC is the November 30, 1996, book value of PFC, plus
a premium, plus a fixed daily accrual representing earnings from November 30,
1996, through the closing date.

The following is an unaudited summary of PFC's balance sheet as of September
30, 1996 and December 31, 1995, and unaudited results of operations for the year
ended December 31, 1995:

CONDENSED BALANCE SHEET

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
-------------- --------------
<S> <C> <C>
(UNAUDITED) (UNAUDITED)
Assets:
Cash and due from banks........................................................ $ 14,028,271 $ 13,169,628
Interest-bearing deposits with banks........................................... 1,256,000 876,000
Federal funds sold............................................................. -- 4,900,000
Investment securities.......................................................... 71,779,691 63,764,635
Loans, net..................................................................... 116,569,192 113,498,772
Property and equipment, net.................................................... 2,062,337 2,130,254
Other assets................................................................... 2,831,685 2,230,636
-------------- --------------
Total assets..................................................................... $ 208,527,176 $ 200,569,925
-------------- --------------
-------------- --------------
Liabilities and stockholders' equity:
Deposits....................................................................... $ 164,965,563 $ 165,753,622
Securities sold under repurchase agreements.................................... 17,510,802 10,665,906
Accrued expenses and other liabilities......................................... 1,458,702 1,262,022
-------------- --------------
Total liabilities................................................................ 183,935,067 177,681,550
Stockholders' equity............................................................. 24,592,109 22,888,375
-------------- --------------
Total liabilities and stockholders' equity....................................... $ 208,527,176 $ 200,569,925
-------------- --------------
-------------- --------------
</TABLE>

F-31
<PAGE>
UNITED COMMUNITY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 21. ACQUISITION (UNAUDITED) (CONTINUED)
CONDENSED STATEMENT OF INCOME

<TABLE>
<CAPTION>
DECEMBER 31,
1995
-------------
<S> <C>
(UNAUDITED)
Interest income.................................................................................... $ 14,968,748
Interest expense................................................................................... 5,671,616
-------------
Net interest income................................................................................ 9,297,132
Provision for loan losses.......................................................................... 720,000
-------------
Net interest income after provision for loan losses................................................ 8,577,132
Noninterest income................................................................................. 1,658,712
Noninterest expense................................................................................ 6,337,773
-------------
Income before income taxes......................................................................... 3,898,071
Income tax expense................................................................................. 1,497,263
-------------
Net income......................................................................................... $ 2,400,808
-------------
-------------
</TABLE>

F-32
<PAGE>
INDEPENDENT AUDITOR'S REPORT

Board of Directors
Park Financial Corporation and Subsidiary
Minneapolis, Minnesota

We have audited the accompanying consolidated balance sheets of Park
Financial Corporation (a Minnesota corporation) and Subsidiary at December 31,
1995 and 1994, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Park
Financial Corporation and Subsidiary at December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.

As described in Note 1 to the consolidated financial statements and as
required by generally accepted accounting principles, the Company changed its
method of accounting for investments in debt securities in 1994 and income taxes
in 1993.

LARSON, ALLEN, WEISHAIR, & CO., LLP
Minneapolis, Minnesota
January 31, 1996

F-33
<PAGE>
PARK FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, -------------------------------
1996 1995 1994
-------------- -------------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and Due from Banks............................ $ 14,028,271 $ 13,169,628 $ 10,383,932
Interest Bearing Deposits with Banks............... 1,256,000 876,000 --
Federal Funds Sold................................. -- 4,900,000 7,600,000
Commercial Paper................................... 3,511,281 1,570,357 2,281,129
Securities:
Available-for-Sale............................... 68,268,410 61,044,394 52,837,500
Held-to-Maturity................................. -- 1,149,884 513,559
Loans (Less Allowance for Loan Losses of $2,174,975
in 1996, $2,481,705 in 1995 and $2,019,723 in
1994)............................................. 116,569,192 113,498,772 102,882,230
Land, Buildings, Leasehold Improvements and
Equipment (Less Accumulated Depreciation and
Amortization)..................................... 2,062,337 2,130,254 2,225,913
Other Assets....................................... 2,831,685 2,230,636 2,780,933
-------------- -------------- --------------
Total Assets................................. $ 208,527,176 $ 200,569,925 $ 181,505,196
-------------- -------------- --------------
-------------- -------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
Demand........................................... $ 45,038,960 $ 46,810,324 $ 46,295,507
Money Market Demand and NOW Accounts............. 14,591,118 15,456,490 14,991,459
Regular Savings.................................. 12,675,617 10,197,306 12,695,656
Money Market Savings............................. 40,693,028 38,356,160 32,696,892
Savings Certificates and Other Time.............. 51,966,840 54,933,342 50,024,887
-------------- -------------- --------------
$ 164,965,563 $ 165,753,622 $ 156,704,401
Securities Sold Under Repurchase Agreements........ 17,510,802 10,665,906 4,354,251
Accrued Interest Payable and Other Liabilities..... 1,458,702 1,262,022 1,209,228
-------------- -------------- --------------
Total Liabilities............................ $ 183,935,067 $ 177,681,550 $ 162,267,880
-------------- -------------- --------------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common Stock, Par Value $1 Per Share; 5,000,000
Shares Authorized; 472,710 Shares Issued and
Outstanding in 1996 and 650,000 Shares Issued in
1995 and 1994................................... $ 472,710 $ 650,000 $ 650,000
Additional Contributed Capital................... -- 1,198,497 1,198,497
Retained Earnings................................ 24,152,130 22,033,841 19,633,033
Net Unrealized Gain (Loss) on Available-for-Sale
Securities...................................... (32,731) 502,191 (702,815)
-------------- -------------- --------------
Total........................................ $ 24,592,109 $ 24,384,529 $ 20,778,715
Less: Common Stock in Treasury (at Cost); 177,290
Shares in 1995 and 178,490 Shares in 1994....... -- 1,496,154 1,541,399
-------------- -------------- --------------
Total Stockholders' Equity................... $ 24,592,109 $ 22,888,375 $ 19,237,316
-------------- -------------- --------------
Total Liabilities and Stockholders' Equity... $ 208,527,176 $ 200,569,925 $ 181,505,196
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-34
<PAGE>
PARK FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------- ------------------------------------
1996 1995 1995 1994 1993
----------- ----------- ----------- ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans................. $8,382,177 $8,320,374 $11,268,722 $ 8,833,418 $7,110,961
Interest on Investment Securities:
U.S. Treasury Securities................. 1,042,121 1,000,296 1,273,402 1,153,539 456,010
Obligations of Other U.S. Government
Agencies and Corporations............... 963,115 660,341 918,354 574,718 1,061,439
Obligations of States and Political
Subdivisions............................ 517,369 208,625 313,653 379,287 641,937
Other Securities......................... 777,898 586,589 831,094 449,920 320,451
Interest on Federal Funds Sold and Interest
Bearing Deposits.......................... 174,252 234,470 363,523 272,043 153,652
----------- ----------- ----------- ----------- ----------
Total Interest Income.................. 11,856,932 11,010,695 14,968,748 11,662,925 9,744,450
----------- ----------- ----------- ----------- ----------
INTEREST EXPENSE
Interest on Deposits....................... 4,007,924 3,798,083 5,171,989 3,361,568 2,820,531
Interest on Federal Funds Purchased and
Securities Sold Under Repurchase
Agreements................................ 511,106 327,618 499,627 176,035 106,727
----------- ----------- ----------- ----------- ----------
Total Interest Expense................. 4,519,030 4,125,701 5,671,616 3,537,603 2,927,258
----------- ----------- ----------- ----------- ----------
NET INTEREST INCOME.......................... 7,337,902 6,884,994 9,297,132 8,125,322 6,817,192
PROVISION FOR LOAN LOSSES.................... 329,274 540,000 720,000 740,227 552,000
----------- ----------- ----------- ----------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES...................................... 7,008,628 6,344,994 8,577,132 7,385,095 6,265,192
----------- ----------- ----------- ----------- ----------
OTHER INCOME
Service Fees............................... 1,179,247 1,150,735 1,529,870 1,404,965 1,358,658
Investment Securities Gains................ 1,000 39,125 39,125 68,902 430,726
Other...................................... 58,076 70,116 89,717 81,965 312,407
----------- ----------- ----------- ----------- ----------
Total Other Income..................... 1,238,323 1,259,976 1,658,712 1,555,832 2,101,791
----------- ----------- ----------- ----------- ----------
OTHER EXPENSE
Salaries................................... 1,984,767 2,116,241 3,174,566 3,015,073 2,829,026
Profit Sharing and Other Employee
Benefits.................................. 453,302 227,207 315,196 297,794 252,311
Net Occupancy Expenses..................... 460,763 443,950 595,766 596,926 689,163
Equipment Expenses......................... 444,948 387,744 522,021 491,051 526,182
Other Operating Expenses................... 1,262,452 1,547,561 1,730,224 1,674,680 1,937,104
----------- ----------- ----------- ----------- ----------
Total Other Expense.................... 4,606,232 4,722,703 6,337,773 6,075,524 6,233,786
----------- ----------- ----------- ----------- ----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE
EFFECT OF CHANGES IN ACCOUNTING PRINCIPLE... 3,640,719 2,882,267 3,898,071 2,865,403 2,133,197
PROVISION FOR INCOME TAX EXPENSE............. 1,402,063 1,096,242 1,497,263 1,030,415 659,104
----------- ----------- ----------- ----------- ----------
INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE......................... 2,238,656 1,786,025 2,400,808 1,834,988 1,474,093
Cumulative Effect of Change in Accounting
Principle................................... -- -- -- -- 850,221
----------- ----------- ----------- ----------- ----------
NET INCOME................................... $2,238,656 $1,786,025 $ 2,400,808 $ 1,834,988 $2,324,314
----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------
PER SHARE OF COMMON STOCK
Income Before Cumulative Effect of Change
in Accounting Principle................... $ 4.74 $ 3.78 $ 5.09 $ 3.89 $ 3.15
Cumulative Effect of Change in Accounting
Principle................................. -- -- -- -- 1.81
----------- ----------- ----------- ----------- ----------
$ 4.74 $ 3.78 $ 5.09 $ 3.89 $ 4.96
----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-35
<PAGE>
PARK FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN (LOSS) ON
ADDITIONAL AVAILABLE-
COMMON CONTRIBUTED RETAINED FOR-SALE TREASURY
STOCK CAPITAL EARNINGS SECURITIES STOCK TOTAL
---------- ------------ ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992................ $ 650,000 $ 1,198,497 $ 15,473,731 $ -- $ (1,682,298) $ 15,639,930
2,600 Shares of Common Stock Purchased
for Treasury........................... -- -- -- -- (86,870) (86,870)
8,225 Shares of Common Stock Sold from
Treasury............................... -- -- -- -- 274,962 274,962
Net Income for the Year................. -- -- 2,324,314 -- -- 2,324,314
---------- ------------ ------------- -------------- ------------- -------------
BALANCE, DECEMBER 31, 1993................ 650,000 1,198,497 17,798,045 -- (1,494,206) 18,152,336
5,000 Shares of Common Stock Purchased
for Treasury........................... -- -- -- -- (196,890) (196,890)
3,900 Shares of Common Stock Sold from
Treasury............................... -- -- -- -- 149,697 149,697
Net Change in Unrealized Gain (Loss) on
Securities Available-for-Sale, Net of
Taxes.................................. -- -- -- (702,815) -- (702,815)
Net Income for the Year................. -- -- 1,834,988 -- -- 1,834,988
---------- ------------ ------------- -------------- ------------- -------------
BALANCE, DECEMBER 31, 1994................ 650,000 1,198,497 19,633,033 (702,815) (1,541,399) 19,237,316
1,200 Shares of Common Stock Sold from
Treasury............................... -- -- -- -- 45,245 45,245
Net Change in Unrealized Gain (Loss) on
Securities Available-for-Sale, Net of
Taxes.................................. -- -- -- 1,205,006 -- 1,205,006
Net Income for the Year................. -- -- 2,400,808 -- -- 2,400,808
---------- ------------ ------------- -------------- ------------- -------------
BALANCE, DECEMBER 31, 1995 (UNAUDITED).... 650,000 1,198,497 22,033,841 502,191 (1,496,154) 22,888,375
Net Change in Unrealized Gain (Loss) on
Securities Available-for-Sale, Net of
Taxes.................................. -- -- -- (534,922) -- (534,922)
Retirement of Treasury Stock............ (177,290) (1,198,497) (120,367) -- 1,496,154 --
Net Income for the Nine Months.......... -- -- 2,238,656 -- -- 2,238,656
---------- ------------ ------------- -------------- ------------- -------------
BALANCE, SEPTEMBER 30, 1996............... $ 472,710 $ -- $ 24,152,130 $ (32,731) $ -- $ 24,592,109
---------- ------------ ------------- -------------- ------------- -------------
---------- ------------ ------------- -------------- ------------- -------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-36
<PAGE>
PARK FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEARS ENDED
SEPTEMBER 30, DECEMBER 31,
------------------------------- ------------------------------------------------
1996 1995 1995 1994 1993
-------------- -------------- -------------- -------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net Income................................. $ 2,238,656 $ 1,786,025 $ 2,400,808 $ 1,834,988 $ 2,324,314
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Cumulative Effect of Accounting Change... -- -- -- -- (850,221)
Depreciation and Amortization............ 314,854 237,318 318,006 323,460 362,047
Deferred Income Taxes.................... 69,188 (121,025) 48,642 72,309 108,217
Investment Premium Amortization (Net).... 99,723 163,715 210,731 201,264 412,489
Provision for Loan Losses................ 329,274 540,000 720,000 740,227 552,000
(Gain) Loss on Sale of Other Real Estate
and Equipment, Net...................... -- -- -- -- 42,431
Securities Gains......................... (1,000) (39,125) (39,125) (68,902) (430,726)
(Increase) Decrease in Interest and Fees
Receivable.............................. (257,458) (444,112) (317,378) (438,304) 93,829
(Increase) Decrease in Prepaid Expenses
and Other Assets........................ (56,166) (28,488) 47,074 (66,338) 55,693
Increase (Decrease) in Interest
Payable................................. (101,783) (105,675) (53,511) 127,225 (73,727)
Increase (Decrease) in Other
Liabilities............................. 298,463 269,953 74,924 229,179 (186,022)
-------------- -------------- -------------- -------------- --------------
Net Cash Provided by Operating
Activities............................ 2,933,751 2,258,586 3,410,171 2,955,108 2,410,324
-------------- -------------- -------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Available-for-Sale
Securities................................ (26,923,773) (15,001,702) (22,110,843) (34,334,524) (23,866,396)
Proceeds from Sales, Maturities or Called
Available-for-Sale Securities............. 19,859,382 10,789,250 16,254,248 22,866,982 25,356,770
Purchase of Held-to-Maturity Securities.... -- -- (1,149,884) -- --
Net Increase in Interest Bearing Deposits
with Banks................................ (380,000) (689,000) (876,000) -- --
Net Increase in Loans...................... (3,399,694) (12,131,531) (11,336,542) (6,973,296) (11,297,959)
Proceeds from the Sale of Other Real
Estate.................................... -- -- -- -- 192,190
Net (Increase) Decrease in Commercial
Paper..................................... (1,940,924) (403,646) 710,772 (2,281,129) --
Purchase of Properties and Equipment....... (246,936) (198,351) (222,347) (287,310) (154,825)
-------------- -------------- -------------- -------------- --------------
Net Cash Used by Investing
Activities............................ (13,031,945) (17,634,980) (18,730,596) (21,009,277) (9,770,220)
-------------- -------------- -------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Demand Deposits, NOW
Accounts, Savings Accounts, and
Certificates of Deposits.................. (788,059) (370,817) 9,049,221 21,341,090 3,326,146
Net Increase (Decrease) in Short-Term
Borrowings................................ 6,844,896 9,304,619 6,311,655 1,072,953 (1,433,819)
Sales of Treasury Stock.................... -- -- 45,245 149,697 274,962
Purchase of Treasury Stock................. -- -- -- (196,890) (86,870)
-------------- -------------- -------------- -------------- --------------
Net Cash Provided by Financing
Activities............................ 6,056,837 8,933,802 15,406,121 22,366,850 2,080,419
-------------- -------------- -------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................. (4,041,357) (6,442,592) 85,696 4,312,681 (5,279,477)
Cash and Cash Equivalents -- Beginning of
Period...................................... 18,069,628 17,983,932 17,983,932 13,671,251 18,950,728
-------------- -------------- -------------- -------------- --------------
CASH AND CASH EQUIVALENTS -- END OF PERIOD... $ 14,028,271 $ 11,541,340 $ 18,069,628 $ 17,983,932 $ 13,671,251
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash Paid During the Period for:
Interest................................... $ 4,620,813 $ 4,227,376 $ 5,725,127 $ 3,410,378 $ 3,000,985
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Income Taxes............................... $ 1,066,316 $ 953,425 $ 1,422,747 $ 917,608 $ 750,949
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

F-37
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF ACTIVITIES

Park Financial Corporation is a one-bank holding company providing bank and
bank-related services through its subsidiary, Park National Bank. The majority
of the subsidiary bank's business activity is with customers located within the
immediate area of the subsidiary bank.

A summary of the Company's significant accounting and reporting policies
consistently applied in the preparation of the accompanying consolidated
financial statements follows:

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Park National Bank. All significant
intercompany accounts and transactions have been eliminated in preparing the
consolidated financial statements.

STATEMENTS OF CASH FLOWS

For purposes of reporting cash flows, cash and cash equivalents include cash
on hand, amounts due from banks and federal funds sold. Generally, federal funds
are sold and purchased for one day periods. Cash flows for loans originated by
the Company, deposits and securities sold under agreement to repurchase are
reported net. In 1993, other real estate of $1,586,378 was transferred to loans.

CONCENTRATION OF CREDIT RISK

Substantially all of the Company's loans, commitments to extend credit and
standby letters of credit have been granted to customers in the Bank's market
area. Investments in securities issued by State and political subdivisions (see
Note 2) involve diverse governmental entities. The concentration of credit by
type of loan is set forth in Note 3. Standby letters of credit were granted
primarily to commercial customers.

INVESTMENT SECURITIES

Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT
AND EQUITY SECURITIES. This statement requires that management determine the
appropriate classification of securities at the date of adoption and thereafter
as each individual security is acquired. In addition, the appropriateness of
such classification is reassessed at each balance sheet date. The
classifications and related accounting policies under SFAS No. 115 are as
follows:

HELD-TO-MATURITY SECURITIES

Held to maturity securities consist of bonds, notes and debentures for
which the Company has the positive intent and ability to hold to maturity.
Held-to-maturity securities are reported at cost, adjusted for premiums and
discounts that are recognized in interest income using the interest method
over the period to maturity.

AVAILABLE-FOR-SALE SECURITIES

Available-for-sale Securities consist of bonds, notes, and debentures
not classified as held-to-maturity securities. Unrealized holding gains and
losses, net of tax, on available-for-sale securities are reported as a net
amount in a separate component of stockholders' equity until realized. Gains
and losses on the sale of available-for-sale securities are determined using
the specific-identification method.

F-38
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
TRADING ACCOUNT SECURITIES

Debt and equity securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading account
securities and are reported at fair value. Gains or losses on sales of
trading account securities, adjustments to fair values, and other
noninterest income are included in trading account profits and commissions.
The Company had no investments it classified as trading at December 31, 1995
and 1994.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company and its bank subsidiary have not invested in instruments which
are typically described as derivative financial instruments, and have no current
plans to do so, for trading, investing, hedging or other purposes.

LOANS AND ALLOWANCES FOR LOSSES

Loans are stated at the amount of unpaid principal. Interest on loans is
calculated by using the simple interest method on daily balances of the
principal amount outstanding.

Loans are reduced by an allowance for losses, which is established through
provisions for loan losses charged to expense. Loans are charged against the
allowance for losses when management believes that the collectibility of the
principal is unlikely. The allowance is an amount that management believes will
be adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of collectibility and prior loss experience.
The evaluations take into consideration such factors as changes in the nature
and volume of the loan portfolio, overall quality, review of specific problem
loans and current economic conditions that may affect the borrowers' ability to
pay. Accrual of interest is discontinued when management believes, after
consideration of economic and business conditions and collection efforts, that
the borrowers' financial condition is such that collection of interest is
doubtful. Interest on these loans is recognized only when actually paid by the
borrower if collection of the principal is likely to occur.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates may 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 vary from the estimates that
were used.

BUILDINGS, LEASEHOLD IMPROVEMENTS AND EQUIPMENT

Buildings and equipment are stated at cost, less accumulated depreciation.
Depreciation is provided on the straight-line method for financial reporting
purposes at rates sufficient to absorb the cost over the estimated useful life
of each asset which range from 3 to 32 years. For income tax reporting purposes,
depreciation is provided using accelerated methods. Leasehold improvements are
amortized over the term of the lease or the estimated useful lives of the
improvements, whichever is shorter.

INCOME TAXES

In 1993, the Company began providing for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109 (SFAS 109). In
accordance with SFAS 109, the asset and liability approach is used to determine
deferred income taxes. The asset and liability approach requires recognition of
deferred tax liabilities and assets for the expected future consequences of
temporary differences between the financial reporting basis and tax basis of
assets and liabilities. A valuation allowance is provided when it is

F-39
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

1 NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
more likely than not that a deferred tax asset will not be realized. The effect
of the adjustment as of January 1, 1993 to adopt SFAS 109 has been reflected in
the income statement as a cumulative effect of an accounting change and
increased 1993 net earnings by $850,221.

The Company and its subsidiary bank file consolidated federal and unitary
state income tax returns.

EMPLOYEE BENEFIT PLAN

The Company has established a 401(k) defined contribution profit sharing
plan covering substantially all officers and employees. The Company matches
employee contributions in accordance with the plan agreement. Additional annual
contributions by the Company are voluntary and made at the discretion of the
Board of Directors. Contributions of $64,275, $69,931 and $65,481 were made to
the plan at December 31, 1995, 1994 and 1993, respectively.

TREASURY STOCK

The Company records the purchase of its common stock at cost. Gains or
losses on the sale of treasury stock are based on the net proceeds and the cost
basis of the common stock using the last-in, first-out method. As of September
30, 1996, the Company retired all of its outstanding treasury stock.

NET INCOME PER SHARE OF COMMON STOCK

Net income per share of common stock is calculated on the basis of the
weighted average number of shares outstanding during the year which totaled
471,540, 471,931 and 468,692 shares in 1995, 1994 and 1993, respectively.

RECLASSIFICATIONS

Certain reclassifications have been made to the 1994 and 1993 financial
statements in order to conform to the 1995 presentation. These reclassifications
had no effect on net income or stockholders' equity as originally presented.

INTERIM FINANCIAL DATA

The interim financial statements are unaudited; however, in management's
opinion, the interim financial statements include all adjustments necessary for
a fair presentation of the financial results for the interim periods.

F-40
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

2 SECURITIES
The amortized cost and estimated market values of investments in debt and
equity securities at December 31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
1995
------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Available-For-Sale:
U.S. Government Obligations.................... $ 18,045,014 $ 104,094 $ (14,323) $ 18,134,785
Obligations of Federal Agencies................ 16,928,813 284,297 (39,150) 17,173,960
Obligations of States and Political
Subdivisions.................................. 10,267,585 155,872 (19,516) 10,403,941
Corporate Securities........................... 12,914,844 376,325 (9,974) 13,281,195
Mortgage-Backed Securities..................... 2,001,654 0 (641) 2,001,013
Other Securities............................... 49,500 0 0 49,500
------------- ----------- ----------- -------------
$ 60,207,410 $ 920,588 $ (83,604) $ 61,044,394
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
Held-to-Maturity:
Obligations of Federal Agencies................ $ 1,149,884 $ 0 $ 0 $ 1,149,884
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

<TABLE>
<CAPTION>
1994
--------------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Available-For-Sale:
U.S. Government Obligations................. $ 29,195,538 $ 0 $ (653,597) $ 28,541,941
Obligations of Federal Agencies............. 12,970,556 0 (289,994) 12,680,562
Obligations of States and Political
Subdivisions............................... 6,033,104 55,289 (111,134) 5,977,259
Corporate Securities........................ 3,750,581 0 (116,974) 3,633,607
Mortgage-Backed Securities.................. 2,009,581 0 (54,950) 1,954,631
Other Securities............................ 49,500 0 0 49,500
------------- ----------- ------------- -------------
$ 54,008,860 $ 55,289 $ (1,226,649) $ 52,837,500
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
Held-to-Maturity:
Obligations of States and Political
Subdivisions............................... $ 513,559 $ 0 $ (48,872) $ 464,687
------------- ----------- ------------- -------------
------------- ----------- ------------- -------------
</TABLE>

During 1995, the Bank transferred a held-to-maturity security of $512,307 to
available-for-sale.

F-41
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

2 SECURITIES (CONTINUED)
The amortized cost and estimated market value of securities at December 31,
1995, by contractual maturity, are shown below. Expected maturities will differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties. Mortgage-backed
securities are included below at their stated maturity date.

<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
---------------------------- --------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Due in One Year or Less................................ $ 20,105,750 $ 20,108,571 $ 1,149,884 $ 1,149,884
Due after One Year through Five Years.................. 30,374,477 31,097,515 0 0
Due after Five Years through Ten Years................. 5,515,537 5,617,695 0 0
Due After Ten Years.................................... 4,211,646 4,220,613 0 0
------------- ------------- ------------ ------------
Total.............................................. $ 60,207,410 $ 61,044,394 $ 1,149,884 $ 1,149,884
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
</TABLE>

Gross gains from sales of securities available-for-sale were $39,125,
$68,902 and $430,726 for 1995, 1994 and 1993, respectively.

Investment securities with a carrying amount of $32,595,000 and $31,864,222
at December 31, 1995 and 1994, respectively, were pledged to secure public
deposits and securities sold under repurchase agreements and for other purposes
required or permitted by law.

3 LOANS
Major classifications of loans at December 31, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Commercial............................................................. $ 70,905,502 $ 61,320,880
Consumer............................................................... 11,113,783 13,107,442
Real Estate............................................................ 33,151,994 29,580,177
Ready Reserve.......................................................... 549,627 568,641
Other.................................................................. 259,571 324,813
-------------- --------------
Total.............................................................. $ 115,980,477 $ 104,901,953
Less: Allowance for Loan Losses........................................ 2,481,705 2,019,723
-------------- --------------
Loans (Net)........................................................ $ 113,498,772 $ 102,882,230
-------------- --------------
-------------- --------------
</TABLE>

The impairment of loans having carrying values of $1,889,581 in 1995 have
been recognized in conformity with FASB Statement No. 114, ACCOUNTING BY
CREDITORS FOR IMPAIRMENT OF A LOAN. The total allowance for credit losses
related to these loans was $849,341 in 1995. For impairment recognized in
conformity with FASB Statement No. 114, the entire change in present value of
expected cash flows is reported as bad debt expense in the same manner which
impairment initially was recognized or as a reduction in the amount of bad debt
expense that otherwise would be reported.

F-42
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

3 LOANS (CONTINUED)
Changes in the allowance for loan losses as of December 31, 1995, 1994 and
1993 were as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Balance, Beginning of Year.................................... $ 2,019,723 $ 1,545,320 $ 1,455,760
Provision Charged to Operations............................. 720,000 740,227 552,000
Loans Charged Off........................................... (380,882) (429,094) (632,066)
Recoveries.................................................. 122,864 163,270 169,626
------------ ------------ ------------
Balance, End of Year.......................................... $ 2,481,705 $ 2,019,723 $ 1,545,320
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

In the ordinary course of business, the Company and its subsidiary bank have
granted loans to certain directors, officers, employees and stockholders and the
companies with which they are associated. The approximate aggregate amount of
all such loans at December 31, 1995 and 1994 was $1,805,534 and $2,078,120,
respectively.

4 LAND, BUILDINGS, LEASEHOLD IMPROVEMENTS AND EQUIPMENT
Major classifications of these assets at December 31, 1995 and 1994 are
summarized as follows:

<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Buildings and Improvements........................................ $ 981,364 $ 981,364
Leasehold Improvements............................................ 733,251 733,251
Equipment......................................................... 2,717,230 2,556,028
Other............................................................. 21,111 21,111
------------ ------------
$ 4,452,956 $ 4,291,754
Less: Accumulated Depreciation and Amortization................... 2,808,792 2,551,931
------------ ------------
$ 1,644,164 $ 1,739,823
Land.............................................................. 486,090 486,090
------------ ------------
Total......................................................... $ 2,130,254 $ 2,225,913
------------ ------------
------------ ------------
</TABLE>

5 OTHER ASSETS
Other assets consist of the following at December 31, 1995 and 1994:

<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Accrued Interest and Fees Receivable.............................. $ 1,785,362 $ 1,467,984
Deferred Taxes.................................................... 297,943 1,118,544
Prepaid Expenses and Other........................................ 147,331 194,405
------------ ------------
Total......................................................... $ 2,230,636 $ 2,780,933
------------ ------------
------------ ------------
</TABLE>

6 NOTE PAYABLE
At December 31, 1995 and 1994, the Company had $3,000,000 and $6,000,000,
respectively, available for use under a one year revolving promissory note with
an unrelated bank. Interest which is payable monthly was at the federal funds
rate plus 2.25% in 1995 and at the lenders prime rate in 1994 (effective rate of
7.63% on December 31, 1995 and 8.5% on December 31, 1994). The promissory notes
are collateralized by all of the outstanding shares of common stock of Park
National Bank. No borrowings were outstanding under the line at December 31,
1995 and 1994.

F-43
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

7 INCOME TAXES
The provision for income tax expense in the statements of income for the
years ended December 31, 1995, 1994 and 1993 is as follows:

<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ----------
<S> <C> <C> <C>
Current......................................................... $ 1,448,621 $ 958,106 $ 550,887
Deferred........................................................ 48,642 72,309 108,217
------------ ------------ ----------
Total....................................................... $ 1,497,263 $ 1,030,415 $ 659,104
------------ ------------ ----------
------------ ------------ ----------
</TABLE>

Deferred tax expense results from temporary differences in the recognition
of revenue and expense for financial reporting and income tax purposes. The
principal sources of these differences are the provision for loan losses for tax
purposes which differs from the provision for financial reporting purposes, from
using accelerated methods of depreciation for tax purposes only, and the
benefits of alternative minimum tax credit carryforwards.

The Company has alternative minimum tax credit carryforwards of $-0- and
$352,014 at December 31, 1995 and 1994, respectively.

Income tax expense differs from income tax expense computed by applying the
statutory federal income tax rate. The reasons for these differences are as
follows:

<TABLE>
<CAPTION>
1995 1994 1993
-------------------------- -------------------------- -------------------------
PERCENT PERCENT PERCENT
OF PRETAX OF PRETAX OF PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
----------- ------------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Income Tax Expense at Statutory
Rate........................... $ 1,325,344 34.0% $ 974,237 34.0% $ 725,287 34.0%
State Taxes, Net of Federal Tax
Benefit........................ 253,107 6.5 186,089 6.5 135,615 6.4
Exempt Interest from Investments
and Loans...................... (105,080) (2.7) (123,355) (4.3) (209,000) (9.8)
Other........................... 23,892 0.6 (6,556) (0.2) 7,202 0.3
----------- --- ----------- --- ---------- ---
Income Tax Expense............ $ 1,497,263 38.4% $ 1,030,415 36.0% $ 659,104 30.9%
----------- --- ----------- --- ---------- ---
----------- --- ----------- --- ---------- ---
</TABLE>

8 COMMITMENTS AND CONTINGENT LIABILITIES
The Company conducts the majority of its operations in leased facilities. In
addition to basic rent, the Company is obligated to pay a percentage of
insurance, real estate taxes, and other building operating and maintenance
costs. The lease, which expires on October 31, 2004 includes a mark to market
clause which allows the landlord to adjust the rent to market once during the
period beginning on November 1, 1999 until the end of the lease. The lease
includes options to renew for three additional successive ten year periods under
similar terms. The Bank has also entered into sublease agreements with various
tenants. These subleases call for base rental payments and operating expenses
payable to Park National Bank and expire in 1998.

F-44
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

8 COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
The approximate minimum annual rental commitments as of December 31, 1995
are as follows:

<TABLE>
<CAPTION>
GROSS SUBLEASE NET
YEAR ENDING DECEMBER 31, AMOUNT AMOUNT AMOUNT
- ---------------------------------------------------------------- ------------ ---------- ------------
<S> <C> <C> <C>
1996............................................................ $ 307,000 $ (44,000) $ 263,000
1997............................................................ 312,000 (44,000) 268,000
1998............................................................ 315,000 (11,000) 304,000
1999............................................................ 263,000 0 263,000
------------ ---------- ------------
Total....................................................... $ 1,197,000 $ (99,000) $ 1,098,000
------------ ---------- ------------
------------ ---------- ------------
</TABLE>

The total rental expense under all lease agreements was $570,568, $578,057
and $652,839 in 1995, 1994 and 1993, respectively.

In the normal course of business there are outstanding various commitments
and contingent liabilities, such as commitments to extend credit, items held for
collections, and unsold travelers checks, which are not reflected in the
accompanying financial statements. The subsidiary bank does not anticipate
losses as a result of these transactions.

9 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company's subsidiary bank is a party to financial instruments with
off-balance sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments include commitments to
extend credit and standby letters of credit. The instruments involve, to varying
degrees, elements of credit and interest rate risk in excess of the amounts
recognized in the balance sheets. The contract or notional amounts of these
instruments reflect the extent of involvement the subsidiary bank has in
particular classes of financial instruments.

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

The contract or notional amount of financial instruments whose contract
amounts represent credit risk were approximately $32,434,688 and $25,513,751 for
commitments to extend credit and $1,211,354 and $3,321,931 for standby letters
of credit at December 31, 1995 and 1994, respectively.

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The subsidiary bank evaluates each
customer's credit worthiness on a case-by-case basis. The amount of collateral
obtained if deemed necessary by the subsidiary bank upon extension of credit is
based on management's credit evaluation. Collateral held varies but may include
accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties.

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

F-45
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

10 JUMBO CERTIFICATES OF DEPOSIT
Certificate of deposits equal to or in excess of $100,000 totaled
approximately $14,560,270 and $17,633,692 at December 31, 1995 and 1994,
respectively. Interest expense related to these deposits totaled approximately
$317,000 and $762,000 at December 31, 1995 and 1994, respectively.

11 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value:

CASH AND DUE FROM BANKS, INTEREST-BEARING DEPOSITS IN BANKS,
FEDERAL FUNDS SOLD, AND COMMERCIAL PAPER

For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.

ACCRUED INTEREST RECEIVABLE AND ACCRUED INTEREST PAYABLE

For these short-term receivables and payables, the carrying value is a
reasonable estimate of fair value.

INVESTMENT SECURITIES

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

LOANS

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

DEPOSIT LIABILITIES

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

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.

OTHER BORROWINGS

Rates currently available to the Company for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt.

F-46
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

11 DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
COMMITMENTS TO EXTEND CREDIT, LINE-OF-CREDIT ARRANGEMENTS,
CREDIT CARD ARRANGEMENTS, AND LETTERS OF CREDIT

For these commitments, the carrying amount is a reasonable estimate of fair
value, since the stated fees and interest rates charged on these arrangements
does not significantly vary from the terms currently being offered.

<TABLE>
<CAPTION>
1995 1994
------------------------------ ------------------------------
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Financial Assets:
Investment Securities........................ $ 62,194,278 $ 62,194,278 $ 53,351,059 $ 53,302,187
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Loans........................................ $ 115,980,477 $ 104,901,953
Less: Allowance for Loan Losses.............. 2,481,705 2,019,723
-------------- --------------
Net Loans.................................. $ 113,498,772 $ 115,485,449 $ 102,882,230 $ 104,084,659
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
Financial Liabilities:
Deposits..................................... $ 165,753,622 $ 165,915,248 $ 156,704,401 $ 157,155,168
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>

12 REGULATORY CAPITAL REQUIREMENTS
Federal regulatory agencies have adopted various capital standards for
financial institutions, including risk-based capital standards. The primary
objectives of the risk-based capital framework are to provide a more consistent
system for comparing capital positions of financial institutions' assets and
off-balance-sheet items.

Risk-based capital standards have been supplemented with requirements for a
minimum Tier 1 capital to asset ratio (leverage ratio). In addition, regulatory
agencies consider the published capital levels as minimum levels and may require
a financial institution to maintain capital at higher levels.

A comparison of the capital of the Company's bank subsidiary as of December
31, 1995, with the minimum requirements is presented below:

<TABLE>
<CAPTION>
WELL ADEQUATELY
ACTUAL CAPITALIZED CAPITALIZED
----------- ------------- ---------------
<S> <C> <C> <C>
Total Risk-Based Capital................................... 12.2% 10% 8%
Tier 1 Risk-Based Capital.................................. 10.6% 6% 4%
Leverage Ratio............................................. 8.1% 5% 4%
</TABLE>

Banking regulations restrict the amount of dividends that may be paid
without prior approval of Bank supervisory authorities.

F-47
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

13 PARENT COMPANY FINANCIAL INFORMATION

Condensed financial information for Park Financial Corporation (parent
Company only) follows:

BALANCE SHEETS (in 000's)

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Interest-Bearing Deposits with Subsidiary Bank.............................................. $ 15 $ 1,642
Investments Held to Maturity................................................................ 1,150 0
Commercial Paper............................................................................ 1,570 2,281
Loans (Less Allowance for Loan Losses $101 in 1995 and 1994)................................ 3,501 1,086
Investment in Bank Subsidiary............................................................... 16,553 14,237
Other Assets................................................................................ 137 56
--------- ---------
Total Assets............................................................................ $ 22,926 $ 19,302
--------- ---------
--------- ---------

LIABILITIES AND STOCKHOLDERS' EQUITY
Other Liabilities........................................................................... $ 38 $ 65
Stockholders' Equity........................................................................ 22,888 19,237
--------- ---------
Total Liabilities and Stockholders' Equity.............................................. $ 22,926 $ 19,302
--------- ---------
--------- ---------
</TABLE>

INCOME STATEMENT (in 000's)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Dividend Income from Bank Subsidiary................................................. $ 1,150 $ 1,000 $ 1,000
Interest............................................................................. 394 223 271
Other................................................................................ 47 166 248
--------- --------- ---------
Total Income..................................................................... $ 1,591 $ 1,389 $ 1,519
Expenses............................................................................. 208 272 385
--------- --------- ---------
Income before Income Taxes, Equity in Undistributed Earnings of Subsidiary and
Cumulative Effect of Change in Accounting Principle................................. $ 1,383 $ 1,117 $ 1,134
Provision for Income Taxes........................................................... 94 47 54
--------- --------- ---------
Income before Equity in Undistributed Earnings of Bank Subsidiary and Cumulative
Effect of Change in Accounting Principle............................................ $ 1,289 $ 1,070 $ 1,080
Equity in Undistributed Earnings of Bank Subsidiary.................................. 1,112 765 1,264
--------- --------- ---------
Income before Cumulative Effect of Change in Accounting Principle.................... $ 2,401 $ 1,835 $ 2,344
Cumulative Effect of Change in Accounting Principle.................................. 0 0 (20)
--------- --------- ---------
NET INCOME........................................................................... $ 2,401 $ 1,835 $ 2,324
--------- --------- ---------
--------- --------- ---------
</TABLE>

F-48
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

13 PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)
STATEMENTS OF CASH FLOWS (in 000's)

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net Income....................................................................... $ 2,401 $ 1,835 $ 2,324
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Equity in Undistributed Earnings of Subsidiary................................. (1,112) (765) (1,264)
(Increase) Decrease in Prepaid Expenses and Other Assets....................... (81) 129 481
Increase (Decrease) in Other Liabilities....................................... (26) (30) (58)
--------- --------- ---------
Net Cash Provided by Operating Activities.................................... $ 1,182 $ 1,169 $ 1,483
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of Held to Maturity Securities......................................... $ (1,150) $ 0 $ 0
Net (Increase) Decrease in Loans................................................. (2,415) 1,132 2,193
Net (Increase) Decrease in Commercial Paper...................................... 711 (795) (1,487)
--------- --------- ---------
Net Cash Provided (Used) by Investing Activities............................. $ (2,854) $ 337 $ 706
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Decrease in Short-Term Borrowings............................................ $ 0 $ 0 $ (2,225)
Sales of Treasury Stock.......................................................... 45 150 275
Purchase of Treasury Stock....................................................... 0 (197) (87)
--------- --------- ---------
Net Cash Provided (Used) by Financing Activities............................. $ 45 $ (47) $ (2,037)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS....................................................................... $ (1,627) $ 1,459 $ 152
Cash and Cash Equivalents -- Beginning of Year..................................... 1,642 183 31
--------- --------- ---------
CASH AND CASH EQUIVALENTS -- END OF YEAR........................................... $ 15 $ 1,642 $ 183
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest......................................................................... $ 25 $ 0 $ 54
--------- --------- ---------
--------- --------- ---------
Income Taxes Paid (Refund)....................................................... $ 156 $ 105 $ (71)
--------- --------- ---------
--------- --------- ---------
</TABLE>

Federal law prevents the corporation from borrowing from its subsidiary bank
unless the loans are secured by specified assets. Such secured loans by any
subsidiary bank are generally limited to 10 percent of the subsidiary bank's
capital and surplus.

The payment of dividends to the corporation by subsidiary banks is subject
to various federal and state regulatory limitations. The bank must obtain the
approval of the Comptroller of the Currency if the total of all dividends
declared in any calendar year exceeds the bank's net profits for that year
combined with its retained net profits for the preceding two calendar years.

F-49
<PAGE>

PARK FINANCIAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
September 30, 1996 and 1995 (Unaudited)
and December 31, 1995, 1994 and 1993

14 SUBSEQUENT EVENTS

On October 7, 1996, the Company entered into a merger agreement with United
Community Bancshares, Inc. The merger has been approved by the Board of
Directors and will be completed upon regulatory approval and fulfillment of
certain covenants and conditions.

An appreciation bonus of approximately $1,000,000 will be paid to certain
employees of the Company's Bank subsidiary upon the successful closing of the
merger. An accrual for this bonus will be recorded by the Bank in November 1996.

F-50
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL
STATEMENTS OF UNITED AND PFC

The Unaudited Pro Forma Consolidated Balance Sheet is derived from the
unaudited balance sheets of United and PFC as of September 30, 1996 included
elsewhere herein and assumes that the transactions were consummated on September
30, 1996. The Unaudited Pro Forma Consolidated Statement of Income for the Year
Ended December 31, 1995 is derived from the audited Consolidated Statements of
Income of United and PFC included elsewhere herein and assumes that the
transactions were consummated on January 1, 1995. The Unaudited Pro Forma
Consolidated Statements of Income for the Nine Months Ended September 30, 1996
and 1995 are derived from the unaudited Consolidated Statements of Income of
United and PFC included elsewhere herein and assumes that the transactions were
consummated on January 1, 1996, and January 1, 1995, respectively.

The Unaudited Pro Forma Consolidated Financial Statements do not purport to
represent what United's results of operations or financial condition would
actually have been if the transactions had occurred on the dates indicated, and
do not project United's results or financial condition for or to any future
period or date. The Unaudited Pro Forma Consolidated Financial Statements are
presented for comparative purposes only. The pro forma adjustments, as discussed
in Note 1, are based on available information and certain assumptions that
management believes are reasonable.

The acquisition will be accounted for using the purchase method of
accounting. The purchase price of the acquisition will be allocated to the
tangible assets and liabilities of PFC based upon management's preliminary
estimates of their fair value with the remainder allocated to goodwill. The
allocation of purchase price for the acquisition is subject to revision when
additional information concerning asset and liability valuations are obtained.
In the opinion of United's management, and assuming a stable interest rate
environment, the asset and liability valuations for the acquisition will not be
materially different from the Unaudited Pro Forma Consolidated Financial
Statements presented.

F-51
<PAGE>

UNAUDITED PRO FORMA CONSOLIDATED
BALANCE SHEET OF UNITED AND PFC
SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
COMMON AND PRO FORMA
PREFERRED CONSOLIDATED
STOCK UNITED BALANCE
UNITED OFFERING PRO FORMA PFC ADJUSTMENTS SHEET
------------- ------------- ------------- ------------- ------------- -------------

<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks..... $ 24,001,941 $ 15,127,960(a) $ 39,129,901 $ 15,284,271 $(45,139,540)(c) $ 38,837,322
24,000,000(d)
5,562,690(e)
Federal funds sold.......... 7,875,000 7,875,000 -- 7,875,000
Investment securities
available for sale......... 103,453,335 103,453,335 71,779,691 (3,511,281) (e) 171,721,745
Loans and leases............ 280,212,723 280,212,723 118,744,167 (1,972,776)(e) 396,849,114
(135,000)(c)
Allowance for loan and
lease losses........... (2,867,523) (2,867,523) (2,174,975) 70,274(e) (4,972,224)
------------- ------------- ------------- ------------- -------------
Net loans and
leases............... 277,345,200 277,345,200 116,569,192 (2,037,502) 391,876,890
------------- ------------- ------------- ------------- -------------
Property and equipment,
net........................ 10,887,181 10,887,181 2,062,337 (11,084)(e) 12,938,434
Cash surrender value of life
insurance.................. 9,421,321 9,421,321 -- 9,421,321
Intangible assets, net...... 3,684,285 3,684,285 -- 21,223,731(c) 24,908,016
Other assets................ 5,181,713 5,181,713 2,831,685 (167,136)(e) 7,846,262
------------- ------------- ------------- ------------- ------------- -------------
Total assets............ $ 441,849,976 $ 15,127,960 $456,977,936 $ 208,527,176 $ (80,122) $665,424,990
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits.................. $ 351,825,044 $351,825,044 $ 164,965,563 $516,790,607
Securities sold under
repurchase agreements.... 27,556,398 27,556,398 17,510,802 45,067,200
Accrued expenses and other
liabilities.............. 5,880,339 5,880,339 1,458,702 595,300(b) 7,851,028
(29,313)(e)
(54,000)(c)
Notes payable and other
borrowings............... 16,708,565 16,708,565 -- 24,000,000(d) 40,708,565
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities....... 401,970,346 -- 401,970,346 183,935,067 24,511,987 610,417,400
------------- ------------- ------------- ------------- ------------- -------------
Company obligated
mandatorily redeemable
preferred securities of
subsidiary trust holding
solely junior subordinated
debentures................. -- 10,159,000(a) 10,159,000 -- 10,159,000
------------- ------------- ------------- ------------- ------------- -------------
Stockholders' equity:
Common stock.............. 5,466 472(a) 5,938 472,710 (472,710)(c) 5,938
Additional paid-in
capital.................. 21,015,602 (30,000)(a) 25,984,090 -- -- 25,984,090
4,998,488(a)
Retained earnings......... 18,917,959 18,917,959 24,152,130 (23,556,830)(c) 18,917,959
(595,300)(b)
Unrealized loss on
securities available
for sale............... (59,397) (59,397) (32,731) 32,731(c) (59,397)
------------- ------------- ------------- ------------- ------------- -------------
Total stockholders'
equity............... 39,879,630 4,968,960 44,848,590 24,592,109 (24,592,109) 44,848,590
------------- ------------- ------------- ------------- ------------- -------------
Total liabilities and
stockholders'
equity............... $ 441,849,976 $ 15,127,960 $456,977,936 $ 208,527,176 $ (80,122) $665,424,990
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>

See Note to the Unaudited Pro Forma Consolidated Financial Statements

F-52
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME OF UNITED AND PFC
YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
STATEMENT OF
UNITED PFC ADJUSTMENTS INCOME
------------- ------------- ----------------- ------------
<S> <C> <C> <C> <C>
Interest income:
Loans and leases.............................. $ 25,089,584 $ 11,268,722 $ 27,000(f) $ 36,142,994
(242,312)(h)
Investment securities......................... 5,355,179 3,336,503 (140,917)(h) 8,550,765
Federal funds sold............................ 760,820 363,523 1,124,343
------------- ------------- ----------------- ------------
Total interest income....................... 31,205,583 14,968,748 (356,229) 45,818,102
------------- ------------- ----------------- ------------
Interest expense:
Deposits...................................... 10,438,601 5,171,989 15,610,590
Federal funds purchased and securities sold
under repurchase agreements.................. 1,453,699 499,627 1,953,326
Notes payable and other borrowings............ 955,752 -- 1,687,200(g) 2,642,952
------------- ------------- ----------------- ------------
Total interest expense...................... 12,848,052 5,671,616 1,687,200 20,206,868
------------- ------------- ----------------- ------------
Net interest income........................... 18,357,531 9,297,132 (2,043,429) 25,611,234
Provision for loan and lease losses............. 60,999 720,000 -- 780,999
------------- ------------- ----------------- ------------
Net interest income after provision for loan (2,043,429)
and lease losses........................... 18,296,532 8,577,132 24,830,235
Noninterest income:
Service charges and other fees................ 2,922,664 1,529,870 4,452,534
Net investment securities gains............... (32,329) 39,125 6,796
Other......................................... 1,028,650 89,717 1,118,367
------------- ------------- ----------------- ------------
Total noninterest income.................... 3,918,985 1,658,712 -- 5,577,697
------------- ------------- ----------------- ------------
Noninterest expense:
Salaries and employee benefits................ 9,291,893 3,489,762 12,781,655
Occupancy..................................... 1,208,300 595,766 1,804,066
Depreciation.................................. 1,252,682 522,021 (28,813)(h) 1,745,890
Other......................................... 4,778,059 1,730,224 1,414,915(f) 7,923,198
------------- ------------- ----------------- ------------
Total noninterest expense................... 16,530,934 6,337,773 1,386,102 24,254,809
------------- ------------- ----------------- ------------
Income before income taxes and minority interest (3,429,531)
in preferred securities dividends of
subsidiary..................................... 5,684,583 3,898,071 6,153,123
Income tax expense.............................. 2,055,552 1,497,263 (805,846)(i) 2,746,969
Minority interest in preferred securities -- -- (660,000)(j) (822,900)
dividends of subsidiary........................ (162,900)(k)
------------- ------------- ----------------- ------------
Net income...................................... $ 3,629,031 $ 2,400,808 $ (3,446,585) $ 2,583,254
------------- ------------- ----------------- ------------
------------- ------------- ----------------- ------------
Earnings per common share..................... $ 6.97 $ 5.09 $ 4.55
Weighted average common shares outstanding.... 520,306 471,540 567,466
</TABLE>

See Note to the Unaudited Pro Forma Consolidated Financial Statements

F-53
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME OF UNITED AND PFC

NINE MONTHS ENDED SEPTEMBER 30, 1996

<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
STATEMENT OF
UNITED PFC ADJUSTMENTS INCOME
------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
Interest income:
Loans and leases............................... $ 20,061,287 $ 8,382,177 $ 20,250(f) $ 28,322,282
(141,432)(h)
Investment securities.......................... 4,549,378 3,300,503 (120,828)(h) 7,729,053
Federal funds sold............................. 389,775 174,252 564,027
------------- ------------ ----------------- ------------
Total interest income........................ 25,000,440 11,856,932 (242,010) 36,615,362
------------- ------------ ----------------- ------------
Interest expense:
Deposits....................................... 8,721,275 4,007,924 12,729,199
Federal funds purchased and securities sold
under repurchase agreements................... 956,487 511,106 1,467,593
Notes payable and other borrowings............. 767,214 -- 1,265,400(g) 2,032,614
------------- ------------ ----------------- ------------
Total interest expense....................... 10,444,976 4,519,030 1,265,400 16,229,406
------------- ------------ ----------------- ------------
Net interest income.......................... 14,555,464 7,337,902 (1,507,410) 20,385,956
Provision for loan and lease losses.............. 145,823 329,274 -- 475,097
------------- ------------ ----------------- ------------
Net interest income after provision for loan (1,507,410)
and lease losses............................ 14,409,641 7,008,628 19,910,859
Noninterest income:
Service charges and other fees................. 2,442,366 1,179,247 3,621,613
Net investment securities gains................ -- 1,000 1,000
Other.......................................... 1,005,623 58,076 1,063,699
------------- ------------ ----------------- ------------
Total noninterest income..................... 3,447,989 1,238,323 -- 4,686,312
------------- ------------ ----------------- ------------
Noninterest expense:
Salaries and employee benefits................. 7,323,248 2,438,069 9,761,317
Occupancy...................................... 645,535 460,763 1,106,298
Depreciation................................... 1,141,406 444,948 (8,573)(h) 1,577,781
Other.......................................... 3,664,528 1,262,452 1,061,186(f) 5,988,166
------------- ------------ ----------------- ------------
Total noninterest expense.................... 12,774,717 4,606,232 1,052,613 18,433,562
------------- ------------ ----------------- ------------
Income before income taxes and minority interest (2,560,023)
in preferred securities dividends of
subsidiary...................................... 5,082,913 3,640,719 6,163,609
Income tax expense............................... 1,677,987 1,402,063 (599,535)(i) 2,480,515
Minority interest in preferred securities -- -- (495,000)(j) (617,175)
dividends of subsidiary......................... (122,175)(k)
------------- ------------ ----------------- ------------
Net income................................... $ 3,404,926 $ 2,238,656 $ (2,577,663) $ 3,065,919
------------- ------------ ----------------- ------------
------------- ------------ ----------------- ------------
Earnings per common share...................... $ 6.20 $ 4.74 $ 5.14
Weighted average common shares outstanding..... 549,079 472,710 596,239
</TABLE>

See Note to the Unaudited Pro Forma Consolidated Financial Statements

F-54
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF INCOME OF UNITED AND PFC

NINE MONTHS ENDED SEPTEMBER 30, 1995

<TABLE>
<CAPTION>
PRO FORMA
CONSOLIDATED
STATEMENT OF
UNITED PFC ADJUSTMENTS INCOME
------------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
Interest income:
Loans and leases............................... $ 18,522,558 $ 8,320,374 $ 20,250(f) $ 26,709,707
(153,475)(h)
Investment securities.......................... 3,863,727 2,455,851 (111,582)(h) 6,207,996
Federal funds sold............................. 532,775 234,470 767,245
------------- ------------ ----------------- ------------
Total interest income........................ 22,919,060 11,010,695 (244,807) 33,684,948
------------- ------------ ----------------- ------------
Interest expense:
Deposits....................................... 7,626,718 3,798,083 11,424,801
Federal funds purchased and securities sold
under repurchase agreements................... 1,057,758 327,618 1,385,376
Notes payable and other borrowings............. 712,785 -- 1,265,400(g) 1,978,185
------------- ------------ ----------------- ------------
Total interest expense....................... 9,397,261 4,125,701 1,265,400 14,788,362
------------- ------------ ----------------- ------------
Net interest income.......................... 13,521,799 6,884,994 (1,510,207) 18,896,586
Provision for loan and lease losses.............. 41,215 540,000 -- 581,215
------------- ------------ ----------------- ------------
Net interest income after provision for loan (1,510,207)
and lease losses............................ 13,480,584 6,344,994 18,315,371
Noninterest income:
Service charges and other fees................. 2,135,645 1,150,735 3,286,380
Net investment securities (losses)............. (22,869) 39,125 16,256
Other.......................................... 773,744 70,116 843,860
------------- ------------ ----------------- ------------
Total noninterest income..................... 2,886,520 1,259,976 -- 4,146,496
------------- ------------ ----------------- ------------
Noninterest expense:
Salaries and employee benefits................. 6,865,658 2,343,448 9,209,106
Occupancy...................................... 743,539 443,950 1,187,489
Depreciation................................... 911,640 387,744 (26,237)(h) 1,273,147
Other.......................................... 3,626,573 1,547,561 1,061,186(f) 6,235,320
------------- ------------ ----------------- ------------
Total noninterest expense.................... 12,147,410 4,722,703 1,034,949 17,905,062
------------- ------------ ----------------- ------------
Income before income taxes and minority interest (2,545,156)
in preferred securities dividends of
subsidiary...................................... 4,219,694 2,882,267 4,556,805
Income tax expense............................... 1,249,086 1,096,242 (593,588)(i) 1,751,740
Minority interest in preferred securities -- -- (495,000)(j) (617,175)
dividends of subsidiary......................... (122,175)(k)
------------- ------------ ----------------- ------------
Net income................................... $ 2,970,608 $ 1,786,025 $ (2,568,743) $ 2,187,890
------------- ------------ ----------------- ------------
------------- ------------ ----------------- ------------
Earnings per common share...................... $ 5.82 $ 3.78 $ 3.92
Weighted average common shares outstanding..... 510,770 471,510 557,930
</TABLE>

See Note to the Unaudited Pro Forma Consolidated Financial Statements

F-55
<PAGE>
NOTE TO THE UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS OF UNITED AND PFC

NOTE 1: PRO FORMA ADJUSTMENTS

Management's assumptions and the related pro forma adjustments are as
follows:

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

(a) Reflects the sale of $11,000,000 of preferred securities and approximately
$5,000,000 of common stock. A total of 47,160 shares of the common stock are
assumed to be sold at a price of $106.00 per share. A total of 440,000
shares of preferred securities are assumed to be sold at a price of $25.00
per share. Total offering costs of the preferred securities are estimated to
be $841,000 and total offering costs of the common stock are estimated to be
$30,000.

(b) Reflects a $1,000,000 appreciation bonus granted to employees of PFC by the
former owner. The after-tax effect is estimated to be $595,300, resulting in
an increase in accrued liabilities and a reduction in equity.

(c) Reflects the allocation of the purchase price and the elimination of PFC's
equity. The purchase price is $21,110,000 plus the equity of PFC excluding
the unrealized loss on securities available for sale. The investment
securities are recorded at fair value, therefore no adjustments are
required. The fair value adjustment to loans was a decrease of $135,000.
This adjustment to loans was based on discounted cash flows, using interest
rates currently being offered for loans with similar terms to borrowers with
similar credit quality. Management determined that no fair value adjustment
was necessary for deposits based on a discounted cash flow calculation that
applies interest rates currently being offered on certificates of deposit of
similar remaining maturities to the existing certificate of deposit
portfolio.

The following table summarizes the calculation of the purchase price:

<TABLE>
<S> <C>
Equity of PFC, excluding unrealized loss on securities
available for sale............................................ $24,624,840
Premium........................................................ 21,110,000
Bonus accrual.................................................. (1,000,000)
Tax benefit related to bonus................................... 404,700
----------
Purchase price................................................. 45,139,540
PFC book value................................................. 24,592,109
----------
Purchase price in excess of book value......................... $20,547,431
----------
----------
</TABLE>

The following table summarizes the purchase price in excess of book value:

<TABLE>
<S> <C>
Bonus, net of tax effect....................................... $ (595,300)
Fair value adjustment to loans................................. (135,000)
Deferred taxes on loan adjustment.............................. 54,000
Goodwill....................................................... 21,223,731
----------
Purchase price in excess of book value......................... $20,547,431
----------
----------
</TABLE>

The following table summarizes the allocation of the purchase price:

<TABLE>
<S> <C>
Fair value adjustment to loans, net of tax effect.............. $ (81,000)
PFC book value................................................. 24,592,109
Bonus, net of tax effect....................................... (595,300)
Goodwill....................................................... 21,223,731
----------
Purchase price................................................. $45,139,540
----------
----------
</TABLE>

(d) Reflects the additional proceeds received from bank financing to be obtained
from Firstar in conjunction with the Park Acquisition.

F-56
<PAGE>
(e) Reflects the cash liquidation and extinguishment of PFC's parent
company-only assets and liabilities (excluding its investment in Park Bank).

UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME

(f) Reflects the effect of push-down accounting to goodwill resulting in
additional amortization of $1,414,915 and $1,061,186 for the year ended
December 31, 1995 and for the nine months ended September 30, 1996 and 1995,
respectively. Goodwill will be amortized over 15 years. A further effect of
push-down accounting is to accrete to income the loan fair value adjustment
over the estimated life of the respective portfolio. The accretion for the
year ended December 31, 1995 and for each of the nine months ended September
30, 1996 and 1995 is $27,000 and $20,250, respectively.

(g) Reflects the additional interest expense incurred as a result of the
additional financing of $24,000,000 required to complete the Park
Acquisition. The interest rate is assumed to be 140 basis points over the 90
day LIBOR rate or 7.03%. The actual interest rate may be higher or lower
than this rate. A change of 0.125% in the interest rate would change the pro
forma interest expense by approximately $30,000 for the year ended December
31, 1995 and by approximately $22,500 for each of the nine months ended
September 30, 1996 and 1995, respectively.

(h) Reflects the reduction of interest income and depreciation assuming PFC's
loans, investment securities and property and equipment were assumed to be
sold on January 1, 1995 and January 1, 1996, respectively. The amounts
eliminated reflect actual interest income and depreciation expense recorded
for the periods.

(i) Reflects the tax effect of the taxable pro forma adjustments. The goodwill
amortization is not tax deductible. The effective tax rate is assumed to be
forty percent for the year ended December 31, 1995 and for the nine months
ended September 30, 1996 and 1995 resulting in decreased income tax expense
of $805,846, $599,535 and $593,588 respectively.

(j) Reflects the dividends paid on the preferred securities at an assumed rate
of 10.0% per annum paid quarterly on $11,000,000 of preferred securities,
net of income taxes. The effective tax rate is assumed to be forty percent.

(k) Reflects the amortization of the $841,000 of offering costs associated with
the preferred securities over a five year term. Amortization expense for the
year ended December 31, 1995 and for each of the nine months ended September
30, 1996 and 1995 is $162,900 and $122,175, respectively.

F-57
<PAGE>

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY UNITED, UNITED CAPITAL OR BY THE UNDERWRITER. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF UNITED
SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
ITEM PAGE
- -------------------------------------------------------------------------- ----
<S> <C>
Summary................................................................... 4
Risk Factors.............................................................. 12
Acquisition of Park....................................................... 19
Use of Proceeds........................................................... 22
Accounting Treatment...................................................... 22
Capitalization............................................................ 23
Selected Financial Data................................................... 24
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................. 28
Business.................................................................. 47
Management................................................................ 54
Principal Shareholders.................................................... 60
Supervision and Regulation................................................ 62
Description of Preferred Securities....................................... 68
Description of Junior Subordinated Debentures............................. 79
Book-Entry Issuance....................................................... 89
Description of Guaranty................................................... 91
Relationship Among Preferred Securities, Junior Subordinated Debentures
and Guaranty........................................................... 93
Description of the Company's Capital Stock................................ 95
Certain Federal Income Tax Consequences................................... 98
Underwriting.............................................................. 101
Legal Matters............................................................. 101
Experts................................................................... 101
Additional Information.................................................... 102
Index to Financial Information............................................ F-1
</TABLE>

UNTIL , 1997 ( DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE PREFERRED SECURITIES COVERED HEREBY,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS.

440,000 PREFERRED SECURITIES
UNITED CAPITAL TRUST I
% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY

[LOGO]

-----------------
P R O S P E C T U S
-----------------

PIPER JAFFRAY INC.

, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following expenses will be paid by United in connection with the
distribution of the securities registered hereby and do not include the
underwriting commission to be paid to the Underwriter. All of such expenses,
except for the SEC registration fee and NASD fee are estimated.

<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 3,334
NASD Fee.......................................................... 1,600
Registrant's Legal Fees........................................... 190,000
Underwriter's Advisory Fee........................................ 110,000
Accountants' Fees and Expenses.................................... 75,000
Printing Expenses................................................. 100,000
Blue Sky Fees and Expenses........................................ 30,000
Miscellaneous..................................................... 1,066
---------
Total............................................................. $ 511,000
---------
---------
</TABLE>

- ------------------------
* To be filed by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 302A.521, subd. 2, of the Minnesota Statutes requires the Registrant
to indemnify a person made or threatened to be made a party to a proceeding by
reason of the former or present official capacity of the person with respect to
the Registrant, against judgments, penalties, fines, including, without
limitation, excise taxes assessed against the person with respect to an employee
benefit plan, settlements, and reasonable expenses, including attorneys' fees
and disbursements, incurred by the person in connection with the proceeding with
respect to the same acts or omissions if such person (1) has not been
indemnified by another organization or employee benefit plan for the same
judgments, penalties or fines; (2) acted in good faith; (3) received no improper
personal benefit, and statutory procedure has been followed in the case of any
conflict of interest by a director; (4) in the case of a criminal proceeding,
had no reasonable cause to believe the conduct was unlawful; and (5) in the case
of acts or omissions occurring in the person's performance in the official
capacity of director or, for a person not a director, in the official capacity
of officer, board committee member or employee, reasonably believed that the
conduct was in the best interests of the Registrant, or, in the case of
performance by a director, officer or employee of the Registrant involving
service as a director, officer, partner, trustee, employee or agent of another
organization or employee benefit plan, reasonably believed that the conduct was
not opposed to the best interests of the Registrant. In addition, Section
302A.521, subd. 3, requires payment by the Registrant, upon written request, of
reasonable expenses in advance of final disposition of the proceeding in certain
instances. A decision as to required indemnification is made by a disinterested
majority of the Board of Directors present at a meeting at which a disinterested
quorum is present, or by a designated committee of the Board, by special legal
counsel, by the shareholders, or by a court.

Provisions regarding indemnification of officers and directors of the
Registrant are contained in Bylaw Section 5.1 of the Registrant's Bylaws
(Exhibit 3.2 to this Registration Statement).

Under Section of the Underwriting Agreement, filed as Exhibit 1.1
hereto, the Underwriter agrees to indemnify, under certain conditions, the
Registrant, its directors, certain of its officers and persons who control the
Registrant within the meaning of the Securities Act of 1933, as amended (the
"Act"), against certain liabilities.

Under the Trust Agreement, the Company will agree to indemnify each of the
Trustees of United Capital or any predecessor Trustee for United Capital, and to
hold each Trustee harmless against, any loss,

II-1
<PAGE>

damage, claims, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of the Trust Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties under the Trust Agreement.

The Company and United Capital have agreed to indemnify the Underwriter, and
the Underwriter has agreed to indemnify United Capital and the Company against
certain civil liabilities, including liabilities under the Securities Act of
1933, as amended. Reference is made to the Underwriting Agreement filed as
Exhibit 1.1 herewith.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On January 1, 1994, United issued 138,067 shares of its Common Stock to
shareholders of Goodhue in exchange for the conversion of the outstanding
Goodhue shares in connection with the merger of Signal and Goodhue, in reliance
upon an exemption under Rule 506 of Regulation D. Concurrently with that merger
transaction, United issued 61,504 shares of its Common Stock to investors in
exchange for an aggregate purchase price of $4,182,272, in reliance upon an
exemption under Rule 506 of Regulation D. Based upon Letter of Investment Intent
and Subscription Agreements, United believes the former Goodhue shareholders and
the purchasing investors were "sophisticated investors" and they were either
"accredited" investors or did not exceed an aggregate of 35 nonaccredited
investors.

In March, 1995, United issued 2,103 shares to the United Community
Bancshares, Inc. Employee Stock Ownership Plan in exchange for an aggregate
purchase price of $164,938, in reliance upon Section 4(2) of the Act.

In August, 1995, United issued 41,907 shares of its Common Stock to
investors in exchange for an aggregate purchase price of $3,527,731, in reliance
upon an exemption under Section 3(a) (11) of the Act and Rule 147 thereunder.
Based upon Letter of Investment Intent and Subscription Agreements, United
believes that all of the investors were residents of the State of Minnesota, the
state in which United is incorporated.

In January, 1996, United issued 160 shares upon exercise of a stock option
granted to a former employee in exchange for an aggregate purchase price of
$11,754, in reliance upon an exemption under Section 4(2) of the Act.

Also in January, 1996, United issued 50 shares to an accredited investor in
exchange for an aggregate purchase price of $4,653, in reliance upon an
exemption under Section 4(2) of the Act.

In March, 1996, United issued 2,150 shares to the United Community
Bancshares, Inc. Employee Stock Ownership Plan in exchange for an aggregate
purchase price of $200,079, in reliance upon an exemption under Section 4(2) of
the Act.

In April, 1996, United issued 107 shares to an accredited investor in
exchange for an aggregate purchase price of $9,957, in reliance upon an
exemption under Section 4(2) of the Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement*
2.1 Merger Agreement with Park Financial Corporation dated October 7, 1996**
2.2 Indemnification Agreement with the Park Financial Corporation Revocable Trust dated October 7, 1996**
3.1 Restated Articles of Incorporation of the Company**
3.2 Bylaws of the Company
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Form of Indenture, to be dated January , 1997
4.2 Form of Junior Subordinated Debenture (included as an exhibit to Exhibit 4.1)
4.3 Certificate of Trust of United Capital Trust I, dated as of December 6, 1996
4.4 Trust Agreement of United Capital Trust I, dated as of December 6, 1996
4.5 Form of Amended and Restated Trust Agreement of United Capital Trust I, to be dated January , 1997
4.6 Form of Preferred Security Certificate of United Capital Trust I (included as an exhibit to Exhibit 4.5)
4.7 Form of Preferred Securities Guaranty Agreement for United Capital Trust I
4.8 Form of Agreement as to Expenses and Liabilities (included as an exhibit to Exhibit 4.5)
5.1 Opinion and Consent of Fredrikson & Byron, P.A.*
5.2 Opinion and Consent of Richards, Layton & Finger*
10.1 1994 Stock Option Plan***
10.2 Executive Salary Continuation Agreement between Signal Bank and Galen T. Pate***
10.3 Executive Salary Continuation Agreement between Signal Bank and Marcia L. O'Brien***
10.4 Executive Salary Continuation Agreement between Signal Bank and John H. LeMay***
10.5 Executive Salary Continuation Agreement between Signal Bank and John C. Dorsey***
10.6 Executive Salary Continuation Agreement between United and Donald M. Davies***
10.7 Lease Agreement between United and Whitewood (Minneapolis) Limited Partnership, dated September 7, 1995,
respecting 2600 Eagan Woods Drive, Suite 155, Eagan, Minnesota.**
10.8 Lease Agreement between Signal Bank and Signal Hills Company (a Minnesota corporation), dated January 1,
1976, as amended, respecting 100 Signal Hills, West St. Paul, Minnesota.**
10.9 Lease Agreement between Signal Bank and Signal Hills Company (a Minnesota general partnership), dated
January 29, 1993, respecting an area in the Signal Hills Center.**
10.10 Lease Agreement between Signal Bank and Signal Hills Company (a Minnesota general partnership), dated
July 20, 1986, respecting an area in the Signal Hills Center.**
10.11 Lease Agreement between United and ELPO Partnership, dated January 1, 1996, respecting 432 West Third
Street, Red Wing, Minnesota.**
10.12 Lease Agreement between CCC and County Crossroads Center United Partnership, dated August 27, 1993,
respecting the County Crossroads Center, Hastings, Minnesota.**
10.13 Lease Agreement between CCC and Lubbers' Properties Inc., dated June 8, 1994, respecting 1014 South
Highway 3, Northfield, Minnesota.**
10.14 Sublease Agreement between United and CENEX, Inc., dated August, 1994, as amended, respecting 5400
Babcock Trail, Inver Grove Heights, Minnesota.**
10.15 Form of Term Loan Agreement with Firstar Bank Milwaukee, N.A.
12.1 Statement Regarding Computation of Ratios
16 Letter Regarding Change in Certifying Accountant
21 Subsidiaries of United Community Bancshares, Inc.
23.1 Consent of Fredrikson & Byron, P.A. (included in Exhibit 5.1)
23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.2)
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
23.3 Consent of McGladrey & Pullen, LLP, independent auditors
23.4 Consent of Leininger & Leininger, Ltd., independent auditors
23.5 Consent of Larson, Allen & Weishair & Co., LLP, independent auditors
24 Power of Attorney (included on signature page of the Registration Statement)
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Indenture
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Amended and
Restated Trust Agreement
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Preferred
Securities Guaranty Agreement
27 Financial Data Schedule
</TABLE>

- ------------------------
* To be filed by amendment.

** Previously filed.

*** Previously filed management agreement or compensatory plan or arrangement.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 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 of 1933 and will be governed by the final adjudication of such issue.

The undersigned Registrant further undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, 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 of
1933, 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.

(3) It will provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in such
names as required by the underwriter to permit prompt delivery to each
purchaser.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Minneapolis, State of Minnesota, on December 9, 1996.

UNITED COMMUNITY BANCSHARES, INC.

By /s/ GALEN T. PATE
-----------------------------------------
Galen T. Pate, PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Minneapolis, State of Minnesota, on December 9, 1996.

UNITED CAPITAL TRUST I

By /s/ MARCIA O'BRIEN
-----------------------------------------
Marcia O'Brien, TRUSTEE

and

By /s/ JOHN H. LEMAY
-----------------------------------------
John H. LeMay, TRUSTEE

POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------- ----------------------

<C> <S> <C>
* Chairman and Director (principal
------------------------------------------- executive officer) December 9, 1996
R. Scott Jones

/s/ GALEN T. PATE President and Director (principal
------------------------------------------- executive officer) December 9, 1996
Galen T. Pate

Executive Vice President and
/s/ MARCIA L. O'BRIEN Chief Financial Officer
------------------------------------------- (principal financial and December 9, 1996
Marcia L. O'Brien accounting officer)

*
------------------------------------------- Director December 9, 1996
Arlin A. Albrecht
</TABLE>

Signatures continued on following page

II-5
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ --------------------------------- ----------------------

<C> <S> <C>
*
------------------------------------------- Director December 9, 1996
Larry C. Barenbaum

*
------------------------------------------- Director December 9, 1996
Spencer A. Broughton

*
------------------------------------------- Director December 9, 1996
James P. Fritz

*
------------------------------------------- Director December 9, 1996
John W. Johnson

*
------------------------------------------- Director December 9, 1996
Ora G. Jones

*
------------------------------------------- Director December 9, 1996
Louis J. Langer

*Executed by Galen T. Pate as Attorney-in-Fact
for each of individuals listed:

/s/ GALEN T. PATE
-------------------------------------------
Galen T. Pate, ATTORNEY-IN-FACT
</TABLE>

II-6
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
UNITED COMMUNITY BANCSHARES, INC.
EXHIBIT INDEX TO FORM S-1

2.1 Merger Agreement with Park Financial Corporation dated October 7, 1996**

2.2 Indemnification Agreement with the Park Financial Corporation Revocable Trust dated October 7, 1996**

3.1 Restated Articles of Incorporation of the Company**

3.2 Bylaws of the Company

4.1 Form of Indenture, to be dated January , 1997

4.2 Form of Junior Subordinated Debenture (included as an exhibit to Exhibit 4.1)

4.3 Certificate of Trust of United Capital Trust I

4.4 Trust Agreement of United Capital Trust I, dated as of December 4, 1996

4.5 Form of Amended and Restated Trust Agreement of United Capital Trust I, to be dated January , 1997

4.6 Form of Preferred Security Certificate of United Capital Trust I (included as an exhibit to Exhibit 4.5)

4.7 Form of Preferred Securities Guaranty Agreement for United Capital Trust I

4.8 Form of Agreement as to Expenses and Liabilities (included as an exhibit to Exhibit 4.5)

5.1 Opinion and Consent of Fredrikson & Byron, P.A.*

5.2 Opinion and Consent of Richards, Layton & Finger*

10.1 1994 Stock Option Plan***

10.2 Executive Salary Continuation Agreement between Signal Bank and Galen T. Pate***

10.3 Executive Salary Continuation Agreement between Signal Bank and Marcia L. O'Brien***

10.4 Executive Salary Continuation Agreement between Signal Bank and John H. LeMay***

10.5 Executive Salary Continuation Agreement between Signal Bank and John C. Dorsey***

10.6 Executive Salary Continuation Agreement between United and Donald M. Davies***

10.7 Lease Agreement between United and Whitewood (Minneapolis) Limited Partnership, dated September 7, 1995,
respecting 2600 Eagan Woods Drive, Suite 155, Eagan, Minnesota.**

10.8 Lease Agreement between Signal Bank and Signal Hills Company (a Minnesota corporation), dated January 1,
1976, as amended, respecting 100 Signal Hills, West St. Paul, Minnesota.**

10.9 Lease Agreement between Signal Bank and Signal Hills Company (a Minnesota general partnership), dated
January 29, 1993, respecting an area in the Signal Hills Center.**

10.10 Lease Agreement between Signal Bank and Signal Hills Company (a Minnesota general partnership), dated
July 20, 1996, respecting an area in the Signal Hills Center.**

10.11 Lease Agreement between United and ELPO Partnership, dated January 1, 1996, respecting 432 West Third
Street, Red Wing, Minnesota.**

10.12 Lease Agreement between CCC and County Crossroads Center United Partnership, dated August 27, 1993,
respecting the County Crossroads Center, Hastings, Minnesota.**
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.13 Lease Agreement between CCC and Lubbers' Properties Inc., dated June 8, 1994, respecting 1014 South
Highway 3, Northfield, Minnesota.**

10.14 Sublease Agreement between United and CENEX, Inc., dated August, 1994, as amended, respecting 5400
Babcock Trail, Inver Grove Heights, Minnesota.**

10.15 Form of Term Loan Agreement with Firstar Bank Milwaukee, N.A.

12.1 Statement regarding computation of ratios

16 Letter Regarding Change in Certifying Accountant

21 Subsidiaries of United Community Bancshares, Inc.

23.1 Consent of Fredrikson & Byron, P.A. (included in Exhibit 5.1)

23.2 Consent of Richards, Layton & Finger (included in Exhibit 5.2)

23.3 Consent of McGladrey & Pullen, LLP, independent auditors

23.4 Consent of Leininger & Leininger, Ltd., independent auditors

23.5 Consent of Larson, Allen & Weishair & Co., LLP, independent auditors

24 Power of Attorney (included on signature page of the Registration Statement)

25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Indenture

25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Amended and
Restated Trust Agreement

25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company to act as trustee under the Preferred
Securities Guaranty Agreement

27 Financial Data Schedule
</TABLE>

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* To be filed by amendment.

** Previously filed.

*** Previously filed management agreement or compensatory plan or arrangement.

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EXHIBIT 3.2

BYLAWS
OF
UNITED COMMUNITY BANCSHARES, INC.

ARTICLE 1.
OFFICES

1.1) OFFICES. The address of the registered office of the corporation
shall be designated in the Articles of Incorporation, as amended from time to
time. The principal executive office of the corporation shall initially be
located at 100 Signal Hills, West St. Paul, Minnesota 55118-2385, and the
corporation may have offices at such other places within or without the State of
Minnesota as the Board of Directors shall from time to time determine or the
business of the corporation requires.

ARTICLE 2.
MEETINGS OF SHAREHOLDERS

2.1) REGULAR MEETINGS. Regular meetings of the shareholders of the
corporation entitled to vote shall be held on an annual or other less frequent
basis as shall be determined by the Board of Directors or by the chief executive
officer; provided, that if a regular meeting has not been held during the
immediately preceding 15 months, a shareholder or shareholders holding three
percent (3%) or more of the voting power of all shares entitled to vote may
demand a regular meeting of shareholders by written notice of demand given to
the chief executive officer or chief financial officer of the corporation. At
each regular meeting, the shareholders, voting as provided in the Articles of
Incorporation and these Bylaws, shall elect qualified successors for directors
who serve for an indefinite term or whose terms have expired or are due to
expire within six months after the date of the meeting, and shall transact such
other business as shall come before the meeting. No meeting shall be considered
a regular meeting unless specifically designated as such in the notice of
meeting or unless all the shareholders entitled to vote are present in person or
by proxy and none of them objects to such designation.

2.2) SPECIAL MEETINGS. Special meetings of the shareholders entitled to
vote may be called at any time by the Chairman of the Board, the chief executive
officer, the chief financial officer, two or more directors, or a shareholder or
shareholders holding ten percent (10%) or more of the voting power of all shares
entitled to vote who shall demand such special meeting by giving written notice
of demand to the chief executive officer or the chief financial officer
specifying the purposes of the meeting.

2.3) MEETINGS HELD UPON SHAREHOLDER DEMAND. Within thirty (30) days after
receipt by the chief executive officer or the chief financial officer of a
demand from any shareholder or shareholders entitled to call a regular or
special meeting of shareholders, the Board of Directors shall cause such meeting
to be called and held on notice no later than ninety (90) days after receipt of
such demand. If the Board of Directors fails to cause such a meeting to be
called and held, the shareholder or shareholders making the demand may call the
meeting by giving notice as provided in Section 2.5 hereof at the expense of the
corporation.

2.4) PLACE OF MEETINGS. Meetings of the shareholders shall be held at the
principal executive office of the corporation or at such other place, within or
without the State of Minnesota, as is designated by the Board of Directors,
except that a regular meeting called by or at the demand of a shareholder shall
be held in the county where the principal executive office of the corporation is
located.

2.5) NOTICE OF MEETINGS. Except as otherwise specified in Section 2.6 or
required by law, a written notice setting out the place, date and hour of any
regular or special meeting shall be given to each holder of shares entitled to
vote not less than two (2) days nor more than sixty (60) days prior to the date
of the meeting; provided, that notice of a meeting at which there is to be
considered a proposal (i) to dispose of all, or substantially all, of

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the property and assets of the corporation or (ii) to dissolve the corporation
shall be given to all shareholders of record, whether or not entitled to vote;
and provided further, that notice of a meeting at which there is to be
considered a proposal to adopt a plan of merger or exchange shall be given to
all shareholders of record, whether or not entitled to vote, at least fourteen
(14) days prior thereto. Notice of any special meeting shall state the purpose
or purposes of the proposed meeting, and the business transacted at all special
meetings shall be confined to the purposes stated in the notice.

2.6) WAIVER OF NOTICE. A shareholder may waive notice of any meeting
before, at or after the meeting, in writing, orally or by attendance.
Attendance at a meeting by a shareholder is a waiver of notice of that meeting
unless the shareholder objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or objects before a vote on an item of business because the item may not be
lawfully considered at such meeting and does not participate in the
consideration of the item at such meeting.

2.7) QUORUM AND ADJOURNED MEETING. The holders of a majority of the voting
power of the shares entitled to vote at a meeting, represented either in person
or by proxy, shall constitute a quorum for the transaction of business at any
regular or special meeting of shareholders. If a quorum is present when a duly
called or held meeting is convened, the shareholders present may continue to
transact business until adjournment, even though the withdrawal of a number of
shareholders originally present leaves less than the proportion or number
otherwise required for a quorum. In case a quorum is not present at any
meeting, those present shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until the requisite
number of shares entitled to vote shall be represented. At such adjourned
meeting at which the required amount of shares entitled to vote shall be
represented, any business may be transacted which might have been transacted at
the original meeting.

2.8) VOTING. At each meeting of the shareholders, every shareholder having
the right to vote shall be entitled to vote in person or by proxy duly appointed
by an instrument in writing subscribed by such shareholder. Each shareholder
shall have one (1) vote for each share having voting power standing in each
shareholder's name on the books of the corporation except as may be otherwise
provided in the terms of the share. Upon the demand of any shareholder, the
vote for directors or the vote upon any question before the meeting shall be by
ballot. All elections shall be determined and all questions decided by a
majority vote of the number of shares entitled to vote and represented at any
meeting at which there is a quorum except in such cases as shall otherwise be
required by statute or the Articles of Incorporation.

2.9) ORDER OF BUSINESS. The suggested order of business at any regular
meeting and, to the extent appropriate, at all other meetings of the
shareholders shall, unless modified by the presiding chairman, be:

(a) Call of roll
(b) Proof of due notice of meeting or waiver of notice
(c) Determination of existence of quorum
(d) Reading and disposal of any unapproved minutes
(e) Reports of officers and committees
(f) Election of directors
(g) Unfinished business
(h) New business
(i) Adjournment.

ARTICLE 3.
DIRECTORS

3.1 GENERAL POWERS. Except as authorized by the shareholders pursuant to
a shareholder control agreement or unanimous affirmative vote, the business and
affairs of the corporation shall be managed by or under the direction of a Board
of Directors.

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3.2) NUMBER, TERM AND QUALIFICATIONS. The Board of Directors shall consist
of one or more members. At each regular meeting, the shareholders shall
determine the number of directors; provided, that between regular meetings the
authorized number of directors may be increased or decreased by the shareholders
or increased by the Board of Directors. Each director shall serve for such
fixed term (not to exceed five years) as may be specified by the shareholders or
the Board of Directors, as the case may be, that expires at the regular meeting
of shareholders for the year in which such fixed term expires or, if a fixed
term is not specified, for an indefinite term that expires at the next regular
meeting of shareholders, and until such director's successor is elected and
qualified, or until such director's earlier death, resignation,
disqualification, or removal as provided by statute.

3.3) VACANCIES. Vacancies on the Board of Directors may be filled by the
affirmative vote of a majority of the remaining members of the Board, though
less than a quorum; provided, that newly created directorships resulting from an
increase in the authorized number of directors shall be filled by the
affirmative vote of a majority of the directors serving at the time of such
increase. Persons so elected shall be directors until their successors are
elected by the shareholders, who may make such election at the next regular or
special meeting of the shareholders.

3.4) QUORUM AND VOTING. A majority of the directors currently holding
office shall constitute a quorum for the transaction of business. In the
absence of a quorum, a majority of the directors present may adjourn a meeting
from time to time until a quorum is present. If a quorum is present when a duly
called or held meeting is convened, the directors present may continue to
transact business until adjournment even though the withdrawal of a number of
directors originally present leaves less than the proportion or number otherwise
required for a quorum. Except as otherwise required by law or the Articles of
Incorporation, the acts of a majority of the directors present at a meeting at
which a quorum is present shall be the acts of the Board of Directors.

3.5) BOARD MEETINGS; PLACE AND NOTICE. Meetings of the Board of Directors
may be held from time to time at any place within or without the State of
Minnesota that the Board of Directors may designate. In the absence of
designation by the Board of Directors, Board meetings shall be held at the
principal executive office of the corporation, except as may be otherwise
unanimously agreed orally, or in writing, or by attendance. Any director may
call a Board meeting by giving twenty-four (24) hours notice to all directors of
the date and time of the meeting. The notice need not state the purpose of the
meeting, and may be given by mail, telephone, telegram, telefax, or in person.
If a meeting schedule is adopted by the Board, or if the date and time of a
Board meeting has been announced at a previous meeting, no notice is required.

3.6) WAIVER OF NOTICE. A director may waive notice of any meeting before,
at or after the meeting, in writing, orally or by attendance. Attendance at a
meeting by a director is a waiver of notice of that meeting unless the director
objects at the beginning of the meeting to the transaction of business because
the meeting is not lawfully called or convened and does not participate
thereafter in the meeting.

3.7) ABSENT DIRECTORS. A director may give advance written consent or
opposition to a proposal to be acted on at a Board meeting. If the director is
not present at the meeting, consent or opposition to a proposal does not
constitute presence for purposes of determining the existence of a quorum, but
consent or opposition shall be counted as a vote in favor of or against the
proposal and shall be entered in the minutes of the meeting, if the proposal
acted on at the meeting is substantially the same or has substantially the same
effect as the proposal to which the director has consented or objected.

3.8) COMPENSATION. Directors shall receive such fixed sum and expenses per
meeting attended or such fixed annual sum or both as shall be determined from
time to time by resolution of the Board of Directors. Nothing herein contained
shall be construed to preclude any director from serving this corporation in any
other capacity and receiving proper compensation therefor.

3.9) COMMITTEES. The Board of Directors may, by resolution approved by
affirmative vote of a majority of the Board, establish committees having the
authority of the Board in the management of the business of the corporation only
to the extent provided in the resolution. Committees may include a special
litigation committee consisting of one or more independent directors or other
independent persons to consider legal rights or

<PAGE>

remedies of the corporation and whether those rights and remedies should be
pursued. Each such committee shall consist of one or more natural persons (who
need not be directors) appointed by the affirmative vote of a majority of the
directors present, and shall, other than special litigation committees, be
subject at all times to the direction and control of the Board. A majority of
the members of a committee present at a meeting shall constitute a quorum for
the transaction of business.

3.10) ORDER OF BUSINESS. The suggested order of business at any
meeting of the Board of Directors shall, to the extent appropriate and unless
modified by the presiding chairman, be:

(a) Roll call
(b) Proof of due notice of meeting or waiver of notice, or unanimous
presence and declaration by presiding chairman
(c) Determination of existence of quorum
(d) Reading and disposal of any unapproved minutes
(e) Reports of officers and committees
(f) Election of officers
(g) Unfinished business
(h) New business
(i) Adjournment.

ARTICLE 4.
OFFICERS

4.1) NUMBER AND DESIGNATION. The corporation shall have one or more
natural persons exercising the functions of the offices of chief executive
officer and chief financial officer. The Board of Directors may elect or
appoint such other officers or agents as it deems necessary for the operation
and management of the corporation including, but not limited to, one or more
Chairmen of the Board, one or more Presidents, one or more Vice Presidents, a
Secretary and a Treasurer, each of whom shall have the powers, rights, duties
and responsibilities set forth in these Bylaws unless otherwise determined by
the Board. Any of the offices or functions of those offices may be held by the
same person.

4.2) ELECTION, TERM OF OFFICE AND QUALIFICATION. At the first meeting of
the Board following each election of directors, the Board shall elect officers,
who shall hold office until the next election of officers or until their
successors are elected or appointed and qualify; provided, however, that any
officer may be removed with or without cause by the affirmative vote of a
majority of the Board of Directors present (without prejudice, however, to any
contract rights of such officer).

4.3) RESIGNATION. Any officer may resign at any time by giving written
notice to the corporation. The resignation is effective when notice is given to
the corporation, unless a later date is specified in the notice, and acceptance
of the resignation shall not be necessary to make it effective.

4.4) VACANCIES IN OFFICE. If there be a vacancy in any office of the
corporation, by reason of death, resignation, removal or otherwise, such vacancy
may, or in the case of a vacancy in the office of chief executive officer or
chief financial officer shall, be filled for the unexpired term by the Board of
Directors.

4.5) CHIEF EXECUTIVE OFFICER. Unless provided otherwise by a resolution
adopted by the Board of Directors, the chief executive officer (a) shall have
general active management of the business of the corporation; (b) shall, when
present and in the absence of the Chairman of the Board, preside at all
meetings of the shareholders and Board of Directors; (c) shall see that all
orders and resolutions of the Board are carried into effect; (d) shall sign
and deliver in the name of the corporation any deeds, mortgages, bonds,
contracts or other instruments pertaining to the business of the corporation,
except in cases in which the authority to sign and deliver is required by law
to be exercised by another person or is expressly delegated by the Articles,
these Bylaws or the Board to some other officer or agent of the corporation;
(e) may maintain records of and certify proceedings of the Board

<PAGE>

and shareholders; and (f) shall perform such other duties as may from time to
time be assigned to the chief executive officer by the Board. In the event
that there are co-chief executive officers, each co-chief executive officer
may exercise all of the powers and functions of the office of chief executive
officer jointly with the other co-chief executive officer or alone, unless
provided otherwise by a resolution adopted by the Board of Directors.

4.6) CHIEF FINANCIAL OFFICER. Unless provided otherwise by a resolution
adopted by the Board of Directors, the chief financial officer (a) shall keep
accurate financial records for the corporation; (b) shall deposit all monies,
drafts and checks in the name of and to the credit of the corporation in such
banks and depositories as the Board of Directors shall designate from time to
time; (c) shall endorse for deposit all notes, checks and drafts received by
the corporation as ordered by the Board, making proper vouchers therefor; (d)
shall disburse corporate funds and issue checks and drafts in the name of the
corporation, as ordered by the Board; (e) shall render to the chief executive
officer and the Board of Directors, whenever requested, an account of all
transactions undertaken as chief financial officer and of the financial
condition of the corporation; and (f) shall perform such other duties as may
be prescribed by the Board of Directors or the chief executive officer from
time to time.

4.7) CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at
all meetings of the shareholders and of the Board and shall exercise general
supervision and direction over the more significant matters of policy
affecting the affairs of the corporation, including particularly its
financial and fiscal affairs. In the event that there are Co-Chairmen of the
Board, each Co-Chairman may exercise all of the powers and functions of the
office of Chairman of the Board jointly with the other Co-Chairman or alone,
unless provided otherwise by a resolution adopted by the Board of Directors.

4.8) PRESIDENT. Unless otherwise determined by the Board, the
President(s) shall be the chief executive officer(s). If an officer other
than the President is designated chief executive officer, the President shall
perform such duties as may from time to time be assigned to the President by
the Board. If the office of Chairman of the Board is not filled, the
President shall also perform the duties set forth in Section 4.7.

4.9) VICE PRESIDENT. Each Vice President shall have such powers and
shall perform such duties as may be specified in these Bylaws or prescribed
by the Board of Directors. In the event of absence or disability of the
President, the Board of Directors may designate a Vice President or Vice
Presidents to succeed to the power and duties of the President.

4.10) SECRETARY. The Secretary shall, unless otherwise determined by the
Board, be secretary of and attend all meetings of the shareholders and Board
of Directors, and may record the proceedings of such meetings in the minute
book of the corporation and, whenever necessary, certify such proceedings.
The Secretary shall give proper notice of meetings of shareholders and shall
perform such other duties as may be prescribed by the Board of Directors or
the chief executive officer from time to time.

4.11) TREASURER. Unless otherwise determined by the Board, the Treasurer
shall be the chief financial officer of the corporation. If an officer other
than the Treasurer is designated chief financial officer, the Treasurer shall
perform such duties as may be prescribed by the Board of Directors or the
chief executive officer from time to time.

4.12) DELEGATION. Unless prohibited by a resolution approved by the
affirmative vote of a majority of the directors present, an officer elected
or appointed by the Board may delegate in writing some or all of the duties
and powers of such officer to other persons.

ARTICLE 5.
INDEMNIFICATION

5.1) INDEMNIFICATION. The corporation shall indemnify such persons, for
such expenses and liabilities, in such manner, under such circumstances, and
to such extent, as permitted by Minnesota Statutes, Section 302A.521, as now
enacted or hereafter amended.

<PAGE>

ARTICLE 6.
SHARES AND THEIR TRANSFER

6.1) CERTIFICATE OF STOCK. Every owner of stock of the corporation
shall be entitled to a certificate, in such form as the Board of Directors
may prescribe, certifying the number of shares of stock of the corporation
owned by such shareholder. The certificates for such stock shall be numbered
(separately for each class) in the order in which they are issued and shall,
unless otherwise determined by the Board, be signed by the chief executive
officer, the chief financial officer, or any other officer of the
corporation. A signature upon a certificate may be a facsimile.
Certificates on which a facsimile signature of a former officer, transfer
agent or registrar appears may be issued with the same effect as if such
person were such officer, transfer agent or registrar on the date of issue.

6.2) STOCK RECORD. As used in these Bylaws, the term "shareholder"
shall mean the person, firm or corporation in whose name outstanding shares
of capital stock of the corporation are currently registered on the stock
record books of the corporation. The corporation shall keep, at its
principal executive office or at another place or places within the United
States determined by the Board, a share register not more than one year old
containing the names and addresses of the shareholders and the number and
classes of shares held by each shareholder. The corporation shall also keep
at its principal executive office or at another place or places within the
United States determined by the Board, a record of the dates on which
certificates representing shares were issued. Every certificate surrendered
to the corporation for exchange or transfer shall be cancelled and no new
certificate or certificates shall be issued in exchange for any existing
certificate until such existing certificate shall have been so cancelled
(except as provided for in Section 6.4 of this Article 6).

6.3) TRANSFER OF SHARES. Transfer of shares on the books of the
corporation may be authorized only by the shareholder named in the
certificate (or the shareholder's legal representative or duly authorized
attorney-in-fact) and upon surrender for cancellation of the certificate or
certificates for such shares. The shareholder in whose name shares of stock
stand on the books of the corporation shall be deemed the owner thereof for
all purposes as regards the corporation; provided, that when any transfer of
shares shall be made as collateral security and not absolutely, such fact, if
known to the corporation or to the transfer agent, shall be so expressed in
the entry of transfer; and provided, further, that the Board of Directors may
establish a procedure whereby a shareholder may certify that all or a portion
of the shares registered in the name of the shareholder are held for the
account of one or more beneficial owners.

6.4) LOST CERTIFICATE. Any shareholder claiming a certificate of stock
to be lost or destroyed shall make an affidavit or affirmation of that fact
in such form as the Board of Directors may require, and shall, if the
directors so require, give the corporation a bond of indemnity in form and
with one or more sureties satisfactory to the Board of at least double the
value, as determined by the Board, of the stock represented by such
certificate in order to indemnify the corporation against any claim that may
be made against it on account of the alleged loss or destruction of such
certificate, whereupon a new certificate may be issued in the same tenor and
for the same number of shares as the one alleged to have been destroyed or
lost.

ARTICLE 7.
RESTRICTIONS ON TRANSFER OF SHARES

7.1) OPTION RIGHT OF CORPORATION. The corporation shall have, and each
shareholder who accepts certificates evidencing capital stock of the
corporation hereby grants, upon the conditions and for the price specified in
this Article 7, the option to purchase the corporation's capital stock owned
by any shareholder upon the happening of any one of the following events:

(a) the desire or compulsion of such shareholder to sell or otherwise
transfer the corporation's stock, other than a sale, gift, testamentary
disposition or other transfer of the corporation's stock by such
shareholder to the spouse or a natural or adopted child of such shareholder
or a trust for the benefit of such

<PAGE>

shareholder or spouse or child of such shareholder, so long as the
transferee agrees to be bound by the terms, conditions and stock transfer
restrictions contained in this Article 7, or

(b) the bankruptcy or insolvency of such shareholder.

Such option shall become exercisable upon the happening of the event giving rise
thereto and shall be exercised within the manner and within the time hereinafter
provided.

7.2) OPTION RIGHT OF SHAREHOLDERS. In the event that the corporation shall
not exercise its option to purchase all of such shares, then, and in such event,
the other shareholders shall have, and are hereby granted, upon the conditions
and for the price specified in this Article 7, the option to purchase the shares
of the corporation's stock owned by the affected shareholder and not purchased
by the corporation. Such option shall become exercisable upon the corporation's
failure to exercise, or partial exercise of, its option under Section 7.1 and
shall be exercised within the manner and within the time hereinafter provided.
Except as otherwise provided in Section 7.4, each shareholder having the right
to exercise an option under this Article 7 (herein referred to as "purchaser" or
"purchasers") shall be entitled to purchase that portion of the seller's stock
which is equal to the ratio of the number of shares of stock of the corporation
owned by such purchaser to the total number of shares of such stock owned by
those entitled to purchase.

7.3) NOTICE. Written notice of the occurrence of the event giving rise to
the option provided in this Article 7 shall be forthwith given by the person
whose stock is subject to such option (said person being herein designated
"seller") or by the seller's legally constituted representative, as the case may
be, to the Secretary of the corporation; provided, however, that if the
Secretary of the corporation is the seller or the legally constituted
representative of the seller, such notice shall be given to the President or a
Vice President, or such other officer of the corporation who is neither the
seller nor the seller's legally constituted representative. Within a reasonable
time after receipt of such notice to sell or from the time the corporation is
apprised of an event specified in Section 7.1, the Secretary of the corporation
or the corporation's officer to whom such notice is directed, shall give written
notice to the other shareholders if an option is exercisable by the other
shareholders. If the notice hereinabove provided for is not given to the
corporation, the option to purchase shall, nevertheless, be exercisable from and
after the event giving rise thereto, but the time limits hereinafter prescribed
for exercise of such option and making payments therefor shall not begin until
such notice is given.

7.4) EXERCISE OF OPTION BY CORPORATION. The corporation's option shall
be exercised by the corporation not later than sixty (60) days from receipt
by the corporation of the notice specified in Section 7.3, except and unless
the corporation has within the previous twelve (12) month period purchased
such additional stock in the corporation from other shareholders in such
amounts which, when combined with the present proposed purchase, would exceed
10% of the shares of the corporation issued and outstanding as of the
beginning of said period and the consummation of said proposed purchase would
be in violation of the then existing statutory and regulatory sanctions
concerning purchase of stock by a corporation. The corporation may by
written notice to the seller, said notice to be delivered within sixty (60)
days after receipt of the notice specified in Section 7.3, notify the seller
of the corporation's desire to purchase said stock and further advise the
seller as to what date the corporation would be legally able to consummate
said purchase, which date shall not be more than three (3) years from the
date of said notice by the corporation. The notice of the corporation to
exercise its option to purchase on a delayed basis shall constitute an
exercise of its option and preclude further action pursuant to Article 7
concerning the sale or transfer of said stock by a seller.

7.5) EXERCISE OF OPTION BY SHAREHOLDERS. In the event the option is not
fully exercised by the corporation within such period, or the corporation
determines prior to the expiration of such period that it does not intend to
exercise such option, the option provided for hereunder for the other
shareholders of the corporation shall be exercised by such shareholder(s) by
giving written notice of such shareholder's election to exercise the option
to the corporation not later than ninety (90) days after the notice to the
other shareholders provided for in Section 7.3 has been given.

<PAGE>

7.6) FAILURE TO EXERCISE OPTION. Should any party entitled to be a
purchaser hereunder fail to exercise such purchaser's option within the time
period prescribed, or thereafter fail to deposit within the time period
herein prescribed the full purchase price of the shares of stock such
purchaser is entitled to purchase, then this corporation's Employee Stock
Ownership Plan (the "ESOP") shall have the right to purchase all then
available shares of stock not purchased by the other shareholders. The ESOP
shall be entitled to thirty (30) days notice of the availability of said
shares and within that time period shall tender to the corporation, the
purchase price as established herein in payment for said stock. Should the
ESOP fail to complete the exercise of its option within the time prescribed,
then each of the shareholders shall again have the right to purchase such
shares in the same ratio as each exercising purchaser's shares bears to the
total number of shares held by all exercising purchasers. Within five (5)
days after expiration of the ESOP option exercise period, the corporation
shall give written notice to all electing purchasers of the "secondary"
option created hereunder, setting forth the number of additional shares
subject to such secondary option and the date within which such option may be
exercised. Such "secondary" option shall be exercised by written notice
thereof given to the corporation not later than fifteen (15) days after the
notice of such "secondary" option has been given.

7.7) DEPOSIT OF CERTIFICATE(S). Within ten (10) days after notice of
the event giving rise to the sale is given or upon demand by the corporation
if no such notice is given, the seller, or the seller's legally constituted
representative, as the case may be, shall deposit the certificate or
certificates representing the seller's stock in the corporation, duly
endorsed or duly assigned in blank, with the corporation, as a depository,
and shall by such deposit vest in the corporation, as a depository, the
authority to deliver such certificate or certificates and the shares
represented thereby to the purchasers upon full payment of the purchase
price. Any shares not purchased hereunder shall be forthwith returned by the
corporation to the seller. Until the shares held by the corporation as
depository are delivered to the purchasers, the seller shall for all purposes
other than transfer be treated as the owner of such shares.

7.8) PURCHASE PRICE CALCULATION. The purchase price to be paid for each
share of stock purchased hereunder, regardless of whether the purchaser is
the corporation or any other shareholder, shall be an amount equal to One
Hundred Fifty Percent (150%) of the "Total Adjusted Consolidated Tangible
Book Value" of such stock as of the most recent quarter ended prior to
receipt of written notice from the seller indicating a desire to sell the
corporation's stock. As used herein, "Total Adjusted Consolidated Tangible
Book Value" begins with the "Adjusted Consolidated Book Value" which includes
all equity accounts of the corporation, but shall not include any cumulative
unrealized gain or loss resulting from the subsidiary banks' compliance with
the Statement of Financial Accounting Standards No. 115 issued by the
Financial Accounting Standards Board. Intangible assets incurred PRIOR to the
merger of this corporation's predecessor corporations (that is, the merger of
Goodhue County Financial Corporation with and into Signal Bancshares, Inc.,
as provided in that certain Merger Agreement dated as of May 31, 1993, as
amended, the "Merger Agreement") are then subtracted from the "Adjusted
Consolidated Book Value of Company" to reflect "Adjusted Consolidated Book
Value of Company Prior to Goodhue Merger Adjustments." The Goodhue Merger
Adjustments which include any recorded goodwill and/or fair market value
adjustments in connection with the Goodhue merger that are unamortized,
unaccreted or not depreciated, as determined in accordance with generally
accepted accounting principles, are subtracted to the extent of the ratio of
the "Goodhue Conversion Value" exchanged for stock divided by the total
"Aggregate Goodhue Conversion Value." As used herein, "Goodhue Conversion
Value" shall mean the sum of the Goodhue Common Stock Conversion Value, the
12% Preferred Conversion Value and the 18% Preferred Conversion Value, each
as defined in the Merger Agreement. As used herein, "Aggregate Goodhue
Conversion Value" shall mean the sum of the Goodhue Common Stock Aggregate
Conversion Value, the 12% Preferred Aggregate Conversion Value and the 18%
Preferred Aggregate Conversion Value, each as defined in the Merger
Agreement. The formula to be used would be:

Consolidated Book Value of Company $

Subtract: Cumulative Unrealized Gains ( )
Resulting from FASB 115
Add: Cumulative Unrealized Losses
Resulting from FASB 115
------
Adjusted Consolidated Book Value of Company $

<PAGE>

Subtract Intangible Assets Incurred Prior to Goodhue
Merger
(a) Core Deposit Intangible - Signal ( )
------
Adjusted Consolidated Book Value of Company Prior to Goodhue $
Merger Adjustments
Subtract Pro Rata Portion of Goodhue Push-Down
Accounting Merger Adjustments
(a) Unamortized Goodwill $
(b) Unamortized Fair Market Value
Adjustments Related to Merger
(Push-Down Accounting) ------

Total Goodhue Merger Related Adjustments $
Multiply by Percent of Goodhue Conversion Value
Exchanged for Stock x % ( )
------ ------

Total Adjusted Consolidated Tangible Book Value of Company $

Multiply by 150 percent x 1.50
------
Total Purchase Price Calculation $

Divide by Number of Shares Outstanding ------

Purchase Price Per Share $
------
------

The Chief Financial Officer or other competent officer of the corporation shall
cause the foregoing determination of the purchase price to be promptly made and
written notice thereof shall be given to all interested parties as provided in
Section 7.3.

7.9) DEPOSIT/PAYMENT OF PURCHASE PRICE. Within ten (10) days after an
election to exercise an option hereunder has been made, except for the
delayed purchase by the corporation as provided for in Section 7.4, such
purchasing party shall deliver to the corporation cash for the account of the
seller, or the seller's legally constituted representative, as the case may
be, an amount to equal the full purchase price of that portion of said stock
being purchased by such purchasing party. Upon receipt of the purchase price
for all of the shares being sold, the corporation shall forthwith pay over
such proceeds to the seller and shall deliver a certificate or certificates
for the shares sold to the purchasers as their interests may appear.
Thereafter, the corporation shall have no further obligation with respect to
the sale.

7.10) TERMINATION OF OPTION. Any option granted hereunder shall
terminate forthwith upon the failure of the party to whom such option is
granted to exercise the same within the time and in the manner herein
specified. If, with respect to any stock in the corporation, all options
hereunder are terminated, then, and in such event, the seller shall have the
full right to sell such stock on the market or to any third person, or
persons, and upon any such sale there shall be issued to the purchaser or
purchasers a certificate or certificates covering the stock so sold and there
shall be incorporated in or set forth on such certificate or certificates the
legend provided in Section 7.13.

7.11) AMENDMENT OF ARTICLE 7. This Article 7 shall remain in force and
effect until such time as the holders of 66.66% of the outstanding shares of
common stock of the corporation terminate or amend it by affirmative vote.

7.12) RESTRICTION ON TRANSFER; BINDING EFFECT. No stock of the
corporation held by any shareholder shall be transferred on the books thereof
and no sale, transfer or other disposition of any of said stock shall be
effective unless the same be done in conformity with the applicable terms and
conditions of this Article 7. Should any shareholder violate this Article 7
by attempting to transfer or otherwise dispose of any or all of such
shareholder's stock in the corporation without first complying with the terms
of this Article 7, any holder of any option to purchase such stock or any
part thereof shall have the right to compel the transferee to transfer and
deliver at the

<PAGE>

price and pursuant to the provisions of such option all such stock as may have
been transferred to said transferee. The provisions of Article 7 shall be
binding upon all of the corporation's shareholders and their respective heirs,
representatives, successors and assigns, and upon such additional persons as may
become shareholders by acquiring stock of the corporation.

7.13) CERTIFICATE LEGEND. Each certificate evidencing the ownership of
shares of stock in the corporation shall contain a reference to the terms of
this Article 7 so as to give notice thereof to any purchaser/transferee by
having the following legend endorsed on the face thereof as is or may
hereafter be provided by law:

"The shares of stock represented by this certificate are subject to certain
purchase options in the corporation and others as set forth in Article 7 of
the Bylaws, which Bylaws are available for inspection at the principal
office of the corporation."

7.14) PLEDGE OF STOCK. Nothing herein contained shall be construed to
prevent any shareholder from pledging any or all of such shareholder's stock
as security for a debt or obligation, but the pledgee of such stock shall
hold the same subject to the terms and rights to purchase to which such
pledged stock is subject and said option shall become immediately exercisable
upon receipt of written notice of said foreclosure as herein provided and the
party or parties having such option or options shall be entitled to purchase
the stock at the price and according to the terms herein provided.

7.15) SUBSIDIARY BANK STOCK. No shares of subsidiary bank stock shall
be sold by the corporation unless such sale has been authorized by the holders
of 66.66% of the corporation's shares at a meeting duly called for such purpose.
The corporation shall cause the subsidiary banks to issue no shares to persons
other than the corporation, except for qualifying shares for directors which
shall be subject to repurchase by the corporation upon the retirement,
voluntarily or involuntarily, of such persons from the Board.

7.16) MANNER OF GIVING NOTICE. All notices required or provided for
hereunder shall be in writing and shall be deemed given when delivered
personally or when deposited in the United States mails, postage prepaid,
addressed to the last known address of the party to whom mailed.

7.17) REGULATORY APPROVAL. Notwithstanding any other provision of this
Article 7 to the contrary, it is expressly agreed and understood that: (i)
closing of any sale/purchase of stock under this Article 7 is contingent upon
receipt of all necessary regulatory approvals for such sale/purchase; (ii)
closing of any such sale/purchase will be delayed as needed to obtain all
necessary regulatory approvals; and (iii) the parties shall be under no
obligation to consummate any sale/purchase for which regulatory approval has not
been received. A party exercising such party's option to acquire shares under
this Article 7 shall submit any necessary regulatory applications, in
conjunction with such proposed purchase, within thirty (30) days of such
exercise. The purchasing party agrees to submit any required Notification of
Change in Control, pursuant to federal and state law, in conjunction with that
purchasing party's exercise of such option within twenty-one (21) days of such
exercise. The corporation and/or the purchasing shareholder, as the case may
be, agree to inform the seller within fifteen (15) days of receipt of any
regulatory notification pursuant to this Section 7.17.

7.18) AUTOMATIC TERMINATION OF ARTICLE 7. This Article 7 of these
Bylaws shall automatically terminate without any action by any party upon the
successful completion of an initial public offering of any of the corporation's
securities pursuant to a Registration Statement under the Securities Act of
1933, as amended.

ARTICLE 8.
GENERAL PROVISIONS

8.1) RECORD DATES. In order to determine the shareholders entitled to
notice of and to vote at a meeting, or entitled to receive payment of a
dividend or other distribution, the Board of Directors may fix a record date
which shall not be more than sixty (60) days preceding the date of such
meeting or distribution. In the absence of action by the Board, the record
date for determining shareholders entitled to notice of and to vote at a
meeting shall be at the close of business on the day preceding the day on
which notice is given, and the record date for

<PAGE>

determining shareholders entitled to receive a distribution shall be at the
close of business on the day on which the Board of Directors authorizes such
distribution.

8.2) DISTRIBUTIONS; ACQUISITIONS OF SHARES. Subject to the provisions of
law, the Board of Directors may authorize the acquisition of the corporation's
shares and may authorize distributions whenever and in such amounts as, in its
opinion, the condition of the affairs of the corporation shall render it
advisable.

8.3) FISCAL YEAR. The fiscal year of the corporation shall be established
by the Board of Directors.

8.4) SEAL. The corporation shall have no corporate seal.

8.5) SECURITIES OF OTHER CORPORATIONS.

(a) VOTING SECURITIES HELD BY THE CORPORATION. Unless otherwise ordered
by the Board of Directors, the chief executive officer shall have full
power and authority on behalf of the corporation (i) to attend and to vote
at any meeting of security holders of other companies in which the
corporation may hold securities; (ii) to execute any proxy for such meeting
on behalf of the corporation; and (iii) to execute a written action in lieu
of a meeting of such other company on behalf of this corporation. At such
meeting, by such proxy or by such writing in lieu of meeting, the chief
executive officer shall possess and may exercise any and all rights and
powers incident to the ownership of such securities that the corporation
might have possessed and exercised if it had been present. The Board of
Directors may from time to time confer like powers upon any other person or
persons.

(b) PURCHASE AND SALE OF SECURITIES. Unless otherwise ordered by the
Board of Directors, the chief executive officer shall have full power and
authority on behalf of the corporation to purchase, sell, transfer or
encumber securities of any other company owned by the corporation which
represent not more than 10% of the outstanding securities of such issue,
and may execute and deliver such documents as may be necessary to
effectuate such purchase, sale, transfer or encumbrance. The Board of
Directors may from time to time confer like powers upon any other person or
persons.

8.6) SHAREHOLDER AGREEMENTS. In the event of any conflict or inconsistency
between these Bylaws, or any amendment thereto, and any shareholder control
agreement as defined in Minnesota Statutes, Section 302A.457, whenever adopted,
such shareholder control agreement shall govern.

ARTICLE 9.
MEETINGS

9.1) TELEPHONE MEETINGS AND PARTICIPATION. A conference among directors by
any means of communication through which the directors may simultaneously hear
each other during the conference constitutes a Board meeting, if the same notice
is given of the conference as would be required for a meeting, and if the number
of directors participating in the conference would be sufficient to constitute a
quorum at a meeting. Participation in a meeting by that means constitutes
presence in person at the meeting. A director may participate in a Board
meeting not heretofore described in this paragraph, by any means of
communication through which the director, other directors so participating, and
all directors physically present at the meeting may simultaneously hear each
other during the meeting. Participation in a meeting by that means constitutes
presence in person at the meeting. The provisions of this section shall apply
to committees and members of committees to the same extent as they apply to the
Board and directors.

9.2) AUTHORIZATION WITHOUT MEETING. Any action of the shareholders, the
Board of Directors, or any committee of the corporation which may be taken at a
meeting thereof, may be taken without a meeting if authorized by a writing
signed by all of the holders of shares who would be entitled to vote on such
action, by all of the directors (unless less than unanimous action is permitted
by the Articles of Incorporation), or by all of the members of such committee,
as the case may be.

<PAGE>

ARTICLE 10.
AMENDMENTS OF BYLAWS

10.1) AMENDMENTS. Unless the Articles of Incorporation provide
otherwise, these Bylaws may be altered, amended, added to or repealed by the
affirmative vote of a majority of the members of the Board of Directors.
Such authority in the Board of Directors is subject to the power of the
shareholders to change or repeal such Bylaws, and the Board of Directors
shall not make or alter any Bylaws fixing a quorum for meetings of
shareholders, prescribing procedures for removing directors or filling
vacancies on the Board, or fixing the number of directors or their
classifications, qualifications or terms of office, but the Board may adopt
or amend a Bylaw to increase the number of directors.

The undersigned, Galen T. Pate, Co-Chief Executive Officer and Secretary of
United Community Bancshares, Inc., hereby certifies that the foregoing Bylaws
were duly adopted as the Bylaws of the corporation by its shareholders to be
effective as of January 1, 1994.

/s/
-----------------------------------------
Galen T. Pate, Co-Chief Executive Officer
and Secretary

Attest:

/s/
- -------------------------------------------
R. Scott Jones, Co-Chief Executive Officer
and Chief Financial Officer

<PAGE>

Bylaws Amendments
Approved April 30, 1996

7.1) OPTION RIGHT OF CORPORATION. The corporation shall have, and each
shareholder who accepts certificates evidencing capital stock of the corporation
hereby grants, upon the conditions and for the price specified in this Article
7, the option to purchase the corporation's capital stock owned by any
shareholder upon the happening of any one of the following events:

(a) the desire or compulsion of such shareholder to sell or otherwise
transfer the corporation's stock, other than:

(x) a sale, gift, testamentary disposition or other transfer of
the corporation's stock by such shareholder to:

(i) the spouse or a natural or adopted child or grandchild
of such shareholder; or,

(ii) a trust for the benefit of such shareholder or spouse
or natural or adopted child or grandchild of such shareholder,

(y) a gift or testamentary disposition of the corporate stock to
a charitable organization or private foundation as defined in the
applicable sections of the Internal Revenue Code of 1986 as amended
and the Regulations of the Secretary of the Treasury promulgated
thereunder,

so long as the transferee agrees in writing to be bound by the terms,
conditions and stock transfer restrictions contained in this Article 7, or

(b) the bankruptcy or insolvency of such shareholder.

Such option shall become exercisable upon the happening of the event giving rise
thereto and shall be exercised within the manner and within the time hereinafter
provided.

7.8) STOCK TRANSFER PRICE CALCULATION. The transfer price to be paid for
each share of stock transferred hereunder, regardless of whether the transferee
is the corporation or any other shareholder, shall be an amount equal to One
Hundred Fifty Percent (150%) of the "Total Adjusted Consolidated Tangible Book
Value" plus One Hundred Percent (100%) of the "Total Consolidated Intangible
Book Value" of such stock as of the most recent quarter ended prior to receipt
of written notice from the seller indicating a desire to sell the corporation's
stock. As used herein, "Total Adjusted Consolidated Tangible Book Value" is
defined as "Adjusted Consolidated Book Value" (which is defined as Total
Stockholders' Equity of the corporation excluding any cumulative unrealized gain
or loss resulting from the subsidiary bank's compliance with the Statement of
Financial Accounting Standards No. 115 issued by the Financial Accounting
Standards Board) less "Consolidated Intangible Book Value" (defined as the
balance of Intangible Assets that are unamortized, unaccreted or not
depreciated, as determined in accordance with generally accepted accounting
principles). The formula shall be as follows:

Consolidated Stockholders' Equity $
Subtract FASB 115 Unrealized Gains ( )
Add FASB Unrealized Losses ------------------

Adjusted Consolidated Book Value $
Less Con Multiply by 150% ( )
------------------
Adjusted Consolidated Tangible Book Value $
x 1.50
------------------

<PAGE>

Consolidated Tangible Transfer Value $
Plus Consolidated Intangible Book Value +
------------------

Total Stock Transfer Price Calculation $
Divide by Outstanding Shares ------------------
Stock Transfer Price Per Share $
------------------
------------------

The Chief Financial Officer of the corporation or designee shall cause the
foregoing determination of the purchase price to be promptly made and written
notice thereof shall be given to all interested parties as provided in Section
7.3.

BYLAWS AMENDMENT
APPROVED NOVEMBER 8, 1996

7.18) AUTOMATIC TERMINATION OF ARTICLE 7. This Article 7 of these
Bylaws shall automatically terminate without any action by any party upon the
successful registration of the corporation's common stock pursuant to a
Registration Statement under the Securities Act of 1933, as amended, in
connection with which the corporation's common stock is listed for trading on
the Nasdaq Small Cap Market, the Nasdaq National Market or any securities
exchange registered under the Securities Exchange Act of 1934, as amended.

<PAGE>

UNITED COMMUNITY BANCSHARES, INC.

AND

WILMINGTON TRUST COMPANY,
AS TRUSTEE

SUBORDINATED INDENTURE

____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

DATED AS OF JANUARY ___, 1997.

<PAGE>

TABLE OF CONTENTS

PAGE NO.

ARTICLE ONE: DEFINITIONS.................................................... 1
SECTION 1.1. DEFINITIONS OF TERMS...................................... 1

ARTICLE TWO: DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE JUNIOR SUBORDINATED
DEBENTURES................................................................. 9
SECTION 2.1. DESIGNATION AND PRINCIPAL AMOUNT.......................... 9
SECTION 2.2. MATURITY.................................................. 9
SECTION 2.3. FORM AND PAYMENT.......................................... 11
SECTION 2.4. GLOBAL SUBORDINATED DEBENTURE............................. 11
SECTION 2.5. INTEREST.................................................. 13
SECTION 2.6. EXECUTION, AUTHENTICATION, DELIVERY AND DATING............ 14
SECTION 2.7. REGISTRATION AND TRANSFER................................. 14
SECTION 2.8. MUTILATED, DESTROYED, LOST AND STOLEN
JUNIOR SUBORDINATED DEBENTURES......................................... 15

ARTICLE THREE: REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES................. 16
SECTION 3.1. REDEMPTION................................................ 16
SECTION 3.2. SPECIAL EVENT REDEMPTION.................................. 16
SECTION 3.3. OPTIONAL REDEMPTION BY COMPANY............................ 17
SECTION 3.4. NOTICE OF REDEMPTION...................................... 17
SECTION 3.5. PAYMENT UPON REDEMPTION................................... 19
SECTION 3.6. NO SINKING FUND........................................... 19

ARTICLE FOUR: EXTENSION OF INTEREST PAYMENT PERIOD.......................... 20
SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD...................... 20
SECTION 4.2. NOTICE OF EXTENSION....................................... 20
SECTION 4.3. LIMITATION OF TRANSACTIONS DURING EXTENSION............... 21

ARTICLE FIVE: PARTICULAR COVENANTS OF THE COMPANY........................... 21
SECTION 5.1. PAYMENT OF PRINCIPAL AND INTEREST......................... 21
SECTION 5.2. MAINTENANCE OF AGENCY..................................... 21
SECTION 5.3. PAYING AGENTS............................................. 22
SECTION 5.4. APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE.......... 23
SECTION 5.5. COMPLIANCE WITH CONSOLIDATION PROVISIONS.................. 23
SECTION 5.6. RESTRICTIONS ON CERTAIN PAYMENTS.......................... 23
SECTION 5.7. COVENANTS AS TO THE TRUST................................. 24

<PAGE>

ARTICLE SIX: SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE............................................. 24
SECTION 6.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
SECURITYHOLDERS.................................................... 24
SECTION 6.2. PRESERVATION OF INFORMATION; COMMUNICATIONS WITH
SECURITYHOLDERS.................................................... 25
SECTION 6.3. REPORTS BY THE COMPANY.................................... 25
SECTION 6.4. REPORTS BY THE TRUSTEE.................................... 26

ARTICLE SEVEN: REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT........................................................ 26
SECTION 7.1. EVENTS OF DEFAULT......................................... 26
SECTION 7.2. COLLECTION OF INDEBTEDNESS AND SUITS FORENFORCEMENT
BY TRUSTEE......................................................... 28
SECTION 7.3. APPLICATION OF MONEYS COLLECTED........................... 30
SECTION 7.4. LIMITATION ON SUITS....................................... 30
SECTION 7.5. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION
NOT WAIVER......................................................... 31
SECTION 7.6. CONTROL BY SECURITYHOLDERS................................ 32
SECTION 7.7. UNDERTAKING TO PAY COSTS.................................. 32

ARTICLE EIGHT: FORM OF JUNIOR SUBORDINATED DEBENTURE AND
ORIGINAL ISSUE............................................................. 33
SECTION 8.1. FORM OF JUNIOR SUBORDINATED DEBENTURE..................... 33
SECTION 8.2. ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES.......... 33

ARTICLE NINE: CONCERNING THE TRUSTEE........................................ 33
SECTION 9.1. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE........ 33
SECTION 9.2. CERTAIN RIGHTS OF TRUSTEE................................. 35
SECTION 9.3. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OR
THE JUNIOR SUBORDINATED DEBENTURES................................. 36
SECTION 9.4. MAY HOLD JUNIOR SUBORDINATED DEBENTURES................... 36
SECTION 9.5. MONEYS HELD IN TRUST...................................... 36
SECTION 9.6. COMPENSATION AND REIMBURSEMENT............................ 37
SECTION 9.7. RELIANCE ON OFFICERS' CERTIFICATE......................... 37
SECTION 9.8. DISQUALIFICATION; CONFLICTING INTERESTS.................. 38
SECTION 9.9. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY................... 38
SECTION 9.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR........ 38
SECTION 9.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR................... 39

<PAGE>

SECTION 9.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS........................................................ 40
SECTION 9.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
COMPANY............................................................ 41
SECTION 9.14. APPOINTMENT OF AUTHENTICATING AGENT...................... 41

ARTICLE TEN: CONCERNING THE SECURITYHOLDERS................................. 42
SECTION 10.1. EVIDENCE OF ACTION BY SECURITYHOLDERS.................... 42
SECTION 10.2. PROOF OF EXECUTION BY SECURITYHOLDERS.................... 43
SECTION 10.3. WHO MAY BE DEEMED OWNERS................................. 43
SECTION 10.4. CERTAIN JUNIOR SUBORDINATED DEBENTURES OWNED BY
COMPANY DISREGARDED................................................ 44
SECTION 10.5. ACTIONS BINDING ON FUTURE SECURITYHOLDERS................ 44

ARTICLE ELEVEN: SUPPLEMENTAL INDENTURES..................................... 45
SECTION 11.1. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
SECURITYHOLDERS.................................................... 45
SECTION 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF
SECURITYHOLDERS.................................................... 46
SECTION 11.3. EFFECT OF SUPPLEMENTAL INDENTURES........................ 46
SECTION 11.4. JUNIOR SUBORDINATED DEBENTURES AFFECTED BY
SUPPLEMENTAL INDENTURES............................................ 46
SECTION 11.5. EXECUTION OF SUPPLEMENTAL INDENTURES..................... 47

ARTICLE TWELVE: SUCCESSOR CORPORATION....................................... 47
SECTION 12.1. COMPANY MAY CONSOLIDATE, ETC............................. 47
SECTION 12.2. SUCCESSOR SUBSTITUTED.................................... 48
SECTION 12.3. EVIDENCE OF CONSOLIDATION, ETC., TO TRUSTEE.............. 48

ARTICLE THIRTEEN: SATISFACTION AND DISCHARGE................................ 48
SECTION 13.1. SATISFACTION AND DISCHARGE OF INDENTURE.................. 48
SECTION 13.2. DISCHARGE OF OBLIGATIONS................................. 49
SECTION 13.3. DEPOSITED MONEYS TO BE HELD IN TRUST..................... 49
SECTION 13.4. PAYMENT OF MONIES HELD BY PAYING AGENTS.................. 49
SECTION 13.5. REPAYMENT TO COMPANY..................................... 50

ARTICLE FOURTEEN: IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS........................................................... 50
SECTION 14.1. NO RECOURSE.............................................. 50

ARTICLE FIFTEEN: MISCELLANEOUS PROVISIONS................................... 51
SECTION 15.1. EFFECT ON SUCCESSORS AND ASSIGNS......................... 51
SECTION 15.2. ACTIONS BY SUCCESSOR..................................... 51
SECTION 15.3. SURRENDER OF COMPANY POWERS.............................. 51

iii

<PAGE>

SECTION 15.4. NOTICES.................................................. 51
SECTION 15.5. GOVERNING LAW............................................ 51
SECTION 15.6. TREATMENT OF JUNIOR SUBORDINATED DEBENTURES
AS DEBT............................................................ 52
SECTION 15.7. COMPLIANCE CERTIFICATES AND OPINIONS..................... 52
SECTION 15.8. PAYMENTS ON BUSINESS DAYS................................ 52
SECTION 15.9. CONFLICT WITH TRUST INDENTURE ACT........................ 52
SECTION 15.10. COUNTERPARTS............................................ 53
SECTION 15.11. SEPARABILITY............................................ 53
SECTION 15.12. ASSIGNMENT.............................................. 53
SECTION 15.13. ACKNOWLEDGMENT OF RIGHTS................................ 53

ARTICLE SIXTEEN: SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES............ 54
SECTION 16.1. AGREEMENT TO SUBORDINATE................................. 54
SECTION 16.2. DEFAULT ON SENIOR INDEBTEDNESS........................... 54
SECTION 16.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY..................... 55
SECTION 16.4. SUBROGATION.............................................. 56
SECTION 16.5. TRUSTEE TO EFFECTUATE SUBORDINATION...................... 57
SECTION 16.6. NOTICE BY THE COMPANY.................................... 57
SECTION 16.7. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR
INDEBTEDNESS....................................................... 58
SECTION 16.8. SUBORDINATION MAY NOT BE IMPAIRED........................ 58

<PAGE>

SUBORDINATED INDENTURE (the "Indenture), dated as of January ___, 1997,
among United Community Bancshares, Inc., a Minnesota corporation (the "Company")
and Wilmington Trust Company, a Delaware banking corporation, as trustee (the
"Trustee");

WHEREAS, for its lawful corporate purposes, the Company has duly authorized
the execution and delivery of this Indenture to provide for the issuance of its
securities to be known as its _____ % Junior Subordinated Deferrable Interest
Debentures due 2027 (hereinafter referred to as the "Junior Subordinated
Debentures"), the form and substance of such Junior Subordinated Debentures and
the terms, provisions and conditions thereof to be set forth as provided in this
Indenture; and

WHEREAS, United Capital Trust, a Delaware statutory business trust (the
"Trust"), has offered to the public $11,000,000 aggregate liquidation amount of
its ___% Cumulative Trust Preferred Securities (the "Preferred Securities"),
representing undivided beneficial interests in the assets of the Trust and
proposes to invest the proceeds from such offering, together with the proceeds
of the issuance and sale by the Trust to the Company of $___ million aggregate
liquidation amount of its ___% Trust Common Securities, in $____ million
aggregate principal amount of the Junior Subordinated Debentures; and

WHEREAS, the Company has requested that the Trustee execute and deliver
this Indenture, and all requirements necessary to make this Indenture a valid
instrument in accordance with its terms, and to make the Junior Subordinated
Debentures, when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company, have been performed, and the
execution and delivery of this Indenture has been duly authorized in all
respects; and

WHEREAS, to provide the terms and conditions upon which the Junior
Subordinated Debentures are to be authenticated, issued and delivered, the
Company has duly authorized the execution of this Indenture; and

WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.

NOW, THEREFORE, in consideration of the premises and the purchase of the
Junior Subordinated Debentures by the holders thereof, it is mutually covenanted
and agreed as follows for the equal and ratable benefit of the holders of Junior
Subordinated Debentures:

ARTICLE ONE
DEFINITIONS

SECTION 1.1. DEFINITIONS OF TERMS

The terms defined in this Section (except as in this Indenture otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of

<PAGE>

any indenture supplemental hereto shall have the respective meanings specified
in this Section and shall include the plural as well as the singular. All other
terms used in this Indenture that are defined in the Trust Indenture Act of
1939, as amended, or that are by reference in said Trust Indenture Act defined
in the Securities Act of 1933, as amended (except as herein otherwise expressly
provided or unless the context otherwise requires), shall have the meanings
assigned to such terms in said Trust Indenture Act and in said Securities Act as
in force at the date of the execution of this Indenture.

"Accelerated Maturity Date" means, if the Company elects to accelerate the
Maturity Date in accordance with Section 2.2(c), the date selected by the
Company which is prior to the Scheduled Maturity Date, but is after January 14,
2002.

"Administrative Trustees" has the meaning set forth in the Trust Agreement.

"Additional Sums" shall have the meaning set forth in Section 2.5.

"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person, (d) a partnership in which the specified Person is a
general partner, (e) any officer or director of the specified Person, and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.

"Authenticating Agent" means an authenticating agent with respect to the
Junior Subordinated Debentures appointed by the Trustee pursuant to Section
9.14.

"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state
law for the relief of debtors.

"Board of Directors" means the Board of Directors of the Company or any
duly authorized committee of such Board.

"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification.

"Business Day" means any day other than a day on which Federal or State
banking institutions in the State of Minnesota are authorized or obligated by
law, executive order or regulation to close or a day on which the Trustee is
closed.

<PAGE>

"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company. The Certificate need not comply with the provisions of Section
15.7.

"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.

"Common Securities" means undivided beneficial interests in the assets of
the Trust which rank pari passu with Preferred Securities issued by the Trust;
provided, however, that upon the occurrence of an Event of Default, the rights
of holders of Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.

"Company" means United Community Bancshares, Inc., a corporation duly
organized and existing under the laws of the State of Minnesota, and, subject to
the provisions of Article Twelve, shall also include its successors and assigns.

"Compounded Interest" shall have the meaning set forth in Section 4.1.

"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration.

"Custodian" means any receiver, trustee, assignee, liquidator, or similar
official under any Bankruptcy Law.

"Debt" means with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.

<PAGE>

"Default" means any event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.

"Deferred Interest" shall have the meaning set forth in Section 4.1.

"Depositary" means, with respect to Junior Subordinated Debentures issued
as a Global Subordinated Debenture, The Depository Trust Company, New York, New
York, another clearing agency, or any successor registered as a clearing agency
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
other applicable statute or regulation, which, in each case, shall be designated
by the Company pursuant to either Section 2.1 or 2.4.

"Dissolution Event" means that as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Trust Agreement and the Subordinated Debentures held by the Property Trustee
are to be distributed to the holders of the Trust Securities issued by the Trust
pro rata in accordance with the Trust Agreement.

"Distributions" shall have the meaning set forth in the Trust Agreement

"Event of Default" means any event specified in Section 7.1, continued for
the period of time, if any, therein designated.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Extended Interest Payment Period" shall have the meaning set forth in
Section 4.1.

"Extended Maturity Date" means if the Company elects to extend the Maturity
Date in accordance with Section 2.2(b), the date selected by the Company which
is after the Scheduled Maturity Date but before January 15, 2046.

"Federal Reserve" means the Board of Governors of the Federal Reserve
System.

"Global Subordinated Debentures" means a Junior Subordinated Debenture
executed by the Company and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, all in accordance with this Indenture,
which shall be registered in the name of the Depositary or its nominee.

"Governmental Obligations" means securities that are (i) direct obligations
of the United States of America for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as

<PAGE>

amended) as custodian with respect to any such Governmental Obligation or a
specific payment of principal of or interest on any such Governmental Obligation
held by such custodian for the account of the holder of such depositary receipt;
provided, however, that (except as required by law) such custodian is not
authorized to make any deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in respect of the
Governmental Obligation or the specific payment of principal of or interest on
the Governmental Obligation evidenced by such depositary receipt.

"Herein," "hereof," and "hereunder," and other words of similar import,
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision.

"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into in accordance with the terms hereof.

"Interest Payment Date," when used with respect to any installment of
interest on the Junior Subordinated Debentures, means the date specified in the
Junior Subordinated Debenture as the fixed date on which an installment of
interest with respect to the Junior Subordinated Debentures is due and payable.

"Investment Company Act" means the Investment Company Act of 1940, as
amended.

"Investment Company Event" means the receipt by the Company and the Trust
of an Opinion of Counsel experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in Investment
Company Act Law"), the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company Act, which Change
in Investment Company Act Law becomes effective on or after the date of original
issuance of the Preferred Securities under the Trust Agreement.

"Junior Subordinated Debentures" means the ___% Junior Subordinated
Deferrable Interest Debentures authenticated and delivered under this Indenture.

"Liquidation Amount" means the stated amount of $25 per Trust Security.

"Maturity Date" means the date on which the Junior Subordinated Debentures
mature and on which the principal shall be due and payable together with all
accrued and unpaid interest thereon including Compounded Interest and Additional
Sums, if any.

"Non Book-Entry Preferred Securities" shall have the meaning set forth in
Section 2.4.

<PAGE>

"Officers' Certificate" means a certificate signed by the President or a
Vice President and by the Chief Financial Officer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary of the Company
that is delivered to the Trustee in accordance with the terms hereof. Each such
certificate shall include the statements provided for in Section 15.7, if and to
the extent required by the provisions thereof.

"Opinion of Counsel" means an opinion in writing of legal counsel, who may
be an employee of or counsel for the Company, that is delivered to the Trustee
in accordance with the terms hereof. Each such opinion shall include the
statements provided for in Section 15.7, if and to the extent required by the
provisions thereof.

"Outstanding," when used with reference to Junior Subordinated Debentures
means, subject to the provisions of Section 10.4, as of any particular time, all
Junior Subordinated Debentures theretofore authenticated and delivered by the
Trustee under this Indenture, except (a) Junior Subordinated Debentures
theretofore cancelled by the Trustee or any paying agent, or delivered to the
Trustee or any paying agent for cancellation or that have previously been
cancelled; (b) Junior Subordinated Debentures or portions thereof for the
payment or redemption of which moneys or Governmental Obligations in the
necessary amount shall have been deposited in trust with the Trustee or with any
paying agent (other than the Company) or shall have been set aside and
segregated in trust by the Company (if the Company shall act as its own paying
agent); provided, however, that if such Junior Subordinated Debentures or
portions of such Junior Subordinated Debentures are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as in Article
Three provided, or provision satisfactory to the Trustee shall have been made
for giving such notice; and (c) Junior Subordinated Debentures in lieu of or in
substitution for which other Junior Subordinated Debentures shall have been
authenticated and delivered pursuant to the terms of Section 2.8.

"Person" means any individual, corporation, partnership, joint venture,
joint-stock company, unincorporated organization or government or any agency or
political subdivision thereof.

"Predecessor Security" means every previous Junior Subordinated Debenture
evidencing all or a portion of the same debt and as that evidenced by such
particular Junior Subordinated Debenture; and, for the purposes of this
definition, any Junior Subordinated Debenture authenticated and delivered under
Section 2.8 in lieu of a lost, destroyed or stolen Junior Subordinated Debenture
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Junior Subordinated Debenture.

"Preferred Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with Common Securities issued by the Trust;
provided, however, that upon the occurrence of an Event of Default, the rights
of holders of Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.

<PAGE>

"Preferred Securities Certificate" has the meaning set forth in the Trust
Agreement.

"Preferred Securities Guaranty" means any guaranty that the Company may
enter into with Wilmington Trust Company or other Persons that operates directly
or indirectly for the benefit of holders of Preferred Securities of the Trust.

"Property Trustee" has the meaning set forth in the Trust Agreement.

"Redemption Price" means the amount equal to 100% of the principal amount
of Junior Subordinated Debentures to be redeemed plus any accrued and unpaid
interest thereon to the date of the redemption of such Junior Subordinated
Debentures.

"Responsible Officer" when used with respect to the Trustee means the
Chairman of the Board of Directors, the President, any Vice President, the
Secretary, the Treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.

"Scheduled Maturity Date" means January 15, 2027.

"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 2.7.

"Securityholder," "Holder," "Holder of Securities," "Registered Holder," or
other similar term, means the Person or Persons in whose name or names a
particular Junior Subordinated Debenture shall be registered in the Securities
Register.

"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of this Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Junior Subordinated Debentures or to other
Debt which is pari passu with, or subordinated to, the Junior Subordinated
Debentures; provided, however, that Senior Debt shall not be deemed to include
(i) any Debt of the Company which when incurred and without respect to any
election under section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to the Company, (ii) any Debt of the Company to
any of its subsidiaries, (iii) any Debt to any employee of the Company, (iv) any
Debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Junior
Subordinated Debentures as a result of the subordination provisions of this
Indenture would be greater than they otherwise would have

<PAGE>

been as a result of any obligation of such holders to pay amounts over to the
obligees on such trade accounts payable or accrued liabilities arising in the
ordinary course of business as a result of subordination provisions to which
such Debt is subject, (v) any Debt which constitutes Subordinated Debt, and (vi)
any other debt securities issued pursuant to this Indenture.

"Senior Indebtedness" means Senior Debt and/or Subordinated Debt.

"Special Event" means a Tax Event or an Investment Company Event.

"Subordinated Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, which is by its terms expressly provided to be junior and subordinate
to other Debt of the Company (other than the Junior Subordinated Debentures).

"Subsidiary" means, with respect to any Person, (i) any corporation at
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person, or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by such
Person, or by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries and (iii) any limited partnership of which such Person or
any of its Subsidiaries is a general partner.

"Tax Event" means the receipt by the Company and the Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Junior Subordinated Debentures there is more than an insubstantial risk that
(i) interest payable by the Company on the Junior Subordinated Debentures is
not, or within 90 days after the date of such Opinion of Counsel will not be,
deductible by the Company, in whole or in part, for United States federal income
tax purposes; (ii) the Trust is, or will be within 90 days after the date of
such Opinion of Counsel, subject to United States federal income tax with
respect to income received or accrued on the Junior Subordinated Debentures, or
(iii) the Trust is, or will be within 90 days after the date of such Opinion of
Counsel, subject to more than a de minimis amount of other taxes, duties,
assessments or other governmental charges.

<PAGE>

"Trust" means United Capital Trust, a Delaware business trust created for
the purpose of issuing Preferred Securities and Common Securities in connection
with the issuance of Junior Subordinated Debentures under this Indenture.

"Trust Agreement" means the Amended and Restated Trust Agreement, dated as
of January __, 1997, of the Trust.

"Trustee" means Wilmington Trust Company and, subject to the provisions of
Article Nine, shall also include its successors and assigns, and, if at any time
there is more than one Person acting in such capacity hereunder, "Trustee" shall
mean each such Person.

"Trust Indenture Act," means the Trust Indenture Act of 1939 as in force at
the date of execution of this Indenture; provided, however, that in the event
the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture
Act" means, to the extent required by any such amendment, the Trust Indenture
Act of 1939 as so amended.

"Trust Securities" means Common Securities and Preferred Securities of the
Trust.

"Voting Stock," as applied to stock of any Person, means shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person having ordinary voting power for the election of a majority of
the directors (or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.

ARTICLE TWO
DESCRIPTION, TERMS, CONDITIONS
REGISTRATION AND EXCHANGE OF THE JUNIOR SUBORDINATED DEBENTURES

SECTION 2.1. DESIGNATION AND PRINCIPAL AMOUNT

There is hereby authorized a series of Securities designated the "___%
Junior Subordinated Deferrable Interest Debentures due 2027", limited in
aggregate principal amount to $11,340,200, which amount shall be as set forth in
any written order of the Company for the authentication and delivery of Junior
Subordinated Debentures pursuant to Section 8.2 of this Indenture.

SECTION 2.2. MATURITY

(a) The Maturity Date will be either:

(i) the Scheduled Maturity Date; or

<PAGE>

(ii) if the Company elects to extend the Maturity Date beyond the
Scheduled Maturity Date in accordance with Section 2.2(b), the
Extended Maturity Date; or

(iii) if the Company elects to accelerate the Maturity Date
to be a date prior to the Scheduled Maturity Date in accordance with
Section 2.2(c), the Accelerated Maturity Date.

(b) The Company may, at any time before the day which is 90 days
before the Scheduled Maturity Date, elect to extend the Maturity Date only
once to the Extended Maturity Date provided that the Company has received
the prior approval of the Federal Reserve if then required under applicable
capital guidelines or policies of the Federal Reserve and further provided
that the following conditions in this Section 2.2(b) are satisfied both at
the date the Company gives notice in accordance with Section 2.2(d) of its
election to extend the Maturity Date and at the Scheduled Maturity Date:

(i) the Company is not in bankruptcy, otherwise insolvent or
in liquidation;

(ii) the Company is not in default on any Junior Subordinated
Debentures issued to the Trust or any trustee of the Trust in
connection with the issuance of Trust Securities by the Trust; and

(iii) the Trust is not in arrears on payments of Distributions
on the Trust Securities issued by it and no deferred Distributions are
accumulated.

(c) The Company may, at any time before the day which is 90 days
before the Scheduled Maturity Date, elect to shorten the Maturity Date only
once to the Accelerated Maturity Date provided that the Company has
received the prior approval of the Federal Reserve if then required under
applicable capital guidelines or policies of the Federal Reserve.

(d) If the Company elects to extend the Maturity Date in accordance
with Section 2.2(b), the Company shall give notice to registered holders of
the Junior Subordinated Debentures, the Property Trustee and the Trust of
the extension of the Maturity Date and the Extended Maturity Date at least
90 days before the Scheduled Maturity Date.

(e) If the Company elects to accelerate the Maturity Date in
accordance with Section 2.2(c), the Company shall give notice to registered
holders of the Junior Subordinated Debentures, the Property Trustee and the
Trust of the acceleration of the Maturity Date and the Accelerated Maturity
Date at least 90 days before the Accelerated Maturity Date.

<PAGE>

SECTION 2.3. FORM AND PAYMENT

Except as provided in Section 2.4, the Junior Subordinated Debentures shall
be issued in fully registered certificated form without interest coupons.
Principal and interest on the Junior Subordinated Debentures issued in
certificated form will be payable, the transfer of such Junior Subordinated
Debentures will be registrable and such Junior Subordinated Debentures will be
exchangeable for Junior Subordinated Debentures bearing identical terms and
provisions at the office or agency of the Trustee; provided, however, that
payment of interest may be made at the option of the Company by check mailed to
the Holder at such address as shall appear in the Securities Register.
Notwithstanding the foregoing, so long as the Holder of any Junior Subordinated
Debentures is the Property Trustee, the payment of the principal of and interest
(including Compounded Interest and Additional Sums, if any) on such Junior
Subordinated Debentures held by the Property Trustee will be made at such place
and to such account as may be designated by the Property Trustee.

SECTION 2.4. GLOBAL SUBORDINATED DEBENTURE

(a) In connection with a Dissolution Event,

(i) the Junior Subordinated Debentures in certificated form
may be presented to the Trustee by the Property Trustee in exchange
for a global Junior Subordinated Debenture in an aggregate principal
amount equal to the aggregate principal amount of all outstanding
Junior Subordinated Debentures (a "Global Subordinated Debenture"), to
be registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary for crediting to the
accounts of its participants pursuant to the instructions of the
Administrative Trustees. The Company upon any such presentation shall
execute a Global Subordinated Debenture in such aggregate principal
amount and deliver the same to the Trustee for authentication and
delivery in accordance with this Indenture. Payments on the Junior
Subordinated Debentures issued as a Global Subordinated Debenture will
be made to the Depositary; and

(ii) if any Preferred Securities are held in non book-entry
certificated form, the Junior Subordinated Debentures in certificated
form may be presented to the Trustee by the Property Trustee and any
Preferred Securities Certificate which represents Preferred Securities
other than Preferred Securities held by the Depositary or its nominee
("Non Book-Entry Preferred Securities") will be deemed to represent
beneficial interests in Junior Subordinated Debentures presented to
the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate Liquidation Amount of the Non Book-Entry
Preferred Securities until such Preferred Securities Certificates are
presented to the Securities Registrar for transfer or reissuance at
which time such Preferred Securities Certificates will be

<PAGE>

cancelled and a Junior Subordinated Debenture, registered in the name
of the holder of the Preferred Securities Certificate or the
transferee of the holder of such Preferred Securities Certificate, as
the case may be, with an aggregate principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities Certificate
cancelled, will be executed by the Company and delivered to the
Trustee for authentication and delivery in accordance with this
Indenture. On issue of such Junior Subordinated Debentures, Junior
Subordinated Debentures with an equivalent aggregate principal amount
that were presented by the Property Trustee to the Trustee will be
deemed to have been cancelled.

(b) A Global Subordinated Debenture may be transferred, in whole but
not in part, only to another nominee of the Depositary, or to a successor
Depositary selected or approved by the Company or to a nominee of such
successor Depositary.

(c) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or if at any time the
Depositary for such series shall no longer be registered or in good
standing under the Exchange Act or other applicable statute or regulation,
and a successor Depositary for such series is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of
such condition, as the case may be, the Company will execute, and the
Trustee, upon written notice from the Company, will authenticate and
deliver the Junior Subordinated Debentures in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Subordinated Debenture
in exchange for such Global Junior Subordinated Debenture. In addition,
the Company may at any time determine that the Junior Subordinated
Debentures shall no longer be represented by a Global Subordinated
Debenture. In such event the Company will execute, and the Trustee, upon
receipt of an Officers' Certificate evidencing such determination by the
Company, will authenticate and deliver the Junior Subordinated Debentures
in definitive registered form without coupons, in authorized denominations,
and in an aggregate principal amount equal to the principal amount of the
Global Subordinated Debenture in exchange for such Global Subordinated
Debenture. Upon the exchange of the Global Subordinated Debenture for such
Junior Subordinated Debentures in definitive registered form without
coupons, in authorized denominations, the Global Subordinated Debenture
shall be cancelled by the Trustee. Such Junior Subordinated Debentures in
definitive registered form issued in exchange for the Global Subordinated
Debenture shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Junior Subordinated Debentures to the Depositary
for delivery to the Persons in whose names such Junior Subordinated
Debentures are so registered.

<PAGE>

SECTION 2.5. INTEREST

(a) Each Junior Subordinated Debenture will bear interest at the rate
of ___% per annum (the "Coupon Rate") from the original date of issuance
until the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest at the Coupon
Rate, compounded quarterly, payable (subject to the provisions of Article
Four) quarterly in arrears on the last day of March, June, September and
December in each year (each, an "Interest Payment Date"), commencing on
March 31, 1997, to the Person in whose name such Junior Subordinated
Debenture or any predecessor Junior Subordinated Debenture is registered,
at the close of business on the regular record date for such interest
installment, which, in respect of (i) Junior Subordinated Debentures of
which the Property Trustee is the Holder and the Preferred Securities are
in book-entry only form or (ii) a Global Subordinated Debenture, shall be
the close of business on the Business Day next preceding that Interest
Payment Date. Notwithstanding the foregoing sentence, if (i) the Junior
Subordinated Debentures are held by the Property Trustee and the Preferred
Securities are no longer in book-entry only form or (ii) the Junior
Subordinated Debentures are not represented by a Global Subordinated
Debenture, the record date for such interest installment which shall be the
15th day of the month in which such payment is to be made.

(b) The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. Except as provided in
the following sentence, the amount of interest payable for any period
shorter than a full quarterly period for which interest is computed will be
computed on the basis of the actual number of days elapsed in such a 30-day
period. In the event that any date on which interest is payable on the
Junior Subordinated Debentures is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if
made on such date.

(c) If, at any time while the Property Trustee is the Holder of any
Junior Subordinated Debentures, the Trust or the Property Trustee is
required to pay any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any case, the Company will
pay as additional interest ("Additional Sums") on the Junior Subordinated
Debentures held by the Property Trustee such additional amounts as shall be
required so that the net amounts received and retained by the Trust and the
Property Trustee after paying such taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust and the
Property Trustee would have

<PAGE>

received had no such taxes, duties, assessments or other government charges
been imposed.

SECTION 2.6. EXECUTION, AUTHENTICATION, DELIVERY AND DATING

The Junior Subordinated Debentures shall be executed on behalf of the
Company by its President or any Vice President and attested by its Secretary or
Assistant Secretary. The signature of any of these officers on the Subordinated
Debentures may be manual or facsimile.

Junior Subordinated Debentures bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Junior Subordinated Debentures or did not hold such offices at the date of such
Junior Subordinated Debentures.

At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Junior Subordinated Debentures executed by
the Company to the Trustee for authentication, together with a Company order for
the authentication and delivery of such Junior Subordinated Debentures. The
Trustee in accordance with such Company order shall authenticate and deliver
such Junior Subordinated Debentures as in this Indenture provided and not
otherwise.

Upon the initial issuance, each Junior Subordinated Debentures shall be
dated January 16, 1997, and thereafter Junior Subordinated Debentures issued
hereunder shall be dated the date of their authentication.

No Junior Subordinated Debenture shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears on
such Junior Subordinated Debenture a certificate of authentication substantially
in the form provided for herein executed by the Trustee by manual signature, and
such certificate upon any Junior Subordinated Debenture shall be conclusive
evidence, and the only evidence, that such Junior Subordinated Debenture has
been duly authenticated and delivered hereunder and is entitled to the benefits
of this Indenture.

SECTION 2.7. REGISTRATION AND TRANSFER

The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office or any other office
or agency pursuant to Section 5.2 being herein sometimes referred to as the
"Securities Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of the Junior
Subordinated Debentures and of transfers of the Junior Subordinated Debentures.
The Trustee is hereby appointed "Securities Registrar" for the purpose of

<PAGE>

registering the Junior Subordinated Debentures and transfers of the Junior
Subordinated Debentures as herein provided.

Upon surrender for registration of transfer of any Junior Subordinated
Debenture at an office or agency of the Company designated pursuant to Section
5.2 for such purpose, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, a new Junior Subordinated Debenture of the authorized denomination.

All Junior Subordinated Debentures issued upon any registration of transfer
of Junior Subordinated Debentures shall be valid obligations of the Company,
evidencing the same debt and entitled to the same benefits under this Indenture
as the Junior Subordinated Debentures surrendered upon such registration of
transfer.

Every Junior Subordinated Debenture presented or surrendered for
registration of transfer shall be duly endorsed for transfer (if so required by
the Company or the Trustee), or shall be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing.

No service charge shall be made for any registration of transfer of Junior
Subordinated Debentures, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer of Junior Subordinated Debentures.

The Company shall not be required to issue or register the transfer of any
Junior Subordinated Debenture during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Junior Subordinated Debentures selected for redemption pursuant to Article Three
and ending at the close of business on the day of such mailing.

SECTION 2.8 MUTILATED, DESTROYED, LOST AND STOLEN JUNIOR
SUBORDINATED DEBENTURES

If any mutilated Junior Subordinated Debenture is surrendered to the
Trustee, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a new Junior Subordinated Debenture of like tenor
and principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Company and the Trustee (i) evidence to
their satisfaction of the destruction, loss or theft of any Junior Subordinated
Debenture and (ii) such security or indemnity as may be required by them to save
each of them harmless, then, in the absence of notice to the Company or the
Trustee that such Junior Subordinated Debenture has been acquired by a bona fide
purchaser, the Company shall execute and upon

<PAGE>

its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Junior Subordinated Debenture, a new Junior
Subordinated Debenture of like tenor and principal amount and bearing a number
not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Junior Subordinated
Debenture has become or is about to become due and payable, the Company in its
discretion may, instead of issuing a new Junior Subordinated Debenture, pay such
Junior Subordinated Debenture.

Upon the issuance of any new Junior Subordinated Debenture under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.

Every new Junior Subordinated Debenture issued pursuant to this Section in
lieu of any destroyed, lost or stolen Junior Subordinated Debenture shall
constitute an original additional contractual obligation of the Company, whether
or not the destroyed, lost or stolen Junior Subordinated Debenture shall be at
any time enforceable by anyone, and shall be entitled to all of the benefits of
this Indenture.

The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Junior Subordinated Debentures.

ARTICLE THREE
REDEMPTION OF JUNIOR SUBORDINATED DEBENTURES

SECTION 3.1. REDEMPTION

Subject to the Company having received prior approval of the Federal
Reserve, if then required under the applicable capital guidelines or policies of
the Federal Reserve, the Company may redeem the Junior Subordinated Debentures
in accordance with this Article Three.

SECTION 3.2. SPECIAL EVENT REDEMPTION

Subject to the Company having received the prior approval of the Federal
Reserve, if then required under the applicable capital guidelines or policies of
the Federal Reserve, if a Special Event has occurred and is continuing, then,
notwithstanding Section 3.3, the Company shall have the right upon not less than
30 days nor more than 60 days notice to the Holders of the Junior Subordinated
Debentures to redeem the Junior Subordinated Debentures, in whole but not in
part, for cash within 90 days following the occurrence of such Special Event
(the "90-Day Period") at the Redemption Price, provided that if at the

<PAGE>

time there is available to the Company the opportunity to eliminate, within the
90-Day Period, the Tax Event by taking some ministerial action ("Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on the Company, the Trust
or the Holders of the Trust Securities issued by the Trust, the Company shall
pursue such Ministerial Action in lieu of redemption, and, provided, further,
that the Company shall have no right to redeem the Junior Subordinated
Debentures while the Trust is pursuing any Ministerial Action pursuant to its
obligations under the Trust Agreement. The Redemption Price shall be paid prior
to 2:00 p.m., Minneapolis time, on the date of such redemption or such earlier
time as the Company determines, provided that the Company shall deposit with the
Trustee an amount sufficient to pay the Redemption Price by 12:00 noon,
Minneapolis time, on the date such Redemption Price is to be paid.

SECTION 3.3. OPTIONAL REDEMPTION BY COMPANY

(a) Except as otherwise may be specified in this Indenture, the
Company shall have the right to redeem the Junior Subordinated Debentures,
in whole or in part, from time to time, on or after January 15, 2002, at
the Redemption Price. Any redemption pursuant to this Section 3.3 will be
made upon not less than 30 days nor more than 60 days notice to the Holder
of the Junior Subordinated Debentures, at the Redemption Price. If the
Junior Subordinated Debentures are only partially redeemed pursuant to this
Section 3.3, the Junior Subordinated Debentures will be redeemed pro rata
or by lot or by any other method utilized by the Trustee; provided, that if
at the time of redemption the Junior Subordinated Debentures are registered
as a Global Subordinated Debenture, the Depositary shall determine, in
accordance with its procedures, the principal amount of such Junior
Subordinated Debentures held by each Holder of Junior Subordinated
Debentures to be redeemed. The Redemption Price shall be paid prior to
2:00 p.m., Minneapolis time, on the date of such redemption or at such
earlier time as the Company determines provided that the Company shall
deposit with the Trustee an amount sufficient to pay the Redemption Price
by 12:00 noon, Minneapolis time, on the date such Redemption Price is to be
paid.

(b) If a partial redemption of the Junior Subordinated Debentures
would result in the delisting of the Preferred Securities issued by the
Trust from the Nasdaq National Market or any national securities exchange
or other organization on which the Preferred Securities may then be listed,
if any, the Company shall not be permitted to effect such partial
redemption and may only redeem the Junior Subordinated Debentures in whole.

SECTION 3.4. NOTICE OF REDEMPTION

(a) In case the Company shall desire to exercise such right to redeem
all or, as the case may be, a portion of the Junior Subordinated Debentures
in accordance

<PAGE>

with the right reserved so to do, the Company shall, or shall cause the
Trustee to, give notice of such redemption to Holders of the Junior
Subordinated Debentures to be redeemed by mailing, first class postage
prepaid, a notice of such redemption not less than 30 days and not more
than 60 days before the date fixed for redemption to such Holders at their
last addresses as they shall appear upon the Securities Register. Any
notice that is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the registered Holder
receives the notice. In any case, failure duly to give such notice to the
Holder of any Junior Subordinated Debenture designated for redemption in
whole or in part, or any defect in the notice, shall not affect the
validity of the proceedings for the redemption of any other Junior
Subordinated Debentures. In the case of any redemption of Junior
Subordinated Debentures prior to the expiration of any restriction on such
redemption provided elsewhere in this Indenture, the Company shall furnish
the Trustee with an Officers' Certificate evidencing compliance with any
such restriction.

Each such notice of redemption shall specify the date fixed for
redemption and the Redemption Price, and shall state that payment of the
Redemption Price of such Junior Subordinated Debentures to be redeemed will
be made at the office or agency of the Company in Minneapolis, Minnesota,
upon presentation and surrender of such Junior Subordinated Debentures,
that interest accrued to the date fixed for redemption will be paid as
specified in said notice, that from and after said date interest will cease
to accrue. If less than all the Junior Subordinated Debentures are to be
redeemed, the notice to the Holders of Junior Subordinated Debentures to be
redeemed in whole or in part shall specify the particular Junior
Subordinated Debentures to be so redeemed. In case any Junior Subordinated
Debenture is to be redeemed in part only, the notice that relates to such
Junior Subordinated Debenture shall state the portion of the principal
amount thereof to be redeemed, and shall state that on and after the
redemption date, upon surrender of such Junior Subordinated Debenture, a
new Junior Subordinated Debenture or Junior Subordinated Debentures in
principal amount equal to the unredeemed portion thereof shall be issued to
the Holder.

(b) If less than all the Junior Subordinated Debentures are to be
redeemed, the Company shall give the Trustee at least 45 days' notice in
advance of the date fixed for redemption as to the aggregate principal
amount of Junior Subordinated Debentures to be redeemed, and thereupon the
Trustee shall select, by lot or in such other manner as it shall deem
appropriate and fair in its discretion and that may provide for the
selection of a portion or portions (equal to twenty-five U.S. dollars ($25)
or any integral multiple thereof), the Junior Subordinated Debentures to be
redeemed and shall thereafter promptly notify the Company in writing of the
numbers of the Junior Subordinated Debentures to be redeemed, in whole or
in part.

The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the

<PAGE>

Trustee or any paying agent to call all or any part of the Junior
Subordinated Debentures for redemption and to give notice of redemption in
the manner set forth in this Section, such notice to be in the name of the
Company or in the name of the Trustee or the paying agent, as the Trustee
or such paying agent may deem advisable. In any case in which notice of
redemption is to be given by the Trustee or any such paying agent, the
Company shall deliver or cause to be delivered to, or permit to remain
with, the Trustee or such paying agent, as the case may be, such Securities
Register, transfer books or other records, or suitable copies or extracts
therefrom, sufficient to enable the Trustee or such paying agent to give
any notice by mail that may be required under the provisions of this
Section.

SECTION 3.5. PAYMENT UPON REDEMPTION

(a) If the giving of notice of redemption shall have been completed
as above provided, the Junior Subordinated Debentures or portions of Junior
Subordinated Debentures to be redeemed specified in such notice shall
become due and payable on the date and at the place stated in such notice
at the Redemption Price (which includes interest accrued to the date fixed
for redemption) and interest on such Junior Subordinated Debentures or
portions of Junior Subordinated Debentures shall cease to accrue on and
after the date fixed for redemption, unless the Company shall default in
the payment of such Redemption Price with respect to any such Junior
Subordinated Debenture or portion thereof. On presentation and surrender
of such Junior Subordinated Debentures on or after the date fixed for
redemption at the place of payment specified in the notice, such Junior
Subordinated Debentures shall be paid and redeemed at the Redemption Price
(which includes the interest accrued thereon to the date fixed for
redemption) (but if the date fixed for redemption is an Interest Payment
Date, the interest installment payable on such date shall be payable to the
registered Holder at the close of business on the applicable record date
pursuant to Section 2.5(a)).

(b) Upon presentation of any Junior Subordinated Debenture that is to
be redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the Junior Subordinated
Debenture is presented shall deliver to the Holder thereof, at the expense
of the Company, a new Junior Subordinated Debenture or Junior Subordinated
Debentures of authorized denominations in principal amount equal to the
unredeemed portion of the Junior Subordinated Debenture so presented.

SECTION 3.6. NO SINKING FUND

The Junior Subordinated Debentures are not entitled to the benefit of any
sinking fund.

<PAGE>

ARTICLE FOUR
EXTENSION OF INTEREST PAYMENT PERIOD

SECTION 4.1. EXTENSION OF INTEREST PAYMENT PERIOD

The Company shall have the right, at any time and from time to time during
the term of the Junior Subordinated Debentures, to defer payments of interest by
extending the interest payment period of such Junior Subordinated Debentures for
a period not exceeding 20 consecutive quarters (the "Extended Interest Payment
Period"), during which Extended Interest Payment Period no interest shall be due
and payable; provided that no Extended Interest Payment Period may extend beyond
the Maturity Date. To the extent permitted by applicable law, interest, the
payment of which has been deferred because of the extension of the interest
payment period pursuant to this Section 4.1, will bear interest thereon at the
Coupon Rate compounded quarterly for each quarter of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and unpaid on the
Junior Subordinated Debentures, including any Additional Sums and Compounded
Interest (together, "Deferred Interest") that shall be payable to the Holders of
the Junior Subordinated Debentures in whose names the Subordinated Debentures
are registered in the Securities Register on the first record date after the end
of the Extended Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Company may further extend such period, provided
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters, or extend beyond the Maturity Date. Upon the
termination of any Extended Interest Payment Period and upon the payment of all
Deferred Interest then due, the Company may commence a new Extended Interest
Payment Period, subject to the foregoing requirements. No interest shall be due
and payable during an Extended Interest Payment Period, except at the end
thereof, but the Company may prepay at any time all or any portion of the
interest accrued during an Extended Interest Payment Period.

SECTION 4.2. NOTICE OF EXTENSION

(a) If the Property Trustee is the only registered Holder of the
Junior Subordinated Debentures at the time the Company selects an Extended
Interest Payment Period, the Company shall give written notice to the
Administrative Trustees, the Property Trustee and the Trustee of its
selection of such Extended Interest Payment Period one Business Day before
the earlier of (i) the next succeeding date on which Distributions are
payable, or (ii) the date the Trust is required to give notice of the
record date, or the date such Distributions are payable, to the Preferred
Securities holders or to the Nasdaq National Market or other applicable
self regulatory organization, if any, but in any event at least one
Business Day before such record date.

(b) If the Property Trustee is not the only Holder of the Junior
Subordinated Debentures at the time the Company selects an Extended
Interest

<PAGE>

Payment Period, the Company shall give the Holders of the Junior
Subordinated Debentures and the Trustee written notice of its selection of
such Extended Interest Payment Period at least one Business Day before the
earlier of (i) the next succeeding Interest Payment Date, or (ii) the date
the Company is required to give notice of the record or payment date of
such interest payment to the Holders of the Junior Subordinated Debentures
or to the Nasdaq National Market or other applicable self regulatory
organization, if any.

(c) The quarter in which any notice is given pursuant to paragraph
(a) or paragraph (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the maximum Extended Interest Payment Period
permitted under Section 4.1.

SECTION 4.3. LIMITATION OF TRANSACTIONS DURING EXTENSION

If (i) the Company shall exercise its right to defer payment of interest as
provided in Section 4.1, or (ii) there shall have occurred any Event of Default,
then the Company may not (1) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of the Company's capital stock or (2) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in interest to the Junior
Subordinated Debentures or make any guaranty payments with respect to any
guaranty by the Company of the debt securities of any subsidiary of the Company
if such guaranty ranks pari passu with or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock, (b) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan in
the future, or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Preferred Securities Guaranty and (d) purchases of common
stock under any of the Company's benefit plans for its director, officers or
employees).

ARTICLE FIVE
PARTICULAR COVENANTS OF THE COMPANY

SECTION 5.1. PAYMENT OF PRINCIPAL AND INTEREST

The Company will duly and punctually pay or cause to be paid the principal
of and interest on the Junior Subordinated Debentures at the time and place and
in the manner provided herein and established with respect to such Junior
Subordinated Debentures.

SECTION 5.2. MAINTENANCE OF AGENCY

So long as any Junior Subordinated Debentures remain Outstanding, the
Company agrees to maintain an office or agency in Minneapolis, Minnesota or at
such other location or

<PAGE>

locations as may be designated as provided in this Section 5.2, where (i) Junior
Subordinated Debentures may be presented for payment, (ii) Junior Subordinated
Debentures may be presented as hereinabove authorized for registration of
transfer and exchange, and (iii) notices and demands to or upon the Company in
respect of the Junior Subordinated Debentures and this Indenture may be given or
served, such designation to continue with respect to such office or agency until
the Company shall, by written notice signed by its President or a Vice President
and delivered to the Trustee, designate some other office or agency for such
purposes or any of them. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, notices and demands may be made or served
at the Corporate Trust Office of the Trustee, and the Company hereby appoints
the Trustee as its agent to receive all such presentations, notices and demands.

SECTION 5.3. PAYING AGENTS

(a) If the Company shall appoint one or more paying agents for the
Junior Subordinated Debentures, other than the Trustee, the Company will
cause each such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:

(i) that it will hold all sums held by it as such agent for the
payment of the principal of or interest on the Junior Subordinated
Debentures (whether such sums have been paid to it by the Company or
by any other obligor) in trust for the benefit of the Persons entitled
thereto;

(ii) that it will give the Trustee notice of any failure by the
Company (or by any other obligor) to make any payment of the principal
of or interest on the Junior Subordinated Debentures when the same
shall be due and payable;

(iii) that it will, at any time during the continuance of any
failure referred to in the preceding paragraph (a)(ii) above, upon the
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such paying agent; and

(iv) that it will perform all other duties of paying agent as set
forth in this Indenture.

(b) If the Company shall act as its own paying agent with respect to
the Junior Subordinated Debentures, it will on or before each due date of
the principal of or interest on Junior Subordinated Debentures, set aside,
segregate and hold in trust for the benefit of the Persons entitled thereto
a sum sufficient to pay such principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of such

<PAGE>

action, or any failure (by it or any other obligor) to take such action.
Whenever the Company shall have one or more paying agents for the Junior
Subordinated Debentures, it will, prior to each due date of the principal
of or interest on the Junior Subordinated Debentures, deposit with the
paying agent a sum sufficient to pay the principal or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled
to such principal or interest, and (unless such paying agent is the
Trustee) the Company will promptly notify the Trustee of this action or
failure so to act.

(c) Notwithstanding anything in this Section to the contrary, (i) the
agreement to hold sums in trust as provided in this Section is subject to
the provisions of Section 13.5, and (ii) the Company may at any time, for
the purpose of obtaining the satisfaction and discharge of this Indenture
or for any other purpose, pay, or direct any paying agent to pay, to the
Trustee all sums held in trust by the Company or such paying agent, such
sums to be held by the Trustee upon the same terms and conditions as those
upon which such sums were held by the Company or such paying agent; and,
upon such payment by any paying agent to the Trustee, such paying agent
shall be released from all further liability with respect to such money.

SECTION 5.4. APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE

The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 9.10, a Trustee, so
that there shall at all times be a Trustee hereunder.

SECTION 5.5. COMPLIANCE WITH CONSOLIDATION PROVISIONS

The Company will not, while any of the Junior Subordinated Debentures
remain Outstanding, consolidate with, or merge into, or merge into itself, or
sell or convey all or substantially all of its property to any other company
unless the provisions of Article Twelve hereof are complied with.

SECTION 5.6. RESTRICTIONS ON CERTAIN PAYMENTS

If at any time (i) there shall have occurred any event of which the Company
has actual knowledge that (a) with the giving of notice or the lapse of time, or
both, would constitute an Event of Default and (b) in respect to which the
Company shall not have taken reasonable steps to cure, or (ii) the Company shall
have given notice of its election of an Extended Interest Payment Period as
provided herein with respect to the Junior Subordinated Debentures and shall not
have rescinded such notice, or such Extended Interest Payment Period, or any
extension thereof, shall be continuing; or (iii) while the Junior Subordinated
Debentures are held by the Trust, the Company shall be in default with respect
to its payment of any obligation under the Preferred Securities Guaranty, then
the Company will not (1) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or

<PAGE>

make a liquidation payment with respect to, any of the Company's capital stock
or (2) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company (including the Junior
Subordinated Debentures) that rank pari passu with or junior in interest to the
Junior Subordinated Debentures or make any guaranty payments with respect to any
guaranty by the Company of the debt securities of any subsidiary of the Company
if such guaranty ranks pari passu or junior in interest to the Junior
Subordinated Debentures (other than (a) dividends or distributions in common
stock, (b) any declaration of a dividend in connection with the implementation
of a shareholders' rights plan, or the issuance of stock under any such plan in
the future or the redemption or repurchase of any such rights pursuant thereto,
(c) payments under the Preferred Securities Guaranty and (d) purchases of common
stock related to rights under any of the Company's benefit plans for its
directors, officers or employees).

SECTION 5.7. COVENANTS AS TO THE TRUST

For so long as the Trust Securities of the Trust remain outstanding, the
Company will (i) maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of the
Company under this Indenture may succeed to the Company's ownership of the
Common Securities, (ii) use its reasonable efforts to cause the Trust (a) to
remain a business trust, except in connection with a distribution of Securities,
the redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement, and
(b) to otherwise continue not to be treated as an association taxable as a
corporation or partnership for United States federal income tax purposes and
(iii) to use its reasonable efforts to cause each Holder of Trust Securities to
be treated as owning an individual beneficial interest in the Securities.

If the Junior Subordinated Debentures are to be issued as a Global
Subordinated Debenture in connection with the distribution of the Junior
Subordinated Debentures to the holders of the Preferred Securities issued by the
Trust upon a Dissolution Event, the Company will use its best efforts to list
such Junior Subordinated Debentures on the Nasdaq National Market or on such
other exchange as the Preferred Securities may then be listed.

ARTICLE SIX
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 6.1. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
SECURITYHOLDERS

The Company will furnish or cause to be furnished to the Trustee (a) on a
monthly basis on each regular record date (as defined in Section 2.5(a)) a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Holders as of such

<PAGE>

regular record date, provided that the Company shall not be obligated to furnish
or cause to furnish such list at any time that the list shall not differ in any
respect from the most recent list furnished to the Trustee by the Company and
(b) at such other times as the Trustee may request in writing within 30 days
after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that, in either case, no such list need be
furnished if the Trustee shall be the Security Registrar.

SECTION 6.2. PRESERVATION OF INFORMATION; COMMUNICATIONS WITH
SECURITYHOLDERS

(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Holders
contained in the most recent list furnished to it as provided in Section
6.1 and as to the names and addresses of Holders received by the Trustee in
its capacity as Security Registrar (if acting in such capacity).

(b) The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.

(c) Securityholders may communicate as provided in Section 312(b) of
the Trust Indenture Act with other Securityholders with respect to their
rights under this Indenture or under the Junior Subordinated Debentures.

SECTION 6.3. REPORTS BY THE COMPANY

(a) The Company covenants and agrees to file with the Trustee, within
15 days after the Company is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) that
the Company may be required to file with the Commission pursuant to Section
13 or Section 15(d) of the Exchange Act; or, if the Company is not required
to file information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission, in accordance
with the rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents
and reports that may be required pursuant to any applicable rules and
regulations of the Commission.

(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from to
time by the Commission, such additional information, documents and reports
with respect to compliance by the Company with the conditions and covenants
provided for in this Indenture as may be required from time to time by such
rules and regulations.

<PAGE>

(c) The Company covenants and agrees to transmit by mail, first-class
postage prepaid, or reputable over-night delivery service that provides for
evidence of receipt, to the Securityholders, as their names and addresses
appear upon the Securities Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to subsections (a) and
(b) of this Section as may be required by rules and regulations prescribed
from time to time by the Commission.

SECTION 6.4. REPORTS BY THE TRUSTEE

(a) On or before July 15 in each year in which any of the Junior
Subordinated Debentures are Outstanding, the Trustee shall transmit by
mail, first class postage prepaid, to the Securityholders, as their names
and addresses appear upon the Securities Register, a brief report dated as
of the preceding May 15, if and to the extent required under Section 313(a)
of the Trust Indenture Act.

(b) The Trustee shall comply with Section 313(b) and 313(c) of the
Trust Indenture Act.

(c) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with the Company,
and also with the Commission.

ARTICLE SEVEN
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT

SECTION 7.1. EVENTS OF DEFAULT

(a) Whenever used herein, "Event of Default" means any one or more of
the following events that has occurred and is continuing:

(i) the Company defaults in the payment of any installment of
interest upon any of the Junior Subordinated Debentures, as and when
the same shall become due and payable, and continuance of such default
for a period of 30 days; provided, however, that a valid extension of
an interest payment period by the Company in accordance with the terms
of this Indenture shall not constitute a default in the payment of
interest for this purpose;

(ii) the Company defaults in the payment of the principal of any
of the Junior Subordinated Debentures as and when the same shall
become due and payable whether at maturity, upon redemption, by
declaration or otherwise; provided, however, that a valid extension of
the maturity in

<PAGE>

accordance with the terms of this Indenture shall not constitute a
default in the payment of principal;

(iii) the Company fails to observe or perform any other of
its covenants or agreements hereunder with respect to the Junior
Subordinated Debentures for a period of 90 days after the date on
which written notice of such failure, requiring the same to be
remedied and stating that such notice is a "Notice of Default"
hereunder, shall have been given to the Company by the Trustee, by
registered or certified mail, or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Junior Subordinated
Debentures at the time Outstanding;

(iv) the Company pursuant to or within the meaning of any
Bankruptcy Law (1) commences a voluntary case, (2) consents to the
entry of an order for relief against it in an involuntary case, (3)
consents to the appointment of a custodian of it or for all or
substantially all of its property or (4) makes a general assignment
for the benefit of its creditors;

(v) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (1) is for relief against the Company in an
involuntary case, (2) appoints a custodian of the Company for all or
substantially all of its property, or (3) orders the liquidation of
the Company, and the order or decree remains unstayed and in effect
for 90 days; or

(vi) in the event Junior Subordinated Debentures are issued to
the Trust or a trustee of the Trust in connection with the issuance of
Trust Securities by the Trust, the Trust shall have voluntarily or
involuntarily dissolved, wound-up its business or otherwise terminated
its existence, except in connection with (1) the distribution of
Junior Subordinated Debentures to holders of Trust Securities in
liquidation of their interests in the Trust, (2) the redemption of all
of the outstanding Trust Securities of the Trust or (3) certain
mergers, consolidations or amalgamations, each as permitted by the
Trust Agreement.

(b) In each and every such case, unless the principal of all the
Junior Subordinated Debentures shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Junior Subordinated Debentures then Outstanding
hereunder, by notice in writing to the Company (and to the Trustee if given
by such Securityholders) may declare the principal of all the Junior
Subordinated Debentures to be due and payable immediately, and upon any
such declaration the same shall become and shall be immediately due and
payable, notwithstanding anything contained in this Indenture or in the
Junior Subordinated Debentures to the contrary.

<PAGE>

(c) At any time after the principal of the Junior Subordinated
Debentures shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been
obtained or entered as hereinafter provided, the Holders of a majority in
aggregate principal amount of the Junior Subordinated Debentures then
Outstanding, by written notice to the Company and the Trustee, may rescind
and annul such declaration and its consequences if: (i) the Company has
paid or deposited with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Junior Subordinated Debentures and
the principal of any and all Junior Subordinated Debentures that shall have
become due otherwise than by acceleration (with interest upon such
principal and, to the extent that such payment is enforceable under
applicable law, upon overdue installments of interest, at the rate per
annum expressed in the Junior Subordinated Debentures to the date of such
payment or deposit) and the amount payable to the Trustee under Section
9.6, and (ii) any and all Events of Default under this Indenture, other
than the nonpayment of principal on Junior Subordinated Debentures that
shall not have become due by their terms, shall have been remedied or
waived as provided in Section 7.6. Should the Holders fail to annul such
declaration and waive such default, then the holders of a majority in
aggregate Liquidation Amount of the Preferred Securities shall have such
right.

No such rescission and annulment shall extend to or shall affect any
subsequent default or impair any right consequent thereon.

(d) In case the Trustee shall have proceeded to enforce any right
with respect to Junior Subordinated Debentures under this Indenture and
such proceedings shall have been discontinued or abandoned because of such
rescission or annulment or for any other reason or shall have been
determined adversely to the Trustee, then and in every such case the
Company and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Trustee shall continue as though no such proceedings had
been taken.

SECTION 7.2. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE

(a) The Company covenants that (i) in case it shall default in the
payment of any installment of interest on any of the Junior Subordinated
Debentures as and when the same shall have become due and payable, and such
default shall have continued for a period of 90 Business Days, or (ii) in
case it shall default in the payment of the principal of any of the Junior
Subordinated Debentures when the same shall have become due and payable,
whether upon maturity of the Junior Subordinated Debentures or upon
redemption or upon declaration or otherwise, then, upon demand of the
Trustee, the Company will pay to the Trustee, for the benefit of the Holders
of the Junior Subordinated Debentures, the whole amount that then shall have
become

<PAGE>

due and payable on all such Junior Subordinated Debentures for principal or
interest, or both, as the case may be, with interest upon the overdue
principal and (to the extent that payment of such interest is enforceable
under applicable law and, if the Junior Subordinated Debentures are held by
the Trust or a trustee of the Trust, without duplication of any other
amounts paid by the Trust or trustee in respect thereof) upon overdue
installments of interest at the rate per annum expressed in the Junior
Subordinated Debentures; and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, and the
amount payable to the Trustee under Section 9.6.

(b) If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at
law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and
may enforce any such judgment or final decree against the Company or other
obligor upon the Junior Subordinated Debentures and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or other obligor upon the Junior Subordinated
Debentures, wherever situated.

(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or judicial
proceedings affecting the Company or the creditors or property of either,
the Trustee shall have power to intervene in such proceedings and take any
action therein that may be permitted by the court and shall (except as may
be otherwise provided by law) be entitled to file such proofs of claim and
other papers and documents as may be necessary or advisable in order to
have the claims of the Trustee and of the Holders of Junior Subordinated
Debentures allowed for the entire amount due and payable by the Company
under this Indenture at the date of institution of such proceedings and for
any additional amount that may become due and payable by the Company after
such date, and to collect and receive any moneys or other property payable
or deliverable on any such claim, and to distribute the same after the
deduction of the amount payable to the Trustee under Section 9.6; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Holders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of such
payments directly to such Securityholders, to pay to the Trustee any amount
due it under Section 9.6.

(d) All rights of action and of asserting claims under this Indenture
may be enforced by the Trustee without the possession of any of the Junior
Subordinated Debentures, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall, after

<PAGE>

provision for payment to the Trustee of any amounts due under Section 9.6,
be for the ratable benefit of the Holders of the Junior Subordinated
Debentures.

In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall
deem most effectual to protect and enforce any of such rights, either at
law or in equity or in bankruptcy or otherwise, whether for the specific
enforcement of any covenant or agreement contained in this Indenture or in
aid of the exercise of any power granted in this Indenture, or to enforce
any other legal or equitable right vested in the Trustee by this Indenture
or by law.

Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder
any plan of reorganization, arrangement, adjustment or composition
affecting the Junior Subordinated Debentures or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding.

SECTION 7.3. APPLICATION OF MONEYS COLLECTED

Any moneys collected by the Trustee pursuant to this Article with respect
to the Junior Subordinated Debentures shall be applied in the following order,
at the date or dates fixed by the Trustee and, in case of the distribution of
such moneys on account of principal or interest, upon presentation of the Junior
Subordinated Debentures, and notation thereon the payment, if only partially
paid, and upon surrender thereof if fully paid:

FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 9.6;

SECOND: To the payment of all Senior Indebtedness of the Company if
and to the extent required by Article Sixteen; and

THIRD: To the payment of the amounts then due and unpaid upon Junior
Subordinated Debentures for principal and interest, in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Junior Subordinated Debentures for principal and interest,
respectively.

SECTION 7.4. LIMITATION ON SUITS

No Holder shall have any right by virtue of or by availing any provision of
this Indenture to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Indenture or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless (i) such Holder
previously shall have given to the Trustee written

<PAGE>

notice of an Event of Default and of the continuance thereof; (ii) the Holders
of not less than 25% in aggregate principal amount of the Junior Subordinated
Debentures then Outstanding shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as trustee hereunder;
(iii) such Holder or Holders shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby; and (iv) the Trustee for 60 days after its receipt
of such notice, request and offer of indemnity shall have failed to institute
any such action, suit or proceeding; and (v) during such 60 day period, the
Holders of a majority in principal amount of the Junior Subordinated Debentures
do not give the Trustee a direction inconsistent with the request.

Notwithstanding any other provisions of this Indenture to the contrary, the
right of any Holder to receive payment of the principal of and interest on the
Junior Subordinated Debentures on or after the respective due dates (or in the
case of redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates or redemption
date, shall not be impaired or affected without the consent of such Holder; and
by accepting a Junior Subordinated Debenture hereunder it is expressly
understood, intended and covenanted by the Holder thereof with every other such
Holder and the Trustee, that no one or more Holders shall have any right in any
manner whatsoever by virtue of or by availing any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holders, or to obtain or
seek to obtain priority over or preference to any such other Holders, or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal, ratable and common benefit of all Holders of Junior Subordinated
Debentures. For the protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.

SECTION 7.5. RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT
WAIVER

(a) Except as otherwise provided in Section 7.2, all powers and
remedies given by this Article to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not
exclusive of any other powers and remedies available to the Trustee or the
Holders of the Junior Subordinated Debentures, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with
respect to such Junior Subordinated Debentures.

(b) No delay or omission of the Trustee or of any Holder of any of
the Junior Subordinated Debentures to exercise any right or power accruing
upon any Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any
such default or on acquiescence therein; and, subject to the provisions of
Section 7.4, every power and remedy given by this Article or by law to the
Trustee or the Securityholders may be exercised from

<PAGE>

time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.

SECTION 7.6. CONTROL BY SECURITYHOLDERS

The Holders of a majority in aggregate principal amount of the Junior
Subordinated Debentures at the time Outstanding, determined in accordance with
Section 10.4, shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee; provided, however, that such
direction shall not be in conflict with any rule of law or with this Indenture.
Subject to the provisions of Section 9.1, the Trustee shall have the right to
decline to follow any such direction if the Trustee in good faith shall, by a
Responsible Officer or Officers of the Trustee, determine that the proceeding so
directed would involve the Trustee in personal liability. The Holders of a
majority in aggregate principal amount of the Junior Subordinated Debentures at
the time Outstanding affected thereby, determined in accordance with Section
10.4, may on behalf of the Holders of all of the Junior Subordinated Debentures
waive any past default in the performance of any of the covenants contained
herein and its consequences, except (i) a default in the payment of the
principal of or interest on any of the Junior Subordinated Debentures as and
when the same shall become due by its terms otherwise than by acceleration
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal has been deposited with the Trustee (in
accordance with Section 7.1(c)), (ii) a default in the covenants contained in
Section 5.6 or (iii) in respect of a covenant or provision hereof which under
Article Eleven cannot be modified or amended without the consent of the Holder
of each Outstanding Junior Subordinated Debenture affected; provided, however,
that if the Junior Subordinated Debentures are held by the Trust or a Trustee of
the Trust, such waiver or modification to such waiver shall not be effective
until the Holders of a majority in Liquidation Amount of Trust Securities of the
Trust shall have consented to such waiver or modification to such waiver;
provided further, that if the consent of the Holder of each Outstanding Junior
Subordinated Debentures is required, such waiver shall not be effective until
each Holder of the Trust Securities of the Trust shall have consented to such
waiver. Upon any such waiver, the default covered thereby shall be deemed to be
cured for all purposes of this Indenture and the Company, the Trustee and the
Holders of the Junior Subordinated Debentures shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other default or impair any right consequent thereon.

SECTION 7.7. UNDERTAKING TO PAY COSTS

All parties to this Indenture agree, and each Holder of any Junior
Subordinated Debentures by such Holder's acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of

<PAGE>

such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Securityholder, or
group of Securityholders, holding more than 10% in aggregate principal amount of
the Outstanding Junior Subordinated Debentures, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of or
interest on the Junior Subordinated Debentures on or after the due dates
thereof.

ARTICLE EIGHT
FORM OF JUNIOR SUBORDINATED DEBENTURE AND ORIGINAL ISSUE

SECTION 8.1. FORM OF JUNIOR SUBORDINATED DEBENTURE

The Junior Subordinated Debenture and the Trustee's Certificate of
Authentication to be endorsed thereon are to be substantially in the forms
contained as Exhibit A to this Indenture, attached hereto and incorporated
herein by reference.

SECTION 8.2. ORIGINAL ISSUE OF JUNIOR SUBORDINATED DEBENTURES

Junior Subordinated Debentures in the aggregate principal amount of
$11,340,200 may, upon execution of this Indenture, be executed by the Company
and delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver the Junior Subordinated Debentures to or upon the
written order of the Company, signed by its Chairman, its Vice Chairman, its
President, any Vice President or its Chief Financial Officer, without any
further action by the Company.

ARTICLE NINE
CONCERNING THE TRUSTEE

SECTION 9.1. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE

(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, shall
undertake to perform with respect to the Junior Subordinated Debentures
such duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants shall be read into this Indenture
against the Trustee. In case an Event of Default has occurred (that has
not been cured or waived), the Trustee shall exercise such of the rights
and powers vested in it by this Indenture, and use the same degree of care
and skill in their exercise as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.

<PAGE>

(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

(1) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:

(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture,
and the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and

(ii) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case
of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirement of this Indenture;

(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;

(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a majority in principal
amount of the Junior Subordinated Debentures at the time Outstanding
relating to the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee under this Indenture; and

(4) none of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Indenture or adequate indemnity against such risk is not reasonably
assured to it.

<PAGE>

SECTION 9.2. CERTAIN RIGHTS OF TRUSTEE

Except as otherwise provided in Section 9.1:

(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security or other paper or document believed by it to be genuine and
to have been signed or presented by the proper party or parties;

(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Board Resolution or an
instrument signed in the name of the Company by the President or any Vice
President and by the Secretary or an Assistant Secretary or the Chief
Financial Officer thereof (unless other evidence in respect thereof is
specifically prescribed herein);

(c) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted hereunder in good faith and in reliance thereon;

(d) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (that has not been cured or waived) to
exercise such of the rights and powers vested in it by this Indenture, and
to use the same degree of care and skill in their exercise as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs;

(e) The Trustee shall not be liable for any action taken or omitted
to be taken by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture;

(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security, or other papers or documents, unless requested in writing
so to do by the Holders of not less than a majority in principal amount of
the Outstanding Junior Subordinated Debentures (determined as provided in
Section 10.4); provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of
the Trustee, not

<PAGE>

reasonably assured to the Trustee by the security afforded to it by the
terms of this Indenture, the Trustee may require reasonable indemnity
against such costs, expenses or liabilities as a condition to so
proceeding. The reasonable expense of every such examination shall be paid
by the Company or, if paid by the Trustee, shall be repaid by the Company
upon demand; and

(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.

SECTION 9.3. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OR
THE JUNIOR SUBORDINATED DEBENTURES

(a) The recitals contained herein and in the Junior Subordinated
Debentures shall be taken as the statements of the Company and the Trustee
assumes no responsibility for the correctness of the same.

(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Junior Subordinated Debentures.

(c) The Trustee shall not be accountable for the use or application
by the Company of any of the Junior Subordinated Debentures or of the
proceeds of such Junior Subordinated Debentures, or for the use or
application of any moneys paid over by the Trustee in accordance with any
provision of this Indenture, or for the use or application of any moneys
received by any paying agent other than the Trustee.

SECTION 9.4. MAY HOLD JUNIOR SUBORDINATED DEBENTURES

The Trustee or any paying agent or Securities Registrar, in its individual
or any other capacity, may become the owner or pledgee of Junior Subordinated
Debentures with the same rights it would have if it were not Trustee, paying
agent or Securities Registrar.

SECTION 9.5. MONEYS HELD IN TRUST

Subject to the provisions of Section 13.5, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.

36
<PAGE>

SECTION 9.6. COMPENSATION AND REIMBURSEMENT

(a) The Company covenants and agrees to pay to the Trustee, and the
Trustee shall be entitled to, such reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a
trustee of an express trust), as the Company and the Trustee may from time
to time agree in writing, for all services rendered by it in the execution
of the trusts hereby created and in the exercise and performance of any of
the powers and duties hereunder of the Trustee, and, except as otherwise
expressly provided herein, the Company will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel and of all Persons not regularly in its
employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith. The Company also covenants to indemnify the
Trustee (and its officers, agents, directors and employees) for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Trustee and arising out of or in
connection with the acceptance or administration of this trust, including
the costs and expenses of defending itself against any claim of liability
in the premises.

(b) The obligations of the Company under this Section to compensate
and indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior
to that of the Junior Subordinated Debentures upon all property and funds
held or collected by the Trustee as such, except funds held in trust for
the benefit of the Holders of the Junior Subordinated Debentures.

SECTION 9.7. RELIANCE ON OFFICERS' CERTIFICATE

Except as otherwise provided in Section 9.1, whenever in the administration
of the provisions of this Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting to take any action hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may, in the absence of
negligence or bad faith on the part of the Trustee, be deemed to be conclusively
proved and established by an Officers' Certificate delivered to the Trustee and
such certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.

<PAGE>

SECTION 9.8. DISQUALIFICATION; CONFLICTING INTERESTS

If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act.

SECTION 9.9. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY

There shall at all times be a Trustee with respect to the Junior
Subordinated Debentures issued hereunder which shall at all times be a
corporation organized and doing business under the laws of the United States of
America or any State or Territory thereof or of the District of Columbia, or a
corporation or other Person permitted to act as trustee by the Commission,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, and subject to supervision or
examination by Federal, State, Territorial, or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
Company may not, nor may any Person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 9.10.

SECTION 9.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR

(a) The Trustee, or any successor hereafter appointed, may at any
time resign by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first-class postage prepaid, to
the Securityholders, as their names and addresses appear upon the
Securities Register. Upon receiving such notice of resignation, the
Company shall promptly appoint a successor trustee by written instrument,
in duplicate, executed by order of the Board of Directors, one copy of
which instrument shall be delivered to the resigning Trustee and one copy
to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 30 days after the mailing of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee, or any
Securityholder who has been a bona fide Holder of Junior Subordinated
Debentures for at least six months may, subject to the provisions of
Section 7.7, on behalf of such Securityholder and all other Holders,
petition any such court for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.

(b) In case at any time any one of the following shall occur:

<PAGE>

(i) the Trustee shall fail to comply with the provisions of
Section 9.8 after written request therefor by the Company or by any
Securityholder who has been a bona fide Holder of Junior Subordinated
Debentures for at least six months; or

(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.9 and shall fail to resign after written
request therefor by the Company or by any such Securityholder; or

(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy
proceeding, or a receiver of the Trustee or of its property shall be
appointed or consented to, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then, in any such
case, the Company may remove the Trustee and appoint a successor
trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to
the Trustee so removed and one copy to the successor trustee, or,
subject to the provisions of Section 7.7, unless the Trustee's duty to
resign is stayed as provided herein, any Securityholder who has been a
bona fide Holder of Junior Subordinated Debentures for at least six
months may, on behalf of that Holder and all other Holders, petition
any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor trustee. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe, remove
the Trustee and appoint a successor trustee.

(c) The Holders of a majority in aggregate principal amount of the
Junior Subordinated Debentures at the time Outstanding may at any time
remove the Trustee by so notifying the Trustee and the Company and may
appoint a successor Trustee with the consent of the Company.

(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 9.11.

SECTION 9.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR

(a) In case of the appointment hereunder of a successor trustee,
every such successor trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested

<PAGE>

with all the rights, powers, trusts and duties of the retiring Trustee;
but, on the request of the Company or the successor trustee, such retiring
Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor trustee all the rights, powers,
and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor trustee all property and money held by such
retiring Trustee hereunder.

(b) Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts
referred to in paragraph (a) of this Section.

(c) No successor trustee shall accept its appointment unless at the
time of such acceptance such successor trustee shall be qualified and
eligible under this Article.

(d) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Company shall transmit notice of the succession of
such trustee hereunder by mail, first-class postage prepaid, to the
Securityholders, as their names and addresses appear upon the Securities
Register. If the Company fails to transmit such notice within ten days
after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be transmitted at the expense of the
Company.

SECTION 9.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS

Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided that such corporation shall be
qualified and eligible under the provisions of this Article Nine, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding. In case any
Junior Subordinated Debentures shall have been authenticated, but not delivered,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Junior Subordinated Debentures so authenticated with the same effect
as if such successor Trustee had itself authenticated such Junior Subordinated
Debentures.

<PAGE>

SECTION 9.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE
COMPANY

The Trustee shall comply with Section 311(a) of the Trust Indenture Act,
excluding any creditor relationship described in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent included therein.

SECTION 9.14. APPOINTMENT OF AUTHENTICATING AGENT

At any time when any of the Junior Subordinated Debentures remain
Outstanding, the Trustee may appoint an Authenticating Agent or Agents which
shall be authorized to act on behalf of the Trustee to authenticate Junior
Subordinated Debentures issued upon original issuance, exchange, registration of
transfer or partial redemption thereof or pursuant to Section 2.8, and Junior
Subordinated Debentures so authenticated shall be entitled to the benefits of
this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Junior Subordinated Debentures
by the Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication and delivery on behalf of the Trustee
by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
shall be acceptable to the Company and shall at all times be a corporation
organized and doing business under the laws of the United States of America, any
State thereof or the District of Columbia, authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of not less than
$10,000,000 and subject to supervision or examination by Federal or State
authority. If such Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of such supervision or
examining authority, for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.

Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the

<PAGE>

Company. Upon receiving such notice of resignation or upon such termination, or
in case at any time such Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section, the Trustee may appoint a
successor Authenticating Agent which shall be acceptable to the Company and
shall mail written notice of such appointment by first-class mail, postage
prepaid, to all Securityholders as their names and addresses appear in the
Securities Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with the like effect as if originally named as an
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section.

The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 9.6.

If an appointment is made pursuant to this Section, the Junior Subordinated
Debentures may have endorsed thereon, in lieu of the form of certificate of
authentication set forth in Section 8.1, a certificate of authentication in the
following form:

"This is one of the Junior Subordinated Debentures described in the
within mentioned Indenture."

__________________________________________
As Trustee

By __________________________________________
As Authenticating Agent

By __________________________________________
Authorized Signature

ARTICLE TEN
CONCERNING THE SECURITYHOLDERS

SECTION 10.1. EVIDENCE OF ACTION BY SECURITYHOLDERS

Whenever in this Indenture it is provided that the Holders of a majority or
specified percentage in aggregate principal amount of the Junior Subordinated
Debentures may take any action (including the making of any demand or request,
the giving of any notice, consent or waiver or the taking of any other action),
the fact that at the time of taking any such

<PAGE>

action the Holders of such majority or specified percentage have joined therein
may be evidenced by any instrument or any number of instruments of similar tenor
executed by such Holders in Person or by agent or proxy appointed in writing.

If the Company shall solicit from the Securityholders any request, demand,
authorization, direction, notice, consent, waiver or other action, the Company
may, at its option, as evidenced by an Officers' Certificate, fix in advance a
record date for the determination of Securityholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action may be given before or after the record date, but only
the Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of Outstanding Junior Subordinated
Debentures have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action, and for that
purpose the Outstanding Junior Subordinated Debentures shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six months after the record date.

SECTION 10.2. PROOF OF EXECUTION BY SECURITYHOLDERS

Subject to the provisions of Section 6.1, proof of the execution of any
instrument by a Securityholder (such proof will not require notarization) or his
agent or proxy and proof of the holding by any Person of any of the Junior
Subordinated Debentures shall be sufficient if made in the following manner:

(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the
Trustee.

(b) The ownership of Junior Subordinated Debentures shall be proved
by the Securities Register or by a certificate of the Securities Registrar
thereof.

SECTION 10.3. WHO MAY BE DEEMED OWNERS

Prior to the due presentment for registration of transfer of any Junior
Subordinated Debenture, the Company, the Trustee, any paying agent and any
Securities Registrar may deem and treat the Person in whose name such Junior
Subordinated Debenture shall be registered upon the books of the Company as the
absolute owner of such Junior Subordinated Debenture (whether or not such Junior
Subordinated Debenture shall be overdue and

<PAGE>

notwithstanding any notice of ownership or writing thereon made by anyone other
than the Securities Registrar) for the purpose of receiving payment of or on
account of the principal of and (subject to Section 2.3) interest on such Junior
Subordinated Debenture and for all other purposes; and neither the Company nor
the Trustee nor any paying agent nor any Securities Registrar shall be affected
by any notice to the contrary.

SECTION 10.4. CERTAIN JUNIOR SUBORDINATED DEBENTURES OWNED BY
COMPANY DISREGARDED

In determining whether the Holders of the requisite aggregate principal
amount of Junior Subordinated Debentures have concurred in any direction,
consent or waiver under this Indenture, the Junior Subordinated Debentures that
are owned by the Company or any other obligor on the Junior Subordinated
Debentures or by any Person directly or indirectly controlling or controlled by
or under common control with the Company or any other obligor on the Junior
Subordinated Debentures shall be disregarded and deemed not to be Outstanding
for the purpose of any such determination, except that for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, consent or waiver, only Junior Subordinated Debentures that the
Trustee actually knows are so owned shall be so disregarded. The Junior
Subordinated Debentures so owned that have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section, if the pledgee shall
establish to the satisfaction of the Trustee the pledgee's right with respect to
such Junior Subordinated Debentures and that the pledgee is not a Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any such other obligor. In case of a dispute
as to such right, any decision by the Trustee taken upon the advice of counsel
shall be full protection to the Trustee.

SECTION 10.5. ACTIONS BINDING ON FUTURE SECURITYHOLDERS

At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 10.1, of the taking of any action by the Holders of the
majority or percentage in aggregate principal amount of the Junior Subordinated
Debentures specified in this Indenture in connection with such action, any
Holder who is shown by the evidence to have consented to such action may, by
filing written notice with the Trustee, and upon proof of holding as provided in
Section 10.2, revoke such action so far as concerns such Holder's Junior
Subordinated Debentures. Except as aforesaid any such action taken by the
Holder shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Holder's Junior Subordinated Debentures, and of any
Junior Subordinated Debentures issued in exchange therefor, on registration of
transfer thereof or in place thereof, irrespective of whether or not any
notation in regard thereto is made upon such Junior Subordinated Debentures.
Any action taken by the Holders of the majority or percentage in aggregate
principal amount of the Junior Subordinated Debentures specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the Holders of all the Junior Subordinated Debentures.

<PAGE>

ARTICLE ELEVEN
SUPPLEMENTAL INDENTURES

SECTION 11.1. SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
SECURITYHOLDERS

In addition to any supplemental indenture otherwise authorized by this
Indenture, the Company and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as then in effect), without the
consent of the Securityholders, for one or more of the following purposes:

(a) to cure any ambiguity, defect, or inconsistency herein, or in the
Junior Subordinated Debentures, provided that any such action does not
materially adversely affect the interests of the Holders or the holders of
the Preferred Securities so long as they remain outstanding;

(b) to comply with Article Twelve;

(c) to provide for uncertificated Junior Subordinated Debentures in
addition to or in place of certificated Junior Subordinated Debentures;

(d) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;

(e) to add to, delete from, or revise the conditions, limitations,
and restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Junior Subordinated Debentures, as herein
set forth;

(f) to make any change that does not adversely affect the rights of
any Securityholder in any material respect; or

(g) to establish the form of any certifications required to be
furnished pursuant to the terms of this Indenture or to add to the rights
of the Holders.

The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee shall
not be obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section may
be executed by the Company and the Trustee without the consent of the Holders of
any of the

<PAGE>

Junior Subordinated Debentures at the time Outstanding, notwithstanding any of
the provisions of Section 11.2.

SECTION 11.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF
SECURITYHOLDERS

With the consent (evidenced as provided in Section 10.1) of the Holders of
not less than a majority in aggregate principal amount of the Junior
Subordinated Debentures at the time Outstanding, the Company, when authorized by
Board Resolutions, and the Trustee may from time to time and at any time enter
into an indenture or indentures supplemental hereto (which shall conform to the
provisions of the Trust Indenture Act as then in effect) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner not covered by Section 11.1 the rights of the Holders of the Junior
Subordinated Debentures under this Indenture; provided, however, that no such
supplemental indenture shall without the consent of the Holders of each Junior
Subordinated Debenture then Outstanding, (i) change the stated maturity of the
Junior Subordinated Debentures, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, or (ii)
reduce the percentage of principal amount of Junior Subordinated Debentures, the
Holders of which are required to consent to any such supplemental indenture;
provided, further, that if the Junior Subordinated Debentures are held by the
Trust or a trustee of the Trust, such supplemental indenture shall not be
effective until the holders of a majority in aggregate Liquidation Amount of
Preferred Securities shall have consented to such supplemental indenture;
provided further, that if the consent of the Holder of each Outstanding Junior
Subordinated Debenture is required, such supplemental indenture shall not be
effective until each Holder of the Trust Securities shall have consented to such
supplemental indenture.

It shall not be necessary for the consent of the Securityholders to approve
the particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.

SECTION 11.3. EFFECT OF SUPPLEMENTAL INDENTURES

Upon the execution of any supplemental indenture pursuant to the provisions
of this Article or of Section 12.1, this Indenture shall be and be deemed to be
modified and amended in accordance therewith.

SECTION 11.4. JUNIOR SUBORDINATED DEBENTURES AFFECTED BY
SUPPLEMENTAL INDENTURES

Junior Subordinated Debentures, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental indenture
pursuant to the provisions of this Article or of Section 12.1, may bear a
notation in form approved by the Company, as to any matter provided for in such
supplemental indenture. If the Company shall so determine,

<PAGE>

new Junior Subordinated Debentures so modified as to conform, in the opinion of
the Board of Directors, to any modification of this Indenture contained in any
such supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Junior Subordinated Debentures then
Outstanding.

SECTION 11.5. EXECUTION OF SUPPLEMENTAL INDENTURES

Upon the request of the Company, accompanied by Board Resolutions
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders required
to consent thereto as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion but shall not be
obligated to enter into such supplemental indenture. The Trustee, subject to
the provisions of Section 9.1, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof.

Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first-class postage prepaid, a notice, setting forth in
general terms the substance of such supplemental indenture, to the
Securityholders as their names and addresses appear upon the Securities
Register. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.

ARTICLE TWELVE
SUCCESSOR CORPORATION

SECTION 12.1. COMPANY MAY CONSOLIDATE, ETC.

The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an entirety
to any Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless (i) in case the Company consolidates with or merges into
another Person or conveys or transfers its properties and assets substantially
as an entirety to any Person, the successor Person is organized under the laws
of the United States or any state or the District of Columbia, and such
successor Person expressly assumes the Company's obligations on the Junior
Subordinated Debentures issued under this Indenture; (ii) immediately after
giving effect thereto, no Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default, shall have occurred and
be continuing; and (iii) such successor Person expressly assumes the due and
punctual performance and observance of all

<PAGE>

the covenants and conditions of this Indenture to be kept and performed by the
Company by executing and delivering a supplemental indenture in form and
substance satisfactory to the Trustee.

SECTION 12.2. SUCCESSOR SUBSTITUTED

(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
Person by supplemental indenture, executed and delivered to the Trustee and
satisfactory in form to the Trustee, of the due and punctual payment of the
principal of and interest on all of the Junior Subordinated Debentures
Outstanding and the due and punctual performance of all of the covenants
and conditions of this Indenture to be performed by the Company, such
successor Person shall succeed to and be substituted for the Company, with
the same effect as if it had been named as the Company herein, and
thereupon the predecessor corporation shall be relieved of all obligations
and covenants under this Indenture and the Junior Subordinated Debentures.

(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not
in substance) may be made in the Junior Subordinated Debentures thereafter
to be issued as may be appropriate.

SECTION 12.3. EVIDENCE OF CONSOLIDATION, ETC., TO TRUSTEE

The Trustee, subject to the provisions of Section 9.1, may receive an
Opinion of Counsel as conclusive evidence that any such consolidation, merger,
sale, conveyance, transfer or other disposition, and any such assumption, comply
with the provisions of this Article.

ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE

SECTION 13.1. SATISFACTION AND DISCHARGE OF INDENTURE

If at any time: (a) the Company shall have delivered to the Trustee for
cancellation all Junior Subordinated Debentures theretofore authenticated (other
than any Junior Subordinated Debentures that shall have been destroyed, lost or
stolen and that shall have been replaced or paid as provided in Section 2.8) and
Junior Subordinated Debentures for whose payment money or Governmental
Obligations have theretofore been deposited in trust or segregated and held in
trust by the Company (and thereupon repaid to the Company or discharged from
such trust, as provided in Section 13.5); or (b) all such Junior Subordinated
Debentures not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for

<PAGE>

redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit or cause to be
deposited with the Trustee as trust funds the entire amount in moneys or
Governmental Obligations sufficient or a combination thereof sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay at
maturity or upon redemption all Junior Subordinated Debentures not theretofore
delivered to the Trustee for cancellation, including principal and interest due
or to become due to such date of maturity or date fixed for redemption, as the
case may be, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company; then this Indenture shall thereupon cease
to be of further effect except for the provisions of Sections 2.2, 2.3, 2.4,
2.5, 4.1, 4.2, 4.3 and 9.10, that shall survive until the date of maturity or
redemption date, as the case may be, and Sections 9.6 and 13.5, that shall
survive to such date and thereafter, and the Trustee, on demand of the Company
and at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture.

SECTION 13.2. DISCHARGE OF OBLIGATIONS

If at any time all such Junior Subordinated Debentures not theretofore
delivered to the Trustee for cancellation or that have not become due and
payable as described in Section 13.1 shall have been paid by the Company by
depositing irrevocably with the Trustee as trust funds moneys or an amount of
Governmental Obligations sufficient to pay at maturity or upon redemption all
such Junior Subordinated Debentures not theretofore delivered to the Trustee for
cancellation, including principal and interest due or to become due to such date
of maturity or date fixed for redemption, as the case may be, and if the Company
shall also pay or cause to be paid all other sums payable hereunder by the
Company, then after the date such moneys or Governmental Obligations, as the
case may be, are deposited with the Trustee the obligations of the Company under
this Indenture shall cease to be of further effect except for the provisions of
Sections 2.2, 2.3, 2.4, 2.5, 4.1, 4.2, 4.3, 9.6, 9.10 and 13.5 hereof that shall
survive until such Junior Subordinated Debentures shall mature and be paid.
Thereafter, Sections 9.6 and 13.5 shall survive.

SECTION 13.3. DEPOSITED MONEYS TO BE HELD IN TRUST

All monies or Governmental Obligations deposited with the Trustee pursuant
to Sections 13.1 or 13.2 shall be held in trust and shall be available for
payment as due, either directly or through any paying agent (including the
Company acting as its own paying agent), to the Holders of the Junior
Subordinated Debentures for the payment or redemption of which such moneys or
Governmental Obligations have been deposited with the Trustee.

SECTION 13.4. PAYMENT OF MONIES HELD BY PAYING AGENTS

In connection with the satisfaction and discharge of this Indenture all
moneys or Governmental Obligations then held by any paying agent under the
provisions of this

<PAGE>

Indenture shall, upon demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys or Governmental Obligations.

SECTION 13.5. REPAYMENT TO COMPANY

Any monies or Governmental Obligations deposited with any paying agent or
the Trustee, or then held by the Company in trust for payment of principal of or
interest on the Junior Subordinated Debentures that are not applied but remain
unclaimed by the Holders of such Junior Subordinated Debentures for at least two
years after the date upon which the principal of or interest on such Junior
Subordinated Debentures shall have respectively become due and payable, shall be
repaid to the Company on January 16 of each year or (if then held by the
Company) shall be discharged from such trust; and thereupon the paying agent and
the Trustee shall be released from all further liability with respect to such
moneys or Governmental Obligations, and the Holder of any of the Junior
Subordinated Debentures entitled to receive such payment shall thereafter, as an
unsecured general creditor, look only to the Company for the payment thereof.

ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS

SECTION 14.1. NO RECOURSE

No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of any Junior Subordinated Debenture, or for any claim based
thereon or otherwise in respect thereof, shall be had against any incorporator,
stockholder, officer or director as such, past, present or future, of the
Company or of any predecessor or successor corporation, either directly or
through the Company or any such predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that this
Indenture and the obligations issued hereunder are solely corporate obligations,
and that no such personal liability whatever shall attach to, or is or shall be
incurred by, the incorporators, stockholders, officers or directors as such, of
the Company or of any predecessor or successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Junior Subordinated Debentures or implied therefrom; and that
any and all such personal liability of every name and nature, either at common
law or in equity or by constitution or statute, of, and any and all such rights
and claims against, every such incorporator, stockholder, officer or director as
such, because of the creation of the indebtedness hereby authorized, or under or
by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Junior Subordinated Debentures or implied therefrom,
are hereby expressly waived and released as

<PAGE>

a condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Junior Subordinated Debentures.

ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS

SECTION 15.1. EFFECT ON SUCCESSORS AND ASSIGNS

All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company or the Trustee shall bind their
respective successors and assigns, whether so expressed or not.

SECTION 15.2. ACTIONS BY SUCCESSOR

Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful sole successor of the Company.

SECTION 15.3. SURRENDER OF COMPANY POWERS

The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power so
surrendered shall terminate both as to the Company and as to any successor
corporation.

SECTION 15.4. NOTICES

Except as otherwise expressly provided herein any notice or demand that by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the Holders of Junior Subordinated Debentures to or on the
Company may be given or served by being deposited first-class postage prepaid in
a post-office letterbox addressed (until another address is filed in writing by
the Company with the Trustee), as follows: c/o United Community Bancshares,
Inc., 2600 Eagan Woods Drive, Suite 155, Eagan, Minnesota 55121, Attention Chief
Financial Officer. Any notice, election, request or demand by the Company or
any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made in writing at the
Corporate Trust Office of the Trustee.

SECTION 15.5. GOVERNING LAW

This Indenture and each Junior Subordinated Debenture shall be deemed to be
a contract made under the internal laws of the State of Minnesota and for all
purposes shall be construed in accordance with the laws of said State.

<PAGE>

SECTION 15.6. TREATMENT OF JUNIOR SUBORDINATED DEBENTURES AS DEBT

It is intended that the Junior Subordinated Debentures will be treated as
indebtedness and not as equity for federal income tax purposes. The provisions
of this Indenture shall be interpreted to further this intention.

SECTION 15.7. COMPLIANCE CERTIFICATES AND OPINIONS

(a) Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent have been
complied with, except that in the case of any such application or demand as
to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or
demand, no additional certificate or opinion need be furnished.

(b) Every certificate or opinion delivered to the Trustee with
respect to compliance with a condition or covenant in this Indenture shall
include (1) a statement that the Person making such certificate or opinion
has read such covenant or condition; (2) a brief statement as to the nature
and scope of the examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based; (3) a
statement that, in the opinion of such Person, such Person has made such
examination or investigation as is necessary to enable such Person to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and (4) a statement as to whether or not, in the
opinion of such Person, such condition or covenant has been complied with.

SECTION 15.8. PAYMENTS ON BUSINESS DAYS

In any case where the date of maturity of interest or principal of the
Junior Subordinated Debentures or the date of redemption of the Junior
Subordinated Debentures shall not be a Business Day, then payment of interest or
principal will be made on the next succeeding Business Day (without any
additional interest or other payment in respect of any such delay), except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on the date such payment was originally payable.

SECTION 15.9. CONFLICT WITH TRUST INDENTURE ACT

If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.

<PAGE>

SECTION 15.10. COUNTERPARTS

This Indenture may be executed in any number of counterparts, each of which
shall be an original, but such counterparts shall together constitute but one
and the same instrument.

SECTION 15.11. SEPARABILITY

In case any one or more of the provisions contained in this Indenture or in
the Junior Subordinated Debentures shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
the Junior Subordinated Debentures, but this Indenture and the Junior
Subordinated Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.

SECTION 15.12. ASSIGNMENT

The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly-owned Subsidiary of the Company, provided that, in the event of any such
assignment, the Company will remain liable for all such obligations. Subject to
the foregoing, this Indenture is binding upon and inures to the benefit of the
parties thereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties hereto.

SECTION 15.13. ACKNOWLEDGMENT OF RIGHTS

The Company acknowledges that, with respect to any Junior Subordinated
Debentures held by the Trust or a trustee of the Trust, if the Property Trustee
of the Trust fails to enforce its rights under this Indenture as the Holder of
the Junior Subordinated Debentures held as the assets of the Trust, any holder
of Preferred Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this Indenture without
first instituting any legal proceedings against such Property Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Company to pay interest or principal on the Junior Subordinated Debentures
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), the Company acknowledges that a holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder on or after the
respective due date specified in the Junior Subordinated Debentures. This
Section 15.3 may not be amended without the prior written consent of the holders
of all of the Preferred Securities.

<PAGE>

ARTICLE SIXTEEN
SUBORDINATION OF JUNIOR SUBORDINATED DEBENTURES

SECTION 16.1. AGREEMENT TO SUBORDINATE

The Company covenants and agrees, and each Holder of Junior Subordinated
Debentures issued hereunder by such Holder's acceptance thereof likewise
covenants and agrees, that all Junior Subordinated Debentures shall be issued
subject to the provisions of this Article Sixteen; and each Holder, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.

The payment by the Company of the principal of and interest on all Junior
Subordinated Debentures issued hereunder shall, to the extent and in the manner
hereinafter set forth, be subordinated and junior in right of payment to the
prior payment in full of all Senior Indebtedness, whether outstanding at the
date of this Indenture or thereafter incurred.

No provision of this Article Sixteen shall prevent the occurrence of any
default or Event of Default hereunder.

SECTION 16.2. DEFAULT ON SENIOR INDEBTEDNESS

In the event and during the continuation of any default by the Company in
the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness of the Company or in the event that the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default,
then, in either case, no payment shall be made by the Company with respect to
the principal of or interest on the Junior Subordinated Debentures.

In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 16.2, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but only to the extent
that the holders of the Senior Indebtedness (or their representative or
representatives or a trustee) notify the Trustee in writing within 90 days of
such payment of the amounts then due and owing on the Senior Indebtedness and
only the amounts specified in such notice to the Trustee shall be paid to the
holders of Senior Indebtedness.

<PAGE>

SECTION 16.3. LIQUIDATION; DISSOLUTION; BANKRUPTCY

Upon any payment by the Company or distribution of assets of the Company of
any kind or character, whether in cash, property or securities, to creditors
upon any dissolution or winding-up or liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal or interest on the Junior Subordinated Debentures; and
upon any such dissolution or winding-up or liquidation or reorganization, any
payment by the Company, or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders or the
Trustee would be entitled to receive from the Company, except for the provisions
of this Article Sixteen, shall be paid by the Company or by any receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making such
payment or distribution, or by the Holders or by the Trustee under the Indenture
if received by them or it, directly to the holders of Senior Indebtedness of the
Company (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Holders or to the Trustee.

In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, and their respective interests may appear, as calculated
by the Company, for application to the payment of all Senior Indebtedness of the
Company, as the case may be, remaining unpaid to the extent necessary to pay
such Senior Indebtedness in full in money in accordance with its terms, after
giving effect to any concurrent payment or distribution to or for the benefit of
the holders of such Senior Indebtedness.

For purposes of this Article Sixteen, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Sixteen with
respect to the Junior Subordinated Debentures to the payment of all

<PAGE>

Senior Indebtedness of the Company, as the case may be, that may at the time be
outstanding, provided that (i) such Senior Indebtedness is assumed by the new
corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness are not, without the
consent of such holders, altered by such reorganization or readjustment. The
consolidation of the Company with, or the merger of the Company into, another
corporation or the liquidation or dissolution of the Company following the
conveyance or transfer of its property as an entirety, or substantially as an
entirety, to another corporation upon the terms and conditions provided for in
Article Twelve of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 16.3 if such
other corporation shall, as a part of such consolidation, merger, conveyance or
transfer, comply with the conditions stated in Article Twelve of this Indenture.
Nothing in Section 16.2 or in this Section 16.3 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 9.6 of this Indenture.

SECTION 16.4. SUBROGATION

Subject to the payment in full of all Senior Indebtedness of the Company,
the rights of the Holders of the Junior Subordinated Debentures shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company, as the
case may be, applicable to such Senior Indebtedness until the principal of and
interest on the Junior Subordinated Debentures shall be paid in full; and, for
the purposes of such subrogation, no payments or distributions to the holders of
such Senior Indebtedness of any cash, property or securities to which the
Holders of the Junior Subordinated Debentures or the Trustee would be entitled
except for the provisions of this Article Sixteen, and no payment over pursuant
to the provisions of this Article Sixteen to or for the benefit of the holders
of such Senior Indebtedness by Holders of the Junior Subordinated Debentures or
the Trustee, shall, as between the Company, its creditors other than holders of
Senior Indebtedness of the Company, and the Holders of the Junior Subordinated
Debentures, be deemed to be a payment by the Company to or on account of such
Senior Indebtedness. It is understood that the provisions of this Article
Sixteen are and are intended solely for the purposes of defining the relative
rights of the Holders of the Junior Subordinated Debentures, on the one hand,
and the holders of such Senior Indebtedness on the other hand.

Nothing contained in this Article Sixteen or elsewhere in this Indenture or
in the Junior Subordinated Debentures is intended to or shall impair, as between
the Company, its creditors other than the holders of Senior Indebtedness of the
Company, and the Holders of the Junior Subordinated Debentures, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders of
the Junior Subordinated Debentures the principal of and interest on the Junior
Subordinated Debentures as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders of the Junior Subordinated Debentures and creditors of the
Company, other than the holders of Senior Indebtedness of the Company, nor shall
anything herein or therein prevent the Trustee or the Holder of any Junior
Subordinated Debenture from exercising all

<PAGE>

remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article Sixteen of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.

Upon any payment or distribution of assets of the Company referred to in
this Article Sixteen, the Trustee, subject to the provisions of Section 9.1, and
the Holders of the Junior Subordinated Debentures shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Holders of the
Junior Subordinated Debentures, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, as the case may be, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Sixteen.

SECTION 16.5. TRUSTEE TO EFFECTUATE SUBORDINATION

Each Holder of Junior Subordinated Debentures by such Holder's acceptance
thereof authorizes and directs the Trustee on such Holder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article Sixteen and appoints the Trustee such Holder's
attorney-in-fact for any and all such purposes.

SECTION 16.6. NOTICE BY THE COMPANY

The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Junior Subordinated
Debentures pursuant to the provisions of this Article Sixteen. Notwithstanding
the provisions of this Article Sixteen or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment of monies to or by the Trustee in
respect of the Junior Subordinated Debentures pursuant to the provisions of this
Article Sixteen, unless and until a Responsible Officer of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Section 9.1,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section 16.6 at least two Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of or interest on any Junior
Subordinated Debenture), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which

<PAGE>

they were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.

The Trustee, subject to the provisions of Section 9.1, shall be entitled to
conclusively rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness of the Company (or a
trustee on behalf of such holder), to establish that such notice has been given
by a holder of such Senior Indebtedness or a trustee on behalf of any such
holder or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of such Senior Indebtedness to participate in any payment or distribution
pursuant to this Article Sixteen, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article Sixteen, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.

SECTION 16.7. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS

The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article Sixteen in respect of any Senior Indebtedness at any
time held by it, to the same extent as any other holder of Senior Indebtedness,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.

With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article Sixteen, and no
implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of such Senior
Indebtedness and, subject to the provisions of Section 9.1, the Trustee shall
not be liable to any holder of such Senior Indebtedness if it shall pay over or
deliver to Holders of Junior Subordinated Debentures, the Company or any other
Person money or assets to which any holder of such Senior Indebtedness shall be
entitled by virtue of this Article Sixteen or otherwise.

SECTION 16.8. SUBORDINATION MAY NOT BE IMPAIRED

No right of any present or future holder of any Senior Indebtedness of the
Company to enforce subordination as herein provided shall at any time in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or
by any noncompliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.

<PAGE>

Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness of the Company may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Junior Subordinated Debentures, without incurring responsibility to the Holders
of the Junior Subordinated Debentures and without impairing or releasing the
subordination provided in this Article Sixteen or the obligations hereunder of
the Holders of the Junior Subordinated Debentures to the holders of such Senior
Indebtedness, do any one or more of the following: (i) change the manner, place
or terms of payment or extend the time of payment of, or renew or alter, such
Senior Indebtedness, or otherwise amend or supplement in any manner such Senior
Indebtedness or any instrument evidencing the same or any agreement under which
such Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing such
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.

UNITED COMMUNITY BANCSHARES, INC.

By:_____________________________________
Name: R. Scott Jones
Title: Chairman
and

By:_____________________________________
Name: Galen T. Pate
Title: President

WILMINGTON TRUST COMPANY,
AS TRUSTEE

By:_____________________________________
Name: _____________________________
Title: ____________________________

<PAGE>

STATE OF MINNESOTA )
) ss:
COUNTY OF HENNEPIN )

On the _______ day of January 1997, before me personally came R. Scott
Jones and Galen T. Pate, to me known, who, being by me duly sworn, did depose
and say that they are the Chairman and President, respectively, of UNITED
COMMUNITY BANCSHARES, INC., one of the corporations described in and which
executed the above instrument; and that they signed their names thereto on
behalf of said corporation by authority of the Board of Directors of said
corporation.

___________________________________
Notary Public

STATE OF DELAWARE )
) ss:
COUNTY OF ______________ )

On the _______ day of January 1997, before me personally came
______________________, to me known, who, being by me duly sworn, did depose and
say that he/she is the _______________________ of WILMINGTON TRUST COMPANY, one
of the corporations described in and which executed the above instrument; and
that he/she signed his/her name thereto on behalf of said corporation by
authority of the Board of Directors of said corporation.

___________________________________
Notary Public

60
<PAGE>

EXHIBIT A

(FORM OF FACE OF JUNIOR SUBORDINATED DEBENTURE)

This Junior Subordinated Debenture is a Global Subordinated Debenture
within the meaning of the Indenture hereinafter referred to and is registered in
the name of a Depositary or a nominee of a Depositary. This Junior Subordinated
Debenture is exchangeable for Junior Subordinated Debentures registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Junior
Subordinated Debenture (other than a transfer of this Junior Subordinated
Debenture as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in such limited circumstances.

Unless this Junior Subordinated Debenture is presented by an authorized
representative of Wilmington Trust Company (Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001) to the issuer or its agent for
registration of transfer, exchange or payment, and any Junior Subordinated
Debenture issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of Wilmington Trust Company (and any
payment hereon is made to Cede & Co. or to such other entity as is requested by
an authorized representative of Wilmington Trust Company), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch the registered owner hereof, Cede & Co., has an interest herein.

Registered Principal Amount:

Registered No. _______________________ $_______________________________

CUSIP No.______________________________

<PAGE>

UNITED COMMUNITY BANCSHARES, INC.

___% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE JANUARY 15, 2027

United Community Bancshares, Inc., a Minnesota corporation (the "Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ______________ or
registered assigns, the principal sum of _____________ Dollars ($___________) on
January 15, 2027 (which date may be extended as provided in the Indenture, the
"Stated Maturity"), and to pay interest on said principal sum from January ___,
1997, or from the most recent interest payment date (each such date, an
"Interest Payment Date") to which interest has been paid or duly provided for,
quarterly (subject to deferral as set forth herein) in arrears on the last day
of March, June, September and December in each year commencing March 31, 1997,
at the rate of ___% per annum until the principal hereof shall have become due
and payable, and on any overdue principal and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the same rate per annum compounded quarterly.
The amount of interest payable on any Interest Payment Date shall be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on this Junior Subordinated Debenture is not a
business day, then payment of interest payable on such date will be made on the
next succeeding day that is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding business day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the person in whose name this Junior Subordinated Debenture (or one
or more Predecessor Securities, as defined in the Indenture) is registered at
the close of business on the regular record date for such interest installment,
which shall be the close of business on the business day next preceding such
Interest Payment Date unless otherwise provided in the Indenture. The principal
of and the interest on this Junior Subordinated Debenture shall be payable at
the office or agency of the Trustee (as defined in the Indenture) maintained for
that purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered Holder (as defined in the Indenture)
at such address as shall appear in the Securities Register (as defined in the
Indenture). Notwithstanding the foregoing, so long as the Holder of this Junior
Subordinated Debenture is the Property Trustee (as defined in the Indenture),
the payment of the principal of and interest on this Junior Subordinated
Debenture will be made at such place and to such account as may be designated by
the Property Trustee.

The Stated Maturity may be shortened at any time by the Company to any date
not earlier than January 15, 2002, subject to the Company having received prior
approval of the Federal Reserve (as defined in the Indenture) if then required
under applicable capital guidelines or policies of the Federal Reserve. Such
date may also be extended at any time at the election of the Company for one or
more periods, but in no event to a date later than January 15, 2046, subject to
certain limitations described in the Indenture.

<PAGE>

The indebtedness evidenced by this Junior Subordinated Debenture is, to the
extent provided in the Indenture, subordinate and junior in right of payment to
the prior payment in full of all Senior Indebtedness (as defined in the
Indenture), and this Junior Subordinated Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Junior
Subordinated Debenture, by accepting the same, (a) agrees to and shall be bound
by such provisions, (b) authorizes and directs the Trustee on his or her behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or her
attorney-in-fact for any and all such purposes. Each Holder hereof, by his or
her acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior Indebtedness, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon said provisions.

This Junior Subordinated Debenture shall not be entitled to any benefit
under the Indenture, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.

The provisions of this Junior Subordinated Debenture are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.

IN WITNESS WHEREOF, the Company has caused this instrument to be executed.

Dated: ___________________________ UNITED COMMUNITY BANCSHARES, INC.

By:______________________________
Name: R. Scott Jones
Title: Chairman

and By:______________________________
Name: Galen T. Pate
Title: President

Attest:

By:___________________________
Name: John H. LeMay
Title: Secretary

<PAGE>

[FORM OF CERTIFICATE OF AUTHENTICATION]

CERTIFICATE OF AUTHENTICATION

This is one of the Junior Subordinated Debentures described in the
within-mentioned Indenture.

Dated:_____________________________ WILMINGTON TRUST COMPANY

By:_______________________________
Authorized Signature

<PAGE>

[FORM OF REVERSE OF JUNIOR SUBORDINATED DEBENTURE]

_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
(CONTINUED)

This Junior Subordinated Debenture is one of the junior subordinated
deferrable interest debentures of the Company (herein sometimes referred to as
the "Junior Subordinated Debentures"), specified in the Indenture, all issued
under and pursuant to a Subordinated Indenture dated as of January __, 1997 (the
"Indenture") duly executed and delivered between the Company and Wilmington
Trust Company, as Trustee (the "Trustee"), to which Indenture reference is
hereby made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the Holders of
the Junior Subordinated Debentures. The Junior Subordinated Debentures are
limited in aggregate principal amount as specified in the Indenture.

Because of the occurrence and continuation of a Special Event (as defined
in the Indenture), in certain circumstances, this Junior Subordinated Debenture
may become due and payable at the option of the Company at the principal amount
together with any interest accrued thereon (the "Redemption Price"). The
Redemption Price shall be paid prior to 2:00 p.m. Minneapolis Time on the date
of such redemption or at such earlier time as the Company determines.

The Company shall have the right to redeem this Junior Subordinated
Debenture at the option of the Company, in whole or in part, from time to time,
on or after January 15, 2002, at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued but unpaid interest thereon to
the date of such redemption. Any redemption pursuant to this paragraph will be
made upon not less than 30 days nor more than 60 days notice. If the Junior
Subordinated Debentures are only partially redeemed by the Company pursuant to
this paragraph, the Junior Subordinated Debentures will be redeemed pro rata or
by lot or by any other method utilized by the Trustee; provided that if, at the
time of redemption, the Junior Subordinated Debentures are registered as a
Global Subordinated Debenture (as defined in the Indenture), the Depositary (as
defined in the Indenture) shall determine the principal amount of such Junior
Subordinated Debentures held by each Junior Subordinated Debenture Holder to be
redeemed in accordance with its procedures.

In the event of redemption of this Junior Subordinated Debenture in part
only, a new Junior Subordinated Debenture for the unredeemed portion hereof will
be issued in the name of the Holder hereof upon the cancellation hereof.

In case an Event of Default (as defined in the Indenture), shall have
occurred and be continuing, the principal of all of the Junior Subordinated
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.

The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal amount of the Junior

<PAGE>

Subordinated Debentures at the time Outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or of modifying in any
manner the rights of the Holders of the Junior Subordinated Debentures;
provided, however, that no such supplemental indenture shall (i) extend the
fixed maturity of the Junior Subordinated Debentures except as provided in
the Indenture, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, without the consent of the
Holder of each Junior Subordinated Debenture so affected, or (ii) reduce the
aforesaid percentage of Junior Subordinated Debentures, the Holders of which
are required to consent to any such supplemental indenture, without the
consent of the Holders of each Junior Subordinated Debenture then Outstanding
and affected thereby. The Indenture also contains provisions permitting the
Holders of a majority in aggregate principal amount of the Junior
Subordinated Debentures at the time Outstanding, on behalf of all of the
Holders of the Junior Subordinated Debentures, to waive any past default in
the performance of any of the covenants contained in the Indenture, or
established pursuant to the Indenture, and its consequences, except a default
in the payment of the principal of or interest on any of the Junior
Subordinated Debentures. Any such consent or waiver by the registered Holder
of this Junior Subordinated Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Junior Subordinated Debenture and of any
Junior Subordinated Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise), irrespective of whether
or not any notation of such consent or waiver is made upon this Junior
Subordinated Debenture.

No reference herein to the Indenture and no provision of this Junior
Subordinated Debenture or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the principal of and
interest on this Junior Subordinated Debenture at the time and place and at the
rate and in the money herein prescribed.

The Company shall have the right at any time during the term of the Junior
Subordinated Debentures and from time to time to extend the interest payment
period of such Junior Subordinated Debentures for up to 20 consecutive quarters
(an "Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate specified for the Junior Subordinated Debentures to the extent that
payment of such interest is enforceable under applicable law). Before the
termination of any such Extended Interest Payment Period, the Company may
further extend such Extended Interest Payment Period, provided that such
Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters or extend beyond the Stated
Maturity. At the termination of any such Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest and any additional amounts
then due, the Company may commence a new Extended Interest Payment Period.

As provided in the Indenture and subject to certain limitations therein set
forth, this Junior Subordinated Debenture is transferable by the registered
Holder hereof on the Securities Register of the Company, upon surrender of this
Junior Subordinated Debenture

<PAGE>

for registration of transfer at the office or agency of the Trustee accompanied
by a written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more new
Junior Subordinated Debentures of authorized denominations and for the same
aggregate principal amount will be issued to the designated transferee or
transferees. No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.

Prior to due presentment for registration of transfer of this Junior
Subordinated Debenture, the Company, the Trustee, any paying agent and the
Securities Registrar (as defined in the Indenture) may deem and treat the
registered holder hereof as the absolute owner hereof (whether or not this
Junior Subordinated Debenture shall be overdue and notwithstanding any notice of
ownership or writing hereon made by anyone other than the Securities Registrar)
for the purpose of receiving payment of or on account of the principal hereof
and interest due hereon and for all other purposes, and neither the Company nor
the Trustee nor any paying agent nor any Securities Registrar shall be affected
by any notice to the contrary.

No recourse shall be had for the payment of the principal of or the
interest on this Junior Subordinated Debenture, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issuance
hereof, expressly waived and released.

The Junior Subordinated Debentures are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereof. This
Global Subordinated Debenture is exchangeable for Junior Subordinated Debentures
in definitive form only under certain limited circumstances set forth in the
Indenture. Junior Subordinated Debentures so issued are issuable only in
registered form without coupons in denominations of $25 and any integral
multiple thereof.

<PAGE>

EXHIBIT 4.3

CERTIFICATE OF TRUST
OF
UNITED CAPITAL TRUST I

This Certificate of Trust of UNITED CAPITAL TRUST I (the "Trust"), dated
December 6, 1996, is being duly executed and filed by Wilmington Trust Company,
a Delaware banking corporation, and Marcia L. O'Brien, John H. LeMay, and Donald
M. Davies, each an individual, as trustees, to form a business trust under the
Delaware Business Trust Act (12 Del. C. Section 3801 et seq.).

1. NAME. The name of the business trust formed hereby is United Capital
Trust I.

2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attn:
Corporate Trust Administration.

3. EFFECTIVE DATE. This Certificate of Trust shall be effective on December
6, 1996.

IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.

WILMINGTON TRUST COMPANY,
as Trustee

By: /s/
-----------------------------------
Name:
Title:

/s/
--------------------------------------
MARCIA L. O'BRIEN, as Trustee

/s/
--------------------------------------
JOHN H. LEMAY, as Trustee

/s/
--------------------------------------
DONALD M. DAVIES, as Trustee

<PAGE>

EXHIBIT 4.4

TRUST AGREEMENT

This TRUST AGREEMENT, dated as of December 6, 1996 (this "Trust
Agreement"), among (i) United Community Bancshares, Inc., a Minnesota
corporation (the "Depositor"), (ii) Wilmington Trust Company, a Delaware banking
corporation, as trustee, and (iii) Marcia L. O'Brien, John H. LeMay, and Donald
M. Davies, each an individual, as trustees (each of such trustees in (ii) and
(iii) a "Trustee" and collectively, the "Trustees"). The Depositor and the
Trustees hereby agree as follows:

1. The trust created hereby (the "Trust") shall be known as "United
Capital Trust I" in which name the Trustees, or the Depositor to the
extent provided herein, may engage in the transactions contemplated
hereby, make and execute contracts, and sue and be sued.

2. The Depositor hereby assigns, transfers, conveys and sets over to the
Trustees the sum of Ten Dollars ($10.00). The Trustees hereby
acknowledge receipt of such amount in trust from the Depositor, which
amount shall constitute the initial trust estate. The Trustees hereby
declare that they will hold the trust estate in trust for the
Depositor. It is the intention of the parties hereto that the Trust
created hereby constitute a business trust under Chapter 38 of Title
12 of the Delaware Code, 12 Del. C. Section 3801, et seq. (the
"Business Trust Act"), and that this document constitutes the
governing instrument of the Trust. The Trustees are hereby authorized
and directed to execute and file a certificate of trust with the
Delaware Secretary of State in accordance with the provisions of the
Business Trust Act.

3. The Depositor and the Trustees will enter into an amended and restated
Trust Agreement, satisfactory to each such party and substantially in
the form included as an exhibit to the 1933 Act Registration Statement
(as defined below), to provide for the contemplated operation of the
Trust created hereby and the issuance of the Preferred Securities and
Common Securities referred to therein. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustees
shall not have any duty or obligation hereunder or with respect to the
trust estate, except as otherwise required by applicable law or as may
be necessary to obtain prior to such execution and delivery any
licenses, consents or approvals required by applicable law or
otherwise.

4. The Depositor and the Trustees hereby authorize and direct the
Depositor, as the sponsor of the Trust, (i) to file with the
Securities and Exchange Commission (the "Commission") and execute, in
each case on behalf of the Trust, (a) the Registration Statement on
Form S-1 (the "1933 Act Registration Statement"), including any
pre-effective or post-effective amendments to the 1933 Act
Registration Statement, relating to the registration under the
Securities Act of 1933, as amended, of the Preferred Securities of the
Trust and possibly certain other securities and (b) if required, a
Registration

1
<PAGE>

Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto)
relating to the registration of the Preferred Securities of the Trust
under the Securities Exchange Act of 1934, as amended; (ii) to file
with the Nasdaq National Market or a national stock exchange (each, an
"Exchange") and execute on behalf of the Trust one or more listing
applications and all other applications, statements, certificates,
agreements and other instruments as shall be necessary or desirable to
cause the Preferred Securities to be listed on any of the Exchanges;
(iii) to file and execute on behalf of the Trust such applications,
reports, surety bonds, irrevocable consents, appointments of attorney
for service of process and other papers and documents as shall be
necessary or desirable to register the Preferred Securities under the
securities or blue sky laws of such jurisdictions as the Depositor, on
behalf of the Trust, may deem necessary or desirable; and (iv) to
execute on behalf of the Trust that certain Underwriting Agreement
relating to the Preferred Securities, among the Trust, the Depositor
and the Underwriter named therein, substantially in the form included
as an exhibit to the 1933 Act Registration Statement. In the event
that any filing referred to in clauses (i), (ii) and (iii) above is
required by the rules and regulations of the Commission, an Exchange
or state securities or blue sky laws to be executed on behalf of the
Trust by one or more of the Trustees, each of the Trustees, in such
Trustee's capacity as a Trustee of the Trust, is hereby authorized
and, to the extent so required, directed to join in any such filing
and to execute on behalf of the Trust any and all of the foregoing, it
being understood that Wilmington Trust Company in its capacity as a
Trustee of the Trust shall not be required to join in any such filing
or execute on behalf of the Trust any such document unless required by
the rules and regulations of the Commission, the Exchange or state
securities or blue sky laws. In connection with the filings referred
to above, the Depositor and Marcia L. O'Brien, John H. LeMay, and
Donald M. Davies, each as Trustees and not in their individual
capacities, hereby constitutes and appoints Marcia L. O'Brien, John H.
LeMay, and Donald M. Davies, and each of them, as the Depositor's or
such Trustee's true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for the Depositor or such
Trustee or in the Depositor's or such Trustee's name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to the 1933 Act Registration Statement and
the 1934 Act Registration Statement (if required) and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, the Exchange and administrators of the
state securities or blue sky laws, granting unto said
attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be
done in connection therewith, as fully and to all intents and purposes
as the Depositor or such Trustee might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or
any of them, or their respective substitute or substitutes, shall do
or cause to be done by virtue hereof.

5. This Trust Agreement may be executed in one or more counterparts.

2
<PAGE>

6. The number of Trustees initially shall be four (4) and thereafter the
number of Trustees shall be such number as shall be fixed from time to
time by a written instrument signed by the Depositor which may
increase or decrease the number of Trustees; provided, however, that
to the extent required by the Business Trust Act, one Trustee shall
either be a natural person who is a resident of the State of Delaware
or, if not a natural person, an entity which has its principal place
of business in the State of Delaware and otherwise meets the
requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee
at any time. The Trustees may resign upon thirty (30) days' prior
notice to the Depositor.

7. This Trust Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware (without regard to conflict of
laws of principles).

IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed as of the day and year first above written.

UNITED COMMUNITY BANCSHARES, INC.,
as Depositor

By: /s/
---------------------------------

Name: Galen T. Pate
Title: President

WILMINGTON TRUST COMPANY,
as Trustee

By: /s/
-----------------------------------
Name:
Title:

/s/
--------------------------------------
MARCIA L. O'BRIEN, as Trustee

/s/
--------------------------------------
JOHN H. LEMAY, as Trustee

/s/
--------------------------------------
DONALD M. DAVIES, as Trustee

<PAGE>

UNITED CAPITAL TRUST

AMENDED AND RESTATED
TRUST AGREEMENT

among

UNITED COMMUNITY BANCSHARES, INC., as Depositor

WILMINGTON TRUST COMPANY, as Property Trustee

WILMINGTON TRUST COMPANY, as Delaware Trustee

and

THE ADMINISTRATIVE TRUSTEES NAMED HEREIN

Dated as of January __, 1997

<PAGE>

TABLE OF CONTENTS
Page
----

ARTICLE I. DEFINED TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 101. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE II. ESTABLISHMENT OF THE TRUST. . . . . . . . . . . . . . . . . . . 11
SECTION 201. NAME. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES. . . . . . . . . . . 12
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND
PURCHASE OF JUNIOR SUBORDINATED DEBENTURES . . . . . . . . . . . . 12
SECTION 206. DECLARATION OF TRUST. . . . . . . . . . . . . . . . . . . 12
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS. . . . . 13
SECTION 208. ASSETS OF TRUST . . . . . . . . . . . . . . . . . . . . . 16
SECTION 209. TITLE TO TRUST PROPERTY . . . . . . . . . . . . . . . . . 16

ARTICLE III. PAYMENT ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 301. PAYMENT ACCOUNT . . . . . . . . . . . . . . . . . . . . . 16

ARTICLE IV. DISTRIBUTIONS; REDEMPTION . . . . . . . . . . . . . . . . . . . 17
SECTION 401. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 402. REDEMPTION. . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 403. SUBORDINATION OF COMMON SECURITIES. . . . . . . . . . . . 20
SECTION 404. PAYMENT PROCEDURES. . . . . . . . . . . . . . . . . . . . 20
SECTION 405. TAX RETURNS AND REPORTS . . . . . . . . . . . . . . . . . 21
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST . . . . . . . 21
SECTION 407. PAYMENTS UNDER INDENTURE. . . . . . . . . . . . . . . . . 21

ARTICLE V. TRUST SECURITIES CERTIFICATES. . . . . . . . . . . . . . . . . . 21
SECTION 501. INITIAL OWNERSHIP . . . . . . . . . . . . . . . . . . . . 21
SECTION 502. THE TRUST SECURITIES CERTIFICATES . . . . . . . . . . . . 22
SECTION 503. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES . 22
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . 22
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 506. PERSONS DEEMED SECURITYHOLDERS. . . . . . . . . . . . . . 24

i
<PAGE>

SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES. . 24
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . 24
SECTION 509. APPOINTMENT OF PAYING AGENT . . . . . . . . . . . . . . . 25
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR . . . . . . . 25
SECTION 511. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 512. NOTICES TO CLEARING AGENCY. . . . . . . . . . . . . . . . 26
SECTION 513. DEFINITIVE PREFERRED SECURITIES CERTIFICATES. . . . . . . 27
SECTION 514. RIGHTS OF SECURITYHOLDERS . . . . . . . . . . . . . . . . 27

ARTICLE VI. ACTS OF SECURITYHOLDERS; MEETINGS; VOTING . . . . . . . . . . . 28
SECTION 601. LIMITATIONS ON VOTING RIGHTS. . . . . . . . . . . . . . . 28
SECTION 602. NOTICE OF MEETINGS. . . . . . . . . . . . . . . . . . . . 29
SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS . . . . . . . . . . 30
SECTION 604. VOTING RIGHTS . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 605. PROXIES, ETC. . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT. . . . . . . . . 31
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES . . . . . . . . 31
SECTION 608. ACTS OF SECURITYHOLDERS . . . . . . . . . . . . . . . . . 31
SECTION 609. INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . 32

ARTICLE VII. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 32
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE PROPERTY
TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND
THE DELAWARE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR . . . . . . . 35

ARTICLE VIII. THE TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES . . . . . . . . . . . 35
SECTION 802. CERTAIN NOTICES . . . . . . . . . . . . . . . . . . . . . 37
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE. . . . . . . . . . . . 37
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. . 39
SECTION 805. MAY HOLD SECURITIES . . . . . . . . . . . . . . . . . . . 39
SECTION 806. COMPENSATION; INDEMNITY; FEES . . . . . . . . . . . . . . 40
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF
TRUSTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 808. CONFLICTING INTERESTS . . . . . . . . . . . . . . . . . . 41
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE. . . . . . . . . . . . . 41

ii
<PAGE>

SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR . . . . 43
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. . . . . . . . . . 44
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 45
SECTION 814. REPORTS BY PROPERTY TRUSTEE . . . . . . . . . . . . . . . 45
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE . . . . . . . . . . . . . 46
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. . . . . 46
SECTION 817. NUMBER OF TRUSTEES. . . . . . . . . . . . . . . . . . . . 46
SECTION 818. DELEGATION OF POWER . . . . . . . . . . . . . . . . . . . 47
SECTION 819. VOTING. . . . . . . . . . . . . . . . . . . . . . . . . . 47

ARTICLE IX. TERMINATION, LIQUIDATION AND MERGER . . . . . . . . . . . . . . 47
SECTION 901. TERMINATION UPON EXPIRATION DATE. . . . . . . . . . . . . 47
SECTION 902. EARLY TERMINATION . . . . . . . . . . . . . . . . . . . . 47
SECTION 903. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 904. LIQUIDATION . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS
OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ARTICLE X. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 51
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS. . . . . . . . . 51
SECTION 1002. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 1003. SEPARABILITY . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 1004. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . 52
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY . . . . . . . . . . . . 52
SECTION 1006. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1007. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 1008. REPORTS, NOTICES AND DEMANDS . . . . . . . . . . . . . . 53
SECTION 1009. AGREEMENT NOT TO PETITION. . . . . . . . . . . . . . . . 54
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT . 54
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTY AND
INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities Certificate

iii
<PAGE>

CROSS-REFERENCE TABLE

SECTION OF SECTION OF AMENDED
TRUST INDENTURE ACT AND RESTATED TRUST
OF 1939, AS AMENDED AGREEMENT
_________________________ ____________________

310(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807
310(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807
310(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 807
310(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .207(a)(ii)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 808
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
312(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 507
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .814(a)
313(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .814(b)
313(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .814(b)
313(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
313(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .814(c)
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 815
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
314(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 816
314(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 816
314(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101, 816
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .801(a), 803(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .802, 108
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .801(a)
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .801, 803
315(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
316(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
316(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
316(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 607
317(a)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
317(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1010

iv
<PAGE>

AMENDED AND RESTATED TRUST AGREEMENT, dated as of January _____, 1997,
among (i) United Community Bancshares, Inc., a Minnesota corporation (including
any successors or assigns, the "Depositor"), (ii) Wilmington Trust Company, a
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as property trustee (the "Property Trustee" and, in its
separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) Wilmington Trust Company, a Delaware banking corporation duly
organized and existing under the laws of the State of Delaware, as Delaware
trustee (the "Delaware Trustee," and, in its separate corporate capacity and not
in its capacity as Delaware Trustee, the "Delaware Bank"), (iv) Marcia L.
O'Brien, an individual, and John H. LeMay, an individual, and Donald M. Davies,
an individual, each of whose address is c/o United Community Bancshares, Inc.
(each an "Administrative Trustee" and collectively the "Administrative
Trustees") (the Property Trustee, the Delaware Trustee and the Administrative
Trustees referred to collectively as the "Trustees") and (v) the several
Holders, as hereinafter defined.

W I T N E S S E T H:

WHEREAS, the Depositor, the Delaware Trustee, and Marcia L. O'Brien, John
H. LeMay, and Donald M. Davies, each as an Administrative Trustee, have
heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act by the entering into of that certain Trust
Agreement, dated as of December 6, 1996 (the "Original Trust Agreement"), and by
the execution and filing by the Delaware Trustee, the Depositor and the
Administrative Trustees with the Secretary of State of the State of Delaware of
the Certificate of Trust, filed on December 6, 1996, the form of which is
attached as Exhibit A; and

WHEREAS, the Depositor, the Delaware Trustee, the Property Trustee and the
Administrative Trustees desire to amend and restate the Original Trust Agreement
in its entirety as set forth herein to provide for, among other things, (i) the
issuance of the Common Securities by the Trust to the Depositor, (ii) the
issuance and sale of the Preferred Securities by the Trust pursuant to the
Underwriting Agreement, (iii) the acquisition by the Trust from the Depositor of
all of the right, title and interest in the Junior Subordinated Debentures and
(iv) the appointment of the Property Trustee;

NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, each party, for the benefit of the other parties and for
the benefit of the Securityholders, hereby amends and restates the Original
Trust Agreement in its entirety and agrees as follows:

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ARTICLE I.
DEFINED TERMS

SECTION 101. DEFINITIONS.

For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:

(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;

(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein;

(c) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Trust Agreement; and

(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.

"Act" has the meaning specified in Section 608.

"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Junior Subordinated Debentures for such period.

"Additional Sums" has the meaning specified in section 2.5 of the
Indenture.

"Administrative Trustee" means each of Marcia L. O'Brien, John H. LeMay,
and Donald M. Davies, solely in such person's capacity as Administrative Trustee
of the Trust formed and continued hereunder and not in such person's individual
capacity, or such Administrative Trustee's successor in interest in such
capacity, or any successor trustee appointed as herein provided.

"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

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<PAGE>

"Bank" has the meaning specified in the preamble to this Trust Agreement.

"Bankruptcy Event" means, with respect to any Person:

(a) the entry of a decree or order by a court having jurisdiction in the
premises adjudging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking liquidation or reorganization of or in respect of such
Person under the Federal Bankruptcy Code or any other similar applicable Federal
or State law, and the continuance of any such decree or order unvacated and
unstayed for a period of 90 days; or the commencement of an involuntary case
under the Federal Bankruptcy Code in respect of such Person, which shall
continue undismissed for a period of 90 days or entry of an order for relief in
such case; or the entry of a decree or order of a court having jurisdiction in
the premises for the appointment on the ground of insolvency or bankruptcy of a
receiver, custodian, liquidator, trustee or assignee in bankruptcy or insolvency
of such Person or of its property, or for the winding up or liquidation of its
affairs, and such decree or order shall have remained in force unvacated and
unstayed for a period of 90 days; or

(b) the institution by such Person of proceedings to be adjudicated a
voluntary bankrupt, or the consent by such Person to the filing of a bankruptcy
proceeding against it, or the filing by such Person of a petition or answer or
consent seeking liquidation or reorganization under the Federal Bankruptcy Code
or other similar applicable Federal or State law, or the consent by such Person
to the filing of any such petition or to the appointment on the ground of
insolvency or bankruptcy of a receiver or custodian or liquidator or trustee or
assignee in bankruptcy or insolvency of such Person or of its property, or such
Person shall make a general assignment for the benefit of creditors.

"Bankruptcy Laws" has the meaning specified in Section 1009.

"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the appropriate Trustee.

"Book-Entry Preferred Securities Certificates" means certificates
representing Preferred Securities issued in global, fully registered form to the
Clearing Agency as described in Section 511.

"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of Minnesota are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Property Trustee's Corporate Trust Office or the Corporate Trust Office of the
Debenture Trustee is closed for business.

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<PAGE>

"Certificate Depository Agreement" means the agreement among the Trust, the
Depositor and The Depositary Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Trust Securities Certificates,
substantially in the form attached as Exhibit B, as the same may be amended and
supplemented from time to time.

"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.

"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The
Depositary Trust Company will be the initial Clearing Agency.

"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.

"Closing Date" means the date of execution and delivery of this Trust
Agreement.

"Code" means the Internal Revenue Code of 1986, as amended.

"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, as amended,
or, if at any time after the execution of this Trust Agreement such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.

"Common Security" means an undivided beneficial interest in the assets of
the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.

"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.

"Corporate Trust Office" means the principal corporate trust office of the
Property Trustee located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001.

"Debenture Event of Default" means an "Event of Default" as defined in the
Indenture.

"Debenture Redemption Date" means, with respect to any Junior Subordinated
Debentures to be redeemed under the Indenture, the date fixed for redemption
under the Indenture.

4
<PAGE>

"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation organized under the laws of the State of Delaware and any successor
thereto, as trustee under the Indenture.

"Definitive Preferred Securities Certificates" means either or both (as the
context requires) of (a) Preferred Securities Certificates issued as Book-Entry
Preferred Securities Certificates as provided in Section 511(a), and (b)
Preferred Securities Certificates issued in certificated, fully registered form
as provided in Section 513.

"Delaware Bank" has the meaning specified in the preamble to this Trust
Agreement.

"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Delaware Code Sections 3801 et seq as it may be amended from time to
time.

"Delaware Trustee" means the commercial bank or trust company identified as
the "Delaware Trustee" in the preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Trust formed and continued hereunder and not
in its individual capacity, or its successor in interest in such capacity, or
any successor trustee appointed as herein provided.

"Depositor" has the meaning specified in the preamble to this Trust
Agreement.

"Distribution Date" has the meaning specified in Section 401(a).

"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 401.

"Event of Default" means any one of the following events shall have
occurred and be continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

(a) the occurrence of a Debenture Event of Default; or

(b) default by the Trust in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period of 30
days; or

(c) default by the Trust in the payment of any Redemption Price of any
Trust Security when it becomes due and payable; or

5
<PAGE>

(d) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trustees in this Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach of
which is dealt with in clause (b) or (c), above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the defaulting Trustee or Trustees by the
Holders of at least 25% in aggregate Liquidation Amount of the Outstanding
Preferred Securities a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or

(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor Property Trustee
within 60 days thereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Depositor and the Trust, substantially in the form attached as
Exhibit D, as amended from time to time.

"Expiration Date" has the meaning specified in Section 901.

"Extension Period" means the "Extended Interest Payment Period" as defined
in the Indenture.

"Global Subordinated Debenture" has the meaning specified in the Indenture.

"Guaranty" means the Preferred Securities Guaranty Agreement executed and
delivered by the Depositor and Wilmington Trust Company as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the holders of the Preferred Securities, as amended from time to
time.

"Holder" means a Securityholder.

"Indenture" means the Subordinated Indenture, dated as of January __, 1997,
between the Depositor and the Debenture Trustee, as trustee, as amended or
supplemented from time to time.

"Investment Company Act" means the Investment Company Act of 1940, as
amended.

"Investment Company Event" means the receipt by the Depositor and the Trust
of an Opinion of Counsel experienced in such matters to the effect that, as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in Investment
Company Act Law"), the Trust is or will be considered an "investment company"
that is required to be registered under the Investment Company Act,

6
<PAGE>

which Change in Investment Company Act Law becomes effective on or after the
date of original issuance of the Preferred Securities under this Trust
Agreement.

"Junior Subordinated Debentures" means the $11,340,200 aggregate principal
amount of the Depositor's ____% Junior Subordinated Deferrable Interest
Debentures, issued pursuant to the Indenture.

"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.

"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to the principal amount of
Junior Subordinated Debentures to be contemporaneously redeemed in accordance
with the Indenture and the proceeds of which will be used to pay the Redemption
Price of such Trust Securities and (b) with respect to a distribution of Junior
Subordinated Debentures to Holders of Trust Securities in connection with a
termination or liquidation of the Trust, Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Trust Securities of the
Holder to whom such Junior Subordinated Debentures are distributed.

"Liquidation Amount" means the stated amount of $25 per Trust Security.

"Liquidation Date" means the date on which Junior Subordinated Debentures
are to distributed to Holders of Trust Securities in connection with a
termination and liquidation of the Trust pursuant to Section 904(a).

"Liquidation Distribution" has the meaning specified in Section 904(d).

"Officers' Certificate" means a certificate signed by the President or a
Vice President and by the Chief Financial Officer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary, of the
Depositor, and delivered to the appropriate Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 816 shall be the
principal executive, financial or accounting officer of the Depositor. Any
Officers' Certificate delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:

(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;

7
<PAGE>

(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.

"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Trust, the Property Trustee, the Delaware Trustee or the Depositor, but
not an employee of any thereof, and who shall be reasonably acceptable to the
Property Trustee.

"Original Trust Agreement" has the meaning specified in the recitals to
this Trust Agreement.

"Outstanding", when used with respect to Preferred Securities, means, as of
the date of determination, all Preferred Securities theretofore executed and
delivered under this Trust Agreement, except:

(a) Preferred Securities theretofore cancelled by the Property Trustee or
delivered to the Property Trustee for cancellation;

(b) Preferred Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Preferred Securities; provided that, if
such Preferred Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and

(c) Preferred Securities which have been paid or in exchange for or in
lieu of which other Preferred Securities have been executed and delivered
pursuant to Sections 504, 505, 511 and 513;

provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the
Depositor or any Trustee shall be disregarded and deemed not to be Outstanding,
except that (i) in determining whether any Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Preferred Securities that such Trustee knows to be so owned shall
be so disregarded and (ii) the foregoing shall not apply at any time when all of
the Outstanding Preferred Securities are owned by the Depositor, one or more of
the Trustees and/or any such Affiliate. Preferred Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrative Trustees the pledgee's
right as to such Preferred Securities so owned.

8
<PAGE>

"Owner" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).

"Paying Agent" means any paying agent or co-paying agent appointed pursuant
to Section 509 and shall initially be the Bank.

"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Securityholders in which all amounts paid in respect of
the Junior Subordinated Debentures will be held and from which the Property
Trustee shall make payments to the Securityholders in accordance with Sections
401 and 402.

"Person" means any individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.

"Preferred Security" means an undivided beneficial interest in the assets
of the Trust, designated "____% Cumulative Trust Preferred Securities," having a
Liquidation Amount of $25 and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.

"Preferred Securities Certificate" means a certificate evidencing ownership
of Preferred Securities, substantially in the form attached as Exhibit E.

"Property Trustee" means the commercial bank or trust company identified as
the "Property Trustee" in the preamble to this Trust Agreement solely in its
capacity as Property Trustee of the Trust heretofore formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as herein provided.

"Redemption Date" means, with respect to any Trust Security to be redeemed,
the date fixed for such redemption by or pursuant to this Trust Agreement;
provided that each Debenture Redemption Date and the stated maturity of the
Junior Subordinated Debentures shall be a Redemption Date for a Like Amount of
Trust Securities.

"Redemption Price" means, with respect to any Trust Security to be
redeemed, the Liquidation Amount of such Trust Security, plus accumulated and
unpaid Distributions to the Redemption Date allocated on a pro rata basis (based
on Liquidation Amounts) among the Trust Securities to be redeemed.

"Relevant Trustee" shall have the meaning specified in Section 810.

9
<PAGE>

"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 504.

"Securityholder" means a Person in whose name a Trust Security or
Securities is registered in the Securities Register; any such Person is a
beneficial owner within the meaning of the Delaware Business Trust Act.

"Tax Event" means the receipt by the Depositor or the Trust of an Opinion
of Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under this Trust Agreement, or the Junior Subordinated
Debentures under the Indenture, as the case may be, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days after the
date of such Opinion of Counsel, subject to United States federal income tax
with respect to income received or accrued on the Junior Subordinated
Debentures, (ii) interest payable by the Depositor on the Junior Subordinated
Debentures is not, or within 90 days after the date of such Opinion of Counsel
will not be, deductible by the Depositor, in whole or in part, for United States
federal income tax purposes or (iii) the Trust is, or will be within 90 days
after the date of such Opinion of Counsel, subject to more than a de minimis
amount of other taxes, duties, assessments or other governmental charges.

"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.

"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including all exhibits hereto, including, for all purposes of
this Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Trust Agreement and any such modification, amendment or supplement,
respectively.

"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at
the date as of which this Trust Agreement was executed; provided, however, that
in the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.

"Trust Property" means (a) the Junior Subordinated Debentures, (b) the
rights of the Property Trustee under the Guaranty, (c) any cash on deposit in,
or owing to, the Payment Account and (d) all proceeds and rights in respect of
the foregoing and any other property

10
<PAGE>

and assets for the time being held or deemed to be held by the Property Trustee
pursuant to the trusts of this Trust Agreement.

"Trust Security" means any one of the Common Securities or the Preferred
Securities.

"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.

"Trustees" means, collectively, the Property Trustee, the Delaware Trustee
and the Administrative Trustees.

"Underwriting Agreement" means the Underwriting Agreement, dated as of
January, 1997, among the Trust, the Depositor and the Underwriter named therein.

ARTICLE II.
ESTABLISHMENT OF THE TRUST

SECTION 201. NAME.

The Trust created and continued hereby shall be known as "United Capital
Trust," as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
other Trustees, in which name the Trustees may engage in the transactions
contemplated hereby, make and execute contracts and other instruments on behalf
of the Trust and sue and be sued.

SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.

The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration, or such other address in the State of
Delaware as the Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal executive office of the Trust
is c/o United Community Bancshares, Inc., 2600 Eagan Woods Drive, Suite 155,
Eagan, Minnesota 55121.

SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES.

The Trustees acknowledge receipt in trust from the Depositor in connection
with the Original Trust Agreement of the sum of $10, which constituted the
initial Trust Property. The Depositor shall pay organizational expenses of the
Trust as they arise or shall, upon request of any Trustee, promptly reimburse
such Trustee for any such expenses paid by such Trustee. The Depositor shall
make no claim upon the Trust Property for the payment of such expenses.

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SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES.

On January _____, 1997 the Depositor and an Administrative Trustee, on
behalf of the Trust and pursuant to the Original Trust Agreement, executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf of the
Trust, shall execute in accordance with Section 502 and deliver in accordance
with the Underwriting Agreement Preferred Securities Certificates, registered in
the name of the nominee of the initial Clearing Agency, in an aggregate amount
of Preferred Securities having an aggregate Liquidation Amount of $11,000,000
against receipt of the aggregate purchase price of such Preferred Securities of
$11,000,000, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee.

SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE
OF JUNIOR SUBORDINATED DEBENTURES.

Contemporaneously with the execution and delivery of this Trust Agreement,
an Administrative Trustee, on behalf of the Trust, shall execute in accordance
with Section 502 and deliver to the Depositor Common Securities Certificates,
registered in the name of the Depositor, in an aggregate amount of Common
Securities having an aggregate Liquidation Amount of $340,200 against payment by
the Depositor of such amount. Contemporaneously therewith, an Administrative
Trustee, on behalf of the Trust, shall subscribe to and purchase from the
Depositor Junior Subordinated Debentures, registered in the name of the Property
Trustee on behalf of the Trust and having an aggregate principal amount equal to
$340,200, and, in satisfaction of the purchase price for such Junior
Subordinated Debentures, the Property Trustee, on behalf of the Trust, shall
deliver to the Depositor the sum of $340,200.

SECTION 206. DECLARATION OF TRUST.

The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Junior
Subordinated Debentures, and (b) to engage in those activities necessary,
convenient or incidental thereto. The Depositor hereby appoints the Trustees as
trustees of the Trust, to have all the rights, powers and duties to the extent
set forth herein, and the Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property in trust upon and
subject to the conditions set forth herein for the benefit of the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the Property Trustee or the Administrative
Trustees set forth herein. The Delaware Trustee shall be one of the Trustees of
the Trust for the sole and limited purpose of fulfilling the requirements of
Section 3807 of the Delaware Business Trust Act.

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SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.

(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section and Article VIII, and in accordance with the
following provisions (i) and (ii), the Administrative Trustees shall have the
authority to enter into all transactions and agreements determined by the
Administrative Trustees to be appropriate in exercising the authority, express
or implied, otherwise granted to the Administrative Trustees under this Trust
Agreement, and to perform all acts in furtherance thereof, including without
limitation, the following:

(i) As among the Trustees, each Administrative Trustee, acting singly or
jointly, shall have the power and authority to act on behalf of the Trust with
respect to the following matters:

(A) the issuance and sale of the Trust Securities;

(B) to cause the Trust to enter into, and to execute, deliver and
perform on behalf of the Trust, the Expense Agreement and the Certificate
Depository Agreement and such other agreements or documents as may be necessary
or desirable in connection with the purposes and function of the Trust;

(C) assisting in the registration of the Preferred Securities under
the Securities Act of 1933, as amended, and under state securities or blue sky
laws, and the qualification of this Trust Agreement as a trust indenture under
the Trust Indenture Act;

(D) assisting in the listing of the Preferred Securities upon the
Nasdaq National Market or such securities exchange or exchanges as shall be
determined by the Depositor and, if required, the registration of the Preferred
Securities under the Securities Exchange Act of 1934, as amended, and the
preparation and filing of all periodic and other reports and other documents
pursuant to the foregoing;

(E) the sending of notices (other than notices of default) and other
information regarding the Trust Securities and the Junior Subordinated
Debentures to the Securityholders in accordance with this Trust Agreement;

(F) the appointment of a Paying Agent, authenticating agent and
Securities Registrar in accordance with this Trust Agreement;

(G) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust and the preparation, execution and
filing of the certificate of cancellation with the Secretary of State of the
State of Delaware;

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(H) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created; and

(I) the taking of any action incidental to the foregoing as the
Administrative Trustees may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement for the benefit of
the Securityholders (without consideration of the effect of any such action on
any particular Securityholder).

(ii) As among the Trustees, the Property Trustee shall have the power, duty
and authority to act on behalf of the Trust with respect to the following
matters:

(A) the establishment of the Payment Account;

(B) the receipt of the Junior Subordinated Debentures;

(C) the collection of interest, principal and any other payments made
in respect of the Junior Subordinated Debentures in the Payment Account;

(D) the distribution of amounts owed to the Securityholders in
respect of the Trust Securities in accordance with the terms of this Trust
Agreement;

(E) the exercise of all of the rights, powers and privileges of a
holder of the Junior Subordinated Debentures;

(F) the sending of notices of default and other information regarding
the Trust Securities and the Junior Subordinated Debentures to the
Securityholders in accordance with this Trust Agreement;

(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;

(H) to the extent provided in this Trust Agreement, the winding up of
the affairs of and liquidation of the Trust;

(I) after an Event of Default the taking of any action incidental to
the foregoing as the Property Trustee may from time to time determine is
necessary or advisable to give effect to the terms of this Trust Agreement and
protect and conserve the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any particular
Securityholder);

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(J) registering transfers of the Trust Securities in accordance with
this Trust Agreement; and

(K) except as otherwise provided in this Section 207(a)(ii), the
Property Trustee shall have none of the duties, liabilities, powers or the
authority of the Administrative Trustees set forth in Section 207(a)(i).

(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees shall not (i) acquire any investments or
engage in any activities not authorized by this Trust Agreement, (ii) sell,
assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt or (v) take or consent to any action that would result in the
placement of a Lien on any of the Trust Property. The Administrative Trustees
shall defend all claims and demands of all Persons at any time claiming any Lien
on any of the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.

(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of this
Trust Agreement are hereby ratified and confirmed in all respects):

(i) the preparation and filing by the Trust with the Commission and the
execution on behalf of the Trust of a registration statement on the appropriate
form in relation to the Preferred Securities and the Junior Subordinated
Debentures, including any amendments thereto;

(ii) the determination of the states in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by or on behalf of
the Trust, and advise the Trustees of actions they must take on behalf of the
Trust, and prepare for execution and filing any documents to be executed and
filed by the Trust or on behalf of the Trust, as the Depositor deems necessary
or advisable in order to comply with the applicable laws of any such states;

(iii) the preparation for filing by the Trust and execution on behalf
of the Trust of an application to the Nasdaq National Market or a national stock
exchange or other organizations for listing upon notice of issuance of any
Preferred Securities and to file or cause an Administrative Trustee to file
thereafter with such exchange or organization such notifications and documents
as may be necessary from time to time;

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(iv) if required, the preparation for filing by the Trust with the
Commission and the execution on behalf of the Trust of a registration statement
on Form 8-A relating to the registration of the Preferred Securities under
Section 12(b) or 12(g) of the Exchange Act, including any amendments thereto;

(v) the negotiation of the terms of, and the execution and delivery of,
the Underwriting Agreement providing for the sale of the Preferred Securities;
and

(vi) the taking of any other actions necessary or desirable to carry out
any of the foregoing activities.

(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the Investment Company Act, will be
classified as a "grantor trust" and not as an association taxable as a
corporation for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the Depositor for
United States federal income tax purposes. In this connection, subject to
Section 1002, the Depositor and the Administrative Trustees are authorized to
take any action, not inconsistent with applicable law or this Trust Agreement,
that each of the Depositor and the Administrative Trustees determines in their
discretion to be necessary or desirable for such purposes.

SECTION 208. ASSETS OF TRUST.

The assets of the Trust shall consist of the Trust Property.

SECTION 209. TITLE TO TRUST PROPERTY.

Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Securityholders in accordance with
this Trust Agreement.

ARTICLE III.
PAYMENT ACCOUNT

SECTION 301. PAYMENT ACCOUNT.

(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property Trustee
shall have exclusive control and sole right of withdrawal with respect to the
Payment Account for the purpose of making deposits and withdrawals from the
Payment Account in accordance with this Trust Agreement. All monies and other
property deposited or held from time to time in the Payment Account shall be
held by the Property Trustee in the Payment Account for the

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exclusive benefit of the Securityholders and for distribution as herein
provided, including (and subject to) any priority of payments provided for
herein.

(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.

ARTICLE IV.
DISTRIBUTIONS; REDEMPTION

SECTION 401. DISTRIBUTIONS.

(a) Distributions on the Trust Securities shall be cumulative, and will
accumulate whether or not there are funds of the Trust available for the payment
of Distributions. Distributions shall accumulate from January ___, 1997, and,
except during any Extension Period with respect to the Junior Subordinated
Debentures, shall be payable quarterly in arrears on the last day of March,
June, September and December in each year, commencing March 31, 1997. If any
date on which a Distribution is otherwise payable on the Trust Securities is not
a Business Day, then the payment of such Distribution shall be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) except that, if such Business Day is in the next
succeeding calendar year, payment of such Distribution shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date (each date on which distributions are payable in
accordance with this Section 401(a) a "Distribution Date").

(b) The Trust Securities represent undivided beneficial interests in the
Trust Property, and, as a practical matter, the Distributions on the Trust
Securities shall be payable at a rate of ___% per annum of the Liquidation
Amount of the Trust Securities. The amount of Distributions payable for any
full period shall be computed on the basis of a 360-day year of twelve 30-day
months. The amount of Distributions for any partial period shall be computed on
the basis of the number of days elapsed in a 360-day year of twelve 30-day
months. During any Extension Period with respect to the Junior Subordinated
Debentures, Distributions on the Preferred Securities will be deferred for a
period equal to the Extension Period. The amount of Distributions payable for
any period shall include the Additional Amounts, if any.

(c) Distributions on the Trust Securities shall be made by the Property
Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand and
immediately available in the Payment Account for the payment of such
Distributions.

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(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
one Business Day prior to such Distribution Date; provided, however, that in the
event that the Preferred Securities do not remain in book-entry-only form, the
relevant record date shall be the 15th day of the month in which the relevant
Distribution Date occurs.

SECTION 402. REDEMPTION.

(a) On each Debenture Redemption Date and on the stated maturity of the
Junior Subordinated Debentures, the Trust will be required to redeem a Like
Amount of Trust Securities at the Redemption Price.

(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Trust Securities to be redeemed,
at such Holder's address appearing in the Securities Register. The Property
Trustee shall have no responsibility for the accuracy of any CUSIP number
contained in such notice. All notices of redemption shall state:

(i) the Redemption Date;

(ii) the Redemption Price;

(iii) the CUSIP number;

(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of the
particular Trust Securities to be redeemed; and

(v) that on the Redemption Date the Redemption Price will become due
and payable upon each such Trust Security to be redeemed and that distributions
thereon will cease to accumulate on and after said date.

(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the contemporaneous
redemption of Junior Subordinated Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has immediately available
funds then on hand and available in the Payment Account for the payment of such
Redemption Price.

(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, Minneapolis time, on the Redemption
Date, subject to Section 402(c), the Property Trustee will, so long as the
Preferred Securities are in

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book-entry-only form, deposit with the Clearing Agency for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the holders thereof. If the Preferred Securities are no
longer in book-entry-only form, the Property Trustee, subject to Section 402(c),
will deposit with the Paying Agent funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable instructions and
authority to pay the Redemption Price to the Holders thereof upon surrender of
their Preferred Securities Certificates. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Trust
Securities called for redemption shall be payable to the Holders of such Trust
Securities as they appear on the Securities Register for the Trust Securities on
the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then upon the
date of such deposit, all rights of Securityholders holding Trust Securities so
called for redemption will cease, except the right of such Securityholders to
receive the Redemption Price, but without interest on such Redemption Price, and
such Securities will cease to be Outstanding. In the event that any date on
which any Redemption Price is payable is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of any Trust Securities called
for redemption is improperly withheld or refused and not paid either by the
Trust or by the Depositor pursuant to the Guaranty, Distributions on such Trust
Securities will continue to accumulate, at the then applicable rate, from the
Redemption Date originally established by the Trust for such Trust Securities to
the date such Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating
the Redemption Price.

(e) Payment of the Redemption Price on the Trust Securities shall be made
to the record holders thereof as they appear on the Securities Register for the
Trust Securities on the relevant record date, which shall be one Business Day
prior to the relevant Redemption Date; provided, however, that in the event that
the Preferred Securities do not remain in book-entry-only form, the relevant
record date shall be the date fifteen days prior to the relevant Redemption
Date.

(f) Subject to Section 403(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated on a
pro rata basis (based on Liquidation Amounts) among the Common Securities and
the Preferred Securities. The particular Preferred Securities to be redeemed
shall be selected not more than 60 days prior to the Redemption Date by the
Property Trustee from the outstanding Preferred Securities not previously called
for redemption, by such method (including, without limitation, by lot) as the
Property Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to $25 or an integral multiple of
$25 in excess thereof) of

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the Liquidation Amount of Preferred Securities of a denomination larger than
$25. The Property Trustee shall promptly notify the Securities Registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the Liquidation
Amount of Preferred Securities which has been or is to be redeemed.

SECTION 403. SUBORDINATION OF COMMON SECURITIES.

(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable, shall be
made, subject to Section 402(f), pro rata among the Common Securities and the
Preferred Securities based on the Liquidation Amount of the Trust Securities;
provided, however, that if on any Distribution Date or Redemption Date any Event
of Default resulting from a Debenture Event of Default shall have occurred and
be continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the Redemption Price the full amount
of such Redemption Price on all Outstanding Preferred Securities then called for
redemption, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.

(b) In the case of the occurrence of any Event of Default resulting from a
Debenture Event of Default, the Holder of Common Securities will be deemed to
have waived any right to act with respect to any such Event of Default under
this Trust Agreement until the effect of all such Events of Default with respect
to the Preferred Securities shall have been cured, waived or otherwise
eliminated. Until any such Event of Default under this Trust Agreement with
respect to the Preferred Securities shall have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Preferred Securities and not the Holder of the Common Securities,
and only the Holders of the Preferred Securities will have the right to direct
the Property Trustee to act on their behalf.

SECTION 404. PAYMENT PROCEDURES.

Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Preferred Securities shall be made by check mailed to the address
of the Person entitled thereto as such address shall appear on the Securities
Register or, if the Preferred Securities

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are held by a Clearing Agency, such Distributions shall be made to the Clearing
Agency in immediately available funds, which shall credit the relevant Persons'
accounts at such Clearing Agency on the applicable Distribution Dates. Payments
in respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Common Securityholder.

SECTION 405. TAX RETURNS AND REPORTS.

The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
Form required to be filed in respect of the Trust in each taxable year of the
Trust and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service form required to be
furnished to such Securityholder or the information required to be provided on
such form. The Administrative Trustees shall provide the Depositor with a copy
of all such returns and reports promptly after such filing or furnishing. The
Property Trustee shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Securityholders under the Trust Securities.

SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.

Upon receipt under the Junior Subordinated Debentures of Additional Sums,
the Property Trustee, at the direction of an Administrative Trustee or the
Depositor, shall promptly pay any taxes, duties or governmental charges of
whatsoever nature (other than withholding taxes) imposed on the Trust by the
United States or any other taxing authority.

SECTION 407. PAYMENTS UNDER INDENTURE.

Any amount payable hereunder to any Holder of Preferred Securities shall be
reduced by the amount of any corresponding payment such Holder has directly
received under the Indenture pursuant to Section 514(b) or (c) hereof.

ARTICLE V.
TRUST SECURITIES CERTIFICATES

SECTION 501. INITIAL OWNERSHIP.

Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 203 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are outstanding, the Depositor shall
be the sole beneficial owner of the Trust.

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<PAGE>

SECTION 502. THE TRUST SECURITIES CERTIFICATES.

The Preferred Securities Certificates shall be issued in minimum
denominations of $25 Liquidation Amount and integral multiples of $25 in excess
thereof, and the Common Securities Certificates shall be issued in denominations
of $25 Liquidation Amount and integral multiples of $25 in excess thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by manual
signature of at least one Administrative Trustee. Trust Securities Certificates
bearing the manual signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 504, 511
and 513.

SECTION 503. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.

On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Amount as provided in
Sections 204 and 205, to be executed on behalf of the Trust by at least one of
the Administrative Trustees and delivered to or upon the written order of the
Depositor, signed by its President, any Vice President or the Chief Financial
Officer without further corporate action by the Depositor, in authorized
denominations.

SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES.

The Depositor shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 508, a register or registers for the purpose of
registering Trust Securities Certificates and transfers and exchanges of
Preferred Securities Certificates (herein referred to as the "Securities
Register") in which the registrar designated by the Depositor (the "Securities
Registrar"), subject to such reasonable regulations as it may prescribe, shall
provide for the registration of Preferred Securities Certificates and Common
Securities Certificates (subject to Section 510 in the case of the Common
Securities Certificates) and registration of transfers and exchanges of
Preferred Securities Certificates as herein provided. The Property Trustee
shall be the initial Securities Registrar.

Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 508, the
Administrative Trustees or any one of them shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of

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<PAGE>

a like aggregate Liquidation Amount dated the date of execution by such
Administrative Trustee or Trustees. The Securities Registrar shall not be
required to register the transfer of any Preferred Securities that have been
called for redemption. At the option of a Holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 508.

Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and the
Securities Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Property Trustee in accordance with its customary practice.
The Trust shall not be required to (i) issue, register the transfer of, or
exchange any Preferred Securities during a period beginning at the opening of
business 15 calendar days before the date of mailing of a notice of redemption
of any Preferred Securities called for redemption and ending at the close of
business on the day of such mailing or (ii) register the transfer of or exchange
any Preferred Securities so selected for redemption, in whole or in part, except
the unredeemed portion of any such Preferred Securities being redeemed in part.

No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.

SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES.

If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Administrative Trustees such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Securities Certificate shall have been acquired by a bona fide purchaser, the
Administrative Trustees, or any one of them, on behalf of the Trust shall
execute and make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection
with the issuance of any new Trust Securities Certificate under this Section,
the Administrative Trustees or the Securities Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Trust Securities Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
undivided beneficial interest in the assets of

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the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Trust Securities Certificate shall be found at any time.

SECTION 506. PERSONS DEEMED SECURITYHOLDERS.

The Trustees, the Paying Agent and the Securities Registrar shall treat the
Person in whose name any Trust Securities Certificate shall be registered in the
Securities Register as the owner of such Trust Securities Certificate for the
purpose of receiving Distributions and for all other purposes whatsoever, and
neither the Trustees nor the Securities Registrar shall be bound by any notice
to the contrary.

SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.

At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished to the Property Trustee (a) semi-annually on or before January 1
and July 1 in each year, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Securityholders as of the
most recent Record Date and (b) promptly after receipt by any Administrative
Trustee or the Depositor of a request therefor from the Property Trustee, such
other information as the Property Trustee may reasonably require in order to
enable the Property Trustee to discharge its obligations under this Trust
Agreement, in each case to the extent such information is in the possession or
control of the Administrative Trustees or the Depositor and is not identical to
a previously supplied list or has not otherwise been received by the Property
Trustee in its capacity as Securities Registrar. The rights of Securityholders
to communicate with other Securityholders with respect to their rights under
this Trust Agreement or under the Trust Securities, and the corresponding rights
of the Trustee shall be as provided in the Trust Indenture Act. Each Holder, by
receiving and holding a Trust Securities Certificate, and each Owner shall be
deemed to have agreed not to hold the Depositor, the Property Trustee or the
Administrative Trustees accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.

SECTION 508. MAINTENANCE OF OFFICE OR AGENCY.

The Administrative Trustees shall maintain an office or offices or agency
or agencies where Preferred Securities Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustees in respect of the Trust Securities Certificates may be served. The
Administrative Trustees initially designate the principal corporate trust office
of the Property Trustee, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, as the principal corporate trust office for
such purposes. The Administrative Trustees shall give prompt written notice to
the Depositor and to the Securityholders of any change in the location of the
Securities Register or any such office or agency.

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SECTION 509. APPOINTMENT OF PAYING AGENT.

The Paying Agent shall make distributions to Securityholders from the
Payment Account and shall report the amounts of such distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making the Distributions referred to above. The Administrative Trustees may
revoke such power and remove the Paying Agent if such Trustees determine in
their sole discretion that the Paying Agent shall have failed to perform its
obligations under this Trust Agreement in any material respect. The Paying
Agent shall initially be the Property Trustee, and any co-paying agent chosen by
the Property Trustee, and acceptable to the Administrative Trustees and the
Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustees, the
Property Trustee and the Depositor. In the event that the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act as
Paying Agent (which shall be a bank or trust company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment to
the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying Agent
shall return all unclaimed funds to the Property Trustee and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Property Trustee. The provisions of Sections 801, 803 and 806 shall apply
to the Property Trustee also in its role as Paying Agent, for so long as the
Property Trustee shall act as Paying Agent and, to the extent applicable, to any
other paying agent appointed hereunder. Any reference in this Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.

SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.

On the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, any attempted transfer of the Common Securities (other than a transfer in
connection with a merger or consolidation of the Depositor into another
corporation pursuant to Section 12.1 of the Indenture) shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE".

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SECTION 511. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE.

(a) The Preferred Securities Certificates, upon original issuance, will be
issued in the form of a typewritten Preferred Securities Certificate or
Certificates representing Book-Entry Preferred Securities Certificates, to be
delivered to or held on behalf of The Depositary Trust Company, the initial
Clearing Agency, by, or on behalf of, the Trust. Such Book-Entry Preferred
Securities Certificate or Certificates shall initially be registered on the
Securities Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no beneficial owner will receive a Definitive Preferred
Securities Certificate representing such beneficial owner's interest in such
Preferred Securities, except as provided in Section 513. Unless and until
Definitive Preferred Securities Certificates have been issued to beneficial
owners pursuant to Section 513:

(i) the provisions of this Section 511(a) shall be in full force and
effect;

(ii) the Securities Registrar, the Paying Agent and the Trustees shall
be entitled to deal with the Clearing Agency for all purposes of this Trust
Agreement relating to the Book-Entry Preferred Securities Certificates
(including the payment of the Liquidation Amount of and Distributions on the
Book-Entry Preferred Securities) as the sole Holder of Book-Entry Preferred
Securities and shall have no obligations to the Owners thereof;

(iii) to the extent that the provisions of this Section 511
conflict with any other provisions of this Trust Agreement, the provisions of
this Section 511 shall control; and

(iv) the rights of the Owners of the Book-Entry Preferred Securities
Certificates shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive Preferred
Securities Certificates are issued pursuant to Section 513, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency Participants and
will receive and transmit payments on the Preferred Securities to such Clearing
Agency Participants. Any Clearing Agency designated pursuant hereto will not be
deemed an agent of the Trustees for any purpose.

(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.

SECTION 512. NOTICES TO CLEARING AGENCY.

To the extent that a notice or other communication to the Owners is
required under this Trust Agreement, unless and until Definitive Preferred
Securities Certificates shall have been issued to Owners pursuant to Section
513, the Trustees shall give all such notices and

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communications specified herein to be given to Owners to the Clearing Agency,
and shall have no obligations to the Owners.

SECTION 513. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.

If (a) the Depositor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Preferred Securities Certificates, and the Depositor is
unable to locate a qualified successor, (b) the Depositor at its option advises
the Trustees in writing that it elects to terminate the book-entry system
through the Clearing Agency, or (c) after the occurrence of a Debenture Event of
Default, Owners of Preferred Securities Certificates representing beneficial
interests aggregating at least a majority of the Liquidation Amount advise the
Property Trustee in writing that the continuation of a book-entry system through
the Clearing Agency is no longer in the best interests of the Owners of
Preferred Securities Certificates, then the Property Trustee shall notify the
Clearing Agency, and the Clearing Agency shall notify all Owners of Preferred
Securities Certificates, of the occurrence of any such event and of the
availability of the Definitive Preferred Securities Certificates to Owners of
such class or classes, as applicable, requesting the same. Upon surrender to
the Property Trustee of the typewritten Preferred Securities Certificate or
Certificates representing the Book-Entry Preferred Securities Certificates by
the Clearing Agency, accompanied by registration instructions, the
Administrative Trustees, or any one of them, shall execute the Definitive
Preferred Securities Certificates in accordance with the instructions of the
Clearing Agency. Neither the Securities Registrar nor the Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Preferred Securities Certificates, the Trustees shall recognize
the Holders of the Definitive Preferred Securities Certificates as
Securityholders. The Definitive Preferred Securities Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by the
execution thereof by the Administrative Trustees or any one of them.

SECTION 514. RIGHTS OF SECURITYHOLDERS.

(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 209, and
the Securityholders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights. When issued and
delivered to Holders of the Preferred Securities against payment of the purchase
price therefor, the Preferred Securities will be fully paid and nonassessable
interests in the Trust. The Holders of the Preferred Securities, in their
capacities as such, shall be entitled to the same limitation of personal
liability extended to

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stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.

(b) For so long as any Preferred Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Preferred Securities then Outstanding shall have such
right by a notice in writing to the Depositor and the Debenture Trustee; and
upon any such declaration such principal amount of and the accrued interest on
all of the Junior Subordinated Debentures shall become immediately due and
payable, provided that the payment of principal and interest on such Junior
Subordinated Debentures shall remain subordinated to the extent provided in the
Indenture. If, as a result of a Debenture Event of Default, the Debenture
Trustee or the holders of not less than 25% in aggregate outstanding principal
amount of the Junior Subordinated Debentures have declared the Junior
Subordinated Debentures due and payable and if such default has been cured and a
sum sufficient to pay all matured installments due (otherwise than by
acceleration) under the Junior Subordinated Debentures has been deposited with
the Debenture Trustee, then (if the holders of not less than a majority in
aggregate outstanding principal amount of Junior Subordinated Debentures have
not annulled such declaration and waived such default) the holders of a majority
in aggregate Liquidation Amount of the Preferred Securities may annul such
declaration and waive such default.

(c) For so long as any Preferred Securities remain outstanding, if, upon a
Debenture Event of Default arising from the failure to pay interest or principal
on the Junior Subordinated Debentures, the Holders of any Preferred Securities
then Outstanding shall, to the fullest extent permitted by law, have the right
to directly institute proceedings for enforcement of payment to such Holders of
principal of or interest on the Junior Subordinated Debentures having a
principal amount equal to the Liquidation Amount of the Preferred Securities of
such Holders.

ARTICLE VI.
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING

SECTION 601. LIMITATIONS ON VOTING RIGHTS.

(a) Except as provided in this Section, in Sections 514, 810 and 1002 and
in the Indenture and as otherwise required by law, no Holder of Preferred
Securities shall have any right to vote or in any manner otherwise control the
administration, operation and management of the Trust or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Trust Securities Certificates, be construed so as to constitute the
Securityholders from time to time as partners or members of an association.

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(b) So long as any Junior Subordinated Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Junior Subordinated Debentures, (ii) waive any past default which is
waivable under Article Seven of the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of outstanding Junior Subordinated Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior written consent
of each Holder of Preferred Securities. The Trustees shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Outstanding Preferred Securities, except by a subsequent vote of the Holders of
the Outstanding Preferred Securities. The Property Trustee shall notify each
Holder of the Outstanding Preferred Securities of any notice of default received
from the Debenture Trustee with respect to the Junior Subordinated Debentures.
In addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Trustees shall, at
the expense of the Depositor, obtain an Opinion of Counsel experienced in such
matters to the effect that the Trust will continue to be classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes on account of such action.

(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
in any material respect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding-up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a majority in Liquidation
Amount of the Outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would cease
to be classified as a grantor trust or would be classified as an association
taxable as a corporation for United States federal income tax purposes.

SECTION 602. NOTICE OF MEETINGS.

Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder of record, at and
Securityholder's registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business

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<PAGE>

properly before the meeting may be so considered whether or not stated in the
notice of the meeting. Any adjourned meeting may be held as adjourned without
further notice.

SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS.

No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Preferred Securityholders of
25% of the Outstanding Preferred Securities (based upon their aggregate
Liquidation Amount) and the Administrative Trustees or the Property Trustee may,
at any time in their discretion, call a meeting of Preferred Securityholders to
vote on any matters as to which the Preferred Securityholders are entitled to
vote.

Preferred Securityholders of record of 50% of the Outstanding Preferred
Securities (based upon their aggregate Liquidation Amount), present in person or
by proxy, shall constitute a quorum at any meeting of Securityholders.

If a quorum is present at a meeting, an affirmative vote by the Preferred
Securityholders of record present, in person or by proxy, holding more than a
majority of the Preferred Securities (based upon their aggregate Liquidation
Amount) held by the Preferred Securityholders of record present, either in
person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.

SECTION 604. VOTING RIGHTS.

Securityholders shall be entitled to one vote for each $25 of Liquidation
Amount represented by their Trust Securities in respect of any matter as to
which such Securityholders are entitled to vote.

SECTION 605. PROXIES, ETC.

At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
When Trust Securities are held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Trust Securities,
but if more than one of them shall be present at such meeting in person or by
proxy, and such joint owners or their proxies so present disagree as to any vote
to be cast, such vote shall not be received in respect of such Trust Securities.
A proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and, the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.

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<PAGE>

SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT.

Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their aggregate Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).

SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES.

For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees may from time to time fix a date, not
more than 90 days prior to the date of any meeting of Securityholders or the
payment of Distribution or other action, as the case may be, as a record date
for the determination of the identity of the Securityholders of record for such
purposes.

SECTION 608. ACTS OF SECURITYHOLDERS.

Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Securityholders or Owners may be embodied in and evidenced by one or
more instruments of substantially similar tenor signed by such Securityholders
or Owners in person or by an agent duly appointed in writing; and, except as
otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders or
Owners signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 801) conclusive in favor
of the Trustees, if made in the manner provided in this Section.

The fact and date of the execution by any Person of any such instrument or
writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him or her the execution thereof. Where such
execution is by a signer acting in a capacity other than such signer's
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of such signer's authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which any Trustee receiving the
same deems sufficient.

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The ownership of Preferred Securities shall be proved by the Securities
Register.

Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.

Without limiting the foregoing, a Securityholder entitled hereunder to take
any action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.

A Securityholder may institute a legal proceeding directly against the
Depositor under the Guaranty to enforce its rights under the Guaranty without
first instituting a legal proceeding against the Guaranty Trustee (as defined in
the Guaranty), the Trust or any Person.

SECTION 609. INSPECTION OF RECORDS.

Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by Securityholders
during normal business hours for any purpose reasonably related to such
Securityholder's interest as a Securityholder.

ARTICLE VII.
REPRESENTATIONS AND WARRANTIES

SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE PROPERTY
TRUSTEE.

The Bank and the Property Trustee, each severally on behalf of and as to
itself, as of the date hereof, and each Successor Property Trustee at the time
of the Successor Property Trustee's acceptance of its appointment as Property
Trustee hereunder (the term "Bank" being used to refer to such Successor
Property Trustee in its separate corporate capacity), hereby represents and
warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:

(a) each of the Property Trustee and the Bank is a Delaware banking
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware;

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<PAGE>

(b) each of the Property Trustee and the Bank has full corporate power,
authority and legal right to execute, deliver and perform its obligations under
this Trust Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Trust Agreement;

(c) this Trust Agreement has been duly authorized, executed and delivered
by each of the Property Trustee and the Bank and constitutes the valid and
legally binding agreement of each of the Property Trustee and the Bank
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;

(d) the execution, delivery and performance by each of the Property
Trustee and the Bank of this Trust Agreement has been duly authorized by all
necessary corporate or other action on the part of the Property Trustee and the
Bank and does not require any approval of the stockholders of the Property
Trustee or the Bank and such execution, delivery and performance will not (i)
violate the Property Trustee's or the Bank's charter or by-laws, (ii) violate
any provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of, any Lien on any
properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or instrument
to which the Property Trustee or the Bank is a party or by which it is bound, or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Delaware, as the case may be, governing the banking or trust powers
of the Bank or the Property Trustee, as the case may be, or any order, judgment
or decree applicable to the Property Trustee or the Bank;

(e) neither the authorization, execution or delivery by the Property
Trustee or the Bank of this Trust Agreement nor the consummation of any of the
transactions by the Property Trustee or the Bank contemplated herein or therein
requires the consent or approval of, the giving of notice to, the registration
with or the taking of any other action with respect to, any governmental
authority or agency under any existing federal law governing the banking or
trust powers of the Bank or the Property Trustee, as the case may be, under the
laws of the United States or the State of Delaware; and

(f) there are no proceedings pending or, to the best of the Bank's or the
Property Trustee's knowledge, threatened against or affecting the Bank or the
Property Trustee, as the case may be, in any court or before any governmental
authority, agency or arbitration board or tribunal which, individually or in the
aggregate, would materially and adversely affect the Trust or would question the
right, power and authority of the Bank or the Property Trustee, as the case may
be, to enter into or perform its obligations as one of the Trustees under this
Trust Agreement.

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<PAGE>

SECTION 702. REPRESENTATIONS AND WARRANTIES OF THE DELAWARE BANK AND THE
DELAWARE TRUSTEE.

The Delaware Bank and the Delaware Trustee, each severally on behalf of and
as to itself, as of the date hereof, and each Successor Delaware Trustee at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee hereunder (the term "Delaware Bank" being used to refer to such
Successor Delaware Trustee in its separate corporate capacity), hereby
represents and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:

(a) each of the Delaware Trustee and the Delaware Bank is a Delaware
banking corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware;

(b) each of the Delaware Trustee and the Delaware Bank has full corporate
power, authority and legal right to execute, deliver and perform its obligations
under this Trust Agreement and has taken all necessary action to authorize the
execution, delivery and performance by it of this Trust Agreement;

(c) this Trust Agreement has been duly authorized, executed and delivered
by each of the Delaware Trustee and the Delaware Bank and constitutes the valid
and legally binding agreement of each of the Delaware Trustee and the Delaware
Bank enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;

(d) the execution, delivery and performance by each of the Delaware
Trustee and the Delaware Bank of this Trust Agreement has been duly authorized
by all necessary corporate or other action on the part of the Delaware Trustee
and the Delaware Bank and does not require any approval of the stockholders of
the Delaware Trustee or the Delaware Bank and such execution, delivery and
performance will not (i) violate the Delaware Trustee's or the Delaware Bank's
charter or by-laws, (ii) violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation or
imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Delaware Bank or the
Delaware Trustee is a party or by which it is bound, or (iii) violate any law,
governmental rule or regulation of the United States or the State of Delaware,
as the case may be, governing the banking or trust powers of the Delaware Bank
or the Delaware Trustee, as the case may be, or any order, judgment or decree
applicable to the Delaware Bank or the Delaware Trustee;

(e) neither the authorization, execution or delivery by the Delaware
Trustee or the Delaware Bank of this Trust Agreement nor the consummation of any
of the transactions by the Delaware Trustee or the Delaware Bank contemplated
herein or therein requires the

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consent or approval of, the giving of notice to, the registration with or the
taking of any other action with respect to, any governmental authority or agency
under any existing federal law governing the banking or trust powers of the
Delaware Bank or the Delaware Trustee, as the case may be, under the laws of the
United States or the State of Delaware; and

(f) there are no proceedings pending or, to the best of the Delaware
Bank's or the Delaware Trustee's knowledge, threatened against or affecting the
Delaware Bank or the Delaware Trustee, as the case may be, in any court or
before any governmental authority, agency or arbitration board or tribunal
which, individually or in the aggregate, would materially and adversely affect
the Trust or would question the right, power and authority of the Delaware Bank
or the Delaware Trustee, as the case may be, to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.

SECTION 703. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.

The Depositor hereby represents and warrants for the benefit of the
Securityholders that:

(a) the Trust Securities Certificates issued on the Closing Date on behalf
of the Trust have been duly authorized and will have been duly and validly
executed, issued and delivered by the Administrative Trustees pursuant to the
terms and provisions of, and in accordance with the requirements of, this Trust
Agreement and the Securityholders will be, as of such date, entitled to the
benefits of this Trust Agreement; and

(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Bank, the Property Trustee, the Delaware Bank or
the Delaware Trustee, as the case may be, of this Trust Agreement.

ARTICLE VIII.
THE TRUSTEES

SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.

(a) The duties and responsibilities of the Trustees shall be as provided
by this Trust Agreement and, in the case of the Property Trustee, by the Trust
Indenture Act. Notwithstanding the foregoing, no provision of this Trust
Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. No Administrative Trustee nor the Delaware Trustee shall be liable for such
Trustee's acts or omissions hereunder except as a result of such Trustee's own
gross negligence or willful

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misconduct. The Property Trustee's liability shall be determined under the
Trust Indenture Act. Whether or not therein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustees shall be subject to the
provisions of this Section. To the extent that, at law or in equity, the
Delaware Trustee or an Administrative Trustee has duties (including fiduciary
duties) and liabilities relating thereto to the Trust or to the Securityholders,
the Delaware Trustee or such Administrative Trustee shall not be liable to the
Trust or to any Securityholder for such Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Delaware Trustee
or the Administrative Trustees otherwise existing at law or in equity, are
agreed by the Depositor and the Securityholders to replace such other duties and
liabilities of the Delaware Trustee and the Administrative Trustees.

(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each
Securityholder, by such Securityholder's acceptance of a Trust Security, agrees
that such Securityholder will look solely to the revenue and proceeds from the
Trust Property to the extent legally available for distribution to such
Securityholder as herein provided and that the Trustees are not personally
liable to such Securityholder for any amount distributable in respect of any
Trust Security or for any other liability in respect of any Trust Security.
This Section 801(b) does not limit the liability of the Trustees expressly set
forth elsewhere in this Trust Agreement or, in the case of the Property Trustee,
in the Trust Indenture Act.

(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;

(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in Liquidation Amount of
the Trust Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Trust Agreement;

(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Subordinated Debentures
and the Payment Account shall be to deal with such Property in a similar manner
as the Property Trustee deals with

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similar property for its own account, subject to the protections and limitations
on liability afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;

(iv) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the Depositor and
money held by the Property Trustee need not be segregated from other funds held
by it except in relation to the Payment Account maintained by the Property
Trustee pursuant to Section 301 and except to the extent otherwise required by
law; and

(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their respective
duties under this Trust Agreement, nor shall the Property Trustee be liable for
the negligence, default or misconduct of the Administrative Trustees or the
Depositor.

SECTION 802. CERTAIN NOTICES.

(a) Within 5 Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit, in
the manner and to the extent provided in Section 1008, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived. For purposes of
this Section the term "Event of Default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default.

(b) The Administrative Trustees shall transmit, to the Securityholders in
the manner and to the extent provided in Section 1008, notice of the Depositor's
election to begin or further extend an Extension Period on the Junior
Subordinated Debentures (unless such election shall have been revoked) within
the time specified for transmitting such notice to the holders of the Junior
Subordinated Debentures pursuant to the Indenture as originally executed.

SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE.

Subject to the provisions of Section 801:

(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;

(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of action or
(ii) in construing any of the provisions of this Trust Agreement the Property
Trustee finds the same ambiguous or

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inconsistent with other provisions contained herein or (iii) the Property
Trustee is unsure of the application of any provision of this Trust Agreement,
then, except as to any matter as to which the Preferred Securityholders are
entitled to vote under the terms of this Trust Agreement, the Property Trustee
shall deliver a notice to the Depositor requesting written instructions of the
Depositor as to the course of action to be taken and the Property Trustee shall
take such action, or refrain from taking such action, as the Property Trustee
shall be instructed in writing to take, or to refrain from taking, by the
Depositor; provided, however, that if the Property Trustee does not receive such
instructions of the Depositor within ten Business Days after it has delivered
such notice, or such reasonably shorter period of time set forth in such notice
(which to the extent practicable shall not be less than two Business Days), it
may, but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Trust Agreement as it shall deem advisable and in the
best interests of the Securityholders, in which event the Property Trustee shall
have no liability except for its own bad faith, negligence or willful
misconduct;

(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;

(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officer's Certificate which,
upon receipt of such request, shall be promptly delivered by the Depositor or
the Administrative Trustees;

(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;

(f) the Property Trustee may consult with counsel of its choice and the
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon and in accordance with such advice (such counsel
may be counsel to the Depositor or any of its Affiliates, and may include any of
its employees); the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;

(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;

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(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Securityholders, but the
Property Trustee may make such further inquiry or investigation into such facts
or matters as it may see fit;

(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys, provided that the Property Trustee shall be responsible for its own
negligence or recklessness with respect to selection of any agent or attorney
appointed by it hereunder;

(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of the Trust Securities
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be protected in acting in accordance with such instructions; and

(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement. No provision of
this Trust Agreement shall be deemed to impose any duty or obligation on the
Property Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it, in any jurisdiction in which it shall
be illegal, or in which the Property Trustee shall be unqualified or incompetent
in accordance with applicable law, to perform any such act or acts, or to
exercise any such right, power, duty or obligation. No permissive power or
authority available to the Property Trustee shall be construed to be a duty.

SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.

The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Junior
Subordinated Debentures.

SECTION 805. MAY HOLD SECURITIES.

Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections

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808 and 813 and except as provided in the definition of the term "Outstanding"
in Article I, may otherwise deal with the Trust with the same rights it would
have if it were not a Trustee or such other agent.

SECTION 806. COMPENSATION; INDEMNITY; FEES.

The Depositor agrees:

(a) to pay to the Trustees from time to time reasonable compensation for
all services rendered by them hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);

(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to such Trustee's negligence, bad faith or
willful misconduct (or, in the case of the Administrative Trustees or the
Delaware Trustee, any such expense, disbursement or advance as may be
attributable to its, his or her gross negligence, bad faith or willful
misconduct); and

(c) to indemnify each of the Trustees or any predecessor Trustee for, and
to hold the Trustees harmless against, any loss, damage, claim, liability,
penalty or expense incurred without negligence or bad faith on its part, arising
out of or in connection with the acceptance or administration of this Trust
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder, except any such cost or expense as may be
attributable to such Trustee's negligence, bad faith or willful misconduct (or,
in the case of the Administrative Trustees or the Delaware Trustee, any such
cost or expense as may be attributable to its, his or her gross negligence, bad
faith or willful misconduct).

No Trustee may claim any Lien on any Trust Property as a result of any
amount due pursuant to this Section 806.

SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.

(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the

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Property Trustee with respect to the Trust Securities shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.

(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.

(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.

SECTION 808. CONFLICTING INTERESTS.

If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.

SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.

Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property may
at the time be located, the Depositor and the Administrative Trustees shall have
power to appoint, and upon the written request of the Property Trustee, the
Depositor and the Administrative Trustees shall for such purpose join with the
Property Trustee in the execution, delivery and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to the extent required by
law to act as separate trustee of any such property, in either case with such
powers as may be provided in the instrument of appointment, and to vest in such
Person or Persons in the capacity aforesaid, any property, title, right or power
deemed necessary or desirable, subject to the other provisions of this Section.
If the Depositor and the Administrative Trustees do not join in such appointment
within 15 days after the receipt by them of a request so to do, or in case a
Debenture Event of Default has occurred and is continuing, the Property Trustee
alone shall have power to make such appointment. Any co-trustee or separate
trustee appointed pursuant to this Section shall either be (i) a natural person
who is at least 21 years of age and a resident of the United States or (ii) a
legal entity with its principal place of business in the United States that
shall act through one or more persons authorized to bind such entity.

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Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged, and delivered
by the Depositor.

Every co-trustee or separate trustee shall, to the extent permitted by law,
but to such extent only, be appointed subject to the following terms, namely:

(a) The Trust Securities shall be executed and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder, shall be exercised,
solely by such Trustees and not by such co-trustee or separate trustee.

(b) The rights, powers, duties and obligations hereby conferred or imposed
upon the Property Trustee in respect of any property covered by such appointment
shall be conferred or imposed upon and exercised or performed by the Property
Trustee or by the Property Trustee and such co-trustee or separate trustee
jointly, as shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
co-trustee or separate trustee.

(c) The Property Trustee at any time, by an instrument in writing executed
by it, with the written concurrence of the Depositor, may accept the resignation
of or remove any co-trustee or separate trustee appointed under this Section,
and, in case a Debenture Event of Default has occurred and is continuing, the
Property Trustee shall have power to accept the resignation of, or remove, any
such co-trustee or separate trustee without the concurrence of the Depositor.
Upon the written request of the Property Trustee, the Depositor shall join with
the Property Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section 809.

(d) No co-trustee or separate trustee hereunder shall be personally liable
by reason of any act or omission of the Property Trustee or any other trustee
hereunder.

(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.

(f) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.

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SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.

No resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 811.

Subject to the immediately preceding paragraph, the Relevant Trustee may
resign at any time with respect to the Trust Securities by giving written notice
thereof to the Securityholders. If the instrument of acceptance by the
successor Trustee required by Section 811 shall not have been delivered to the
Relevant Trustee within 30 days after the giving of such notice of resignation,
the Relevant Trustee may petition, at the expense of the Depositor, any court of
competent jurisdiction for the appointment of a successor Relevant Trustee with
respect to the Trust Securities.

Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by Act of the Common Securityholder. If
a Debenture Event of Default shall have occurred and be continuing, the Property
Trustee or the Delaware Trustee, or both of them, may be removed at such time by
Act of the Holders of a majority in Liquidation Amount of the Preferred
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust). An Administrative Trustee may be removed by the Common
Securityholder at any time. In no event will the Holders of the Preferred
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees.

If any Trustee shall resign, be removed or become incapable of acting as
Trustee, or if a vacancy shall occur in the office of any Trustee for any cause,
at a time when no Debenture Event of Default shall have occurred and be
continuing, the Common Securityholder, by Act of the Common Securityholder
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees with respect to the Trust Securities and the Trust, and the successor
Trustee shall comply with the applicable requirements of Section 811. If the
Property Trustee or the Delaware Trustee shall resign, be removed or become
incapable of continuing to act as the Property Trustee or the Delaware Trustee,
as the case may be, at a time when a Debenture Event of Default shall have
occurred and is continuing, the Preferred Securityholders, by Act of the
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then Outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust

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Securities and the Trust, and such successor Trustee shall comply with the
applicable requirements of Section 811. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder, by Act of the Common Securityholder delivered to an
Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees with respect to the Trust Securities and the
Trust, and such successor Administrative Trustee or Administrative Trustees
shall comply with the applicable requirements of Section 811. If no successor
Relevant Trustee with respect to the Trust Securities shall have been so
appointed by the Common Securityholder or the Preferred Securityholders and
accepted appointment in the manner required by Section 811, any Securityholder
who has been a Securityholder of Trust Securities on behalf of such
Securityholder and all others similarly situated may petition a court of
competent jurisdiction for the appointment Trustee with respect to the Trust
Securities.

The Property Trustee shall give notice of each resignation and each removal
of a Trustee and each appointment of a successor Trustee to all Securityholders
in the manner provided in Section 1008 and shall give notice to the Depositor.
Each notice shall include the name of the successor Relevant Trustee and the
address of its Corporate Trust office if it is the Property Trustee.

Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of remaining Administrative Trustees if
there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees set forth in Section 807).

SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.

In case of the appointment hereunder of a successor Relevant Trustee with
respect to the Trust Securities and the Trust, the retiring Relevant Trustee and
each successor Relevant Trustee with respect to the Trust Securities shall
execute and deliver an instrument hereto wherein each successor Relevant Trustee
shall accept such appointment and which shall contain such provisions as shall
be necessary or desirable to transfer and confirm to, and to vest in, each
successor Relevant Trustee all the rights, powers, trusts and duties of the
retiring Relevant Trustee with respect to the Trust Securities and the Trust and
upon the execution and delivery of such instrument the resignation or removal of
the retiring Relevant Trustee shall become effective to the extent provided
therein and each such successor Relevant Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee with respect to the Trust Securities and
the Trust; but, on request of the Trust or any successor Relevant Trustee such
retiring Relevant Trustee shall duly assign, transfer and deliver to such
successor Relevant Trustee all Trust Property, all proceeds thereof and money
held by such retiring Relevant Trustee hereunder with respect to the Trust
Securities and the Trust.

Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor

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Relevant Trustee all such rights, powers and trusts referred to in the
immediately preceding paragraph, as the case may be.

No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.

SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.

SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST.

If and when the Property Trustee or the Delaware Trustee shall be or become
a creditor of the Depositor or the Trust (or any other obligor upon the Junior
Subordinated Debentures or the Trust Securities), the Property Trustee or the
Delaware Trustee, as the case may be, shall be subject to and shall take all
actions necessary in order to comply with the provisions of the Trust Indenture
Act regarding the collection of claims against the Depositor or Trust (or any
such other obligor).

SECTION 814. REPORTS BY PROPERTY TRUSTEE.

(a) Not later than July 15 of each year commencing with July 15, 1997, the
Property Trustee shall transmit to all Securityholders in accordance with
Section 1008, and to the Depositor, a brief report dated as of the preceding May
15 with respect to:

(i) its eligibility under Section 807 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section, a
written statement to such effect; and

(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by the
Property Trustee in the performance of its duties hereunder which it has not
previously reported and which in its opinion materially affects the Trust
Securities.

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(b) In addition the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.

(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with each national securities exchange
or other organization upon which the Trust Securities may be listed, with the
Commission and with the Depositor.

SECTION 815. REPORTS TO THE PROPERTY TRUSTEE.

The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.

SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.

Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with the
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.

SECTION 817. NUMBER OF TRUSTEES.

(a) The number of Trustees shall be four, provided that the Holder of all
of the Common Securities by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware
Trustee may be the same Person.

(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 817(a), or if the
number of Trustees is increased pursuant to Section 817(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 810.

(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to annul the
Trust. Whenever a vacancy in the number of Administrative Trustees shall occur,
until such vacancy is filled by the appointment of an Administrative Trustee in
accordance with Section 810, the Administrative Trustees in office, regardless
of their number (and notwithstanding any other

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provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.

SECTION 818. DELEGATION OF POWER.

(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
207(a); and

(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.

SECTION 819. VOTING.

Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by not
less than a majority of the Administrative Trustees, unless there are only two,
in which case both must consent.

ARTICLE IX.
TERMINATION, LIQUIDATION AND MERGER

SECTION 901. TERMINATION UPON EXPIRATION DATE.

Unless earlier dissolved, the Trust shall automatically dissolve on January
16, 2054 (the "Expiration Date") subject to distribution of the Trust Property
in accordance with Section 904.

SECTION 902. EARLY TERMINATION.

The first to occur of any of the following events is an "Early Termination
Event":

(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;

(b) delivery of written direction to the Property Trustee by the Depositor
at any time (which direction is wholly optional and within the discretion of the
Depositor) to dissolve the Trust and distribute the Junior Subordinated
Debentures to Securityholders in exchange for the Preferred Securities in
accordance with Section 904;

47
<PAGE>

(c) the redemption of all of the Preferred Securities in connection with
the redemption of all of the Junior Subordinated Debentures; and

(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction.

SECTION 903. TERMINATION.

The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 904, or upon the
redemption of all of the Trust Securities pursuant to Section 402, of all
amounts required to be distributed hereunder upon the final payment of the Trust
Securities; (b) the payment of any expenses owed by the Trust; and (c) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust or
the Securityholders, and (d) the filing of a Certificate of cancellation by the
Administrative Trustee under the Business Trust Act.

SECTION 904. LIQUIDATION.

(a) If an Early Termination Event specified in clause (a), (b), or (d) of
Section 902 occurs or upon the Expiration Date, the Trust shall be liquidated by
the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of Junior
Subordinated Debentures, subject to Section 904(d). Notice of liquidation shall
be given by the Property Trustee by first-class mail, postage prepaid, mailed
not later than 30 nor more than 60 days prior to the Liquidation Date to each
Holder of Trust Securities at such Holder's address appearing in the Securities
Register. All notices of liquidation shall:

(i) state the Liquidation Date;

(ii) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust Securities
Certificates not surrendered for exchange will be deemed to represent a Like
Amount of Junior Subordinated Debentures; and

(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities certificates for Junior Subordinated
Debentures, or if Section 904(d) applies receive a Liquidation Distribution, as
the Administrative Trustees or the Property Trustee shall deem appropriate.

48
<PAGE>

(b) Except where Section 902(c) or 904(d) applies, in order to effect the
liquidation of the Trust and distribution of the Junior Subordinated Debentures
to Securityholders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Junior Subordinated Debentures in
exchange for the Outstanding Trust Securities Certificates.

(c) Except where Section 902(c) or 904(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
certificates (or, at the election of the Depositor a Global Subordinated
Debenture, subject to the provisions of the Indenture) representing a Like
Amount of Junior Subordinated Debentures will be issued to holders of Trust
Securities Certificates upon surrender of such certificates to the
Administrative Trustees or their agent for exchange, (iii) the Depositor shall
use its reasonable efforts to have the Junior Subordinated Debentures listed on
the Nasdaq National Market or on such other securities exchange or other
organization as the Preferred Securities may then be listed or traded, (iv) any
Trust Securities Certificates not so surrendered for exchange will be deemed to
represent a Like Amount of Junior Subordinated Debentures, accruing interest at
the rate provided for in the Junior Subordinated Debentures from the last
Distribution Date on which a Distribution was made on such Trust Securities
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments of interest or principal will be
made to holders of Trust Securities Certificates with respect to such Junior
Subordinated Debentures) and (v) all rights of Securityholders holding Trust
Securities will cease, except the right of such Securityholders to receive
Junior Subordinated Debentures upon surrender of Trust Securities Certificates.

(d) In the event that, notwithstanding the other provisions of this
Section 904, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Junior Subordinated
Debentures in the manner provided herein is determined by the Property Trustee
not to be practical, the Trust Property shall be liquidated, and the Trust shall
be dissolved, wound-up or terminated, by the Property Trustee in such manner as
the Property Trustee determines. In such event, on the date of the dissolution,
winding-up or other termination of the Trust, Securityholders will be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
dissolution, winding-up or termination, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be paid
on a pro rata basis (based upon Liquidation Amounts). The holder of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if a

49
<PAGE>

Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities.

SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
TRUST.

The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the holders of the Preferred
Securities, the Property Trustee or the Delaware Trustee, the Trust may merge
with or into, consolidate, amalgamate, be replaced by or convey, transfer or
lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) the
Depositor expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee as the holder
of the Junior Subordinated Debentures, (iii) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any material respect, (iv)
such successor entity has a purpose identical to that of the Trust, (v) the
Successor Securities will be listed or traded on any national securities
exchange or other organization on which the Preferred Securities may then be
listed, (vi) prior to such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of Counsel
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the Preferred
Securities (including any Successor Securities) in any material respect, and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be required
to register as an "investment company" under the Investment Company Act and
(vii) the Depositor owns all of the Common Securities of such successor entity
and guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guaranty. Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.

50
<PAGE>

ARTICLE X.
MISCELLANEOUS PROVISIONS

SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS.

The death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person, to
claim an accounting, take any action or bring any proceeding in any court for a
partition or winding-up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them.

SECTION 1002. AMENDMENT.

(a) This Trust Agreement may be amended from time to time by the Trustees
and the Depositor, without the consent of any Securityholders, (i) as provided
in Section 811 with respect to acceptance of appointment by a successor Trustee,
(ii) to cure any ambiguity, correct or supplement any provision herein or
therein which may be inconsistent with any other provision herein or therein, or
to make any other provisions with respect to matters or questions arising under
this Trust Agreement, that shall not be inconsistent with the other provisions
of this Trust Agreement, or (iii) to modify, eliminate or add to any provisions
of this Trust Agreement to such extent as shall be necessary to ensure that the
Trust will be classified for United States federal income tax purposes as a
grantor trust at all times that any Trust Securities are Outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the case
of clause (ii), such action shall not adversely affect in any material respect
the interests of any Securityholder, and any amendments of this Trust Agreement
shall become effective when notice thereof is given to the Securityholders.

(b) Except as provided in Section 601(c) or Section 1002(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of Trust Securityholders representing not less
than a majority (based upon Liquidation Amounts) of the Trust Securities then
Outstanding and (ii) upon receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status as
a grantor trust for United States federal income tax purposes or the Trust's
exemption from status of an "investment company" under the Investment Company
Act.

(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 603 or 606 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Securityholder to institute suit

51
<PAGE>

for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 603 or 606 hereof), this
paragraph (c) of this Section 1002 may not be amended.

(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
status of an "investment company" under the Investment Company Act or to fail or
cease to be classified as a grantor trust for United States federal income tax
purposes.

(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.

(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.

(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.

SECTION 1003. SEPARABILITY.

In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.

SECTION 1004. GOVERNING LAW.

THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES).

SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY.

If the date fixed for any payment on any Trust Security shall be a day that
is not a Business Day, then such payment need not be made on such date but may
be made on the next succeeding day which is a Business Day (except as otherwise
provided in Sections

52
<PAGE>

401(a) and 402(d)), with the same force and effect as though made on the date
fixed for such payment, and no distribution shall accumulate thereon for the
period after such date.

SECTION 1006. SUCCESSORS.

This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Trust or the Relevant Trustee(s),
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article Twelve of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.

SECTION 1007. HEADINGS.

The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.

SECTION 1008. REPORTS, NOTICES AND DEMANDS.

Any report, notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
any Securityholder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a
Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Common Securityholder or the Depositor, to United Community
Bancshares, Inc., 2600 Eagan Woods Drive, Suite 155, Eagan, Minnesota 55121;
Attention: Chief Financial Officer; Facsimile No.: (612) 552-2885. Any notice
to Preferred Securityholders shall also be given to such owners as have, within
two years preceding the giving of such notice, filed their names and addresses
with the Property Trustee for that purpose. Such notice, demand or other
communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.

Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(a) with respect to the Property Trustee to Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration; (b) with respect to the Delaware
Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration; and (c) with respect to the Administrative Trustees, to them at
the address above for notices to the Depositor, marked "Attention:
Administrative Trustees of United Capital Trust." Such

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<PAGE>

notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.

SECTION 1009. AGREEMENT NOT TO PETITION.

Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in
the commencement of any proceeding against the Trust under any Bankruptcy Law.
In the event the Depositor takes action in violation of this Section 1009, the
Property Trustee agrees, for the benefit of Securityholders, that at the expense
of the Depositor (which expense shall be paid prior to the filing), it shall
file an answer with the bankruptcy court or otherwise properly contest the
filing of such petition by the Depositor against the Trust or the commencement
of such action and raise the defense that the Depositor has agreed in writing
not to take such action and should be stopped and precluded therefrom. The
provisions of this Section 1009 shall survive the termination of this Trust
Agreement.

SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.

(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.

(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.

(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.

(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.

54
<PAGE>

SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTY AND
INDENTURE.

THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTY AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS.

UNITED COMMUNITY BANCSHARES, INC.,
as Depositor

By:___________________________________________
Name: R. Scott Jones
[Signatures continue.] Title: Chairman

and

By:___________________________________________
Name: Galen T. Pate
Title: President

WILMINGTON TRUST COMPANY,
as Property Trustee

By:___________________________________________
Name:
Title:

[Signatures continue.]

55
<PAGE>

WILMINGTON TRUST COMPANY,
as Delaware Trustee

By:___________________________________________
Name:
Title:

-----------------------------------------------
Marcia L. O'Brien, As Administrative Trustee

-----------------------------------------------
John H. LeMay, As Administrative Trustee

-----------------------------------------------
Donald M. Davies, As Administrative Trustee

<PAGE>

EXHIBIT D
AGREEMENT AS TO EXPENSES AND LIABILITIES

AGREEMENT dated as of December __, 1996, between United Community
Bancshares, Inc., a Minnesota corporation ("United"), and United Capital Trust
I, a Delaware business trust (the "Trust").

WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities") to, and receive Junior Subordinated Deferrable Interest Debentures
(the "Junior Subordinated Debentures") from, United and to issue and sell
Preferred Securities (the "Preferred Securities") with such powers, preferences
and special rights and restrictions as are set forth in the Trust Agreement of
the Trust dated as of December 6, 1996, as the same may be amended from time to
time (the "Trust Agreement");

WHEREAS, United will directly or indirectly own all of the Common
Securities of the Trust and will issue the Junior Subordinated Debentures;

NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase United hereby agrees shall benefit United
and which purchase United acknowledges will be made in reliance upon the
execution and delivery of this Agreement, United, including in its capacity as
holder of the Common Securities, and the Trust hereby agree as follows:

ARTICLE I

SECTION 1.1. GUARANTY BY UNITED.

Subject to the terms and conditions hereof, United, including in its
capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment,
when and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
liabilities of the Trust other than obligations of the Trust to pay to holders
of any Preferred Securities or other similar interests in the Trust the amounts
due such holders pursuant to the terms of the Preferred Securities or such other
similar interests, as the case may be. This Agreement is intended to be for the
benefit of, and to be enforceable by, all such Beneficiaries, whether or not
such Beneficiaries have received notice hereof.

SECTION 1.2. TERM OF AGREEMENT.

This Agreement shall terminate and be of no further force and effect upon
the later of (a) the date on which full payment has been made of all amounts
payable to all holders of all the Preferred Securities (whether upon redemption,
liquidation, exchange or otherwise) and (b) the date on which there are no
Beneficiaries remaining; provided, however, that this

<PAGE>

Agreement shall continue to be effective or shall be reinstated, as the case may
be, if at any time any holder of Preferred Securities or any Beneficiary must
restore payment of any sums paid under the Preferred Securities, under any
Obligation, under the Preferred Securities Guaranty Agreement dated the date
hereof by United and Wilmington Trust Company as guaranty trustee or under this
Agreement, for any reason whatsoever. This Agreement is continuing,
irrevocable, unconditional and absolute.

SECTION 1.3. WAIVER OF NOTICE.

United hereby waives notice of acceptance of this Agreement and of any
Obligation to which it applies or may apply, and United hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.

SECTION 1.4. NO IMPAIRMENT.

The obligations, covenants, agreements and duties of United under this
Agreement shall in no way be affected or impaired by reason of the happening
from time to time of any of the following:

(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation under,
arising out of, or in connection with, the Obligations;

(b) any failure, omission, delay or lack of diligence on the part of the
Beneficiaries to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Beneficiaries with respect to the Obligations or any
action on the part of the Trust granting indulgence or extension of any kind; or

(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust.

The Beneficiaries shall not be obligated to give notice to, or obtain the
consent of, United with respect to the happening of any of the foregoing.

SECTION 1.5. ENFORCEMENT.

A Beneficiary may enforce this Agreement directly against United, and
United waives any right or remedy to require that any action be brought against
the Trust or any other person or entity before proceeding against United.

<PAGE>

ARTICLE II

SECTION 2.1. BINDING EFFECT.

All guarantees and agreements contained in this Agreement shall bind the
successors, assigns, receivers, trustees and representatives of United and shall
inure to the benefit of the Beneficiaries.

SECTION 2.2. AMENDMENT.

So long as there remains any Beneficiary or any Preferred Securities are
outstanding, this Agreement shall not be modified or amended in any manner
adverse to such Beneficiary or to the holders of the Preferred Securities.

SECTION 2.3. NOTICES.

Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same by facsimile
transmission (confirmed by mail), telex, or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or upon
receipt of an answer back, if sent by telex):

United Capital Trust I
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Facsimile No.: (302) 651-1576
Attention: Corporate Trust Administration

United Community Bancshares, Inc.
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Facsimile No.: (612) 552-2885
Attention: Marcia L. O'Brien, Chief Financial Officer

SECTION 2.4. GOVERNING LAW.

This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Minnesota (without regard to conflict
of laws principles).

<PAGE>

THIS AGREEMENT is executed as of the day and year first above written.

UNITED COMMUNITY BANCSHARES, INC.

By:
-------------------------
Name: R. Scott Jones
Title: Chairman

and

By:
-------------------------
Name: Galen T. Pate
Title: President

UNITED CAPITAL TRUST I

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

<PAGE>

EXHIBIT E

This Preferred Security is a Global Certificate within the meaning of the
Trust Agreement hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the Depositary. This
Preferred Security is exchangeable for Preferred Securities registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Trust Agreement (as defined below) and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.

Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("Depository Trust
Company"), to United Capital Trust I or its agent for registration of transfer,
exchange or payment, and any Preferred Security issued is registered in the name
of Cede & Co., or such other name as requested by an authorized representative
of Depository Trust Company (and any payment hereon is made to Cede & Co. or to
such other entity as is requested by an authorized representative of Depository
Trust Company), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &
Co. has an interest herein.

Certificate Number Number of Preferred Securities
P-

CUSIP NO.

<PAGE>

Certificate Evidencing Preferred Securities
of
United Capital Trust I

% Cumulative Trust Preferred Securities
(liquidation amount $25 per Preferred Security)

UNITED CAPITAL TRUST I, a statutory business trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that _________________________
(the "Holder") is the registered owner of ______________ (______) preferred
securities of the Trust representing undivided beneficial interests in the
assets of the Trust and designated the ____ % Cumulative Trust Preferred
Securities (liquidation amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and
records of the Trust, in person or by a duly authorized attorney, upon surrender
of this certificate duly endorsed and in proper form for transfer as provided in
Section 504 of the Trust Agreement (as defined below). The designations,
rights, privileges, restrictions, preferences, and other terms and provisions of
the Preferred Securities are set forth in, and this certificate and the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated Trust Agreement
of the Trust dated as of January , 1997, as the same may be amended from
time to time (the "Trust Agreement"), including the designation of the terms of
Preferred Securities as set forth therein. The Holder is entitled to the
benefits of the Preferred Securities Guaranty Agreement entered into by United
Community Bancshares, Inc., a Minnesota corporation, and Wilmington Trust
Company, as guaranty trustee, dated as of January , 1997 (the "Guaranty"), to
the extent provided therein. The Trust will furnish a copy of the Trust
Agreement and the Guaranty to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.

Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.

IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ______ day of January, 1997.

UNITED CAPITAL TRUST I

By___________________________
Name:
Title:

<PAGE>

PREFERRED SECURITIES GUARANTY AGREEMENT

UNITED COMMUNITY BANCSHARES, INC.

AND

WILMINGTON TRUST COMPANY

DATED: JANUARY , 1997

<PAGE>

TABLE OF CONTENTS

Page No.

ARTICLE I - DEFINITIONS AND INTERPRETATION. . . . . . . . . . . . . . . . . . 1

SECTION 1.1 Definitions and Interpretation. . . . . . . . . . . . . . . . 1

ARTICLE II - TRUST INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . . 4

SECTION 2.1 Trust Indenture Act; Application . . . . . . . . . . . . . . 4

SECTION 2.2 Lists of Holders of Securities . . . . . . . . . . . . . . . 4

SECTION 2.3 Reports by the Preferred Guaranty
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 5

SECTION 2.4 Periodic Reports to Preferred
Guaranty Trustee . . . . . . . . . . . . . . . . . . . . . 5

SECTION 2.5 Evidence of Compliance with
Conditions Precedent . . . . . . . . . . . . . . . . . . . 5

SECTION 2.6 Events of Default; Waiver. . . . . . . . . . . . . . . . . . 5

SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . . . . . . . 5

SECTION 2.8 Conflicting Interests. . . . . . . . . . . . . . . . . . . . 6

ARTICLE III - POWERS, DUTIES AND RIGHTS OF PREFERRED
GUARANTY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 6

SECTION 3.1 Powers and Duties of the Preferred
Guaranty Trustee . . . . . . . . . . . . . . . . . . . . . 6

SECTION 3.2 Certain Rights of Preferred Guaranty
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . 8

SECTION 3.3 Not Responsible for Recitals or
Issuance of Guaranty . . . . . . . . . . . . . . . . . . .10

ARTICLE IV - PREFERRED GUARANTY TRUSTEE . . . . . . . . . . . . . . . . . . .10

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SECTION 4.1 Preferred Guaranty Trustee; Eligibility. . . . . . . . . . .10

SECTION 4.2 Appointment, Removal and Resignation of
Preferred Guaranty Trustees. . . . . . . . . . . . . . . .10

ARTICLE V - GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

SECTION 5.1 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . .11

SECTION 5.2 Waiver of Notice and Demand. . . . . . . . . . . . . . . . .12

SECTION 5.3 Obligations Not Affected . . . . . . . . . . . . . . . . . .12

SECTION 5.4 Rights of Holders. . . . . . . . . . . . . . . . . . . . . .13

SECTION 5.5 Guaranty of Payment. . . . . . . . . . . . . . . . . . . . .13

SECTION 5.6 Subrogation. . . . . . . . . . . . . . . . . . . . . . . . .13

SECTION 5.7 Independent Obligations. . . . . . . . . . . . . . . . . . .13

ARTICLE VI - LIMITATION OF TRANSACTIONS; SUBORDINATION. . . . . . . . . . . .14

SECTION 6.1 Limitation of Transactions . . . . . . . . . . . . . . . . .14

SECTION 6.2 Ranking. . . . . . . . . . . . . . . . . . . . . . . . . . .14

ARTICLE VII - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . .14

SECTION 7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . .14

ARTICLE VIII - INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 8.1 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 8.2 Indemnification. . . . . . . . . . . . . . . . . . . . . . .15

ARTICLE IX - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . .15

SECTION 9.1 Successors and Assigns . . . . . . . . . . . . . . . . . . .15

SECTION 9.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . .16

SECTION 9.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .16

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SECTION 9.4 Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . .17

SECTION 9.5 Governing Law. . . . . . . . . . . . . . . . . . . . . . . .17

iii

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CROSS REFERENCE TABLE

Section of Trust Section of
Indenture Act of Guaranty
1939, as Amended Agreement
- ---------------- ----------

310(a) 4.1(a)
310(b) 4.1(c), 2.8
310(c) Inapplicable
311(a) 2.2(b)
311(b) 2.2(b)
311(c) Inapplicable
312(a) 2.2(a)
312(b) 2.2(b)
313 2.3
314(a) 2.4
314(b) Inapplicable
314(c) 2.5
314(d) Inapplicable
314(e) 1.1, 2.5, 3.2
314(f) 2.1, 3.2
315(a) 3.1(d)
315(b) 2.7
315(c) 3.1
315(d) 3.1(d)
316(a) 1.1, 3.6, 5.4
316(b) 5.3
316(c) 8.2
317(a) Inapplicable
317(b) Inapplicable
318(a) 2.1(b)
318(b) 2.1
318(c) 2.1(a)

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PREFERRED SECURITIES GUARANTY AGREEMENT

This GUARANTY AGREEMENT (the "Preferred Securities Guaranty"), dated as of
January __, 1997, is executed and delivered by United Community Bancshares,
Inc., a Minnesota corporation (the "Guarantor"), and Wilmington Trust Company,
as trustee (the "Preferred Guaranty Trustee"), for the benefit of the Holders
(as defined herein) from time to time of the Preferred Securities (as defined
herein) of United Capital Trust I, a Delaware statutory business trust ("United
Capital").

WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of January __, 1997, among the trustees of United Capital
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of United Capital, United Capital
is issuing on the date hereof [ ] preferred
securities, having an aggregate liquidation amount of $[ ], designated
the _____% Cumulative Trust Preferred Securities (the "Preferred Securities");

WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Preferred Securities Guaranty, to pay to the Holders of the
Preferred Securities the Guaranty Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guaranty for the benefit of the Holders.

ARTICLE I
DEFINITIONS AND INTERPRETATION

SECTION 1.1 Definitions and Interpretation

In this Preferred Securities Guaranty, unless the context otherwise
requires:

(a) capitalized terms used in this Preferred Securities Guaranty but not
defined in the preamble above have the respective meanings assigned to them in
this Section 1.1;

(b) a term defined anywhere in this Preferred Securities Guaranty has the
same meaning throughout;

(c) all references to "the Preferred Securities Guaranty" or "this
Preferred Securities Guaranty" are to this Preferred Securities Guaranty as
modified, supplemented or amended from time to time;

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(d) all references in this Preferred Securities Guaranty to Articles and
Sections are to Articles and Sections of this Preferred Securities Guaranty,
unless otherwise specified;

(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Preferred Securities Guaranty, unless otherwise defined in this
Preferred Securities Guaranty or unless the context otherwise requires; and

(f) a reference to the singular includes the plural and vice versa.

"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.

"Business Day" means any day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the State of Minnesota are authorized or
required by law or executive order to remain closed, or (c) a day on which the
Preferred Guaranty Trustee's Corporate Trust Office is closed for business.

"Corporate Trust Office" means the office of the Preferred Guaranty Trustee
at which the corporate trust business of the Preferred Guaranty Trustee shall,
at any particular time, be principally administered, which office at the date of
execution of this Agreement is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001.

"Covered Person" means any Holder or beneficial owner of Preferred
Securities.

"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Preferred Securities Guaranty.

"Guaranty Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by United Capital: (i) any accrued and unpaid Distributions (as defined in
the Trust Agreement) that are required to be paid on such Preferred Securities
to the extent United Capital shall have funds available therefor, (ii) the
redemption price, including all accrued and unpaid Distributions to the date of
redemption (the "Redemption Price") to the extent United Capital has funds
available therefor, with respect to any Preferred Securities called for
redemption by United Capital, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of United Capital (other than in
connection with the distribution of Junior Subordinated Debentures to the
Holders in exchange for Preferred Securities as provided in the Trust
Agreement), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent United Capital shall have funds available therefor, and
(b) the amount of assets of United Capital remaining available for distribution
to Holders in liquidation of United Capital (in either case, the "Liquidation
Distribution").

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"Holder" shall mean any holder, as registered on the books and records of
United Capital of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.

"Indemnified Person" means the Preferred Guaranty Trustee, any Affiliate of
the Preferred Guaranty Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Preferred Guaranty Trustee.

"Indenture" means the Subordinated Indenture dated as of January ___, 1997,
among the Guarantor (the "Debenture Issuer") and Wilmington Trust Company, as
trustee, and any indenture supplemental thereto pursuant to which the Junior
Subordinated Debentures are to be issued to the Property Trustee of United
Capital.

"Junior Subordinated Debentures" means the series of junior subordinated
deferrable interest debt securities of the Guarantor designated the ___% Junior
Subordinated Deferrable Interest Debentures due 2027 held by the Property
Trustee (as defined in the Trust Agreement) of United Capital.

"Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities.

"Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Preferred Securities Guaranty shall include:

(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definition relating thereto;

(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;

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(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.

"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.

"Preferred Guaranty Trustee" means Wilmington Trust Company, until a
Successor Preferred Guaranty Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guaranty and
thereafter means each such Successor Preferred Guaranty Trustee.

"Responsible Officer" means, with respect to the Preferred Guaranty
Trustee, any officer within the Corporate Trust Office of the Preferred Guaranty
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Preferred Guaranty Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.

"Successor Preferred Guaranty Trustee" means a successor Preferred Guaranty
Trustee possessing the qualifications to act as Preferred Guaranty Trustee under
Section 4.1.

"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.

ARTICLE II
TRUST INDENTURE ACT

SECTION 2.1 Trust Indenture Act; Application

(a) This Preferred Securities Guaranty is subject to the provisions of the
Trust Indenture Act that are required to be part of this Preferred Securities
Guaranty and shall, to the extent applicable, be governed by such provisions;
and

(b) If and to the extent that any provision of this Preferred Securities
Guaranty limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.

SECTION 2.2 Lists of Holders of Securities

(a) The Guarantor shall provide the Preferred Guaranty Trustee with a
list, in such form as the Preferred Guaranty Trustee may reasonably require, of
the names and

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addresses of the Holders of the Preferred Securities ("List of Holders") (i) on
or before January 1 and July 1 of each year, and (ii) at any other time within
30 days of receipt by the Guarantor of a written request for a List of Holders,
as of a date no more than 14 days before such List of Holders is given to the
Preferred Guaranty Trustee provided, that the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Preferred Guaranty Trustee by
the Guarantor. The Preferred Guaranty Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.

(b) The Preferred Guaranty Trustee shall comply with its obligations under
Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.

SECTION 2.3 Reports by the Preferred Guaranty Trustee

On or before July 15 of each year, the Preferred Guaranty Trustee shall
provide to the Holders of the Preferred Securities such reports as are required
by Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Preferred Guaranty
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.

SECTION 2.4 Periodic Reports to Preferred Guaranty Trustee

The Guarantor shall provide to the Preferred Guaranty Trustee such
documents, reports and information as required by Section 314 of the Trust
Indenture Act, if any, and the compliance certificate required by Section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.

SECTION 2.5 Evidence of Compliance with Conditions Precedent

The Guarantor shall provide to the Preferred Guaranty Trustee such evidence
of compliance with the conditions precedent, if any, provided for in this
Preferred Securities Guaranty that relate to any of the matters set forth in
Section 314(c) of the Trust Indenture Act. Any certificate or opinion required
to be given by an officer pursuant to Section 314(c)(1) may be given in the form
of an Officers' Certificate.

SECTION 2.6 Events of Default; Waiver

The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such
Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guaranty, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent thereon.

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SECTION 2.7 Event of Default; Notice

(a) The Preferred Guaranty Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guaranty
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, the Preferred Guaranty Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Preferred Guaranty
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Preferred Securities.

(b) The Preferred Guaranty Trustee shall not be deemed to have knowledge
of any Event of Default unless the Preferred Guaranty Trustee shall have
received written notice, or of which a Responsible Officer of the Preferred
Guaranty Trustee charged with the administration of the Trust Agreement shall
have obtained actual knowledge.

SECTION 2.8 Conflicting Interests

The Trust Agreement shall be deemed to be specifically described in this
Preferred Securities Guaranty for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.

ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTY TRUSTEE

SECTION 3.1 Powers and Duties of the Preferred Guaranty Trustee

(a) This Preferred Securities Guaranty shall be held by the Preferred
Guaranty Trustee for the benefit of the Holders of the Preferred Securities, and
the Preferred Guaranty Trustee shall not transfer this Preferred Securities
Guaranty to any Person except a Holder of Preferred Securities exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Preferred Guaranty
Trustee on acceptance by such Successor Preferred Guaranty Trustee of its
appointment to act as Successor Preferred Guaranty Trustee. The right, title and
interest of the Preferred Guaranty Trustee shall automatically vest in any
Successor Preferred Guaranty Trustee, and such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Preferred Guaranty
Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the
Preferred Guaranty Trustee has occurred and is continuing, the Preferred
Guaranty Trustee shall enforce this Preferred Securities Guaranty for the
benefit of the Holders of the Preferred Securities.

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(c) The Preferred Guaranty Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guaranty, and no implied covenants shall be read into
this Preferred Securities Guaranty against the Preferred Guaranty Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guaranty Trustee, the Preferred Guaranty Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guaranty, and
use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.

(d) No provision of this Preferred Securities Guaranty shall be construed
to relieve the Preferred Guaranty Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:

(A) the duties and obligations of the Preferred Guaranty
Trustee shall be determined solely by the express provisions of this
Preferred Securities Guaranty, and the Preferred Guaranty Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Preferred Securities Guaranty, and no implied
covenants or obligations shall be read into this Preferred Securities
Guaranty against the Preferred Guaranty Trustee; and

(B) in the absence of bad faith on the part of the Preferred
Guaranty Trustee, the Preferred Guaranty Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Preferred Guaranty
Trustee and conforming to the requirements of this Preferred Securities
Guaranty; but in the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the Preferred
Guaranty Trustee, the Preferred Guaranty Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements of
this Preferred Securities Guaranty;

(ii) the Preferred Guaranty Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guaranty Trustee, unless it shall be proved that the Preferred
Guaranty Trustee was negligent in ascertaining the pertinent facts upon which
such judgment was made;

(iii) the Preferred Guaranty Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
liquidation amount of the Preferred Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the

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Preferred Guaranty Trustee, or exercising any trust or power conferred upon the
Preferred Guaranty Trustee under this Preferred Securities Guaranty; and

(iv) no provision of this Preferred Securities Guaranty shall
require the Preferred Guaranty Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers if the Preferred
Guaranty Trustee shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under
the terms of this Preferred Securities Guaranty or indemnity, reasonably
satisfactory to the Preferred Guaranty Trustee, against such risk or
liability is not reasonably assured to it.

SECTION 3.2 Certain Rights of Preferred Guaranty Trustee

(a) Subject to the provisions of Section 3.1:

(i) The Preferred Guaranty Trustee may conclusively rely upon,
and shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.

(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guaranty shall be sufficiently evidenced by an Officers'
Certificate.

(iii) Whenever, in the administration of this Preferred Securities
Guaranty, the Preferred Guaranty Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting any action
hereunder, the Preferred Guaranty Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part, request
and conclusively rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.

(iv) The Preferred Guaranty Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof).

(v) The Preferred Guaranty Trustee may consult with counsel, and
the written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees. The
Preferred Guaranty Trustee shall have the right at any time to seek
instructions concerning the administration of this Preferred Securities
Guaranty from any court of competent jurisdiction.

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(vi) The Preferred Guaranty Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Preferred Securities
Guaranty at the request or direction of any Holder, unless such Holder shall
have provided to the Preferred Guaranty Trustee such security and indemnity,
reasonably satisfactory to the Preferred Guaranty Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of the
Preferred Guaranty Trustee's agents, nominees or custodians) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Preferred Guaranty
Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall be
taken to relieve the Preferred Guaranty Trustee, upon the occurrence of an Event
of Default, of its obligation to exercise the rights and powers vested in it by
this Preferred Securities Guaranty.

(vii) The Preferred Guaranty Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Preferred Guaranty Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit.

(viii) The Preferred Guaranty Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees, custodians or attorneys, and the Preferred Guaranty
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.

(ix) Any action taken by the Preferred Guaranty Trustee or its
agents hereunder shall bind the Holders of the Preferred Securities, and the
signature of the Preferred Guaranty Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred Guaranty Trustee to
so act or as to its compliance with any of the terms and provisions of this
Preferred Securities Guaranty, both of which shall be conclusively evidenced
by the Preferred Guaranty Trustee's or its agent's taking such action.

(x) Whenever in the administration of this Preferred Securities
Guaranty the Preferred Guaranty Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any other
action hereunder, the Preferred Guaranty Trustee (i) may request instructions
from the Holders of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be protected
in conclusively relying on or acting in accordance with such instructions.

(b) No provision of this Preferred Securities Guaranty shall be deemed to
impose any duty or obligation on the Preferred Guaranty Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in

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which it shall be illegal, or in which the Preferred Guaranty Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Preferred Guaranty Trustee shall
be construed to be a duty.

SECTION 3.3 Not Responsible for Recitals or Issuance of Guaranty

The recitals contained in this Preferred Securities Guaranty shall be taken
as the statements of the Guarantor, and the Preferred Guaranty Trustee does not
assume any responsibility for their correctness. The Preferred Guaranty Trustee
makes no representation as to the validity or sufficiency of this Preferred
Securities Guaranty.

ARTICLE IV
PREFERRED GUARANTY TRUSTEE

SECTION 4.1 Preferred Guaranty Trustee; Eligibility

(a) There shall at all times be a Preferred Guaranty Trustee which shall:

(i) not be an Affiliate of the Guarantor; and

(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, and subject to supervision
or examination by Federal, State, Territorial or District of Columbia authority.
If such corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority referred
to above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.

(b) If at any time the Preferred Guaranty Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guaranty Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).

(c) If the Preferred Guaranty Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guaranty Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.

SECTION 4.2 Appointment, Removal and Resignation of Preferred Guaranty Trustees

<PAGE>

(a) Subject to Section 4.2(b), the Preferred Guaranty Trustee may be
appointed or removed without cause at any time by the Guarantor.

(b) The Preferred Guaranty Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Preferred Guaranty Trustee has been appointed
and has accepted such appointment by written instrument executed by such
Successor Preferred Guaranty Trustee and delivered to the Guarantor.

(c) The Preferred Guaranty Trustee appointed to office shall hold office
until a Successor Preferred Guaranty Trustee shall have been appointed or until
its removal or resignation. The Preferred Guaranty Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guaranty Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guaranty Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guaranty Trustee and
delivered to the Guarantor and the resigning Preferred Guaranty Trustee.

(d) If no Successor Preferred Guaranty Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Preferred Guaranty Trustee may petition any court of competent jurisdiction for
appointment of a Successor Preferred Guaranty Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Preferred Guaranty Trustee.

(e) No Preferred Guaranty Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guaranty Trustee.

(f) Upon termination of this Preferred Securities Guaranty or removal or
resignation of the Preferred Guaranty Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guaranty Trustee all amounts accrued to the
date of such termination, removal or resignation.

ARTICLE V
GUARANTY

SECTION 5.1 Guaranty

The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders the Guaranty Payments (without duplication of amounts theretofore paid
by United Capital), as and when due, regardless of any defense, right of set-off
or counterclaim that United Capital may have or assert. The Guarantor's
obligation to make a Guaranty Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing United Capital to
pay such amounts to the Holders.

<PAGE>

SECTION 5.2 Waiver of Notice and Demand

The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guaranty and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
United Capital or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.

SECTION 5.3 Obligations Not Affected

The obligations, covenants, agreements and duties of the Guarantor under
this Preferred Securities Guaranty shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:

(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by United Capital of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by United Capital;

(b) the extension of time for the payment by United Capital of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Subordinated Debentures or any extension of the maturity date of the
Subordinated Debentures permitted by the Indenture);

(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of United Capital granting indulgence or extension of any
kind;

(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, United Capital or any of the assets of
United Capital;

(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;

(f) the settlement or compromise of any obligation guarantied hereby or
hereby incurred; or

(g) any other circumstance whatsoever that might otherwise constitute a
legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the

<PAGE>

obligations of the Guarantor hereunder shall be absolute and unconditional under
any and all circumstances.

There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.

SECTION 5.4 Rights of Holders

(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guaranty Trustee in
respect of this Preferred Securities Guaranty or exercising any trust or power
conferred upon the Preferred Guaranty Trustee under this Preferred Securities
Guaranty.

(b) Any Holder of Preferred Securities may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Preferred
Securities Guaranty, without first instituting a legal proceeding against United
Capital, the Preferred Guaranty Trustee or any other Person.

SECTION 5.5 Guaranty of Payment

This Preferred Securities Guaranty creates a guaranty of payment and not of
collection.

SECTION 5.6 Subrogation

The Guarantor shall be subrogated to all (if any) rights of the Holders of
Preferred Securities against United Capital in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities Guaranty;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guaranty, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guaranty. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.

SECTION 5.7 Independent Obligations

The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of United Capital with respect to the Preferred Securities,
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guaranty Payments pursuant to the terms of this Preferred Securities
Guaranty notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3.

<PAGE>

ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 6.1 Limitation of Transactions

So long as any Preferred Securities remain outstanding, if there shall have
occurred an Event of Default or an event of default under the Trust Agreement,
then (a) the Guarantor shall not declare or pay any dividend or distributions
on, or redeem, purchase, acquire, or make a liquidation payment with respect to,
any of its capital stock, (b) the Guarantor shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Guarantor (including other Junior Subordinated
Debentures) which rank pari passu with or junior in interest to the Junior
Subordinated Debentures or (c) the Guarantor shall not make any guaranty
payments with respect to any guaranty by the Guarantor of the debt securities of
any subsidiary of the Guarantor if such guaranty ranks pari passu or junior in
interest to the Junior Subordinated Debentures (other than (a) dividends or
distributions in common stock, (b) any declaration of a dividend in connection
with the implementation of a shareholders' rights plan, or the issuance of stock
under any such plan in the future or the redemption or repurchase of any such
rights pursuant thereto, (c) payments under this Preferred Securities Guaranty
and (d) purchases of common stock related to rights under any of the Guarantor's
benefit plans for its directors, officers of employees).

SECTION 6.2 Ranking

This Preferred Securities Guaranty will constitute an unsecured obligation
of the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guaranty now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to the Guarantor's common stock.

ARTICLE VII
TERMINATION

SECTION 7.1 Termination

This Preferred Securities Guaranty shall terminate upon (i) full payment of
the Redemption Price of all Preferred Securities, (ii) upon full payment of the
amounts payable in accordance with the Trust Agreement upon liquidation of
United Capital or (iii) upon distribution of the Junior Subordinated Debentures
to the holders of the Preferred Securities. Notwithstanding the foregoing, this
Preferred Securities Guaranty will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guaranty.

<PAGE>

ARTICLE VIII
INDEMNIFICATION

SECTION 8.1 Exculpation

(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guaranty and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Preferred Securities Guaranty or by law, except that an Indemnified Person shall
be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.

(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.

SECTION 8.2 Indemnification

The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guaranty.

ARTICLE IX
MISCELLANEOUS

SECTION 9.1 Successors and Assigns

All guaranties and agreements contained in this Preferred Securities
Guaranty shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.

<PAGE>

SECTION 9.2 Amendments

Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Preferred Securities Guaranty may only be amended with the prior approval
of the Holders of at least a Majority in liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accrued and unpaid Distributions to the date upon which the voting percentages
are determined) of all the outstanding Preferred Securities. The provisions of
Article VI of the Trust Agreement with respect to meetings of Holders of the
Securities apply to the giving of such approval.

SECTION 9.3 Notices

All notices provided for in this Preferred Securities Guaranty shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
telecopied or mailed by registered or certified mail, as follows:

(a) If given to the Preferred Guaranty Trustee, at the Preferred Guaranty
Trustee's mailing address set forth below (or such other address as the
Preferred Guaranty Trustee may give notice of to the Holders of the Preferred
Securities):

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration

(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):

United Community Bancshares, Inc.
2600 Eagan Woods Drive, Suite 155
Eagan, MN 55121
Attention: Marcia L. O'Brien
Chief Financial Officer

All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed

<PAGE>

address of which no notice was given, such notice or other document shall be
deemed to have been delivered on the date of such refusal or inability to
deliver.

SECTION 9.4 Benefit

This Preferred Securities Guaranty is solely for the benefit of the Holders
of the Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.

SECTION 9.5 Governing Law

THIS PREFERRED SECURITIES GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MINNESOTA.

THIS PREFERRED SECURITIES GUARANTY is executed as of the day and year first
above written.

UNITED COMMUNITY BANCSHARES, INC.,
as Guarantor

By:
----------------------------------------------------
Name: R. Scott Jones
Title: Chairman

and

By:
----------------------------------------------------
Name: Galen T. Pate
Title: President

WILMINGTON TRUST COMPANY,
as Preferred Guaranty Trustee

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

<PAGE>

EXHIBIT 10.15

Bank Stock Control Loan

FORM OF TERM LOAN AGREEMENT

This Term Loan Agreement (the "AGREEMENT") is made and entered into as of
the _____ day of ____________, 19___ by and between _________________________
(the "BORROWER") and Firstar Bank Milwaukee, N.A. (the "BANK").

ARTICLE I DEFINITIONS

1.1 DEFINITIONS. Except as otherwise provided, all accounting terms will
be construed in accordance with generally accepted accounting principles
consistently applied and consistent with those applied in the preparation of the
financial statements referred to in paragraph 4.13, and financial data submitted
pursuant to this Agreement will be prepared in accordance with such principles.
As used herein:

(a) "ASSETS" means the sum of all assets including Loan Loss Reserves
of the Subsidiary Bank determined in accordance with generally
accepted accounting principles applicable to banks, consistently
applied.

(b) "LOAN LOSS RESERVES" means the loan loss reserves of the
Subsidiary Bank reported in the most recent call reports of the
Subsidiary Bank.

(c) "NONPERFORMING LOANS" means the sum of those loans 90 days or
more past due and those loans classified as "non-accrual" or
"renegotiated" as reported in the most recent call reports of the
Subsidiary Bank.

(d) "OTHER REAL ESTATE" means the value of all real estate owned by
the Subsidiary Bank and classified as such by the examiners of
the Comptroller of the Currency, Federal Deposit Insurance
Corporation, Federal Reserve Board or appropriate state agency
responsible for examining the Subsidiary Bank, as shown on the
most recent examination reports of the Subsidiary Bank.

(e) "PRIMARY CAPITAL" means the sum of Total Tangible Equity and Loan
Loss Reserves.

(f) "SUBSIDIARY" OR "SUBSIDIARIES" means the Subsidiary Bank and any
entity of which the Borrower owns, directly or through another
Subsidiary, at the date of determination, more than 50% of the
outstanding stock having ordinary voting power for the election
of

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<PAGE>

directors, irrespective of whether or not at such time stock
of any other class or classes might have voting power by reason
of the happening of any contingency.

(g) "SUBSIDIARY BANK" means, whether one or more ___________________
________________________________________________________________
________________________________________________________________

(h) "TOTAL LOANS" means the aggregate outstanding principal amount of
all loans shown as assets of the Subsidiary Bank as reported in
the most recent call reports of the Subsidiary Bank.

(i) "TOTAL TANGIBLE EQUITY" means the total amount of the capital
stock, surplus and undivided profits accounts less intangibles,
all of which will be determined in accordance with generally
accepted accounting principles applicable to banks, consistently
applied.

ARTICLE II LOANS

2.1 TERMS FOR ADVANCE(S). [CHOOSE ONE:]

/ / SINGLE ADVANCE TERM LOAN. As of the date hereof, the Borrower
has obtained a term loan from the Bank in the amount of
$_____________ (the "LOAN AMOUNT"). The term loan is evidenced
by a single promissory note of the Borrower to the order of the
Bank in the principal amount of the Loan Amount and dated as of
the date hereof (the "NOTE").

/ / MULTIPLE ADVANCE TERM LOAN. Prior to _________________ or the
earlier termination hereof, the Borrower may obtain advances from
the Bank in an aggregate amount not exceeding $____________ (the
"LOAN AMOUNT"). The term loans will be evidenced by a single
promissory note of the Borrower to the Bank in the principal
amount of the Loan Amount and dated as of the date hereof (the
"NOTE"). Although the Note will be expressed as payable in the
full Loan Amount, the Borrower will be obligated to pay only the
amounts actually disbursed hereunder, together with the accrued
interest on the outstanding balance at the rates and on the dates
specified therein and such other charges provided for herein.

2.2 ADVANCES AND PAYING PROCEDURE. The Bank is authorized and directed to
credit any of the Borrower's accounts with the Bank (or to the account the
Borrower designates in writing) for all loans made hereunder, and the Bank is
authorized to debit such account or any other account of the Borrower with the
Bank for the amount of any principal or interest due under the Note or other
accounts due hereunder on the due date with respect

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<PAGE>

thereto. The Borrower will maintain a demand deposit account at the Bank to
facilitate borrowings and repayments hereunder.

2.3 SECURITY. The loans provided for hereunder will be secured by all of
the common and preferred stock of the Subsidiary Bank now owned or hereafter
acquired by the Borrower, except directors qualifying shares, if any.

2.4 MANDATORY PREPAYMENT. If _________________________________________
ceases for any reason to be active in the management of the Subsidiary Bank for
a period of 30 consecutive days or more, and is not replaced by an individual of
comparable ability and experience, the Borrower will promptly give the Bank
written notice thereof and upon demand by the Bank, the Borrower will repay the
loans made hereunder, and any other loans from the Bank to the Borrower, on the
date specified in such demand.

ARTICLE III CONDITIONS TO BORROWING

3.1 CONDITIONS TO BORROWING. The Bank will not be obligated to make (or
continue to make) advances hereunder unless (i) the Bank has received executed
copies of the Note and all other documents or agreements applicable to the loans
described herein, including but not limited to the documents specified in
Article V (collectively with this Agreement the "LOAN DOCUMENTS", in form and
content satisfactory to the Bank; (ii) the Bank has received confirmation
satisfactory to it that the Bank has a properly perfected security interest,
mortgage or lien, with the proper priority; (iii) the Bank has received
certified copies of the Articles of Incorporation and By-Laws and a certificate
of status of the Borrower and the Subsidiaries; (iv) the Bank has received a
certified copy of a resolution or authorization in form and content satisfactory
to the Bank authorizing the loan and all acts contemplated by this Agreement and
all related documents, and confirmation of proper authorization of all
guaranties and other acts of third parties contemplated hereunder; (v) the Bank
has been provided with an opinion of the Borrower's counsel in form and content
satisfactory to the Bank confirming the matters outlined in paragraph 4.1 and
such other matters as the Bank requests; (vi) no default exists under this
Agreement or under any other Loan Documents, or under any other agreements by
and between the Borrower and the Bank and no condition or event will exist or
have occurred which with the passage of time, the giving of notice or both would
constitute a default under this Agreement or under any other Loan Documents or
under any other agreements by and between the Borrower and the Bank; and (vii)
all proceedings taken in connection with the transactions contemplated by this
Agreement and all instruments, authorizations and other documents applicable
thereto, will be satisfactory to the Bank and its counsel.

ARTICLE IV. WARRANTIES AND COVENANTS

During the term of this Agreement, and while any part of the credit granted
the Borrower is available or any obligations under any of the Loan Documents are
unpaid or outstanding, the Borrower warrants and agrees as follows:

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<PAGE>

4.1 ORGANIZATION AND AUTHORITY. The Borrower is a validly existing
corporation in good standing under the laws of its state of organization, and
has all requisite power and authority, corporate or otherwise, and possesses all
licenses necessary, to conduct its business and own its properties. The
execution, delivery and performance of this Agreement and the other Loan
Documents (i) are within the Borrower's power; (ii) have been duly authorized by
proper corporate action; (iii) do not require the approval of any governmental
agency; and (iv) will not violate any law, agreement or restriction by which the
Borrower is bound. This Agreement and the other Loan Documents are the legal,
valid and binding obligations of the Borrower, enforceable against the Borrower
in accordance with their terms.

4.2 SUBSIDIARIES.

(a) The Borrower has __________ Subsidiaries consisting of the
Subsidiary Bank and ______________________________________
________________________________________________________________.

(b) ___________________________ has issued and outstanding __________
shares of common stock, par value $___________ per share, which
are duly authorized, validly issued, fully paid and
non-assessable, of which the Borrower owns ___________ shares,
which represent _______% of the issued and outstanding capital
stock of ____________________________________________________,
free and clear of any liens, charges, encumbrances, rights of
redemption, preemptive rights or rights of first refusal of any
kind or nature whatsoever, except liens in favor of the Bank.
__________________ has no shares of capital stock (common or
preferred), or securities or other obligations convertible into
any of the foregoing, authorized or outstanding and has no
outstanding offers, subscriptions, warrants, rights or other
agreements or commitments obligating
______________________________ to issue or sell any of the
foregoing.

(c) ____________________________________ has issued and outstanding
_______ shares of common stock, par value $____________ per
share, which are duly authorized, validly issued, fully paid and
non-assessable, of which the Borrower owns __________ shares,
which represent ________% of the issued and outstanding capital
stock of ______________________________________________________
__________________________________________________________, free
and clear of any liens, charges, encumbrances, rights of
redemption, preemptive rights or rights of first refusal of any
kind or nature whatsoever, except liens in favor of the Bank.
________________________________________________ has no shares of
capital stock (common or preferred), or securities or other
obligations convertible into any of the foregoing, authorized or

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<PAGE>

outstanding and has no outstanding offers, subscriptions,
warrants, rights or other agreements or commitments obligating
_________________________________________ to issue or sell any of
the foregoing.

(d) ________________________________ has issued and outstanding
_______ shares of common stock, par value $_________ per share,
which are duly authorized, validly issued, fully paid and
non-assessable, of which the Borrower owns _________ shares,
which represent _______% of the issued and outstanding capital
stock of ___________________________________, free and clear of
any liens, charges, encumbrances, rights of redemption,
preemptive rights or rights of first refusal of any kind or
nature whatsoever, except liens in favor of the Bank.
____________________________________ has no shares of capital
stock (common or preferred), or securities or other obligations
convertible into any of the foregoing, authorized or outstanding
and has no outstanding offers, subscriptions, warrants, rights or
other agreements or commitments obligating
____________________________________ to issue or sell any of the
foregoing.

(e) _________________________________ has issued and outstanding
_______ shares of common stock, par value $____________ per
share, which are duly authorized, validly issued, fully paid and
non-assessable, of which the Borrower owns _________ shares,
which represent _______% of the issued and outstanding capital
stock of _______________________ ____________________________,
free and clear of any liens, charges, encumbrances, rights of
redemption, preemptive rights or rights of first refusal of any
kind or nature whatsoever, except liens in favor of the Bank.
__________________________________________ has no shares of
capital stock (common or preferred), or securities or other
obligations convertible into any of the foregoing, authorized or
outstanding and has no outstanding offers, subscriptions,
warrants, rights or other agreements or commitments obligating
_________________________ issue or sell any of the foregoing.

4.3 LITIGATION AND COMPLIANCE WITH LAWS. The Borrower and the
Subsidiaries have complied in all material respects with and will continue to
comply with all applicable federal and state laws and regulations: (i) that
regulate or are concerned in any way with its or their banking and trust
business, including without limitation those laws and regulations relating to
the investment of funds, lending of money, collection of interest, extension of
credit, and location and operation of banking facilities; or (ii) otherwise
relate to or affect the business or assets of Borrower or any of the
Subsidiaries or the assets owned, used or occupied by them. Except to the
extent previously disclosed to Bank, there are no claims,

- 5 -
<PAGE>

actions, suits, or proceedings pending, or to the best knowledge of Borrower,
threatened or contemplated against or affecting Borrower or any of the
Subsidiaries, at law or in equity, or before any federal, state or other
governmental authority, or before any arbitrator or arbitration panel, whether
by contract or otherwise, and there is no decree, judgment or order of any kind
in existence against or restraining Borrower or any of the Subsidiaries, or any
of their officers, employees or directors, from taking any action of any kind in
connection with the business of Borrower or any of the Subsidiaries. Except to
the extent previously disclosed to the Bank, neither Borrower nor any of the
Subsidiaries has (i) received from any regulatory authority any criticisms,
recommendations or suggestions of a material nature, and Borrower has no reason
to believe that any such is contemplated, concerning the capital structure of
any of the Subsidiaries, loan policies or portfolio, or other banking and
business practices of any of the Subsidiaries that have not been resolved to the
satisfaction of such regulatory authorities or (ii) entered into any memorandum
of understanding or similar arrangement with any federal or state regulator
relating to any unsound or unsafe banking practice or conduct or any violation
of law respecting the operations of the Borrower or the operations of any of the
Subsidiaries.

4.4 F.D.I.C. INSURANCE. The Subsidiary Bank is insured as to deposits by
the Federal Deposit Insurance Corporation and no act has occurred which could
adversely affect the status of the Subsidiary Bank as an insured bank.

4.5 CORPORATE EXISTENCE; BUSINESS ACTIVITIES; ASSETS. The Borrower will
and will cause each Subsidiary to (i) preserve its corporate existence, rights
and franchises; (ii) carry on its business activities in substantially the
manner such activities are conducted as of the date of this Agreement; (iii) not
liquidate, dissolve, merge or consolidate with or into another entity; and (iv)
not sell, lease, transfer or otherwise dispose of all or substantially all of
its assets.

4.6 USE OF PROCEEDS; MARGIN STOCK; SPECULATION. [CHOOSE ONE OR MORE] (i)
Advances by the Bank hereunder will be used exclusively by the Borrower to
refinance existing indebtedness with _________________________________ in the
amount of $_______________; (ii) for working capital purposes; (iii) to acquire
the capital stock of _____________________________________; and (iv) other
acquisition fees and expenses. The Borrower will not use any of the loan
proceeds to purchase or carry "margin" stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System). No part of any of the
proceeds will be used for speculative investment purposes, including, without
limitation, speculating or hedging in the commodities and/or futures market.

4.7 ENVIRONMENTAL MATTERS. Except as disclosed in a written schedule
attached to this Agreement (if no schedule is attached, there are no
exceptions), there exists no uncorrected violation by the Borrower of any
federal, state or local laws (including statutes, regulations, ordinances or
other governmental restrictions and requirements) relating to the discharge of
air pollutants, water pollutants or process waste water or otherwise relating to
the environment or Hazardous Substances as hereinafter defined, whether such
laws currently exist or are enacted in the future (collectively "ENVIRONMENTAL
LAWS". The term

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<PAGE>

"HAZARDOUS SUBSTANCES" will mean any hazardous or toxic wastes, chemicals or
other substances, the generation, possession or existence of which is prohibited
or governed by any Environmental Laws. The Borrower is not subject to any
judgment, decree, order or citation, or a party to (or threatened with) any
litigation or administrative proceeding, which asserts that the Borrower (i) has
violated any Environmental Laws; (ii) is required to clean up, remove or take
remedial or other action with respect to any Hazardous Substances (collectively
"REMEDIAL ACTION"); or (iii) is required to pay all or a portion of the cost of
any Remedial Action, as a potentially responsible party. Except as disclosed on
the Borrower's environmental questionnaire provided to the Bank, there are not
now, nor to the Borrower's knowledge after reasonable investigation have there
ever been, any Hazardous Substances (or tanks or other facilities for the
storage of Hazardous Substances) stored, deposited, recycled or disposed of on,
under or at any real estate owned or occupied by the Borrower during the periods
that the Borrower owned or occupied such real estate, which if present on the
real estate or in soils or ground water, could require Remedial Action. To the
Borrower's knowledge, there are no proposed or pending changes in Environmental
Laws which would adversely affect the Borrower or its business, and there are no
conditions existing currently or likely to exist while the Loan Documents are in
effect which would subject the Borrower to Remedial Action or other liability.
The Borrower currently complies with and will continue to timely comply with all
applicable Environmental Laws; and will provide the Bank, immediately upon
receipt, copies of any correspondence, notice, complaint, order or other
document from any source asserting or alleging any circumstance or condition
which requires or may require a financial contribution by the Borrower or
Remedial Action or other response by or on the part of the Borrower under
Environmental Laws, or which seeks damages or civil, criminal or punitive
penalties from the Borrower for an alleged violation of Environmental Laws.

4.8 RESTRICTION ON INDEBTEDNESS. The Borrower will not and will not
permit any of the Subsidiaries to create, incur, assume or have outstanding any
indebtedness for borrowed money (including capitalized leases) except (i)
indebtedness under the Note issued under this Agreement; (ii) other indebtedness
to the Bank; and (iii) any other indebtedness outstanding on the date hereof,
and shown on the Borrower's financial statements delivered to the Bank prior to
the date hereof, provided such other indebtedness shall not be renewed, extended
or increased.

4.9 RESTRICTION ON LIENS. The Borrower will not create, incur, assume or
permit to exist any mortgage, pledge, encumbrance or other lien or levy upon or
security interest in any of the Borrower's property now owned or hereafter
acquired, except (i) taxes and assessments which are either not delinquent or
which are being contested in good faith with adequate reserves provided; (ii)
easements, restrictions and minor title irregularities which do not, as a
practical matter, have an adverse effect upon the ownership and use of the
affected property; (iii) liens in favor of the Bank; and (iv) other liens
disclosed in writing to the Bank prior to the date hereof which are fully
subordinated to any security interest or other lien held by the Bank.

- 7 -
<PAGE>

4.10 RESTRICTION ON CONTINGENT LIABILITIES. The Borrower will not and will
not permit any of the Subsidiaries to guarantee or become a surety or otherwise
contingently liable for any obligations of others, except pursuant to the
deposit and collection of checks, the issuance or confirmation of letters of
credit by the Subsidiary Bank and similar matters in the ordinary course of
banking business.

4.11 INSURANCE. The Borrower will maintain and cause each Subsidiary to
maintain insurance to such extent, covering such risks and with such insurers as
is usual and customary for businesses operating similar properties, and as is
satisfactory to the Bank, including insurance for fire and other risks insured
against by extended coverage, public liability insurance and workers'
compensation insurance.

4.12 TAXES AND OTHER LIABILITIES. The Borrower will pay and discharge, and
cause each Subsidiary to pay and discharge when due, all of its taxes,
assessments and other liabilities, except when the payment thereof is being
contested in good faith by appropriate procedures which will avoid foreclosure
of liens securing such items, and with adequate reserves provided therefor.

4.13 FINANCIAL STATEMENTS AND REPORTING. The financial statements and
other information previously provided to the Bank or provided to the Bank in the
future are or will be complete and accurate and prepared in accordance with
generally accepted accounting principles. There has been no material adverse
change in the Borrower's financial condition since such information was provided
to the Bank. The Borrower will, and will cause each Subsidiary to (i) maintain
accounting records in accordance with generally recognized and accepted
principles of accounting consistently applied throughout the accounting periods
involved; (ii) provide the Bank with such information concerning its business
affairs and financial condition (including insurance coverage) as the Bank may
reasonably request; and (iii) without request, provide the Bank with the
following information:

(a) As soon as available, and in any event within 90 days after the
end of each fiscal year of the Borrower, the Borrower's annual
audited financial statements prepared by an accounting firm
acceptable to the Bank; and

(b) Within 45 days of the end of each quarter, quarterly call reports
prepared on FFIEC forms, or any successors thereto, of the
Subsidiary Bank prepared in accordance with the guidelines of the
regulatory agency which regulates such Subsidiary Bank; and

(c) As soon as available, copies of all reports or materials
submitted or distributed to shareholders of the Borrower or filed
with the SEC or other governmental agency having regulatory
authority over the Borrower or any Subsidiary or with any
national securities exchange; and

- 8 -
<PAGE>

(d) Promptly after the furnishing thereof, copies of any statement or
report furnished to any other holder of obligations of the
Borrower or any Subsidiary pursuant to the terms of any
indenture, loan or similar agreement and not otherwise required
to be furnished to the Bank pursuant to any other clause of this
paragraph 4.13; and

(e) Promptly, and in any event within 10 days, after the Borrower has
knowledge thereof, a statement of the chief financial officer of
the Borrower describing: (i) any event which, either of itself or
with the lapse of time or the giving of notice or both, would
constitute a default hereunder or under any other material
agreement to which the Borrower or any Subsidiary is a party,
together with a statement of the actions which the Borrower
proposes to take with respect thereto; and (ii) any pending or
threatened litigation or administrative proceeding of the type
described in paragraph 4.3; and

(f) Notice of any memorandum of understanding or any other agreement
with any banking regulatory agencies, or cease and desist order,
immediately after entered into by or issued against Borrower or
any Subsidiary; and

(g) Promptly after request therefor, any other information concerning
the business affairs and financial condition of the Borrower or
any Subsidiary as the Bank may reasonably request.

4.14 INFORMATION. The Borrower will make available for review by the Bank,
promptly upon Bank's request, financial statements, call reports and any other
records or documents of the Borrower or the Subsidiary Bank. The Borrower and
the Subsidiaries will obtain the consent of any person or regulator which it
deems necessary or appropriate for disclosure of the information described
above.

4.15 FINANCIAL COVENANTS. The Borrower will cause the Subsidiary Bank to
maintain at all times:

(a) a ratio of Primary Capital to Assets of at least 7.0%.

(b) a ratio of Nonperforming Loan plus Other Real Estate to Total
Loan plus Other Real Estate of not greater than 3.0%.

(d) an average return on assets of at least .75% for Signal Bank and
Goodhue County National Bank and .45% for Park National Bank.

- 9 -
<PAGE>

4.16 INSPECTION OF PROPERTIES AND RECORDS; FISCAL YEAR. The Borrower will
permit representatives of the Bank to visit and inspect any of the properties
and examine any books and records of the Borrower and the Subsidiaries including
without limitation the stock transfer records of the Subsidiary Bank, at any
reasonable time and as often as the Bank may reasonably desire. The Borrower
will not change its fiscal year.

4.17 ISSUANCE OF STOCK. The Borrower will not permit any Subsidiary Bank
to issue any additional shares of common or preferred stock, or any options,
warrants or other common stock equivalents, or sell or issue securities or
obligations convertible into such ("NEW STOCK"), whether in the form of stock
dividends or stock splits or otherwise, unless such New Stock will be issued to
the Borrower and delivered by the Borrower to the Bank, together with any
additional documents required by the Bank, as additional collateral to secure
the loan provided for hereunder.

ARTICLE V. COLLATERAL

5.1 COLLATERAL. This Agreement and the Note are secured by a Collateral
Pledge Agreement dated _______________________. The information in this Article
V is for information only and the omission of any reference to an agreement will
not affect the validity or enforceability thereof. The rights and remedies of
the Bank outlined in this Agreement and the documents identified above are
intended to be cumulative.

5.2 CREDIT BALANCES; SETOFF. As additional security for the payment of
the obligations described in the Loan Documents and any other obligations of the
Borrower to the Bank of any nature whatsoever (collectively the "OBLIGATIONS"),
the Borrower hereby grants to the Bank a security interest in, a lien on and an
express contractual right to set off against all depository account balances,
cash and any other property of the Borrower now or hereafter in the possession
of the Bank. The Bank may, at any time upon the occurrence of a default
hereunder (notwithstanding any notice requirements or grace/cure periods under
this or other agreements between the Borrower and the Bank) set off against the
Obligations WHETHER OR NOT THE OBLIGATIONS (INCLUDING FUTURE INSTALLMENTS) ARE
THEN DUE OR HAVE BEEN ACCELERATED, ALL WITHOUT ANY ADVANCE OR CONTEMPORANEOUS
NOTICE OR DEMAND OF ANY KIND TO THE BORROWER, SUCH NOTICE AND DEMAND BEING
EXPRESSLY WAIVED.

ARTICLE VI. DEFAULTS

6.1 DEFAULTS. NOTWITHSTANDING ANY CURE PERIODS DESCRIBED BELOW, THE
BORROWER WILL IMMEDIATELY NOTIFY THE BANK IN WRITING WHEN THE BORROWER OBTAINS
KNOWLEDGE OF THE OCCURRENCE OF ANY DEFAULT SPECIFIED BELOW. Regardless of
whether the Borrower has given the required notice, the occurrence of one or
more of the following will constitute a default:

(a) NONPAYMENT. The Borrower fails to pay (i) any interest due on
the Note or any fees, charges, costs or expenses under the Loan

- 10 -
<PAGE>

Documents by 5 days after the same becomes due; or (ii) any
principal amount of the Note when due.

(b) NONPERFORMANCE. The Borrower or any guarantor of Borrower's
Obligations to the Bank ("GUARANTOR") fails to perform or observe
any agreement, term, provision, condition, or covenant (other
than a default occurring under (a), (c), (d), (e), (f) or (g) of
this paragraph 6.1) required to be performed or observed by the
Borrower or any Guarantor hereunder or under any other Loan
Document or other agreement with or in favor of the Bank.

(c) MISREPRESENTATION. Any financial information, statement,
certificate, representation or warranty given to the Bank by the
Borrower or any Guarantor (or any of their representatives) in
connection with entering into this Agreement or the other Loan
Documents and/or any borrowing thereunder, or required to be
furnished under the terms thereof, proves untrue or misleading in
any material respect (as determined by the Bank in the exercise
of its judgment) as of the time when given.

(d) DEFAULT ON OTHER OBLIGATIONS. The Borrower, any Guarantor or any
Subsidiary will be in default under the terms of any loan
agreement, promissory note, lease, conditional sale contract or
other agreement, document or instrument evidencing, governing or
securing any indebtedness owing by the Borrower, any Guarantor or
any Subsidiary to the Bank or any indebtedness in excess of
$10,000 owing by the Borrower to any third party, and the period
of grace, if any, to cure said default will have passed.

(e) JUDGMENTS. Any judgment is obtained against the Borrower, any
Guarantor or any Subsidiary which, together with all other
outstanding unsatisfied judgments against the Borrower (or such
Guarantor or Subsidiary), exceeds the sum of $10,000 and remains
unvacated, unbonded or unstayed for a period of 30 days following
the date of entry thereof.

(f) INABILITY TO PERFORM; BANKRUPTCY/INSOLVENCY. (i) the Borrower,
any Guarantor or any Subsidiary dies or ceases to exist; or (ii)
any Guarantor attempts to revoke any guaranty of the Obligations
described herein, or any guaranty becomes unenforceable in whole
or in part for any reason; or (iii) any bankruptcy, insolvency or
receivership proceedings, or an assignment for the benefit of
creditors, is commenced under any Federal or state law by or
against the Borrower, any Guarantor or any Subsidiary; or (iv)
the Borrower, any Guarantor or any Subsidiary becomes the subject
of any out-of-court settlement

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<PAGE>

with its creditors; or (v) the Borrower, any Guarantor or any
Subsidiary is unable or admits in writing its inability to pay
its debts as they mature; or (vi) the Borrower or any Subsidiary
is closed or taken over by a Regulatory Agency.

(g) ADVERSE CHANGE; INSECURITY. (i) There is a material adverse
change in the business, properties, financial condition or
affairs of the Borrower, any Guarantor or any Subsidiary, or in
any collateral securing the Obligations; or (ii) the Bank in good
faith deems itself insecure.

(h) REGULATORY ORDERS. The Borrower or any Subsidiary enters into
any memorandum of understanding or other agreement with any
banking regulatory agency relating to any unsound or unsafe
banking practice or conduct or any violation of law respecting
the operation of Borrower or such Subsidiary; or Borrower or any
Subsidiary or any of their officers, employees, or directors
become the subject of a judicial or administrative determination
restraining any of them from taking any actions of any kind in
connection with the business of Borrower or such Subsidiary,
assessing a civil penalty, finding that any criminal offense
occurred in connection with the operations of Borrower or such
Subsidiary, or suspending or removing any officer or director of
Borrower or such Subsidiary.

6.2 TERMINATION OF LOAN; ADDITIONAL BANK RIGHTS. Upon the occurrence of
any of the events identified in paragraph 6.1, the Bank may at any time
(notwithstanding any notice requirements or grace/cure periods under this or
other agreements between the Borrower and the Bank) (i) immediately terminate
its obligation, if any, to make additional loans to the Borrower; (ii) set off;
and/or (iii) take such other steps to protect or preserve the Bank's interest in
any collateral, including without limitation, notifying account debtors to make
payments directly to the Bank, advancing funds to protect any collateral and
insuring collateral at the Borrower's expense; all without demand or notice of
any kind, all of which are hereby waived.

6.3 ACCELERATION OF OBLIGATIONS. Upon the occurrence of any of the events
identified in paragraphs 6.1(a) through 6.1(e) and 6.1(g) and 6.1(h), and the
passage of any applicable cure periods, the Bank may at any time thereafter, (i)
by written notice to the Borrower, declare the unpaid principal balance of any
Obligations, together with the interest accrued thereon and other amounts
accrued hereunder and under the other Loan Documents, to be immediately due and
payable; and the unpaid balance will thereupon be due and payable, all without
presentation, demand, protest or further notice of any kind, all of which are
hereby waived, and notwithstanding anything to the contrary contained herein or
in any of the other Loan Documents; and (ii) require the Borrower to cause the
Subsidiary Bank to appoint an independent transfer agent for the purpose of
registering and transferring ownership of the capital stock of the Subsidiary
Bank. Upon the occurrence of any event under paragraph 6.1(f), the unpaid
principal balance of any Obligations, together with all

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<PAGE>

interest accrued thereon and other amounts accrued hereunder and under the other
Loan Documents, will thereupon be immediately due and payable, all without
presentation, demand, protest or notice of any kind, all of which are hereby
waived, and notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents. NOTHING CONTAINED IN PARAGRAPH 6.1, PARAGRAPH 6.2
OR THIS SECTION WILL LIMIT THE BANK'S RIGHT TO SET OFF AS PROVIDED IN PARAGRAPH
5.2 OR OTHERWISE IN THIS AGREEMENT.

6.4 OTHER REMEDIES. Nothing in this Article VI is intended to restrict
the Bank's rights under any of the Loan Documents or at law, and the Bank may
exercise all such rights and remedies as and when they are available.

ARTICLE VII. MISCELLANEOUS

7.1 DELAY; CUMULATIVE REMEDIES. No delay on the part of the Bank in
exercising any right, power or privilege hereunder or under any of the other
Loan Documents will operate as a waiver thereof, nor will any single or partial
exercise of any right, power or privilege hereunder preclude other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein specified are cumulative and are not exclusive of any
rights or remedies which the Bank would otherwise have.

7.2 RELATIONSHIP TO OTHER DOCUMENTS. The warranties, covenants and other
obligations of the Borrower (and the rights and remedies of the Bank) that are
outlined in this Agreement and the other Loan Documents are intended to
supplement each other. In the event of any inconsistencies in any of the terms
in the Loan Documents, all terms will be cumulative so as to give the Bank the
most favorable rights set forth in the conflicting documents, except that if
there is a direct conflict between any preprinted terms and specifically
negotiated terms (whether included in an addendum or otherwise), the
specifically negotiated terms will control.

7.3 PARTICIPATIONS; GUARANTORS. The Bank may, at its option, sell all or
any interests in the Note and other Loan Documents to other financial
institutions. Any purchaser of an interest in the Note is hereinafter referred
to as a "Participant." In connection with such sales (and thereafter), the Bank
may disclose any financial information the Bank may have concerning the Borrower
to any such Participant or potential Participant. From time to time, the Bank
may, in its discretion and without obligation to the Borrower, any guarantor or
any other third party, disclose information about the Borrower and this
Agreement to any guarantor, surety or other accommodation party. This provision
does not obligate the Bank to supply any information or release the Borrower
from its obligation to provide such information, and the Borrower agrees to keep
all Guarantors advised of its financial condition and other matters which may be
relevant to the Guarantors' obligations to the Bank.

7.4 EXPENSES AND ATTORNEYS' FEES. The Borrower will reimburse the Bank
and any Participant for all attorneys' fees and all other costs, fees and
out-of-pocket disbursements (including fees and disbursements of both inside
counsel and outside counsel)

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<PAGE>

incurred by the Bank or any Participant in connection with the preparation,
execution, delivery, administration, defense and enforcement of this Agreement
or any of the other Loan Documents, including fees and costs related to any
waivers or amendments with respect thereto (examples of costs and fees include
but are not limited to fees and costs for: filing, perfecting or confirming the
priority of the Bank's lien, title searches or insurance, appraisals,
environmental audits and other reviews related to the Borrower, any collateral
or the loans, if requested by the Bank). The Borrower will also reimburse the
Bank and any Participant for all costs of collection before and after judgment,
and the costs of preservation and/or liquidation of any collateral (including
fees and disbursements of both inside and outside counsel).

7.5 SUCCESSORS. The rights, options, powers and remedies granted in this
Agreement and the other Loan Documents will extend to the Bank and to its
successors and assigns, will be binding upon the Borrower and its successors and
assigns and will be applicable hereto and to all renewals and/or extensions
hereof.

7.6 INDEMNIFICATION. Except for harm arising from the Bank's willful
misconduct, the Borrower hereby indemnifies and agrees to defend and hold the
Bank harmless from any and all losses, costs, damages, claims and expenses of
any kind suffered by or asserted against the Bank relating to claims by third
parties arising out of the financing provided under the Loan Documents or
related to any collateral. This indemnification and hold harmless provision
will survive the termination of the Loan Documents and the satisfaction of the
Obligations due the Bank.

7.7 NOTICE OF CLAIMS AGAINST BANK; LIMITATION OF CERTAIN DAMAGES. In
order to allow the Bank to mitigate any damages to the Borrower from the Bank's
alleged breach of its duties under the Loan Documents or any other duty, if any,
to the Borrower, the Borrower agrees to give the Bank immediate written notice
of any claim or defense it has against the Bank, whether in tort or contract,
relating to any action or inaction by the Bank under the Loan Documents, or the
transactions related thereto, or of any defense to payment of the Obligations
for any reason. The requirement of providing timely notice to the Bank
represents the parties' agreed-to standard of performance regarding claims
against the Bank. Notwithstanding any claim that the Borrower may have against
the Bank, and regardless of any notice the Borrower may have given the Bank, THE
BANK WILL NOT BE LIABLE TO THE BORROWER FOR CONSEQUENTIAL AND/OR SPECIAL DAMAGES
ARISING THEREFROM, EXCEPT THOSE DAMAGES ARISING FROM THE BANK'S WILLFUL
MISCONDUCT.

7.8 NOTICES. Although any notice required to be given hereunder or under
any of the other Loan Documents might be accomplished by other means, notice
will always be deemed given when placed in the United States Mail, with postage
prepaid, or sent by overnight delivery service, or sent by telex or facsimile,
in each case to the address set forth below or as amended.

7.9 PAYMENTS. Payments due under the Note and other Loan Documents will
be made in lawful money of the United States, and the Bank is authorized to
charge payments

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<PAGE>

due under the Loan Documents against any account of the Borrower. All payments
may be applied by the Bank to principal, interest and other amounts due under
the Loan Documents in any order which the Bank elects.

7.10 APPLICABLE LAW AND JURISDICTION; INTERPRETATION; JOINT LIABILITY.
This Agreement and all other Loan Documents will be governed by and interpreted
in accordance with the internal laws of the state where the Bank's main office
is located, except to the extent superseded by Federal law. Invalidity of any
provisions of this Agreement will not affect any other provision. THE BORROWER
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
SITUATED IN THE COUNTY OR FEDERAL JURISDICTION WHERE THE BANK'S OFFICE WHICH IS
DESIGNATED IN THE NOTE AS THE PLACE FOR PAYMENT IS LOCATED (OR, IN THE ABSENCE
OF SUCH DESIGNATION, THE BANK'S MAIN OFFICE), AND WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR
PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTES, THE COLLATERAL, ANY OTHER
LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR
INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein will affect the Bank's
rights to serve process in any manner permitted by law, or limit the Bank's
right to bring proceedings against the Borrower in the competent courts of any
other jurisdiction or jurisdictions. This Agreement, the other Loan Documents
and any amendments hereto (regardless of when executed) will be deemed effective
and accepted only upon the Bank's receipt of the executed originals thereof. If
there is more than one Borrower, the liability of the Borrowers will be joint
and several, and the reference to "Borrower" will be deemed to refer to all
Borrowers.

7.11 COPIES; ENTIRE AGREEMENT; MODIFICATION. The Borrower hereby
acknowledges the receipt of a copy of this Agreement and all other Loan
Documents.

IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS
OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
THIS NOTICE SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS
NOW IN EFFECT BETWEEN YOU AND THIS LENDER. A MODIFICATION OF ANY OTHER CREDIT
AGREEMENTS NOW IN EFFECT BETWEEN YOU AND THIS LENDER, WHICH OCCURS AFTER RECEIPT
BY YOU OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR
IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD
NOT BE RELIED UPON.

7.12 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY JOINTLY AND
SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY

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<PAGE>

IN ANY ACTION OR PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE
OBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY
TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. THE BORROWER AND THE BANK
EACH REPRESENTS TO THE OTHER THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY GIVEN.

IN WITNESS WHEREOF, the undersigned have executed this TERM LOAN AGREEMENT as of
___________________, 19___.

By:
----------------------------------------
Name and Title:
---------------------------

FIRSTAR BANK MILWAUKEE, N.A.

By:
----------------------------------------
Name and Title:
---------------------------

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<PAGE>

EXHIBIT 12.1
STATEMENT REGARDING COMPUTATION OF RATIOS

For the purpose of calculating the ratio of earnings to fixed charges, earnings
consist of earnings before income taxes and fixed charges. Fixed charges
consist of one-third rent expense and interest expense.

For the purpose of calculating the common stock dividend payout ratio, dividends
per share is divided by net income per share.

CALCULATION OF THE RATIO OF EARNINGS TO FIXED CHARGES

As of and for the
Nine Months Ended September 30 As of and for the years ended December 31
------------------------------ -----------------------------------------------------------
UNITED 1996 1995 1995 1994 1993 1992 1991
- ------------------------------ ---------- ----------- --------- -------- -------- ------- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income taxes
and cumulative effect of change
in accounting principle $5,083 $4,220 $5,685 $3,829 $3,242 $2,336 $512

Interest expense 10,445 9,397 12,848 9,159 9,035 4,334 6,470

1/3 rent expense 73 57 80 61 20 38 50
---------- -------- --------- -------- -------- -------- --------
Total Earnings $15,601 $13,674 $18,613 $13,049 $12,297 $6,708 $7,032
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Interest expense $10,445 $9,397 $12,848 $9,159 $9,035 $4,334 $6,470

1/3 rent expense 73 57 80 61 20 38 50

---------- -------- --------- -------- -------- -------- --------
Total Fixed Charges $10,518 $9,454 $12,928 $9,220 $9,055 $4,372 $6,520
---------- -------- --------- -------- -------- -------- --------
Ratio 1.48 1.45 1.44 1.42 1.36 1.53 1.08
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Income before income taxes
and cumulative effect of change
in accounting principle $5,083 $4,220 $5,685 $3,829 $3,242 $2,336 $512

Interest expense 10,445 9,397 12,848 9,159 9,035 4,334 6,470

Less interest on deposits (8,721) (7,627) (10,439) (7,530) (7,953) (4,223) (6,335)

1/3 rent expense 73 57 80 61 20 38 50
---------- -------- --------- -------- -------- -------- --------
Total Earnings $6,880 $6,047 $8,174 $5,519 $4,344 $2,485 $697
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Interest expense $10,445 $9,397 $12,848 $9,159 $9,035 $4,334 $6,470

Less interest on deposits (8,721) (7,627) (10,439) (7,530) (7,953) (4,223) (6,335)

1/3 rent expense 73 57 80 61 20 38 50

---------- -------- --------- -------- -------- -------- --------
Total Fixed Charges $1,797 $1,827 $2,489 $1,690 $1,102 $149 $185
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Ratio 3.83 3.31 3.28 3.27 3.94 16.68 3.76
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

</TABLE>

CALCULATION OF THE RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS

As of and for the
Nine Months Ended September 30 As of and for the years ended December 31
------------------------------ -----------------------------------------------------------
PFC 1996 1995 1995 1994 1993 1992 1991
- ------------------------------ ---------- ----------- --------- -------- -------- ------- ------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Income before income taxes
and cumulative effect of change
in accounting principle $3,641 $2,882 $3,898 $2,865 $2,133 $1,909 $361

Interest expense 4,519 4,126 5,672 3,538 2,927 4,229 6,604

1/3 rent expense 116 130 190 193 218 229 232
---------- -------- --------- -------- -------- -------- --------
Total Earnings $8,276 $7,138 $9,760 $6,596 $5,278 $6,367 $7,197
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------
Interest expense $4,519 $4,126 $5,672 $3,538 $2,927 $4,229 $6,604

1/3 rent expense 116 130 190 193 218 229 232

---------- -------- --------- -------- -------- -------- --------
Total Fixed Charges $4,635 $4,256 $5,862 $3,731 $3,145 $4,458 $6,836
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Ratio 1.79 1.68 1.66 1.77 1.68 1.43 1.05
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Income before income taxes
and cumulative effect of change
in accounting principle $3,641 $2,882 $3,898 $2,865 $2,133 $1,909 $361

Interest expense 4,519 4,126 5,672 3,538 2,927 4,229 6,604

Less interest on deposits (4,008) (3,798) (5,172) (3,362) (2,821) (4,003) (6,130)

1/3 rent expense 116 130 190 193 218 229 232
---------- -------- --------- -------- -------- -------- --------
Total Earnings $4,268 $3,340 $4,588 $3,234 $2,457 $2,364 $1,067
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Interest expense $4,519 $4,126 $5,672 $3,538 $2,927 $4,229 $6,604

Less interest on deposits (4,008) (3,798) (5,172) (3,362) (2,821) (4,003) (6,130)

1/3 rent expense 116 130 190 193 218 229 232

---------- -------- --------- -------- -------- -------- --------
Total Fixed Charges $627 $458 $690 $369 $324 $455 $706
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------

Ratio 6.81 7.29 6.65 8.76 7.58 5.20 1.51
---------- -------- --------- -------- -------- -------- --------
---------- -------- --------- -------- -------- -------- --------
</TABLE>
<PAGE>

As of and for
As of and for the the year ended
Nine Months Ended Sept. 30 December 31
- ----------------------------------- ------------------------- --------------
PRO FORMA 1996 1995 1995
- ----------------------------------- -------- -------- --------
(dollars in thousands)

Income before income taxes $6,164 $4,557 $6,153

Interest expense 16,229 14,788 20,207

1/3 rent expense 190 187 270
-------- -------- --------
Total Earnings $22,583 $19,532 $26,630
-------- -------- --------
-------- -------- --------
Interest expense $16,229 $14,788 $20,207

1/3 rent expense 190 187 270

-------- -------- --------
Total Fixed Charges $16,419 $14,975 $20,477
-------- -------- --------
-------- -------- --------

Ratio 1.38 1.30 1.30
-------- -------- --------
-------- -------- --------

Income before income taxes $6,164 $4,557 $6,153

Interest expense 16,229 14,788 20,207

Less interest on deposits (12,729) (11,425) (15,611)

1/3 rent expense 190 187 270
-------- -------- --------
Total Earnings $9,854 $8,107 $11,019
-------- -------- --------
-------- -------- --------

Interest expense $16,229 $14,788 $20,207

Less interest on deposits (12,729) (11,425) (15,611)

1/3 rent expense 190 187 270

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

Total Fixed Charges $3,690 $3,550 $4,866
-------- -------- --------
-------- -------- --------

Ratio 2.67 2.28 2.26
-------- -------- --------
-------- -------- --------

<PAGE>
[LETTERHEAD]

December 9, 1996

Securities and Exchange Commission
Washington, DC 20549:

We agree with the statements made by management contained in Exhibit 16 with
respect to the change in accountants and disagreements with our firm on
accounting and financial disclosures related to our audit of the December 31,
1993 financial statements of United Community Bancshares, Inc. (formerly Signal
Bancshares, Inc. and Subsidiary).

More specifically, our report on the December 31, 1993 financial statements did
not contain an adverse opinion or a disclaimer of opinion, and was not qualified
or modified as to uncertainty, audit scope, or accounting principles. There
were no disagreements with our firm on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope of procedure.
There were no reportable events.

Sincerely,

LEININGER & LEININGER, LTD.
Certified Public Accountants

/s/ David J. Leininger
David J. Leininger

<PAGE>

Exhibit 21

Subsidiaries of the Registrant

Set forth below are all of the subsidiaries of United Community Bancshares, Inc.
and their state or jurisdiction of incorporation or organization.

State or Jurisdiction of Incorporation
Name or Organization
---- --------------------------------------

Signal Bank, Inc. Minnesota
Goodhue County National Bank United States
Consumers Credit Corporation Minnesota
Unitech Services, Inc. Minnesota
United Capital Trust I Delaware

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated February 23, 1996 relating to the consolidated financial statements
of United Community Bancshares, Inc., as of and for the years ended December 31,
1995 and 1994, and to the reference to our Firm under the caption "Experts" in
the Prospectus.

/s/ McGladrey & Pullen, LLP

McGLADREY & PULLEN, LLP

St. Paul, Minnesota
December 9, 1996

<PAGE>
[LETTERHEAD]

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated February 18, 1994 relating to the consolidated statements of
income, stockholders' equity, and cash flows of United Community Bancshares,
Inc. and Subsidiary (formerly Signal Bancshares, Inc. and Subsidiary), as of
and for the year ended December 31, 1993, and to the reference to our Firm under
the caption "Experts" in the Prospectus.

Leininger & Leininger, Ltd.

Plymouth, Minnesota
December 11, 1996

<PAGE>

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 1 to the Registration Statement No.
333-14587 of United Community Bancshares, Inc. on Form S-1 of our report dated
January 31, 1996, appearing in the Prospectus, which is a part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Prospectus.

/s/ Larson, Allen, Weishair & Co., LLP

LARSON, ALLEN, WEISHAIR & CO., LLP

Minneapolis, Minnesota
December 6, 1996

<PAGE>

Registration No.
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2)
----

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

UNITED COMMUNITY BANCSHARES, INC.

(Exact name of obligor as specified in its charter)

Minnesota 41-1380239
(State of incorporation) (I.R.S. employer identification no.)

2600 Eagan Woods Drive, Suite 155
Eagan, Minnesota 55121
(Address of principal executive offices) (Zip Code)

Guarantee of United Community Bancshares, Inc. with respect to
Preferred Securities of United Capital Trust
(Title of the indenture securities)

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

<PAGE>

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe each
affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust
powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.

Pursuant to the requirements of the Trust Indenture Act of
1939, as amended, the trustee, Wilmington Trust Company, a corporation organized
and existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 5th day
of December, 1996.

WILMINGTON TRUST COMPANY

[SEAL]

Attest:/S/ Donald G. MacKelcan By:/S/ Emmett R. Harmon
------------------------- ------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

<PAGE>

EXHIBIT A

AMENDED CHARTER

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON MAY 9, 1987

<PAGE>

AMENDED CHARTER

ACT OF INCORPORATION

WILMINGTON TRUST COMPANY

WILMINGTON TRUST COMPANY, originally incorporated by an Act
of the General Assembly of the State of Delaware, entitled "An Act to
Incorporate the Delaware Guarantee and Trust Company", approved March 2, A.D.
1901, and the name of which company was changed to "WILMINGTON TRUST COMPANY"
by an amendment filed in the Office of the Secretary of State on March 18,
A.D. 1903, and the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements pursuant to the
corporation law for state banks and trust companies of the State of Delaware,
does hereby alter and amend its Charter or Act of Incorporation so that the
same as so altered and amended shall in its entirety read as follows:

FIRST: - The name of this corporation is WILMINGTON TRUST
COMPANY.

SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is
WILMINGTON TRUST COMPANY whose address is Rodney Square North,
in said City. In addition to such principal office, the said
corporation maintains and operates branch offices in the City
of Newark, New Castle County, Delaware, the Town of Newport,
New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at
Milford Cross Roads, New Castle County, Delaware, and shall be
empowered to open, maintain and operate branch offices at Ninth
and Shipley Streets, 418 Delaware Avenue, 2120 Market Street,
and 3605 Market Street, all in the City of Wilmington, New
Castle County, Delaware, and such other branch offices or
places of business as may be authorized from time to time by
the agency or agencies of the government of the State of
Delaware empowered to confer such authority.

THIRD: - (a) The nature of the business and the objects and
purposes proposed to be transacted, promoted or carried on by
this Corporation are to do any or all of the things herein
mentioned as fully and to the same extent as natural persons
might or could do and in any part of the world, viz.:

(1) To sue and be sued, complain and defend in any Court
of law or equity and to make and use a common seal, and
alter the seal at pleasure, to hold, purchase, convey,
mortgage or otherwise deal in real and personal estate and
property, and to appoint such officers and agents as the
business of the

<PAGE>

Corporation shall require, to make by-laws not
inconsistent with the Constitution or laws of the
United States or of this State, to discount bills, notes or
other evidences of debt, to receive deposits of money, or
securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and
generally to use, exercise and enjoy all the powers,
rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the
business of the Corporation hereby created.

(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.

(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute
all papers which may be necessary or proper in such
business.

(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.

(5) To receive upon deposit for safekeeping money,
jewelry, plate, deeds, bonds and any and all other personal
property of every sort and kind, from executors,
administrators, guardians, public officers, courts,
receivers, assignees, trustees, and from all fiduciaries,
and from all other persons and individuals, and from all
corporations whether state, municipal, corporate or
private, and to rent boxes, safes, vaults and other
receptacles for such property.

(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the
two parties, and in like manner may act as Treasurer of any
corporation or municipality.

(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.

<PAGE>

(8) To guarantee the validity, performance or effect of
any contract or agreement, and the fidelity of persons
holding places of responsibility or trust; to become surety
for any person, or persons, for the faithful performance of
any trust, office, duty, contract or agreement, either by
itself or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or
court in the State of Delaware or elsewhere.

(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian,
bailee, or in any other trust capacity in the receiving,
holding, managing, and disposing of any and all estates and
property, real, personal or mixed, and to be appointed as
such trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator, guardian
or bailee by any persons, corporations, court, officer, or
authority, in the State of Delaware or elsewhere; and
whenever this Corporation is so appointed by any person,
corporation, court, officer or authority such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity, it shall not be required to
give bond with surety, but its capital stock shall be taken
and held as security for the performance of the duties
devolving upon it by such appointment.

(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.

(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of
any private, public or municipal corporation within and
without the State of Delaware, or of the Government of the
United States, or of any state, territory, colony, or
possession thereof, or of any foreign government or
country; to receive, collect, receipt for, and dispose of
interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and
to exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual

<PAGE>

owners thereof, including the right to vote thereon;
to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner
as it may think fit and proper, and from time to time to
vary or realize such investments; to issue bonds and secure
the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by
the Corporation, and to sell and pledge such bonds, as and
when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and
to the extent authorized by law, to lease, purchase, hold,
sell, assign, transfer, pledge, mortgage and convey real
and personal property of any name and nature and any estate
or interest therein.

(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have
the following powers:

(1) To do any or all of the things herein set forth, to
the same extent as natural persons might or could do, and
in any part of the world.

(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner
to dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.

(3) To take, hold, own, deal in, mortgage or otherwise
lien, and to lease, sell, exchange, transfer, or in any
manner whatever dispose of property, real, personal or
mixed, wherever situated.

(4) To enter into, make, perform and carry out contracts
of every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw,
make, accept, endorse, discount, execute and issue
promissory notes, drafts, bills of exchange, warrants,
bonds, debentures, and other negotiable or transferable
instruments.

(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.

<PAGE>

(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or
inference from the terms of any other clause of this or any
other paragraph in this charter, but that the objects,
purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects,
purposes and powers.

FOURTH: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").

(b) Shares of Preferred Stock may be issued from time to time
in one or more series as may from time to time be determined by
the Board of Directors each of said series to be distinctly
designated. All shares of any one series of Preferred Stock
shall be alike in every particular, except that there may be
different dates from which dividends, if any, thereon shall be
cumulative, if made cumulative. The voting powers and the
preferences and relative, participating, optional and other
special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from
those of any and all other series at any time outstanding; and,
subject to the provisions of subparagraph 1 of Paragraph (c) of
this Article FOURTH, the Board of Directors of the Corporation
is hereby expressly granted authority to fix by resolution or
resolutions adopted prior to the issuance of any shares of a
particular series of Preferred Stock, the voting powers and the
designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting
the generality of the foregoing, the following:

(1) The distinctive designation of, and the number of
shares of Preferred Stock which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors) or decreased
(but not below the number of shares thereof then
outstanding) from time to time by like action of the Board
of Directors;

(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the
same or other class of

<PAGE>

stock and whether such dividends shall be cumulative
or non-cumulative;

(3) The right, if any, of the holders of Preferred Stock
of such series to convert the same into or exchange the
same for, shares of any other class or classes or of any
series of the same or any other class or classes of stock
of the Corporation and the terms and conditions of such
conversion or exchange;

(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and
conditions on which, Preferred Stock of such series may be
redeemed.

(5) The rights, if any, of the holders of Preferred Stock
of such series upon the voluntary or involuntary
liquidation, merger, consolidation, distribution or sale of
assets, dissolution or winding-up, of the Corporation.

(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the Preferred
Stock of such series; and

(7) The voting powers, if any, of the holders of such
series of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a
class, to elect one or more directors of the Corporation if
there shall have been a default in the payment of dividends
on any one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.

(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any,
shall have been met and after the Corporation shall have
complied with all the requirements, if any, with respect to the
setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of
section (b) of this Article FOURTH), and subject further to any
conditions which may be fixed in accordance with the provisions
of section (b) of this Article FOURTH, then and not otherwise
the holders of Common Stock shall be entitled to receive such
dividends as may be declared from time to time by the Board of
Directors.

(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to

<PAGE>

receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available
for distribution to stockholders ratably in proportion
to the number of shares of Common Stock held by them
respectively.

(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b)
of this Article FOURTH, each holder of Common Stock shall
have one vote in respect of each share of Common Stock held
on all matters voted upon by the stockholders.

(d) No holder of any of the shares of any class or series of
stock or of options, warrants or other rights to purchase
shares of any class or series of stock or of other securities
of the Corporation shall have any preemptive right to purchase
or subscribe for any unissued stock of any class or series or
any additional shares of any class or series to be issued by
reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into
or exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any class or
series, but any such unissued stock, additional authorized
issue of shares of any class or series of stock or securities
convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant
to resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others,
and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.

(e) The relative powers, preferences and rights of each series
of Preferred Stock in relation to the relative powers,
preferences and rights of each other series of Preferred Stock
shall, in each case, be as fixed from time to time by the Board
of Directors in the resolution or resolutions adopted pursuant
to authority granted in section (b) of this Article FOURTH and
the consent, by class or series vote or otherwise, of the
holders of such of the series of Preferred Stock as are from
time to time outstanding shall not be required for the issuance
by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as senior
to, or on a parity with, the powers, preferences and rights of
such outstanding series, or any of them; provided, however,
that the Board of Directors may provide in the resolution or
resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent
of the holders of a majority (or such greater proportion as
shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any
or all other series of Preferred Stock.

<PAGE>

(f) Subject to the provisions of section (e), shares of any
series of Preferred Stock may be issued from time to time as
the Board of Directors of the Corporation shall determine and
on such terms and for such consideration as shall be fixed by
the Board of Directors.

(g) Shares of Common Stock may be issued from time to time as
the Board of Directors of the Corporation shall determine and
on such terms and for such consideration as shall be fixed by
the Board of Directors.

(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be
increased or decreased from time to time by the affirmative
vote of the holders of a majority of the stock of the
Corporation entitled to vote thereon.

FIFTH: - (a) The business and affairs of the Corporation shall
be conducted and managed by a Board of Directors. The number
of directors constituting the entire Board shall be not less
than five nor more than twenty-five as fixed from time to time
by vote of a majority of the whole Board, provided, however,
that the number of directors shall not be reduced so as to
shorten the term of any director at the time in office, and
provided further, that the number of directors constituting the
whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.

(b) The Board of Directors shall be divided into three
classes, as nearly equal in number as the then total number of
directors constituting the whole Board permits, with the term
of office of one class expiring each year. At the annual
meeting of stockholders in 1982, directors of the first class
shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall
be elected to hold office for a term expiring at the second
succeeding annual meeting and directors of the third class
shall be elected to hold office for a term expiring at the
third succeeding annual meeting. Any vacancies in the Board of
Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by
the Board of Directors, acting by a majority of the directors
then in office, although less than a quorum, and any directors
so chosen shall hold office until the next annual election of
directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next
election of the class for which such director shall have been
chosen and until his successor shall be elected and qualified.
No decrease in the number of directors shall shorten the term
of any incumbent director.

(c) Notwithstanding any other provisions of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law, this Charter or Act of Incorporation or the
By-Laws of the Corporation), any director or the entire Board
of Directors of the

<PAGE>

Corporation may be removed at any time without cause, but
only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at
a meeting of the stockholders called for that purpose.

(d) Nominations for the election of directors may be made by
the Board of Directors or by any stockholder entitled to vote
for the election of directors. Such nominations shall be made
by notice in writing, delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of the
Corporation not less than 14 days nor more than 50 days prior
to any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days' notice
of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary
of the Corporation not later than the close of the seventh day
following the day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by the
Board of Directors shall be given by the Chairman on behalf of
the Board.

(e) Each notice under subsection (d) shall set forth (i) the
name, age, business address and, if known, residence address of
each nominee proposed in such notice, (ii) the principal
occupation or employment of such nominee and (iii) the number
of shares of stock of the Corporation which are beneficially
owned by each such nominee.

(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not
made in accordance with the foregoing procedure, and if he
should so determine, he shall so declare to the meeting and the
defective nomination shall be disregarded.

(g) No action required to be taken or which may be taken at
any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power of
stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied.

SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.

SEVENTH: - The Corporation hereby created is hereby given the
same powers, rights and privileges as may be conferred upon
corporations organized under the Act entitled "An Act Providing
a General Corporation Law", approved March 10, 1899, as from
time to time amended.

EIGHTH: - This Act shall be deemed and taken to be a private
Act.

<PAGE>

NINTH: - This Corporation is to have perpetual existence.

TENTH: - The Board of Directors, by resolution passed by a
majority of the whole Board, may designate any of their number
to constitute an Executive Committee, which Committee, to the
extent provided in said resolution, or in the By-Laws of the
Company, shall have and may exercise all of the powers of the
Board of Directors in the management of the business and
affairs of the Corporation, and shall have power to authorize
the seal of the Corporation to be affixed to all papers which
may require it.

ELEVENTH: - The private property of the stockholders shall not
be liable for the payment of corporate debts to any extent
whatever.

TWELFTH: - The Corporation may transact business in any part of
the world.

THIRTEENTH: - The Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the By-Laws of
the Corporation by a vote of the majority of the entire Board.
The stockholders may make, alter or repeal any By-Law whether
or not adopted by them, provided however, that any such
additional By-Laws, alterations or repeal may be adopted only
by the affirmative vote of the holders of two-thirds or more of
the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors
(considered for this purpose as one class).

FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to
time designated by the Board, and the Directors may keep the
books of the Company outside of the State of Delaware at such
places as may be from time to time designated by them.

FIFTEENTH: - (a) In addition to any affirmative vote required
by law, and except as otherwise expressly provided in sections
(b) and (c) of this Article FIFTEENTH:

(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or

(B) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition (in one transaction or a series of
related transactions) to or with any Interested Stockholder
or any Affiliate of any Interested Stockholder of any
assets of the Corporation or any Subsidiary having an
aggregate fair market value of $1,000,000 or more, or

<PAGE>

(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate
of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof)
having an aggregate fair market value of $1,000,000 or
more, or

(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or

(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested
Stockholder,

shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall
be required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.

(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).

(b) The provisions of section (a) of this Article
FIFTEENTH shall not be applicable to any particular
business combination and such business combination shall
require only such affirmative vote as is required by law
and any other provisions of the Charter or Act of
Incorporation of By-Laws if such business combination has
been approved by a majority of the whole Board.

(1) A "person" shall mean any individual firm, corporation or
other entity.

(2) "Interested Stockholder" shall mean, in respect of any
business combination, any person (other than the Corporation or
any Subsidiary) who or which as of the record date for the
determination of stockholders entitled to notice of and to
vote on

<PAGE>

such business combination, or immediately prior to the
consummation of any such transaction:

(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or

(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933.

(3) A person shall be the "beneficial owner" of any Voting
Shares:

(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or

(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise, or (ii)
the right to vote pursuant to any agreement, arrangement or
understanding, or

(C) which are beneficially owned, directly or indirectly,
by any other person with which such first mentioned person
or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.

(4) The outstanding Voting Shares shall include shares deemed
owned through application of paragraph (3) above but shall not
include any other Voting Shares which may be issuable pursuant
to any agreement, or upon exercise of conversion rights,
warrants or options or otherwise.

(5) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as
in effect on December 31, 1981.

<PAGE>

(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in Rule
3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect in December 31,
1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of
Investment Stockholder set forth in paragraph (2) of this
section (c), the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.

(d) majority of the directors shall have the power and
duty to determine for the purposes of this Article
FIFTEENTH on the basis of information known to them, (1)
the number of Voting Shares beneficially owned by any
person (2) whether a person is an Affiliate or Associate of
another, (3) whether a person has an agreement, arrangement
or understanding with another as to the matters referred to
in paragraph (3) of section (c), or (4) whether the assets
subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market
value of $1,00,000 or more.

(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.

SIXTEENTH: Notwithstanding any other provision of this
Charter or Act of Incorporation or the By-Laws of the
Corporation (and in addition to any other vote that may be
required by law, this Charter or Act of Incorporation by the
By-Laws), the affirmative vote of the holders of at least two-
thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) shall be
required to amend, alter or repeal any provision of Articles
FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter or
Act of Incorporation.

SEVENTEENTH: (a) a Director of this Corporation shall not be
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a Director, except to
the extent such exemption from liability or limitation thereof
is not permitted under the Delaware General Corporation Laws as
the same exists or may hereafter be amended.

(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."

<PAGE>

EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON DECEMBER 21, 1995

<PAGE>

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
STOCKHOLDERS' MEETINGS

Section 1. The Annual Meeting of Stockholders shall be held
on the third Thursday in April each year at the principal office at the
Company or at such other date, time, or place as may be designated by
resolution by the Board of Directors.

Section 2. Special meetings of all stockholders may be
called at any time by the Board of Directors, the Chairman of the Board or
the President.

Section 3. Notice of all meetings of the stockholders shall
be given by mailing to each stockholder at least ten (10 days before said
meeting, at his last known address, a written or printed notice fixing the
time and place of such meeting.

Section 4. A majority in the amount of the capital stock of
the Company issued and outstanding on the record date, as herein determined,
shall constitute a quorum at all meetings of stockholders for the transaction
of any business, but the holders of a small number of shares may adjourn,
from time to time, without further notice, until a quorum is secured. At
each annual or special meeting of stockholders, each stockholder shall be
entitled to one vote, either in person or by proxy, for each shares of stock
registered in the stockholder's name on the books of the Company on the
record date for any such meeting as determined herein.

ARTICLE II
DIRECTORS

Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.

Section 2. No person who has attained the age of seventy-two
(72) years shall be nominated for election to the Board of Directors of the
Company, provided, however, that this limitation shall not apply to any
person who was serving as director of the Company on September 16, 1971.

Section 3. The class of Directors so elected shall hold
office for three years or until their successors are elected and qualified.

Section 4. The affairs and business of the Company shall be
managed and conducted by the Board of Directors.

Section 5. Regular meetings of the Board of Directors shall
be held on the third Thursday of each month at the principal office of the
Company, or at such other place and

<PAGE>

time as may be designated by the Board of Directors, the Chairman of the
Board, or the President.

Section 6. Special meetings of the Board of Directors may be
called at any time by the Chairman of the Board of Directors or by the
President, and shall be called upon the written request of a majority of the
directors.

Section 7. A majority of the directors elected and qualified
shall be necessary to constitute a quorum for the transaction of business at
any meeting of the Board of Directors.

Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of any change
in the time or place of any regular meeting, stating the time and place of
such meeting, which shall be mailed not less than two days before the time of
holding such meeting.

Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of
Directors, although less than a quorum, shall have the right to elect the
successor who shall hold office for the remainder of the full term of the
class of directors in which the vacancy occurred, and until such director's
successor shall have been duly elected and qualified.

Section 10. The Board of Directors at its first meeting
after its election by the stockholders shall appoint an Executive Committee,
a Trust Committee, an Audit Committee and a Compensation Committee, and shall
elect from its own members a Chairman of the Board of Directors and a
President who may be the same person. The Board of Directors shall also
elect at such meeting a Secretary and a Treasurer, who may be the same
person, may appoint at any time such other committees and elect or appoint
such other officers as it may deem advisable. The Board of Directors may
also elect at such meeting one or more Associate Directors.

Section 11. The Board of Directors may at any time remove,
with or without cause, any member of any Committee appointed by it or any
associate director or officer elected by it and may appoint or elect his
successor.

Section 12. The Board of Directors may designate an officer
to be in charge of such of the departments or division of the Company as it
may deem advisable.

ARTICLE III
COMMITTEES

Section I. Executive Committee

(A) The Executive Committee shall be composed of not
more than nine

<PAGE>

members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.

(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to transact all
business for and in behalf of the Company that may be brought before it.

(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times
to be determined by a majority of its members, or at the call of the Chairman
of the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.

(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors at its next
meeting.

(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.

(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the affairs and
business of the Company by its directors and officers as contemplated by
these By-Laws any two available members of the Executive Committee as
constituted immediately prior to such disaster shall constitute a quorum of
that Committee for the full conduct and management of the affairs and
business of the Company in accordance with the provisions of Article III of
these By-Laws; and if less than three members of the Trust Committee is
constituted immediately prior to such disaster shall be available for the
transaction of its business, such Executive Committee shall also be empowered
to exercise all of the powers reserved to the Trust Committee under Article
III Section 2 hereof. In the event of the unavailability, at such time, of a
minimum of two members of such Executive Committee, any three available
directors shall constitute the Executive Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of
these By-Laws (other than this Section) and any resolutions which are
contrary to the provisions of this Section or to the provisions of any such
implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.

<PAGE>

Section 2. Trust Committee

(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall
hold office during the pleasure of the Board.

(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust funds, in
all matters, however, being subject to the approval of the Board of Directors.

(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at least once a month.
A majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Trust Committee may be held
at any time when a quorum is present.

(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.

(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.

Section 3. Audit Committee

(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.

(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however subject to the
approval of the Board of Directors; it shall consider all matters brought to
its attention by the officer in charge of the Audit Division, review all
reports of examination of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such recommendations
to the Board of Directors with respect thereto or with respect to any other
matters pertaining to auditing the Company as it shall deem desirable.

(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute
a quorum.

Section 4. Compensation Committee

(A) The Compensation Committee shall be composed of
not more than

<PAGE>

five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during
the pleasure of the Board.

(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought to its
attention by the management and from time to time review the management of
the Company, major organizational matters, including salaries and employee
benefits and specifically shall administer the Executive Incentive
Compensation Plan.

(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the
Chairman of the Board of Directors, or the President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during
the pleasure of the Board.

(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion of all
matters brought to the Board, with the exception that he would have no right
to vote. An associate director will be eligible for appointment to
Committees of the Company, with the exception of the Executive Committee,
Audit Committee and Compensation Committee, which must be comprised solely of
active directors.

Section 6. Absence or Disqualification of Any Member of a
Committee

(A) In the absence or disqualification of any member
of any Committee created under Article III of the By-Laws of this Company,
the member or members thereof present at any meeting and not disqualified
from voting, whether or not he or they constitute a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in the
place of any such absence or disqualified member.

ARTICLE IV
OFFICERS

Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further authority
and powers and shall perform such duties as the Board of Directors may from
time to time confer and direct. He shall also exercise such powers and
perform such duties as may from time to time be agreed upon between himself
and the President of the Company.

Section 2. The Vice Chairman of the Board of Directors shall
preside at all

<PAGE>

meetings of the Board of Directors at which the Chairman of the Board shall
not be present and shall have such further authority and powers and shall
perform such duties as the Board of Directors or the Chairman of the Board
may from time to time confer and direct.

Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.

Section 4. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry into effect
all legal directions of the Executive Committee and of the Board of
Directors, and shall at all times exercise general supervision over the
interest, affairs and operations of the Company and perform all duties
incident to his office.

Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and
such other powers and duties as may from time to time be assigned to them by
the Board of Directors, the Executive Committee, the Chairman of the Board or
the President and by the officer in charge of the department or division to
which they are assigned.

Section 6. The Secretary shall attend to the giving of
notice of meetings of the stockholders and the Board of Directors, as well as
the Committees thereof, to the keeping of accurate minutes of all such
meetings and to recording the same in the minute books of the Company. In
addition to the other notice requirements of these By-Laws and as may be
practicable under the circumstances, all such notices shall be in writing and
mailed well in advance of the scheduled date of any other meeting. He shall
have custody of the corporate seal and shall affix the same to any documents
requiring such corporate seal and to attest the same.

Section 7. The Treasurer shall have general supervision over
all assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of
all the transactions of the Company. He shall have general supervision of
the expenditures of the Company and shall report to the Board of Directors at
each regular meeting of the condition of the Company, and perform such other
duties as may be assigned to him from time to time by the Board of Directors
of the Executive Committee.

Section 8. There may be a Controller who shall exercise
general supervision over the internal operations of the Company, including
accounting, and shall render to the Board of Directors at appropriate times a
report relating to the general condition and internal operations of the
Company.

<PAGE>

There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller
and such duties as may be prescribed by the Controller.

Section 9. The officer designated by the Board of Directors
to be in charge of the Audit Division of the Company with such title as the
Board of Directors shall prescribe, shall report to and be directly
responsible only to the Board of Directors.

There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor
and such duties as may be prescribed by the officer in charge of the Audit
Division.

Section 10. There may be one or more officers, subordinate
in rank to all Vice Presidents with such functional titles as shall be
determined from time to time by the Board of Directors, who shall ex officio
hold the office Assistant Secretary of this Company and who may perform such
duties as may be prescribed by the officer in charge of the department or
division to whom they are assigned.

Section 11. The powers and duties of all other officers of
the Company shall be those usually pertaining to their respective offices,
subject to the direction of the Board of Directors, the Executive Committee,
Chairman of the Board of Directors or the President and the officer in charge
of the department or division to which they are assigned.

ARTICLE V
STOCK AND STOCK CERTIFICATES

Section 1. Shares of stock shall be transferrable on the
books of the Company and a transfer book shall be kept in which all transfers
of stock shall be recorded.

Section 2. Certificate of stock shall bear the signature of
the President or any Vice President, however denominated by the Board of
Directors and countersigned by the Secretary or Treasurer or an Assistant
Secretary, and the seal of the corporation shall be engraved thereon. Each
certificate shall recite that the stock represented thereby is transferrable
only upon the books of the Company by the holder thereof or his attorney,
upon surrender of the certificate properly endorsed. Any certificate of
stock surrendered to the Company shall be cancelled at the time of transfer,
and before a new certificate or certificates shall be issued in lieu thereof.
Duplicate certificates of stock shall be issued only upon giving such
security as may be satisfactory to the Board of Directors or the Executive
Committee.

Section 3. The Board of Directors of the Company is
authorized to fix in advance a record date for the determination of the
stockholders entitled to notice of, and to vote at, any meeting of
stockholders and any adjournment thereof, or entitled to receive payment of

<PAGE>

any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the
date of any meeting of stockholders or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining such consent.

ARTICLE VI
SEAL

Section 1. The corporate seal of the Company shall be in the
following form:

Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."

ARTICLE VII
FISCAL YEAR

Section 1. The fiscal year of the Company shall be the
calendar year.

ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY

Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors, shall have
full power and authority to enter into, make, sign, execute, acknowledge
and/or deliver and the Secretary or any Assistant Secretary shall have full
power and authority to attest and affix the corporate seal of the Company to
any and all deeds, conveyances, assignments, releases, contracts, agreements,
bonds, notes, mortgages and all other instruments incident to the business of
this Company or in acting as executor, administrator, guardian, trustee,
agent or in any other fiduciary or representative capacity by any and every
method of appointment or by whatever person, corporation, court officer or
authority in the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of Directors
or the Executive Committee, and any and all such instruments shall have the
same force and validity as although expressly authorized by the Board of
Directors and/or the Executive Committee.

<PAGE>

ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

Section 1. Directors and associate directors of the Company,
other than salaried officers of the Company, shall be paid such reasonable
honoraria or fees for attending meetings of the Board of Directors as the
Board of Directors may from time to time determine. Directors and associate
directors who serve as members of committees, other than salaried employees
of the Company, shall be paid such reasonable honoraria or fees for services
as members of committees as the Board of Directors shall from time to time
determine and directors and associate directors may be employed by the
Company for such special services as the Board of Directors may from time to
time determine and shall be paid for such special services so performed
reasonable compensation as may be determined by the Board of Directors.

ARTICLE X
INDEMNIFICATION

Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of
a partnership, joint venture, trust, enterprise or non-profit entity,
including service with respect to employee benefit plans, against all
liability and loss suffered and expenses reasonably incurred by such person.
The Corporation shall indemnify a person in connection with a proceeding
initiated by such person only if the proceeding was authorized by the Board
of Directors of the Corporation.

(B) The Corporation shall pay the expenses incurred
in defending any proceeding in advance of its final disposition, PROVIDED,
HOWEVER, that the payment of expenses incurred by a Director officer in his
capacity as a Director or officer in advance of the final disposition of the
proceeding shall be made only upon receipt of an undertaking by the Director
or officer to repay all amounts advanced if it should be ultimately
determined that the Director or officer is not entitled to be indemnified
under this Article or otherwise.

(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of prosecuting
such claim. In any such action the Corporation shall have the burden of
proving that the claimant was not entitled to the requested indemnification
of payment of expenses

<PAGE>

under applicable law.

(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may
have or hereafter acquire under any statute, provision of the Charter or Act
of Incorporation, these By-Laws, agreement, vote of stockholders or
disinterested Directors or otherwise.

(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.

ARTICLE XI
AMENDMENTS TO THE BY-LAWS

Section 1. These By-Laws may be altered, amended or
repealed, in whole or in part, and any new By-Law or By-Laws adopted at any
regular or special meeting of the Board of Directors by a vote of the
majority of all the members of the Board of Directors then in office.

<PAGE>

EXHIBIT C

SECTION 321(B) CONSENT

Pursuant to Section 321(b) of the Trust Indenture Act of
1939, as amended, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
requests therefor.

WILMINGTON TRUST COMPANY

Dated: December 5, 1996 By: /S/ Emmett R. Harmon
------------------------
Name: Emmett R. Harmon
Title: Vice President

<PAGE>

EXHIBIT D

NOTICE

This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state
banking authorities. Refer to your appropriate state banking authorities for
your state publication requirements.

R E P O R T O F C O N D I T I O N

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
- -------------------------------------------- ------------------
Name of Bank

City

in the State of DELAWARE , at the close of business on September 30, 1996.
-------------

ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities. . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell. . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . . . 3,620,289
LESS: Allowance for loan and lease losses . . . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . .3,570,568
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . .83,675
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies. . . . . 85
Customers' liability to this bank on acceptances outstanding . . . . . . . . . 0
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592

CONTINUED ON NEXT PAGE

<PAGE>

LIABILITIES

Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . . . . . . . . . . 740,731
Interest-bearing . . . . . . . . . . . . . . . . . . . 2,716,910
Federal funds purchased. . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . 94,999
Trading liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money:. . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less. . . . . . . . . . . . . 844,000
With original maturity of more than one year. . . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . 0
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . 0
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . 0

EQUITY CAPITAL

Perpetual preferred stock and related surplus. . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale securities (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital. . 5,303,592

<PAGE>

Registration No.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

UNITED COMMUNITY BANCSHARES, INC.
(Exact name of obligor as specified in its charter)

Minnesota 41-1380239
(State of incorporation) (I.R.S. employer identification no.)

2600 Eagan Woods Drive, Suite 155
Eagan, Minnesota 55121
(Address of principal executive offices) (Zip Code)

Subordinated Debentures of United Community Bancshares, Inc.
(Title of the indenture securities)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

<PAGE>

ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust powers.

The trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe
each affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

WILMINGTON TRUST COMPANY

[SEAL]

Attest: /s/ Donald G. MacKelcan By: /s/ Emmett R. Harmon
----------------------- --------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

<PAGE>

EXHIBIT A

AMENDED CHARTER

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON MAY 9, 1987

<PAGE>

AMENDED CHARTER

ACT OF INCORPORATION

WILMINGTON TRUST COMPANY

WILMINGTON TRUST COMPANY, originally incorporated by an Act of
the General Assembly of the State of Delaware, entitled "An Act to Incorporate
the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:

FIRST: - The name of this corporation is WILMINGTON TRUST
COMPANY.

<PAGE>

Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of
this State, to discount bills, notes or other evidences of
debt, to receive deposits of money, or securities for
money, to buy gold and silver bullion and foreign coins,
to buy and sell bills of exchange, and generally to use,
exercise and enjoy all the powers, rights, privileges and
franchises incident to a corporation which are proper or
necessary for the transaction of the business of the
Corporation hereby created.

(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.

<PAGE>

owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to
vary or realize such investments; to issue bonds and secure
the same by pledges or deeds of trust or mortgages of or
upon the whole or any part of the property held or owned by
the Corporation, and to sell and pledge such bonds, as and
when the Board of Directors shall determine, and in the
promotion of its said corporate business of investment and
to the extent authorized by law, to lease, purchase, hold,
sell, assign, transfer, pledge, mortgage and convey real
and personal property of any name and nature and any estate
or interest therein.

(1) To do any or all of the things herein set forth, to
the same extent as natural persons might or could do, and
in any part of the world.

(3) To take, hold, own, deal in, mortgage or otherwise
lien, and to lease, sell, exchange, transfer, or in any
manner whatever dispose of property, real, personal or
mixed, wherever situated.

<PAGE>

FOURTH: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").

<PAGE>

stock and whether such dividends shall be cumulative or
non-cumulative;

(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the Preferred
Stock of such series; and

<PAGE>

receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to the
number of shares of Common Stock held by them respectively.

<PAGE>

Corporation may be removed at any time without cause, but only
by the affirmative vote of the holders of two-thirds or more
of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors
(considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.

SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.

EIGHTH: - This Act shall be deemed and taken to be a private
Act.

<PAGE>

NINTH: - This Corporation is to have perpetual existence.

ELEVENTH: - The private property of the stockholders shall not
be liable for the payment of corporate debts to any extent
whatever.

TWELFTH: - The Corporation may transact business in any part of
the world.

FIFTEENTH: - (a) In addition to any affirmative vote required
by law, and except as otherwise expressly provided in sections
(b) and (c) of this Article FIFTEENTH:

<PAGE>

(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or

(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).

(1) A "person" shall mean any individual firm, corporation or
other entity.

<PAGE>

such business combination, or immediately prior to the
consummation of any such transaction:

(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or

(3) A person shall be the "beneficial owner" of any Voting
Shares:

(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or

<PAGE>

(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.

<PAGE>

EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON DECEMBER 21, 1995

<PAGE>

BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
STOCKHOLDERS' MEETINGS

Section 1. The Annual Meeting of Stockholders shall be held on
the third Thursday in April each year at the principal office at the Company or
at such other date, time, or place as may be designated by resolution by the
Board of Directors.

Section 2. Special meetings of all stockholders may be called
at any time by the Board of Directors, the Chairman of the Board or the
President.

Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10 days before said meeting,
at his last known address, a written or printed notice fixing the time and place
of such meeting.

Section 4. A majority in the amount of the capital stock of
the Company issued and outstanding on the record date, as herein determined,
shall constitute a quorum at all meetings of stockholders for the transaction of
any business, but the holders of a small number of shares may adjourn, from time
to time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.

ARTICLE II
DIRECTORS

Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.

Section 2. No person who has attained the age of seventy-two
(72) years shall be nominated for election to the Board of Directors of the
Company, provided, however, that this limitation shall not apply to any person
who was serving as director of the Company on September 16, 1971.

Section 3. The class of Directors so elected shall hold office
for three years or until their successors are elected and qualified.

Section 4. The affairs and business of the Company shall be
managed and conducted by the Board of Directors.

Section 5. Regular meetings of the Board of Directors shall be
held on the third Thursday of each month at the principal office of the Company,
or at such other place and

<PAGE>

time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.

Section 7. A majority of the directors elected and qualified
shall be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.

Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of any change in
the time or place of any regular meeting, stating the time and place of such
meeting, which shall be mailed not less than two days before the time of holding
such meeting.

Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.

Section 10. The Board of Directors at its first meeting after
its election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.

Section 12. The Board of Directors may designate an officer to
be in charge of such of the departments or division of the Company as it may
deem advisable.

ARTICLE III
COMMITTEES

Section I. Executive Committee

(A) The Executive Committee shall be composed of not
more than nine

<PAGE>

members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.

(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business for
and in behalf of the Company that may be brought before it.

(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.

(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.

(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-
Law shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.

<PAGE>

Section 2. Trust Committee

(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.

(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.

(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at least once a month. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Trust Committee may be held at
any time when a quorum is present.

(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.

(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

Section 3. Audit Committee

(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.

Section 4. Compensation Committee

(A) The Compensation Committee shall be composed of
not more than

<PAGE>

five (5) members who shall be selected by the Board of Directors
from its own members who are not officers of the Company and who shall hold
office during the pleasure of the Board.

(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.

(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.

(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.

Section 6. Absence or Disqualification of Any Member of a
Committee

(A) In the absence or disqualification of any member
of any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.

ARTICLE IV
OFFICERS

Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further authority and
powers and shall perform such duties as the Board of Directors may from time to
time confer and direct. He shall also exercise such powers and perform such
duties as may from time to time be agreed upon between himself and the President
of the Company.

Section 2. The Vice Chairman of the Board of Directors shall
preside at all

<PAGE>

meetings of the Board of Directors at which the Chairman of the
Board shall not be present and shall have such further authority and powers and
shall perform such duties as the Board of Directors or the Chairman of the Board
may from time to time confer and direct.

Section 4. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry into effect all
legal directions of the Executive Committee and of the Board of Directors, and
shall at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.

Section 6. The Secretary shall attend to the giving of notice
of meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

Section 7. The Treasurer shall have general supervision over
all assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of all
the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.

<PAGE>

There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.

Section 9. The officer designated by the Board of Directors to
be in charge of the Audit Division of the Company with such title as the Board
of Directors shall prescribe, shall report to and be directly responsible only
to the Board of Directors.

There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.

Section 10. There may be one or more officers, subordinate in
rank to all Vice Presidents with such functional titles as shall be determined
from time to time by the Board of Directors, who shall ex officio hold the
office Assistant Secretary of this Company and who may perform such duties as
may be prescribed by the officer in charge of the department or division to whom
they are assigned.

Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.

ARTICLE V
STOCK AND STOCK CERTIFICATES

Section 1. Shares of stock shall be transferrable on the books
of the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.

Section 2. Certificate of stock shall bear the signature of
the President or any Vice President, however denominated by the Board of
Directors and countersigned by the Secretary or Treasurer or an Assistant
Secretary, and the seal of the corporation shall be engraved thereon. Each
certificate shall recite that the stock represented thereby is transferrable
only upon the books of the Company by the holder thereof or his attorney, upon
surrender of the certificate properly endorsed. Any certificate of stock
surrendered to the Company shall be cancelled at the time of transfer, and
before a new certificate or certificates shall be issued in lieu thereof.
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.

Section 3. The Board of Directors of the Company is authorized
to fix in advance a record date for the determination of the stockholders
entitled to notice of, and to vote at, any meeting of stockholders and any
adjournment thereof, or entitled to receive payment of

<PAGE>

ARTICLE VI
SEAL

Section 1. The corporate seal of the Company shall be in the
following form:

Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."

ARTICLE VII
FISCAL YEAR

Section 1. The fiscal year of the Company shall be the
calendar year.

ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY

Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors, shall have full
power and authority to enter into, make, sign, execute, acknowledge and/or
deliver and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.

<PAGE>

ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

Section 1. Directors and associate directors of the Company,
other than salaried officers of the Company, shall be paid such reasonable
honoraria or fees for attending meetings of the Board of Directors as the Board
of Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as members
of committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.

ARTICLE X
INDEMNIFICATION

Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation shall
indemnify a person in connection with a proceeding initiated by such person only
if the proceeding was authorized by the Board of Directors of the Corporation.

(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses

<PAGE>

under applicable law.

(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.

(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.

ARTICLE XI
AMENDMENTS TO THE BY-LAWS

Section 1. These By-Laws may be altered, amended or repealed,
in whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.

<PAGE>

EXHIBIT C

SECTION 321(b) CONSENT

Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
as amended, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
requests therefor.

WILMINGTON TRUST COMPANY

Dated: December 5, 1996 By: /s/ Emmett R. Harmon
--------------------
Name: Emmett R. Harmon
Title: Vice President

<PAGE>

EXHIBIT D

NOTICE

R E P O R T O F C O N D I T I O N

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------------------- ----------------
Name of Bank

City

in the State of DELAWARE, at the close of business on September 30, 1996.
--------

ASSETS
Thousands of dollars

Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . 198,288
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities. . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell. . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance,
and reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,570,568
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . 83,675
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies. 85
Customers' liability to this bank on acceptances outstanding . . . . 0
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,303,592

CONTINUED ON NEXT PAGE

<PAGE>

LIABILITIES

Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . 3,457,641
Noninterest-bearing . . . . . . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . . . . . . 2,716,910
Federal funds purchased. . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . 94,999
Trading liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money:. . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less. . . . . . . . . . . . 844,000
With original maturity of more than one year. . . . . . . . . . . 28,000
Mortgage indebtedness and obligations under capitalized leases . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . 0
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . 0
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . 0

EQUITY CAPITAL

Perpetual preferred stock and related surplus. . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,119
Undivided profits and capital reserves . . . . . . . . . . . . . . . 363,705
Net unrealized holding gains (losses) on available-for-sale
securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (696)
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . 425,628
Total liabilities, limited-life preferred stock, and equity capital. 5,303,592

<PAGE>

Registration No.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___

WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)

Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)

Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)

Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)

UNITED COMMUNITY BANCSHARES, INC.
UNITED CAPITAL TRUST I

(Exact name of obligor as specified in its charter)

Minnesota 41-1380239
Delaware 41-1858234
(State of incorporation) (I.R.S. employer identification no.)

2600 Eagan Woods Drive, Suite 155
Eagan, Minnesota 55121
(Address of principal executive offices) (Zip Code)

Preferred Securities of United Capital Trust
(Title of the indenture securities)

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

<PAGE>
ITEM 1. GENERAL INFORMATION.

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority
to which it is subject.

Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA

(b) Whether it is authorized to exercise corporate trust
powers.

The trustee is authorized to exercise corporate trust
powers.

ITEM 2. AFFILIATIONS WITH THE OBLIGOR.

If the obligor is an affiliate of the trustee, describe
each affiliation:

Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the
obligor is not an affiliate of the trustee.

ITEM 3. LIST OF EXHIBITS.

List below all exhibits filed as part of this Statement of
Eligibility and Qualification.

WILMINGTON TRUST COMPANY

[SEAL]

Attest:/s/ Donald G. MacKelcan By:/s/ Emmett R. Harmon
------------------------ ---------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President

2
<PAGE>

3
<PAGE>
EXHIBIT A

AMENDED CHARTER

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON MAY 9, 1987

<PAGE>
AMENDED CHARTER

ACT OF INCORPORATION

WILMINGTON TRUST COMPANY

WILMINGTON TRUST COMPANY, originally incorporated by an Act of
the General Assembly of the State of Delaware, entitled "An Act to Incorporate
the Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the
name of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment
filed in the Office of the Secretary of State on March 18, A.D. 1903, and the
Charter or Act of Incorporation of which company has been from time to time
amended and changed by merger agreements pursuant to the corporation law for
state banks and trust companies of the State of Delaware, does hereby alter and
amend its Charter or Act of Incorporation so that the same as so altered and
amended shall in its entirety read as follows:

FIRST: - The name of this corporation is WILMINGTON TRUST
COMPANY.

<PAGE>
Corporation shall require, to make by-laws not
inconsistent with the Constitution or laws of the United
States or of this State, to discount bills, notes or
other evidences of debt, to receive deposits of money,
or securities for money, to buy gold and silver bullion
and foreign coins, to buy and sell bills of exchange,
and generally to use, exercise and enjoy all the powers,
rights, privileges and franchises incident to a
corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.

(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.

2
<PAGE>
(8) To guarantee the validity, performance or effect of
any contract or agreement, and the fidelity of persons
holding places of responsibility or trust; to become surety
for any person, or persons, for the faithful performance of
any trust, office, duty, contract or agreement, either by
itself or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or
court in the State of Delaware or elsewhere.

3
<PAGE>
owners thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to
vary or realize such investments; to issue bonds and
secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the
property held or owned by the Corporation, and to sell
and pledge such bonds, as and when the Board of
Directors shall determine, and in the promotion of its
said corporate business of investment and to the extent
authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate
or interest therein.

(1) To do any or all of the things herein set forth, to
the same extent as natural persons might or could do, and
in any part of the world.

(3) To take, hold, own, deal in, mortgage or otherwise
lien, and to lease, sell, exchange, transfer, or in any
manner whatever dispose of property, real, personal or
mixed, wherever situated.

4
<PAGE>
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or
inference from the terms of any other clause of this or any
other paragraph in this charter, but that the objects,
purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects,
purposes and powers.

FOURTH: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:

(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and

(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").

5
<PAGE>
stock and whether such dividends shall be cumulative or
non-cumulative;

(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the Preferred
Stock of such series; and

6
<PAGE>
receive all of the remaining assets of the Corporation,
tangible and intangible, of whatever kind available for
distribution to stockholders ratably in proportion to
the number of shares of Common Stock held by them
respectively.

7
<PAGE>
(f) Subject to the provisions of section (e), shares of any
series of Preferred Stock may be issued from time to time as
the Board of Directors of the Corporation shall determine and
on such terms and for such consideration as shall be fixed by
the Board of Directors.

8
<PAGE>
Corporation may be removed at any time without cause,
but only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose
as one class) cast at a meeting of the stockholders
called for that purpose.

SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.

EIGHTH: - This Act shall be deemed and taken to be a private
Act.

9
<PAGE>
NINTH: - This Corporation is to have perpetual existence.

ELEVENTH: - The private property of the stockholders shall not
be liable for the payment of corporate debts to any extent
whatever.

TWELFTH: - The Corporation may transact business in any part of
the world.

FIFTEENTH: - (a) In addition to any affirmative vote required
by law, and except as otherwise expressly provided in sections
(b) and (c) of this Article FIFTEENTH:

10
<PAGE>
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate
of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof)
having an aggregate fair market value of $1,000,000 or
more, or

(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or

(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).

(1) A "person" shall mean any individual firm, corporation or
other entity.

11
<PAGE>
such business combination, or immediately prior to the
consummation of any such transaction:

(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or

(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or

(3) A person shall be the "beneficial owner" of any Voting
Shares:

(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or

12
<PAGE>
(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in Rule
3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect in December 31,
1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of
Investment Stockholder set forth in paragraph (2) of this
section (c), the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.

(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.

13
<PAGE>
EXHIBIT B

BY-LAWS

WILMINGTON TRUST COMPANY

WILMINGTON, DELAWARE

AS EXISTING ON DECEMBER 21, 1995

<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY

ARTICLE I
STOCKHOLDERS' MEETINGS

Section 1. The Annual Meeting of Stockholders shall be held on
the third Thursday in April each year at the principal office at the Company or
at such other date, time, or place as may be designated by resolution by the
Board of Directors.

Section 2. Special meetings of all stockholders may be called
at any time by the Board of Directors, the Chairman of the Board or the
President.

Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10 days before said meeting,
at his last known address, a written or printed notice fixing the time and place
of such meeting.

Section 4. A majority in the amount of the capital stock of
the Company issued and outstanding on the record date, as herein determined,
shall constitute a quorum at all meetings of stockholders for the transaction of
any business, but the holders of a small number of shares may adjourn, from time
to time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.

ARTICLE II
DIRECTORS

Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.

Section 2. No person who has attained the age of seventy-two
(72) years shall be nominated for election to the Board of Directors of the
Company, provided, however, that this limitation shall not apply to any person
who was serving as director of the Company on September 16, 1971.

Section 3. The class of Directors so elected shall hold office
for three years or until their successors are elected and qualified.

Section 4. The affairs and business of the Company shall be
managed and conducted by the Board of Directors.

Section 5. Regular meetings of the Board of Directors shall be
held on the third Thursday of each month at the principal office of the Company,
or at such other place and

<PAGE>
time as may be designated by the Board of Directors, the Chairman of the Board,
or the President.

Section 7. A majority of the directors elected and qualified
shall be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.

Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of any change in
the time or place of any regular meeting, stating the time and place of such
meeting, which shall be mailed not less than two days before the time of holding
such meeting.

Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.

Section 10. The Board of Directors at its first meeting after
its election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.

Section 12. The Board of Directors may designate an officer to
be in charge of such of the departments or division of the Company as it may
deem advisable.

ARTICLE III
COMMITTEES

Section I. Executive Committee

(A) The Executive Committee shall be composed of not
more than nine

2
<PAGE>
members who shall be selected by the Board of Directors from its own members
and who shall hold office during the pleasure of the Board.

(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business for
and in behalf of the Company that may be brought before it.

(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times to
be determined by a majority of its members, or at the call of the Chairman of
the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.

(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.

(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-
Law shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.

3
<PAGE>
Section 2. Trust Committee

(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.

(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.

(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at least once a month. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Trust Committee may be held at
any time when a quorum is present.

(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.

(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.

Section 3. Audit Committee

(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.

Section 4. Compensation Committee

(A) The Compensation Committee shall be composed of
not more than

4
<PAGE>
five (5) members who shall be selected by the Board of Directors from its own
members who are not officers of the Company and who shall hold office during the
pleasure of the Board.

(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.

(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.

Section 5. Associate Directors

(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.

(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.

Section 6. Absence or Disqualification of Any Member of a
Committee

(A) In the absence or disqualification of any member
of any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.

ARTICLE IV
OFFICERS

Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further authority and
powers and shall perform such duties as the Board of Directors may from time to
time confer and direct. He shall also exercise such powers and perform such
duties as may from time to time be agreed upon between himself and the President
of the Company.

Section 2. The Vice Chairman of the Board of Directors shall
preside at all

5
<PAGE>
meetings of the Board of Directors at which the Chairman of the Board shall not
be present and shall have such further authority and powers and shall perform
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.

Section 4. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry into effect all
legal directions of the Executive Committee and of the Board of Directors, and
shall at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.

Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.

Section 6. The Secretary shall attend to the giving of notice
of meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.

Section 7. The Treasurer shall have general supervision over
all assets and liabilities of the Company. He shall be custodian of and
responsible for all monies, funds and valuables of the Company and for the
keeping of proper records of the evidence of property or indebtedness and of all
the transactions of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of Directors at each
regular meeting of the condition of the Company, and perform such other duties
as may be assigned to him from time to time by the Board of Directors of the
Executive Committee.

6
<PAGE>
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.

Section 9. The officer designated by the Board of Directors to
be in charge of the Audit Division of the Company with such title as the Board
of Directors shall prescribe, shall report to and be directly responsible only
to the Board of Directors.

There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.

Section 10. There may be one or more officers, subordinate in
rank to all Vice Presidents with such functional titles as shall be determined
from time to time by the Board of Directors, who shall ex officio hold the
office Assistant Secretary of this Company and who may perform such duties as
may be prescribed by the officer in charge of the department or division to whom
they are assigned.

Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.

ARTICLE V
STOCK AND STOCK CERTIFICATES

Section 1. Shares of stock shall be transferrable on the books
of the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.

Section 2. Certificate of stock shall bear the signature of
the President or any Vice President, however denominated by the Board of
Directors and countersigned by the Secretary or Treasurer or an Assistant
Secretary, and the seal of the corporation shall be engraved thereon. Each
certificate shall recite that the stock represented thereby is transferrable
only upon the books of the Company by the holder thereof or his attorney, upon
surrender of the certificate properly endorsed. Any certificate of stock
surrendered to the Company shall be cancelled at the time of transfer, and
before a new certificate or certificates shall be issued in lieu thereof.
Duplicate certificates of stock shall be issued only upon giving such security
as may be satisfactory to the Board of Directors or the Executive Committee.

Section 3. The Board of Directors of the Company is authorized
to fix in advance a record date for the determination of the stockholders
entitled to notice of, and to vote at, any meeting of stockholders and any
adjournment thereof, or entitled to receive payment of

7
<PAGE>
any dividend, or to any allotment or rights, or to exercise any rights in
respect of any change, conversion or exchange of capital stock, or in
connection with obtaining the consent of stockholders for any purpose, which
record date shall not be more than 60 nor less than 10 days proceeding the
date of any meeting of stockholders or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining such consent.

ARTICLE VI
SEAL

Section 1. The corporate seal of the Company shall be in the
following form:

Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."

ARTICLE VII
FISCAL YEAR

Section 1. The fiscal year of the Company shall be the
calendar year.

ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY

Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors, shall have full
power and authority to enter into, make, sign, execute, acknowledge and/or
deliver and the Secretary or any Assistant Secretary shall have full power and
authority to attest and affix the corporate seal of the Company to any and all
deeds, conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the Executive Committee.

8
<PAGE>
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES

Section 1. Directors and associate directors of the Company,
other than salaried officers of the Company, shall be paid such reasonable
honoraria or fees for attending meetings of the Board of Directors as the Board
of Directors may from time to time determine. Directors and associate directors
who serve as members of committees, other than salaried employees of the
Company, shall be paid such reasonable honoraria or fees for services as members
of committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.

ARTICLE X
INDEMNIFICATION

Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") by reason of the fact that he, or a person for whom he is the
legal representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation shall
indemnify a person in connection with a proceeding initiated by such person only
if the proceeding was authorized by the Board of Directors of the Corporation.

(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.

(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses

9
<PAGE>
under applicable law.

(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.

(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.

ARTICLE XI
AMENDMENTS TO THE BY-LAWS

Section 1. These By-Laws may be altered, amended or repealed,
in whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.

10
<PAGE>

EXHIBIT C

SECTION 321(b) CONSENT

Pursuant to Section 321(b) of the Trust Indenture Act of 1939,
as amended, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
requests therefor.

WILMINGTON TRUST COMPANY

Dated: December 5, 1996 By: /s/ Emmett R. Harmon
-----------------------
Name: Emmett R. Harmon
Title: Vice President

<PAGE>

EXHIBIT D

NOTICE

This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It
has not been approved by any state banking authorities.
Refer to your appropriate state banking authorities for
your state publication requirements.

R E P O R T O F C O N D I T I O N

Consolidating domestic subsidiaries of the

WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------------------- ---------------
Name of Bank

City

in the State of DELAWARE , at the close of business on September 30, 1996.
------------

ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . 198,288
Interest-bearing balances. . . . . . . . . . . . . . . . . . . . . 0
Held-to-maturity securities. . . . . . . . . . . . . . . . . . . . . . 489,428
Available-for-sale securities. . . . . . . . . . . . . . . . . . . . . 783,718
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Securities purchased under agreements to resell. . . . . . . . . . . . 48,500
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,620,289
LESS: Allowance for loan and lease losses. . . . . . 49,721
LESS: Allocated transfer risk reserve. . . . . . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . .3,570,568
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . 83,675
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . 4,607
Investments in unconsolidated subsidiaries and associated companies. . 85
Customers' liability to this bank on acceptances outstanding . . . . . 0
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,131
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,592
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,303,592

CONTINUED ON NEXT PAGE
<PAGE>

LIABILITIES

Deposits:
In domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . .3,457,641
Noninterest-bearing . . . . . . . . . 740,731
Interest-bearing. . . . . . . . . . 2,716,910
Federal funds purchased. . . . . . . . . . . . . . . . . . . . . . . . 135,889
Securities sold under agreements to repurchase . . . . . . . . . . . . 213,617
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . 94,999
Trading liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . 0
Other borrowed money:. . . . . . . . . . . . . . . . . . . . . . . . . ///////
With original maturity of one year or less . . . . . . . 844,000
With original maturity of more than one year . . . . . . .28,000
Mortgage indebtedness and obligations under capitalized leases . . . . 0
Bank's liability on acceptances executed and outstanding . . . . . . . 0
Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . 0
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 103,818
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .4,877,964
Limited-life preferred stock and related surplus . . . . . . . . . . . 0

EQUITY CAPITAL

<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> SEP-30-1996 DEC-31-1995
<CASH> 24,002 20,513
<INT-BEARING-DEPOSITS> 0 0
<FED-FUNDS-SOLD> 7,875 8,725
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<INVESTMENTS-HELD-FOR-SALE> 103,453 101,837
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<INVESTMENTS-MARKET> 0 0
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<ALLOWANCE> (2,868) (2,899)
<TOTAL-ASSETS> 441,850 421,841
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<INTEREST-TOTAL> 25,001 31,206
<INTEREST-DEPOSIT> 8,721 10,439
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<INTEREST-INCOME-NET> 14,556 18,358
<LOAN-LOSSES> 146 61
<SECURITIES-GAINS> 0 (32)
<EXPENSE-OTHER> 12,775 16,531
<INCOME-PRETAX> 5,083 5,685
<INCOME-PRE-EXTRAORDINARY> 3,405 3,629
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,405 3,629
<EPS-PRIMARY> 6.20 6.97
<EPS-DILUTED> 6.20 6.97
<YIELD-ACTUAL> 8.63 8.72
<LOANS-NON> 722 403
<LOANS-PAST> 342 249
<LOANS-TROUBLED> 132 100
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<ALLOWANCE-OPEN> 2,899 2,856
<CHARGE-OFFS> 570 337
<RECOVERIES> 393 319
<ALLOWANCE-CLOSE> 2,868 2,899
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