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                            MONOCACY BANCSHARES, INC.
                         TANEYTOWN, MARYLAND, AS BUYER;


                            U.S.B. HOLDING CO., INC.
                        ORANGEBURG, NEW YORK, AS SELLER:


                           ROYAL OAK SAVINGS BANK, FSB
                       RANDALLSTOWN, MARYLAND, AS ACQUIREE



                                 August 25, 1995

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                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
1.   THE STOCK PURCHASE. . . . . . . . . . . . . . . . . . . . . . . .         1
     (a)  Assets and Liabilities Excluded. . . . . . . . . . . . . . .         2
     (b)  Purchase Price . . . . . . . . . . . . . . . . . . . . . . .         2
     (c)  Estimated Purchase Price . . . . . . . . . . . . . . . . . .         2
     (d)  Closing Adjustments and Determination
            of Final Purchase Price. . . . . . . . . . . . . . . . . .         2

2.   REPRESENTATIONS AND WARRANTIES BY BUYER . . . . . . . . . . . . .         3
     (a)  Organization, Good Standing, Authority,
            Insurance, Etc.. . . . . . . . . . . . . . . . . . . . . .         3
     (b)  Agreement, Authority, Absence of Conflicts . . . . . . . . .         4
     (c)  Sufficient Resources, Etc. . . . . . . . . . . . . . . . . .         4
     (d)  Ownership of Acquiree Stock. . . . . . . . . . . . . . . . .         4
     (e)  Full Disclosure. . . . . . . . . . . . . . . . . . . . . . .         4
     (f)  Litigation . . . . . . . . . . . . . . . . . . . . . . . . .         5
     (g)  Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . .         5
     (h)  Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .         5
     (i)  Accuracy of Representations. . . . . . . . . . . . . . . . .         5
     (j)  Compliance with Applicable Laws. . . . . . . . . . . . . . .         5

3.   REPRESENTATIONS AND WARRANTIES BY SELLER AND ACQUIREE . . . . . .         6
     (a)  Organization, Good Standing, Authority, Deposit
            Insurance, Etc.. . . . . . . . . . . . . . . . . . . . . .         6
     (b)  Capitalization, Investments. . . . . . . . . . . . . . . . .         6
     (c)  Financial Statements . . . . . . . . . . . . . . . . . . . .         6
     (d)  Absence of Certain Developments. . . . . . . . . . . . . . .         7
     (e)  Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . .         8
     (f)  Litigation . . . . . . . . . . . . . . . . . . . . . . . . .         9
     (g)  Brokerage. . . . . . . . . . . . . . . . . . . . . . . . . .         9
     (h)  Properties . . . . . . . . . . . . . . . . . . . . . . . . .         9
     (i)  Compliance with Applicable Laws. . . . . . . . . . . . . . .        10
     (j)  Contracts and Commitments, Etc.. . . . . . . . . . . . . . .        10
     (k)  Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .        11
     (l)  No Guarantees. . . . . . . . . . . . . . . . . . . . . . . .        11
     (m)  Examination Reports. . . . . . . . . . . . . . . . . . . . .        11
     (n)  Agreement, Authority, Absence of Conflicts . . . . . . . . .        11
     (o)  Reporting. . . . . . . . . . . . . . . . . . . . . . . . . .        12
     (p)  Full Disclosure. . . . . . . . . . . . . . . . . . . . . . .        12
     (q)  Employee Benefit Plans . . . . . . . . . . . . . . . . . . .        12
     (r)  Labor Matters. . . . . . . . . . . . . . . . . . . . . . . .        12
     (s)  Environmental Matters. . . . . . . . . . . . . . . . . . . .        12
     (t)  Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .        14
     (u)  Undisclosed Liabilities. . . . . . . . . . . . . . . . . . .        14
     (v)  Financial Institutions Bond. . . . . . . . . . . . . . . . .        14
     (w)  Not Used . . . . . . . . . . . . . . . . . . . . . . . . . .        14
     (x)  Assumability of Leases and Contracts . . . . . . . . . . . .        14
     (y)  Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . .        14
     (z)  Not Used . . . . . . . . . . . . . . . . . . . . . . . . . .        15
     (aa) Trademarks, Trade Names. . . . . . . . . . . . . . . . . . .        15


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     (bb) Accuracy of Representations. . . . . . . . . . . . . . . . .        15
     (cc) Materiality. . . . . . . . . . . . . . . . . . . . . . . . .        15
     (dd) Absence of Questionable Payments . . . . . . . . . . . . . .        15
     (ee) Powers of Attorney, Guarantees . . . . . . . . . . . . . . .        16
     (ff) Mortgage Servicing Agreements. . . . . . . . . . . . . . . .        16

4.   ACCESS TO AND INFORMATION CONCERNING PROPERTIES, RECORDS, ETC.. .        16
     (a)  Bank Premises. . . . . . . . . . . . . . . . . . . . . . . .        17

5.   AFFIRMATIVE COVENANTS OF BUYER. . . . . . . . . . . . . . . . . .        17
     (a)  Conduct of Business. . . . . . . . . . . . . . . . . . . . .        17
     (b)  Preservation of Business . . . . . . . . . . . . . . . . . .        18
     (c)  Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .        18
     (d)  Laws, Rules, Etc.. . . . . . . . . . . . . . . . . . . . . .        18
     (e)  Best Efforts . . . . . . . . . . . . . . . . . . . . . . . .        18
     (f)  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .        18
     (g)  Randallstown Property. . . . . . . . . . . . . . . . . . . .        18

6.   AFFIRMATIVE COVENANTS OF ACQUIREE . . . . . . . . . . . . . . . .        19
     (a)  Conduct of Business. . . . . . . . . . . . . . . . . . . . .        19
     (b)  Preservation of Business . . . . . . . . . . . . . . . . . .        19
     (c)  Properties . . . . . . . . . . . . . . . . . . . . . . . . .        19
     (d)  Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .        20
     (e)  Contracts, Etc.. . . . . . . . . . . . . . . . . . . . . . .        20
     (f)  Financial Statements . . . . . . . . . . . . . . . . . . . .        20
     (g)  Laws, Rules, Etc.. . . . . . . . . . . . . . . . . . . . . .        21
     (h)  Corporate Existence. . . . . . . . . . . . . . . . . . . . .        21
     (i)  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . .        21
     (j)  Best Efforts . . . . . . . . . . . . . . . . . . . . . . . .        21
     (k)  Cooperate in Transferring Deposit Accounts to Buyer. . . . .        22

7.   NEGATIVE COVENANTS OF SELLER AND ACQUIREE . . . . . . . . . . . .        22

8.   CONDITIONS TO THE OBLIGATIONS OF BUYER, SELLER AND ACQUIREE . . .        25
     (a)  Approval of Regulatory Agencies. . . . . . . . . . . . . . .        25
     (b)  Suits, Actions . . . . . . . . . . . . . . . . . . . . . . .        25
     (c)  Statutes, Orders . . . . . . . . . . . . . . . . . . . . . .        25

9.   CONDITIONS TO THE OBLIGATIONS OF BUYER. . . . . . . . . . . . . .        25
     (a)  Representations, Warranties and Covenant . . . . . . . . . .        26
     (b)  Opinion of Special Counsel . . . . . . . . . . . . . . . . .        26
     (c)  Suit, Action, Etc. . . . . . . . . . . . . . . . . . . . . .        29
     (d)  Closing Documents. . . . . . . . . . . . . . . . . . . . . .        29

10.  CONDITIONS TO THE OBLIGATIONS OF SELLER AND ACQUIREE. . . . . . .        29
     (a)  Representations and Warranties . . . . . . . . . . . . . . .        29
     (b)  Opinion of Counsel . . . . . . . . . . . . . . . . . . . . .        30
     (c)  Suit, Action, Etc. . . . . . . . . . . . . . . . . . . . . .        32
     (d)  Deposit into Payment Fund. . . . . . . . . . . . . . . . . .        32
     (e)  Closing Documents. . . . . . . . . . . . . . . . . . . . . .        32


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11.  CERTAIN TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . .        32
     (a)  Internal Revenue Code Section 338(h)(10) Election. . . . . .        32
     (b)  Allocation of Purchase Price . . . . . . . . . . . . . . . .        33
     (c)  Returns, Indemnification and Liability for Taxes.. . . . . .        34

12.  TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . .       34

13.  EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       35

14.  CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . .       36

15.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC.. . . . . . . . .        36

16.  CERTAIN POST-MERGER AGREEMENTS. . . . . . . . . . . . . . . . . .        36
     (a)  Employees. . . . . . . . . . . . . . . . . . . . . . . . . .        37
     (b)  Indemnification of Buyer . . . . . . . . . . . . . . . . . .        37
     (c)  Indemnification of Seller. . . . . . . . . . . . . . . . . .        38
     (d)  FDIC Insurance Premium Adjustment Retroactively. . . . . . .        38

17.  ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . .        38

18.  PUBLICITY . . . . . . . . . . . . . . . . . . . . . . . . . . . .        39

19.  AMENDMENT AND WAIVER. . . . . . . . . . . . . . . . . . . . . . .        39

20.  GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . .        39

21.  COMMUNICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . .        39

22.  SUCCESSORS AND ASSIGNS. . . . . . . . . . . . . . . . . . . . . .        40

23.  HEADINGS, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . .        40

24.  SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . .        40

25.  NO THIRD PARTY BENEFICIARY. . . . . . . . . . . . . . . . . . . .        40

26.  COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . .        40

27.  FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . .        40


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                            STOCK PURCHASE AGREEMENT


   THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 25th day of August,
1995, by and among MONOCACY BANCSHARES, INC., a Maryland corporation and bank
holding company having its principal office in Taneytown, Maryland ("Buyer"),
U.S.B. HOLDING CO., INC., a Delaware corporation and savings and loan holding
company having its principal office in Orangeburg, New York ("Seller") and ROYAL
OAK SAVINGS BANK, FSB, a federal savings bank having its principal office in
Randallstown, Maryland ("Acquiree").

                              W I T N E S S E T H:

   WHEREAS, the respective Boards of Directors of Buyer, Seller and Acquiree
have approved and deem it advisable and in the best interests of their
respective companies to consummate the transactions provided in this Agreement;

   WHEREAS, Buyer desires to purchase and Seller desires to sell 1,000 shares of
common stock $10.00 par value per share of the Acquiree (the "Acquiree Stock")
comprising all of Acquiree's capital stock issued and outstanding (the
acquisition of the Acquiree Stock is referred to herein as the "Stock
Purchase");

   WHEREAS, Buyer may reorganize its corporate structure after the Stock
Purchase in such a way that the Acquiree will continue to be operated as a
separate subsidiary, will be merged with and into a subsidiary of Buyer or will
be liquidated, but for which the Buyer has not yet decided which form of
reorganization that it will effect;

   NOW THEREFORE, in consideration of the premises, mutual promises, covenants,
agreements, representations and warranties hereinafter set forth, and of other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:


     1.   THE STOCK PURCHASE. Upon the terms and subject to the conditions set
forth herein, the Stock Purchase is to be accomplished at a closing (the
"Closing") on the effective date (the "Effective Date"), by means of the
delivery of funds by Buyer against delivery by Seller of the certificates
representing the Acquiree Stock and all rights of ownership of the Acquiree
Stock shall pass from Seller to Buyer, resulting in all outstanding shares of
Acquiree being owned by Buyer at and after the Effective Date. The parties shall
cooperate fully, and shall cause each of their affiliates to cooperate fully, in
the preparation and submission by them, as promptly as reasonably practicable,
of such notices, applications, petitions, and other documents and materials as
any of them may reasonably deem necessary (or desirable) to the Board of
Governors of the Federal Reserve System (the "Federal

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Reserve"), the Maryland state bank regulatory authorities, the Federal Deposit
Insurance Corporation ("FDIC"), the Office of Thrift Supervision (the "OTS"),
other regulatory authorities, and any other persons for the purpose of obtaining
any approvals or consents necessary to consummate the transactions contemplated
by this Agreement. Prior to the making of any such filings with any regulatory
authority or any third person (such as mailings to shareholders or press
releases), the parties shall submit to each other the materials to be filed,
mailed or released. Any such materials must be acceptable to the parties (such
acceptance not to be unreasonably withheld) with indications of acceptance
required prior to use, except to the extent that any party is legally required
to proceed (although still provide notice) prior to obtaining the acceptances of
the other parties.

          (a)  ASSETS AND LIABILITIES EXCLUDED. Prior to the Effective Date,
     Acquiree shall transfer to Seller or such other entity as it deems
     appropriate, or otherwise remove from its books, those assets and
     liabilities described and quantified on Schedule 1(a) and updated as to
     dollar amounts on an addendum to Schedule 1(a) prepared immediately prior
     to the Effective Date (the "Excluded Assets and Liabilities"). The Excluded
     Assets and Liabilities shall pass to the Seller and Buyer shall assume no
     rights or obligations directly or indirectly associated with or in any way
     related to the Excluded Assets and Liabilities.

          (b)  PURCHASE PRICE. The purchase price for the Stock Purchase shall
     be determined as set forth on Schedule 1(b); provided, however, that such
     purchase price shall be adjusted in accordance with the provisions of
     Sections 1(c) and 1(d), hereof.

          (c)  ESTIMATED PURCHASE PRICE. At least five (5) days prior to the
     Effective Date, Seller and Acquiree shall deliver to Buyer Schedule 1(b)
     based upon information as of the most recent practicable date (the
     "Estimated Purchase Price") together with details reconciling such amounts
     with the corresponding amounts previously calculated as of the date hereof
     in accordance with paragraph 1(b). The Estimated Purchase Price shall be
     paid by Buyer at Closing with the understanding that such Estimated
     Purchase Price shall be further adjusted in accordance with paragraph l(d),
     hereof and Buyer shall receive a refund, or pay for any shortfall,
     resulting from such adjustment.

          (d)  CLOSING ADJUSTMENTS AND DETERMINATION OF FINAL PURCHASE PRICE. As
     soon as reasonably practicable following the Effective Date and in no event
     more than ten (10) days thereafter, Seller shall prepare and deliver to
     Buyer an unaudited final computation of the purchase price (the "Final
     Purchase Price") measured as of the Effective Date, with the individual
     amounts purporting to represent unaudited,

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     unadjusted book values presented thereon having been determined in
     accordance with generally accepted accounting principles consistent with
     Acquiree's past practices, together with adjustments to reconcile such
     amounts to those previously presented on the schedule detailing the
     Estimated Purchase Price. The parties shall cooperate in the preparation of
     such final schedule and adjustments. Buyer shall provide Seller and its
     designees with full access to the books, records, personnel and
     representatives of Buyer and such information as Seller may reasonably
     request in connection with the preparation of such schedule and
     adjustments. The Parties shall cooperate in resolving any disputed amounts
     set forth on the schedule and shall commence good faith negotiations with a
     view toward promptly resolving any disagreement that arises. If Buyer and
     Seller are unable to resolve their differences within 30 days following the
     preparation of the Final Purchase Price and related adjustments, such
     disagreement shall be referred to a firm of independent accountants
     mutually agreed upon by Seller and Buyer for resolution of such
     disagreement in accordance with the provisions of this Agreement. If Buyer
     and Seller do not promptly agree on the selection of an independent
     accounting firm, the respective independent public accountants of Buyer and
     Seller shall select such firm. Buyer and Seller shall use their best
     efforts to cause any independent accounting firm selected to render its
     determination as soon as practicable after referral of the disagreement to
     such firm, and each shall cooperate with such firm and provide such firm
     with access to the books, records, personnel and representatives as such
     firm may require in order to render its determination. All of the fees and
     expenses of such independent accounting firm shall be paid one half by
     Buyer and one half by Seller. The determinations of the parties or, if
     required, the independent accounting firm with respect to any disagreement,
     shall be final and binding upon the parties and the resulting amounts shall
     be used to calculate any excess or deficiency. Seller shall promptly remit
     to or collect from Buyer such excess or deficiency, as appropriate.


     2.   REPRESENTATIONS AND WARRANTIES BY BUYER. Buyer represents and warrants
to Acquiree and Seller as follows:

          (a) ORGANIZATION, GOOD STANDING, AUTHORITY, INSURANCE, ETC. Buyer is a
     Maryland corporation organized, validly existing and in good standing under
     the laws of the State of Maryland. Buyer has all requisite corporate power
     and authority to conduct its business as it is now conducted, to own and
     operate its properties and assets and to lease properties used in its
     business. Buyer has all requisite corporate power and authority to enter
     into this Agreement and, subject to obtaining any required regulatory
     approvals, to perform

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     and carry out the provisions of and all its obligations under this
     Agreement.

          (b) AGREEMENT, AUTHORITY, ABSENCE OF CONFLICTS. The execution,
     delivery and performance of this Agreement and the consummation of the
     transactions contemplated herein, have been duly and validly authorized by
     the Board of Directors of Buyer. No other corporate action on the part of
     Buyer is necessary for Buyer to authorize this Agreement or to consummate
     the transactions contemplated herein. This Agreement has been duly executed
     and delivered by Buyer and, assuming due authorization, execution and
     delivery by Seller and Acquiree, constitutes a valid and binding obligation
     of Buyer, enforceable in accordance with its terms. The execution, delivery
     and performance of this Agreement and the consummation of the transactions
     contemplated herein, will not constitute a violation or breach or a default
     under the Articles of Incorporation or Bylaws of Buyer, any statute, rule,
     regulation, order, writ, injunction, decree, or directive applicable to
     Buyer, or any agreement, indenture or other instrument to which Buyer is a
     party.

          (c) SUFFICIENT RESOURCES, ETC. Buyer has and will have available at
     the Effective Date available financial resources to enable it to lawfully
     satisfy its obligations pursuant to this Agreement without the need to
     borrow funds or to raise additional equity capital, unless otherwise
     mandated by a regulatory authority after the date hereof. Prior to the
     Effective Date, Buyer has and will have sufficient management and financial
     resources to process the required regulatory and other applications to
     consummate the transactions contemplated by this Agreement. On the date of
     this Agreement, there is no pending or, to the knowledge of Buyer,
     threatened legal or governmental proceeding against Buyer or any subsidiary
     or affiliate thereof, and Buyer is unaware of any fact or circumstance
     which would affect Buyer's ability to obtain any of the required regulatory
     approvals or satisfy any other conditions required to be satisfied in order
     to consummate the transactions contemplated by this Agreement.

          (d)  OWNERSHIP OF ACQUIREE STOCK. As of the date hereof, neither Buyer
     nor its subsidiaries directly or indirectly own, or have any rights to
     acquire, any shares of Acquiree Stock, other than pursuant to this
     Agreement.

          (e) FULL DISCLOSURE. None of the information with respect to Buyer or
     Buyer's subsidiaries which has been furnished to Seller or Acquiree or
     included in any application to, or filing with, any regulatory authority
     made in connection with the transactions contemplated

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     hereby will, at the respective time it is furnished or filed, be false or
     misleading with respect to any material fact, or omit to state any material
     fact necessary in order to make the statements therein not misleading in
     light of the circumstances under which they were made.

          (f) LITIGATION. There is no material action, suit, claim,
     counterclaim, or other litigation or proceeding or to the best knowledge of
     Buyer, any investigation pending or known by the executive officers of
     Buyer to be threatened, against Buyer before any court or governmental or
     administrative agency, domestic or foreign, that could materially and
     adversely affect the Buyer's ability to complete the Stock Purchase or the
     transactions contemplated by this Agreement. There is no outstanding order,
     writ, injunction, judgment, decree, directive, consent agreement or
     memorandum of understanding involving Buyer and any federal regulatory
     agency, state or local or governmental authority or arbitration tribunal
     that could materially and adversely affect Buyer's ability to complete the
     Stock Purchase or the transactions contemplated by this Agreement. Buyer is
     unaware of any fact or condition presently existing that might give rise to
     any litigation, investigation, or proceeding which, if determined adversely
     to Buyer, would materially and adversely affect Buyer's ability to complete
     the Stock Purchase or the transactions contemplated by this Agreement.

          (g)  BROKERAGE. There is no claim for brokerage commission, finders
     fee or similar compensation arising out of or due to any act of Buyer in
     connection with the transactions contemplated by this Agreement or based on
     any agreement or arrangement made by or on behalf of Buyer.

          (h) PROCEEDINGS. As of the date of this Agreement there is no pending
     or, to the best knowledge of Buyer, threatened, legal or governmental
     proceeding against Buyer and Buyer is unaware of any fact or circumstance
     which could adversely affect Buyer's ability to obtain any required
     regulatory approvals applicable to it or satisfy any of the other
     conditions required to be satisfied by it in order to consummate the
     transactions contemplated by this Agreement.

          (i)  ACCURACY OF REPRESENTATIONS. Until Closing, Buyer will promptly
     notify Seller and Acquiree if any of the representations contained in this
     Section 2 ceases to be true and correct subsequent to the date hereof.

          (j)  COMPLIANCE WITH APPLICABLE LAWS. Buyer is in compliance in all
     material respects with all statutes, laws, ordinances, rules, regulations,
     judgements, orders, decrees, directives, consent agreements, memoranda of
     understanding, permits, concessions, grants, franchises, licenses and other
     governmental authorizations or approvals applicable to Buyer,

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     which are necessary to complete the Stock Purchase or the transactions
     contemplated by this Agreement.


     3.   REPRESENTATIONS AND WARRANTIES BY SELLER AND ACQUIREE. Seller and
Acquiree represent and warrant to Buyer as follows:

          (a) ORGANIZATION, GOOD STANDING, AUTHORITY, DEPOSIT INSURANCE, ETC.
     Seller is a savings and loan holding company organized, validly existing
     and in good standing under the laws of the state of Delaware. Acquiree is a
     wholly-owned subsidiary of Seller and is a federal savings bank organized
     and validly subsisting and, to the knowledge of Acquiree, is in good
     standing under federal law. Acquiree has no subsidiary. Acquiree has all
     requisite corporate power and authority to conduct its business as it is
     now conducted, to own and operate its properties and assets and to lease
     properties used in its business. Acquiree has all requisite corporate power
     and authority to enter into this Agreement and, subject to obtaining any
     required regulatory and shareholder approvals, to perform and carry out the
     provisions of and all of its respective obligations under this Agreement.
     The customer deposits held by Acquiree are insured by the Savings
     Association Insurance Fund ("SAIF") administered by the FDIC in accordance
     with the Federal Deposit Insurance Act. Acquiree has paid all assessments
     and filed all reports required by the Federal Deposit Insurance Act.

          (b)  CAPITALIZATION, INVESTMENTS. As of the date hereof, the
     authorized capital stock of Acquiree consists solely of the Acquiree Stock
     which shares are validly issued and outstanding, fully paid and
     non-assessable. There are no authorized, issued or outstanding options,
     convertible securities, warrants or other rights to purchase or acquire any
     Acquiree Stock and there is no commitment of Seller or Acquiree to issue
     same and, other than by operation of law, there are no outstanding
     agreements, restrictions, contracts, commitments or demands of any
     character to which Seller or Acquiree is a party, which relate to the
     transfer or restrict the transfer of any shares of Acquiree Stock. To the
     knowledge of Seller and Acquiree, there are no shareholder agreements,
     understandings or commitments relating to the right of Acquiree to vote or
     dispose of Acquiree Stock. No share of Acquiree Stock has been issued in
     violation of the preemptive rights of any person.

          (c)  FINANCIAL STATEMENTS. Seller has furnished Buyer with unaudited
     statements of financial condition, operations and various supporting
     financial schedules as of, and for the periods ending on, each of the last
     two

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     fiscal quarters, all as included in the Thrift Financial Reports ("TFR's")
     provided to the OTS. Seller and Acquiree have also provided Buyer with all
     management letters from Seller's independent certified public accountants
     since January 1, 1992, to the extent such letters or portions thereof
     related to Acquiree. For purposes of this Agreement, the "Acquiree
     Statement" shall mean the unaudited statements of financial condition for
     Acquiree as of June 30, 1995 as included in the TFR's (but excluding the
     amounts associated with Excluded Assets and Liabilities). The above
     unaudited statements of financial condition and operations (excluding the
     amounts associated with Excluded Assets and Liabilities) present fairly the
     financial condition and results of operations of Acquiree at the dates
     thereof, in accordance with the instructions for preparing TFR's and, where
     applicable, with generally accepted accounting principles consistently
     applied. Except as and to the extent reflected or reserved against in the
     Acquiree Statement, or as otherwise disclosed pursuant to this Agreement
     Acquiree had, at the date thereof, no material liabilities or obligations,
     or any other liabilities or obligations which in the aggregate would be
     material, secured or unsecured (whether accrued, absolute, contingent or
     otherwise), which should be reflected in the Acquiree Statement in
     accordance with the instructions for preparing TFR's and, where applicable,
     with generally accepted accounting principles consistently applied. The
     books and records of Acquiree are maintained in accordance with generally
     accepted accounting principles consistently applied.

          (d)  ABSENCE OF CERTAIN DEVELOPMENTS. Since June 30, 1995, except as
     set forth on Schedule 3(d) hereto, and as contemplated by Section l(a) or
     any other provision hereof, there has been (i) no material adverse change
     in the financial condition, business or results of operations of Acquiree
     excluding changes resulting from or attributable to (a) any changes since
     such date in any federal or state law, rule or regulation or in generally
     accepted accounting principles that affect savings institutions or their
     holding companies generally, or (b) reasonable expenses incurred since such
     date in connection with the transactions contemplated by this Agreement,
     (ii) no declaration, setting aside or payment of any dividend or other
     distribution with respect to the stock of Acquiree other than cash
     dividends, the timing and amounts of which are consistent with those
     declared and paid in the prior fiscal year; (iii) no material loss,
     destruction, or damage to the properties of Acquiree which loss,
     destruction, or damage is not adequately covered by insurance; (iv) no
     agreement, contract or commitment entered into or agreed to be entered into
     except for those in the ordinary course of

                                        7

<PAGE>

     business and except for this Agreement; (v) no amendment or termination of
     any material contract, lease, license, or other agreement to which Acquiree
     is a party except in the ordinary course of business; and (vi) no change in
     any of the accounting methods or practices or revaluation of any of the
     assets of Acquiree, except as required by changes in generally accepted
     accounting principles, or applicable laws, rules or regulations. Since such
     date, Acquiree has conducted its business only in the ordinary course.

          (e)  TAXES. As of the date of this Agreement Acquiree is a "domestic
     building and loan association" as defined in Section 7701(a)(19) of the
     Internal Revenue Code of 1986, as amended (the "Code"). Except as set forth
     on Schedule 3(e) hereto, (i) Acquiree has filed all tax returns (as
     described below) that it is required to file and all taxes (as described
     below) of Acquiree to be due from Acquiree have been duly paid, other than
     taxes or charges which are not as yet due, delinquent or have not been
     finally determined, and no extensions for the time of payment have been
     requested; (ii) no additional assessments of tax have been proposed, are
     pending or, to the best knowledge of Acquiree, threatened by any
     governmental authority; and (iii) no waivers of statutes of limitation
     concerning taxes associated with the Acquiree are in effect as of the date
     hereof. Except as set forth on Schedule 3(e), Acquiree has properly made
     all accruals and reserves for tax liabilities for the payment of any of
     Acquiree's respective federal, state, county, municipal, local and foreign
     tax liabilities, including interest and penalties, whether proposed,
     pending, threatened or disputed, for any period ended on or prior to the
     date hereof and for which Acquiree may, at said date, have been liable,
     except as a result of the transactions contemplated by this Agreement.
     Internal Revenue Service audits of Acquiree have never been conducted.
     Copies of all returns (or portions thereof relating to Acquiree) filed as
     well as all related material correspondence and documents concerning
     federal, state, county, municipal or local income, capital stock,
     franchise, or other similar taxes in respect of the two most recently
     completed tax years have been made available to Buyer. Except as set forth
     on Schedule 3(e), Acquiree has not executed or filed with the Internal
     Revenue Service any agreement extending the period for assessment and
     collection of any federal tax.

          The Internal Revenue Service has not, to the knowledge of Acquiree,
     commenced, or given notice of its intention to commence, any examination or
     audit of the federal income tax returns of Acquiree for any year subsequent
     to the year ended December 31, 1991.

                                        8

<PAGE>

          (f)  LITIGATION. Except as set forth on Schedule 3(f) hereto, no
     material action, suit, claim, counterclaim or other litigation or
     proceeding, or to the best knowledge of Acquiree investigation, is pending,
     or is known by the executive officers of Acquiree to be threatened, against
     Acquiree before any court or governmental or administrative agency,
     domestic or foreign. There are no outstanding orders, writs, injunctions,
     judgments, decrees, directives, consent agreements or memoranda of
     understanding involving Acquiree and any federal regulatory agency, state
     or local court or governmental authority or arbitration tribunal that could
     materially and adversely affect the condition, financial or otherwise,
     assets, liabilities, business, operations or future prospects of Acquiree
     or that in any manner restrict the right of Acquiree to conduct its
     business as presently conducted. Acquiree is unaware of any fact or
     condition presently existing that might give rise to any litigation,
     investigation, or proceeding which, if determined adversely to Acquiree
     would materially and adversely affect the condition, financial or
     otherwise, of the assets, liabilities, business operations or future
     prospects of Acquiree.

          (g)  BROKERAGE. Except as set forth on Schedule 3(g) hereto, there are
     no claims for brokerage commissions, finder's fees or similar compensation
     arising out of or due to any act of Acquiree in connection with the
     transactions contemplated by this Agreement or based on any agreement or
     arrangement made by or on behalf of Acquiree.

          (h)  PROPERTIES. Except as set forth on Schedule 3(h) hereto, Acquiree
     has good and marketable title, free and clear of any mortgage, pledge,
     lien, charge or other encumbrance, to all of its real or personal property
     which is being retained by Acquiree pursuant to the terms of the Agreement,
     except for (i) liens for current taxes not yet due; (ii) such imperfections
     of title, encumbrances and easements, if any, as are not individually or in
     the aggregate substantial or material in character, amount or extent and do
     not materially detract from the value, or interfere with the present or
     proposed use, of such properties; and (iii) dispositions of such property
     or assets in the ordinary course of business. The structure and other
     improvements to real estate, furniture, fixtures and equipment which is
     being retained by Acquiree pursuant to the terms of the Agreement, are in
     good operating condition and repair (ordinary wear and tear excepted) and
     comply in all material respects with all applicable laws, ordinances and
     regulations, including, without limitation, all building codes, zoning
     ordinances and other similar laws. Except as set forth on Schedule 3(h),
     Acquiree owns or has the right to use all real and personal property which
     is being retained by Acquiree pursuant to the

                                        9

<PAGE>

     terms of the Agreement. Except as set forth on Schedule 3(h), each lease
     pursuant to which Acquiree as lessee, leases real or personal property is
     valid and in effect in accordance with its respective terms, and there is
     not, under any of such leases, on the part of the lessee any material
     existing default or any event which with notice or lapse of time, or both,
     would constitute such a default, other than defaults which would not
     individually or in the aggregate have a material adverse effect on the
     financial condition, business, prospects, or operating results of Acquiree
     taken as a whole. Except as set forth on Schedule 3(h), each of such leases
     is assumable by Buyer or its assigns in accordance with the transactions
     contemplated by this Agreement and without payment of any penalty or
     special assessment.

          (i)  COMPLIANCE WITH APPLICABLE LAWS. Except as disclosed on Schedule
     3(i) hereto, Acquiree is in compliance in all material respects with all
     statutes, laws, ordinances, rules, regulations, judgments, orders, decrees,
     directives, consent agreements, memoranda of understanding, permits,
     concessions, grants, franchises, licenses, and other governmental
     authorizations or approvals applicable to Acquiree's depository or other
     liabilities, and all permits, concessions, grants, franchises, licenses,
     certificates of authority, and other governmental authorizations and
     approvals necessary for the conduct of the business of Acquiree as
     presently conducted have been duly obtained and are in full force and
     effect and there are no proceedings pending, or to the knowledge of
     Acquiree threatened, which may result in the revocation, cancellation,
     suspension or material adverse modification of any such permits,
     concessions, grants, franchises, licenses, and other governmental
     authorizations and approvals, and all filings, applications and
     registrations have been made with federal, state, local, and foreign
     governmental or regulatory bodies that are required in order to permit it
     to carry on its business as it is presently conducted.

          (j)  CONTRACTS AND COMMITMENTS. ETC. Each written or oral contract
     (other than loans to or contracts with customers reasonably incurred by
     Acquiree in the ordinary course of business) which involves aggregate
     payments or receipts in excess of $10,000 per year to which Acquiree is a
     party, or by which Acquiree is bound, including without limitation every
     employment benefit plan, agreement, lease, license and other commitment to
     which Acquiree is a party or by which Acquiree or its properties may be
     bound ("Material Contracts"), is identified in Schedule 3(j) hereto. Except
     as disclosed on Schedule 3(j), all such Material Contracts are valid and in
     full force and effect, and all parties thereto have in all material
     respects performed all obligations required to be performed by them to date
     and are not in

                                       10

<PAGE>

     default in any material respect and no event has occurred which, with the
     lapse of time or notice by a third party or both could result in a default
     by-Acquiree under such Material Contract, Charter or Bylaws of Acquiree.
     Schedule 3(j) identifies each such Material Contract that requires the
     consent or approval of third parties to the execution and delivery of this
     Agreement or to the consummation of the transactions contemplated herein.

          (k)  INSURANCE. Set forth on Schedule 3(k) is a listing of all
     insurance policies owned by Acquiree. Such policies are in effect and full
     force pursuant to their terms. No notices of cancellation have been
     received in connection therewith.

          (l) NO GUARANTEES. Except as disclosed in Schedule 3(l) hereto,
     Acquiree is not obligated as guarantor, co-signer or surety (or otherwise
     in a secondary liability capacity) for any obligation of any kind of any
     other person or entity.

          (m)  EXAMINATION REPORTS. Neither Seller nor Acquiree is subject to
     any cease and desist order, written agreement or memorandum of
     understanding with, or is a party to any commitment letter or similar
     undertaking to, or is subject to any order or directive by, or is a
     recipient of any extraordinary supervisory letter from, or has adopted any
     board resolutions at the request of, federal or state governmental
     authorities charged with the supervision or regulation of savings and loan
     associations or savings and loan holding companies or engaged in the
     insurance of savings and loan deposits (collectively "Thrift Regulators"
     and individually "Thrift Regulator"), nor has it been advised by any Thrift
     Regulator that it is contemplating issuing or requesting (or is considering
     the appropriateness of issuing or requesting) any such order, directive,
     written agreement, memorandum of understanding, extraordinary supervisory
     letter, commitment letter, board resolutions or similar undertaking.

          (n)  AGREEMENT, AUTHORITY, ABSENCE OF CONFLICTS. The execution,
     delivery and performance of this Agreement have been duly and validly
     authorized by the Boards of Directors of Seller and Acquiree, as the case
     may be, and do not and, subject to obtaining all required authorizations
     and approvals, will not violate (i) any of the provisions of, or constitute
     a default under or give any person or party the right to accelerate payment
     or performance under any Material Contract; (ii) the Charter or Bylaws of
     Seller or Acquiree; or (iii) any order, writ, injunction, decree, statute,
     rule or regulation applicable to Seller or Acquiree. This Agreement has
     been duly executed and delivered by Seller and Acquiree

                                       11

<PAGE>

     and constitutes, assuming the due authorization, execution and delivery
     thereof by Buyer, a valid and binding obligation of Seller and Acquiree,
     respectively, enforceable in accordance with its terms except as
     enforcement thereof may be limited by bankruptcy, insolvency or other
     similar laws effecting the enforcement of creditor's rights generally or by
     general principles of equity (whether applied in a proceeding in equity or
     at law).

          (o)  REPORTING. Acquiree has timely filed all reports required to be
     filed by it pursuant to rules and regulations of federal bank regulatory
     authorities and all such reports when filed were complete and correct in
     all material respects.

          (p)  FULL DISCLOSURE. None of the information with respect to Acquiree
     which has been furnished to Buyer or included in any application to, or
     filing with, any regulatory agency made in connection with the transactions
     contemplated hereby will, at the respective time it is furnished,
     distributed, mailed or filed, be false or misleading with respect to any
     material fact, or omit to state any material fact necessary in order to
     make the statements therein not misleading in light of the circumstances
     under which they were made.

          (q)  EMPLOYEE BENEFIT PLANS. All employee fringe or other benefits
     applicable to Acquiree's employees are listed and described on Schedule
     3(q).

          (r) LABOR MATTERS. Acquiree is not a party to, or bound by, any
     collective bargaining agreement, contract or other agreement or
     understanding with a labor union or labor organization, nor is Acquiree the
     subject of a proceeding asserting that Acquiree has committed an unfair
     labor practice or seeking to compel Acquiree to bargain with any labor
     organization as to wages and conditions of employment, nor is there any
     strike or other labor dispute involving Acquiree pending, or, to the best
     knowledge of Acquiree, threatened, that might materially or adversely
     affect the condition, financial or otherwise, assets, liabilities, business
     or operations of Acquiree. Except as set forth on Schedule 3(r) hereto,
     Acquiree is not subject to or a party in any complaint or action before any
     state human relations commission, Equal Employment Opportunity Commission
     or the Department of Labor.

          (s) ENVIRONMENTAL MATTERS. For purposes of this paragraph (s), the
     following terms shall have the indicated meaning:

                                       12




<PAGE>

               "Environmental Law" means any federal, state or local law,
          statute, ordinance, rule, regulation or code, license, permit,
          authorization, approval relating to (1) the protection, preservation
          or restoration of the environment (including, without limitation, air,
          water vapor, surface water, groundwater, drinking water supply,
          surface soil, subsurface soil, plant and animal life or any other
          natural resource), and (2) the use, storage, recycling, treatment,
          generation, transportation, processing, handling, labeling,
          production, release or disposal of Hazardous Substances. The term
          Environmental Law includes without limitation (1) the Comprehensive
          Environmental Response, Compensation and Liability Act, as amended, 42
          U.S.C. Section 9601, ET SEQ.; the Resource Conservation and Recovery
          Act, as amended, 42 U.S.C. 6901, ET SEQ.; the Clean Air Act, as
          amended, 42 U.S.C. Section 7401, ET SEQ.; the Federal Water Pollution
          Control Act, as amended, 33 U.S.C. Section 1251, ET SEQ.,; the Toxic
          Substances Control Act, as amended, 15 U.S.C. Section 9601, ET SEQ.;
          the Emergency Planning and Community Right to Know Act, 42 U.S.C.
          Section 11001, ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. Section
          300f, ET SEQ.; and all comparable state and local laws, and (2) any
          common law (including without limitation common law that may impose
          strict liability) that may impose liability or obligation for injuries
          or damages due to, or threatened as a result of, the presence of or
          exposure to any Hazardous Substance.

               "Hazardous Substance" means any substance presently listed,
          defined, designated or classified as hazardous, toxic, radioactive or
          dangerous or otherwise regulated under any Environmental Law, whether
          by type or by quantity, including any material containing any such
          substance as a component. Hazardous Substances include without
          limitation petroleum or any derivative or by-product thereof,
          asbestos, radioactive material, and polychlorinated biphenyls.

          Except as set forth on Schedule 3(s) (i) Acquiree has not received
     notice of any violation of, or claim, citation, assessment, proposed
     assessment or demand for abatement in connection with any Environmental
     Laws, or generated, stored, or disposed of any Hazardous Substance, and to
     the actual knowledge of Acquiree is not subject to any claim or lien under
     any Environmental Laws; and (ii) no real estate to be

                                       13

<PAGE>

     retained by Acquiree pursuant to the terms of the Agreement, whether owned,
     operated or leased by Acquiree, has been designated to Acquiree as
     requiring any environmental cleanup or response action to comply with
     Environmental Laws, or to the actual knowledge of Acquiree, has been the
     site of release of any Hazardous Substance.

          (t)  PROCEEDINGS. As of the date of this Agreement, there is no
     pending or, to the best knowledge of Acquiree, threatened, legal or
     governmental proceeding against Acquiree and Acquiree and Seller are
     unaware of any fact or circumstance which would adversely affect Seller's
     or Acquiree's, ability to obtain any required regulatory approvals
     applicable to them or satisfy any of the other conditions required to be
     satisfied by them in order to consummate the transactions contemplated by
     this Agreement.

          (u)  UNDISCLOSED LIABILITIES. Acquiree has incurred no liabilities or
     obligations (whether absolute, contingent or otherwise) of any nature not
     recorded or otherwise disclosed, except liabilities or obligations incurred
     in the ordinary course of business or which would not have a material
     adverse effect on the financial condition, business, prospects or operating
     results of Acquiree taken as a whole.

          (v)  FINANCIAL INSTITUTIONS BOND. Since January 1, 1994, Acquiree has
     continuously maintained in full force and effect a financial institutions
     bond with coverage equal to or greater than that provided for on a "Form
     24" insuring against acts of dishonesty by each of its employees. Except as
     disclosed on Schedule 3(v) hereto, no claim has been made under any such
     bond, and Seller and Acquiree are unaware of any fact or condition
     presently existing which might form the basis of a claim under any such
     bond. Seller and Acquiree have no reason to believe that Acquiree's present
     financial institutions bond will not be renewed by its carrier on
     substantially the same basis and terms as those now in effect.

          (w)  (NOT USED.)

          (x) ASSUMABILITY OF LEASES AND CONTRACTS.  Except as disclosed on
     Schedule 3(x) hereto, all Material Contracts are assumable and assignable
     and do not contain any term or provision that would accelerate or increase
     payments that would otherwise be due by Acquiree to such person or entity
     or change or modify the provisions or terms of such contract by reason of
     this Agreement or the transactions contemplated hereby.

          (y)  LOANS. Except as disclosed on Schedule 3(y) hereto, each loan to
     be retained by the Acquiree pursuant

                                       14

<PAGE>

     to the terms of the Agreement is, to Acquiree's knowledge, the legal, valid
     and binding obligation of the obligor named therein, enforceable in
     accordance with its terms, subject to bankruptcy, insolvency and other laws
     of general applicability relating to or affecting creditors' rights and to
     general equity principles. All such loans, and the collateral and other
     security therefor, and the documentation for the same, meets the
     requirements, rules, regulations or directives of the OTS, FDIC, or other
     applicable governmental authorities.

          (z)  (NOT USED.)

          (aa) TRADEMARKS, TRADE NAMES. Set forth in Schedule 3(aa) hereto is an
     accurate and complete list and brief description of all trademarks, either
     registered or common, trade names and copyrights and all applications and
     licenses therefor owned by Acquiree or in which it has an interest.
     Acquiree owns, or has the right to use, all trademarks, trade names and
     copyrights used in or necessary for the ordinary conduct of its existing
     business as heretofore conducted, and the consummation of the transactions
     contemplated hereby will not alter or impair any such rights. Except as set
     forth in Schedule 3(aa), no claims are pending for the use of any
     trademarks, trade names or copyrights or challenging or questioning the
     validity or effectiveness of any license or agreement relating to the same
     nor is there any valid basis for any such claim, challenge or question,
     and, to the best knowledge of Acquiree, the use of such trademarks, trade
     names and copyrights by Acquiree does not infringe on the rights of any
     person.

          (bb) ACCURACY OF REPRESENTATIONS. Until Closing, Acquiree will
     promptly notify Buyer if any of the representations contained in this
     Section 3 ceases to be true and correct subsequent to the date hereof.

          (cc) MATERIALITY. For purposes of this Section 3, unless otherwise
     defined, the term "material" or "materially" refers to amounts in excess of
     $200,000.

          (dd) ABSENCE OF QUESTIONABLE PAYMENTS. From and after July 1, 1991,
     Acquiree has not, nor, to the best knowledge of Seller and Acquiree, has
     any director, officer, agent, employee, consultant or other person
     associated with, or acting on behalf of, Acquiree (i) used any Acquiree
     corporate funds for unlawful contributions, gifts, entertainment or
     unlawful expenses relating to political activity; or (ii) made any direct
     or indirect unlawful payments to governmental officials from any Acquiree
     corporate funds, or established or maintained any unlawful or unrecorded
     accounts with funds received from Acquiree.

                                       15

<PAGE>

          (ee) POWERS OF ATTORNEY, GUARANTEES. Except as set forth on Schedule
     3(ee), Acquiree has no power of attorney outstanding, or any obligation or
     liability, either actual, accruing or contingent, as guarantor, surety,
     cosigner, endorser, comaker or indemnitor in respect of the obligation of
     any person, corporation, partnership, joint venture, association,
     organization or other entity, except for letters of credit issued in the
     ordinary course of business which are listed on Schedule 3(ee).

          (ff) MORTGAGE SERVICING AGREEMENTS. Acquiree has previously provided
     Buyer true and complete copies of all mortgage servicing agreements to
     which Acquiree is a party as of the date hereof (the "Mortgage Servicing
     Agreements") and shall, by separate instrument, executed within ten (10)
     days hereof enter into a servicing agreement pursuant to which Buyer will
     service loans for Seller. Except as set forth in Schedule 3(ff), the
     Mortgage Servicing Agreements set forth all applicable terms and conditions
     and have not been modified in any material respect. Each Mortgage Servicing
     Agreement is a valid and binding obligation of Acquiree and to Acquiree's
     knowledge of all of the other parties thereto and is in full force and
     effect, enforceable in accordance with its terms, except as enforcement
     thereof may be limited by bankruptcy, insolvency or other similar laws
     affecting the enforcement of creditors' rights generally and by general
     principles of equity (whether applied in a proceeding in equity or at law).
     Except as set forth in Schedule 3(ff), there is no default or claim of
     default by any party under any such Mortgage Servicing Agreement, and
     except for the consummation of the transactions contemplated by this
     Agreement, no event has occurred which with the passage of time or the
     giving of notice or both would constitute a default by any party under any
     such Mortgage Servicing Agreement or would result in any such Mortgage
     Servicing Agreement being terminable by any party thereto. As of the date
     of this Agreement, there is no pending or, to the best knowledge of
     Acquiree, threatened cancellation of any Mortgage Servicing Agreement.
     Except as set forth in Schedule 3(ff), no material sanctions or penalties
     have been imposed upon Acquiree under any Mortgage Servicing Agreement or
     under any applicable regulation relating thereto.


     4.   ACCESS TO AND INFORMATION CONCERNING PROPERTIES, RECORDS, ETC. Seller
and Acquiree shall, to the extent permitted by law, give to Buyer, its counsel,
accountants, financial advisors and other representatives full access, at
reasonable times and upon reasonable notice (so as not to interfere unreasonably
with the ordinary course and conduct of business of Acquiree) throughout the

                                       16

<PAGE>

period prior to the Closing, access to all of Acquiree's properties, books,
contracts, commitments and records, including, but not limited to, minute books,
Charter and Bylaws, and shall furnish to Buyer during such period all such
information concerning Acquiree and its affairs as Buyer may reasonably request.
In addition, Acquiree shall make its officers available at reasonable times and
upon reasonable notice to discuss with Buyer's designated representatives the
substance of all documents, financial statements and other information provided
by Acquiree, and other matters as Buyer shall reasonably deem pertinent to the
transactions contemplated by this Agreement. All information disclosed by any
party hereto or by any affiliate of a party hereto pursuant to this Section 4
shall be subject to Section 14 hereof (regarding confidential treatment of
confidential or non-public information).

          (a)  BANK PREMISES. Buyer shall be entitled to possession of the
     branch facilities acquired in connection with this Agreement upon and after
     the Effective Date. Seller shall coordinate with Buyer to have Acquiree's
     signs, logos and related equipment removed from such branch premises as
     soon as possible following the Effective Date at Seller's expense. Within
     one (1) business day following the Effective Date, Seller shall remove all
     of Acquiree's personal property not being transferred hereunder, including,
     but not limited to, stationery, forms, labels, shipping material, brochures
     and advertising material. Seller shall provide Buyer with reasonable access
     to such premises at Buyer's request prior to the Closing to facilitate
     Buyer's occupation of such premises and the smooth transition of the
     transfer.


     5.   AFFIRMATIVE COVENANTS OF BUYER. Buyer covenants and agrees that,
throughout the period commencing on the date hereof and ending on the date of
Closing, except for specific proposed actions or inaction as shall be consented
to in writing by Acquiree, Buyer will for its own part:

          (a)  CONDUCT OF BUSINESS. Conduct its business and that of its
     subsidiaries in a manner that will not adversely affect Buyer's ability to
     obtain all necessary regulatory approvals for the transactions contemplated
     hereby or Buyer's ability to perform its obligations under this Agreement
     and conduct its and its subsidiaries businesses in the ordinary course;
     provided that Buyer may undertake activities which are not in the ordinary
     course on the condition that such activities will not result in a material
     adverse change in the financial condition of Buyer and its subsidiaries
     taken as a whole or impair Buyer's ability to consummate the transaction
     contemplated by this Agreement;

                                       17

<PAGE>

          (b)  PRESERVATION OF BUSINESS. Use its best efforts to maintain and
     preserve its and its subsidiaries businesses;

          (c)  INSURANCE. Maintain in full force and effect insurance customary
     with industry practices for the businesses conducted by Buyer and its
     subsidiaries;

          (d) LAWS, RULES, ETC. Comply with and perform in all material respects
     all obligations and duties imposed upon it by all federal and state laws
     and all rules, regulations and orders imposed by federal or state
     governmental authorities, except in respects not materially adverse to the
     financial condition of Buyer and its subsidiaries or which would not
     materially impair the ability of Buyer to consummate the transactions
     contemplated hereby;

          (e)  BEST EFFORTS. Use its best efforts to assure, to the extent
     reasonably within its control, as soon as it is reasonably practicable, the
     satisfaction of the conditions to the effectiveness of the transactions
     contemplated hereunder and the transactions contemplated by this Agreement
     including without limiting the generality of the foregoing, the Buyer shall
     take all steps necessary to prepare, promptly file and prosecute all
     required applications for regulatory approval of the transactions
     contemplated by this Agreement;

          (f)  NOTICES. Notify Acquiree of (i) any fact or circumstance of which
     the executive officers of Buyer or its subsidiaries have knowledge which
     would, absent disclosure by Buyer to Acquiree and Acquiree's subsequent
     consent to such fact or circumstance, not permit Buyer to satisfy the
     conditions set forth in Section 9(a)(i) of this Agreement, (ii) any breach
     of any of its covenants and agreements contained herein, and (iii) any
     material adverse change in its financial condition on a consolidated basis;
     and

          (g)  RANDALLSTOWN PROPERTY. Promptly obtain, at its own expense, a
     building inspection report ("Inspection Report") and a Phase I
     environmental study ("Phase I Study") for the Randallstown, Maryland branch
     property. The Inspection Report and Phase I Study shall be conducted by
     parties selected by Buyer and approved by Seller, which approval shall not
     be unreasonably withheld. The results of the Inspection Report and the
     Phase I Study shall be submitted to both Buyer and Seller and shall be
     satisfactory to Buyer, in its sole discretion. Provided, however, that in
     the event Buyer shall deem either the Inspection Report or the Phase I
     Study, or both, to contain evidence of defects in the property that are
     unacceptable to Buyer, the Buyer shall,

                                       18

<PAGE>

     within five (5) business days of receiving the respective written copies
     thereof, notify Seller in writing describing any objectionable defects. In
     such event, Seller shall be entitled to cure such defects provided that
     such cure is effected or, with the Agreement of Buyer, initiated within
     twenty (20) business days of receiving notice from Buyer. Such cure shall
     be acceptable to Buyer in Buyer's sole discretion. In the event such cure
     is unsatisfactory to Buyer or in the event Seller does not attempt to cure
     any such defect, Buyer shall not be obligated to purchase the Randallstown,
     Maryland branch property as part of this Agreement, or otherwise, but shall
     proceed with the Stock Purchase and the remaining transactions contemplated
     by this Agreement. In such event, the parties shall proceed in good faith
     to enter into a lease agreement the provisions of which, exclusive of
     price, shall, in all material respects, be substantially the same as the
     lease agreement involving the Eldersburg, Maryland branch also entered into
     as part of this Agreement.


     6.   AFFIRMATIVE COVENANTS OF ACQUIREE. Seller and Acquiree covenant and
agree that, throughout the period commencing on the date hereof and ending on
the date of Closing, except for specific proposed actions or inaction as shall
otherwise be consented to in writing by Buyer, Acquiree will for its own part,
and Seller will cause the Acquiree to:

          (a)  CONDUCT OF BUSINESS. Conduct Acquiree's business, including
     extensions of credit, only in the ordinary course consistent with past
     practices and written policies except as may be contemplated by Section
     1(a) or any other provision hereof;

          (b)  PRESERVATION OF BUSINESS. Except as may be contemplated by
     Section 1(a) hereof use their best efforts to maintain and preserve
     Acquiree's business, including, but not limited to, maintaining goodwill
     and relationships with customers and others having business dealings with
     Acquiree, preserving and collecting all material claims and causes of
     action belonging to Acquiree, and maintaining its books of account and
     other records;

          (c)  PROPERTIES. Except as may be contemplated by Section 1(a) hereof
     maintain and keep Acquiree's properties, both real property and tangible
     personal property, in as good repair and condition in all material respects
     as they presently exist, except for depreciation due to ordinary wear and
     tear and damage due to unavoidable casualty;

                                       19

<PAGE>

          (d)  INSURANCE. Maintain in full force and effect all insurance
     policies presently in effect;

          (e) CONTRACTS, ETC. Except as may be contemplated by Section 1(a)
     hereof perform all material obligations under agreements, contracts,
     leases, documents and instruments relating to or affecting Acquiree's
     assets, properties and business;

          (f) FINANCIAL STATEMENTS. Furnish to Buyer:

               (i)       As soon as practicable and in any event within
          forty-five (45) days after the end of each of the fiscal quarters
          beginning July 1, 1995 and ending prior to Closing, unaudited
          statements of operations of Acquiree for the period beginning at the
          commencement of the fiscal year and ending at the end of such
          quarterly period, and an unaudited balance sheet of Acquiree as of the
          end of such quarterly period;

               (ii)      As soon as practicable, copies of all such financial
          statements and reports as it shall send to or file with the OTS or any
          other banking regulatory authority;

               (iii)       Promptly upon any executive officer of Acquiree
          obtaining knowledge of any condition or event which would constitute a
          material violation of the terms and conditions of this Agreement or
          which would constitute a material default under any material
          indenture, mortgage, agreement or other instrument securing or
          relating to any indebtedness of Acquiree for borrowed money, a
          certificate of the Chairman of Acquiree, specifying the nature of such
          material violation or default and what action Acquiree has taken or is
          taking or proposes to take with respect thereto;

               (iv)      Promptly upon becoming aware that any person has given
          notice to Acquiree or taken any other action with respect to a claimed
          violation or default of the type referred to in subsection (iii) of
          this Subsection (f), a written notice describing the notice given or
          action taken by such person, the nature of such violation or default
          and what action Acquiree has taken or is taking or proposes to take
          with respect thereto; and

                                       20

<PAGE>

               (v)       With reasonable promptness, such additional financial
          data as Buyer may reasonably request;

          (g)  LAWS, RULES, ETC. Comply with and perform in all material
     respects all material obligations and duties imposed upon it by all
     federal, state, county, local and municipal laws and all rules,
     regulations, directives, decrees, orders, and ordinances imposed by
     federal, state, county, local or municipal governmental authorities,
     including, but not by way of limitation of the above, compliance with
     examination reports, regulations and rulings of the OTS;

          (h)  CORPORATE EXISTENCE. Maintain its existence as a savings bank
     validly subsisting under the laws of the United States of America;

          (i)  NOTICES. Notify Buyer of (i) any fact or circumstance of which
     the executive officers of Acquiree have knowledge which would, absent
     disclosure by Acquiree to Buyer and Buyer's subsequent consent to such fact
     or circumstance, not permit Acquiree to satisfy the conditions set forth in
     Section 10(a)(i) of this Agreement and (ii) any material breach of any of
     its covenants and agreements contained herein;

          (j)  BEST EFFORTS. Use its best efforts to assure, to the extent
     reasonably within its control, as soon as it is reasonably practicable, the
     satisfaction of the conditions to the effectiveness of the transactions
     contemplated by this Agreement. Acquiree shall cooperate with Buyer and
     shall use its best efforts to do or cause to be done all things reasonably
     necessary or appropriate on its part in order to fulfill the conditions
     precedent relating to it set forth in this Agreement and to consummate this
     Agreement. In particular, without limiting the generality of the foregoing,
     Acquiree shall:


               (i)       cooperate with Buyer in the preparation of all required
          applications for regulatory approval of the transactions contemplated
          by this Agreement;

               (ii)      take all actions which are necessary or appropriate on
          its part in order to secure the approval and adoption of this
          Agreement by its sole shareholder;

               (iii) cooperate with Buyer in making the employees of Acquiree
          reasonably available for training by Buyer prior to the Effective

                                       21

<PAGE>

          Date, to the extent such training is deemed reasonably necessary by
          Buyer; and

          (k)  COOPERATE IN TRANSFERRING DEPOSIT ACCOUNTS TO BUYER. Acquiree
     shall cooperate in marketing and promotional efforts directed at Acquiree's
     depositors and customers for the purpose of inducing them to transfer their
     existing depository accounts to, and open new accounts with Buyer.
     Provided, however, that no promotional efforts shall be undertaken prior to
     the receipt of all regulatory approvals, excluding any statutory waiting
     periods, contemplated by this Agreement. Any promotional efforts undertaken
     prior to the Effective Date shall be within Buyer's discretion, subject to
     Seller's rights as contemplated by this Section 6(k). If Buyer engages in
     promotional efforts prior to the Effective Date then, notwithstanding the
     method of calculating the Final Purchase Price, as contemplated by Section
     1(d), Buyer shall be responsible for the payment of a premium on the
     deposits it assumes pursuant to this Agreement, in an amount that is no
     less than the amount that would result from calculating such premium based
     on the amount of deposits existing as of the close of business on the day
     such promotional efforts are first undertaken, it being understood that
     such day will be deemed to be the first day on which any promotional
     materials are mailed or any direct advertising or solicitation is first
     undertaken, whichever occurs first. In the event this Agreement is
     terminated after Buyer engages in promotional efforts then Buyer shall be
     responsible for the payment of a premium measured by the amount of
     decrease, if any, in Acquiree's deposits between the day on which the
     promotional efforts begin and the close of business on the date of
     termination. Acquiree shall have the right to review and approve any
     promotional material directed toward depositors as well as any letter
     simply advising them of the transactions contemplated by this Agreement.


     7.   NEGATIVE COVENANTS OF SELLER AND ACQUIREE. Seller and Acquiree
covenant and agree that, throughout the period commencing on the date hereof and
ending on the date of Closing, except for proposed specific actions as shall
otherwise be consented to in writing by Buyer, they will not (subject to the
fiduciary obligations of Seller's and Acquiree's Boards of Directors with
respect to Sections 7(b), (d) and (i)):

          (a)  Amend Acquiree's charter or bylaws;

          (b)  Issue, sell or otherwise dispose of (or authorize or agree to
     issue, sell or dispose of) any share of capital stock of Acquiree or any
     securities or documents convertible into or representing a right or option
     to purchase any such shares, or enter into any other agreements to issue or
     sell any shares of capital stock or change the presently outstanding shares
     of

                                       22

<PAGE>

     capital stock into a greater or lesser number of shares either by way of a
     recapitalization, reorganization, consolidation of shares or the like, or
     by a stock split, stock dividend, or by way of a merger or consolidation;

          (c) Purchase, redeem, retire or otherwise acquire, or hypothecate,
     pledge or otherwise encumber, any shares of capital stock of Acquiree;

          (d) Merge Acquiree into, consolidate Acquiree with, or permit Acquiree
     to be purchased or acquired by, any other corporation, entity or person (or
     agree to any such merger, consolidation, affiliation, purchase or
     acquisition), or permit (or agree to permit) any other corporation, entity
     or person to be merged, consolidated or affiliated with Acquiree or be
     purchased or acquired by it, or, except to realize upon collateral and
     except for purchases or sales of loans in the ordinary course of its
     business, permit Acquiree to acquire (or agree to acquire) all or
     substantially all of the assets of any other corporation, entity or person
     or except as contemplated by Section 1(a) hereof, sell or dispose (or agree
     to sell or dispose) all or any substantial part of Acquiree's assets in
     each case;

          (e) Make, declare or pay any dividend on the Acquiree Stock or declare
     or make any distribution on any shares of Acquiree's capital stock except
     as contemplated by the terms of the Agreement;

          (f) Enter into any employment contract, deferred compensation
     arrangement, or other agreement affecting compensation or benefits, or pay
     any bonus to, or increase the rate of compensation of any director,
     officer, employee or consultant of Acquiree other than in the ordinary
     course;

          (g) Except for the payments of reasonable severance to employees who
     do not remain with the Acquiree or Seller as of the Closing or within 30
     days thereafter enter into or modify (except as may be required by
     applicable law or to effect the transactions contemplated by this
     Agreement) any pension, retirement, stock option, stock purchase,
     severance, profit sharing, deferred compensation, consulting, bonus, group
     insurance or other employee benefit, incentive or welfare contract, plan or
     arrangement, or any trust agreement related thereto, in respect of any
     current or former directors, officers or other employees of Acquiree;

          (h) Except for indebtedness and contingent liabilities incurred in the
     ordinary course of business (e.g., deposit liabilities, Federal Home Loan
     Bank advances, or advances from Seller or Seller's affiliates)

                                       23

<PAGE>

     incur any indebtedness or liability for borrowed money evidenced by notes,
     bonds, debentures or other similar obligations;

          (i)  Solicit or encourage inquiries or proposals with respect to, or
     furnish any information relating to, or participate in any negotiations or
     discussions concerning, any acquisition or purchase of all or a material
     portion of Acquiree's assets (except as contemplated in Section l(a)
     hereof) or of a substantial equity interest in Acquiree or any business
     combination with Acquiree and except with respect to transactions
     contemplated by Section 1(a) hereof Acquiree shall notify Buyer immediately
     if any such inquiries or proposals are received by, any such information is
     requested from, or any such negotiations or discussions are sought to be
     initiated with, Acquiree; and Seller and Acquiree shall not permit any
     officer, director, agent, advisor, or affiliate to do any of the above and
     shall instruct their respective officers, directors, agents, advisors and
     affiliates to comply with the above;

          (j) Except in the ordinary course of business, enter into or assume
     any material contract, incur any material liability or obligation, make any
     material commitment, acquire or dispose of any property or asset (except as
     contemplated in Section 1(a) hereof) or engage in a transaction or subject
     any of Acquiree's properties or assets to any material lien, claim, charge,
     or encumbrance of any kind whatsoever;

          (k) Take or permit to be taken any action which would constitute a
     breach of any representation, warranty or covenant set forth in this
     Agreement;

          (l) Enter into any related party transaction involving Acquiree except
     such related party transactions relating to extensions of credit made in
     accordance with applicable laws, regulations and rules and in the ordinary
     course of business on substantially the same terms, including interest
     rates and collateral, as those prevailing at the time for comparable arm's
     length transactions with other persons that do not involve more than the
     normal risk of collectability or present other unfavorable features;

          (m) Waive, release, grant or transfer any rights of value or modify or
     change in any material respect any existing agreement to which Acquiree is
     a party, other than the ordinary course of business, consistent with past
     practice or as otherwise contemplated by the terms of this Agreement;

                                       24


<PAGE>

          (n)  Except as is consistent with past practice, enter into, renew,
     extend or modify any other transaction involving Acquiree and any
     affiliate;

          (o)  Knowingly take any action that would, under any statute,
     regulation or administrative practice of the Federal Reserve, the FDIC, the
     state banking regulators, or the OTS, materially or adversely affect the
     ability to obtain any required approvals for consummation of the
     transactions contemplated by this Agreement; or

          (p)  materially alter or vary Acquiree's methods or policies of buying
     or selling rights to service mortgage loans.


     8.   CONDlTIONS TO THE OBLIGATIONS OF BUYER, SELLER AND ACQUIREE. The
Closing shall be expressly conditioned upon the following:

          (a)  APPROVAL OF REGULATORY AGENCIES. All required consents and
     approvals of all regulatory agencies and other authorities having
     jurisdiction over the transactions contemplated by this Agreement,
     including without limitation the FDIC, OTS and state banking regulators,
     shall have been granted and obtained, all applicable notice and waiting
     periods shall have expired or passed, it being expressly understood that no
     term or provision of any regulatory approval or consent shall have imposed
     any materially burdensome condition or requirement which is nonstandard for
     a transaction such as the transaction contemplated by this Agreement and,
     in the opinion of Buyer, renders consummation of this Agreement, or the
     transactions contemplated therein or thereby, inadvisable. Provided,
     however, that no issue concerning federal deposit insurance shall be deemed
     nonstandard for these purposes;

          (b)  SUITS, ACTIONS.  No party hereto shall be subject to any action,
     suit, proceeding, order, decree or injunction of a court or agency of
     competent jurisdiction which is intended to enjoin or prohibit the
     consummation of the transaction contemplated by this Agreement; and

          (c)  STATUTES, ORDERS.  No statute, rule, regulation, order,
     injunction or decree shall have been enacted, entered, promulgated or
     enforced by any governmental authority which prohibits, restricts or
     makes illegal the consummation of the transactions contemplated by this
     Agreement.


     9.   CONDITIONS TO THE OBLIGATIONS OF BUYER. Consummation by Buyer of the
transactions contemplated hereby is subject to the following conditions
precedent, any of which, however, may be

                                       25

<PAGE>

waived, to the extent permitted by applicable law or regulation, by the consent
in writing of Buyer.

          (a)  REPRESENTATIONS, WARRANTIES AND COVENANTS.

               (i)       The representations and warranties of Seller and
          Acquiree contained herein (A) shall have been true and correct in all
          material respects on the date hereof, and (B) other than as disclosed
          by Acquiree to, and approved by, Buyer in writing prior to or at the
          Closing, shall be true and correct in all material respects as of the
          Closing, except as otherwise provided or permitted by this Agreement
          and except as to any representation or warranty which specifically
          relates to an earlier date.

               (ii)      Acquiree shall have duly performed or complied in all
          material respects with all covenants, not otherwise waived by Buyer in
          writing, required by this Agreement to be performed by Acquiree prior
          to or at the Closing.

               (iii) Buyer shall have received certificates of Seller and
          Acquiree dated as of the Closing, signed by the Chairman and Chief
          Financial Officer of each of Acquiree and Seller, certifying in such
          detail as Buyer may reasonably request the fulfillment of the
          conditions set forth in Sections 9(a)(i) and (ii) above.

          (b)  OPINION OF SPECIAL COUNSEL. All proceedings and legal details
     incident to this Agreement shall be satisfactory to Buyer based on advice
     of special counsel for Buyer and Buyer shall have received an opinion
     reasonably satisfactory to it from Acquiree's counsel dated as of the date
     of the Closing and addressed to Buyer, to the effect that:

               (i)       Acquiree is a savings bank organized and validly
          subsisting under federal law and has the corporate power and authority
          to execute, deliver and perform all transactions contemplated by the
          Agreement and has the corporate power and authority to own and hold
          its properties as of the Closing.

               (ii)      The authorized capital stock of Acquiree consists of
          1,000 shares of common stock, par value $10.00 per share ("Acquiree
          Stock") of which 1,000 shares are issued and

                                       26

<PAGE>

          outstanding on the Effective Date and no shares are held as treasury
          shares. Each of the outstanding shares of Acquiree Stock has been
          validly issued and is fully paid and nonassessable. None of such
          outstanding shares of Acquiree Stock have been issued in violation of
          any preemptive rights. To such counsel's actual knowledge, after
          reasonable investigation, no unissued shares of Acquiree Stock or any
          other securities of Acquiree are subject to any warrants, options,
          commitments, preemptive or other rights of any kind or nature, and
          Acquiree is not obligated to issue any additional shares of capital
          stock or any other securities of any kind or nature.

               (iii)     Seller has the corporate power and authority to 
          execute, deliver and perform all transactions relating to it 
          contemplated by this Agreement.

               (iv)      The execution and delivery of the Agreement and
          performance of all transactions contemplated by the Agreement have
          been duly authorized by the Boards of Directors of Seller and of
          Acquiree and do not violate any of the provisions of, or constitute a
          default under or give any person or party the right to accelerate
          payment or performance under, the articles of incorporation or bylaws
          of Seller or Acquiree or to such counsel's actual knowledge, after
          reasonable investigation, any material agreement, document or
          instrument to which Acquiree is a party or by which it or any of its
          properties or assets is bound.

               (v)       The Agreement has been duly authorized, executed and
          delivered by Seller and Acquiree and constitutes valid and binding
          obligations of Seller and Acquiree enforceable against Seller and
          Acquiree in accordance with its terms, except as may be limited by (i)
          bankruptcy, insolvency, reorganization, moratorium, conservatorship,
          receivership or other similar laws now or hereafter in effect relating
          to or affecting the enforcement of creditors' rights generally or the
          rights of creditors of federal savings institutions or their holding
          companies, (ii) general equitable principles, and (iii) laws relating
          to the safety and soundness of insured depository institutions, except
          that no opinion need be expressed as to the effect or

                                       27

<PAGE>

          availability of equitable remedies or injunctive relief (regardless of
          whether such enforceability is considered in a proceeding in equity or
          at law).

               (vi)      To the actual knowledge of such counsel, after
          reasonable investigation, the execution, delivery and performance of
          the Agreement and the transactions contemplated thereunder by Seller
          and Acquiree do not violate any provision of federal banking law,
          regulation or rule applicable to Seller or Acquiree.

               (vii)      All consents and approvals of (and filings with) all
          federal regulatory agencies or other authorities having jurisdiction
          over the transactions contemplated by this Agreement required by law
          to have been obtained or made by Seller and Acquiree have been
          obtained or made; [such opinion to express those agencies or
          authorities whose approvals have been obtained.]

               (viii)     To the actual knowledge of such counsel, after
          reasonable investigation, there is no action, suit or proceeding
          pending or threatened against Acquiree before any federal, state or
          local court or governmental authority or before any arbitration
          tribunal which seeks to modify, enjoin or prohibit or otherwise
          adversely and materially affect the transactions contemplated by the
          Agreement.

          The opinion of Acquiree's special counsel shall be governed by the
     Legal Opinion Accord ("Accord") of the American Bar Association Section of
     Business Law (1991). The term "actual knowledge" as used herein shall have
     the meaning set forth in the Accord. In addition, such opinion may be
     limited to present statutes, regulations, rulings, and formal agency and
     judicial interpretations and to facts as they presently exist; in rendering
     such opinion, such counsel need assume no obligation to revise or
     supplement it should the present laws be changed by legislative or
     regulatory action, judicial decision or otherwise after such opinion is
     rendered. Such counsel may assume that any agreement is the valid and
     binding obligation of any parties to such agreement other than Seller or
     Acquiree. In giving such opinion, such counsel may rely as to all matters
     of fact on certificates of officers or directors of Seller or Acquiree and
     certificates of public officials, so long as such reliance and the facts
     thereunder are expressly stated.

                                       28

<PAGE>

     Such counsel's opinion shall be limited to matters governed by federal law.
     With respect to matters involving the application of the law of other
     jurisdictions, such counsel may rely, to the extent it deems proper and as
     specified in its opinion, upon the opinion of local counsel.

          (c)  SUIT, ACTION, ETC. No suit, action or other proceeding shall be
     pending or directly threatened by any federal, state or other governmental
     agency, commission or authority having jurisdiction or authority over
     Seller, Acquiree, or Buyer, or by any other person, in which it is sought
     to restrain or prohibit consummation of the transactions contemplated by
     this Agreement and which in the reasonable and good faith judgment of the
     management of Buyer, in consultation with counsel, is meritorious and
     adversely affects the prospects of such consummation.

          (d)  CLOSING DOCUMENTS. Seller and Acquiree shall have delivered to
     Buyer (i) all consents and authorizations of landlords and other persons
     that are necessary to permit this Agreement to be consummated without
     violation of any lease or other agreement to which Acquiree is a party or
     by which Acquiree or any of its properties are bound; and (ii) such other
     certificates and documents as Buyer and their counsel may reasonably
     request (all of the foregoing certificates and other documents being herein
     referred to as "Acquiree Closing Documents").


     10.  CONDITIONS TO THE OBLIGATIONS OF SELLER AND ACQUIREE. Consummation by
Seller and Acquiree of the transactions contemplated hereby is subject to the
following conditions precedent, any of which, however, may be waived, to the
extent permitted by applicable law or regulation, by the consent in writing of
Seller and Acquiree.

          (a) REPRESENTATIONS AND WARRANTIES.

               (i)       The representations and warranties of Buyer contained
          herein (A) shall have been true and correct in all material respects
          on the date hereof, and (B) other than as disclosed by Buyer to, and
          approved by, Seller and Acquiree in writing prior to or at the
          Closing, shall be true and correct in all material respects as of the
          Closing, except as otherwise permitted by this Agreement and except as
          to any representation or warranty which specifically relates to an
          earlier date.

                                       29

<PAGE>

               (ii)      Buyer shall have duly performed or complied in all
          material respects with all covenants, not otherwise waived by Seller
          and Acquiree in writing, required by this Agreement to be performed by
          Buyer prior to or at the Closing.

               (iii)     Seller and Acquiree shall have received a certificate
          of Buyer dated as of the Closing, signed by the President and the
          Chief Financial Officer of Buyer, certifying in such detail as
          Acquiree may reasonably request the fulfillment of the conditions set
          forth in Sections 10(a)(i) and (ii) above.

          (b) OPINION OF COUNSEL. All proceedings and legal details incident to
     this Agreement shall be satisfactory to Seller and Acquiree on advice of
     special counsel and Seller and Acquiree shall have received an opinion
     reasonably satisfactory to it from Buyer's counsel dated as of the date of
     the Closing and addressed to Seller and Acquiree to the effect that:

               (i)       Buyer is a corporation and is organized, validly
          existing and in good standing under the laws of the State of Maryland
          and has the corporate power and authority to execute, deliver and
          perform all transactions contemplated by this Agreement.

               (ii)      The execution, delivery and performance of all
          transactions contemplated by the Agreement have been duly authorized
          by the Board of Directors of Buyer and do not and will not violate any
          of the provisions of, or constitute a default under, or give any
          person or party the right to accelerate payment or performance under
          the Articles of Incorporation or Bylaws of Buyer or to such counsel's
          knowledge, after reasonable investigation, any material agreement,
          document or instrument to which Buyer is a party or by which it or any
          of its properties or assets is bound.

               (iii)     The Agreement has been duly authorized, executed and
          delivered by Buyer and constitutes a valid and binding obligation of
          Buyer enforceable against Buyer in accordance with its terms, except
          as may be limited by (i) bankruptcy, insolvency, reorganization,
          moratorium, conservatorship, receivership or other similar laws now or
          hereafter in effect relating to or affecting

                                       30

<PAGE>

          the enforcement of creditors' rights generally; (ii) general equitable
          principles; and (iii) laws relating to the safety and soundness of
          insured depository institutions, except that no opinion need be
          expressed as to the effect or availability of equitable remedies or
          injunctive relief (regardless of whether such enforceability is
          considered in a proceeding in equity or at law).

               (iv)      To the actual knowledge of such counsel, after
          reasonable investigation, the execution, delivery and performance as
          of the date of the opinion of the Agreement and the transactions
          contemplated thereunder by Buyer does not violate any provision of
          law, regulation, rule, order or decree applicable to Buyer.

               (v)       All consents and approvals of (and filings with) all
          federal or state regulatory agencies or other authorities having
          jurisdiction over the transactions contemplated by the Agreement
          required by law for Buyer to have been obtained or made have been
          obtained or made; such opinion to express those agencies or
          authorities whose approvals have been obtained or accomplished.

               (vi)      To the actual knowledge of such counsel, after
          reasonable investigation, there is no action, suit or proceeding
          pending or threatened against Buyer before any federal, state or local
          court or government authority or before any arbitration tribunal which
          seeks to modify, enjoin or prohibit or otherwise adversely and
          materially affect the transactions contemplated by the Agreement.

          The opinion of Buyer's special counsel shall be governed by the Legal
     Opinion Accord ("Accord") of the American Bar Association Section of
     Business Law (1991). The term "actual knowledge" as used herein shall have
     the meaning set forth in the Accord. In addition, such opinions may be
     limited to present statutes, regulation, rulings, and formal agency and
     judicial interpretations and to facts as they presently exist; in rendering
     such opinion, such counsel need assume no obligation to revise or
     supplement it should the present laws be changed by legislation or
     regulatory action, judicial decision or otherwise, after such opinion has
     been rendered. Such counsel may assume that any agreement is the valid and
     binding obligation of any parties to such agreement, other than Buyer. In
     giving such opinion, such counsel

                                       31

<PAGE>

     officers or directors of Buyer and certificates of public officials, so
     long as such reliance and the facts thereunder are expressly stated. Such
     counsel's opinion shall be limited to matters governed by federal laws and
     by the laws of the State of Maryland.

          (c)  SUIT, ACTION, ETC. No suit, action or other proceeding shall be
     pending, or directly threatened by any federal, state or other governmental
     agency, commission or authority having jurisdiction or authority over
     Seller, Acquiree, or Buyer or by any other person, in which it is sought to
     restrain or prohibit consummation of the transactions contemplated by this
     Agreement.

          (d)  DEPOSIT INTO PAYMENT FUND. On or prior to the Effective Date,
     Buyer shall have deposited cash into a payment fund in an amount sufficient
     to enable Buyer to satisfy its obligations to pay the aggregate
     consideration under this Agreement.

          (e)  CLOSING DOCUMENTS. Buyer shall have delivered to Seller and
     Acquiree (i) all consents and authorizations necessary to permit this
     Agreement to be consummated; and (ii) such other certificates and documents
     as Seller and Acquiree and their counsel may reasonably request (all of the
     foregoing certificates and other documents being herein referred to as
     "Buyer Closing Documents").


      11.  CERTAIN TAX MATTERS. Seller, Acquiree and Buyer hereby covenant and
agree with respect to certain tax matters as follows:

          (a)  INTERNAL REVENUE CODE SECTION 338 (h)(10) ELECTION. With respect
     to the Stock Purchase hereunder, Buyer shall make a timely election Section
     338 (g) of the Code and Seller and Buyer shall jointly make an election
     under Section 338 (h)(10) of the Code (and any corresponding elections
     under state or local tax laws) (collectively, a "Section 338 (h)(10)
     Election"). Seller and Buyer shall (i) cooperate with each other to take
     all actions necessary and appropriate (including filing such forms,
     returns, elections, schedules and other documents as may be required) to
     effect and preserve a timely Section 338 (h)(10) Election in accordance
     with Section 338 of the Code and the temporary regulations thereunder, or
     any successor provisions, as promptly as practicable following the Closing
     Date, but not later than the latest date on which such Section 338 (h)(10)
     Election is permitted to be made, and from time to time thereafter, and
     (ii) Seller and Buyer shall report the Stock Purchase pursuant to this
     Agreement consistent with Section 338

                                       32

<PAGE>

     (h)(10) Election and shall take no position contrary thereto or
     inconsistent therewith in any tax return, any discussion with or proceeding
     before any a taxing authority, or otherwise.

          (b)  ALLOCATION OF PURCHASE PRICE. Schedule 11(a) sets forth the
     tentative allocation (the "Tentative Allocation Schedule") of the purchase
     price among the assets acquired and liabilities assumed. Buyer, Seller and
     Acquiree acknowledge that the allocation contained in the Tentative
     Allocation Schedule is based upon the purchase price calculated in
     accordance with paragraph l(b). Buyer, Seller and Acquiree further
     acknowledge that the Final Purchase Price determined in accordance with
     Paragraph l(d) shall serve as the basis for a final revised allocation (the
     "Final Allocation Schedule") of the Final Purchase Price among the assets
     acquired and liabilities assumed by Buyer in connection with this
     Agreement. All allocations utilized in connection with the determination of
     the Final Allocation Schedule shall be prepared in accordance with Section
     338(h)(10) of the Code and the applicable regulations promulgated
     thereunder. Seller shall have the right to review the Final Allocation
     Schedule and Seller and Buyer shall consult and resolve in good faith any
     issues arising as a result of Seller's review of such schedule. If the
     parties are unable to resolve any dispute within five business days of the
     receipt by Seller of the Final Allocation Schedule, the parties shall
     jointly request an independent accounting firm, selected in the same manner
     as described in paragraph l(d), to resolve any dispute as promptly as
     possible, with one half of the cost of such resolution to be borne by each
     of Seller and Buyer. If such independent accounting firm is unable to make
     a determination with respect to any dispute prior to the due date for the
     filing of any required tax return for which such determination is
     necessary, Buyer and Seller shall file such return without such
     determination having been made, subject, however, to the parties'
     obligation thereafter to file amended returns reflecting the final decision
     by the independent accounting firm. Seller and Buyer (i) shall be bound by
     the allocation contained in the Final Allocation Schedule for purposes of
     determining any and all consequences with respect to income taxes
     associated with the transactions contemplated herein; (ii) shall prepare
     and file all returns required to be filed with any taxing authority in a
     manner consistent with such allocations; (iii) shall take no position
     inconsistent with such allocation in any return, in any discussion with or
     preceding before any taxing authority, or otherwise. In the event such
     allocation is disputed by any taxing authority and in the event that the
     applicable statute of limitations has not expired with respect to either
     party, the party receiving notice of such dispute shall promptly notify and
     consult with the other party hereto concerning resolution of such dispute,
     and no such dispute shall be finally settled or compromised

                                       33

<PAGE>

     without the mutual consent of Seller and Buyer, which consent shall not be
     unreasonably withheld.

          (c)  RETURNS, INDEMNIFICATION AND LIABILITY FOR TAXES. Seller and
     Acquiree shall prepare and file or caused to be prepared and filed on a
     timely basis, without extension, all returns with respect to Acquiree for
     all taxable periods ending on or before the Effective Date and, subject to
     the terms and conditions of this Agreement, shall pay and shall indemnify
     and hold Buyer and each affiliate of Buyer, harmless against and from, on
     an after-tax basis, (i) all the taxes of Acquiree for all taxable years or
     periods which end on or before the Effective Date which are not paid prior
     to the Effective Date and for which adequate reserve was not made; (ii) all
     taxes of all members of any Affiliated Group which Acquiree is or has been
     a member prior to the Effective Date; (iii) all taxes of Acquiree due or
     accrued or subsequently determined to be due through the Effective Date in
     respect of any taxable year or period commencing before the Effective Date
     and ending after the Effective Date to the extent that such taxes relate to
     the period prior to the Effective Date; (iv) all taxes on income or gain
     for the period up to and including the Effective Date imposed on Buyer by
     any state or local taxing authority; and (v) Buyer shall prepare and file
     or cause to be prepared and filed on a timely basis, without extension, all
     returns and shall pay and shall indemnify and hold Seller and Acquiree
     harmless against and from, on an after-tax basis, (i) all taxes of Buyer
     and Acquiree for any taxable year or period commencing after the Effective
     Date; and (ii) all taxes of Buyer and Acquiree which accrue after the
     Effective Date and which relate to periods after such date.


     12.  TERMINATION OF AGREEMENT. This Agreement may be terminated at any time
prior to the Effective Date, whether before or after the receipt of required
approvals only if one or more of the following events shall occur:

          (a)  By any party to the Agreement, if the Closing shall not have
     occurred on or before December 29, 1995, unless the failure to so
     consummate by such time is due to the breach of this Agreement by the party
     seeking to terminate, or such later date as shall have been agreed to by
     the parties hereto (the "Termination Date").

          (b)  At any time by the mutual written agreement of the parties
     hereto.

          (c)  Immediately upon the expiration of thirty (30) days from the date
     that Buyer has given notice to Seller or Acquiree of their material
     misrepresentation or breach of any warranty or representation or breach in
     any material respect, individually or collectively, of any

                                       34

<PAGE>

     covenant or agreement herein; provided, however, that no such termination
     shall take effect unless it is reasonably evident that Seller or Acquiree
     cannot or will not fully and completely correct the grounds for termination
     as specified in the aforementioned notice on or before the date of Closing.

          (d)  Immediately upon the expiration of thirty (30) days from the date
     that Seller or Acquiree has given notice to Buyer of Buyer's material
     misrepresentation or breach of any warranty or representation or breach in
     any material respect, individually or collectively, of any covenant or
     agreement herein; provided, however, that no such termination shall take
     effect unless it is reasonably evident that Buyer cannot or will not fully
     and completely correct the grounds for termination as specified in the
     aforementioned notice on or before the date of Closing.

          (e)  By any party who has been informed in writing by the OTS or state
     regulator that a required approval or consent will not be granted and the
     time period for all appeals and reconsideration has expired.


     13.  EXPENSES.

          (a)  Each party hereto will bear all expenses incurred by it in
     connection with this Agreement and the transactions contemplated hereby in
     the event of termination of this Agreement pursuant to Section 12 then this
     Agreement shall thereafter become void and there shall be no liability on
     the part of any party hereto or their respective officers or directors,
     except as provided in Sections 13(b) and 14 hereof, and except that any
     such termination shall be without prejudice to the rights of any party
     hereto arising out of the willful breach of any covenant or willful
     misrepresentation contained in this Agreement by any other party hereto.

          (b)  In the event any party shall default in its obligations
     hereunder, any non-defaulting party may pursue any remedy available at law
     or in equity to enforce its rights and shall be paid by the defaulting
     party for all damages (except consequential damages), costs and expenses,
     including legal, accounting, printing and mailing expenses, incurred or
     suffered by the non-defaulting party in connection herewith or in the
     enforcement of its rights hereunder. Any negligent misrepresentation or
     negligent omission of information which is not material to this Agreement
     is not grounds for default or rescission of this Agreement.

                                       35

<PAGE>

     14.  CONFIDENTIALITY. Any non-public or confidential information disclosed
by either Seller or Acquiree or by Buyer to the other parties pursuant to this
Agreement or as a result of the discussions and negotiations leading to this
Agreement, or otherwise disclosed, or to which any other party has acquired or
may acquire access, and indicated (either expressly, in writing or orally, or by
the context of the disclosure or access) by the disclosing party to be
non-public or confidential, or which by the context thereof reasonably appears
to be non-public or confidential, shall be kept strictly confidential and shall
not be used in any manner by the recipient except in connection with the
transactions contemplated by this Agreement. To that end, the parties hereto
will each, to the maximum extent practicable, restrict knowledge of and access
to non-public or confidential information of the other party to its officers,
directors, employees and professional advisors who are directly involved in the
transactions contemplated hereby and reasonably need to know such information.
Further to that end, all non-public or confidential documents (including all
copies thereof) obtained or created hereunder by any party shall be returned as
soon as practicable after any termination of this Agreement.


     15.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES, ETC. No representation,
warranty or covenant contained in this Agreement, or in any exhibit, certificate
or other instrument referred to in this Agreement, and which are delivered or
made pursuant to this Agreement (or in connection with any transaction
contemplated by this Agreement) shall survive the Closing except for the
provisions of Sections 1, 14, and 16 hereof.

     16.  CERTAIN POST-MERGER AGREEMENTS. The parties hereto agree that:


          (a)  EMPLOYEES.

               (i)       On or before the Effective Date Buyer shall negotiate
          individual employment agreements and arrangements with those of
          Acquiree's employees that Buyer proposes to employ on an "at will"
          basis or otherwise. Seller shall then notify each employee of Acquiree
          that Buyer has not arranged to employ that it will offer to employ
          such person or that their employment with Acquiree is terminated, as
          Seller deems appropriate. Seller shall, if it so chooses, pay
          termination benefits, as determined solely by Seller or Acquiree, to
          each person who is terminated. Any employee who is employed by Buyer
          but who is subsequently terminated within ninety (90) days of the
          Effective Date may likewise be paid such termination benefits

                                       36

<PAGE>

          by Seller if, and to the extent determined by Seller. Nothing in this
          Agreement shall obligate or require Buyer to hire or employ any of
          Seller's or Acquiree's employees or to assume responsibility for any
          vested benefit or claim, right or entitlement of any employee of
          Acquiree or Seller relating to the period of employment preceding the
          Effective Date.

          (b)  INDEMNIFICATION OF BUYER. On and after the Effective Date, Seller
     shall indemnify, defend and hold harmless all former and then existing
     directors, officers, employees and agents of Buyer and each subsidiary of
     Buyer against all losses, claims, damages, costs, expenses, liabilities or
     judgments or amounts that are paid in settlement (with the approval of
     Seller, which approval shall not be unreasonably withheld) in connection
     with any claim, action, suit, proceeding or investigation based in whole or
     in part or arising in whole or in part due to the operation of Acquiree's
     business prior to the Effective Date. The foregoing shall be deemed to
     encompass, but shall not be limited to any loss claim, action, suit,
     proceeding or investigation concerning or resulting from: (i) the failure
     or alleged failure of any individual retirement account, Keogh plan account
     or other depository account maintained by Acquiree prior to the Effective
     Date to comply with applicable laws and regulations; (ii) any employment
     related claim by any person employed or claiming to have been employed by
     Acquiree prior to the Effective Date unless such claim is based wholly on
     facts or events which relate to the period after the Effective Date; and
     (iii) with respect to mortgage servicing rights being transferred by Seller
     pursuant to this Agreement, any failure by Acquiree, prior to the Effective
     Date, to comply with any applicable provision of any Mortgage Servicing
     Agreement including any covenant, representation, warranty or any
     applicable documentation requirement, regulation, directive, bulletin or
     users guide related thereto.

          (c)  INDEMNIFICATION OF SELLER. On and after the Effective Date, Buyer
     shall indemnify, defend and hold harmless all former and then existing
     directors, officers, employees and agents of Seller and Acquiree and each
     subsidiary of Seller against all losses, claims, damages, costs, expenses,
     liabilities or judgements or amounts that are paid in settlement (with the
     approval of Buyer which approval shall not be unreasonably withheld) in
     connection with any claim, action, suit, proceeding or investigation based
     in whole or in part or arising in whole or in part due to the operation of
     the business of Acquiree subsequent to the Effective Date. The foregoing
     shall be deemed to encompass, but shall not be limited to, any loss, claim,
     action, suit, proceeding or investigation concerning or resulting from (i)
     the failure or alleged failure of any individual retirement account, Keogh
     plan account or other depository account

                                       37

<PAGE>

     maintained by Acquiree subsequent to the Effective Date to comply with
     applicable laws and regulations; (ii) any employment related claim by any
     person employed or claiming to have been employed by Acquiree or Buyer
     subsequent to the Effective Date unless such claim is based wholly on facts
     or events which relate to the period before the Effective Date; (iii) with
     respect to mortgage servicing rights being transferred by Seller pursuant
     to this Agreement, any failure by Acquiree or Buyer, subsequent to the
     Effective Date, to comply with any applicable provision of any Mortgage
     Servicing Agreement including any covenant, representation, warranty or any
     applicable documentation requirement, rule, regulation, directive, bulletin
     or users guide related thereto.

          (d)  FDIC INSURANCE PREMIUM ADJUSTMENTS APPLIED RETROACTIVELY. Any
     adjustment in the deposit insurance premium, excluding any special
     assessment to recapitalize the federal deposit insurance fund, applied by
     the FDIC to Acquiree's deposits subsequent to the date hereof shall be
     allocated to either Buyer or Seller depending on the time period of
     coverage involved in relation to the Effective Date. By way of
     illustration, any adjustment relating to the period prior to the Effective
     Date shall be the Seller's responsibility, or benefit, depending on whether
     such adjustment comprises an increase, or decrease, respectively. Likewise
     any adjustment relating to the period on or subsequent to the Effective
     Date shall be the Buyer's responsibility, or benefit, depending on whether
     such adjustment comprises an increase, or decrease, respectively. Seller
     and Acquiree shall be responsible for paying any special assessment to
     recapitalize the federal deposit insurance fund unless (i) the assessment
     is levied after November 30, 1995, regardless of when federal legislation
     relating thereto is enacted into law or what date is chosen in such law for
     purposes of determining deposit levels; and (ii) the Stock Purchase is
     consummated, in which case Buyer shall be responsible for paying such
     assessment.


     17.  ENTIRE AGREEMENT. This Agreement, and all exhibits and schedules
attached hereto, embody the entire agreement among the parties hereto with
respect to the matters agreed to herein. All prior negotiations, discussions and
agreements by and among the parties hereto with respect to matters agreed to in
this Agreement, or the exhibits or schedules hereto, are hereby superseded and
shall have no force or effect.


     18.  PUBLICITY. The content and timing of all publicity and announcements
concerning this Agreement, and all transactions contemplated by this Agreement,
shall be subject to joint consultation and approval of the parties hereto,
subject, however, to the legal obligations applicable to public companies.

                                       38

<PAGE>

     19.  AMENDMENT AND WAIVER. Neither this Agreement, nor any term, covenant,
condition or other provision hereof, may be amended, modified, supplemented,
waived, discharged or terminated except by a document in writing signed by
responsible officers and duly authorized by the respective boards of directors
of the parties hereto.


     20.  GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland except to the extent that
federal law is controlling.


     21.  COMMUNICATIONS. All notices, claims, requests, demands, consents and
other communications which are required or permitted to be given hereunder shall
be in writing and shall be deemed to have been duly given if hand delivered,
sent by recognized overnight delivery service, sent by certified or registered
mail, postage prepaid, return receipt requested, or by confirmed telecopy as
follows:
          (a)  IF TO BUYER, to:

               Frank W. Neubauer, President
               MONOCACY BANCSHARES, INC.
               222 East Baltimore Street
               Taneytown, MD  21787

or to such other person or place as shall be designated to Seller and Acquiree
in writing, and with a copy to:

               Paul A. Adams, Esquire
               SHUMAKER WILLIAMS, P.C.
               3425 Simpson Ferry Road
               Camp Hill, PA  17011
               Phone:    (717) 763-1121
               Fax:      (717) 763-7419

          (b)  IF TO SELLER AND ACQUIREE, to:

               Thomas E. Hales, President
               U.S.B. HOLDING CO., INC.
               100 Dutch Hill Road
               Orangeburg, NY  10962

or to such other person or place as shall be designated to buyer in writing, and
with a copy to:

               Daniel P. Weitzel, Esquire
               ELIAS, MATZ, TIERNAN  HERRICK L.L.P.
               12th Floor
               734 15th Street NW
               Washington, DC  20005
               Phone:    (202) 347-0300
               Fax:      (202) 347-2172

                                       39

<PAGE>

Any such notice or other communication so addressed shall be deemed to have been
received by the addressee (i) if hand-delivered or sent by overnight delivery,
on the next business day following the date so delivered or sent, (ii) if sent
by registered or certified mail, five (5) business days following the date sent,
or (iii) if sent by telecopy, upon verbal telephone confirmation of receipt
thereof by an individual authorized to accept telecopy communications at the
above-specified telecopy number as of the date of such receipt or confirmation.

     22.  SUCCESSORS AND ASSIGNS. The rights and obligations of the parties
hereto shall inure to the benefit of and shall be binding upon the successors
and assigns of each of them; provided, however, that neither this Agreement nor
any of the rights, interest or obligations hereunder shall be assigned by any
party hereto without the prior written consent of the other party.

     23.  HEADINGS, ETC. The headings of the Sections and Subsections of this
Agreement have been inserted for convenience only and shall not be deemed to be
a part of this Agreement.

     24.  SEVERABILITY. In the event that any one or more provisions of this
Agreement shall for any reason be held invalid, illegal or unenforceable in any
respect, by any court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement and the
parties shall use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purposes and
intents of this Agreement.

     25.  NO THIRD PARTY BENEFICIARY. Except as expressly provided for herein,
nothing in this Agreement is intended to confer upon any person who is not a
party hereto any rights or remedies of any nature whatsoever under or by reason
of this Agreement.

     26.  COUNTERPARTS. To facilitate execution, this Agreement may be executed
in as many counterparts as may be required; and it shall not be necessary that
the signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.

     27.  FURTHER ASSURANCES. Each party will execute and deliver such
instruments and take such other actions as the other party hereto may reasonably
request in order to carry out the intent and purposes of this Agreement.

                                       40

<PAGE>

     IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Agreement to be duly executed, as of the date set forth
above.


ATTEST:                                      MONOCACY BANCSHARES, INC.


By: /s/                                      By: /s/ Frank W. Neubauer
   -----------------------------------          -------------------------------
                                                Frank W. Neubauer, President


ATTEST:                                      U.S.B. HOLDING COMPANY, INC.


By: /s/                                       By: /s/ Thomas E. Hales
   ------------------------------------         -------------------------------
                                                Thomas E. Hales, Chairman
                                                  of the Board, President 
                                                  and Chief Executive 
                                                  Officer


ATTEST:                                      ROYAL OAK SAVINGS BANK, FSB


By: /s/                                      By: /s/ Thomas E. Hales
   -----------------------------------          -------------------------------
                                                Thomas E. Hales, Chairman
                                                  of the Board and Chief
                                                  Executive Officer


                                       41


<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                 STOCK PURCHASE AGREEMENT DATED AUGUST 25, 1995
                                  SCHEDULE 1(a)
                                EXCLUDABLE ASSETS


                                                                        PAGE 1

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


                                                                 Book Value
                                                                   as of
                                                              December 31, 1995
                                                              -----------------

CASH:

Due from Bank - Time Accounts  (listing attached)               $   886,101.21

Due from Bank - Demand - IBAA                                   $    52,920.00

INVESTMENTS AND RELATED RECEIVABLES (listing attached)          $20,644,103.50

FEDERAL FUNDS SOLD - USB                                        $(1,415,225.55)


LOANS:

Credit Cards (including unused lines) (listing attached)        $    37,563.42

Commercial Mortgages (listing attached)                         $ 1,683,913.00

Residential Mortgage Loans (listing attached)                   $16,538,918.81

Home Equity Loans (including unused lines)                      $ 3,557,114.33
  (listing attached)

Installment Loans (listing attached)                            $   288,998.16

Less:  Allowance for Loan Losses                                   (318,820.18)
                                                                --------------

                                                                $21,787,687.54


(1)  Excludes 5% FHLMC participation in the amount of $96,948.60 that will be
     retained by Royal Oak.

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                 STOCK PURCHASE AGREEMENT DATED AUGUST 25, 1995
                                  SCHEDULE 1(a)
                                EXCLUDABLE ASSETS


                                                                         PAGE 2
--------------------------------------------------------------------------------

FIXED ASSETS:

Building & Property located at 1350 Liberty Road                $   356,878.00

Less:  Accumulated Depreciation                                     (45,556.00)
                                                                --------------
                                                                    311,322.00

Furniture & Equipment (net) (listing attached)                  $     4,611.00


OTHER ASSETS:

Accrued Interest Receivable (listing attached)                  $   269,033.47

Reimbursable foreclosure related expense                        $     7,514.69


EXCLUDABLE LIABILITIES:

Other Liabilities - Escrow balances loans servicing purchased   $     7,841.54

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                  SCHEDULE 1(a)
                               EXCLUDABLE F.F.&E.

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

                                                                NET BOOK
                                                                  VALUE
                                                                  AS OF
                                                             DECEMBER 31, 1995
                                                             -----------------

CREDIT CARD OFFICE

1 - Executive Chair
                                                                  $     497
2 - Side Chairs

CREDIT CARD OFFICE

1 - Personal Computer and
     associated Printer                                               2,216

EXECUTIVE VICE PRESIDENT OFFICE

Contura Notebook                                                      1,898


2 - Desks (Executive Officer's Offices)                                   0

1 - Four Drawer File (Ron Moss Office)                                    0

4 - Three Drawer File Cabinets (Credit Card Office)                       0

1 - Photocopier (Credit Card Dept.)                                       0

1 - Conference Table (Credit Card Dept.)                                  0

6 - Side Chairs (Credit Card Dept.)                                       0
                                                                  ---------

                                                                  $   4,611
                                                                  ---------


<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                 STOCK PURCHASE AGREEMENT DATED AUGUST 25, 1995
                                  SCHEDULE 1(b)
                           PURCHASE PRICE CALCULATION
                             AS OF DECEMBER 31, 1995
                                     SUMMARY

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

<TABLE>
<CAPTION>

                                                    Current            Adjustments for     Acquired
                                                    Balance              Transaction         Value
                                                    -------            ---------------     ---------
Category
--------
<S>                                              <C>                  <C>               <C>
Assets:
Cash and cash items                              $45,210,824.71         $      -        $ 45,210,824.71
Passbook and overdraft
   loans (5)                                         352,210.45         $      -             352,210.45

FHLB Stock                                           226,800.00                              226,800.00
FHLMC 5% participation                                96,948.60                -              96,948.60
Mortgage Servicing Rights (5):
  Sold to FHLMC ($23,825mm)
  On-Balance Sheet Loans
    ($16,218mm)
    Total Servicing
      ($40,043mm)                                          -             281,943.00 (3)      281,943.00

Property:
  Personal Property (6)                               43,998.21                -              43,998.21
  Randallstown Real
   Property (6)                                      465,660.14           45,389.86 (1)      511,050.00
  Certain Other Assets (5)                           343,963.16                -             343,963.16
                                                  -------------       -------------       -------------

    Total Assets                                  46,740,396.27          327,332.86       47,067,729.13

Deposits (Including
  escrows) (5)                                    42,329,079.87        3,595,932.00 (2)   38,733,147.87
                                                                                    (8)
Certain Other Liabilities                            511,016.41                -             511,016.41
  (5)                                             -------------       -------------       -------------
Net Assets Acquired (7)                          $ 3,900,299.99       $3,923,264.86      $ 7,823,564.85
                                                  -------------       -------------       -------------

</TABLE>

(1)  Excess of agreed price over book value ($59,339.86), less amount of agreed
     "repair" credit $13,950.00.

(2)  8.5% of deposits.

(3)  .7041% of serviced balances.

(4)  Aggregate premium:
         Deposits          $ 3,595,932.00
         Servicing             281,943.00
         Randallstown           45,389.86
                           --------------
                           $ 3,923,264.86
                           --------------

(5)  Current balance per December 31, 1995 general ledger trial balance. In the
     case of other assets and liabilities only applicable items are included.

(6)  Current balance per fixed asset records.

(7)  Current balance per December 31, 1995 general ledger trial balance.
     Represents common stock, surplus and undivided profits.

(8)  Excludes premium on $24,000 of escheatable deposits.

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                             STOCK PURCHASE AGREEMENT
                                  SCHEDULE 3(d)
                              CERTAIN DEVELOPMENTS
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------


                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (e)
              TAX RETURNS NOT FILED, ACCRUALS NOT MADE, EXTENSIONS,
                             ASSESSMENTS OR WAIVERS
                               AS OF THE CLOSING,
                               DECEMBER 29, 1995


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


                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (f)
                    MATERIAL LEGAL OR ADMINISTRATIVE ACTIONS,
                               SUITS, CLAIMS, ETC.
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------



                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (g)
                                    BROKERAGE
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------



                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (h)
                                   PROPERTIES
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------



There are no disclosures required to be made pursuant to this schedule 3 (h).

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (i)
                              NON-COMPLIANCE ISSUES
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

NONE, except with respect to certain Share Loans and Money Magic loans - see
schedule 3(y).



<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (j)
                         CONTRACTS AND COMMITMENTS, ETC.
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------


     -    Royal Oak Savings Bank, F.S.B. has entered into a contract
          with AT&T Global Information Solutions in which AT&T
          provides data processing services.


     -    Royal Oak Savings Bank, F.S.B. has entered into a contract
          with Internet, Inc. for ATM service.


     -    Royal Oak Savings Bank, F.S.B. has entered into a contract
          to provide VISA card service to the Ancient Free and
          Accepted Masons of Maryland(1).


     -    Royal Oak Savings Bank, F.S.B. has entered into a contract to provide
          VISA card service to the Free and Accepted Masons of New Hampshire(1).


     -    Royal Oak Savings Bank, F.S.B. has entered into a contract with IBAA
          Bancard in which IBAA Bancard processes credit card activity(1).



          See schedule 3(x).




(1) To be retained by seller, and subsequently assigned to Union State Bank, 
    or cancelled.

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (k)
                                    INSURANCE
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

          See attached listing included in Schedule 3(K) as included in the 
                   Stock Purchase Agreement dated August 25, 1995.



<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (l)
                                  NO GUARANTEES
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------




                            None, see schedule 3(ee)

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                  SCHEDULE 3(q)
                                EMPLOYEE BENEFITS
                                AS OF THE CLOSING,
                                DECEMBER 29, 1995


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



-  Medical Insurance:                   Empire BlueCross and BlueShield

-  Short-Term Disability:               The First Rehabilitation Insurance
                                        Company of America

-  Long-Term Disability:                Provident Life and Casualty
                                        Insurance Company

-  Life Insurance:                      C.U. Life Insurance Company
                                        of New York



   All contracts have been or will be cancelled as of December 31, 1995.

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (r)
                                 LABOR MATTERS
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------



                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (s)
                              ENVIRONMENTAL MATTERS
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------



                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (v)
                      FINANCIAL INSTITUTIONS BOND - CLAIMS
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------



                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3 (aa)
               LIST OF TRADEMARKS, COPYRIGHTS, ALL LICENSES, ETC.
                                AS OF THE CLOSING
                                DECEMBER 29, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------




                         Royal Oak Savings Bank, F.S.B.


      The above is based on common usage and is not a registered trademark.

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                  SCHEDULE 3(x)
                             NON-ASSUMABLE CONTRACTS
                               AS OF THE CLOSING,
                                DECEMBER 29, 1995


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



     -    AT&T Global Information Solutions
          - Data Processing
          - Subject to cancellation penalties (1)

     -    Internet, Inc.
          - ATM Participant Service Agreement
            Includes: Internet sponsored Plus access, VISA Net
                      access and authorization processor





(1)  AT&T has agreed to continue this contract and Buyer will make any
     arrangements necessary directly with AT&T.

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                  SCHEDULE 3(y)
                                 LOAN EXCEPTIONS
                               AS OF THE CLOSING,
                                DECEMBER 29, 1995


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




None, except as follows:

                                   Loan No.                Loan Balance*
                                   --------                -------------
SHARE LOANS
                               01-91-0000131                 $10,709
                               01-91-0000200                   2,250
                               01-91-0021129                   2,007
                               01-91-0021134                   4,051
                               01-91-0021135                   1,227
                               01-91-0021138                   3,441
                               01-91-0021161                   5,385
                               01-91-0021162                   6,932
                               01-91-0021163                   2,927
                               01-91-0021164                  81,000
                               01-91-0030851                  17,500
                                                            --------

                                        Total               $137,429
                                                            --------

MONEY MAGIC

                                  10006                     $    992
                                  10019                            0
                                  10024                            0
                                  10025                          451
                                  10026                            0
                                  10027                          504
                                  10028                            0
                                  10029                            0
                                  10031                            0
                                  10033                            0
                                  10036                          451
                                                            --------
                                        Total                $ 2,398
                                                            --------

* - AMOUNTS AS OF DECEMBER 26, 1995

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3(ee)
                         POWERS OF ATTORNEY, GUARANTEES
                               AS OF THE CLOSING,
                                DECEMBER 29, 1995

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



     None, except for the guarantee of 131 (1) residential mortgage loans with
     unpaid principal balances totalling $1,852,136 which were sold to FHLMC.



     (1) Amount is as of December 22, 1995.

<PAGE>


                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 3(ff)
                         MORTGAGE SERVICING AGREEMENTS
                           EXCEPTIONS, DEFAULTS, ETC.
                               AS OF THE CLOSING,
                                DECEMBER 29, 1995


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



                                      NONE

<PAGE>

                         ROYAL OAK SAVINGS BANK, F.S.B.
                            STOCK PURCHASE AGREEMENT
                                 SCHEDULE 11(a)
                      TENTATIVE PURCHASE PRICE ALLOCATION
                               AS OF THE CLOSING,
                                DECEMBER 29, 1995
                         Amounts Presented in Thousands


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


Buyer expects to allocate amounts to assets acquired and liabilities assumed
based on Acquiree's respective book values with the following exceptions:


          Mortgage Servicing Rights                        $  283
          Randallstown Real Property Premium                   45
          Deposit Premium                                   3,570
                                                           ------

              Total Premium Applied                        $3,898
                                                           ------