<PAGE>
 
                                                                     EXHIBIT 3.2


                   [SEAL OF THE STATE OF TEXAS APPEARS HERE]


                              The State of Texas

                              Secretary of State

                         CERTIFICATE OF INCORPORATION

                                      OF

                            "L & B FINANCIAL, INC."
                            CHARTER NUMBER 01369516

     THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS, HEREBY
CERTIFIES THAT THE ATTACHED ARTICLES OF INCORPORATION FOR THE ABOVE NAMED
CORPORATION HAVE BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO CONFORM TO LAW.

     ACCORDINGLY, THE UNDERSIGNED, AS SECRETARY OF STATE, AND BY VIRTUE OF THE
AUTHORITY VESTED IN THE SECRETARY BY LAW, HEREBY ISSUES THIS CERTIFICATE OF
INCORPORATION.

     ISSUANCE OF THIS CERTIFICATE OF INCORPORATION DOES NOT AUTHORIZE THE USE OF
A CORPORATE NAME IN THIS STATE IN VIOLATION OF THE RIGHTS OF ANOTHER UNDER THE
FEDERAL TRADEMARK ACT OF 1946, THE TEXAS TRADEMARK LAW, THE ASSUMED BUSINESS OR
PROFESSIONAL NAME ACT OR THE COMMON LAW.


DATED SEP. 8, 1995

EFFECTIVE SEP. 8, 1995


       [SEAL]


                                    /S/ ANTONIO O. GARZA, JR.
                                    -----------------------------------------
                                    Antonio O. Garza, Jr., Secretary of State

<PAGE>
 
                           ARTICLES OF INCORPORATION
                                      OF
                             L & B FINANCIAL, INC.

                                   ARTICLE I

                                     NAME

     Name. The name of the corporation is "L & B Financial, Inc." (hereinafter
referred to as the "Corporation").

                                  ARTICLE II

                                   DURATION

     Duration. The period of duration of the existence of the Corporation is
perpetual.

                                  ARTICLE III

                            PURPOSE; EFFECTIVE DATE

     Purpose and Effective Date. The purpose of the Corporation is to engage in
any lawful activity or business for which a Texas corporation may be
incorporated under the Texas Business Corporation Act ("TBCA"). The Corporation
has and may exercise all expressed, implied and incidental powers conferred by
the Constitution and laws of the State of Texas or by any other federal or state
governmental authority having the power to regulate or to grant rights, powers
and privileges to the Corporation. These Articles of Incorporation shall become
effective upon the date that they are endorsed as filed with the Secretary of
the State of Texas.

                                  ARTICLE IV

             REGISTERED OFFICE; REGISTERED AGENT; PRINCIPAL OFFICE

     Registered Office and Registered Agent. The address of the registered
office of the Corporation in the State of Texas is 306 North Davis, in the city
of Sulphur Springs, County of Hopkins, Texas 75482. The name of the registered
agent at such address is: Linda Galligher. The principal office of the
Corporation is 306 North Davis, in the city of Sulphur Springs, County of
Hopkins, Texas 75482.

     The name and address of the sole incorporator of the Corporation is Sulphur
Springs Building and Loan Association, A Texas Savings Association, 306 North
Davis, in the city of Sulphur Springs, County of Hopkins, Texas 75482.


<PAGE>
 
     The name and address of the sole incorporator of the Corporation is Sulphur
Springs Building and Loan Association, A Texas Savings Association, 306 North
Davis, in the city of Sulphur Springs, County of Hopkins, Texas 75482.

                                   ARTICLE V

                                 CAPITAL STOCK

        Capital Stock. The total number of shares of capital stock which the
Corporation has authority to issue is 30,000,000, of which 25,000,000 shall be
common stock, $0.01 par value per share (hereinafter the "Common Stock") and of
which 5,000,000 shall be preferred stock, no par value per share (hereinafter
the "Preferred Stock"). The Board of Directors shall have the authority to
establish series of unissued shares of any class of capital stock by fixing and
determining the designations, preferences, limitations and relative rights,
including voting rights, of the shares of any series so established to the same
extent that such designations, preferences, limitations and relative rights
could be stated if fully set forth in these Articles of Incorporation. Except to
the extent required by governing law, rule or regulation, the shares of capital
stock may be issued from time to time by the Board of Directors without further
approval of stockholders. The consideration for the issuance of the shares of
capital stock shall be paid in full in cash before their issuance and shall not
be less than their par value, if any, and the Corporation shall not loan funds
against the shares of its outstanding capital stock. The Corporation shall have
the authority to purchase its capital stock out of funds lawfully available
therefor, which funds shall include, without limitation, the Corporation's
unreserved and unrestricted capital.

     The Corporation will not commence business until it has received for the
issuance of shares consideration of the value of a stated sum which shall be at
least One Thousand Dollars ($1,000.00) (cash required).

     A description of the different classes and series (if any shall be
established or created) of the Corporation's capital stock and a statement of
the designations, and the relative rights, preferences and limitations of the
shares of each class of and series of capital stock are as follows:

     Nothing contained in this Article Five (or in any supplementary sections
hereto) shall entitle the holders of any class of capital stock to vote as a
separate class or series or to more than one vote per share; provided, that this
                                                             --------
restriction on voting separately by class or series shall not apply:

     (i)  To any provision which would authorize the holders of preferred stock,
          voting as a class or series, to elect some members of the Board of
          Directors, but less than a majority thereof, in the event of default
          in the payment of dividends on any class or series of preferred stock;

                                       2

<PAGE>
 
     (ii)  to any provision which would require the holders of preferred stock,
           voting as a class or series, to approve the merger or consolidation
           of the Corporation with another corporation or the sale, lease or
           conveyance (other than by mortgage or pledge) of properties or
           business in exchange for securities of a corporation other than the
           Corporation if the preferred stock is exchanged for securities of
           such other corporation; or

     (iii) to any amendment which would adversely change the specific terms of
           any class or series of capital stock as set forth in this Article
           Five (or in any supplementary sections hereto), including any
           amendment which would create or enlarge any class or series ranking
           prior thereto in rights and preferences. An amendment which increases
           the number of authorized shares of any class or series of capital
           stock, or substitutes the surviving association in a merger or
           consolidation for the Corporation, shall not be considered to be such
           an adverse change.

     Shares of the capital stock of the Corporation shall not be cumulated when
voting for the election of directors or for any other matter. A description of
the different classes and series (if any) of the Corporation's capital stock and
a statement of the designations and the relative rights, preferences and
limitations of the shares of each class or and series (if any) of capital stock
are as follows:

     A.   Common Stock. Except as provided in this Article V (or in any
resolution or resolutions adopted by the Board of Directors pursuant hereto) and
as provided in Article X.D., the exclusive voting power shall be vested in the
Common Stock, the holders thereof being entitled to one vote for each share of
such Common Stock standing in the holder's name on the books of the Corporation.
Subject to any rights and preferences of any class of stock having preference
over the Common Stock, holders of Common Stock shall be entitled to such
dividends as may be declared by the Board of Directors out of any assets
lawfully available therefor. Upon any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, holders of
Common Stock shall be entitled to receive pro rata the remaining assets of the
Corporation (in cash or kind) after the payment or provision for payment of the
Corporation's debts and liabilities and after the holders of any class of stock
having preference over the Common Stock have been paid in full any sums to which
they may be entitled. Each share of Common Stock shall have the same relative
rights as and be identical in all respects with all other shares of Common
Stock.

     B.   Preferred Stock. The Board of Directors is hereby expressly authorized
to provide, by resolution or resolutions, out of the unissued shares of
Preferred Stock, for one or more classes of Preferred Stock, which shall be
separately identified. The shares of any class may be divided into and issued in
series, with each series separately designated so as to distinguish the shares
thereof from the shares of all other series and classes. All shares of the same
class shall be identical except as to certain relative rights and preferences,
as

                                       3




<PAGE>
 
to which there may be variations between different series.  Before any shares of
any such series are issued, the Board of Directors shall fix, and hereby is 
expressly empowered to fix, by resolution or resolutions, the following 
provisions of the shares thereof:

        (a) The designation of such series, the number of shares to constitute
such series and the stated value, if any, thereof;

        (b) Whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights, which may be general or limited;

        (c) The dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any shares of stock
of any other class or any other series of this class;

        (d) Whether the shares of such series shall be subject to redemption by
the Corporation, and, if so, the times, prices and other conditions of such
redemption;

        (e) The amount or amounts payable upon shares of such series upon, and
the rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up, or upon any distribution of the assets,
of the Corporation;

        (f) Whether the shares of such series shall be subject to the operation
of a retirement or sinking fund and, if so, the extent to and manner in which
any such retirement or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relative to the operation thereof;

        (g) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of a
class or any other securities of the Corporation, and, if so, the price or
prices or the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;

        (h) The price or other consideration for which the shares of such series
shall be issued;

        (i) Whether the shares of such series which are redeemed or converted
shall have the status of authorized but unissued shares of preferred stock and
whether such shares may be reissued as shares of the same or any other series of
preferred stock;

                                       4

<PAGE>
 
          (j) The limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;

          (k) The conditions or restrictions, if any, upon the creation of 
indebtedness of the Corporation or upon the issue of any additional stock, 
including additional shares of such series or of any other series of this class 
or of any other class; and

          (l) Any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof.

     The powers, preferences and relative, participating, optional and other 
special rights, of each series of Preferred Stock, and the qualifications, 
limitations or restrictions thereof, if any, may differ from those of any and 
all other series, and shares of any one series issued at different times may 
differ as to the dates from which dividends thereon shall accrue and/or be 
cumulative.

     Prior to the issuance of any shares of a series of capital stock 
established by resolution adopted by the Board of Directors, if such issuance is
the first issuance of shares of such series since the resolution was adopted, 
the Corporation shall submit to the Secretary of State of Texas a statement as 
required by the TBCA.  Upon the filing of such statement by the Secretary of 
State, the resolution establishing and designating the series and fixing and 
determining the preferences, limitations, and relative rights thereof shall 
become an amendment of these Articles of Incorporation.

                                  ARTICLE VI

                             NO PREEMPTIVE RIGHTS

     Preemptive Rights.  No holder of the capital stock of the Corporation shall
be entitled as such, as a matter of right or otherwise, to subscribe for or 
purchase any part of any new or additional issue of equity or debt of any class 
or series whatsoever, of the Corporation, or of securities convertible into 
equity or debt of any class whatsoever, whether now or hereafter authorized, or 
whether issued for cash or other consideration or by way of a dividend.

                                       5
     
<PAGE>
 
                                  ARTICLE VII

                              BOARD OF DIRECTORS

     Directors.  The initial Board of Directors of the Corporation shall be:

     C. Glynn Lowe

     Daniel E. Bonner

     James H. Connelley

     Wayne H. Galyean

     Thomas J. Payne

     Enos L. Ashcroft, III

     Bob J. Burgin

     W.T. Allison, II

     The business address of each member of the Board of Directors of the 
Corporation shall be 306 North Davis, in the city of Sulphur Springs, Texas 
75482.

     The business and affairs of the Corporation shall be managed by or under 
the direction of a Board of Directors.  Each director must be an owner in good 
faith and in his or her own right on the books of the Corporation of capital 
stock of the Corporation having a value of at least one thousand dollars 
($1,000), which shall not be reduced by a pledge for a loan by the Corporation,
for so long as such person may be a director of the Corporation.  Except as 
otherwise fixed pursuant to the provisions of Article V hereof relating to the 
rights of the holders of any class or series of stock having a preference over 
the Common Stock as to dividends or upon liquidation to elect additional 
directors, the number of directors shall be determined by resolution of the 
Board of Directors as provided in the Corporation's Bylaws, as may be amended 
from time to time, provided, however, that the number of directors shall not be 
less than five nor greater than twenty-one.  Directors shall be elected by a 
plurality of the votes cast by the holders of shares entitled to vote in the 
election of directors at a meeting of stockholders at which a quorum is present.
There shall be no cumulative voting for the election of the Corporation.

     A.   Classification and Term.  The Board of Directors, other than those who
may be elected by the holders of any class or series of stock having preference 
over the Common Stock as to dividends or upon liquidation, shall be divided into
three classes as nearly equal

                                       6
<PAGE>
 
in number as possible, with one class to be elected for a term of three years, 
as set forth in the Bylaws of the Corporation.

     B.   Vacancies.  Except as otherwise fixed pursuant to the provisions of 
Article V hereof relating to the rights of the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon 
liquidation to elect directors:  (i) any vacancy occurring in the Board of 
Directors shall be filled by a majority vote of the Whole Board of Directors and
a majority of the Continuing Directors then in office, as defined by Article X, 
though less than a quorum of the Board of Directors, or by a sole remaining 
director, and any director so chosen shall be elected for the unexpired term of 
his predecessor in office and until such director's successor shall have been 
elected and qualified; and (ii) any vacancy to be filled by reason of an 
increase in the number of directors shall be filled by a majority vote of the 
Whole Board of Directors and a majority of the Continuing Directors then in 
office, as defined by Article X, through less than a quorum, or by the sole 
remaining director, and any director so chosen shall be elected for a term of 
office continuing only until the next election of one or more directors by the 
stockholders; provided that the Board of Directors may not fill more than two 
such directorships during the period between any two successive annual meetings 
of stockholders.  Whenever the holders of any class or series of shares or group
of classes or series of shares are entitled to elect one or more directors by 
the provision of these Articles of Incorporation, any vacancies in such 
directorships and any newly created directorships of such class to be filled by 
reason of increase in the number of such directors shall be filled by the 
affirmative vote of a majority vote of the remaining Whole Board of Directors 
and a majority of the Continuing Directors then in office, though less than a 
quorum of the Board of Directors, or by a sole remaining director, and any 
director so chosen shall be elected for the unexpired term of his predecessor in
office and until such director's successor shall have been elected and 
qualified.  When the number of directors is changed, the Board of Directors 
shall determine the class or classes to which the increased or decreased number
of directors shall be apportioned; provided that no decrease in the number of
directors shall shorten the term of any incumbent director.

     C.   Removal.  Subject to the rights of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation to elect 
directors, any director (including persons elected by directors to fill 
vacancies in the Board of Directors) may be removed from office only with cause 
by an affirmative vote of not less than two-thirds of the votes eligible to be 
cast by stockholders at a duly constituted meeting of stockholders called 
expressly for such purpose.  Whenever the holders of any class or series of 
capital stock of the Corporation are entitled to elect one or more directors by 
the provisions of these Articles of Incorporation or any amendment thereto, only
the holders of shares of that class or series of Capital Stock shall be entitled
to vote for or against the removal of any director elected by the holders of the
shares of that class or series.  Cause for removal shall exist only if the 
director whose removal is proposed has been either declared of unsound mind by 
an order of a court of competent jurisdiction, convicted of a felony or of an 
offense punishable by imprisonment for a term of more than one year by a court 
of competent 

                                       7
<PAGE>
 
jurisdiction, or deemed liable by a court of competent jurisdiction for gross 
negligence or misconduct in the performance of such director's duties to the 
Corporation.  At least thirty (30) days prior to such meeting of stockholders, 
written notice shall be sent to the director whose removal will be considered at
the meeting.

     D.   Nominations of Directors.  Nominations of candidates for election as 
directors at any annual meeting of stockholders may be made (a) by, or at the 
direction of, a majority of the Board of Directors or (b) by any stockholder 
entitled to vote at such annual meeting.  Only persons nominated in accordance 
with the procedures set forth in this Article VII.D. shall be eligible for 
election as directors at an annual meeting.  Ballots bearing the names of all 
the persons who have been nominated for election as directors at an annual 
meeting in accordance with the procedures set forth in this Article VII.D. shall
be provided for use at the annual meeting.

     Subject to the rights of the holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation, 
nominations, other than those made by or at the direction of the Board of 
Directors, shall be made pursuant to timely notice in writing to the Secretary 
of the Corporation as set forth in this Article VII.D.  To be timely, a 
stockholder's notice shall be delivered to, or mailed and received at, the 
principal executive offices of the Corporation (i) with respect to the first 
annual meeting of stockholders of the Corporation following its acquisition of 
all of the capital stock of Sulphur Springs Building and Loan Association, A 
Texas Savings Association (the "Association"), not later than 90 days after the 
date of the mailing of proxy materials to stockholders of the Association 
regarding a meeting of stockholders called for purposes of approval of the plan 
of reorganization to the holding company form of organization, ,(ii) with 
respect to an election to be held at any succeeding annual meeting of 
stockholders, 60 days prior to the anniversary date of the mailing of proxy 
materials by the Corporation in connection with the immediately preceding annual
meeting of stockholders of the Corporation; and (iii) with respect to a special 
meeting of stockholders for the election of directors, the close of business on 
the tenth day following the date on which notice of such meeting is first given
to stockholders.  Such stockholder's notice shall set forth (a) as to each 
person whom the stockholder proposes to nominate for election or re-election 
as a director (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the Corporation's stock which are Beneficially
Owned (as defined in Article X.A.(d)) by such person on the date of such
stockholder notice, and (iv) any other information relating to such person that
is required to be disclosed in solicitations of proxies with respect to nominees
for election as directors, pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), including, but not
limited to, information required to be disclosed by Items 4, 5, 6 and 7 of
Schedule 14A and information which would be required to be filed on Schedule 14B
with the Securities and Exchange Commission (or any successor of such items or
schedules); and (b) as to the stockholder giving the notice (i) the name and
address, as they appear on the Corporation's books, of such stockholder and any
other stockholders known by such stockholder to be supporting such nominees and
(ii) the

                                       8
<PAGE>
 
class and number of shares of the Corporation stock which are Beneficially Owned
by such stockholder on the date of such stockholder notice and, to the extent 
known, by any other stockholders known by such stockholder to be supporting such
nominees on the date of such stockholder notice.  At the request of the Board of
Directors, any person nominated by, or at the direction of, the Board for 
election as a director at an annual or special meeting of stockholders shall 
furnish to the Secretary of the Corporation that information required to be set 
forth in a stockholder's notice of nomination which pertains to the nominee.

     The Board of Directors may reject any nomination by a stockholder not 
timely made in accordance with the requirements of this Article VII.D.  If the 
Board of Directors, or a designated committee thereof, determines that the 
information provided in a stockholder's notice does not satisfy the 
informational requirements of this Article Vii.D. in any material respect, the 
Secretary of the Corporation shall promptly notify such stockholder of the 
deficiency in the notice.  The stockholder shall have an opportunity to cure the
deficiency by providing additional information to the Secretary within such 
period of time, not to exceed five days from the date such deficiency notice is 
given to the stockholder, as the Board of Directors or such committee thereof 
shall reasonably determine.  If the deficiency is not cured within such period, 
or if the Board of Directors or such committee thereof reasonably determines 
that the additional information provided by the stockholder, together with 
information previously provided, does not satisfy the requirements of this 
Article VII.D. in any material respect, then the Board of Directors may reject 
such stockholder's nomination.  The Secretary of the Corporation shall notify a 
stockholder in writing whether his nomination has been made in accordance with 
the time and informational requirements of this Article VII.D.  Notwithstanding 
the procedures set forth in this paragraph, if neither the Board of Directors 
nor such committee thereof makes a determination as to the validity of any 
nominations by a stockholder, the presiding officer of the annual meeting shall 
determine and declare at the annual meeting whether the nomination was made in 
accordance with the terms of this Article VII.D.  If the presiding officer 
determines that a nomination was made in accordance with the terms of this 
Article VII.D., he or she shall so declare at the annual meeting and ballots 
shall be provided for use at the meeting with respect to such nominee. If the
presiding officer determines that a nomination was not made in accordance with
the terms of this Article VII.D., he or she shall so declare at the annual
meeting and the defective nomination shall be disregarded.

     Notwithstanding the foregoing, and except as otherwise required by law, 
whenever the holders of any one or more series of Preferred Stock shall have the
right, voting separately as a class, to elect one or more directors of the 
Corporation, the provisions of this Article VII.D. shall not apply with respect 
to the director or directors elected by such holders of Preferred Stock.

     E.   Discharge of Duties.  In discharging the duties of their respective 
positions, the Board of Directors, committees of the Board and individual 
directors shall, in considering the best interests of the Corporation, consider 
the effects of any action upon the employees of the Corporation and its 
subsidiaries, its depositors and borrowers of any banking

                                       9
<PAGE>
 
subsidiary, the communities in which offices or other establishments of the 
Corporation or any subsidiary are located and all other pertinent factors.

                                 ARTICLE VIII

                           INDEMNIFICATION, ETC. OF
                   OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS

     A.  Limitation of Liability.  No director shall be personally liable to the
Corporation or its stockholders for monetary damages for any act or omission by 
such director as a director; provided that a director's liability shall not be 
eliminated to the extent provided by Section 7.06B. of the Texas Miscellaneous 
Corporation Laws Act or any successor provision thereto. No amendment to or 
repeal of this Subsection (A) to Article VIII shall apply to or have any effect 
on the liability or alleged liability of any director of the Corporation for or 
with respect to any acts or omissions of such director occurring prior to such 
amendment.

     B.  Indemnification.  The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or 
completed action, suit or proceeding, whether civil, criminal, administrative, 
arbitrative or investigative, by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation or any predecessor of 
the Corporation, or is or was serving at the request of the Corporation or any 
predecessor of the Corporation, as a director, officer, employee or agent of 
another corporation, partnership, joint venture, trust or other enterprise, 
against liability and expenses (including court costs and attorney's fees), 
judgments, fines, excise taxes and amounts paid in satisfaction, settlement or 
compromise actually and reasonable incurred by such person in connection with 
such action, suit or proceeding to the full extent authorized by law.

     C.  Advancement of Expenses.  Reasonable expenses incurred by a director, 
officer, employee or agent of the Corporation in defending a civil or criminal 
action, suit or proceeding described in Article VIII.B. shall be paid by the 
Corporation in advance of the final disposition of such action, suit or 
proceeding as authorized by the Board of Directors only upon receipt of written 
affirmation by or on behalf of such person of his good faith belief that he or 
she has met the standard of conduct necessary for indemnification under 
relevant law and a written undertaking to repay such amount if it shall 
ultimately be determined that the person has not met that standard or if it is 
ultimately determined that indemnification of the person against expenses 
incurred by him or her in connection with that proceeding is prohibited by 
relevant law.

     D.  Other Rights and Remedies.  The indemnification provided by this 
Article VIII shall not be deemed to exclude any other rights to which those 
seeking indemnification or advancement of expenses may be entitled under the 
Corporation's Articles of Incorporation,

                                      10

<PAGE>
 
any insurance or other agreement, vote of stockholders or disinterested 
directors or otherwise, both as to action in their official capacity and as to 
actions in another capacity while holding such office, and shall continue as to 
a person who has ceased to be a director, officer, employee or agent and shall 
inure to the benefit of the heirs, executors and administrators of such person; 
provided that no indemnification shall be made to or on behalf of an individual 
if a judgment or other final adjudication establishes that his actions,  or 
omissions to act, were material to  the cause of action as adjudicated and (i) 
the person is found liable on the basis that personal benefit was improperly 
received by him or her; (ii) the person is found liable to the Corporation; or 
(iii) the person is found liable for willful or intentional misconduct in the 
performance of his duty to the Corporation; provided, however, that persons 
found liable under clauses (i) and (ii) above, may still be indemnified solely 
as to reasonable expenses actually incurred by such person in connection with 
the proceeding.

     E.  Insurance.  Upon resolution passed by the Board, the Corporation may 
purchase and maintain insurance on behalf of any person who is or was a 
director, officer, employee or agent of the Corporation, or was serving at the 
request of the Corporation as a director, officer, employee or agent of another 
corporation, partnership, joint venture, trust or another enterprise, against 
any liability asserted against him or her or incurred by him or her in any such
capacity, or arising out of his status, whether or not the Corporation would 
have the power to indemnify him or her against such liability under the 
provisions of this Article or the TBCA.

     F.  Modification.  The duties of the Corporation to indemnify and to 
advance expenses to a director or officer provided in this Article VIII shall be
in the nature of a contract between the Corporation and each such director or 
officer, and no amendment or repeal of any provision of this Article VIII shall 
alter, to the detriment of such director or officer, the right of such person to
the advance of expenses or indemnification related to a claim based on an act or
failure to act which took place prior to such amendment or repeal.

     G.  Proceedings Initiated by Indemnified Persons.  Notwithstanding any 
other provision of this Article VIII, the Corporation shall not indemnify a 
director, officer, employee or agent for any liability incurred in an action, 
suit or proceeding initiated by (which shall not be deemed to include 
counter-claims or affirmative defenses), or participated in as an intervenor or 
amicus curiae by, the person seeking indemnification unless such initiation of 
or participation in the action, suit or proceeding is authorized, either before 
or after its commencement, by the affirmative vote of a majority of the 
directors then in office.

                                      11

<PAGE>
 
                                  ARTICLE IX

              MEETINGS OF STOCKHOLDERS AND STOCKHOLDER PROPOSALS

     A.  Special Meetings of Stockholders.  Except as otherwise required by law 
and subject to the rights of the holders of any class or series of Preferred 
Stock, and subject to the provisions of Article VII.D. of these Articles of 
Incorporation, special meetings of the stockholders of the Corporation may be 
called only by (i) the Board of Directors pursuant to a resolution approved by 
the affirmative vote of a majority of the Whole Board of Directors and a 
majority of the Continuing Directors then in office, (ii) the Chairman of the 
Board, (iii) the Chief Executive Officer, or (iv) the holders of not less than 
50 percent of all votes entitled to be cast on any issue proposed to be 
considered at such special meeting.

     B.  Stockholder Proposals.  At an annual meeting of stockholders, only such
business shall be conducted, and only such proposals shall be acted upon, as 
shall have been brought before the annual meeting by, or at the direction of, 
(a) the Board of Directors or (b) any stockholder of the Corporation who 
complies with all the requirements set forth in this Article IX.B.

     Proposals, other than those made by or at the direction of the Board of 
Directors, shall be made pursuant to timely notice in writing to the Secretary 
of the Corporation as set forth in this Article IX.B. For stockholder proposals 
to be included in the Corporation's proxy materials, the stockholder must comply
with all the timing and informational requirements of Rule 14a-8 of the Exchange
Act (or any successor regulation). With respect to stockholder proposals to be 
considered at the annual meeting of stockholders but not included in the 
Corporation's proxy materials, the stockholder's notice shall be delivered to, 
or mailed and received at, the principal executive offices of the Corporation 
not less than (i) with respect to the first annual meeting of stockholders of 
the Corporation following its acquisition of all the capital stock of the 
Association, not later than 90 days after the date of the mailing of proxy 
materials to stockholders of the Association regarding a meeting of stockholders
called for purposes of approval of the plan or reorganization to the holding 
company form of organization, and (ii) with respect to any succeeding annual 
meeting of stockholders, 60 days prior to the anniversary date of the mailing of
proxy materials by the Corporation in connection with the immediately preceding 
annual meeting of stockholders of the Corporation. Such stockholder's notice 
shall set forth as to each matter the stockholder proposes to bring before the 
annual meeting (a) a brief description of the proposal desired to be brought 
before the annual meeting and the reasons for conducting such business at the 
annual meeting, (b) the name and address, as they appear on the Corporation's 
books, of the stockholder proposing such business and, to the extent known, any 
other stockholders known by such stockholder to be supporting such proposal, (c)
the class and number of shares of the Corporation's stock which are Beneficially
Owned by the stockholder on the date of such stockholder notice and, to the 
extent known, by any other

                                      12
 .

<PAGE>
 
stockholders known by such stockholder to be supporting such proposal on the 
date of such stockholder notice, and (d) any financial interest of the 
stockholder in such proposal (other than interests which all stockholders would 
have).

     The Board of Directors may reject any stockholder proposal not timely 
made in accordance with the terms of this Article IX.B.  If the Board of 
Directors, or a designated committee thereof, determines that the information 
provided in a stockholder's notice does not satisfy the informational 
requirements of this Article IX.B. in any material respect, the Secretary of the
Corporation shall promptly notify such stockholder of the deficiency in the 
notice.  The stockholder shall have an opportunity to cure the deficiency by 
providing additional information to the Secretary within such period of time, 
not to exceed five days from the date such deficiency notice is given to the 
stockholder, as the Board of Directors or such committee thereof shall 
reasonably determine.  If the deficiency is not cured within such period, or if 
the Board of Directors or such committee thereof determines that the additional 
information provided by the stockholder, together with information previously 
provided, does not satisfy the requirements of this Article IX.B. in any 
material respect, then the Board of Directors may reject such stockholder's 
proposal.  The Secretary of the Corporation shall notify a stockholder in 
writing whether his proposal has been made in accordance with the time and 
informational requirements of this Article IX.B.  Notwithstanding the procedures
set forth in this paragraph, if neither the Board of Directors nor such 
committee thereof makes a determination as to the validity of any stockholder 
proposal, the presiding officer of the annual meeting shall determine and 
declare at the annual meeting whether the stockholder proposal was made in 
accordance with the terms of this Article IX.B.  If the presiding officer 
determines that a stockholder proposal was made in accordance with the terms of 
this Article IX.B., he or she shall so declare at the annual meeting and ballots
shall be provided for use at the meeting with respect to any such proposal.  If 
the presiding officer determines that a stockholder proposal was not made in 
accordance with the terms of this Article IX.B., he or she shall so declare at 
the annual meeting and any such proposal shall not be acted upon at the annual 
meeting.

     This provision shall not prevent the consideration and approval or 
disapproval at the annual meeting of reports of officers, directors and 
committees of the Board of Directors, but in connection with such reports, no 
new business shall be acted upon at such annual meeting unless stated, filed and
received as herein provided.

                                      13


<PAGE>
 
                                   ARTICLE X

             CERTAIN BUSINESS COMBINATIONS, ACQUISITIONS OF STOCK,
                AND CERTAIN PROVISIONS APPLICABLE FOR TEN YEARS

     A.  Definitions and Related Matters.

         (a) Acquire. The term "acquire" includes every type of acquisition,
whether effected by purchase, exchange, gift, transfer or otherwise, or by
operation of law.

         (b) Affiliate. An "Affiliate" of, or a Person "affiliated with," a
specified Person means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.

          (c)  Associate.  The term "Associate" when used to indicate a 
relationship with any Person means:

               (i) Any corporation or organization (other than the Corporation
          or a Subsidiary of the Corporation) of which such Person is an officer
          or partner or is, directly or indirectly, the beneficial owner of 10
          percent or more of any class of equity securities;

               (ii) Any trust or other estate in which such Person has a 10
          percent or greater beneficial interest or as to which such Person
          serves as trustee or in a similar fiduciary capacity;

               (iii) Any relative or spouse of such Person, or any
          relative of such spouse who has the same home as such Person; or

               (iv) Any investment company registered under the
          Investment Company Act of 1940 for which such Person or any
          Affiliate or Associate of such Person serves as investment
          advisor.

          (d) Beneficial Owner. A Person shall be considered the "Beneficial
Owner" of any shares of stock (whether or not owned of record):

               (i)    With respect to which such Person or any Affiliate
          or Associate of such Person directly or indirectly has or shares (1)
          voting power, including the power to vote or to direct the voting of
          such shares of stock and/or (2) investment power, including the power
          to dispose of or to direct the disposition of such shares of stock;

               (ii)   Which such Person or any Affiliate or Associate of
          such Person has (1) the right to acquire (whether such right is
          exercisable

                                      14

<PAGE>
 

immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, and/or (2) the right to vote pursuant
to any agreement, arrangement or understanding (whether such right is
exercisable immediately or only after the passage of time); or

     (iii)  Which are Beneficially Owned within the meaning of (i) or (ii) of
this Article X.A.(d) by any other Person with which such first-mentioned Person
or any of its Affiliates or Associates has any agreement, arrangement or
understanding, written or oral, with respect to acquiring, holding, voting or
disposing of any shares of stock of the Corporation or any Subsidiary of the
Corporation or acquiring, holding or disposing of all or substantially all, or
any Substantial Part, of the assets or businesses of the Corporation or a
Subsidiary of the Corporation.

     For the purpose only of determining whether a Person is the Beneficial
Owner of a percentage specified in this Article X of the outstanding Voting
Shares, such shares shall be deemed to include any Voting Shares which may be
issuable pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants, options or otherwise
and which are deemed to be Beneficially Owned by such Person pursuant to the
foregoing provisions of this Article X.A.(d).

(e)  Business Combination.  A "Business Combination" means:

     (i)    The sale, exchange, lease, transfer or other disposition to or with
a Related Person or any Affiliate or Associate of such Related Person by the
Corporation or any of its Subsidiaries (in a single transaction or a series of
related transactions) of all or substantially all, or any Substantial Part, of
its or their assets or businesses (including, without limitation, any securities
issued by a Subsidiary);

     (ii)   The purchase, exchange, lease or other acquisition by the
Corporation or any of its Subsidiaries (in a single transaction or a series of
related transactions) of all or substantially all, or any Substantial Part, of
the assets or business of a Related Person or any Affiliate or Associate of such
Related Person;

     (iii)  Any merger or consolidation of the Corporation or any Subsidiary
thereof into or with a Related Person or any Affiliate or Associate of such
Related Person or into or with another Person which, after such merger or
consolidation, would be an Affiliate or an Associate of a Related Person, in
each case irrespective of which Person is the surviving entity in such merger or
consolidation;

                                      15
<PAGE>
 
     (iv)   Any reclassification of securities, recapitalization or other
transaction (other than a redemption in accordance with the terms of the
security redeemed) which has the effect, directly or indirectly, of increasing
the proportionate amount of Voting Shares of the Corporation or any Subsidiary
thereof which are Beneficially Owned by a Related Person, or any partial or
complete liquidation, spin-off or split-up of the Corporation or any Subsidiary
thereof; provided, however, that this Article X.A.(e)(iv) shall not relate to
any transaction of the types specified herein that have been approved by the
affirmative vote of at least two-thirds of the Whole Board of Directors and a
majority of the Continuing Directors; or

     (v)    The acquisition upon the issuance thereof of Beneficial Ownership by
a Related Person of Voting Shares or securities convertible into Voting Shares
or any voting securities or securities convertible into voting securities of any
Subsidiary of the Corporation, or the acquisition upon the issuance thereof of
Beneficial Ownership by a Related Person of any rights, warrants or options to
acquire any of the foregoing or any combination of the foregoing Voting Shares
or voting securities of a Subsidiary.

     As used in this definition, a "series of related transactions" shall be
deemed to include not only a series of transactions with the same Related Person
but also a series of separate transactions with a Related Person or any
Affiliate or Associate of such Related Person.

     Anything in this definition to the contrary notwithstanding, this
definition shall not be deemed to include any transaction of the type set forth
in Article X.A.(e)(i) through X.A.(e)(iii) between or among any two or more
Subsidiaries of the Corporation if such transaction has been approved by the
affirmative vote of at least two-thirds of the Whole Board of Directors and a
majority of the Continuing Directors on or prior to the Date of Determination .

(f)  Continuing Director.  A "Continuing Director" shall mean:

     (i)    Each of the present directors of the Corporation as set forth in
Article VII, whether or not such person is a Related Person or an Affiliate or
Associate of a Related Person, except that such designation shall in no way be
deemed to affect or change or diminish the fiduciary duties of such person to
the Corporation;

     (ii)   An individual who is unaffiliated with a Related Person and who was
a member of the Board of Directors prior to the time that a Related Person
acquired 10% or more of the Voting Shares; or,

                                      16
<PAGE>
 
          (iii)  An individual who is unaffiliated with a Related Person and who
     is designated before his or her initial election as a Continuing Director
     by a majority of the then Continuing Directors.

     (g)  Date of Determination. The term "Date of Determination" means:

          (i)    The date on which a binding agreement (except for the
     fulfillment of conditions precedent, including, without limitation, votes
     of stockholders to approve such transaction) is entered into by the
     Corporation, as authorized by its Board of Directors, and another Person
     providing for any Business Combination; or,

          (ii)   If such an agreement as referred to in Article X.A.(g)(i) above
     is amended so as to make it less favorable to the Corporation and its
     stockholders, the date on which such amendment is approved by the Board of
     Directors of the Corporation; or,

          (iii)  In cases where neither Article X.A.(g)(i) nor (ii) shall be
     applicable, the record date for the determination of stockholders of the
     Corporation entitled to notice of and to vote upon the transaction in
     question.

          A majority of the Continuing Directors shall have the power and duty
     to determine the Date of Determination as to any transaction under this
     Article X. Any such determination shall be conclusive and binding for all
     purposes of this Article X.

     (h)  Fair Market Value. The term "Fair Market Value" shall mean:

          (i)    In the case of stock, the highest closing sale price during the
     30-day period immediately preceding the date in question of a share of such
     stock on the Composite Tape for New York Stock Exchange - Listed Stocks,
     or, if such stock is not quoted on the Composite Tape, on the New York
     Stock Exchange or the American Stock Exchange, or, if such stock is not
     listed on such exchanges, on the principal United States securities
     exchange registered under the Exchange Act on which such shares are listed,
     or, if such shares are not listed on any such exchange, the highest closing
     price with respect to a share of such stock during the 30-day period
     preceding the date in question on the National Market System of the
     National Association of Securities Dealers Automated Quotations ("NASDAQ")
     System, or, if not listed on the National Market System, the highest mean
     of the closing bid and asked quotations on the NASDAQ System during such
     30-day period or any system then in use, or, if no such quotations are
     available, the fair market value on the date in question of a share as
     determined by a majority of the Continuing Directors in good faith; and

                                      17
<PAGE>
 
          (ii)   In the case of property other than cash or stock, the fair
     market value of such property on the date in question as determined by a
     majority of the Continuing Directors in good faith.

     (i)  Independent Majority of Stockholders. The term "Independent Majority
of Stockholders" shall mean the holders of a majority of the outstanding Voting
Shares that are not Beneficially Owned or controlled, directly or indirectly, by
a Related Person.

     (j)  Offer.  The term "Offer" shall mean every offer to buy or otherwise
acquire, solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for value;
provided that the term "Offer" shall not include: (a) inquiries directed solely
--------
to the management of the Corporation and not intended to be communicated to
stockholders which are designed to elicit an indication of management's
receptivity to the basic structure of a potential acquisition with respect to
the amount of cash and/or securities, manner of acquisition and formula for
determining price, or (b) non-binding expressions of understanding or letters of
intent with the management of the Corporation regarding the basic structure of a
potential acquisition with respect to the amount of cash and/or securities,
manner of acquisition and formula for determining price.

     (k)  Person.  The term "Person" shall mean any person, partnership,
corporation, association, joint stock company, trust, unincorporated
organization or similar company, syndicate or group or other entity, alone or
acting in concert with any of the foregoing (other than the Corporation, any
Subsidiary of the Corporation or a trustee holding stock for the benefit of
employees of the Corporation or its Subsidiaries, or any one of them, pursuant
to one or more employee benefit plans or arrangements). When two or more Persons
act as a partnership, limited partnership, syndicate, association or other group
for the purpose of acquiring, holding or disposing of shares of stock, such
partnership, syndicate, association or group shall be deemed a "Person."

     (l)  Related Person.  The term "Related Person" shall mean any Person who
or which is (a) the Beneficial Owner, as of the Date of Determination, or
immediately prior to the consummation of a Business Combination, of 10% or more
of the Voting Shares; or (b) an Affiliate of the Corporation and at any time
within the two-year period immediately prior to the announcement of a Business
Combination was the Beneficial Owner, directly or indirectly, of 10% or more of
the then outstanding Voting Shares; or (c) an assignee of or has otherwise
succeeded to any Voting Shares which were at any time within the two-year period
immediately prior to the announcement of a Business Combination Beneficially
Owned by any Related Person, if such assignment or succession shall have
occurred in the course of a transaction or series of transactions not involving
a public offering within the meaning of the Securities Act of 1933.

     (m)  Substantial Part.  The term "Substantial Part" as used with reference
to the assets of the Corporation, of any Subsidiary or of any Related Person
means assets

                                      18

<PAGE>
 
having a value of more than 10% of the total consolidated assets of the 
Corporation and its Subsidiaries as of the end of the Corporation's most recent 
fiscal year ending prior to the time the determination is being made.

                (n)  Subsidiary.  The term "Subsidiary" shall mean any 
corporation or other entity of which the Person in question owns not less than 
50 percent of any class of equity securities, directly or indirectly.

                (o)  Voting Shares.  The term "Voting Shares" shall mean shares 
of the Corporation entitled to vote generally in the election of directors.

                (p)  Whole Board of Directors.  The term "Whole Board of 
Directors" shall mean the total number of directors which the Corporation would 
have if there were no vacancies.

                (q)  Certain Determinations with Respect to Article X.

                     (i)    A majority of the Continuing Directors shall have
                the power to determine for the purposes of this Article X, on
                the basis of information known to them; (1) the number of Voting
                Shares of which any Person is the Beneficial Owner, (2) whether
                a Person is an Affiliate or Associate of another, (3) whether a
                Person has an agreement, arrangement or understanding with
                another as to the matters referred to in the definition of
                "Beneficial Owner" as hereinabove defined, (4) whether the
                assets subject to any Business Combination constitute a
                "Substantial Part" as hereinabove defined, (5) whether two or
                more transactions constitute a "series of related transactions"
                as hereinabove defined, (6) any matters referred to in Article
                X.A.(q)(ii) below, and (7) such other matters with respect to
                which a determination is required under this Article X.

                     (ii)   A Related Person shall be deemed to have acquired a
                share of the Corporation at the time when such Related Person
                became a Beneficial Owner thereof. With respect to shares owned
                by Affiliates, Associates or other Persons whose ownership is
                attributable to a Related Person under the foregoing definition
                of Beneficial Owner, if the price paid by such Related Person
                for such shares is not determinable, the price so paid shall be
                deemed to be the higher of (1) the price paid upon acquisition
                thereof by the Affiliate, Associate or other Person or (2) the
                market price of the shares in question (as determined by a
                majority of the Continuing Directors) at the time when the
                Related Person became the Beneficial Owner thereof.

                (r)  Fiduciary Obligation.  Nothing contained in this Article X 
shall be construed to relieve any Related Person from any fiduciary obligation 
imposed by law.

                                      19


<PAGE>
 
        B.      Approval of Business Combination.

                (a)  Except as provided in Article X.B.(b), neither the 
Corporation nor any of its Subsidiaries shall become party to any Business 
Combination without the prior affirmative vote at a meeting of the Corporation's
stockholders of:

                     (i)    The holders of not less than 80 percent of the 
                outstanding Voting Shares, voting separately as a class, and

                     (ii)   An Independent Majority of Stockholders.

        Such favorable votes shall be in addition to any stockholder vote which 
would be required without reference to this Article X.B.(a) and shall be 
required notwithstanding the fact that no vote may be required, or that some 
lesser percentage may be specified by law or otherwise.

                (b)  The provisions of Article X.B.(a) shall not apply to a 
particular Business Combination, and such Business Combination shall require 
only such stockholder vote (if any) as would be required without reference to 
this Article X.B., if all of the conditions set forth in subparagraphs (i) 
through (vii) below are satisfied:

                     (i)    The ratio of (1) the aggregate amount of the cash
                and the Fair Market Value of the other consideration to be
                received per share of Common Stock (as defined in Article V) of
                the Corporation in such Business Combination by holders of
                Common Stock other than the Related Person involved in such
                Business Combination, to (2) the market price per share of the
                Common Stock immediately prior to the announcement of the
                proposed Business Combination, is at least as great as the ratio
                of (x) the highest per share price (including brokerage
                commissions, transfer taxes and soliciting dealers' fees) which
                such Related Person has theretofore paid in acquiring any Common
                Stock prior to such Business Combination, to (y) the market
                price per share of Common Stock immediately prior to the initial
                acquisition by such Related Person of any shares of Common
                Stock; and

                     (ii)   The aggregate amount of the cash and the Fair Market
                Value of other consideration to be received per share of Common
                Stock in such Business Combination by holders of Common Stock,
                other than the Related Person involved in such Business
                Combination, is not less than the highest per share price
                (including brokerage commissions, transfer taxes and soliciting
                dealers' fees) paid by such Related Person in acquiring any of
                its holdings of Common Stock; and

                     (iii)  If applicable, the ratio of (1) the aggregate amount
                of the cash and the Fair Market Value of other consideration to
                be received per share of Preferred Stock (as defined in Article
                V) of the Corporation in such

                                      20
<PAGE>
 
     Business Combination by holders of Preferred Stock other than the Related
     Person involved in such Business Combination, to (2) the market price per
     share of the Preferred Stock immediately prior to the announcement of the
     proposed Business Combination, is at least as great as the ratio of (x) the
     highest per share price (including brokerage commissions, transfer taxes
     and soliciting dealers' fees) which such Related Person has theretofore
     paid in acquiring any Preferred Stock prior to such Business Combination to
     (y) the market price per share of Preferred Stock immediately prior to the
     initial acquisition by such Related Person of any shares of Preferred
     Stock; and

          (iv) If applicable, the aggregate amount of the cash and the Fair
     Market Value of other consideration to be received per share of Preferred
     Stock in such Business Combination by holders of Preferred Stock, other
     than the Related Person involved in such Business Combination, is not less
     than the highest per share price (including brokerage commissions, transfer
     taxes and soliciting dealers' fees) paid by such Related Person in
     acquiring any of its holdings of Preferred Stock; and

          (v) The consideration (if any) to be received in such Business
     Combination by holders of stock other than the Related Person (whether
     Common Stock or Preferred Stock) involved shall, except to the extent that
     a stockholder agrees otherwise as to all or part of the shares which he or
     she owns, be in the same form and of the same kind as the consideration
     paid by the Related Person in acquiring Common Stock or Preferred Stock
     already owned by it; and

          (vi)  After such Related Person became a Related Person and prior to 
     the consummation of such Business Combination:

               (1) such Related Person shall vote his shares in such a manner as
          to cause, to the extent necessary and within his power as a
          stockholder, the Board of Directors of the Corporation to include at
          all times representation by Continuing Directors proportionate to the
          ratio that the number of Voting Shares of the Corporation from time to
          time owned by stockholders who are not Related Persons bears to all
          Voting Shares of the Corporation outstanding at the time in question
          (with a Continuing Director to occupy any resulting fractional
          position among the directors);

               (2) such Related Person shall not have acquired from the
          Corporation, directly or indirectly, any shares of the Corporation
          (except (x) upon conversion of convertible securities acquired by it

                                      21

<PAGE>
 
     prior to becoming a Related person or (y) as a result of a pro rata stock 
     dividend, stock split or division of shares or (z) in a transaction which 
     satisfied all applicable requirements of this Article X);

         (3)  such Related Person shall not have acquired any additional Voting 
     Shares of the Corporation or securities convertible into or exchangeable
     for Voting Shares except as a part of the transaction which resulted in
     such Related Person becoming a Related Person;

         (4)  such Related Person shall not have (x) received the benefit, 
     directly or indirectly (except proportionately as a stockholder), of any
     loans, advances, guarantees, pledges or other financial assistance or tax
     credits provided by the Corporation or any Subsidiary, or (y) made any
     major change in the Corporation's business or equity capital structure or
     entered into any contract, arrangement or understanding with the
     Corporation except any such change, contract, arrangement or understanding
     as may have been approved by the favorable vote of not less than a majority
     of the Whole Board of Directors and a majority of the Continuing Directors
     of the Corporation; and

         (5)  except as approved by a majority of the Whole Board of Directors
     and a majority of the Continuing Directors, there shall have been: (x) no
     failure to declare and pay at the regular date therefor any dividends
     (whether or not cumulative) on any outstanding Preferred Stock; (y) no
     reduction in the annual rate of dividends paid on the Common Stock (except
     as necessary to reflect any subdivision of the Common Stock); and (z) an
     increase in such annual rate of dividends as necessary to reflect any
     reclassification (including any reverse stock split), recapitalization,
     reorganization or any similar transaction which has the effect of reducing
     the number of outstanding shares of the stock; and

     (viii)  A proxy statement complying with the requirements under the 
Exchange Act shall have been mailed to all holders of Voting Shares for the 
purpose of soliciting stockholder approval of such Business Combination. Such 
proxy statement is not required to be filed with or approved by the Office of 
Thrift Supervision unless otherwise required by law. Such proxy statement shall 
contain at the front thereof, in a prominent place, any recommendations as to 
the advisability (or inadvisability) of the Business Combination which the 
Continuing Directors, or any of them, may have furnished in writing and, if 
deemed advisable by a majority of the Continuing Directors, an opinion of a 
reputable investment banking firm as to the fairness (or lack of fairness) of 
the terms of such Business Combination from the point

                                      22
<PAGE>
 
          of view of the holders of Voting Shares other than any Related Person
          (such investment banking firm to be selected by a majority of the
          Continuing Directors, to be furnished with all information it
          reasonably requests, and to be paid a reasonable fee for its services
          upon receipt by the Corporation of such opinion).

         (c)  for purposes of Article X.B(b)(i) through X.B.(b)(iv) hereof, in 
the event of a Business Combination upon consummation of which the Corporation
would be the surviving corporation or company or would continue to exist (unless
it is provided, contemplated or intended that as part of such Business
Combination or within one year after consummation thereof a plan of liquidation
or dissolution of the Corporation will be effected), the term "other
consideration to be received" shall include (without limitation) Common Stock
retained by the stockholders of the Corporation other than Related Persons who
are parties to such Business Combination.

         (d)  The provisions of this Article X.B. shall not apply to (i) any 
Business Combination approved by two-thirds of the Whole Board of Directors of 
the Corporation at a time prior to the acquisition of 10 percent or more of the 
outstanding Voting Shares of the Corporation by the Related Person, or (ii) any 
Business Combination approved by two-thirds of the Whole Board of Directors and 
a majority of the Continuing Directors after such acquisition.

     C.  Evaluation of Business Combinations, Etc. In connection with the
exercise of its judgment in determining what is in the best interest of the
Corporation and its stockholders when evaluating a Business Combination or a
proposal by another Person or Persons to make a Business Combination or a
tender or exchange offer, the Board of Directors of the Corporation shall, in
addition to considering the adequacy of the amount to be paid in connection with
any such transaction, consider all of the following factors and any other
factors which it deems relevant: (i) the social and economic effects of the
transaction on the Corporation and its Subsidiaries and their respective
employees, depositors, loan and other customers, creditors and other elements of
the communities in which the Corporation and its Subsidiaries operate or are
located; (ii) the business and financial condition and earnings prospects of the
acquiring Person or Persons, including, but not limited to, debt service and
other existing or likely financial obligations of the acquiring Person or
Persons, and the possible effect of such conditions upon the Corporation and its
Subsidiaries operate or are located; and (iii) the competence, experience and
integrity of the acquiring Person or Persons and its or their management.

     D.  Certain Provisions Applicable for Ten Years.  For a period of ten years
from the date of incorporation of the Corporation, the following provisions 
shall apply:

                                      23
<PAGE>
 
     No Person shall directly or indirectly offer to acquired or acquire the
Beneficial Ownership of more than 10 percent of any class of an equity security
of the Corporation. This limitation shall not apply: (a) to a transaction in
which the Corporation forms a holding company without change in the respective
Beneficial Ownership interests of its stockholders other than pursuant to
the exercise of any dissenter and appraisal rights, the purchase of shares by
underwriters in connection with a public offering, or the purchase of shares by
a tax-qualified employee stock benefit plan which is exempt from the approval
requirements of (S)574.3(c)(1)(vi) of the Rules and Regulations of the Office of
Thrift Supervision; or (b) where (i) the offer or acquisition is approved by
two-thirds of the Whole Board of Directors of the Corporation at a time prior to
the offer or acquisition, or (ii) where the offer or acquisition is approved by
two-thirds of the Whole Board of Directors and a majority of the Continuing
Directors after such offer or acquisition.

     In the event shares are acquired in violation of this Article X.D., all
shares beneficially owned by any Person in excess of 10% shall be considered
"excess shares" and shall not be counted as shares entitled to vote and shall
not be voted by any Person or counted as Voting Shares in connection with any
maters submitted to the stockholders for a vote.

     E.  Amendments, Etc. of this Article X.  Notwithstanding any other
provisions of these Articles of Incorporation or the Bylaws of the Corporation
(and notwithstanding the fact that some lesser percentage may be specified by
law, these Articles of Incorporation or the Bylaws of the Corporation), this
Article X shall not be amended, altered, changed, or repealed without the
affirmative vote of (i) the holders of two-thirds or more of the outstanding
Voting Shares, voting separately as a class, and (ii) an Independent Majority of
Stockholders; provided, however, that this Article X.E. shall not apply to, and
such vote shall not be required for, any such amendment, change or repeal
recommended to stockholders by the favorable vote of not less than two-thirds of
the Whole Board of Directors, including a majority of the Continuing Directors,
and any such amendment, change or repeal so recommended shall require only the
vote, if any, required under the applicable provisions of the TBCA, these
Articles of Incorporation and the Bylaws of the Corporation.

                                  ARTICLE XI

               AMENDMENT OF ARTICLES OF INCORPORATION AND BYLAWS

     A.  Articles of Incorporation.  The Corporation reserves the right to
amend, alter, change or repeal any provision contained in these Articles of
Incorporation, in the manner now or hereafter prescribed by law, and all rights
conferred upon stockholders herein are granted subject to this reservation. No
amendment, addition, alteration, change or repeal of these Articles of
Incorporation shall be made unless it is first approved by the Board of
Directors of the Corporation pursuant to a resolution adopted by the affirmative
vote of a majority of the directors then in office, and thereafter is approved
by the holders of a

                                      24
<PAGE>
 
majority of the shares of the Corporation entitled to vote generally in an 
election of directors, voting together as a single class, unless any class or 
series of shares is entitled to vote thereon as a class, in which event the 
proposed amendment shall be adopted upon receiving the affirmative vote of the 
holders of a majority of the shares within each class or series of outstanding 
shares entitled to vote thereon as a class and of at least a majority of the 
total outstanding shares entitled to vote thereon, provided that, 
notwithstanding anything contained in these Articles of Incorporation to the 
contrary, (i) the affirmative vote of the holders of at least two-thirds of the 
shares of the Corporation entitled to vote generally in an election of 
directors, voting together as a single class, unless any class or series of 
shares is entitled to vote thereon as a class, in which event the proposed 
amendment shall be adopted upon receiving the affirmative vote of the holders of
two-thirds of the shares within each class or series of outstanding shares 
entitled to vote thereon, shall be required to amend, adopt, alter, change or 
repeal any provision inconsistent with Articles VI, VII, VIII, IX and this 
Article XI, and (ii) Article X shall be amended in the manner specified in 
Article X.E.

        B.  Bylaws.  The Board of Directors may adopt, alter, amend or repeal 
the Bylaws of the Corporation.  Such action by the Board of Directors shall 
require the affirmative vote of a majority of the directors then in office at 
any regular or special meeting of the Board of Directors.


                                  ARTICLE XII

                                 SEVERABILITY

        If a final judicial determination is made or an order is issued by a
court or government regulatory agency having jurisdiction that any provision of
these Articles is unreasonable or otherwise unenforceable, such provisions shall
not be rendered void, but shall be deemed amended to apply to the maximum extent
as such court or government regulatory agency may determine or indicate to be
reasonable. If, for any reason, any provision of these Articles shall be held
invalid, such invalidity shall not affect any other provision of these Articles
not held so invalid, and each such other provision shall, to the full extent
consistent with law, continue in full force and effect. If any provision of
these Articles shall be held invalid in part, such invalidity shall in no way
affect the remainder of such provision, and the remainder of such provision,
together with all other provisions of these Articles shall, to the full extent
consistent with law, continue in full force and effect.


                                      25

<PAGE>
 
        I, THE UNDERSIGNED, being the duly authorized Chief Executive Officer 
of the Sulphur Springs Loan and Building Association, A Texas Savings 
Association, Sulphur Springs, Texas, the sole incorporator, for the purpose of 
forming a corporation pursuant to the TBCA do make these Articles of 
Incorporation, hereby declaring and certifying that this is my act and deed on 
behalf of L & B Financial, Inc. and the facts herein stated are true, and 
accordingly have hereunto set my hand this _______th day of August 1995.

                                Sulphur Springs Loan and Building Association
                                 A Texas Savings Association



                                By:
                                   -------------------------------------
                                Name:  C. Glynn Lowe
                                Title: Chief Executive Officer


Subscribed and duly sworn to before me, this _____ day of August 1995 at Sulphur
Springs, Texas.





---------------------------
Notary Public