EXHIBIT 2AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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Title: EXHIBIT 2AGREEMENT AND PLAN OF MERGER
Governing Law: Ohio Date: 8/11/2004
Industry: Regional Banks Law Firm: Vorys, Sater, Seymour and Pease LLP Sector: Financial

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EXHIBIT 2

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (hereinafter referred to as the

"AGREEMENT"), made and entered into this 10th day of August, 2004, by and among

Croghan Bancshares, Inc., a bank holding company incorporated under the laws of

Ohio (hereinafter referred to as "CBI"); The Croghan Colonial Bank, a bank

incorporated under the laws of Ohio (hereinafter referred to as "CCB"); Croghan

Interim Bank, an interim bank to be incorporated under the laws of Ohio

(hereinafter referred to as "INTERIM"); and The Custar State Bank, a bank

incorporated under the laws of Ohio (hereinafter referred to as "CUSTAR");

WITNESSETH:

WHEREAS, the authorized capital of CBI consists of 3,000,000 common

shares, $12.50 par value per share, 1,898,128 of which are issued and

outstanding;

WHEREAS, the authorized capital of CCB consists of 160,232 common shares,

$12.50 par value per share, 160,232 of which are issued and outstanding and are

owned of record by CBI;

WHEREAS, the authorized capital of INTERIM will consist of 1,500 common

shares, $12.50 par value per share, one of which will be issued and outstanding

and owned of record by CCB;

WHEREAS, the authorized capital of CUSTAR consists of 187,498 common

shares, $10.00 par value per share, all of which are issued and outstanding and

held of record by approximately 380 shareholders;

WHEREAS, the Boards of Directors of CBI, CCB and CUSTAR believe that it is

in the best interests of each of them and their shareholders for INTERIM to

merge with and into CUSTAR (hereinafter referred to as the "MERGER");

WHEREAS, as a result of the MERGER and in accordance with the terms of

this Agreement, INTERIM will cease to have a separate corporate existence, CCB

will acquire all of the issued and outstanding shares of CUSTAR as the surviving

corporation and shareholders of CUSTAR will receive from CBI, in exchange for

each common share of CUSTAR, $74.10 in cash; and

WHEREAS, promptly following the MERGER, CUSTAR, as the surviving

corporation in the MERGER, will merge with and into CCB;

NOW THEREFORE, in consideration of the premises and the mutual covenants

and agreements hereinafter set forth, the parties hereto, each intending to be

legally bound, hereby agree as follows:

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ARTICLE ONE

THE MERGER

SECTION 1.01. MERGER OF INTERIM and CUSTAR. In accordance with the terms

and subject to the conditions of this AGREEMENT and Chapters 1115 and 1701 of

the Ohio Revised Code (hereinafter referred to as the "ORC"), INTERIM shall

merge with and into CUSTAR at the EFFECTIVE TIME (hereinafter defined); CUSTAR

shall be the continuing, surviving and resulting corporation in the MERGER;

CUSTAR shall continue to exist as a bank incorporated under Ohio law; and CUSTAR

shall be the only one of CUSTAR and INTERIM to continue its separate corporate

existence after the EFFECTIVE TIME.

SECTION 1.02. The name of the SURVIVING CORPORATION in the MERGER of

INTERIM with and into CUSTAR shall be "The Custar State Bank."

SECTION 1.03. The purposes for which the SURVIVING CORPORATION shall be

formed shall be identical to the purposes for which CUSTAR was formed.

SECTION 1.04. The capital of the SURVIVING CORPORATION shall consist of

187,498 common shares, $10.00 par value per share.

SECTION 1.05. The Articles of Incorporation of CUSTAR, as amended, a copy

of which is attached hereto as Exhibit A, shall be the Articles of Incorporation

of the SURVIVING CORPORATION until amended in accordance with law.

SECTION 1.06. The Code of Regulations of CUSTAR, as amended, shall be the

Code of Regulations of the SURVIVING CORPORATION, except that Article III,

Section 1 of the Code of Regulations of CUSTAR, as amended, shall be amended as

of the EFFECTIVE TIME to read as follows:

SECTION 1. Number of Directors: The number of directors of the

Corporation shall be five (5), until changed in accordance with the

provisions of these Regulations. The number of directors may be

fixed or changed at a meeting of the shareholders called for the

purpose of electing directors at which a quorum is present, only by

the affirmative vote of the holders of not less than a majority of

the voting shares which are represented at the meeting, in person or

by proxy, and entitled to vote on such proposal

SECTION 1.07. At and after the EFFECTIVE TIME and until changed in

accordance with law, the principal place of business of the SURVIVING

CORPORATION shall be 22973 Defiance Pike, Custar, Ohio 43511.

SECTION 1.08. At and after the EFFECTIVE TIME and until changed in

accordance with law, the number of directors of the SURVIVING CORPORATION shall

be five, the names and residence addresses of whom are as follows:

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<TABLE>

NAMES RESIDENCE ADDRESS

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

<S> <C>

Steven C. Futrell 297 Greenbriar Circle

Fremont, Ohio 43420

John P. Keller 1505 McPherson Blvd.

Fremont, Ohio 43420

Daniel W. Lease 2276 East State Street

Fremont, Ohio 43420

Allan E. Mehlow 2569 Fangboner Road

Fremont, Ohio 43420

J. Terrence Wolfe 1305 McPherson Blvd.

Fremont, Ohio 43420

</TABLE>

SECTION 1.09. At and after the EFFECTIVE TIME and until changed in

accordance with law, each individual who is an officer of INTERIM immediately

prior to the EFFECTIVE TIME shall be an officer of the SURVIVING CORPORATION

holding the same office as held with INTERIM immediately prior to the EFFECTIVE

TIME.

SECTION 1.10. CLOSING. (a) The closing of the transactions contemplated by

this AGREEMENT (hereinafter referred to as the "CLOSING") shall take place at a

time and on a date selected by CBI within thirty (30) days after the

satisfaction or waiver of the last of the conditions set forth in Article Eight

of this AGREEMENT to be satisfied or waived.

(b) On the day of the CLOSING, INTERIM and CUSTAR shall cause (i)

a Certificate of Merger in respect of the MERGER to be filed by the

Superintendent of the Division of Financial Institutions of the Ohio Department

of Commerce (hereinafter referred to as the "DIVISION") in the Office of the

Ohio Secretary of State in accordance with Chapters 1115 and 1701 of the ORC.

The MERGER shall become effective at 11:58 p.m. on the date of such filing

(herein referred to as the "EFFECTIVE TIME").

ARTICLE TWO

CONVERSION AND CANCELLATION OF

SHARES IN THE MERGER

SECTION 2.01. CONVERSION AND CANCELLATION OF SHARES IN THE MERGER. At the

EFFECTIVE TIME and as a result of the MERGER, automatically and without further

act of CBI, CCB, INTERIM, CUSTAR, or the holders of INTERIM or CUSTAR shares,

the following shall occur:

(a) Each CUSTAR common share shall be cancelled and extinguished

and, in substitution and exchange therefor, the holders

thereof shall be entitled,

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subject to and upon compliance with Section 2.02 of this

AGREEMENT, to receive from CBI $74.10 in cash (the "PER SHARE

PURCHASE PRICE");

(b) The issued and outstanding common shares of INTERIM before the

EFFECTIVE TIME shall remain issued and outstanding after the

EFFECTIVE TIME and shall be and constitute the issued and

outstanding shares of SURVIVING CORPORATION; and

the EFFECTIVE TIME shall remain issued and outstanding after

the EFFECTIVE TIME and shall be unaffected by the MERGER.

SECTION 2.02. SHARE CERTIFICATES IN THE MERGER. (a) Not later than three

(3) business days after the EFFECTIVE TIME, CBI shall mail to each holder of

record of CUSTAR common shares a form letter of transmittal and instructions for

use in effecting the surrender for exchange of the certificates evidencing the

CUSTAR common shares cancelled and extinguished as a result of the MERGER

(hereinafter referred to, collectively, as the "CERTIFICATES" and, individually,

as a "CERTIFICATE"). At the EFFECTIVE TIME, CBI shall deposit in a designated

account at CBI for the benefit of the former holders of CUSTAR common shares an

amount of cash sufficient to pay the PER SHARE PURCHASE PRICE for each

outstanding CUSTAR common share. Upon surrender of a CERTIFICATE for

cancellation, together with such letter of transmittal, duly executed, the

holder of such CERTIFICATE shall be entitled to receive in exchange therefor the

PER SHARE PURCHASE PRICE for each share evidenced by such CERTIFICATE in

accordance with the provisions of this AGREEMENT, and the CERTIFICATE so

surrendered shall thereafter be cancelled forthwith.

(b) In the event that any holder of CUSTAR common shares cancelled

and extinguished in accordance with this AGREEMENT is unable to deliver the

CERTIFICATE which evidences such shares of the holder, CBI, in the absence of

actual notice that any shares theretofore evidenced by any such CERTIFICATE have

been acquired by a bona fide purchaser, shall deliver to such holder the amount

to which such holder is entitled in accordance with the provisions of this

AGREEMENT upon the presentation of all of the following:

(i) Evidence to the reasonable satisfaction of CBI that any

such CERTIFICATE has been lost, wrongfully taken or

destroyed;

(ii) Such security or indemnity as may be reasonably

requested by CBI to indemnify and hold CBI harmless; and

(iii) Evidence to the reasonable satisfaction of CBI that such

person is the owner of the shares theretofore

represented by each CERTIFICATE claimed by such person

to be lost, wrongfully taken or destroyed and that such

person is the person who would be entitled to present

each such CERTIFICATE for exchange pursuant to this

AGREEMENT.

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accordance with this AGREEMENT is to be made to a person other than the person

in whose name the CERTIFICATE surrendered is registered, the CERTIFICATE so

surrendered shall be properly endorsed or otherwise in proper form for transfer

and the person requesting such payment shall pay any transfer or other taxes

required by reason of the payment to a person other than the registered holder

of the CERTIFICATE surrendered or establish to the satisfaction of CBI that such

tax has been paid or is not applicable. Until surrendered in accordance with the

provisions of this Section 2.02, each CERTIFICATE shall represent for all

purposes the right to receive the cash as determined pursuant to this AGREEMENT.

(d) The certificate evidencing the issued and outstanding common

shares of INTERIM before the EFFECTIVE TIME shall evidence the issued and

outstanding common shares of the SURVIVING CORPORATION after the EFFECTIVE TIME.

SECTION 2.03. COMPLIANCE WITH SECTION 2.02. No payment shall be made by

CBI to any former holder of CUSTAR common shares in accordance with this

AGREEMENT until any such holder shall have complied with paragraphs (a) through

(d) of Section 2.02 of this AGREEMENT.

SECTION 2.04. PAYMENT IN SATISFACTION OF RIGHTS. All payments made upon

the surrender of CERTIFICATES pursuant to this Article Two shall be deemed to

have been made in full satisfaction of all rights pertaining to the shares

evidenced by such CERTIFICATES.

SECTION 2.05. NO FURTHER REGISTRATION OF TRANSFER. After the EFFECTIVE

TIME, there shall be no further registration of transfer of CUSTAR common shares

on the stock transfer books of CUSTAR. In the event that, after the EFFECTIVE

TIME, CERTIFICATES evidencing such shares are presented for transfer, they shall

be cancelled and exchanged as provided in this Article Two.

SECTION 2.06. DISSENTING SHARES. Notwithstanding anything in this

AGREEMENT to the contrary, the CUSTAR common shares which are outstanding

immediately before the EFFECTIVE TIME and which are held by shareholders who

shall not have voted such shares in favor of this AGREEMENT, who shall have

delivered to CBI or CUSTAR a written demand for appraisal of such shares in the

manner provided in Section 1701.85 of the ORC and who shall have otherwise

complied fully with all of the requirements of Section 1701.85 of the ORC shall

not be converted into or be exchangeable for the right to receive the

consideration provided in this AGREEMENT; provided, however, that (i) each of

such shares (hereinafter referred to as the "DISSENTING SHARES") shall

nevertheless be cancelled and extinguished in accordance with this AGREEMENT;

(ii) the holder of DISSENTING SHARES, upon full compliance with the requirements

of Section 1701.85 of the ORC, shall be entitled to payment of the fair cash

value of such shares in accordance with the provisions of Section 1701.85 of the

ORC; and (iii) in the event (I) any holder of DISSENTING SHARES shall

subsequently withdraw such holder's demand for appraisal of such shares within

sixty days after the EFFECTIVE TIME or shall fail to establish such holder's

entitlement to appraisal rights in accordance with Section 1701.85 of the ORC or

(II) any holder of DISSENTING SHARES has not filed a petition demanding a

determination of the value of such shares within the period provided in Section

1701.85 of the

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ORC, such holder shall forfeit the right to appraisal of such shares and such

shares shall thereupon be deemed to have been converted into and to have become

exchangeable for the right to receive the consideration provided in this

AGREEMENT.

SECTION 2.07. SEPARATE EXISTENCE. At and after the EFFECTIVE TIME, the

separate existence of INTERIM shall cease; provided, however, that whenever a

conveyance, assignment, transfer, deed or other instrument or act is necessary

to vest property or rights in the SURVIVING CORPORATION, the officers of INTERIM

and CUSTAR shall execute, acknowledge and deliver such instruments and do such

acts.

SECTION 2.08. PROPERTY. At and after the EFFECTIVE TIME, all of the assets

and property of every kind and character, real, personal and mixed, tangible and

intangible, choses in action, rights and credits owned by INTERIM and CUSTAR at

the EFFECTIVE TIME, or which would inure to any of them, shall immediately, by

operation of law and without any conveyance or transfer and without any further

act or deed, be vested in and become the property of the SURVIVING CORPORATION,

which shall have, hold and enjoy the same in its own right as fully and to the

same extent as the same were possessed, held and enjoyed by INTERIM and CUSTAR

before the EFFECTIVE TIME. The SURVIVING CORPORATION shall be deemed to be and

shall be a continuation of the entity and identity of CUSTAR. All of the rights

and obligations of INTERIM or CUSTAR shall not revert or in any way be impaired

by reason of the MERGER. Any claim existing, or action or proceeding pending, by

or against either INTERIM or CUSTAR, may be prosecuted to judgment with right of

appeal as if the MERGER had not taken place or the SURVIVING CORPORATION may be

substituted in its place.

SECTION 2.09. CREDITOR'S RIGHTS. At and after the EFFECTIVE TIME, all the

rights of creditors of each of INTERIM and CUSTAR shall be preserved unimpaired,

and all liens upon the property of INTERIM and CUSTAR shall be preserved

unimpaired on only the property affected by any such lien immediately before the

EFFECTIVE TIME.

ARTICLE THREE

THE BANK MERGER

SECTION 3.01. MERGER OF CCB AND CUSTAR. In accordance with the terms and

subject to the conditions of this AGREEMENT and Chapters 1115 and 1701 of the

ORC, immediately following the MERGER, CUSTAR shall merge with and into CCB

pursuant to an agreement of merger in the form attached hereto as Exhibit B, to

be executed by CCB and CUSTAR (hereinafter referred to as the "BANK MERGER").

CCB shall be the continuing, surviving and resulting corporation in the BANK

MERGER, shall continue to exist as a bank incorporated under Ohio law and shall

be the only one of CUSTAR and CCB to continue its separate corporate existence

after the BANK MERGER.

ARTICLE FOUR

REPRESENTATIONS AND WARRANTIES OF CUSTAR

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CUSTAR represents and warrants to CBI and CCB that each of the following

is true and accurate in all material respects:

SECTION 4.01. ORGANIZATION AND STANDING. CUSTAR is a bank duly organized,

validly existing and in good standing under the laws of Ohio and has the

corporate power and authority to own or hold under lease all of its properties

and assets and to conduct its business and operations as presently conducted.

CUSTAR is a member in the Federal Reserve System, and the savings accounts and

deposits of CUSTAR are insured up to applicable limits by the Federal Deposit

Insurance Corporation (hereinafter referred to as the "FDIC"). Except as set

forth in Section 4.01 of the schedule delivered by CUSTAR to CBI on the date

hereof (hereinafter referred to as the "DISCLOSURE SCHEDULE"), CUSTAR is in

compliance in all material respects with all applicable local, state or federal

laws and regulations, including, without limitation, the regulations of the

FDIC, the DIVISION and the Federal Reserve Board (hereinafter referred to as the

"FRB").

SECTION 4.02. QUALIFICATION. CUSTAR is either duly qualified to do

business and in good standing in each jurisdiction in which such qualification

is required or the failure to so qualify would not have a material adverse

effect on the business of CUSTAR.

SECTION 4.03. AUTHORITY. (a) Subject to the approval of this AGREEMENT and

the transactions contemplated hereby, including the MERGER, by the CUSTAR

shareholders and by the DIVISION and the FRB, (i) CUSTAR has all of the

requisite corporate power and authority to enter into this AGREEMENT and to

perform all of its obligations hereunder; (ii) the execution and delivery of

this AGREEMENT and the consummation of the transactions contemplated hereby have

been duly authorized by all necessary corporate action by CUSTAR; and (iii) this

AGREEMENT is the valid and binding agreement of CUSTAR, enforceable against

CUSTAR in accordance with its terms, (I) subject to applicable bankruptcy,

insolvency, reorganization and moratorium laws and other laws of general

applicability affecting the enforcement of creditors' rights generally and the

effect of rules of law governing specific performance, injunctive relief and

other equitable remedies on the enforceability of such documents and (II) except

to the extent such enforceability may be limited by laws relating to safety and

soundness of insured depository institutions as set forth in 12 U.S.C. Section

1818(b) or by the appointment of a conservator by the FDIC. This AGREEMENT has

been duly executed and delivered by CUSTAR.

(b) The Articles of Incorporation and Code of Regulations of

CUSTAR and the applicable provisions of the ORC require the approval of this

AGREEMENT and the transactions contemplated hereby, including the MERGER, by the

affirmative vote of the holders of sixty-six and two-thirds (66 2/3) percent of

the outstanding common shares of CUSTAR. No other law or regulation requires any

other vote of the holders of CUSTAR shares in respect of this AGREEMENT or the

transactions contemplated hereby.

SECTION 4.04. GOVERNING DOCUMENTS. CUSTAR has made available to CBI true

and accurate copies of its Articles of Incorporation and Code of Regulations and

has granted CBI access to all records of all meetings and other corporate

actions by the shareholders, Board of Directors and committees of the Board of

Directors of CUSTAR; provided however, that CUSTAR has not provided to CBI the

minutes from one meeting of the CUSTAR Board of

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Directors at which meeting the parties, terms and conditions of the potential

transaction for acquisition of CUSTAR were discussed. Except as noted in the

immediately preceding sentence, the minute books of CUSTAR contain, in all

material respects, complete and accurate records of all meetings and other

corporate actions of the CUSTAR shareholders, Board of Directors and committees

of the Board of Directors.

SECTION 4.05. NO CONFLICTS. Except as set forth in Section 4.05 of the

DISCLOSURE SCHEDULE, the execution and delivery of this AGREEMENT, the

consummation of the transactions contemplated hereby, including the MERGER

(subject to the approval of this AGREEMENT and the transactions contemplated

hereby, including the MERGER, by the CUSTAR shareholders, the DIVISION and the

FRB), will not (a) conflict with or violate any provision of or result in the

breach of any provision of the Articles of Incorporation or Bylaws of CUSTAR;

(b) conflict with or violate any provision of or result in the breach or the

acceleration of or entitle any party to accelerate (whether upon or after the

giving of notice of lapse of time or both) any obligation under, or otherwise

materially affect the terms of, any mortgage, lien, lease, agreement, license,

instrument, order, arbitration award, judgment or decree to which CUSTAR is a

party or by which CUSTAR or its property or assets is bound; (c) require the

consent of any party to any agreement or commitment to which CUSTAR is a party

or by which CUSTAR or its property or assets is bound, the failure to obtain

which could, individually or in the aggregate with all the other failures to

obtain required consents, have a material adverse effect on the business,

operations, condition (financial or otherwise) or prospects of CUSTAR; (d)

result in the creation or imposition of any lien, charge, pledge, security

interest or other encumbrance upon any property or assets of CUSTAR or give rise

to any meritorious cause of action against CUSTAR; or (e) violate or conflict

with any applicable law, ordinance, rule or regulation, including, without

limitation, the rules and regulations of the FDIC, the FRB and the DIVISION. The

termination of the data processing agreement dated as of October 1, 2000 between

CUSTAR and Rurbanc Data Services, Inc., in connection with the transactions

contemplated by this AGREEMENT will result in the payment of a termination fee

of less than $60,000.

SECTION 4.06. CONSENTS. No consent, approval, order or authorization of,

or registration, declaration or filing with, any governmental authority is

required by CUSTAR in connection with the execution and delivery of this

AGREEMENT by CUSTAR or the consummation by CUSTAR of the transactions

contemplated hereby, including the MERGER, except for filings, authorizations,

consents or approvals required by the DIVISION and the FRB.

SECTION 4.07. AUTHORIZED CAPITAL. (a) The authorized capital of CUSTAR

consists of 187,498 common shares, $10.00 par value per share, all of which are

issued and outstanding and held of record by approximately 380 shareholders. All

of the outstanding common shares of CUSTAR are duly authorized, validly issued,

fully paid and nonassessable; were issued in full compliance with all applicable

laws and regulations; and were not issued in violation of the preemptive right

of any shareholder of CUSTAR. CUSTAR has no outstanding class of capital stock

other than such common shares. There are no outstanding subscription rights,

options, conversion rights, warrants or other agreements or commitments or

benefit plans of any nature whatsoever (either firm or conditional) obligating

CUSTAR (i) to issue, deliver or sell, cause to be issued, delivered or sold, or

restricting CUSTAR from selling any additional CUSTAR shares, or (ii) to grant,

extend or enter into any such agreement or commitment.

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SECTION 4.08. FINANCIAL STATEMENTS; CALL REPORTS. (a) CUSTAR has delivered

to CBI copies of the Reports of Condition and Income of CUSTAR as of December

31, 2003, March 31, 2004 and June 30, 2004, as filed with the FRB (hereinafter

referred to as the "CALL REPORTS"). The CALL REPORTS have been, and all Reports

of Condition and Income filed by CUSTAR hereafter will be, prepared on a

consistent basis and fairly present the financial position of CUSTAR at such

dates and the results of its operations for such periods.

(b) CUSTAR has timely filed with the FRB all CALL REPORTS required

to be filed since December 31, 2003. As of their respective dates of filing,

such CALL REPORTS (including all financial statements or schedules included or

incorporated by reference therein) complied in all material respects with the

applicable laws and regulations then in effect.

the DISCLOSURE SCHEDULE, as of June 30, 2004, CUSTAR had no liabilities or

obligations material to the business condition (financial or otherwise) of

CUSTAR, whether accrued, absolute, contingent or otherwise, and whether due or

to become due.

(d) The CALL REPORTS did not, as of the dates thereof, contain any

untrue statement of a material fact or omit to state any material fact necessary

to make the information contained therein, in light of the circumstances under

which they were made, not misleading.

SECTION 4.09. CONDUCT OF BUSINESSES. Except as set forth in Section 4.09

of the DISCLOSURE SCHEDULE, since December 31, 2003, CUSTAR has conducted its

businesses only in the ordinary and usual course, there have been no material

adverse changes in the financial condition, assets, liabilities, obligations,

properties, business or prospects of CUSTAR and, except as set forth in any of

the CALL REPORTS and Section 4.09 of the DISCLOSURE SCHEDULE, CUSTAR has not:

(a) Authorized the creation or issuance of, issued, sold or

disposed of, or created any obligation to issue, sell or

dispose of, any stock, notes, bonds or other securities or any

obligation convertible into or exchangeable for, any shares of

its capital stock;

(b) Declared, set aside, paid or made any dividend or other

distributions on its capital stock or directly or indirectly

redeemed, purchased or acquired any shares or entered into any

agreement in respect of the foregoing;

exchange of shares, readjustment or other reclassification;

(d) Amended its Articles of Incorporation or Code of Regulations;

(e) Purchased, sold, assigned or transferred any material tangible

asset or any material patent, trademark, trade name,

asset or property;

<PAGE>

(f) Mortgaged, pledged or granted or suffered to exist any lien or

other encumbrance or charge on any assets or properties,

tangible or intangible, except for liens for taxes not yet due

and payable and such other liens, encumbrances or charges

which do not materially adversely affect its financial

position;

(g) Waived any rights of material value or cancelled any material

debts or claims;

(h) Incurred any material obligation or liability (absolute or

contingent), including, without limitation, any tax liability,

or paid any material liability or obligation (absolute or

contingent) other than liabilities and obligations incurred in

the ordinary course of business;

(i) Experienced any material change in the amount or general

composition of its deposit liabilities or its loan portfolio;

(j) Entered into or amended any employment contract with any of

its officers, increased the compensation payable to any

officer or director or any family member of any such officer

or director, or become obligated to increase any such

compensation, adopted or amended in any material respect any

employee benefit plans, severance plan or collective

bargaining agreement or made any awards or distributions under

any employee benefit plans not consistent with past practice

or custom;

(k) Incurred any damage, destruction or similar loss, not covered

by insurance, materially affecting its businesses or

properties;

(l) Acquired any stock or other equity interest in any

corporation, partnership, trust, joint venture or other

entity;

(m) Made any (I) material investment (except investments made in

the ordinary course of business) or (II) material capital

expenditure or commitment for any material addition to

property, plant or equipment;

(n) Agreed, whether in writing or otherwise, to take any action

described in this Section 4.09.

SECTION 4.10. PROPERTIES. (a) A description of all personal property and

fixed assets owned by CUSTAR is set forth in Section 4.10(a) of the DISCLOSURE

SCHEDULE (hereinafter referred to as the "PERSONAL PROPERTY"). CUSTAR owns and

has good title to all of the PERSONAL PROPERTY, free and clear of any mortgage,

lien, pledge, charge, claim, conditional sales or other agreement, lease, right

or encumbrance, except (i) as set forth in Section 4.10(a) of the DISCLOSURE

SCHEDULE, (ii) to the extent stated or reserved against in the CALL REPORTS and

(iii) such other exceptions which are not material in character or amount and do

not materially detract from the value of or interfere with the use of the

properties or assets subject thereto or affected thereby.

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(b) Except as set forth in Section 4.10(b) of the DISCLOSURE

SCHEDULE, the documentation (hereinafter referred to as "LOAN DOCUMENTATION")

governing or relating to the loan and credit-related assets (hereinafter

referred to as the "LOAN ASSETS") included within the loan portfolio of CUSTAR

is legally sufficient in all material respects for the purposes intended thereby

and creates enforceable rights in favor of CUSTAR in accordance with the terms

of such LOAN DOCUMENTATION, subject to applicable bankruptcy, insolvency,

reorganization and moratorium laws and other laws of general applicability

affecting the enforcement of creditors' rights generally, and the effect of

rules of law governing specific performance, injunctive relief and other

equitable remedies on the enforceability of such documents. Except as set forth

in Section 4.10(b) of the DISCLOSURE SCHEDULE, to the best knowledge of CUSTAR,

the LOAN DOCUMENTATION is in compliance with, and each of the loans included

within the loan portfolio of CUSTAR has been processed, closed and administered

in conformance with, all applicable federal consumer protection statutes and

regulations, including without limitation, the Truth in Lending Act, the Equal

Credit Opportunity Act and the Real Estate Settlement Procedures Act. Except as

set forth in Section 4.10(b) of the DISCLOSURE SCHEDULE, to the best knowledge

of CUSTAR, no debtor under any of the LOAN DOCUMENTATION has asserted any claim

or defense with respect to the subject matter thereof.

is set forth in Section 4.10(c) of the DISCLOSURE SCHEDULE (hereinafter referred

to individually as a "PARCEL" and collectively as the "REAL PROPERTIES"). CUSTAR

is the owner of each PARCEL in fee simple and has good and marketable title to

each such PARCEL, free and clear of any liens, claims, charges, encumbrances or

security interests of any kind, except (i) as set forth in Section 4.10(c) of

the DISCLOSURE SCHEDULE, (ii) liens for real estate taxes and assessments not

yet delinquent and (iii) utility, access and other easements, rights of way,

restrictions and exceptions, none of which impair the REAL PROPERTIES for the

use and business being conducted thereon.

(d) CUSTAR does not lease any real property to or from any person

or entity. CUSTAR has not received notification from any governmental entity

within the two year period immediately preceding the date hereof of contemplated

improvements to the REAL PROPERTIES or surrounding area or community by public

authority, the costs of which are to be assessed as special taxes against the

REAL PROPERTIES in the future.

(e) A description of all personal property leased by CUSTAR is set

forth in Section 4.10(e) of the DISCLOSURE SCHEDULE (hereinafter referred to as

the "LEASED PERSONAL PROPERTY"). True and correct copies of the leases in

respect of the LEASED PERSONAL PROPERTY (hereinafter referred to as the

"PERSONAL PROPERTY LEASES") and all attachments, amendments and addendums

thereto have been delivered to CBI. Except as set forth in Section 4.10(e) of

the DISCLOSURE SCHEDULE, the PERSONAL PROPERTY LEASES create, in accordance with

their terms, valid, binding and assignable leasehold interests of CUSTAR in all

of the LEASED PERSONAL PROPERTY, free and clear of all liens, claims, charges,

encumbrances or security interests of any kind. CUSTAR has complied in all

material respects with all of the provisions under the PERSONAL PROPERTY LEASES

required on its

<PAGE>

part to be complied with and is not in default with respect to any of its

obligations (including payment obligations) under any of the PERSONAL PROPERTY

LEASES.

(f) Section 4.10(f) of the DISCLOSURE SCHEDULE contains a complete

list of all contracts (hereinafter referred to as the "LOAN SALE CONTRACTS")

pursuant to which CUSTAR has sold loans to third party investors at any time

within the last twenty-four months. Except as otherwise set forth in Section

4.10(f) of the DISCLOSURE SCHEDULE, (i) no purchaser under any LOAN SALE

CONTRACT has requested, or notified CUSTAR that it may be requesting, that

CUSTAR repurchase any loan pursuant to the terms of the LOAN SALE CONTRACT and

(ii) no facts exist that would require CUSTAR to repurchase any loans previously

sold under any LOAN SALE CONTRACT.

SECTION 4.11. ALLOWANCE FOR LOAN LOSSES. Except as set forth in Section

4.11 of the DISCLOSURE SCHEDULE, there is no loan which was made by CUSTAR and

which is reflected as an asset of CUSTAR in the CALL REPORTS that (i) is sixty

(60) days or more delinquent or (ii) has been classified by examiners

(regulatory or internal) as "Substandard," "Doubtful" or "Loss." The allowance

for loan losses reflected in the CALL REPORTS was, as of each respective date,

determined in accordance with all rules and regulations applicable to CUSTAR

and, in the opinion of management of CUSTAR, was adequate in all material

respects to provide for reasonably anticipated losses on outstanding loans, net

of recoveries.

SECTION 4.12. INVESTMENTS. (a) Section 4.12(a) of the DISCLOSURE SCHEDULE

contains (i) a true, accurate and complete list of all investments, other than

investments in the LOAN ASSETS and REAL PROPERTIES, owned by CUSTAR (hereinafter

referred to as the "INVESTMENTS") as of the date hereof, the name of the

registered holder thereof, the location of the certificates therefor or other

evidence thereof and any stock powers or other authority for transfer granted

with respect thereto and (ii) a true, accurate and complete list of the names of

each bank or other depository in which CUSTAR has an account or safe deposit box

and the names of all persons authorized to draw thereon or to have access

thereto. Except as set forth in Section 4.12(a) of the DISCLOSURE SCHEDULE, the

INVESTMENTS, other than any such INVESTMENTS disposed of in the ordinary course

of business prior to the date hereof, are owned by CUSTAR, free and clear of all

liens, pledges, claims, security interests, encumbrances, charges or

restrictions of any kind and may be freely disposed of by CUSTAR at any time.

CUSTAR is not a party to and has no interest in any repurchase agreement,

reverse repurchase agreement, collateralized mortgage obligation or any other

derivative security.

(b) CUSTAR does not own of record or beneficially the outstanding

shares of, or any equity interest in, any corporation or other business entity.

SECTION 4.13. REPORTS AND RECORDS. CUSTAR has filed all reports required

to be filed by it under various rules and regulations of the DIVISION, the FRB

and the FDIC. All such reports complied in all material respects with applicable

requirements of law and regulations in effect at the time of filing such reports

and contained in all material respects the information required to be stated

therein. None of such reports, when filed, contained any untrue statement of a

material fact or omitted to state a material fact required to be stated therein

or necessary in

<PAGE>

order to make the statements therein, in light of the circumstances under which

they were made, not misleading.

SECTION 4.14. TAXES. Except as set forth in Section 4.14 of the DISCLOSURE

SCHEDULE, CUSTAR has timely filed all returns, statements, reports and forms

(including, without limitation, elections, declarations, disclosures, schedules,

estimates and information returns) (collectively, the "TAX RETURNS") with

respect to all federal, state, local and foreign income, gross income, gross

receipts, gains, premium, sales, use, ad valorem, transfer, franchise, profits,

withholding, payroll, employment, excise, severance, stamp, occupancy, license,

lease, environmental, customs, duties, property, windfall profits and all other

taxes (including, without limitation, any interest, penalties or additions to

tax with respect thereto, individually a "TAX," and collectively, "TAXES")

required to be filed with the appropriate tax authority. Such TAX RETURNS were

true, correct and complete in all material respects. CUSTAR has paid and

discharged all TAXES due (whether reflected on such TAX RETURNS or otherwise),

other than such TAXES that are adequately reserved as shown on the CALL REPORTS

(excluding any reserve for deferred TAXES established to reflect timing

differences between book and TAX income) or have arisen in the ordinary course

of business since June 30, 2004. Except as set forth in Section 4.14 of the

DISCLOSURE SCHEDULE, neither the Internal Revenue Service (the "IRS") nor any

other taxing agency or authority, domestic or foreign, has asserted, is now

asserting or, to the knowledge of CUSTAR, is threatening to assert against

CUSTAR any deficiency or claim for additional TAXES. There are no unexpired

waivers by CUSTAR of any statute of limitations with respect to TAXES. No

extension of time within which to file any TAX RETURN (for a period with respect

to which the statute of limitations has not expired) has been filed, or has been

requested or granted. The accruals and reserves for TAXES reflected in the CALL

REPORTS (excluding any reserve for deferred TAXES established to reflect timing

differences between book and TAX income) are adequate for the periods covered.

CUSTAR has withheld or collected and paid over to the appropriate governmental

authorities or are properly holding for such payment all TAXES required by law

to be withheld or collected. There are no liens for TAXES upon the assets of

CUSTAR, other than liens for current TAXES not yet due and payable. CUSTAR has

not agreed to make, nor is it required to make, any adjustment under Section

481(a) of the Internal Revenue Code of 1986, as amended (hereinafter referred to

as the "CODE"). Except as set forth in Section 4.14 of the DISCLOSURE SCHEDULE,

CUSTAR is not a party to any agreement, contract, arrangement or plan that has

resulted, or could result, individually or in the aggregate, in the payment of

"excess parachute payments" within the meaning of Section 280G of the CODE.

CUSTAR has never been a member of an affiliated group of corporations, within

the meaning of Section 1504 of the CODE, other than an affiliated group of which

CUSTAR is or was the common parent corporation. CUSTAR does not have any

liability for the TAXES of any other person or entity under Treasury Department

Regulation Section 1.1502-6 (or any similar provision of state, local or foreign

law), as a transferee or successor, by contract or otherwise. None of the assets

of CUSTAR is property which CUSTAR is required to treat as being owned by any

other person pursuant to the so-called "safe harbor lease" provisions of former

Section 168(f)(8) of the CODE. None of the assets of CUSTAR directly or

indirectly secures any debt the interest on which is tax-exempt under Section

103(a) of the CODE. None of the assets of CUSTAR is "tax-exempt use property"

within the meaning of Section 168(h) of the CODE. CUSTAR is not, and has not

been, a United States real property

<PAGE>

holding corporation (as defined in Section 897(c)(2) of the CODE) during the

applicable period specified in Section 897(c)(1)(A)(ii) of the CODE. No TAX is

required to be withheld pursuant to Section 1445 of the Code as a result of the

transactions contemplated by this AGREEMENT. CUSTAR is not a party to any joint

venture, partnership or other entity, agreement or contract that could be

treated as a partnership for federal income tax purposes. CUSTAR has not made,

nor is it bound by, any election under Section 197 of the CODE. CUSTAR has

disclosed on its federal income TAX RETURNS all positions taken therein that

could give rise to a substantial understatement of federal income tax within the

meaning of Section 6662 of the CODE.

SECTION 4.15. MATERIAL CONTRACTS. (a) Except as set forth in Section

4.15(a) of the DISCLOSURE SCHEDULE, CUSTAR is not a party to or bound by any

written or oral (i) contract or commitment for capital expenditures in excess of

$5,000 for any one project or $10,000 in the aggregate; (ii) contract or

commitment made in the ordinary course of business for the purchase of materials

or supplies or for the performance of services involving payments to or by

CUSTAR of an amount exceeding $5,000 in the aggregate or extending for more than

six (6) months from the date hereof; (iii) contract or option for the purchase

of any property, real or personal; (iv) letter of credit or indemnity calling

for payment, upon the conditions stated therein, of more than $10,000; (v)

guarantee agreement; (vi) instrument granting any person authority to transact

business on behalf of CUSTAR; (vii) contracts or commitments relating to

outstanding loans and/or commitments to make loans (including unfunded

commitments and lines of credit) to any one person (together with "affiliates"

of that person) in excess of $150,000 in the aggregate; (viii) employment,

management, consulting, deferred compensation, severance or other similar

contract with any director, officer or employee of CUSTAR; (ix) note, debenture

or loan agreement pursuant to which CUSTAR has incurred indebtedness; (x) loan

participation agreement; (xi) loan servicing agreement; (xii) contract or

commitment relating to a real estate development project consisting of the

development of more than one single family dwelling; (xiii) commitment to make

any acquisition, development or construction loan; (xiv) commitment or agreement

to do any of the foregoing; or (xv) other contract, agreement or commitment made

outside the ordinary course of business (contracts set forth in Section 4.15 of

the DISCLOSURE SCHEDULE are hereinafter collectively referred to as the

"CONTRACTS"). CUSTAR previously delivered to CBI (i) all of the CONTRACTS and

(ii) all form lending agreements and deposit forms used by CUSTAR in the

ordinary course of business.

(b) CUSTAR is not in material default under any of the CONTRACTS and

no claim of such default by any party has been made or is now threatened. There

does not exist any event which, with notice or the passing of time or both,

would constitute a material default under, or would excuse performance by any

party thereto from, any CONTRACT to which CUSTAR is a party.

SECTION 4.16. INSURANCE. CUSTAR has delivered to CBI copies of all

policies of insurance currently maintained by CUSTAR. Section 4.16 of the

DISCLOSURE SCHEDULE contains a listing of all such insurance policies.

SECTION 4.17. ACTIONS AND SUITS. Except as set forth in Section 4.17 of

the DISCLOSURE SCHEDULE, there are no actions, suits or proceedings or

investigations pending or, to the knowledge of CUSTAR, threatened against or

affecting the business, operations or

<PAGE>

financial condition of CUSTAR in any court or before any federal, state,

municipal or other governmental department, commission, board, bureau, agency or

instrumentality, and management of CUSTAR has no knowledge of any basis for any

such action, suit, proceeding or investigation. Except as set forth in Section

4.17 of the DISCLOSURE SCHEDULE, CUSTAR is not in default in respect of any

judgment, order, writ, injunction or decree of any court or any federal, state,

municipal or other governmental department, commission, board, bureau, agency or

instrumentality.

SECTION 4.18. PERMITS AND LICENSES. CUSTAR has all material permits,

licenses, orders and approvals of all federal, state or local governmental or

regulatory bodies required for CUSTAR to conduct its business as presently

conducted, and all such material permits, licenses, orders and approvals are in

full force and effect, without the threat of suspension or cancellation. None of

such permits, licenses, orders or approvals will be adversely affected by the

consummation of the transactions contemplated by this AGREEMENT.

SECTION 4.19. EMPLOYEE BENEFIT PLANS; ERISA. (a) Section 4.19 of the

DISCLOSURE SCHEDULE contains a true and complete list of all qualified pension

or profit-sharing plans, deferred compensation, consulting, bonus, group

insurance plans or agreements and all other incentive, welfare or employee

benefit plans or agreements maintained for the benefit of employees or former

employees of CUSTAR (hereinafter collectively referred to as the "PLANS").

Copies of such PLANS, together with copies of (i) the most recent actuarial and

financial reports prepared with respect to any PLANS which provide benefits by

means other than through insurance contracts, (ii) the most recent annual

reports filed with any governmental agency, (iii) any summary plan description

or other summaries of PLAN benefits and (iv) all rulings and determination

letters and any open requests for rulings or letters that pertain to any

qualified plan, have been delivered to CBI.

(b) Each PLAN which constitutes an "employee pension plan," as

defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,

as amended (hereinafter referred to as "ERISA"), is and has been administered in

material compliance with its governing documents and the applicable provisions

of ERISA and any such employee pension plan which is intended to be qualified

under the provisions of Section 401(a) of the CODE, is covered by a current

determination letter from the Internal Revenue Service (hereinafter referred to

as the "IRS") and is and has been administered in material compliance with the

applicable provisions of the CODE.

as defined in Section 3(1) of ERISA, is and has been administered in material

compliance with its governing documents and the applicable provisions of ERISA

and the CODE, and each PLAN which constitutes a "group health plan," as defined

in Section 5000(b)(1) of the CODE, is and has been administered in material

compliance with the continuation of coverage provisions contained in Section

4980B of the CODE.

(d) Each PLAN which is not an "employee benefit plan," as defined in

Section 3(3) of ERISA, is and has been administered in material compliance with

its governing documents and with any and all state or federal laws applicable to

such PLAN.

<PAGE>

(e) With respect to any "employee pension plan" (as defined in

Section 3(3) of ERISA) maintained by CUSTAR which is subject to the provisions

of Title IV of ERISA, (i) no liability, other than for minimum funding

contributions with respect to The Custar State Bank Defined Benefit Plan and for

payment of premiums to the Pension Benefit Guaranty Corporation ("PBGC"), which

have been made or will be made on a timely basis, under Title IV of ERISA has

been or is expected to be incurred by CUSTAR; (ii) no notice of a "reportable

event," within the meaning of Section 4043 of ERISA, for which the thirty (30)

day reporting requirement has not been waived, has been required to be filed

within the twelve (12) month period ending on the date hereof, and no such

notice will be required to be filed as a result of the transactions contemplated

by this AGREEMENT; (iii) the PBGC has not instituted termination proceedings

and, to the knowledge of CUSTAR, no condition exists that presents a material

risk that such proceedings will be instituted; (iv) the present value of all

benefit liabilities of the defined benefit plan shall not exceed the value of

the plan's assets, determined as of July 23, 2004 and as if the plan was

terminated on that date under a standard termination pursuant to Title IV of

ERISA, by more than $250,000; and there has been neither an adverse change in

the financial condition of such plan nor any amendment or other change to such

plan that would increase the amount of benefits thereunder which reasonably

could be expected to change such results; (v) no "accumulated funding

deficiency" (whether or not waived) within the meaning of Section 412 of the

CODE or Section 302 of ERISA has been incurred and all required payments to the

PBGC have been made on or before their due dates; and (vi) no action has been

taken nor has any omission occurred that has resulted, or would reasonably be

expected to result, in the imposition of a lien under Section 412(n) of the CODE

or pursuant to ERISA.

(f) CUSTAR does not maintain any PLAN which provides post-retirement

medical, dental or life insurance benefits to any former employee of CUSTAR and

is not obligated to provide any such benefit to any current employee upon his or

her retirement.

(g) CUSTAR has never been obligated to make contributions to any

"multiemployer plan" as defined in Section 3(37) of ERISA.

(h) Neither CUSTAR, nor any PLAN maintained by CUSTAR, nor any

fiduciary of any such PLAN, has incurred any material liability to any PLAN

participant (other than routine claims for benefits), the Pension Benefit

Guaranty Corporation, the United States Department of Labor or to the IRS with

respect to a PLAN.

(i) No prohibited transaction (which shall mean any transaction

prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)

has occurred with respect to any "

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