As filed with the Securities and Exchange Commission on March 5, 1996

Registration No. 33-65197

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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

AMENDMENT NO. 1
TO FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

Carnegie Bancorp
(Exact name of Registrant as specified in its charter)

New Jersey 6712 22-3257100
(State or other juris- (Primary Standard Industrial (I.R.S. Employer
diction of incorporation Classification Code Number) Identification Number)
or organization)

619 Alexander Road
Princeton, New Jersey 08540
(609) 520-0601
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

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

Carnegie Bancorp
619 Alexander Road
Princeton, New Jersey 08540
Attention: Thomas L. Gray, Jr.
Chief Executive Officer
(609) 520-0601
(Name and address, including zip code, and telephone number,
including area code, of agent of service)

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

With copies of all communications to:

Michael M. Horn, Esq. Frederick W. Dreher, Esq.
McCarter & English Duane, Morris & Heckscher
Four Gateway Center 4200 One Liberty Place

Newark, New Jersey 07102 Philadelphia, Pennsylvania 19103
(201) 622-4444 (215) 979-1234

Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this Registration Statement becomes
effective.

Page 1 of ___ pages
Exhibit Index on Page ___

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

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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

CROSS-REFERENCE SHEET

Pursuant to Item 501(b) of Regulation S-K

Form S-4 Item Number Heading or Location
and Caption In Prospectus
- ------------------------------- -------------------------------

A. Information About the
Transaction

1. Forepart of Registration Facing Page; Outside Front
Statement and Outside Front Cover Page of Registration
Cover Page of Prospectus Statement and Prospectus

2. Inside Front and Outside Inside Front and Outside
Back Cover Pages of Back Cover Pages of
Prospectus Prospectus

3. Risk Factors, Ratio of Earn- Summary; Information
ings to Fixed Charges and About Carnegie; Information
Other Information About Regent

4. Terms of the Transaction Summary; Voting and Prox-
ies; Proposal 1 -- The Merger;
Comparison of Shareholders
Rights; Comparative Per
Share Market Information;
Description of Carnegie
Securities

5. Pro Forma Financial Pro Forma Consolidated
Information Financial Statements

6. Material Contacts With the Proposal 1 -- The Merger--Background of
Company Being Acquired the Merger and -- Recommendations
of the Carnegie and Regent
Boards and Reasons for the Merger

7. Additional Information Re- Not Applicable
quired for Reoffering by
Persons and Parties Deemed
to Be Underwriters

8. Interests of Named Experts Not Applicable
and Counsel

9. Disclosure of Commission Not Applicable
Position on Indemnification
for Securities Act

Liabilities

B. Information About the
Registrant

10. Information With Respect to Not Applicable
S-3 Companies

11. Incorporation of Certain Not Applicable
Information by Reference

12. Information With Respect to Not Applicable
S-2 or S-3 Registrants

13. Incorporation of Certain Not Applicable
Information by Reference

14. Information With Respect to Summary; Proposal 1 -- The Merger;
Registrants Other Than S-3 Description of Carnegie
or S-2 Registrants Securities; Information About
Carnegie; Comparison
of Shareholder Rights;
Comparative Per Share
Market Information; Carne-
gie Consolidated Financial
Statements; Proposal 2 --
Amendment to Carnegie's Certificate
of Incorporation to Authorize
Preferred Stock

C. Information About the
Company Being Acquired

15. Information With Respect to Not Applicable
S-3 Companies

16. Information With Respect to Not Applicable
S-2 or S-3 Companies

17. Information With Respect to Summary; Proposal 1 -- The Merger;
Registrants Other Than S-3 Description of Regent
or S-2 Companies Securities; Information
About Regent; Comparison of

Shareholder Rights;
Comparative Per Share
Market Information; Regent
Consolidated Financial
Statements

D. Voting and Management
Information

18. Information if Proxies, Summary; Voting and Prox-
Consents or Authorizations ies; Proposal 1 -- The Merger
are to be Solicited

19. Information if Proxies, Not Applicable
Consents or Authorizations
are not to be Solicited in
an Exchange Offer

CARNEGIE BANCORP
619 Alexander Road
Princeton, New Jersey 08540

____________, 1996

Dear Shareholder:

You are cordially invited to attend a Special Meeting of Shareholders of
Carnegie Bancorp ("Carnegie") to be held at ___ a.m., local time, on ________ ,
March __, 1996, at ____
- ---------------------------------------------------------- .

At the Special Meeting, you will be asked to consider and vote upon an
Amended and Restated Agreement and Plan of Merger dated as of August 30, 1995,
(the "Merger Agreement") among Carnegie, Carnegie Bank, N.A. ("CBN"), a wholly
owned subsidiary of Carnegie, Regent Bancshares Corp. ("Regent") and Regent
National Bank (the "Bank"), a wholly owned subsidiary of Regent. Pursuant to the
Merger Agreement, Regent will be merged with and into Carnegie (the "Merger"),
and CBN will be merged with and into the Bank (the "Bank Merger") which will
conduct business under the name Carnegie Regent Bank, N.A. ("CRBN").

Briefly, the Merger Agreement provides that upon the Merger:

(a) each share of Regent Common Stock will be converted
into 0.75 shares of Carnegie Common Stock;

(b) each share of Regent Series A Convertible Preferred Stock will be
converted into one share of a newly authorized Series A Carnegie Convertible
Preferred Stock, which in turn will be convertible into 0.75 shares of Carnegie
Common Stock; and

(c) each publicly outstanding Regent warrant and stock option will be
converted, without any cash payment, into Carnegie Common Stock at the rate of
one Carnegie share for warrants and options evidencing in the aggregate the
right to buy 7 1/2 Regent shares.

In addition, each share of Regent Series B, Series C, Series D and Series E
Convertible Preferred Stock will be called for redemption at a price of $10.00
per share shortly before consummation of the Merger.

The Merger will not affect the rights of the holders of Carnegie Common
Stock or Carnegie common stock purchase warrants, all of which will remain
unchanged and outstanding.

In connection with the Merger, Carnegie shareholders will be asked to
authorize an amendment (the "Amendment") to Carnegie's

Certificate of Incorporation authorizing 1,500,000 shares of series preferred
stock ("Carnegie Series Preferred Stock") and allowing the Board of Directors to
determine the rights, preferences and designations of any series preferred stock
from time to time. Pursuant to the Merger Agreement, Carnegie will be required
to issue approximately 487,532 shares of Carnegie Series A Convertible Preferred
Stock to the holders of Regent Series A Convertible Preferred Stock. This will
leave approximately 1,012,468 shares of Carnegie Series Preferred Stock
available for future issuances.

In addition, Carnegie shareholders will be asked to approve stock option
plans for the officers and directors of Carnegie and CRBN.

Complete information concerning the Merger and the Bank Merger, a
description of the respective businesses of Carnegie and Regent, their
respective financial statements and the complete text of the Merger Agreement, a
description of the Amendment and complete details of the provisions of the stock
option plans are set forth in the accompanying Joint Proxy Statement/Prospectus.

Carnegie's Board of Directors and management believe the Merger and the
Bank Merger offer significant advantages for Carnegie, its shareholders, its
customers and its employees. They also believe the Merger and the Bank Merger
will strengthen the surviving corporation's ability to compete and enhance its
business potential.

Following the Merger, seven representatives of each of Carnegie and Regent
will constitute Carnegie's Board of Directors. Management of Carnegie following
the Merger will be comprised of current officers of both Carnegie and Regent.
Bruce A. Mahon, the current Chairman of the Board of Carnegie, will continue to
serve as Chairman of the Board of Carnegie and CRBN, Thomas L. Gray, Jr., the
current President and Chief Executive Officer of Carnegie, will continue to
serve as President and Chief Executive Officer of Carnegie and CRBN, David W.
Ring, Chairman of the Board of Regent, will become a Vice Chairman of Carnegie,
and Harvey Porter, the current President and Chief Executive Officer of Regent,
will become a Vice Chairman of Carnegie and CRBN and serve as President and
Chief Executive Officer of the Regent Division of CRBN.

Carnegie's Board of Directors has unanimously approved the proposed Merger
after considering various factors, including the fairness opinion of Capital
Consultants of Princeton, Inc., Carnegie's financial advisor, and believes that
the Merger is in the best interests of Carnegie and its shareholders. Carnegie's
Board of Directors unanimously recommends that you vote "FOR" approval and
adoption of the Merger Agreement and the Amendment. The Board also believes that
the stock option plans are in the

best interests of Carnegie and its shareholders and will help Carnegie and CRBN
retain the highest quality persons to serve as officers and directors. The Board
urges you to vote in favor of the stock option plans.

To effect the Merger, the affirmative vote of a majority of the votes cast
by the holders of Carnegie Common Stock is required. It is important that your
shares be represented at the Special Meeting, regardless of the number of shares
you hold. Therefore, please complete, sign and date your proxy card and return
it in the enclosed envelope as soon as possible, whether or not you plan to
attend the Special Meeting. Returning the proxy card will not affect your right
to revoke your proxy as described in the accompanying Joint Proxy
Statement/Prospectus or to attend the Special Meeting.

Sincerely,

Thomas L. Gray, Jr.
President and Chief
Executive Officer

REGENT BANCSHARES CORP.
1430 Walnut Street
Philadelphia, PA 19102

____________, 1996

Dear Shareholder:

You are cordially invited to attend a Special Meeting of Shareholders of
Regent Bancshares Corp. ("Regent") to be held at 10:00 a.m., local time, on
_________ , March __ , 1996, at
- ---------------------------------------------------------------.

At the Special Meeting, you will be asked to consider and vote upon an
Amended and Restated Agreement and Plan of Merger dated as of August 30, 1995,
(the "Merger Agreement") among Carnegie Bancorp ("Carnegie"), Carnegie Bank,
N.A. ("CBN"), a wholly owned subsidiary of Carnegie, Regent and Regent National
Bank (the "Bank"), a wholly owned subsidiary of Regent, which Merger Agreement
contemplates that Regent will be merged with and into Carnegie (the "Merger"),
and that CBN will be merged with and into the Bank which will conduct business
under the name Carnegie Regent Bank, N.A. ("CRBN").

Briefly, the Merger Agreement provides that upon the Merger:

(a) each share of Regent Common Stock will be converted
into 0.75 shares of Carnegie Common Stock;

(b) each share of Regent Series A Convertible Preferred Stock will be
converted into one share of Carnegie Series A Convertible Preferred Stock which
will be convertible into 0.75 shares of Carnegie Common Stock;

(c) each share of Regent Series B, Series C and Series D Convertible
Preferred Stock will be called for redemption in accordance with its terms at
$10.00 per share not later than 30 days prior to the anticipated effective date
of the Merger, unless theretofore converted in accordance with its terms into
1.177 shares of Regent Common Stock each of which would be converted in the
Merger into 0.75 shares of Carnegie Common Stock;

(d) each share of Regent Series E Convertible Preferred Stock will be
called for redemption in accordance with its terms at $10.00 per share not later
than 30 days prior to the anticipated effective date of the Merger, unless
theretofore converted in accordance with its terms into one share of Regent
Common Stock which would be converted in the Merger into 0.75 shares of Carnegie
Common Stock;

(e) outstanding options to purchase an aggregate of 274,241

shares of Regent Common Stock held by the organizers of Regent will be converted
into options to purchase an aggregate of 174,750 shares of Carnegie Common
Stock;

(f) outstanding warrants to purchase an aggregate of 50,022 shares of
Regent Common Stock held by the organizers of Regent will be converted into an
aggregate of 12,168 shares of Carnegie Common Stock;

(g) outstanding options to purchase an aggregate of 147,124 shares of
Regent Common Stock held by the underwriter of Regent's initial public offering
will be converted into an aggregate of 7,483 shares of Carnegie Common Stock;
and

(h) all other outstanding options and warrants to purchase Regent Common
Stock will be converted into Carnegie Common Stock at the rate of one share of
Carnegie Common Stock for options and warrants representing in the aggregate the
right to purchase 7 1/2 shares of Regent Common Stock.

Complete information concerning the Merger and the Bank Merger, a
description of the respective businesses of Carnegie and Regent, their
respective financial statements and the complete text of the Merger Agreement
are set forth in the accompanying Joint Proxy Statement/Prospectus.

Regent's Board of Directors and management are excited about the prospect
of the Merger and the Bank Merger and believe they offer significant advantages
for Regent, its shareholders, its customers and its employees. They also believe
the Merger and the Bank Merger will strengthen the surviving corporation's
ability to compete and enhance its business potential.

Following the Merger, seven representatives of each of Carnegie and Regent
will constitute Carnegie's Board of Directors. Management of Carnegie following
the Merger will be comprised of current officers of both Carnegie and Regent.
Bruce A. Mahon, the current Chairman of the Board of Carnegie, will continue to
serve as Chairman of the Board of Carnegie and CRBN, Thomas L. Gray, Jr., the
current President and Chief Executive Officer of Carnegie, will continue to
serve as President and Chief Executive Officer of Carnegie and CRBN, David W.
Ring, Chairman of the Board of Regent, will become a Vice Chairman of Carnegie
and CRBN, Abraham L. Bettinger, Vice Chairman of the Board of Regent, will
become Vice Chairman of the Board of Carnegie and CRBN, Harvey Porter will
become a Vice Chairman of Carnegie and CRBN and serve as President and Chief
Executive Officer of the Regent Division of CRBN and Barbara H. Teaford,
Executive Vice President of Regent, will become an Executive Vice President of
Carnegie and CRBN.

Regent's Board of Directors has approved the proposed Merger without
dissent after considering various factors, including the fairness opinion of
Janney Montgomery Scott Inc., Regent's

financial advisor, and believes that the Merger is in the best interests of
Regent and its security holders. Regent's Board of Directors unanimously
recommends that you vote "FOR" approval and adoption of the Merger Agreement.

To effect the Merger, the affirmative vote of a majority of the votes cast
by the holders of Regent Common Stock and Regent Series A Convertible Preferred
Stock voting as a single class is required. Holders of Regent Series B, Series
C, Series D and Series E Convertible Preferred Stock are not entitled to vote on
the Merger unless such stock is converted in accordance with its terms into
Regent Common Stock prior to the record date for the Special Meeting. It is
important that your shares be represented at the Special Meeting, regardless of
the number of shares you hold. Therefore, please complete, sign and date your
proxy card and return it in the enclosed envelope as soon as possible, whether
or not you plan to attend the Special Meeting. Returning the proxy card will not
affect your right to revoke your proxy as described in the accompanying Joint
Proxy Statement/Prospectus or to attend the Special Meeting.

Sincerely,

David W. Ring, Harvey Porter,
Chairman of the Board President and Chief
Executive Officer

CARNEGIE BANCORP
619 Alexander Road
Princeton, New Jersey 08540

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH __, 1996

Notice is hereby given that a Special Meeting (the "Carnegie Special
Meeting") of Shareholders of Carnegie Bancorp ("Carnegie") will be held at
_____________ , on March __, 1996, at _______________, local time, for the
purpose of considering and voting upon the following matters:

1. A proposal to approve and adopt an Amended and Restated Agreement and
Plan of Merger dated as of August 30, 1995, by and among Carnegie,
Carnegie Bank, N.A. ("CBN"), Carnegie's wholly owned national bank
subsidiary, Regent Bancshares Corp. ("Regent") and Regent National
Bank (the "Bank"), Regent's national bank subsidiary (the "Merger
Agreement"), a copy of which is attached as Appendix A to the Joint
Proxy Statement/Prospectus accompanying this notice. Pursuant to the
Merger Agreement, Regent will be merged (the "Merger") with and into
Carnegie and CBN will be merged with and into the Bank (the "Bank
Merger"), which will then operate under the name Carnegie Regent Bank,
N.A. ("CRBN"), and the holders of Regent securities will have the
right to receive Carnegie securities as follows:

(a) each share of Regent Common Stock will be
converted into 0.75 shares of Carnegie Common
Stock;

(b) each share of Regent Series A Convertible Preferred Stock will be
converted into one share of a newly authorized Series A Carnegie
Convertible Preferred Stock which will be convertible into 0.75
shares of Carnegie Common Stock; and

(c) each outstanding Regent warrant and option will be converted,
without any cash payment, into Carnegie Common Stock at the rate
of one Carnegie share for options and warrants representing in
the aggregate the right to purchase 7 1/2 shares of Regent Common
Stock,

all as more fully described in the accompanying Joint
Proxy Statespectus.

2. A proposal to amend Carnegie's Certificate of

Incorporation (the "Amendment") to authorize 1,500,000

shares of Series Preferred Stock and to allow the Board of Directors
to determine the rights, preferences and designations of any Series
Preferred Stock from time to time. Under the Merger Agreement,
Carnegie will issue approximately 487,532 shares of Series A
Convertible Preferred Stock to the holders of Regent Series A
Convertible Preferred Stock. This issuance will leave approximately
1,012,468 shares of Series Preferred Stock available for future
issuance.

3. Approval of the 1995 Directors' Stock Option Plan (the "Directors'
Plan"), which provides for options to purchase up to 154,000 shares of
Carnegie Common Stock to be issued to directors of Carnegie or its
subsidiaries, as more fully set forth in this Joint Proxy
Statement/Prospectus.

4. Approval of the 1995 Employee Stock Option Plan (the "Employee Plan"),
which provides for options to purchase up to 11,530 shares of Carnegie
Common Stock to be issued to employees of Carnegie or its
subsidiaries, all as more fully set forth in the Joint Proxy
Statement/Prospectus.

5. Such other business as shall properly come before the
Meeting and any adjournment, postponement or
continuation thereof.

Shareholders of record at the close of business on March 8, 1996 are
entitled to notice of and to vote at the Carnegie Special Meeting. Whether or
not you contemplate attending the Carnegie Special Meeting, it is suggested that
the enclosed proxy be executed and returned to Carnegie. You may revoke your
proxy at any time prior to the exercise of the proxy by delivering to Carnegie a
later proxy or by delivering a written notice of revocation to Carnegie.

By Order of the Board of Directors,

__________________, 1996 Thomas L. Gray, Jr., President

IMPORTANT-PLEASE MAIL YOUR PROXY PROMPTLY

You are urged to sign and return the enclosed Proxy to Carnegie promptly in
the envelope provided so that there may be sufficient representation at the
Special Meeting.

REGENT BANCSHARES CORP.
1430 Walnut Street
Philadelphia, Pennsylvania 19102

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH __, 1996

To the Holders of Common Stock
and Preferred Stock of
Regent Bancshares Corp.:

A Special Meeting of Shareholders of Regent Bancshares Corp.
("Regent") will be held at 10 a.m., local time, on __________,
March __, 1996, at ________________________________________
for the following purposes:

1. To consider and vote upon a proposal to approve and adopt an Amended and
Restated Agreement and Plan of Merger dated as of August 30, 1995, among
Carnegie Bancorp ("Carnegie"), Carnegie Bank, N.A. ("CBN"), a wholly owned
subsidiary of Carnegie, Regent and Regent National Bank (the "Bank"), a wholly
owned subsidiary of Regent (the "Merger Agreement"), a copy of which is attached
as Appendix A to the Joint Proxy Statement/Prospectus accompanying this Notice,
which contemplates that, among other things (i) Regent will be merged (the
"Merger") with and into Carnegie and CBN will be merged with and into the Bank
(the "Bank Merger"), which will then operate under the name Carnegie Regent
Bank, N.A. ("CRBN") and (ii) the holders of Regent's securities will have the
right to receive Carnegie securities as follows:

(a) each share of Regent Common Stock will be converted
into 0.75 shares of Carnegie Common Stock;

1.177 shares of Regent Common Stock each of which would be converted in the
Merger into 0.75 shares of Carnegie Common Stock;

(e) outstanding options to purchase an aggregate of 274,241 shares of
Regent Common Stock held by the organizers of Regent will be converted into
options to purchase an aggregate of 174,750 shares of Carnegie Common Stock;

all as more fully described in the accompanying Joint Proxy
Statement/Prospectus; and

2. To transact such other business as may properly come before the Special
Meeting and any adjournment, postponement or continuation thereof.

The Board of Directors has fixed the close of business on February ___,
1996 as the record date for shareholders entitled to notice of and to vote at
the Special Meeting. Approval of the Merger will require the affirmative vote of
a majority of the votes cast by the holders of Regent Common Stock and Regent
Series A Convertible Preferred Stock voting together as a single class. Holders
of Regent Common Stock and Regent Series A Convertible Preferred Stock have
dissenters' rights with respect to the Merger to the extent they comply with
Section 14A:11-3 of the New Jersey Business Corporation Act (the "NJBCA").
Holders of Regent Series B, Series C, Series D and Series E Convertible
Preferred Stock are not entitled to dissenters' rights unless such stock is
converted in accordance with its terms into Regent Common Stock

prior to the record date for the Special Meeting. See "Proposal 1 -- The
Merger -- Dissenters' Rights of Holders of Regent Common Stock and Regent
Series A Convertible Preferred Stock" in the accompanying Joint Proxy
Statement/Prospectus.

THE BOARD OF DIRECTORS OF REGENT HAS CAREFULLY CONSIDERED THE TERMS OF THE
MERGER AGREEMENT AND HAS UNANIMOUSLY CONCLUDED THAT SUCH TERMS ARE FAIR AND THAT
THE PROPOSED MERGER IS IN THE BEST INTERESTS OF REGENT AND ITS SECURITY HOLDERS.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
REGENT COMMON STOCK AND REGENT SERIES A CONVERTIBLE PREFERRED STOCK VOTE FOR THE
PROPOSAL TO APPROVE AND ADOPT THE MERGER AGREEMENT.

By Order of the Board of Directors,

Barbara H. Teaford
________ __, 1996 Secretary

IMPORTANT

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING
REGARDLESS OF THE NUMBER OF SHARES THAT YOU HOLD. THEREFORE, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE. IF YOU ARE UNABLE TO ATTEND, YOUR SHARES WILL BE VOTED AS
SPECIFIED IN ANY COMPLETED PROXY CARD RETURNED BY YOU. RETURNING THE ENCLOSED
PROXY CARD WILL NOT AFFECT YOUR RIGHT TO REVOKE YOUR PROXY AS DESCRIBED IN THE
ACCOMPANYING JOINT PROXY STATEMENT/PROSPECTUS.

JOINT PROXY STATEMENT/PROSPECTUS

CARNEGIE BANCORP
(A New Jersey corporation)

1,629,921 shares of Common Stock, no par value
487,532 shares of Series A Convertible Preferred Stock,
$.10 par value

This Joint Proxy Statement/Prospectus relates to the Amended and Restated
Agreement and Plan of Merger dated as of August 30, 1995, (the "Merger
Agreement") among Carnegie Bancorp ("Carnegie"), Carnegie Bank, N.A. ("CBN"),
Carnegie's wholly owned national bank subsidiary, Regent Bancshares Corp.
("Regent") and Regent National Bank (the "Bank"), Regent's wholly owned national
bank subsidiary, providing for the merger of Regent with and into Carnegie (the

"Merger"). This Joint Proxy Statement/Prospectus

constitutes (a) a proxy statement of Carnegie with respect to its solicitation
of proxies for use at Carnegie's Special Meeting of Shareholders to be held on
__________, March __, 1996 at ____ _.M., (b) a proxy statement of Regent with
respect to its solicitation of proxies for use at Regent's Special Meeting of
Shareholders to be held on __________, March __, 1996 at ____ _.M. and (c) a
prospectus of Carnegie filed as part of a registration statement on Form S-4
filed with the Securities and Exchange Commission (the "Commission") pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), covering up to
1,629,921 authorized but unissued shares of Carnegie Common Stock and 487,532
shares of Carnegie Series A Convertible Preferred Stock to be issued pursuant to
the Merger Agreement. All information set forth herein with respect to Carnegie
and CBN has been furnished by Carnegie, and all information set forth herein
with respect to Regent and the Bank has been furnished by Regent.

On the date the Merger is consummated (the "Effective Time"), Regent will
be merged with and into Carnegie and holders of Regent securities will be
entitled to receive Carnegie Common Stock, Carnegie Series A Convertible
Preferred Stock and newly issued options to purchase Carnegie Common Stock (the
"New Options") as follows:

(a) each share of Regent Common Stock will be converted
into 0.75 shares of Carnegie Common Stock;

(c) each share of Regent Series B, Series C and Series D Convertible
Preferred Stock will be called for redemption in accordance with its terms at
$10.00 per share not later than 30 days prior to the anticipated Effective Time
of the Merger, unless theretofore converted in accordance with its terms into
1.177 shares of Regent Common Stock each of which would be converted in the
Merger into 0.75 shares of Carnegie Common Stock;

(d) each share of Regent Series E Convertible Preferred Stock will be
called for redemption in accordance with its terms at $10.00 per share not later
than 30 days prior to the anticipated Effective Time of the Merger, unless
theretofore converted in accordance with its terms into one share of Regent
Common Stock which would be converted in the Merger into 0.75 shares of Carnegie
Common Stock;

(e) outstanding options to purchase an aggregate of 274,241 shares of
Regent Common Stock held by the organizers of Regent will be converted into New
Options to purchase an aggregate of 174,750 shares of Carnegie Common Stock;

(f) outstanding warrants to purchase an aggregate of 50,022

shares of Regent Common Stock held by the organizers of Regent will be converted
into an aggregate of 12,168 shares of Carnegie Common Stock;

The exchange rate set forth above, as well as the rate at which Carnegie
Series A Convertible Preferred Stock can be converted into Carnegie Common Stock
following the Merger is subject to adjustment upon the occurrence of certain
capital adjustments of Carnegie, including the declaration of a stock dividend,
a stock split or other recapitalization.

Consummation of the Merger is subject to various conditions, including the
approval and adoption of the Merger Agreement by the affirmative vote of a
majority of the votes cast by the holders of Regent Common Stock and Regent
Series A Preferred Stock at a special meeting of the holders thereof (the
"Regent Special Meeting"), approval and adoption of the Merger Agreement by the
affirmative vote of a majority of the votes cast by the

holders of Carnegie Common Stock voting at a special meeting of Carnegie
Shareholders (the "Carnegie Special Meeting") and various approvals of the
Office of the Comptroller of the Currency (the "OCC") and the Board of Governors
of the Federal Reserve System (the "FRB"). The Regent Special Meeting and the
Carnegie Special Meeting (the "Meetings") will each be held on March __,
1996, as described in the accompanying Notices to the respective holders of
Regent Common Stock and Regent Preferred Stock and to the holders of Carnegie
Common Stock. See "Proposal 1 -- The Merger."

This Joint Proxy Statement/Prospectus is first being mailed to the holders
of Carnegie Common Stock and Regent Common Stock and Regent Preferred Stock on
or about ___________, 1996.

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

The Common Stock of Carnegie is traded on the Nasdaq National Stock Market
under the symbol "CBNJ". On ___________, 1996, the closing sales price for
Carnegie Common Stock as reported by the NASD was $__________ per share.

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

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

THE SHARES OF CARNEGIE COMMON STOCK AND CARNEGIE SERIES A CONVERTIBLE
PREFERRED STOCK ISSUABLE PURSUANT TO THE MERGER HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE COMMISSION NOR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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

THE SECURITIES OFFERED BY THIS JOINT PROXY STATEMENT/ PROSPECTUS ARE NOT
SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE AGENCY OR ANY OTHER GOVERNMENTAL AGENCY.

The date of this Joint Proxy Statement/Prospectus is ___________, 1996.

AVAILABLE INFORMATION

Carnegie and Regent are each subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and, in accordance therewith, file reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copied at the Public Reference Room of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices located at Suite 1300, Seven World

Trade Center, New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material may be obtained at prescribed rates from the Public Reference Section
of the Commission, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549.
Such reports, proxy statements and other information also may be inspected at
the office of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.

Carnegie has filed a Registration Statement on Form S-4 (together with any
amendments or supplements thereto, the "Registration Statement") with the
Commission under the Securities Act, with respect to the securities to be issued
pursuant to the proposed Merger described therein. This Joint Proxy
Statement/Prospectus does not contain all the information set forth in the
Registration Statement. Such additional information may be obtained from the
Commission's principal office in Washington, D.C. Statements contained in this
Joint Proxy Statement/Prospectus as to the contents of any contract or other
document referred to herein are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED HEREIN IN CONNECTION WITH THE MATTERS DESCRIBED
HEREIN, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY CARNEGIE OR REGENT. THIS JOINT PROXY
STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, THE SECURITIES OFFERED BY THIS JOINT PROXY STATEMENT/PROSPECTUS
OR A SOLICITATION OF A PROXY IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF. HOWEVER, IF ANY

MATERIAL CHANGE OCCURS DURING THE PERIOD THAT THIS JOINT PROXY
STATEMENT/PROSPECTUS IS REQUIRED TO BE DELIVERED, THIS JOINT
PROXY STATEMENT/PROSPECTUS WILL BE AMENDED AND SUPPLEMENTED

ACCORDINGLY.

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

TABLE OF CONTENTS

Page

AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . .(i)

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . .

The Companies . . . . . . . . . . . . . . . . . . . . . .
General Information . . . . . . . . . . . . . . . . . . .
The Meetings. . . . . . . . . . . . . . . . . . . . . . .
Proposal 1 - The Merger . . . . . . . . . . . . . . . . .
Background of the Merger. . . . . . . . . . . . . . . . .
The Merger. . . . . . . . . . . . . . . . . . . . . . . .
Business of Carnegie and Regent
Pending the Merger; No Solicitation . . . . . . . . . .
Proposal 2 - Amendment to Carnegie's Certificate of
Incorporation . . . . . . . . . . . . . . . . . . . . . .
Proposal 3 - Approval of the 1995 Directors' Stock
Option Plan . . . . . . . . . . . . . . . . . . . . . . .
Proposal 4 - Approval of the 1995 Employee Stock Option
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparative Per Share Data. . . . . . . . . . . . . . . .

VOTING AND PROXIES . . . . . . . . . . . . . . . . . . . . . .

Date, Time and Place of the Meetings. . . . . . . . . . .
Record Date and Outstanding Shares. . . . . . . . . . . .
Voting of Proxies . . . . . . . . . . . . . . . . . . . .
Vote Required . . . . . . . . . . . . . . . . . . . . . .
Solicitation of Proxies; Expenses . . . . . . . . . . . .

PROPOSAL 1 - THE MERGER. . . . . . . . . . . . . . . . . . . .

Introduction. . . . . . . . . . . . . . . . . . . . . . .
Background of the Merger. . . . . . . . . . . . . . . . .
Recommendations of the Carnegie and Regent Boards and

Reasons for the Merger. . . . . . . . . . . . . . . . .
Opinions of Financial Advisors. . . . . . . . . . . . . .
Interests of Certain Persons in the Merger. . . . . . . .
Terms of the Merger . . . . . . . . . . . . . . . . . . .

Manner and Basis of Converting Regent Securities. . . . .
Trading of Carnegie Common Stock and Carnegie Series A
Convertible Preferred Stock on Nasdaq . . . . . . . . .
Effective Time of the Merger. . . . . . . . . . . . . . .
Representations and Warranties. . . . . . . . . . . . . .

Business of Carnegie and Regent Pending the Merger. . . .
No Solicitation; Termination Fee. . . . . . . . . . . . .
Conditions to the Merger. . . . . . . . . . . . . . . . .

Amendment and Waiver; Termination . . . . . . . . . . . .
Federal Income Tax Consequences . . . . . . . . . . . . .
Resale of Shares of Carnegie Common Stock and Carnegie
Series A Convertible Preferred Stock Issued in the
Merger; Affiliates. . . . . . . . . . . . . . . . . . .
Accounting Treatment. . . . . . . . . . . . . . . . . . .
Management and Operations of Carnegie Following
the Merger. . . . . . . . . . . . . . . . . . . . . . .
Expenses and Fees . . . . . . . . . . . . . . . . . . . .
Dissenters' Rights of Carnegie Shareholders . . . . . . .
Dissenters' Rights of Holders of Regent Common Stock and
Regent Series A Convertible Preferred Stock . . . . . . .

COMPARATIVE PER SHARE MARKET INFORMATION . . . . . . . . . . .

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . .

COMPARISON OF SHAREHOLDER RIGHTS . . . . . . . . . . . . . . .

DESCRIPTION OF CARNEGIE SECURITIES . . . . . . . . . . . . . .
Common Stock. . . . . . . . . . . . . . . . . . . . . . .
Warrants. . . . . . . . . . . . . . . . . . . . . . . . .
Carnegie Preferred Stock. . . . . . . . . . . . . . . . .
Transfer Agent and Warrant Agent. . . . . . . . . . . . .

INFORMATION ABOUT CARNEGIE . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . .
Business of Carnegie. . . . . . . . . . . . . . . . . . .
Services Areas. . . . . . . . . . . . . . . . . . . . . .
Competition . . . . . . . . . . . . . . . . . . . . . . .
Employees . . . . . . . . . . . . . . . . . . . . . . . .
Properties. . . . . . . . . . . . . . . . . . . . . . . .

Legal Proceedings . . . . . . . . . . . . . . . . . . . .
Supervision and Regulation. . . . . . . . . . . . . . . .
General-Recent Regulatory Enactments. . . . . . . . . . .
Bank Holding Company Regulation . . . . . . . . . . . . .
Bank Regulation . . . . . . . . . . . . . . . . . . . . .
Carnegie Summary and Selected Per Share Data . . . . . .
Management's Discussion and Analysis of Financial Condition
and Results of Operations of Carnegie

MANAGEMENT OF CARNEGIE
Directors . . . . . .. . . . . . . . . . . . . . . . . .
Executive Officers Who Are Not Directors . . . . . . . .
Security Ownership of Certain Beneficial Owners and
Management of Carnegie . . . . . . . . . . . . . . .
Information Regarding Carnegie's Board of Directors,
Executive Officers and Committees

INFORMATION ABOUT REGENT . . . . . . . . . . . . . . . . . . .
Business of Regent and the Bank . . . . . . . . . . . . .
Properties of Regent and the Bank . . . . . . . . . . . .
Description of Regent Securities. . . . . . . . . . . . .
Regent Common Stock Warrants. . . . . . . . . . . . . . .

Extension of Expiration Date of Regent Options and Warrants
Legal Proceedings of Regent . . . . . . . . . . . . . . .
Regent Financial Summary and Selected Per Share Data. . . .
Management's Discussion and Analysis of Financial Condition
and Results of Options of Regent . . . . . . . . . .

INFORMATION REGARDING REGENT BOARD OF DIRECTORS AND EXECUTIVE
OFFICERS
Directors and Executive Officers . . . . . . . . . . . . .
Audit and Compensation Committees . . . . . . . . . . . .
Regent Executive Compensation . . . . . . . . . . . . . .
Securities Ownership of Management and Principal
Shareholders. . . . . . . . . . . . . . . . . . . . . . .

Proposal 2 - AMENDMENT TO CARNEGIE'S CERTIFICATE OF INCORPORATION
TO AUTHORIZE PREFERRED STOCK . . . . . . . . . . . . . . . . .

Proposal 3 - APPROVAL OF 1995 DIRECTORS' STOCK OPTION PLAN. . .

Proposal 4 - APPROVAL OF THE 1995 EMPLOYEE STOCK OPTION PLAN .

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . .

EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . .

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . .

Carnegie. . . . . . . . . . . . . . . . . . . . . . . . .
Regent. . . . . . . . . . . . . . . . . . . . . . . . . .

APPENDICES:

Appendix A - Amended and Restated Agreement and Plan of
Merger dated as of August 30, 1995 among
Carnegie Bancorp, Carnegie Bank, N.A.,
Regent Bancshares Corp. and Regent
National Bank . . . . . . . . . . . . . . .A-1

Appendix B - Fairness Opinion of Capital Consult-
ants of Princeton, Inc. dated

_________, . . . . . . . . . . . . . . . .B-1

Appendix C - Fairness Opinion of Janney Montgomery
Scott Inc. dated _________, 1996. . . . . .C-1

Appendix D - Section 14A:11-3 of the New Jersey
Business Corporation Act. . . . . . . . . .D-1

Appendix E - Proposed Amendment to Article V of
the Certificate of Incorporation
of Carnegie Bancorp . . . . . . . . . . . .E-1

Appendix F - Carnegie Bancorp 1995 Directors' Stock Option
Plan. . . . . . . . . . . . . . . . . . . .F-1

Appendix G - Carnegie Bancorp 1995 Employee Stock
Option Plan . . . . . . . . . . . . . . . .G-1

SUMMARY

This Joint Proxy Statement/Prospectus relates to the approval of the
proposed Merger of Regent with and into Carnegie pursuant to the Merger
Agreement by the shareholders of Regent entitled to vote thereon and by the
shareholders of Carnegie and, in the case of Carnegie shareholders, approval of
the Amendment, the 1995 Directors' Stock Option Plan and the 1995 Employee Stock
Option Plan. The following summary is intended to provide certain facts and
highlights from the information contained in this Joint Proxy
Statement/Prospectus, but is not intended to be a complete statement of all
material features of the proposed Merger, the Amendment or the Stock Option
Plans and is qualified in its entirety by the more detailed information
appearing elsewhere in this Joint Proxy Statement/Prospectus and the attached
Appendices. Holders of Carnegie Common Stock and Regent Common Stock, Preferred
Stock, options and warrants are urged to read this Joint Proxy
Statement/Prospectus and the attached Appendices in their entirety.

The Companies

Both Carnegie and Regent are one-bank holding companies. CBN, which is
wholly owned by Carnegie, services small businesses, high net worth individuals
and professionals from its offices in Princeton, Denville, Hamilton, Marlton,
Montgomery and Toms River, New Jersey. At September 30, 1995, Carnegie had total
assets of $235.0 million. The Bank, which is wholly owned by Regent, serves a
similar customer base from its one office in Center City, Philadelphia,
Pennsylvania. At September 30, 1995,

Regent had total assets of $256.6 million.

Both Carnegie and Regent are subject to the supervision and regulations of
the FRB. Both CBN and the Bank are chartered as national banking associations
and their deposits are insured by the Bank Insurance Fund (the "BIF") of the
Federal Deposit Insurance Corporation (the "FDIC") up to applicable limits. The
operations of CBN and the Bank are subject to the supervision and regulation of
the FRB, the FDIC and the OCC.

General Information

The information set forth herein concerning Carnegie and CBN has been
furnished by Carnegie and the information set forth herein concerning Regent and
the Bank has been furnished by Regent.

This Joint Proxy Statement/Prospectus contains certain information set
forth more fully in the Merger Agreement attached

hereto as Appendix A and is qualified in its entirety by reference to the Merger
Agreement, which is hereby incorporated by reference. The Merger Agreement
should be read carefully by each holder of Carnegie Common Stock and Regent
Common Stock, Preferred Stock, options and warrants.

The principal executive offices of Carnegie are located at 619 Alexander
Road, Princeton, New Jersey 08540, and its telephone number is (609) 520-0601.
The principal executive offices of Regent are located at 1430 Walnut Street,
Philadelphia, Pennsylvania 19102, and its telephone number is (215) 546-6500.

The Meetings

Time, Date, Place and Purpose. The special meeting of shareholders of
Carnegie (the "Carnegie Special Meeting") will be held at ____________
____________________________________ on March __, 1996 at _____ _.M., local
time. The purpose of the Carnegie Special Meeting is to consider and vote upon
the following proposals: (i) to approve and adopt the Merger Agreement; (ii) to
approve the Amendment which will authorize the issuance of up to 1,500,000
shares of Series Preferred Stock with such rights, preferences and designations
as the Board of Directors may from time to time determine; up to 487,532 shares
of a newly designated Series A Convertible Preferred Stock will be issued in
connection with the Merger; (iii) to approve the Directors Stock Option Plan;
(iv) to approve the Employee Stock Option Plan; and (v) to transact such other
business as may properly come before the Carnegie Special Meeting and any
adjournment, postponement or continuation thereof. As of the date of

this Joint Proxy Statement/Prospectus, the management of Carnegie is aware of no
such other business.

A special meeting of shareholders of Regent (the "Regent Special Meeting")
will be held at _____________________________ on March __, 1996 at _____
_.m., local time. The purpose of the Regent Special Meeting is (i) to approve
and adopt the Merger Agreement and (ii) to transact such other business as may
properly come before the Regent Special Meeting or any adjournment, postponement
or continuation thereof. As of the date of this Joint Proxy
Statement/Prospectus, the management of Regent is aware of no such other
business.

Record Date, Requisite Approval. The record date for holders of Carnegie
Common Stock and Regent Common Stock and Regent Series A Convertible Preferred
Stock entitled to notice of and to vote at the Carnegie Special Meeting and the
Regent Special Meeting, respectively, is the close of business on February ___,
1996 (the "Record Date").

The affirmative vote of a majority of the votes cast by the holders of
Carnegie Common Stock present at the Carnegie Special Meeting is necessary to
approve and adopt each of the proposals. As of the Record Date, __________
shares of Carnegie Common Stock were outstanding. As of such date, directors and
officers of Carnegie beneficially owned __________ of such shares representing
___% of the outstanding Carnegie Common Stock. See "Management of
Carnegie--Security Ownership of Management and Principal Shareholders."

The affirmative vote of a majority of the votes cast by the holders of
Regent Common Stock and Regent Series A Preferred Stock present at the Regent
Special Meeting and voting together as a single class is required for approval
and adoption of the Merger Agreement. As of the Record Date, _______ shares of
Regent Common Stock and _______ shares of Regent Series A Convertible Preferred
Stock were outstanding. As of such date, directors and officers of Regent
beneficially owned __________ shares of Regent Common Stock, representing ___%
of the outstanding shares of Regent Common Stock and _____ shares of Regent
Series A Convertible Preferred Stock, representing ____ % of the outstanding
shares of Regent Series A Convertible Preferred Stock. See "Information About
Regent--Information Regarding Regent Board of Directors -- Securities Ownership
of Management and Principal Shareholders." Holders of Regent Series B, Series C,
Series D and Series E Convertible Preferred Stock are not entitled to vote on
the Merger unless such stock is converted in accordance with its terms into
Regent Common Stock prior to the record date for the Regent Special Meeting.

Recommendations of the Boards of Directors of Carnegie and
Regent. The Board of Directors of Regent has approved the Merger

Agreement without dissent, believes that the Merger is in the best interests of
Regent and its security holders and unanimously recommends approval and adoption
of the Merger Agreement by its shareholders. The Board of Directors of Carnegie
has unanimously approved the Merger Agreement, believes the Merger is in the
best interests of Carnegie and its shareholders and recommends that its
shareholders approve and adopt the Merger Agreement. For a discussion of the
reasons considered by the Carnegie and Regent Boards of Directors in making
their recommendations, see "Proposal 1 -- The Merger--Background of the Merger"
and "--Recommendations of the Carnegie and Regent Boards and Reasons for the
Merger."

The Board of Directors of Carnegie also recommends that Carnegie
shareholders approve the Amendment, the Directors' Plan and the Employee Plan.

Proposal 1 - The Merger -(to be voted upon by Carnegie Shareholders and

Regent Shareholders)

Terms of the Merger. Upon the Effective Time of the Merger (the "Effective
Time"), Regent will be merged with and into Carnegie and simultaneously
therewith or as soon thereafter as possible, CBN will be merged with and
into the Bank under the name Carnegie Regent Bank, N.A. ("CRBN") and the holders
of Regent securities will be entitled to receive Carnegie Common Stock, Carnegie
Series A Preferred Stock and New Options as follows:

(a) each share of Regent Common Stock will be converted
into 0.75 shares of Carnegie Common Stock;

(c) each share of Regent Series B, Series C and Series D Convertible
Preferred Stock will be called for redemption in accordance with its terms at
$10.00 per share not later than 30 days prior to the anticipated Effective Time
of the Merger, unless theretofore converted in accordance with its terms into
1.177 shares of Regent Common Stock each of which would be converted in the
Merger into 0.75 shares of Carnegie Common Stock;

(d) each share of Regent Series E Convertible Preferred Stock will be
called for redemption in accordance with its terms at $10.00 per share not later
than 30 days prior to the anticipated Effective Time of the Merger, unless
theretofore converted in accordance with its terms into one share of Regent

Common Stock which would be converted in the Merger into 0.75 shares of Carnegie
Common Stock;

(g) outstanding options to purchase an aggregate of 147,124 shares of
Regent Common Stock held by Hopper, Soliday & Co., Inc., the underwriter of
Regent's initial public offering, and an affiliate, will be converted into an
aggregate of 7,483 shares of Carnegie Common Stock; and

(h) all other outstanding options and warrants to purchase Regent Common
Stock will be converted into Carnegie Common Stock at the rate of one share of

Carnegie Common Stock for options and warrants representing in the aggregate the
right to purchase 7 1/2 shares of Regent Common Stock.

As provided in the Merger Agreement based upon Regent securities
outstanding as of September 30, 1995, an aggregate of 911,899 shares of Carnegie
Common Stock and up to 487,532 shares of Carnegie Series A Convertible Preferred
Stock will be issued to Regent security holders upon conversion of 979,274
shares of Regent Common Stock, 487,532 shares of Regent Series A Convertible
Preferred Stock, and options and warrants to purchase an aggregate of 780,262
shares of Regent Common Stock outstanding as of the Effective Time of the Merger
(assuming the conversion into Regent Common Stock of all outstanding shares of
Regent Series B, Series C, Series D and Series E Convertible Preferred Stock,
but not taking into account any shares of Regent Common Stock issued after
September 30, 1995 upon exercise of outstanding Regent stock options and
warrants or conversion of Regent Series A Convertible Preferred Stock). In
addition, on the Effective Time, outstanding New Options to purchase an
aggregate of 174,750 shares of Carnegie Common Stock will be issued to certain
former holders of Regent stock options and an aggregate of 365,649 shares of
Carnegie Common Stock will be issuable upon the conversion of the Carnegie
Series A Convertible Preferred Stock issued in the Merger. Immediately after the
Merger, the holders of Regent's outstanding securities are expected to own
beneficially approximately 42% of the outstanding Carnegie Common Stock on a

fully diluted basis. The Merger will not result in any change or conversion of
outstanding Carnegie Common Stock, outstanding options to purchase Carnegie
Common Stock or outstanding warrants to purchase Carnegie Common Stock.

Background of the Merger

Mr. Harvey Porter, President and Chief Executive Officer of
Regent, had previously become acquainted with Mr. Bruce A. Mahon,
Chairman of the Board of Carnegie. The two parties had
previously discussed, in general and informal discussions, the

possibility of forming some type of a relationship between
Carnegie and Regent.

In March 1995, Mr. Porter and Mr. Mahon commenced negotiations regarding a
possible relationship between Regent and Carnegie. Various executive officers
and members of the Boards of Directors of Regent and Carnegie participated in
these discussions. As a result of these discussions, Regent and Carnegie
executed a confidentiality agreement on March 20, 1995. Carnegie and Regent
thereupon began to exchange certain confidential information about each other.
The preliminary review of this information by Carnegie and Regent resulted in
the commencement of substantive discussions between Mr. Mahon and members of
Carnegie's Executive Committee on the one hand and Mr. Porter and members of
Regent's Executive Committee on the other. In May 1995, Carnegie and Regent
reached an understanding that, subject to the completion of satisfactory due
diligence investigation of each party and negotiation of a definitive merger
agreement, any merger between Regent and Carnegie would involve an exchange of
Carnegie securities for Regent securities and equal representation on the Board
of Directors of the surviving corporation.

On July 3, 1995, Regent retained the investment banking firm of Janney
Montgomery Scott Inc. ("Janney") to serve as Regent's financial advisor and to
render a fairness opinion in connection with the proposed merger. On May 22,
1995, Carnegie retained Capital Consultants of Princeton, Inc. ("Capital
Consultants") to serve as Carnegie's financial advisor and to render a fairness
opinion in connection with the proposed merger.

During June, July and August 1995, Carnegie, Regent and their respective
counsel and financial advisors had numerous

discussions concerning the terms, conditions and provisions of a proposed merger
agreement between Carnegie and Regent. These discussions were reviewed by
Regent's Board of Directors at regular and special meetings held on June 28,
1995, July 26, 1995 and August 23, 1995, and by Carnegie's Board of Directors at
regular and special meetings held on July 19, 1995, August 16, 1995 and August
30, 1995.

On August 10, 1995, Regent, as a result of its discussions with Carnegie
and market activity involving Regent's Common Stock, issued a press release
stating that Regent was evaluating a merger proposal from a financial
institution of comparable size at a price of approximately $11.00 per share of
Regent Common Stock and that Regent had retained Janney to assist Regent in its
evaluation of the merger proposal. At the same time and continuing through the
morning of August 30, 1995, the representatives of Carnegie and Regent and their
respective legal counsel and financial advisors continued their negotiation of
the terms of the Merger Agreement and related matters.

On the morning of August 30, 1995, Carnegie's Board of Directors met to

review and discuss the terms of the Merger, and received an oral report from
Capital Consultants regarding the fairness, from a financial point of view, of
the proposed Merger to the shareholders of Carnegie. The Carnegie Board then
voted to approve the Merger.

On the afternoon of August 30, 1995, Regent's Board of Directors met to
consider the Merger Agreement as proposed by Carnegie, and were advised that
Carnegie's Board of Directors had approved the Merger Agreement that morning.
Regent's Board of Directors reviewed the terms of the proposed Merger Agreement

following presentations by Mr. Porter and representatives of Janney and Duane,
Morris & Heckscher, Regent's legal counsel. Janney delivered its opinion as to
the fairness, from a financial point of view, of the Carnegie securities to be
issued in the Merger in exchange for the Regent securities.

After discussion, Regent's Board of Directors, by a unanimous vote of those
directors present and with the concurrence of the directors not present, decided
to proceed with the Merger for the reasons discussed below, and approved the
Merger Agreement and the transactions contemplated thereby and recommended
without dissent that the holders of Regent Common Stock and Regent Series A
Convertible Preferred Stock vote to approve and adopt the Merger Agreement.

Regent and Carnegie entered into the Merger Agreement on the night of
August 30, 1995 and, on August 31, 1995, Carnegie and Regent issued a joint
press release announcing that they had entered into the Merger Agreement.

Reasons for the Merger. The Boards of Directors of Carnegie and Regent
believe that the principal reason for the Merger is to combine similar yet
complementary banks, to achieve a stronger company that can better compete in
the marketplace, achieve more profitable operations and expand their respective
geographic market areas. The Boards of Directors of Carnegie and Regent believe
that because of the complementary nature of the two institutions, they can be
consolidated into a stronger financial institution. For example, from an
asset-liability management standpoint, Regent is more liability sensitive and
Carnegie is more asset sensitive. Combining the two institutions is expected to
reduce the interest rate risk of the resulting institution. The Carnegie and
Regent Boards believe that there are a variety of other areas in which the two
institutions are complementary, such as lending types, new customer services and
management strengths. In addition, the Board of Directors of Carnegie believes
that the merger with Regent will provide Carnegie with a cost-efficient entry
into the Center City, Philadelphia market in a manner which Carnegie could not
achieve on its own. Finally, the Boards of both Carnegie and Regent believe that
there will be

certain cost savings and other benefits available by combining
the two institutions and forming a $500 million institution. See
"Proposal 1 -- The Merger--Recommendations of the Carnegie and Regent Boards
and Reasons for the Merger."

Opinions of Financial Advisors. Capital Consultants and Janney have been
retained by Carnegie and Regent, respectively, to act as financial advisors in
connection with the Merger. Capital Consultants has delivered to the Board of
Directors of Carnegie its written opinion, dated __________ __, 1996, to the
effect that, as of such date and based upon the matters described therein, the
terms of the Merger are fair to the Shareholders of Carnegie from a financial
point of view. Janney has delivered to the Board of Directors of Regent its
written opinion, dated August 30, 1995, to the effect that, as of such date and
based upon the matters described therein, the terms of the Merger are fair to
the security holders of Regent from a financial point of view. Reference is made
to the full text of the opinions delivered by Capital Consultants and Janney,
copies of which are attached hereto in their entirety as Appendices B and C,
respectively. Holders of Carnegie Common Stock and Regent Common Stock,
Preferred Stock, options and warrants are urged to read such opinions carefully
for a description of the procedures followed, the factors considered and the
assumptions made by Capital Consultants and Janney. See also "Proposal 1 -- The
Merger--Opinions of Financial Advisors."

The Merger

Effective Time of the Merger. The Merger will be consummated on the date
that a certificate of merger is filed with the Secretary of State of the State
of New Jersey in accordance with the NJBCA. The Effective Time is currently
expected to occur on or about April 15, 1996, subject to approval and adoption
of the Merger Agreement at the Regent Special Meeting, the approval of the
Merger Agreement and the Amendment at the Carnegie Special Meeting and subject
to satisfaction or waiver of the conditions precedent to the Merger set forth in
the Merger Agreement, including the approval of or receipt of a waiver from the
OCC and the FRB. Either Carnegie or Regent may terminate the Merger Agreement if
the Merger has not been consummated by September 30, 1996. See "Proposal 1 --
The Merger--Effective Time of the Merger" and "--Conditions to the Merger."

Exchange of Regent Securities. Upon the Effective Time of the Merger, each
outstanding Regent security will be automatically converted into the right to
receive Carnegie Common Stock, Carnegie Series A Convertible Preferred Stock and
New Options as follows:

(a) each share of Regent Common Stock will be converted
into 0.75 shares of Carnegie Common Stock;

(c) each share of Regent Series B, Series C and Series D Convertible
Preferred Stock will be called for redemption in accordance with its terms at
$10.00 per share not later than 30 days prior to the anticipated Effective Time
of the Merger, unless theretofore converted in accordance with its terms into
1.177 shares of Regent Common Stock each of which would be converted in the
Merger into 0.75 shares of Carnegie Common Stock;

(d) each share of Regent Series E Convertible Preferred Stock will be
called for redemption in accordance with its terms at $10.00 per share not later
than 30 days prior to the anticipated Effective Time of the Merger, unless
theretofore converted in accordance with its terms into one share of Regent
Common Stock which would be converted in the Merger into 0.75 shares of Carnegie
Common Stock;

(g) outstanding options to purchase an aggregate of 147,124 shares of
Regent Common Stock held by Hopper, Soliday & Co., Inc., the underwriter of
Regent's initial public offering, and an affiliate will be converted into an
aggregate of 7,483 shares of Carnegie Common Stock; and

Upon surrender to Registrar and Transfer Company, as exchange agent, of the
certificates which represented Regent securities prior to the Merger pursuant to
the provisions of a letter of transmittal to be sent to each Regent security
holder promptly after the Effective Time, certificates evidencing Carnegie
Common Stock and Carnegie Series A Convertible Preferred Stock will be issued as
set forth above for each Regent security surrendered. No fractional shares of
Carnegie Common Stock will

be issued. Cash will be paid for fractional shares of Carnegie Common Stock to
which holders of Regent securities would be otherwise entitled, determined in

the manner provided in the Merger Agreement. CERTIFICATES SHOULD NOT BE
SURRENDERED FOR EXCHANGE BY THE SHAREHOLDERS OF REGENT PRIOR TO THE EFFECTIVE
TIME OF THE MERGER. Holders of Regent securities will be provided with a letter
of transmittal and related materials needed to exchange their certificates after
the Effective Time.

Business of Carnegie and Regent Pending
the Merger; No Solicitation

Carnegie and Regent. Each of Carnegie and Regent has agreed
that, prior to the Effective Time or earlier termination of the
Merger Agreement, except as permitted by the Merger Agreement,
Carnegie and Regent and their respective subsidiaries will carry
on their respective businesses in the ordinary course as
conducted on the date of the Merger Agreement and consistent with
prudent banking practice and will not engage in any of a number
of actions specified in the Merger Agreement. See "The Merger--
Business of Carnegie and Regent Pending the Merger."

No Solicitation; Termination Fee. The Merger Agreement
provides that Carnegie and Regent will not, nor will either
permit any of its respective subsidiaries to, nor will either

authorize or permit any officer, director, employee, representative or agent to,
solicit any person, entity or group concerning any merger, business combination,
sale of significant assets outside of the ordinary course of business, sale of
shares of capital stock outside of the ordinary course of business or any
similar transaction other than the transactions contemplated by the Merger
Agreement (each, an "Acquisition Transaction"), provided that Carnegie or Regent
may participate in negotiations with or furnish information to a third party if
the Board of Directors of Carnegie or Regent, as the case may be, after
consultation with its outside counsel, determines that the failure to do so may
violate its fiduciary duties. If Regent terminates the Merger Agreement because
Carnegie's Board of Directors (i) has withdrawn its recommendation or approval
of the Merger Agreement in a manner adverse to Regent or (ii) approves or
recommends any proposal other than by Regent in respect of an Acquisition
Transaction or if Carnegie terminates the Merger Agreement to enter into an
agreement with a party other than Regent in respect of an Acquisition
Transaction, Carnegie is obligated to pay Regent a termination fee of $1
million. If Carnegie terminates the Merger Agreement because Regent's Board of
Directors (i) has withdrawn its recommendation or approval of the Merger
Agreement in a manner adverse to Carnegie or (ii) approves or recommends a
proposal other than by Carnegie in respect of an Acquisition Transaction or if
Regent terminates the Merger Agreement to enter into an agreement with a party
other
19

than Carnegie in respect of an Acquisition Transaction, Regent is obligated to
pay Carnegie a termination fee of $1 million.

The Board of Directors and Management of Carnegie Following
the Merger. After the Merger, the Board of Directors of Carnegie
will consist of 14 members, including Bruce A. Mahon, Michael E.
Golden, Thomas L. Gray, Jr., Joseph J. Oakes, III, Mark A. Wolters,
Steven L. Shapiro, and Shelly M. Zeiger, each of whom is presently a
director of Carnegie and CBN, and David W. Ring,
Harvey Porter, Barbara H. Teaford, Abraham L. Bettinger, O. Francis
Biondi, Nelson C. Mishkin and Leonard S. Dwares, each of whom is
presently a director of Regent with the exception of Mr. Mishkin who
is a director of the Bank. Pursuant to the Merger Agreement, the
parties have agreed that in connection with Carnegie's first annual
meeting after consummation of the Merger, the members of the Board of
Directors, to the extent consistent with their fiduciary duty, will
nominate each of the 14 persons listed above for a new one-year term
as a director and will recommend that the then shareholders of
Carnegie vote for the election of such individuals. After the Merger,
Bruce A. Mahon, who is currently the Chairman of the Board of
Carnegie, will continue to serve as Chairman of the Board of Carnegie
and CRBN; Thomas L. Gray, Jr., who is currently the President and
Chief Executive Officer of Carnegie, will continue to serve as
President and Chief Executive Officer of Carnegie and CRBN; David W.
Ring, who is currently

Chairman of the Board of Regent, will serve as a Vice Chairman of Carnegie and
of CRBN; Harvey Porter, who is currently President and Chief Executive Officer
of Regent, will serve as a Vice Chairman of Carnegie and CRBN and as President
of the Regent Division of CRBN; Abraham L. Bettinger, who is currently Vice
Chairman of Regent, will serve as Vice Chairman of Carnegie and CRBN; Mark A.
Wolters, who is currently Executive Vice President of Carnegie and CBN, will
serve as an Executive Vice President of Carnegie and CRBN and Barbara H.
Teaford, who is currently Executive Vice President of Regent, will serve as an
Executive Vice President of CRBN and Carnegie. See "Proposal 1 -- The Merger --
Management and Operations of Carnegie Following the Merger." For biographical
information about the individuals named herein, see "Management of Carnegie" and
"Information Regarding Regent Board of Directors and Executive Officers."

Conditions to Consummation of the Merger; Termination. Consummation of the
Merger is subject to various conditions, including approval of the Merger
Agreement by the holders of Regent Common Stock and Regent Series A Convertible
Preferred Stock, the approval of the Merger Agreement and the Amendment by the
shareholders of Carnegie and receipt of all necessary governmental and other
required approvals, including the approval of the OCC and the FRB. The Merger
Agreement also provides that the obligations of Carnegie and Regent are subject
to the performance, unless waived, in all material respects of their respective
covenants and agreements and the continued truth, in

all material respects, of their respective representations and
warranties. See "Proposal 1 -- The Merger -- Conditions to the
Merger."

The Merger Agreement may be terminated (i) by mutual agreement of the
parties; (ii) by Carnegie if: (a) any required governmental approval contains
conditions which would materially impair the value of Regent and the Bank to
Carnegie or (b) the required purchase accounting and market valuation
adjustments to Regent's balance sheet by reason of the Merger would reduce the
per share net tangible book value of Carnegie's Common Stock as of the month end
preceding the Effective Time by more than $1.50; (iii) by Regent if any required
governmental approval contains conditions which would materially impair the
value of Carnegie Common Stock and Carnegie Series A Convertible Preferred Stock
to Regent's security holders; and (iv) by either party if: (a) without the fault
of such party, the Effective Time does not occur prior to September 30, 1996,
(b) there shall have been a material breach of any representation, warranty,
covenant or agreement on the part of the other party which shall not have been
cured as specified in the Merger Agreement, (c) the required approval of the
holders of Carnegie Common Stock, Regent Common Stock and Regent Series A
Convertible Preferred Stock shall not have been obtained at the respective
Meetings called for such

purpose, (d) any required governmental approval is denied or withdrawn, (e) the
other party suffers a material adverse change in its business, operations,
assets or financial condition, or (f) assuming compliance with the Merger
Agreement, by either party if the other party enters into an agreement in
respect of an Acquisition Transaction involving a third party or if the Board of
Directors of the other party withdraws, modifies or changes its recommendation
or approval in respect of the Merger Agreement. In such event, the party
involved in the Acquisition Transaction would be required to pay a termination
fee of $1 million to the other party. See "Proposal 1 -- The Merger -- Amendment
and Waiver; Termination."

Certain Federal Income Tax Consequences. Carnegie and Regent have received
the opinion of McCarter & English, counsel to Carnegie and CNB, to the effect
that the Merger will qualify as a tax-free reorganization under Section 368 of
the Internal Revenue Code of 1986, as amended (the "Code") and accordingly no
gain or loss will be recognized on the receipt of Carnegie Common Stock and
Carnegie Series A Convertible Preferred Stock by a holder of Regent Common Stock
or Regent Series A Convertible Preferred Stock solely in exchange for Regent
Common Stock or Regent Series A Convertible Preferred Stock, except to the
extent of cash received in lieu of a fractional share. See "Proposal 1--The
Merger--Certain Federal Income Tax Consequences."

Resale of Carnegie Common Stock and Carnegie Series A Convertible Preferred
Stock; Agreements with Affiliates. The Carnegie Common Stock and Carnegie Series
A Convertible Preferred Stock to be received in connection with the Merger have
been

registered under the Securities Act and are freely transferable except as
described herein. Affiliates of Regent prior to the Merger will enter into
agreements with Carnegie pursuant to which they will agree to refrain from the
sale of any Carnegie Common Stock and Carnegie Series A Convertible Preferred
Stock or any interest therein received in connection with the Merger except in
accordance with the provisions of the Securities Act and the general rules and
regulations promulgated thereunder. See "Proposal 1--The Merger--Resale of
Shares of Carnegie Common Stock and Carnegie Series A Convertible Preferred
Stock Issued in the Merger; Affiliates."

Accounting Treatment. The Merger is expected to be
accounted for using the purchase method of accounting. This
method accounts for a business combination as the acquisition of
one enterprise by another. See "Proposal 1--The Merger -- Accounting
Treatment."

Comparative Rights of Shareholders. If the Merger is
consummated, shareholders of Regent, a New Jersey corporation,
will become shareholders of Carnegie, which is also a New Jersey

corporation. The rights of Regent's shareholders will not differ in any
material respect from the rights of Carnegie shareholders, with the exception
that Carnegie Series A Preferred Stock will pay a semi-annual dividend in shares
of Carnegie Common Stock, whereas the Regent Series A Preferred Stock currently
pays an annual dividend in shares of Regent Series E Preferred Stock. See
"Description of Carnegie Securities" and "Comparison of Shareholder Rights."

Expenses and Fees. Whether or not the Merger is
consummated, all fees and expenses incurred in connection with
the Merger Agreement and the transactions contemplated thereby
shall be paid by the party incurring such fees or expenses,
except that in certain circumstances, either party may be
obligated to pay a termination fee to the other party. See
"Proposal 1--The Merger--No Solicitation; Termination Fee."

Dissenters' Rights. Record holders of Carnegie Common Stock, Regent Common
Stock and Regent Series A Convertible Preferred Stock have dissenters' rights
with respect to the Merger, and such holders, to the extent they comply with
applicable provisions of the NJBCA, are entitled to have the fair value of their
shares, as determined in accordance with the NJBCA, paid to them in cash.
In order to exercise these rights, a shareholder must file a written notice
of dissent with Carnegie. Such shareholder will then receive notice that the
merger has become effective. Thereafter, a dissenting shareholder must file a
written demand for payment with Carnegie, and submit the share certificates to
Carnegie so that the certificates may be marked to indicate that the shareholder

has made a demand to be paid the fair value of his shares. In the event
Carnegie and the dissenting shareholder are unable to agree upon a price to be
paid for the dissenting shareholder's shares, a dissenting shareholder must
serve written demand on Carnegie requesting Carnegie commence an action in the
Superior Court of New Jersey for the determination of the fair value of the
dissenting shareholder's shares. In the event Carnegie fails to institute such
a proceeding, the shareholder then has the right to institute the proceeding in
the name of Carnegie. The holders of Regent Series B, Series C, Series D and
Series E Convertible Preferred Stock do not have dissenters' rights unless such
stock is converted in accordance with its terms into Regent Common Stock prior
to the record date for the Regent Special Meeting. See "Proposal 1--The
Merger--Dissenters' Rights of Carnegie Shareholders" and "--Dissenters' Rights
of Holders of Regent Common Stock and Regent Series A Convertible Preferred
Stock."

Proposal 2 - Amendment to Carnegie's Certificate of
Incorporation (to be voted upon by Carnegie Shareholders)

Carnegie's Board of Directors has approved for submission to Carnegie's
shareholders the Amendment which would increase Carnegie's authorized capital to
6,500,000 and authorize Carnegie to issue up to 1,500,000 shares of series
preferred stock (the "Preferred Stock"). A copy of this Amendment is set forth
as Appendix E to this Joint Proxy Statement/Prospectus. The Amendment authorizes
the Board of Directors to authorize the issuance of one or more series of
Preferred Stock from time to time and to fix the relative rights, preferences
and limitations of each series. In connection with the Merger, the Board of
Directors will authorize a new series of the Preferred Stock (the "Carnegie
Series A Convertible Preferred Stock") which will have terms substantially
similar to the Regent Series A Convertible Preferred Stock, which will be
convertible into 0.75 shares of Carnegie Common Stock, and will pay dividends in
Carnegie Common Stock at the rate of .075 shares of Carnegie Common Stock for
every share of Carnegie Series A Convertible Preferred Stock held. In connection
with the Merger, Carnegie will issue approximately 487,532 shares of Carnegie
Series A Convertible Preferred Stock.

Thereafter, the approximately 1,012,468 remaining authorized shares of Preferred
Stock may be issued from time to time by Carnegie's Board of Directors as the
Board so determines, with the rights, terms and preferences as the Board
provides at the time of issuance.

Proposal 3 - Approval of the 1995 Directors' Stock Option Plan (to be
voted upon by Carnegie Shareholders)

At the Carnegie Special Meeting, Carnegie shareholders are also being asked
to approve the Directors' Plan. The Directors' Plan provides for the granting of
options to purchase 154,000 shares of Carnegie Common Stock. Directors of
Carnegie including directors of Regent who become directors of Carnegie and
directors of subsidiaries of Carnegie will be eligible to participate in the
Directors' Plan. The purpose of the Directors' Plan is to assist Carnegie in
attracting and retaining qualified persons to serve as members of the Board of
Directors of Carnegie and its subsidiaries. The Directors' Plan will be
administered by the Board of Directors of Carnegie. A copy of the Directors'
Plan is attached as Appendix F hereto.

Proposal 4 - Approval of the 1995 Employee Stock Option Plan (to be
voted upon by Carnegie Shareholders)

Shareholders of Carnegie will also be asked at the Carnegie Special Meeting
to approve the Employee Plan. The Employee Plan provides for the granting of
options to purchase 11,530 shares of Carnegie Common Stock. Employees of
Carnegie and its subsidiaries will be eligible to participate in the Employee
Plan, as selected by an administrative committee of Carnegie's

Board of Directors. A copy of the Employee Plan is attached as
Appendix G hereto.

Comparative Per Share Data

The following table sets forth the earnings and dividends per share of
Carnegie Common Stock and Regent Common Stock for the nine months ended
September 30, 1995 and for the year ended December 31, 1994, on an historical
and a pro forma basis for Carnegie and on an historical and a pro forma
equivalent basis for Regent. The table also sets forth the tangible book value
per share of both Carnegie Common Stock and Regent Common Stock at September 30,
1995 and at December 31, 1994, assuming conversion of all Regent Preferred Stock
into Regent Common Stock in accordance wih its terms, on an historical basis as
well as on a pro forma basis for Carnegie and on an historical and a pro forma
equivalent basis for Regent. The historical per share data have been derived
from the financial statements of Carnegie and Regent which appear elsewhere in
this Joint Proxy Statement/Prospectus. The pro forma and pro forma equivalent
data have been derived after giving effect to the Merger as if it occurred at
the

beginning of the years presented based on the September 30, 1995
purchase price using the purchase method of accounting. See
"Pro Forma Consolidated Financial Statements" and "Information
About Carnegie--Carnegie Financial Summary and Selected Per
Share Data" and "Information About Regent--Regent Financial

Summary and Selected Per Share Data."

Pro Forma
Combined Pro Forma
Per Equivalent
Historical Historical Carnegie per Regent

Carnegie Regent Share Share(1)

Nine Months Ended September 30, 1995:

Earnings Per Share (4) . . . . . . . $ .87 $ .02 $ .58 $ .44
Tangible Book Value . . . . . . . . 11.78 8.56 10.38 7.79
Cash Dividends Per Common
Share (2)(3) . . . . . . . . . . . . .36 -- .36 .27

Year Ended December 31, 1994:

Earnings Per Share . . . . . . . . . 1.23 .22 .75 .56
Tangible Book Value . . . . . . . . 10.54 7.98 9.65 7.24
Cash Dividends Per Common
Share (2)(3) . . . . . . . . . . . . .40 -- .40 .30

- ---------------
(1) Regent pro forma equivalent per share data is computed by multiplying the
pro forma combined per share data (giving effect to the Merger) by 0.75.

(2) The amount of future dividends payable by Carnegie, if any, is subject to
the discretion of Carnegie's Board of Directors. The Directors normally
consider Carnegie's and CBN's cash needs, general business conditions,
dividends from

subsidiaries and applicable governmental regulations and policies
in determining the declaration and payment of dividends.

(3) Pro Forma amounts assume that Carnegie would have declared cash dividends
per share of Carnegie's Common Stock equal to its historical cash dividends
per share.

(4) Earnings Per Share include the dilutive effect of options to be issued

in connection with the Merger.

Market Price Data. The high and low bid price for Regent

Common Stock on the NASDAQ SmallCap Market as reported by the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") was
$9.75 and $8.75, respectively, per share and for the Regent Series A Convertible
Preferred Stock was $10.00 and $9.00 per share on August 30, 1995, the day prior
to Carnegie's and Regent's joint announcement of the proposed Merger. On the
same date, the high and low bid price for Carnegie Common Stock on the National
Market System as reported by Nasdaq was $15.625 and $15.625, respectively, per
share. See "Comparative Per Share Market Information."

The following table presents the per share market value (average bid and
asked prices) of Regent Common Stock and Regent Series A Convertible Preferred
Stock on an historical and pro forma equivalent basis and the per share market
value of Carnegie Common Stock on an historical basis as of August 30, 1995, the
trading day prior to announcement of the Merger.

Regent Common Stock Regent Series A Carnegie
Convertible Preferred Stock Common Stock

Historical $ 9.25 $9.50 $15.44

Pro forma
equivalent $11.58(1) -- --

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

(1) Regent pro forma equivalent market price is computed by dividing the
historical Carnegie Common Stock price per share by 0.75.

VOTING AND PROXIES

Date, Time and Place of the Meetings

Carnegie. The Carnegie Special Meeting will be held at
__________________________________________________, on March
__, 1996 at _____ _.M., local time.

Regent. The Regent Special Meeting will be held at
_________________ _______________________ on March ___, 1996 at
10:00 a.m., local time.

Record Date and Outstanding Shares

Carnegie. Holders of record of Carnegie Common Stock at the
close of business on February ___, 1996 (the "Record Date") are
entitled to notice of and to vote at the Carnegie Special Meet-

ing. On the Record Date, there were __________ shares of Carnegie Common Stock
issued and outstanding, held by approximately _____ shareholders of record.
Except for the shareholders identified herein under "Management of
Carnegie--Security Ownership of Certain Beneficial Owners and Management of
Carnegie," on the Record Date there were no other persons known to the
management of Carnegie to be the beneficial owners of more than 5% of Carnegie's
outstanding Common Stock.

Regent. Holders of record of Regent Common Stock and Regent Series A
Convertible Preferred Stock at the close of business on the Record Date are
entitled to notice of and to vote at the Regent Special Meeting. On the Record
Date, there were _________ shares of Regent Common Stock and ___________ shares
of Regent Series A Convertible Preferred Stock issued and outstanding, held by
approximately ____ shareholders of record. Except for the shareholders
identified herein under "Information Regarding Regent Board of Directors and
Executive Officers--Securities Ownership of Management and Principal
Shareholders," on the Record Date there were no other persons known to the
management of Regent to be the beneficial owners of more than 5% of the
outstanding Regent Common Stock and Regent Series A Convertible Preferred Stock.
Holders of Regent Series B, Series C, Series D and Series E Convertible
Preferred Stock do not have voting rights with regard to the Merger.

Voting of Proxies

Carnegie. All shares of Carnegie Common Stock represented by duly executed
proxies received by Carnegie before the vote is taken at the Carnegie Special
Meeting will be voted in the manner specified on such proxies at the Carnegie
Special Meeting. Any holder of Carnegie Common Stock giving a proxy may revoke
it at any time prior to its use by filing a written notice of revocation or a
duly executed proxy bearing a later date with the

Secretary of the Carnegie Special Meeting or by attending the Carnegie Special
Meeting and voting in person. Any duly executed proxy that does not specify a
choice will be voted "FOR" the proposal to approve and adopt the Merger
Agreement, "FOR" the proposal to approve the Amendment, "FOR" the proposal to
approve the Directors' Plan and "FOR" the proposal to approve the Employee Plan.

Regent. All Regent Common Stock and Regent Series A Convertible Preferred
Stock represented by duly executed proxies received by Regent before the vote is
taken at the Regent Special Meeting will be voted in the manner specified on
such proxies at the Regent Special Meeting. Any holder of Regent Common Stock or
Regent Series A Convertible Preferred Stock giving a proxy may revoke it at any
time prior to its use by filing a written notice

of revocation or a duly executed proxy bearing a later date with the Secretary
of the Regent Special Meeting or by attending the Regent Special Meeting and
voting in person. Any duly executed proxy that does not specify a choice will be
voted "FOR" the proposal to approve and adopt the Merger Agreement.

Vote Required

Carnegie. The affirmative vote of a majority of the votes cast by the
holders of Carnegie Common Stock present at the Carnegie Special Meeting is
necessary to approve and adopt the Merger Agreement, the Amendment, the
Directors' Plan and the Employee Plan.

Regent. Under the NJBCA, approval and adoption of the Merger Agreement
requires the affirmative vote of a majority of the votes cast by the holders of
shares of Regent Common Stock and Regent Series A Convertible Preferred Stock
voting together as a class. Each share of Regent Common Stock and Regent Series
A Convertible Preferred Stock is entitled to one vote on all matters to come
before the Regent Special Meeting. The holders of Regent Series B, Series C,
Series D and Series E Convertible Preferred Stock are not entitled to vote on
the proposal to approve and adopt the Merger Agreement unless such stock is
converted in accordance with its terms into Regent Common Stock prior to the
record date for the Regent Special Meeting.

Abstentions and broker no votes will be counted as being present, for
purposes of determining a quorum, at both the Carnegie Special Meeting or the
Regent Special Meeting. Since, under New Jersey law, the Merger must be approved
by a majority of the votes cast at each of the Meetings, abstentions and broker
no votes will have the same effect as voting against the Merger.

Solicitation of Proxies; Expenses

If the Merger is not consummated, each of Carnegie and Regent will bear the
cost of the solicitation of proxies from their respective shareholders. In
addition to solicitation by mail, the directors, officers and employees of
Carnegie and Regent may solicit proxies in favor of the Merger from holders of
Carnegie Common Stock and Regent Common Stock and Regent Series A Convertible
Preferred Stock, respectively, by telephone, telegram or letter or in person.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the

beneficial owners of stock held of record by such persons. Carnegie and Regent
will each reimburse such custodians, nominees and fiduciaries for their
reasonable out-of-pocket expenses.

PROPOSAL I - THE MERGER

Introduction

The following is a summary of the terms and conditions of the Merger
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the full text of the Merger Agreement attached as
Appendix A to this Joint Proxy Statement/Prospectus and incorporated by
reference herein.

Background of the Merger

During January and February 1995, Regent's Board of Directors reviewed
intensively the strategic options available to Regent for maximizing shareholder
value. In February 1995, Regent's Board of Directors concluded that the
long-term interests of Regent and the maximization of value for its shareholders
would best be served by combining with a financial institution of approximately
the same size as Regent and with compatible business philosophies rather than
seeking to be acquired by a substantially larger financial institution.
Regent's Board of Directors reached this conclusion because it believes that
business combination prospects are substantially better for institutions
with at least $1 billion in assets than for smaller banks. Because of this
conclusion by Regent's Board of Directors, Regent's Board did not give
substantial consideration to any proposals other than that made by
Carnegie.

During 1993 and 1994, Mr. Bruce A. Mahon, Chairman of the
Board of Carnegie, and Mr. Harvey Porter, President and Chief
Executive Officer of Regent, had become acquainted and had held
general and informal discussions regarding the possibility
of establishing a relationship between Carnegie and Regent. In
March 1995, Mr. Porter and Mr. Mahon began negotiations regarding
a possible relationship between Regent and Carnegie. Various

executive officers and members of the Boards of Directors of Regent and Carnegie
participated in these discussions. As a result of these discussions, Regent and
Carnegie executed a confidentiality agreement on or about March 20, 1995.

Carnegie and Regent thereupon began to exchange certain confidential information
about each other. The preliminary review of this information by Carnegie and
Regent resulted in the commencement of substantive merger discussions between
Mr. Mahon and members of Carnegie's Executive Committee on the one hand and Mr.
Porter and members of Regent's Executive Committee on the other. In May 1995,
Carnegie and Regent reached an understanding that, subject to the completion of
satisfactory due diligence investigation of each party and negotiation of a
merger agreement, any merger between Regent and Carnegie would involve an
exchange of Carnegie securities for Regent securities and an equal
representation on the Boards of Directors of the combined companies and banks.

On July 3, 1995, Regent retained Janney, an investment banking firm, to
serve as Regent's financial advisor in connection with the proposed merger. On
May 22, 1995, Carnegie retained Capital Consultants to serve as Carnegie's
financial advisor in

connection with the proposed merger.

During June, July and August 1995, Carnegie, Regent and their respective
counsel and financial advisors had numerous discussions concerning the terms,
conditions and provisions of a proposed merger agreement between Carnegie and
Regent. These discussions were reviewed by Regent's Board of Directors at
regular and special meetings held on June 28, 1995, July 26, 1995 and August 23,
1995, and by Carnegie's Board of Directors at regular and special meetings held
on July 19, 1995, August 16, 1995 and August 30, 1995.

On August 10, 1995, Regent, as a result of its discussions with Carnegie
and a substantial increase in the trading volume of and prices for Regent's
Common Stock, issued a press release stating that Regent was evaluating a merger
proposal from a financial institution of comparable size at a price of
approximately $11.00 per share of Regent Common Stock and that Regent had
retained Janney to assist Regent in its evaluation of the merger proposal. At
the same time and continuing through the morning of August 30, 1995, the
representatives of Carnegie and Regent and their respective legal counsel and
financial advisors continued their negotiation of the terms of the Merger
Agreement and related matters.

On the morning of August 30, 1995, Carnegie's Board of Directors met to
review and discuss the terms of the Merger, and received an oral report from
Capital Consultants regarding the fairness, from a financial point of view, of
the proposed Merger to the shareholders of Carnegie. The Carnegie Board then
voted to approve the Merger.

On the afternoon of August 30, 1995, Regent's Board of Directors met to
consider the Merger Agreement proposed by Carnegie, and were advised that
Carnegie's Board of Directors had approved the Merger Agreement that morning.
Regent's Board of Directors reviewed the terms of the proposed Merger Agreement
following presentations by Mr. Porter and representatives of Janney and Duane,
Morris & Heckscher, Regent's counsel. Janney delivered its opinion as to the
fairness, from a financial point of view, of the Carnegie securities to be
offered in the Merger in exchange for the Regent securities.

After discussion, Regent's Board of Directors, by a unanimous vote of those
directors present and with the concurrence of the other directors not present,
decided to proceed with the merger of Regent with and into Carnegie for the
reasons discussed below, and approved the Merger Agreement and the transactions
contemplated thereby and recommended without

dissent that the holders of Regent Common Stock and Regent Series A Convertible
Preferred Stock vote to approve and adopt the Merger Agreement.

Recommendations of the Carnegie and Regent
Boards and Reasons for the Merger

The Boards of Directors of Carnegie and Regent believe that the principal
reason for the Merger is to combine similar businesses to achieve a stronger
company that can better compete in the marketplace and achieve more profitable
operations.

Carnegie. Carnegie's Board of Directors approved the Merger Agreement and
believes the Merger is in the best interests of the shareholders of Carnegie
because of the complementary nature of Carnegie and Regent as financial
institutions, cost savings, synergies and other benefits which will be realized
by combining Carnegie and Regent into a $500 million institution, and the fact
that the acquisition of Regent provides Carnegie with cost efficient entry into
the Center City Philadelphia marketplace which Carnegie could not achieve on its
own.

The Board of Directors of Carnegie believes that the balance sheet
structures of Carnegie and Regent are highly complementary and, when combined,
will result in a much stronger institution. For example, Regent has a large
securities portfolio. Pay downs and maturities of that securities portfolio will
provide Carnegie with additional liquidity to meet increasing loan demand which
the Board of Carnegie believes it will generate both from its existing and new
branches and through the Merger. In addition,

from an asset-liability management standpoint the assets and liabilities of
Carnegie and Regent fit together in a complementary way, such that Carnegie's
asset sensitivity is offset by Regent's liability sensitivity. The interest rate
sensitivity of the combined institution will be less than it would be for either
institution on a stand alone basis.

The Board of Directors of Carnegie also believes that substantial cost
savings may be realized by combining CBN and the Bank, without reductions in
employment. As an example, Regent currently outsources certain data processing
functions which Carnegie has the capability to perform in-house for the combined
institution. Likewise, Carnegie currently outsources certain compliance work
which Regent has the ability to perform in-house for the combined institution.
The Carnegie Board also believes that certain opportunities will be available to
the combined

institution due to its size which are not now available to either institution.
For example, CRBN will have a higher regulatory lending limit than either CBN or
the Bank.

Finally, the Board of Directors of Carnegie believes that the Merger will
provide Carnegie with a cost-efficient entry into the Center City Philadelphia
market. Because of the competitive nature of this marketplace, the Board of
Carnegie does not believe Carnegie could successfully enter this marketplace
independently, at least not without incurring substantial near term losses and
expenses. However, because of Regent's established presence in Philadelphia and
the business relationships established by the Board of Directors and management
of Regent, the Board of Directors of Carnegie believes that the Merger provides
Carnegie with an ability to enter into Center City Philadelphia market and
compete on a successful basis.

Regent. Regent's Board of Directors approved the Merger and believes that
the Merger is in the best interests of the security holders and customers of
Regent as a result of the complementary nature of Carnegie and Regent as
financial institutions, cost savings, synergies and other benefits described
above. Furthermore, the Regent Board of Directors believes that the Merger with
Carnegie provides a cost efficient entry into the New Jersey market place that
Regent could not have achieved on its own. Finally, the Board of Directors of
Regent believes that the terms and conditions of the Merger Agreement, including
the Carnegie securities to be received by Regent's security holders, provides
Regent's security holders with the opportunity to participate in the long-term
prospects of the combined entity on an advantageous basis.

Opinions of Financial Advisors

Carnegie

On May 24, 1995, the Carnegie Board retained Capital Consultants to act as
Carnegie's financial advisor in connection with the prospective merger with
Regent and to render its opinion with respect to the fairness, from a financial
point of view, to the shareholders of Carnegie of the consideration to be paid
in a potential merger with Regent.

Capital Consultants is regularly engaged in the valuation of banks, bank
holding companies, thrifts, and thrift holding companies in connection with
mergers, acquisitions and other securities transactions. Capital Consultants has
knowledge of, and experience with, the New Jersey and Pennsylvania banking and
thrift market and financial organizations operating in that market and was
selected by Carnegie because of Capital

Consultants' knowledge of, experience with, and reputation in the financial
services industry. The exchange ratios and other provisions of the Merger
Agreement were determined through negotiations between Carnegie and Regent, in
which Capital Consultants acted as financial advisor to Carnegie. Capital
Consultants is not a market maker in either Carnegie Common stock nor Regent
Common or Regent Preferred Stock. Capital Consultants has provided other
consulting and financial advisory services to Carnegie.

On August 30, 1995, Capital Consultants delivered its verbal opinion to the
Carnegie Board to the effect that, as of that date, the consideration to be paid
to Regent's security holders was fair, from a financial point of view, to the
shareholders of Carnegie. The opinion was reconfirmed in writing as of the date
of this Joint Proxy Statement/Prospectus, when Capital Consultants delivered to
the Carnegie Board of Directors Capital Consultants' written opinion that, based
on and subject to various items set forth in its written opinion, the
consideration to be paid to Regent's security holders pursuant to the Merger
Agreement is fair from a financial point of view to Carnegie's shareholders. In
requesting Capital Consultants' advice and opinion, Carnegie's Board did not
impose any limitations upon Capital Consultants with respect to the
investigations made or procedures followed by it in rendering its opinion.

The full text of the written opinion of Capital Consultants, which sets
forth assumptions made and matters considered, is attached as Appendix B to this
Joint Proxy Statement/Prospectus. Carnegie shareholders are urged to read this
opinion in its entirety. Capital Consultants' opinion is directed only to the
financial terms of the Merger and does not constitute a recommendation to any
Carnegie shareholder as to how such shareholder should vote at the Carnegie
Special Meeting. The summary information regarding Capital Consultants' opinion
and the procedures it followed in rendering such opinion set forth in this Joint
Proxy Statement/Prospectus is qualified in its entirety by reference to the full
text of such opinion.

In arriving at its opinion, Capital Consultants reviewed and analyzed,

among other things: (i) the Merger Agreement; (ii) the Carnegie Registration
Statement on Form S-4 of which this Joint Proxy Statement/Prospectus is a part;
(iii) publicly available information relating to Carnegie and Regent including
their respective annual reports to shareholders for the years ended December 31,
1992 through 1994, Annual Reports on Form 10-K filed with the Commission for the
years ended December 31, 1992 through 1994 with regard to Regent and for the
year ended December 31, 1994 with regard to Carnegie, the Consolidated
Statements of Financial Condition as of December 31, 1994, 1993 and 1992, and
the related Consolidated Statements of Income, Changes in Shareholders' Equity
and Cash Flows for the three-year period

ended December 31, 1994 included therein, and the quarterly reports to
shareholders and Quarterly Reports on Form 10-Q filed with the Commission for
the periods ended March 31, 1995, June 30, 1995 and September 30, 1995; (iv)
certain historical operating and financial information provided to Capital
Consultants by the managements of Carnegie and Regent; (v) historical and
current market data for the Carnegie Common Stock and the Regent Common and
Preferred Stock; (vi) publicly available financial data and stock market
performance data of publicly traded banking and thrift institutions which
Capital Consultants deemed generally comparable to Carnegie and Regent; (vii)
the nature and terms of recent acquisitions and merger transactions involving
banking institutions and bank and thrift holding companies that Capital
Consultants considered reasonably similar to Carnegie and Regent in financial
character, operating character, historical performance, geographic market and
economy; and (viii) such other studies, analyses, inquiries and reports as
Capital Consultants deemed appropriate. In addition, Capital Consultants
conducted meetings with members of senior management of Carnegie and Regent for
purposes of reviewing the future prospects of Carnegie and Regent. Capital
Consultants evaluated the pro forma ownership of Carnegie Common Stock by
Regent's security holders relative to the pro forma contribution of Regent's
assets, deposits, equity and earnings to the pro forma resulting company in the
Merger. Capital Consultants also took into account its experience in other
transactions, as well as its knowledge of the banking and thrift industries and
its experience in securities valuations.

In rendering its opinion, Capital Consultants assumed, without independent
verification, the accuracy, completeness and fairness the financial and other
information provided to it by Carnegie and Regent. Capital Consultants did not
conduct a physical inspection of any of the properties or assets of Carnegie or
Regent and has not made any independent evaluations or appraisals of any
properties, assets or liabilities of Carnegie or Regent. Capital Consultants has
assumed and relied upon the accuracy and completeness of the publicly available
financial and other information provided to it, has relied upon the
representations and warranties of Carnegie and Regent made

pursuant to the Merger Agreement, and has not independently
attempted to verify any such information.

In rendering its opinion, Capital Consultants assumed that in the course of
obtaining the necessary regulatory approvals for the Merger, no conditions will
be imposed that will have a material adverse effect on the contemplated benefits
of the Merger on a pro forma basis to Carnegie.

In arriving at its opinion, Capital Consultants performed a variety of
financial analyses. Capital Consultants believes that its analyses must be
considered as a whole and that consideration

of portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and the process underlying Capital Consultants' opinion. The
preparation of an opinion with respect to fairness, from a financial point of
view, of the consideration to be received by security holders is a complex
process involving complex considerations and judgments and is not necessarily
susceptible to partial analyses and summary description.

In its analyses, Capital Consultants made numerous assumptions with respect
to Carnegie's and Regent's industry performance, business and economic
conditions and other matters, many of which are beyond the control of Carnegie
or Regent. Any estimates reflected in Capital Consultants' analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than such estimates.

Estimates of values of companies do not purport to be appraisals or
necessarily reflect the prices at which companies or their securities may
actually be sold.

In connection with its opinion, Capital Consultants performed various
analyses with respect to Carnegie and Regent. The following is a brief summary
of such analyses, certain of which were presented to the Carnegie Board by
Capital Consultants.

Comparable Company Analysis

Capital Consultants compared the operating performance of Carnegie and
Regent to publicly traded commercial banks that Capital Consultants deemed to be
similar to Carnegie or Regent. The group consisted of 21 publicly traded New
Jersey or Pennsylvania-based commercial banks with total assets of between $245
million and $985 million. Capital Consultants compared Carnegie and Regent with
these institutions based on selected operating fundamentals, including capital
adequacy, profitability and asset quality. Using pricing data as of June 30,
1995, the median price to stated book value was 143% for the comparable

commercial banks, 125% for Carnegie and 66% for Regent. The median equity to
assets ratio was 8.79% for the group of comparable commercial banks, 8.88% for

Carnegie, and 5.45% for Regent. The median return on average assets for the
twelve months ended June 30, 1995 was 1.27% for the comparable group of
commercial banks, 0.92% for Carnegie, and 0.09% for Regent. The median return on
average equity for the twelve months ended June 30, 1995 was 14.02% for the
comparable group of commercial banks, 10.18% for Carnegie, and 1.75% for

Regent.

Finally, Capital Consultants compared the price-to-earnings multiples of
Carnegie Common Stock and Regent Common Stock with the comparable commercial
banks. The analysis indicated that Carnegie Common Stock traded on June 30, 1995
at a price-to- earnings multiple of 13.4 times trailing twelve months earnings
for the period ended March 31, 1995 compared to a comparative group medium of
12.4 times trailing twelve months earnings for the period ended March 31, 1995,
while Regent Common Stock traded on June 30, 1995 at a price-to-earnings
multiple of 100.0 times trailing twelve months earnings. The Capital Consultants
analyses also included summary income statement and balance sheet data and
selected ratio analyses for Carnegie and various other potential merger partners
of Regent.

Contribution Analysis

Capital Consultants prepared a contribution analysis showing the percentage
of assets, deposits, net common equity and 1995 net income Carnegie and Regent
would contribute to the combined company on a pro forma basis, and compared
these percentages to the pro forma ownership after the Merger. This analysis
showed that Carnegie would contribute 47.2% of pro forma consolidated total
assets, 52.4% of pro forma consolidated deposits, 49.9% of pro forma
consolidated shareholders' equity and 96.8% of pro forma consolidated net income
for 1995, while Carnegie shareholders would hold 57.8% of the pro forma
ownership of the combined company. Regent would contribute 52.8% of pro forma
consolidated total assets, 47.6% of pro forma consolidated deposits, 50.1% of
pro forma consolidated shareholders equity, and 3.2% of pro forma consolidated
net income for 1995, while Regent security holders would hold 42.2% of the pro
forma ownership of the combined company.

Pro Forma Merger Analysis

Capital Consultants reviewed pro forma analyses of the financial impact of
the Merger. Using 1996 and 1997 earnings estimates for Carnegie and Regent
prepared by their respective managements and based on certain assumptions
regarding potential revenue improvements in the combined company, Capital
Consultants compared such estimates of Carnegie on a stand alone basis to the

estimated 1996 and 1997 earnings per share of the combined companies on a pro
forma basis. Based on such analyses, the Merger would, prior to expenses related

to the Merger, be accretive to Carnegie in 1997, assuming realization of
potential revenue improvements from items such as increased commercial lending
and more efficient asset-liability management and modest cost savings resulting
from the Merger, such as savings on professional fees and FDIC insurance
premiums. Capital Consultants also calculated

certain capital ratios, including shareholders' equity-to-assets and tangible
shareholders equity-to-assets, for Carnegie pro forma for the Merger. Based on
such calculations, the Merger would decrease such ratios but not below the
levels desired by the applicable regulatory agencies. Capital Consultants also
calculated the pro forma book value per share of Carnegie and concluded that the
Merger would be dilutive to Carnegie's book value per share on a tangible basis.

Comparable Transaction Analysis

Capital Consultants performed an analysis of prices and premiums offered in
recently announced commercial bank and bank holding company transactions in
Pennsylvania and New Jersey. Multiples of earnings and fully diluted book value
implied by the consideration to be paid by Carnegie to Regent's security holders
in the Merger were compared with multiples offered in such transactions, which
included pending and completed acquisitions announced between January 1, 1994
and August 29, 1995. The median offer price to book value for this group of
comparable transactions was 177%. The equivalent offer price to book value for
Regent was 129%, based on the assumed Carnegie offer price of $11.44 for each
outstanding share of Regent Common Stock and Regent Preferred Stock and Regent's
book value as of June 30, 1995. Capital Consultants also reviewed the core
capital ratio to total assets of the comparative group and non-performing assets
as a percentage of total assets and in both analyses, Regent was below the
median of the comparative group.

It is important to note that while Capital Consultants took into account
the values shown in the comparable analyses used in connection with the
rendering of its opinion, no company or transaction used in these analyses was
identical to Carnegie, Regent or the Merger. Accordingly, an analysis of the
results in the foregoing discussion is not mathematical; rather, it involves
complex considerations and judgments concerning differences in financial and
operating characteristics of the companies involved, the timing of the
transactions and prospective buyer interest, the earnings trends and prospects
for the future, as well as other factors that could affect the public trading
values of the companies included in the comparisons.

For Capital Consultants' services in connection with the Merger, Carnegie
has agreed to pay Capital Consultants a fee of approximately $35,000 plus
reimbursement for reasonable out-of-pocket expenses. Carnegie has also agreed to
indemnify Capital

Consultants against certain liabilities, including liabilities under the federal
securities laws. Carnegie paid Capital Consultants $7,500 in August 1995 and
paid an additional $10,000

on the mailing of this Joint Proxy Statement/Prospectus. The balance of the fee
is due upon completion of the Merger. The amount of Capital Consultants' fee was
determined by negotiation between Carnegie and Capital Consultants.

Regent

Regent retained Janney to render a fairness opinion in connection with the
Merger. Janney has rendered its opinion that, based upon and subject to the
various considerations set forth therein, as of August 30, 1995, and as of the
date of this Joint Proxy Statement/Prospectus, the Merger is fair, from a
financial point of view, to the holders of Regent's securities (as such terms
are described in the Merger Agreement).

The full text of Janney's opinion as of the date thereof, which sets forth
the assumptions made, the matters considered and limitations of the review
undertaken, is attached as Appendix C to this Joint Proxy Statement/Prospectus,
is incorporated herein by reference, and should be read in its entirety in
connection with this Joint Proxy Statement/Prospectus. The summary of the
opinion of Janney set forth herein is qualified in its entirety by reference to
the full text of such opinion attached as Appendix C to this Joint Proxy
Statement/Prospectus.

Janney was selected to render an opinion based upon its qualifications,
expertise and experience. Janney has knowledge of, and experience with,
Pennsylvania and New Jersey banking markets and banking organizations operating
in those markets and was selected by Regent because of its knowledge of,
experience with, and reputation in the financial services industry. In addition,
Janney was familiar with Carnegie since Janney served as the lead managing
underwriter for Carnegie's public offering in August 1994, for which Janney
received customary compensation. Janney is also a market maker in Carnegie's
Common Stock.

In such capacity, Janney did not participate in the negotiations with
respect to the pricing and other terms of the Merger, and the decision with
respect to the consideration to be received in the Merger was determined by the
Regent Board in the process of its negotiations with Carnegie. On August 30,
1995, Regent's Board of Directors approved and executed the Merger Agreement.
Janney delivered an opinion (the "August Opinion") to Regent's Board stating
that, as of such date, the consideration to be received in the Merger was fair
to the holders of Regents securities from a financial point of view. Janney
reached the same opinion as of the date of this Joint Proxy
Statement/Prospectus. The full text of the opinion of Janney dated as of the
date of this Joint Proxy Statement/Prospectus (the "Proxy Opinion"), which sets

forth the assumptions made, the matters considered and the limitations of the
review undertaken, is attached as Appendix C to this Joint Proxy
Statement/Prospectus. No limitations were imposed by the Board of Directors of
Regent upon Janney with respect to the investigations made or procedures
followed by Janney in rendering the August Opinion or the Proxy Opinion.

In rendering its Proxy Opinion, Janney (i) reviewed, respectively, the
historical financial performance, current financial position and general
prospects of Regent and Carnegie, (ii) reviewed the Merger Agreement, (iii)
reviewed the Registration Statement on Form S-4 of which this Joint Proxy
Statement/Prospectus is a part, (iv) reviewed and analyzed the stock market
performance of Regent and Carnegie, (v) studied and analyzed the consolidated
financial and operating data of Regent and Carnegie, (vi) compared the terms and
conditions of the proposed Merger between Regent and Carnegie with the terms and
conditions of comparable bank mergers of equals, (vii) met and/or communicated
with certain members of Regent and Carnegie senior management to discuss their
respective operations, historical financial statements, and future prospects,
and (viii) conducted such other financial analyses, studies and investigations
as were deemed appropriate.

Janney relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by and
discussed with it for purposes of the August Opinion and the Proxy Opinion. With
respect to Regent's and Carnegie's financial forecasts reviewed by Janney in
rendering its opinion, Janney assumed that such financial forecasts were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the managements of Regent and Carnegie as to the future
financial performance of Regent and Carnegie. Janney did not make an independent
evaluation or appraisal of the assets (including loans) or liabilities of Regent
or Carnegie nor was it furnished with any such appraisal. Janney also did not
independently verify and has relied on and assumed that all allowances for loan
and lease losses set forth in the balance sheets of Regent and Carnegie were
adequate and complied fully with applicable law, regulatory policy and sound
banking practice as of the date of such financial statements.

The following is a summary of selected analyses prepared by Janney and
presented to Regent's Board of Directors in connection with the August Opinion
and analyzed by Janney in connection with the August Opinion and the Proxy
Opinion.

Contribution Analysis. Janney analyzed the relative
contributions by the two parties to the proposed Merger in
relation to the proportionate interests in Carnegie which will be

held by shareholders of the respective parties following the Merger. Janney
estimated the holders of Regent's securities would receive approximately 42.2%
of the outstanding shares of Carnegie following the Merger and shareholders of
Carnegie would hold approximately 57.8% after the Merger.

Janney presented a contribution analysis to the Board of Directors of
Regent showing approximately the following percentage contributions of
Regent and Carnegie on a pro forma basis (as of and for the twelve
months ended June 30, 1995): assets - Regent 52.2% and Carnegie 47.8%,
net loans - Regent 38.5% and Carnegie 61.5%, investment securities -
Regent 74.4% and Carnegie 25.6%, deposits - Regent 48.1% and Carnegie
51.9%, shareholders' equity - Regent 40.1% and Carnegie 59.9% and net
income - Regent 11.1% and Carnegie 88.9%.

Janney also presented a comparison of various historical measures of
earnings, performance ratios and financial condition for the five fiscal years
ended December 31, 1990 through December 31, 1994 and the reporting period ended
June 30, 1995. Janney compared the following ratios: return on average asset
ratios before extraordinary items for Regent and Carnegie (starting at December
31, 1990) were, respectively, (0.22%, 0.79%, 0.69%, 0.55%, 0.20%, and
0.09% for Regent and 0.42%, 0.95%, 0.98%, 0.81%, 0.87%, and 0.92% for Carnegie;
return on average equity ratios before extraordianry items were (2.68%), 9.17%,
10.33%, 9.29%, 3.89% and 1.75% for Regent and 3.11%, 8.84%, 10.60%, 11.38%,
11.39% and 10.18% for Carnegie; net interest margins were 2.22%, 2.83%, 2.87%,
2.49%, 2.37% and 2.82% for Regent and 4.47%, 4.70%, 4.93%, 5.08%, 5.16%, and
5.29% for Carnegie; noninterest income as a percentage of average assets ratios
were 0.04%, 0.05%, 0.04%, 0.07%, 0.08%, and 0.06% for Regent and 0.18%, 0.21%,
0.20%, 0.25%, 0.28%, and 0.31% for Carnegie; the efficiency ratios (defined as
noninterest expense as a percentage of net interest income plus noninterest
income) were 69.38%, 60.73%, 50.72%, 57.32%, 72.92%, and 80.11% for Regent and
67.83%, 61.70%, 66.68%, 70.63%, 66.07%, and 67.27% for Carnegie; nonperforming
assets as a percentage of assets were 0.83%, 1.73%, 1.96%, 0.87%, 1.51%, and
1.13% for Regent and 0.86%, 1.58%, 1.96%, 2.09%, 1.06%, and 1.38% for Carnegie;
nonperforming assets plus loans 90 days past due as a percentage of assets were
0.83%, 2.09%, 2.11%, 1.04%, 1.68%, and 1.44% for Regent and 1.67%, 2.21%, 2.05%,
2.33%, 1.06%, and 1.38% for Carnegie; loan loss reserves as a percentage of
nonperforming loans plus loans 90 days past due were 62.84%, 32.62%, 24.94%,
51.95%, 41.99%, 50.08% for Regent and 37.60%, 27.67%, 32.83%, 27.22%, 67.67%,
and 51.00% for Carnegie; equity as a percentage of assets ratios were 8.7%,
8.1%, 5.8%, 5.4%, 5.0%, and 5.5% for Regent and 12.0%, 9.8%, 8.4%, 7.0%, 9.2%
and 8.9% for Carnegie; and loans as a percentage of deposits were 47.6%, 41.7%,
33.9%, 36.7%, 49.4% and 48.9% for Regent and 79.3%, 70.1%, 74.7%, 81.0%, 78.4%
and 72.4% for Carnegie.

Comparable Company Analysis. Janney compared selected financial and
operating data for Regent and Carnegie with those of a peer group of selected
bank and bank holding companies located in Pennsylvania and New Jersey with
assets between $100 million and $500 million as of the most recent financial
period publicly available and for the last five fiscal reporting periods.

The analysis showed that net loans as a percentage of deposits was 48.9%
for Regent and 72.4% for Carnegie compared to the peer median of 71.4%,
common equity as a percentage of assets was 3.24% for Regent and 8.88%
for Carnegie compared to the peer median of 8.01%, total equity as a
percentage of assets was 5.45% for Regent and 8.88% for Carnegie
compared to the peer median of 8.01%, nonperforming assets plus loans 90
days past due as a percentage of assets was 1.44% for Regent and 1.38%
for Carnegie compared to the peer median of 1.24%, nonperforming assets
plus loans 90 days past due as a percentage of shareholders' equity plus
loan loss reserves was 23.27% for Regent and 14.37% for Carnegie
compared to the peer median of 13.42% and loan loss reserves as a
percentage of nonperforming loans plus loans 90 days past due was 50.08%
for Regent and 51.00% for Carnegie compared to the peer median of
68.47%. In addition, Janney also compared net interest margins,
efficiency ratios, return on average assets before extraordinary items
and return on average equity before extraordinary items for the latest
twelve months and the averages of these measures over the past five
fiscal years. Net interest margin for Regent for the latest twelve
months and as an average over the last five years was 2.82% and 2.56%,
respectively, and for Carnegie it was 5.29% and 4.87%, respectively,
compared to the peer median of 5.09% and 4.73%, respectively. Efficiency
ratios for Regent for the latest twelve months and as an average over
the last five years were 80.11% and 62.21%, respectively, and for
Carnegie they were 67.27% and 66.58%, respectively, compared to the peer
median of 69.77% and 71.53%, respectively. Return on average assets
before extraordinary items for Regent for the latest twelve months and
as an average over the last five years was 0.09% and 0.40%,
respectively, and for Carnegie it was 0.92% and 0.81%, respectively,
compared to the peer median of 0.88% and 0.62%, respectively. Return on
average equity before extraordinary items for Regent for the latest
twelve months and as an average over the last five years was 1.75% and
6.00%, respectively, and for Carnegie it was 10.18% and 9.06%,
respectively, compared to the peer median of 10.73% and 8.02%,
respectively. Lastly, Janney examined Regent and Carnegie versus some
selected market valuations based on closing prices at August 28, 1995.
Price per share as a percentage of book value per share was 102.9% for
Regent and 131.8% for Carnegie as compared to the peer median of 140.3%.
Price per share as a percentage of tangible book value was 102.9% for
Regent and 131.8% for Carnegie compared to the peer median of 140.8%.
Price as a multiple of latest twelve months earnings was not meaningful
for Regent (as latest twelve months earnings were negative) and was 13.4
times for Carnegie as compared to the peer median of 14.8 times.
Dividend yield on the common stock was 0% for Regent and 3.1% for
Carnegie as compared to the peer median of 2.3%.

Comparable Transaction Analysis. Janney analyzed certain financial aspects
of selected other merger-of-equals transactions announced from January 1, 1989
to August 30, 1995 and compared the multiples of book value, tangible book value
and latest twelve months earnings for the Merger with the multiples paid in
mergers of equals of banks and bank holding companies that Janney deemed
comparable. Janney compared the valuation medians for all merger of equals
transactions ("National") and those involving sellers with assets less than $500
million ("Comparable"). The deal price per share as a percentage of book value
per share was 141.3% for Regent compared to the National median of 135.1% and
the Comparable median of 114.2%. The deal price per share as a percentage of
tangible book value per share was 141.3% for Regent compared to the National
median of 137.9% and the Comparable median of 115.8%. The deal price per share
as a multiple of latest twelve months earnings per share was not meaningful
since Regent had negative earnings for the period reviewed compared to the
National median of 10.0 times and the Comparable median 10.1 times. The deal
price per share as a percentage of assets per share was 7.7% for Regent compared
to the National median of 9.6% and the Comparable median of 10.7%. The tangible
book value premium as a percentage of core deposits was 3.2% for Regent compared
to the National median of 3.7% and the Comparable median of 2.2%. However, no
company or merger used in this analysis is identical to Regent, Carnegie or the
Merger.

Accordingly, an analysis of the result of the foregoing is not

mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that would affect the public trading values of the
companies or company to which they are being compared.

Discounted Dividend Analyses. Using discounted dividend analyses, Janney
estimated the present value of the future dividend streams that Regent could
produce on a stand alone basis over a five-year period under different
assumptions as to dividend payout levels, if Regent performed in accordance with
various earnings growth forecasts. Janney also estimated the terminal value for
Regent Common Stock after the five-year period by applying a range of earnings
multiples from 10x to 13x to Regent's terminal year earnings. The range of
multiples used reflected a variety of scenarios regarding the growth and
profitability prospects of Regent. The dividend streams and terminal values were
then discounted to present value using discount rates ranging from 12% to 17%,
reflecting different assumptions regarding the rates of return required by
holders or prospective buyers of Regent Common Stock. This analysis showed an
implied value ranging from $7.02 per share to $16.30 per share.

In addition, Janney estimated the present value of the future dividend

streams that the combined institution could produce over a five-year period
under different assumptions as to dividend payout levels, if the combined
company performed in accordance with various earnings growth forecasts. Janney
also estimated the terminal value for Carnegie Common Stock after the five-year
period by applying a range of earnings multiples from 11x to 14x Carnegie's pro
forma terminal year earnings. The range of multiples used reflected a variety of
scenarios regarding growth prospects of the combined company. The dividend
streams and terminal values were then discounted to present value using discount
rates ranging from 12% to 17%, reflecting different assumptions regarding the
rates of return required by holders or prospective buyers of Regent Common
Stock. This analysis showed an implied value ranging from $9.45 per share to
$23.36 per share. Neither analysis is necessarily indicative of actual values or
actual future results and does not purport to reflect prices at which securities
may trade at the present or in the future.

Pro Forma Merger Analysis. Janney analyzed, based on projections provided
by Regent and Carnegie, certain pro forma effects resulting from the Merger
based on the proposed consideration to be received in the Merger. This analysis
indicated that the transaction (including management's estimate of transaction
related savings but excluding any revenue enhancements to be gained) would
result in a decrease in projected earnings of approximately 12.40% to Regent and
an increase in projected book value of approximately 10.08%. Janney also
considered the fact that holders of Regent's Common Stock did not receive a

cash dividend but as holders of Carnegie Common Stock would receive a cash
dividend equal to $.36 per Regent Common share

based on Carnegie's current cash dividend payment of $.48 per
share.

In connection with rendering its August Opinion and the Proxy Opinion,
Janney performed a variety of financial analyses. Although the evaluation of the
fairness, from a financial point of view, of the consideration to be paid in the
Merger was to some extent a subjective one based on the experience and judgment
of Janney and not merely the result of mathematical analysis of financial data,
Janney principally relied on the previously discussed financial valuation
methodologies in its determinations. Janney believes its analyses must be
considered as a whole and that selecting portions of such analyses and factors
considered by Janney without considering all such analyses and factors could
create an incomplete view of the process underlying Janney's opinion. In its
analysis, Janney made numerous assumptions with respect to business, market,
monetary and economic conditions, industry performance, and other matters, many
of which are beyond Regent's and Carnegie's control. Any estimates contained in
Janney's analyses are not necessarily indicative of future results or values,

which may be significantly more or less favorable than such estimates.

In reaching its opinion as to fairness, none of the analyses performed by
Janney was assigned a greater significance by Janney than any other. As a result
of its consideration of the aggregate of all factors present and analyses
performed, Janney reaches the conclusion, and opines, that the consideration to
be received to Regent's security holders in the Merger, as set forth in the
Merger Agreement, is fair, from a financial point of view, to holders of
Regent's securities.

In connection with delivering its Proxy Opinion, Janney updated certain
analyses described above to reflect current market conditions and events
occurring since the date of the Merger Agreement. Such reviews and updates
allowed Janney to conclude that it was not necessary to change the conclusions
it had reached in connection with rendering the August Opinion.

Janney, as part of its investment banking business, is regularly engaged in
the valuation of assets, securities and companies in connection with various
types of asset and security transactions, including mergers, acquisitions,
private placements, and valuations for various other purposes.

Janney's Proxy Opinion was based solely upon the information available to
it and the economic, market and other circumstances as they existed as of the
date hereof; events occurring after the date hereof could materially affect the
assumptions used in

preparing its Proxy Opinion. Janney has not undertaken to reaffirm and revise
its Proxy Opinion or otherwise comment upon any events occurring after the date
hereof.

In delivering its August Opinion and its Proxy Opinion, Janney assumed that
in the course of obtaining the necessary regulatory and governmental approvals
for the Merger, no restrictions will be imposed on Carnegie that would have a
material adverse effect on the contemplated benefits of the Merger. Janney also
assumed that there would not occur any change in applicable law or regulation
that would cause a material adverse change in the prospects or operations of
Carnegie after the Merger.

Pursuant to the terms of an engagement letter dated July 3, 1995 between
Regent and Janney, Regent paid Janney $10,000 upon its engagement, and $15,000
upon issuance of its written opinion in connection with the Merger. In addition,
Regent has also agreed to pay Janney $25,000 upon the consummation of the Merger
and to reimburse Janney for its reasonable out-of-pocket expenses. Whether or
not the Merger is consummated, Regent has agreed to indemnify Janney and certain
related persons against certain liabilities, including liabilities under the
Securities Act, relating to or arising out of its engagement.

The full text of the Proxy Opinion of Janney as of the date of this Joint

Proxy Statement/Prospectus, which sets forth assumptions made and matters
considered, is attached hereto as Appendix C to this Joint Proxy
Statement/Prospectus. Regent's shareholders are urged to read the Proxy Opinion
in its entirety. Janney's Proxy Opinion is directed only to the consideration to
be received by Regent shareholders in the Merger and does not constitute a
recommendation to any holder of Regent's securities as to how such security
holder should vote at the Regent Special Meeting.

THE FOREGOING PROVIDES ONLY A SUMMARY OF THE PROXY OPINION OF JANNEY AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THAT OPINION, WHICH
IS SET FORTH AS APPENDIX C TO THIS JOINT PROXY STATEMENT/PROSPECTUS.

Interests of Certain Persons in the Merger

In considering the recommendation of the Carnegie Board and the Regent
Board, shareholders of Carnegie and Regent should be aware that members of
Carnegie's and Regent's management and Boards have interests in the Merger that
are in addition to the interests of shareholders of Carnegie and Regent
generally.

Indemnification. In the Merger Agreement, Carnegie as the
surviving corporation in the Merger, has agreed that, from and

after the Effective Time, it will indemnify, defend and hold harmless each
person who is now or has been at any time prior to August 30, 1995, an officer,
director, employee or agent of Regent or any of its

subsidiaries (the "Indemnified Parties") against (i) all losses, claims,
damages, costs, expenses, liabilities or judgments or amounts that are paid in
settlement in connection with any claim, action, suit, proceeding or
investigation based in whole or in part upon the fact that such person is or was
a director, officer, employee or agent of Regent or any of its subsidiaries,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities") and (ii) all Indemnified Liabilities
based in whole or in part on, or arising in whole or in part out of, or
pertaining to the Merger Agreement or the transactions contemplated by the
Merger Agreement, in each case to the full extent a corporation is permitted
under the NJBCA to indemnify directors and officers, as the case may be.
Carnegie has also agreed to maintain in effect for not less than six years from
the Effective Time the policies of directors' and officers' liability insurance
maintained by Regent on the date of the Merger Agreement or to provide
substitute equivalent insurance coverage, provided that Carnegie shall not be
obligated to expend annually an amount for such insurance that is greater than
250% of the current annual premiums paid by Regent.

Executive Agreements and Other Arrangements. Employment Agreements with
Carnegie Officers. Carnegie does not currently have employment agreements with
any of its executive officers. Pursuant to the terms of the Merger Agreement,
however, Carnegie is to enter into employment agreements with Mr. Thomas L. Gray
to serve as President and Chief Executive Officer of Carnegie and CRBN and with
Mr. Mark Wolters, currently an Executive Vice President of Carnegie and CBN, to
serve as Executive Vice President of Carnegie and CRBN. Each of these agreements
will be for a term of three years, and provides that the agreement will
automatically be extended for successive one year periods unless, 90 days prior
to the end of its term, either party to the agreement indicates its intention
not to renew. The agreements further provide that Carnegie may terminate Mr.
Gray or Mr. Wolters only for "cause," as that term is defined in the agreements.
The agreements further provide that Mr. Gray will be entitled to receive an
annual salary of $200,000 and an annual bonus equal to 3.6% of Carnegie's
income after tax before determination of the bonuses, and Mr. Wolters will
receive an annual salary of $110,000 and an annual bonus equal to 1.2% of
Carnegie's income after tax before determination of the bonuses. Finally, both
agreements provide that Messrs. Gray and Wolters will be

entitled to receive certain benefits in the event their employment is terminated
after the occurrence of a change in control, as that term is defined in the
agreements, other than for cause. The agreements also provide that Messrs.
Wolters and Gray may voluntarily terminate their employment within 18 months of
the occurrence of a change in control if Messrs. Wolters or Gray are demoted,
lose their title, office or significant authority, experience a reduction in
their annual compensation or benefits, or have their principal place of
employment relocated by more than 30 miles from its location immediately prior
to the change in control. Mr. Gray's employment agreement provides that upon his
termination after a change in control or his voluntary termination as permitted
in the agreement, he will be entitled to receive his then current salary and
bonus for the next 30 months succeeding such termination. Mr. Wolters'
employment agreement provides that he will be entitled to receive his then
current salary and bonus through the next 18 months succeeding a change in
control.

Consulting Agreements with Carnegie Directors. As a
condition to the Merger, Carnegie is to enter into a consulting
agreement with Mr. Bruce A. Mahon. Under the consulting agreement, Mr. Mahon
will assist Carnegie in certain real estate related activities, such as
negotiating leases and purchase agreements in connection with Carnegie's
acquisition of properties for possible future expansion. In addition, Mr. Mahon
will assist Carnegie in developing new business. The consulting agreement
would be for a term of two years, and provides that Mr. Mahon

will be paid a consulting fee of $75,000 per year.

Employment Agreements with Regent Officers. Mr. Porter and
Mrs. Teaford have employment agreements with Regent pursuant to
which Mr. Porter serves as Regent's President and Chief Executive
Officer and Mrs. Teaford serves as Regent's Executive Vice

President and Secretary for successive one-year terms ending May 31 of each
year, absent at least three months prior written notice of termination by either
party. Mr. Porter and Mrs. Teaford are currently receiving a base salary under
these agreements of $178,000 and $118,000, respectively, and each are entitled
to a death benefit of one year's salary. In connection with the Merger, Mr.
Porter and Mrs. Teaford will terminate such employment agreements and Carnegie
will enter into three-year employment agreements with Mr. Porter and Mrs.
Teaford having substantially the same terms as the employment agreements with
Messrs. Gray and Wolters described above.

Mr. Porter will be entitled to receive an annual bonus equal to 1.2% of
Carnegie's net income after tax before determination of the bonuses, and upon a
change in control of Carnegie followed by Mr. Porter's termination or
resignation as permitted under the agreement, Mr. Porter will be entitled to
receive his then current salary and bonus for a period of 30 months. Ms. Teaford
will be entitled to receive an annual bonus equal to 1.2% of Carnegie's net
income after tax and, upon a change in control of Carnegie followed by Ms.
Teaford's termination or resignation, as permitted under the agreement, Ms.
Teaford will be entitled to receive her then current salary and bonus

for a period of 18 months succeeding the change in control.

Consulting Agreements with Regent Directors. Regent currently has unwritten
consulting agreements with the bank consulting firm of Bettinger & Leech, Inc.
of which Abraham L. Bettinger, the Vice Chairman of Regent, is the President and
a 50% shareholder. The consulting advice related generally to asset/liability
management, loan analysis, securities activities and strategic planning. Under
these arrangements, Bettinger & Leech, Inc. was paid a total of approximately
$80,700 in consulting fees and reimbursed expenses by Regent in 1994 and $65,760
through October 31, 1995. David W. Ring, Regent's Chairman of the Board,
currently receives a salary at the annual rate of $65,000. In connection with
the Merger, Carnegie will enter into consulting agreements with Mr. Ring and
with Bettinger and Leech, Inc. with a term of two years under which Mr. Ring
will receive an annual consulting fee of $65,000, as well as certain medical
benefits and Bettinger & Leech, Inc. will receive an annual consulting fee of
$70,000 plus reimbursement of business expenses.

Terms of the Merger

The Merger. Subject to the terms and conditions of the Merger Agreement,
Regent will merge with and into Carnegie at the Effective Time. The separate
corporate existence of Regent will then cease, and the internal corporate
affairs of Carnegie (the "Surviving Corporation") will continue to be governed
by the laws of the State of New Jersey.

The Bank Merger. Subject to the terms and conditions of the
Merger Agreement and the Bank Merger Agreement, CBN will
merge with and into the Bank as soon as possible after the Effective

Time under the name Carnegie Regent Bank, N.A. The separate corporate existence
of CBN will then cease, and the internal corporate affairs of CRBN as the
Surviving Bank will continue to be governed by the state and federal statutes
applicable to banks which are members of the Federal Reserve System and to the
regulations of the FRB, the FDIC and the OCC.

Certificate of Incorporation and By-laws. The Merger Agreement provides
that the Certificate of Incorporation of Carnegie as in effect immediately prior
to the Effective Time will become the Certificate of Incorporation of the
Surviving Corporation, as amended to authorize the issuance of one or more
series of Preferred Stock, the terms of which will be decided by Carnegie's
Board of Directors, including the Series A Convertible Preferred Stock to be
issued in the Merger. The By-laws of Carnegie as in effect immediately prior to
the Effective Time will become the By-laws of the Surviving Corporation.

Directors and Officers of the Surviving Corporation. After
the Merger, the Board of Directors of Carnegie will consist of 14
members, including David W. Ring, Harvey Porter, Nelson L.

Mishkin, Barbara H. Teaford, Abraham L. Bettinger, O. Francis Biondi and Leonard
S. Dwares, all of whom are currently directors of Regent with the exception of
Mr. Mishkin who is a director of the Bank. In addition, Bruce A. Mahon, Michael
E. Golden, Thomas L. Gray, Jr., Joseph J. Oakes, III, Mark A. Wolters, Steven L.
Shapiro and Shelly M. Zeiger will continue as directors of the Surviving
Corporation. Pursuant to the Merger Agreement, the parties have agreed that in
connection with Carnegie's first annual meeting after consummation of the
Merger, the members of the Board of Directors, to the extent consistent with
their fiduciary duty, will nominate each of the 14 persons listed above for a
new one year term as a Director and will recommend that the then shareholders of
Carnegie vote for the election of such individuals. The officers of Carnegie at
the Effective Time will continue as officers of the Surviving Corporation until
their successors have been duly appointed or until their earlier resignation or
removal. In addition, David W. Ring, Harvey Porter and Abraham L. Bettinger will
serve as Vice Chairmen of Carnegie and CRBN, Harvey Porter will serve as
President of the Regent Division of CRBN and Barbara H. Teaford will serve as an

Executive Vice President of Carnegie.

Manner and Basis of Converting Regent Securities

Upon the Effective Time of the Merger, outstanding Regent securities will
be converted into the right to receive Carnegie Common Stock, Carnegie Series A
Convertible Preferred Stock and
New Options as follows:

(a) each share of Regent Common Stock will be converted
into 0.75 shares of Carnegie Common Stock;

(c) each share of Regent Series B, Series C and Series D Convertible
Preferred Stock will be called for redemption in accordance with its terms at
$10.00 per share not later than 30 days prior to the anticipated Effective Time
of the Merger, unless theretofore converted in accordance with its terms into
1.177 shares of Regent Common Stock each of which would be converted in the
Merger into 0.75 shares of Carnegie Common Stock;

(d) each share of Regent Series E Convertible Preferred Stock will be
called for redemption in accordance with its terms at $10.00 per share not later
than 30 days prior to the anticipated Effective Time of the Merger, unless
theretofore converted in accordance with its terms into one share of Regent
Common Stock which would be converted in the Merger into 0.75

shares of Carnegie Common Stock;

(g) outstanding options to purchase an aggregate of 147,124 shares of
Regent Common Stock held by Hopper, Soliday & Co., Inc., the underwriter of
Regent's initial public offering, and an affiliate will be converted into an
aggregate of 7,483 shares of Carnegie Common Stock; and

No fractional shares of Carnegie Common Stock will be issued in the Merger.
Each holder of Regent securities otherwise entitled to a fractional interest
shall receive an amount of cash, without interest, determined by multiplying the
average closing price of Carnegie Common Stock on the Nasdaq National Market on
the first ten trading days of the 15 days preceding the Effective Time by the
fractional share interest to which such holder would otherwise be entitled.

As soon as practicable after the Effective Time, Registrar and Transfer
Company will mail a letter of transmittal to each holder of record of Regent
securities with instructions to be used by the holder in surrendering each
certificate or instrument (the "Certificate") which represented Regent
securities prior to the Merger. After the Effective Time, there will be no
further registration of transfers of any Regent securities. Certificates should
not be surrendered for exchange prior to the Effective Time of the Merger.

Upon surrender of a Certificate together with a duly executed letter of
transmittal, the holder of the Certificate will be entitled to receive in
exchange therefor a certificate representing the number and type of Carnegie
securities to which the holder of Regent securities is entitled based upon the
securities represented by the Certificate so surrendered. In the event of the
transfer of ownership of Regent securities not reflected on the transfer records
of Regent, Carnegie securities may be delivered to a transferee if the
Certificate is presented,

together with the related letter of transmittal and accompanied by all documents
required to evidence and effect such transfer and payment of applicable stock
transfer taxes or evidence that any applicable stock transfer taxes have been
paid. Until a Certificate has been surrendered to Carnegie, no dividends on
Carnegie Common Stock and Carnegie Series A Convertible Preferred Stock will be
paid to the holder thereof. From and after the Effective Time, until so
surrendered, each Certificate shall be deemed for all corporate purposes, except
as set forth below, to represent only the right to receive a certificate
representing the number of shares of Carnegie Common Stock and Carnegie Series A
Convertible Preferred Stock into which the Regent securities represented by such
Certificate shall have been converted and cash in lieu of any fractional share
of Carnegie Common Stock. Unless and until any Certificate shall be so
surrendered, the holder of such Certificate shall have no right to vote on any
matters presented to the shareholders of Carnegie.

Carnegie has agreed to reserve and make available sufficient Carnegie
Common Stock for issuance upon exercise of the New Options to be granted to the
organizers of Regent and upon the conversion of the Carnegie Series A
Convertible Preferred Stock. In addition, Carnegie has agreed to prepare and
file with the Commission as soon as practicable following the Effective Time, a
registration statement on the appropriate form relating to the Carnegie Common
Stock issuable upon exercise of the New Options, to use its best efforts to have
such registration statement become effective as soon as practicable after the
Effective Time and to maintain the effectiveness of such registration statement.

Trading of Carnegie Common Stock and Carnegie Series A
Convertible Preferred Stock on Nasdaq

The shares of Carnegie Common Stock to be issued pursuant to the Merger
Agreement have been approved for trading on the Nasdaq National Market System,
subject to official notice of issuance. The shares of Carnegie Series A
Convertible Preferred Stock to be issued pursuant to the Merger Agreement have
been approved for trading on the Nasdaq SmallCap Market, subject to official
notice of issuance.

Effective Time of the Merger

The Merger Agreement provides that the Effective Time of the Merger will
occur when a certificate of merger is filed with the Secretary of State of the
State of New Jersey in accordance with the NJBCA. It is anticipated that, if the
required approvals are obtained at the Carnegie Special Meeting and the Regent
Special Meeting and all other conditions to the Merger have been fulfilled or
waived, the Effective Time will occur on a date as soon as practicable after
necessary approvals have been received from the OCC and the FRB. See "Conditions
to the Merger."

Representations and Warranties

The Merger Agreement includes various customary representations and
warranties of the parties thereto. The Merger Agreement includes representations
and warranties by Regent as to, among other things, (i) the corporate
organization, good standing and power of Regent and its subsidiaries, (ii)
approval of the Merger Agreement by Regent's Board of Directors, (iii) Regent's
capitalization, (iv) the authorization, execution, delivery, performance and
enforceability of the Merger Agreement and related matters, (v) the Merger
Agreement's noncontravention of any agreement, law or charter or By-law
provision and the absence of the need (except as specified) for governmental or
third-party filings, consents, approvals or actions with respect to the Merger,
(vi) documents filed by Regent with the Commission and the accuracy of
information contained therein, and the conformity of Regent's financial
statements with generally accepted accounting principles ("GAAP"), (vii) the
accuracy of information supplied by Regent in connection with this Joint Proxy
Statement/Prospectus and the Registration Statement, (viii) the absence of
certain material changes or events since the most recent audited financial
statements filed with the Commission, (ix) no material pending or threatened
litigation, except as disclosed, (x) the terms, existence, operations,
liabilities and compliance with applicable laws of Regent's benefit plans and
certain other matters relating to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), (xi) filing of tax returns and payment of taxes,
(xii) matters relating to compliance with laws and regulations applicable to

banks, (xiii) Regent's employment agreements and other employee arrangements,
(xiv) Regent's title to its properties and maintenance of insurance, (xv) the
accuracy

of Regent's minute books, (xvi) compliance with applicable laws, (xvii) brokers'
fees and expenses, (xviii) rights to intellectual property, (xviii)
environmental matters, (xix) the adequacy of the Bank's reserve for loan and
lease losses, (xx) the absence of any severance arrangements that would
constitute excess parachute payments and (xxi) material contracts.

The Merger Agreement also includes representations and warranties by
Carnegie as to, among other things, (i) the corporate organization, good
standing and power of Carnegie and CBN, (ii) approval of the Merger Agreement by
Carnegie's Board of Directors, (iii) Carnegie's capitalization, (iv) the
authorization, execution, delivery, performance and enforceability of the Merger
Agreement and related matters, including the authorization of the Carnegie
Common Stock and Carnegie Series A Convertible Preferred Stock to be issued
pursuant to the Merger Agreement, (v) the Merger Agreement's noncontravention of
any agreement, law or charter or by-law provision and the absence of the need
(except as specified) for governmental or third-party

filings, consents, approvals or actions with respect to the Merger, (vi)
documents filed by Carnegie with the Commission and the accuracy of information
contained therein, (vii) the accuracy of information supplied by Carnegie in
connection with this Joint Proxy Statement/ Prospectus and the Registration
Statement, (viii) the absence of certain material changes or events since the
most recent audited financial statements filed with the Commission, (ix) no
material pending or threatened litigation, except as disclosed, (x) the
conformity of Carnegie's financial statements to GAAP, (xi) brokers' fees and
expenses, (xii) the adequacy of Carnegie's capital following the Merger, (xiii)
benefit plans and other matters relating to ERISA, (xiv) filing of tax returns
and payment of taxes, (xv) Carnegie's title to property and maintenance of
insurance, (xvi) compliance with applicable laws, (xvii) the accuracy of
Carnegie's minute books, (xvii) environmental matters, (xviii) the adequacy of
CBN's reserve for loan and lease losses, (xix) the absence of any severance
arrangements that would constitute excess parachute payments and (xx) material
contracts.

Business of Carnegie and Regent Pending the Merger

Carnegie and Regent have agreed that, prior to the Effective Time of the
Merger or earlier termination of the Merger Agreement, each will, and each will
cause its subsidiaries to, carry on their respective businesses in the ordinary
course as conducted on the date of the execution of the Merger Agreement and
consistent with prudent banking practice and to use their best efforts to
preserve intact their respective present business organizations, keep available
the services of their employees and preserve their relationships with customers
and others having business dealings with them. Carnegie and Regent have also

agreed that, prior to the Effective Time of the Merger or earlier

termination of the Merger Agreement, except as otherwise contemplated or
permitted by the Merger Agreement or agreed to in writing by the other, neither
Carnegie nor Regent will, and neither Carnegie nor Regent will permit any of its
subsidiaries to, among other things: (i) declare or pay any dividends or make
any other distributions on shares of its capital stock, other than dividends by
a wholly owned subsidiary of such party or such subsidiary, or split, combine or
reclassify any of its capital stock or purchase, redeem or otherwise acquire any
shares of its capital stock or of any of its subsidiaries other than Regent's
and Carnegie's regular dividends as set forth in disclosure schedules to the
Merger Agreement, (ii) issue, deliver or sell any shares of its capital stock
other than upon the exercise of outstanding Carnegie stock options and warrants
and outstanding Regent stock options and warrants, as the case may be, or upon
the conversion of outstanding Regent Preferred Stock, (iii) amend its
Certificate of Incorporation or By-laws, (iv) make any capital expenditures
outside of the ordinary course of business

other than pursuant to binding commitments in effect on the date of the Merger
Agreement or necessary to maintain existing assets in good order, (v) sell or
dispose of any substantial amount of assets other than in the ordinary course of
business consistent with prior practice, (vi) file any applications or make any
contracts with respect to branching or site location or relocation, (vii) grant
any severance or termination pay or enter into, adopt, amend or terminate any
employee benefit plan or agreement or arrangement with any director, officer or
employee or, except for normal increases in the ordinary course of business
consistent with past practice, increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit not required or
contemplated by a plan or arrangement in effect on the date of the Merger
Agreement, (viii) agree to acquire in any manner whatsoever, other than to
realize upon collateral for a defaulted loan, any business or entity, (ix) make
any material change in its accounting methods or practices, other than changes
required by GAAP, (x) take any action that would result in any of such party's
representations and warranties as set forth in the Merger Agreement being untrue
in any material respect at the Effective Time or (xi) agree to do any of the
foregoing.

No Solicitation; Termination Fee.

The Merger Agreement provides that Carnegie and Regent will not, nor will
either permit any of its respective subsidiaries to, nor will either authorize
or permit any officer, director, employee, representative or agent to solicit
any person, entity or group concerning any Acquisition Transaction, provided
that Carnegie or Regent may participate in negotiations with or furnish
information to a third party if the Board of Directors of Carnegie or Regent, as
the case may be, after consultation with its outside counsel, determines that
the failure to do so may violate its fiduciary duties. If Regent terminates the
Merger Agreement

because Carnegie's Board of Directors (i) has withdrawn its recommendation or
approval of the Merger Agreement in a manner adverse to Regent or (ii) approves
or recommends any proposal other than by Regent in respect of an Acquisition
Transaction or if Carnegie terminates the Merger Agreement to enter into an
agreement with a party other than Regent in respect of an Acquisition
Transaction, Carnegie is obligated to pay Regent a termination fee of $1
million. If Carnegie terminates the Merger Agreement because Regent's Board of
Directors (i) has withdrawn its recommendation or approval of the Merger
Agreement in a manner adverse to Carnegie or (ii) approves or recommends a
proposal other than by Carnegie in respect of an Acquisition Transaction or if
Regent terminates the Merger Agreement to enter into an agreement with a party
other than Carnegie in respect of an Acquisition Transaction, Regent is
obligated to pay Carnegie a termination fee of $1 million.

Conditions to the Merger

Conditions to Each Party's Obligation to Effect the Merger. The respective
obligations of Carnegie and Regent to effect the Merger are subject to the
satisfaction or waiver, where permissible under applicable law, of the following
conditions: (i) the Merger Agreement shall have been approved and adopted by the
requisite vote of the shareholders of Carnegie and Regent, (ii) the shareholders
of Carnegie shall have approved the Amendment, (iii) all authorizations,
consents, approvals or waivers, including that of the OCC and the FRB, required
in connection with the execution and delivery of the Merger Agreement shall have
been obtained without any term or condition which would materially impair the
value of Regent and the Bank to Carnegie or which would materially impair the
value of the Carnegie securities to be issued to the holders of Regent
securities, (iv) there shall not be in effect any final and unappealable order,
judgment or decree of any court or governmental body enjoining or otherwise
preventing consummation of the Merger and no suit, action or other proceeding
shall be pending or threatened by a governmental body seeking to restrain or
prohibit the Merger or the Bank Merger or pending by a private party which
Carnegie or Regent, based upon advice of their respective counsel, determines in
good faith makes it inadvisable to proceed with the Merger and (v) McCarter &
English, counsel to Carnegie, shall have delivered its opinion to the effect
that the Merger will be a tax-free exchange and have the tax consequences set
forth under "Federal Income Tax Consequences."

Conditions to the Obligations of Carnegie. In addition to the foregoing
conditions, the obligations of Carnegie to effect the Merger are further subject
to satisfaction or waiver of the following conditions, among other things: (i)
the representations and warranties of Regent shall be true and correct in all
material respects, (ii) Regent shall have performed in all

material respects all obligations required to be performed by it under the
Merger Agreement, (iii) Carnegie shall have received written consents from all
persons whose consent is required in order for Regent and the Bank to consummate
the Merger and the Bank Merger, (iv) Carnegie shall have received the opinion of
Duane, Morris & Heckscher, counsel to Regent, in form and substance satisfactory
to Carnegie, covering the matters specified in the Merger Agreement, (v) certain
pending litigation involving the Bank shall have been settled in a manner
satisfactory to Carnegie as specified in the Merger Agreement, (vi) Regent shall
have had net income, as specified in the Merger Agreement, of at least $368,000
for the fourth quarter of 1995 and (vii) holders of not more than 10% in the
aggregate of the shares of Carnegie Common Stock, Regent Common Stock and Regent
Series A Convertible Preferred Stock shall have perfected their

dissenters rights of appraisal under the NJBCA.

Conditions to the Obligations of Regent. In addition to the foregoing
conditions, the obligations of Regent to effect the Merger are further subject
to satisfaction or waiver of the following conditions, among others: (i) the
representations and warranties of Carnegie shall be true and correct in all
material respects, (ii) Carnegie shall have performed in all material respects
all material obligations required to be performed by it under the Merger
Agreement, (iii) Regent shall have received the opinion of McCarter & English,
counsel to Carnegie, in form and substance satisfactory to Regent, covering the
matters specified in the Merger Agreement and (iv) Carnegie shall have had net
income, as specified in the Merger Agreement, of at least $2.1 million for the
year ended December 31, 1995.

Amendment and Waiver; Termination

The parties to the Merger Agreement may not amend, change, supplement,
waive or otherwise modify the Merger Agreement, except by an instrument in
writing signed by the parties thereto. Subject to the foregoing, (i) the Merger
Agreement may be amended at any time by action taken or authorized by the
respective Boards of Directors of Carnegie and Regent, except that after the
Merger Agreement has been approved by Regent's shareholders and Carnegie's
shareholders, no amendment may be entered into that requires further approval by
such shareholders unless such further approval is obtained and (ii) the parties,
by action taken or authorized by their respective Boards of Directors, may
extend the time for performance of the obligations of the other parties to the
Merger Agreement, may waive any inaccuracies in the representations and
warranties contained in the Merger Agreement or in any document delivered
pursuant to the Merger Agreement and may waive compliance with any agreements or
conditions for their respective benefit contained in the Merger Agreement.

The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval thereof by Regent's shareholders and the
shareholders of Carnegie, by the mutual written consent of Carnegie and Regent.

The Merger Agreement may also be terminated (i) by either party if the Merger
has not been consummated by September 30, 1996 (provided that such right to
terminate will not be available to any party whose willful and material breach
of any obligation under the Merger Agreement has been the cause of or resulted
in the failure of the Merger to occur on or before such date), (ii) by either
party if any required governmental approval is denied or withdrawn or contains
conditions which would materially impair the value of Regent and the Bank to
Carnegie or the value of the Carnegie Common Stock and Carnegie Series A
Convertible Preferred Stock to Regent's security holders, (iii) by either party
if the

other party shall have suffered a material adverse change in its business,
operations, assets or financial condition, (iv) by Carnegie, if the required
purchase accounting and market valuation adjustments to Regent's balance sheet
by reason of the Merger would reduce the per share net tangible book value of
Carnegie's Common Stock as of the month end preceding the Effective Time by more
than $1.50 or (v) by either party if, assuming compliance with the Merger
Agreement, such party determines to enter into an agreement in respect of an
Acquisition Transaction involving a third party or if the Board of Directors of
the other shall have withdrawn, modified or changed its recommendation or
approval in respect of the Merger Agreement. If Regent terminates the Merger
Agreement because Carnegie's Board of Directors (i) has withdrawn its
recommendation or approval of the Merger Agreement in a manner adverse to Regent
or (ii) approves or recommends any proposal other than by Regent in respect of
an Acquisition Transaction or if Carnegie terminates the Merger Agreement to
enter into an agreement with a party other than Regent in respect of an
Acquisition Transaction, Carnegie is obligated to pay Regent a termination fee
of $1 million. If Carnegie terminates the Merger Agreement because Regent's
Board of Directors (i) has withdrawn its recommendation or approval of the
Merger Agreement in a manner adverse to Carnegie or (ii) approves or recommends
a proposal other than by Carnegie in respect of an Acquisition Transaction or if
Regent terminates the Merger Agreement to enter into an agreement with a party
other than Carnegie in respect of an Acquisition Transaction, Regent is
obligated to pay Carnegie a termination fee of $1 million.

Federal Income Tax Consequences

McCarter & English, counsel to Carnegie and CBN, has delivered to
Carnegie and Regent its opinion that, with respect to the Merger and the Bank
Merger, for Federal income tax purposes, the Merger and the Bank Merger will
constitute reorganizations within the meaning of the Code,

under Code Section 368(a)(1)(A); and accordingly: (i) no taxable gain or loss
will be recognized for Federal income tax purposes by Carnegie, Regent, CBN or
the Bank to the extent such entities receive and/or distribute property

(including stock and/or securities) which may be received or distributed on a
tax-free basis in a reorganization qualifying under Code Section 368(a)(1)(A);
(ii) no gain or loss will be recognized for Federal income tax purposes by the
shareholders of Regent who exchange their shares of Regent Common Stock for
Carnegie Common Stock and/or Regent Series A Convertible Preferred Stock for
Carnegie Series A Convertible Preferred Stock (except to the extent they receive
cash in lieu of fractional shares of Carnegie Common Stock or Carnegie Series A
Convertible Preferred Stock pursuant to such exchange); (iii) the basis of any
Carnegie Common Stock

and/or Carnegie Series A Convertible Preferred Stock received by the holders of
Regent Common Stock and/or Regent Series A Convertible Preferred Stock will be,
in each instance, the same as the basis of the Regent Common Stock and/or Regent
Series A Convertible Preferred Stock surrendered in exchange therefor and (iv)
the holding period of any Carnegie Common Stock and/or Carnegie Series A
Convertible Preferred Stock received by the holders of Regent Common Stock
and/or Regent Series A Convertible Preferred Stock surrendered in exchange
therefor will include the holding period for the Regent Common Stock and/or
Regent Series A Convertible Preferred Stock surrendered therefor.

The foregoing opinions will not apply to any Regent shareholders who
exercise their dissenters' rights and receive a cash payment for the fair value
of their shares of Regent Common Stock or Regent Series A Convertible Preferred
Stock. Such shareholders will recognize either a gain or a loss, depending upon
their tax basis in their shares of Regent stock surrendered therefor.
Furthermore, the referenced opinion shall not offer any analysis of, or provide
any opinion with respect to, the Federal income tax consequences of the Merger
or the Bank Merger to the extent any participant exchanges Underwriter Options,
Stock Options, Public Warrants and/or Put Option Warrants (as those terms are
defined in "Information About Regent--Description of Regent Securities") for any
type or class of Carnegie stock, securities or other interests pursuant to the
Merger and Bank Merger. Holders of the above-referenced Regent interests should
consult with their tax advisors with regard to the tax consequences of the
Merger and Bank Merger on the transfer and/or conversion of their Regent
interests into Carnegie interests, which transfer and/or conversion may result
in the recognition of gain or loss.

THE DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES THAT MAY BE
RELEVANT TO A PARTICULAR SHAREHOLDER OR TO SHAREHOLDERS SUBJECT TO SPECIAL
TREATMENT UNDER CERTAIN FEDERAL INCOME TAX LAWS, SUCH AS DEALERS IN SECURITIES,
BANKS, INSURANCE COMPANIES, TAX-EXEMPT ORGANIZATIONS, NON-UNITED STATES PERSONS,
AND PERSONS WHO ACQUIRED THEIR REGENT SECURITIES AND/OR OTHER REGENT INTERESTS
PURSUANT TO THE EXERCISE OF OPTIONS OR OTHERWISE AS COMPENSATION. THE DISCUSSION
ALSO DOES NOT ADDRESS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE,
LOCALITY, OR FOREIGN JURISDICTION.

THE DISCUSSION IS BASED UPON THE FACTS EXISTING AT THE

TIME OF THIS JOINT PROXY STATEMENT/PROSPECTUS AND THE CODE, TREASURY REGULATIONS
THEREUNDER AND ADMINISTRATIVE RULINGS AND COURT DECISIONS AS OF THE DATE HEREOF.
ALL THE FOREGOING ARE SUBJECT TO CHANGE EITHER PROSPECTIVELY OR RETROACTIVELY,
AND ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION.
HOLDERS OF REGENT SECURITIES AND/OR OTHER REGENT INTERESTS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX
CONSEQUENCES OF THE MERGER AND THE BANK MERGER TO THEM.

Resale of Shares of Carnegie Common Stock and Carnegie Series A
Convertible Preferred Stock Issued in the Merger; Affiliates

The Carnegie Common Stock and Carnegie Series A Convertible Preferred
Stock to be issued pursuant to the Merger Agreement will be freely transferable,
except that shares issued to any holder of Regent securities who may be deemed
to be an "affiliate" (as defined under the Securities Act, and generally
including, without limitation, directors, certain executive officers and
beneficial owners of 10% or more of a class of capital stock) of Regent for
purposes of Rule 145 under the Securities Act shall not be transferable except
in compliance with the Securities Act. This Joint Proxy Statement/ Prospectus
does not cover resales of Carnegie Common Stock and Carnegie Series A
Convertible Preferred Stock received by any person who may be deemed to be an
affiliate of Regent.

Accounting Treatment

It is anticipated that the Merger will be accounted for using purchase
method of accounting under generally accepted accounting principles. Under this
method, upon the Effective Time of the Merger:

(a) the fair market value at the Effective Time of the Carnegie Common
Stock and the Carnegie Series A Convertible Preferred Stock to be issued to the
holders of Regent's

securities will be determined based on then prevailing market
prices;

(b) the carrying value of the Regent assets acquired and the Regent
liabilities assumed by Carnegie as a result of the Merger will be adjusted to
the fair value thereof at the Effective Time using available market data, then
prevailing interest rates and the then anticipated maturity dates of such Regent
assets and liabilities, with any such adjustments being amortized over the
expected lives of such assets and liabilities;

(c) the difference between the purchase price, determined as provided
in paragraph (a), and the fair value of the Regent net assets acquired,
determined as provided in paragraph (b), will be recorded on Carnegie's
consolidated balance sheet as an intangible asset called "goodwill" and will be
amortized over a period, not to exceed 15 years, as determined by Carnegie's
management; and

(d) Carnegie will include Regent's results of operations after the
Effective Time in Carnegie's consolidated statements of income.

Reference is made to the pro forma balance sheets of Carnegie
following the Merger for an example of the purchase accounting adjustments,
assuming consummation of the Merger at September 30, 1995.

Management and Operations of Carnegie Following the Merger

The Board of Directors of Carnegie Following the
Merger. After the Merger, the Board of Directors of Carnegie
will consist of 14 members, including Bruce A. Mahon, Michael E.
Golden, Thomas L. Gray, Jr., Joseph J. Oakes, III, Mark A. Wolters,
Steven L. Shapiro and Shelly M. Zeiger, each of whom is presently
a director of Carnegie, and David W. Ring, Harvey Porter, Barbara H.
Teaford, Abraham L. Bettinger, O. Francis Biondi, Leonard S. Dwares,
and Nelson L. Mishkin each of whom is presently a director of Regent
with the exception of Mr. Mishkin who is presently a director of the
Bank. See "Management of Carnegie" and "Information Regarding
Regent Board of Directors and Executive Officers."

Management of Carnegie Following the Merger. After the
Merger, the principal executive officers of Carnegie will be
Thomas L. Gray, Jr., President and Chief Executive Officer,
Harvey Porter, Vice Chairman and President of the Regent Division
of CRBN, Mark A. Wolters, Executive Vice President, Barbara H.
Teaford, Executive Vice President, and Richard Rosa, Floyd Haggar,
John F. Hosey, Stephen J. Carroll and Kristen M. Evan, each of
whom will be a Senior Vice President. The current positions of
these individuals are as follows: Mr. Gray, President and Chief
Executive Officer of Carnegie; Mr. Porter, President and Chief

Executive Officer of Regent; Mr. Wolters, Executive Vice
President of Carnegie; Mrs. Teaford, Executive Vice President and
Secretary of Regent; Mr. Rosa, Senior Vice President and Chief
Financial Officer of Carnegie; Mr. Haggar, Senior Vice President
and Chief Lending Officer of Carnegie; Mr. Hosey, Senior Vice

President of the Bank, Mr. Carroll, Treasurer and Principal
Financial Officer of Regent and Ms. Evan, Senior Vice President
and Chief Operating Officer of the Bank. For biographical
information about the individuals named herein, see "Management

of Carnegie" and "Information Regarding Regent Board of Directors
and Executive Officers."

Operations. Following the Merger, it is the intention of the parties
that the principal executive offices of Carnegie will be located at Carnegie's
existing facilities in Princeton, New Jersey.

Expenses and Fees

Whether or not the Merger is consummated, all fees and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby shall be paid by the party incurring such fees or expenses,
except that in certain circumstances, a party may be required to pay a
termination fee to the other party. See "- No Solicitation; Termination Fee."

Dissenters' Rights of Carnegie Shareholders

Under the NJBCA, shareholders of Carnegie may dissent from the Merger
and be paid the fair value of their shares if they comply with the applicable
provisions of the NJBCA. Shareholders contemplating the exercise of their
appraisal rights should review the procedures set forth in Chapter 11 of the
NJBCA, a copy of which is attached to this Joint Proxy Statement/Prospectus as
Appendix D. The following is a summary of the steps which must be taken for the
exercise of dissenters' rights and is qualified in its entirety by reference to
the sections of the NJBCA included as Appendix D hereto.

Notice of Dissent. To be eligible to exercise his right of dissent, a
shareholder must file with Carnegie a written notice of dissent, stating that he
intends to demand payment for his shares if the Merger becomes effective. The
notice of dissent must be filed before the vote of the Carnegie shareholders on
the Merger is taken. A shareholder who votes in favor of the Merger waives his
right to dissent. The notice of dissent should be delivered to Richard P. Rosa,
Senior Vice President of Carnegie at Carnegie Bancorp, 619 Alexander Road,
Princeton, New Jersey 08540.

Written Demand. Within 10 days after the date the
Merger becomes effective, Carnegie shareholders who have filed a

notice of dissent will be notified by Carnegie by certified mail of the
effective date of the Merger, except that such notice need not be sent to any
such Carnegie shareholder who voted for or consented in writing to the Merger.
Within 20 days after Carnegie's notice is mailed, a shareholder entitled to

receive such notice who wishes to dissent must file with Carnegie a

written demand for the payment of the fair value of his shares. Such written
demand should be delivered to Richard P. Rosa, Senior Vice President of Carnegie
at Carnegie Bancorp, 619 Alexander Road, Princeton, New Jersey 08540.

Delivery of Shares for Notation. Within 20 days after making his
written demand for payment, the Carnegie shareholder must submit his share
certificates to Carnegie. Carnegie will make a notation thereon that the
shareholder has made a demand to be paid the fair value of his shares and
thereafter the certificate will merely represent the rights of a dissenting
shareholder, and will not represent shares of Carnegie Common Stock.

Demand that Carnegie Institute Lawsuit. Within 10 days after the
expiration of the period within which Carnegie shareholders may make a written
demand to be paid the fair value of their shares, Carnegie will mail to each
dissenting Carnegie shareholder the latest available 12-month profit and loss
statement and a balance sheet and surplus statement as of the close of the
12-month period. The close of the profit and loss statement and the balance
sheet will be as of a date within 12 months prior to the mailing. Carnegie may
accompany these financial statements with a written offer to pay a specified
price for such dissenting shareholder's shares deemed by Carnegie to be the fair
value thereof, but Carnegie is not obligated to do so. Each dissenting Carnegie
shareholder will have a 30-day period following Carnegie's mailing of the
financial statements to agree upon a price with Carnegie. If the Carnegie
shareholder and Carnegie are unable to agree upon a price within the 30-day
period, the shareholder may serve a written demand on Carnegie to commence an
action in the Superior Court of New Jersey for the determination of the fair
value of his shares. The Carnegie shareholder's demand to commence an action
must be served not later than 30 days after the expiration of the 30-day period
shareholders have in which to agree upon a price with Carnegie.

Commencement of Lawsuit by a Shareholder. Carnegie has 30 days after
receipt of a shareholder's demand to commence a proceeding in the Superior
Court. If Carnegie fails to institute the proceeding, the shareholder may
institute the proceeding in the name of Carnegie within 60 days after expiration
of Carnegie's 30-day period.

Determination and Payment of Fair Value. In the New
Jersey Superior Court proceeding, the court has jurisdiction over

all dissenting shareholders who have not agreed upon a price with Carnegie and
may proceed in a summary fashion to determine the fair value of the shares. The
court's judgment must include interest from the date of the dissenting
shareholder's demand for

payment to the date of payment unless the court finds the refusal of any
dissenting shareholder to accept Carnegie's offered price was arbitrary,
vexatious or otherwise not in good faith. The costs of the action (excluding the
fees and expenses of each party's attorneys and experts) and of any
court-appointed appraiser will be apportioned equitably by the court. The court
may in its discretion award a dissenting shareholder the reasonable fees and
expenses of his counsel and of any experts employed by the dissenting
shareholder if the court finds that the price offered by Carnegie was not
offered in good faith or if no such offer was made.

Dissenters' Rights of Holders of Regent Common Stock and Regent
Series A Convertible Preferred Stock

Since Regent is also a New Jersey corporation governed by the NJBCA,
holders of Regent Common Stock and Regent Series A Convertible Preferred Stock
may dissent from the Merger and be paid the fair value of their shares if they
comply with the applicable provisions of the NJBCA, which are summarized herein
under "Dissenters' Rights of Carnegie Shareholders" and to which reference is
hereby made.

Any notice of dissent and any written demand by a holder of Regent
Common Stock or Regent Series A Convertible Preferred Stock should be delivered
by Regent shareholders to Barbara H. Teaford, Secretary, at Regent Bancshares
Corp., 1430 Walnut Street, Philadelphia, Pennsylvania 19102.

Holders of Regent Series B, Series C, Series D and Series E
Convertible Preferred Stock are not entitled to dissenters' rights under the
NJBCA unless such stock is converted in accordance with
its terms into Regent Common Stock prior to the record date for the Regent
Special Meeting.

COMPARATIVE PER SHARE MARKET INFORMATION

Market prices for Carnegie Common Stock are reported on the NASDAQ
National Stock Market and for Regent Common Stock on the NASDAQ SmallCap Market.
The table below sets forth for the periods indicated the high and low closing
prices per share of Carnegie Common Stock and per share of Regent Common Stock
and Regent Series A Convertible Preferred Stock on the NASDAQ System as reported
in published financial sources. The table also reflects cash dividends paid by
Carnegie. These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
For current price information, holders of Carnegie Common Stock

and Regent Common Stock are urged to consult publicly available

sources.

Price Per
Share of
Price Per Share of Price Per Regent
Carnegie Common Carnegie Share of Series A
Stock Dividend Regent Common Convertible
Paid Stock Preferred Stock
High Low High Low High Low

1994:
First Quarter... 13 1/2 12 1/2 0.10 8 1/2 6 3/4 8 1/2 6 1/4

Second Quarter.. 13 1/2 13 1/2 0.10 8 6 3/4 8 1/4 6 1/4

Third Quarter... 14 1/2 12 0.10 8 7 8 5/8 7

Fourth Quarter.. 13 11 0.10 8 1/2 6 7 3/4 6 3/4

1995:
First Quarter... 12 1/4 11 1/4 0.12 7 5 3/4 6 3/4 5 3/4

Second Quarter.. 14 1/4 12 1/4 0.12 6 3/4 5 1/2 6 1/8 5 1/4

Third Quarter... 16 1/2 13 3/4 0.12 11 6 11 5 1/4

Fourth Quarter.. 16 7/8 15 7/8 0.12 11 10 1/2 11 1/4 10

1996:
First Quarter
(through
February 16,
1996)........... 17 3/4 15 3/4 (a) 12 1/4 10 1/2 12 1/4 10 1/2

(a) Carnegie declared a cash dividend of $.12 per share on January 17, 1996,
payable on March 20, 1996.

In addition to the cash dividends shown in the table above, Carnegie
has also issued a 5% stock dividend to its shareholders each year since 1990.

On August 30, 1995, the last full trading day prior to announcement of
the execution of the Merger Agreement, the reported Nasdaq System high and low
bid prices per share of Regent Common Stock, Regent Series A Convertible
Preferred Stock and Carnegie

Common Stock were $9 3/4 and 8 3/4 , $10.00 and $9.00, and $15.625 and $15.625,

respectively. Also on August 30, 1995, the reported Nasdaq System bid and asked
prices per Regent public warrant were $.75 and $1.25, respectively, and per Unit
(consisting of one share of Regent Common Stock and a right to buy 1/2 share of
Regent Common Stock) was $8.75 and $10.75, respectively. On February ___, 1996,
the most recent available date prior to printing this Joint Proxy
Statement/Prospectus, the reported Nasdaq System high and low bid price per
share of Regent Common Stock, Regent Series A Convertible Preferred Stock and
Carnegie Common Stock were $_____ and $_____, $_____ and $_____, $_____ and
$_____, respectively.

Regent has never paid cash dividends on shares of Regent Common Stock or
any series of Regent Preferred Stock. Regent Series A Convertible Preferred
Stock is entitled to receive annually a dividend computed on the basis of one
share of Regent Series E Convertible Preferred Stock for each ten shares of
Regent Series A Convertible Preferred Stock held on the applicable record date.

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated balance sheet and
consolidated statements of income give effect to the Merger under the purchase
method of accounting. These unaudited pro forma consolidated financial
statements are based on the audited consolidated historical financial statements
of Carnegie and Regent as of and for the year ended December 31, 1994 and the
unaudited consolidated historical financial statements of Carnegie and Regent as
of and for the nine months ended September 30, 1995.

The pro forma unaudited consolidated financial statements are provided for
information purposes only. This pro forma information is not necessarily
indicative of actual or future operating results or financial position that
would have occurred or will occur upon consummation of the Merger. The pro forma
unaudited consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto of Carnegie and
Regent contained elsewhere herein.

PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995
(Unaudited)

Historical Pro Forma
---------- Adjustments Pro Forma
Carnegie Regent (Note I) Consolidated
-------- ------ ----------- ------------
(Dollars in thousands)

ASSETS
Cash and due from banks $ 9,459 $ 4,929 $ -- $ 14,388
Investment securities:
Available-for-sale 48,000 31,274 -- 79,274

Held-to-maturity 25,107 111,538 (1,963)(A) 134,682
Mortgage loans held for sale -- 4,071 -- 4,071
Loans, net of unearned income 147,363 103,130 (1,018)(A) 249,475
Less: allowance for loan losses (1,640) (1,914) -- (3,554)
-------- -------- --------- --------
Net loans 145,723 101,216 (1,018) 245,921
-------- -------- --------- --------
Premises and equipment 3,440 666 -- 4,106
Other assets 3,324 2,889 1,394 (A) 7,607
Intangible Assets 11,229 (B) 11,229
-------- -------- ---------- --------
Total Assets $235,053 $256,583 $ 9,642 $501,278
======== ======== ========== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 38,464 $ 15,612 -- $ 54,076
Interest bearing:
Savings, NOW, money market 75,582 58,978 (283)(A) 134,277
Certificates of deposit 97,404 118,353 1,402 (A) 217,159
-------- -------- ----------- --------
Total deposits 211,450 192,943 1,119 405,512
Borrowings 2,000 38,141 -- 40,141
Subordinated debt -- 2,750 -- 2,750
Other liabilities 979 9,221 -- 10,200
-------- ------- ----------- --------
Total liabilities 214,429 243,055 1,119 458,603
-------- -------- ----------- --------

Preferred stock:

Series A -- 49 (49)(B) 49

49 (B)
Series B -- 1 (1)(B) --

Series C -- -- -- --
Series D -- -- -- --
Series E -- 10 (10)(B) --
Common Stock 8,755 98 (98)(B) 13,314
4,559 (B)
Capital surplus 10,850 13,301 (13,301)(B) 28,293
2,706 (A)
(2,706)(B)
10,259 (B)
1,290 (B)
5,894 (B)
Retained earnings 1,352 546 (546)(B) 1,352
Net unrealized loss on securities (333) (477) 477 (B) (333)
available-for-sale -------- -------- ----------- --------
Total Shareholders' Equity 20,624 13,528 8,523 42,675
-------- -------- ----------- --------
Total Liabilities and Shareholders'
Equity $235,053 $256,583 $ 9,642 $501,278
======== ======== =========== ========

See accompanying notes to unaudited pro forma
consolidated financial statements.

PRO FORMA CONSOLIDATED INCOME STATEMENT
NINE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)

Historical Pro Forma
---------- Adjustments Pro forma
Carnegie Regent (Note II) Consolidated
-------- ------ --------- ------------
(Dollars in thousands, except per share data)

Interest Income:
Loans, including fees $10,854 $ 7,482 $ 277 (A) $18,613
Federal funds sold 469 -- -- 469
Investment securities 2,375 7,581 399 (B) 10,355
--------- --------- ---------- ---------

Total interest income 13,698 15,063 676 29,437
--------- --------- ---------- ---------
Interest Expense:
Deposits 6,056 6,786 (456)(C) 12,386
Borrowings 127 2,347 -- 2,474
--------- --------- ---------- ---------
Total interest expense 6,183 9,133 (456) 14,860
--------- --------- ---------- ---------
Net Interest Income 7,515 5,930 1,132 14,577

Provision for loan losses 242 320 -- 562
--------- --------- ---------- ---------
Net interest income after
provision for loan losses 7,273 5,610 1,132 14,015
--------- --------- ---------- ---------
Other Income:
Service fees on deposit
accounts 332 56 -- 388
Other fees and income 239 18 -- 257
--------- --------- ---------- ---------
Total other income 571 74 -- 645
--------- --------- ---------- ---------
Other expenses:
Salaries and employee
benefits 2,447 1,279 -- 3,726
Occupancy 1,154 388 -- 1,542
Other 2,134 3,449 719 (D) 6,302
--------- --------- ---------- ---------
Total other expenses 5,735 5,116 719 11,570

--------- --------- ---------- ---------
Income before income taxes 2,109 568 413 3,090
Provision for income taxes 552 192 315 (E) 1,059
--------- --------- ---------- ---------
NET INCOME $ 1,557 $ 376 $ 98 $ 2,031

Preferred stock dividends -- 360 86 (G) 446
--------- --------- ---------- ---------
Earnings for common stock $ 1,557 $ 16 $ 12 $ 1,585
========= ========= ========== =========
Earnings per common share:
Primary $ .88 $ .02 $ .58
Fully diluted .87 --(F) --(F)
Weighted average number
of shares outstanding:
Primary ................. 1,764,000 1,048,000 2,712,000
Fully Diluted ........... 1,782,000 --(F) --(F)

See accompanying notes to unaudited pro forma consolidated financial statements

PRO FORMA CONSOLIDATED INCOME STATEMENT
TWELVE MONTHS ENDED DECEMBER 31, 1994
(Unaudited)

Historical Pro Forma
----------------- Adjustments Pro Forma
Carnegie Regent (Note II) Consolidated
-------- ------ ----------- ------------
(Dollars in thousands except per share data)

Interest Income:
Loans, including fees $10,923 $6,314 $ 318 (A) $17,555
Federal funds sold 290 10 -- 300
Investment securities 2,342 10,841 613 (B) 13,796
------ ------ -------- ------

Total interest income 13,555 17,165 931 31,651
------ ------ -------- ------
Interest Expense:
Deposits 5,149 9,006 (781)(C) 13,374
Borrowings -- 2,367 -- 2,367
------ ------ -------- ------

Total interest expense 5,149 11,373 (781) 15,741
------ ------ -------- ------

Net Interest Income 8,406 5,792 1,712 15,910
Provision for loan losses 650 860 -- 1,510
------ ------ -------- ------
Net interest income after
provision for loan losses 7,756 4,932 1,712 14,400
------ ------ -------- ------

Other Income:

Service fees on deposit
accounts 236 102 -- 338
Other fees and income 259 100 -- 359
------ ------ -------- ------
Total other income 495 202 -- 697

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

Other expenses:
Salaries and employee benefits 2,572 1,450 -- 4,022
Occupancy 1,063 449 -- 1,512
Other 2,421 2,473 1,061(D) 5,955
------ ------ -------- ------
Total other expenses 6,056 4,372 1,061 11,489
------ ------ -------- ------

Income before income taxes 2,195 762 651 3,608
Provision for income taxes 656 259 454 (E) 1,369
------ ------ -------- ------

NET INCOME $1,539 $ 503 $197 $2,239

Preferred stock dividends -- 287 308 (G) 595
------ ------ -------- ------
Earnings for common stock $1,539 $ 216 $ (111) $ 1,644
====== ====== ======== ======
Earnings per common share:
Primary $1.23 $.22 $ .75
Fully diluted --(F) --(F) --(F)
Weighted average number of
shares outstanding:
Primary 1,253,000 990,000 2,201,000
Fully Diluted --(F) --(F) --(F)

See accompanying notes to unaudited pro forma consolidated financial statements.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Note I: The following is a summary of the adjustments required to the
unaudited pro forma consolidated balance sheet (all amounts in
thousands).

A. Record fair market value over (under) Regent's net assets as
follows:

Investment securities held to maturity $(1,963)
Loans, net of unearned income (1,018)
Non-interest bearing deposits --
Savings, NOW and Money Market Deposits 283
Certificates of Deposit (1,402)
-------
Adjustment to record fair value (4,100)
Deferred Tax (@ 34%) 1,394
-------
Total Fair Value Adjustment $(2,706)
=======
B. Allocation of the purchase price as follows:

911,899 shares of Carnegie Common Stock at $16.25 per share:
Par value - $5 per share $ 4,559
Capital Surplus 10,259

487,532 shares of Carnegie Series A Convertible Preferred
Stock at $12.19 per share ($16.25 x .75)(a):
Par value $.10 per share 49
Capital Surplus 5,894
175,000 Carnegie stock options valued at $7.37 per option 1,290
-------
Total Purchase Price $22,051

Less:
Regent Series A Preferred Stock (49)
Regent Series B Preferred Stock (1)
Regent Series E Preferred Stock (10)
Regent Common Stock (98)
Regent Capital Surplus (13,301)
Regent Retained Earnings (546)
Regent Net Unrealized Loss on Securities
Available for Sale 477
-------
Net Book Value Acquired (13,528)
Fair Value Adjustment (A) 2,706
-------
Fair Value of Net Assets Acquired (10,822)
-------
Excess of Costs over net asset acquired $11,229
Core Deposit Intangible Asset Acquired (971)

-------
Goodwill $10,258
=======

(a) Assuming conversion of all Regent Series B through Series E Convertible
Preferred Stock to shares of Regent Common Stock prior to consummation of
the Merger. Note that if all Regent Series B through Series E Convertible
Preferred Shares are redeemed rather than converted into Regent Common
Stock, the purchase price would be reduced by $1,390,000, and goodwill
reduced from $10,258,000 to $9,986,000.

Note II: The following is a summary of the adjustments required to the
unaudited pro forma consolidated income statements assuming the
adjustments made in Note I above were made at the beginning of the
periods presented.

A. Amortization/accretion of the premium/discount on the loan
portfolio over the estimated weighted average lives of the
applicable loans: commercial fixed rate loans accreted over
5 years, insurance premium finance loans are amortized over
9 months and non-accrual loans amortized over 2 years, using
the effective interest method.

B. Accretion of net discount on the investment securities portfolio
over the estimated weighted average lives of the securities,
5.4 years, using the effective interest method.

C. Amortization/accretion of premium/discount for deposit balances
over the estimated weighted average lives of the applicable
deposits. Transaction accounts are amortized over 5 years, savings
accounts amortized over 5 years and certificates of deposits accreted
over 1.58 years, using the effective interest method.

D. Core deposit intangible amortization over estimated deposit life of 5
years using the effective interest method and goodwill amortization over
15 years using the straight-line method.

E. Net tax effect of fair value adjustments using an effective tax rate of
34%.

F. Fully diluted earnings per share not shown because anti-dilutive.

G. Assume payment of 7.5% stock dividend based on current market
price of Carnegie.

COMPARISON OF SHAREHOLDER RIGHTS

Both Carnegie and Regent are incorporated in the State of New Jersey and
are subject to the NJBCA. Both Carnegie and Regent are bank holding companies
subject to the BHCA and supervision and regulation of the FRB. Therefore, there
are no material differences between the rights of holders of Regent Common Stock
and Carnegie Common Stock. Although the Regent Series A Convertible Preferred
Stock and the Carnegie Series A Convertible Preferred Stock have substantially
the same terms, there are certain differences between the securities. The
primary material difference is that the Regent Series A Convertible Preferred
Stock pays dividends in Regent Series E Convertible Preferred Stock, whereas the
Carnegie Series

A Convertible Preferred Stock will pay dividends in shares of Carnegie Common
Stock. In addition, the Regent Series A Preferred Stock pays dividends annually,
whereas the Carnegie Series A Preferred Stock will pay dividends semiannually.

DESCRIPTION OF CARNEGIE SECURITIES

Common Stock

General. The authorized capital stock of Carnegie consists of 5,000,000
shares of Common Stock, no par value, of which 1,751,076 shares are issued and
outstanding as of September 30, 1995. In addition, 724,500 shares are reserved
for issuance upon the exercise of outstanding warrants and 100,776 shares are
reserved for issuance upon the exercise of outstanding options.

Dividends. Carnegie may pay dividends as declared from time to time by
Carnegie's Board of Directors out of funds legally available therefor, subject
to certain restrictions. Since dividends from CBN are currently Carnegie's sole
source of income, any restriction on CBN's ability to pay dividends will act as
a restriction on Carnegie's ability to pay dividends. Under the National Bank
Act and the regulations of the OCC applicable to CBN, CBN may not pay dividends
in excess of CBN's net profits, as defined, for that year plus CBN's retained
net profits for the preceding two years. In addition, unless a national bank's
capital surplus equals or exceeds the stated capital for its common stock, no
dividends may be declared unless CBN makes transfers from retained earnings to
capital surplus.

Voting Rights. Each holder of Carnegie Common Stock is entitled to one vote
for each share held on all matters voted upon by the shareholders, including the
election of directors. There is no cumulative voting in the election of
directors.

Rights in Liquidation. In the event of a liquidation, dissolution or
winding up of Carnegie, each holder of Carnegie Common Stock would be entitled
to receive a pro rata portion of all assets of Carnegie available for
distribution to holders of Carnegie Common Stock after payment of all debts and

liabilities of Carnegie and the liquidation preferences of any outstanding
preferred stock.

No Preemptive Rights; Redemption. Holders of shares of Carnegie Common
Stock are not entitled to preemptive rights with respect to any shares of
Carnegie Common Stock that may be issued. The Carnegie Common Stock is not
subject to call or redemption and is fully paid and nonassessable.

Warrants

Each warrant entitles the holder thereof to purchase one share of Carnegie
Common Stock at a purchase price equal to

$15.09 or 1.05 shares at $14.37, subject to adjustment as hereinafter described.
The Warrants expire on August 16, 1997. Any warrant not exercised on or before
the expiration date shall expire and will not thereafter be exercisable.

The number of shares purchasable upon exercise and the exercise price of
each warrant will be proportionately adjusted upon the occurrence of certain
events, including stock dividends, stock splits, reclassifications and
reorganizations. The warrants are governed by a Warrant Agreement between
Carnegie and the Warrant Agent. The Warrant Certificate provides that Carnegie
and the Warrant Agent may, without the consent of the warrant holders, make
changes in the Warrant Agreement which are required by reason of any ambiguity,
manifest error or other mistake in the Warrant Agreement or Warrant Certificate,
or that do not adversely affect or change the interest of the holders of the
warrants.

Carnegie Preferred Stock

Upon approval of the Amendment, Carnegie will be authorized to issue up to
1,500,000 shares of preferred stock, with or without par value, in one or more
series, with such designations and such relative voting, dividend, liquidation,
conversion and other rights, preferences and limitations as shall be set forth
in resolutions providing for the issuance thereof adopted by the Carnegie Board
of Directors.

Series A Convertible Preferred Stock

Pursuant to the Merger Agreement, and subject to shareholder approval of
the Amendment, the Carnegie Board of Directors has authorized 487,532 shares of
Series A Convertible Preferred Stock, par value $.10 per share ("Carnegie Series
A Convertible Preferred Stock"). Under the terms of the Merger Agreement, the
holders of Regent Series A Convertible Preferred Stock will receive one share of
Carnegie Series A Convertible Preferred Stock for each share of Regent Series A
Convertible Preferred Stock held. Each share of Carnegie Series A Convertible
Preferred Stock may be converted into 0.75 shares of Carnegie Common Stock. This
issuance will leave 1,012,468 shares of Carnegie Series Preferred Stock
authorized and available for issuance in the future.

The following is a brief description of the terms of the Carnegie Series A
Convertible Preferred Stock, which does not purport to be complete and is
subject to and qualified in its entirety by reference to Article V of Carnegie's
Certificate of Incorporation which is included as Appendix E to the Joint Proxy
Statement/Prospectus.

Dividends. The holders of Carnegie Series A Convertible Preferred Stock are
entitled to receive an annual stock dividend computed on the basis of .075
shares of Carnegie Common Stock for every share of Carnegie Series A Convertible
Preferred Stock held on the applicable record date. The dividend will be paid on
a semi-annual basis.

The holders of Carnegie Series A Convertible Preferred Stock are also
entitled to receive cash dividends on a noncumulative basis when, as and if
declared by Carnegie's Board of Directors.

Optional Redemption. The shares of Carnegie Series A Convertible Preferred
Stock to be issued in connection with the Merger will be redeemable in whole or
in part at the option of Carnegie at a price of $10 per share plus any accrued
but unpaid dividends.

If less than all of the issued and outstanding shares of Carnegie Series A
Convertible Preferred Stock not previously called for redemption are to be
redeemed, Carnegie will select those to be redeemed pro rata or by lot or in
such other manner as Carnegie's Board of Directors may determine. There is no
mandatory redemption or sinking fund obligation with respect to the Carnegie
Series A Convertible Preferred Stock.

In the event that Carnegie exercises its redemption option, notice of
redemption must be mailed at least 30 days but not more than 60 days before the
redemption date to each holder of record of shares of Carnegie Series A
Convertible Preferred Stock to be redeemed at the holder's address shown on the
books of Carnegie. On and after the redemption date, dividends cease (except for
any accrued but unpaid dividends) on shares of Carnegie Series A Convertible
Preferred Stock called for redemption and all rights of the holders of such
shares terminate except the right to receive the redemption price (unless
Carnegie defaults in the payment of the redemption price).

Conversion Right. Each share of Carnegie Series A Convertible Preferred
Stock is convertible into 0.75 shares of Carnegie Common Stock, at the option of
the holder, at any time prior to the close of business on the date fixed by
Carnegie for any redemption (unless Carnegie shall default in making the payment
due upon redemption).

The conversion rate is subject to adjustment in the manner provided in
Carnegie's Certificate of Incorporation in the event of: payment of certain
stock dividends on Carnegie Series A Convertible Preferred Stock, stock splits
or combinations or other similar recapitalizations. In case of any consolidation
or merger of Carnegie with or into any other corporation or any sale or transfer
of substantially all the assets of Carnegie, Carnegie

or any successor corporation is required to make provision that any holder of
Carnegie Series A Convertible Preferred Stock will be entitled, after the
occurrence of any such event, to receive on conversion the consideration that
the holder of Carnegie Series A Convertible Preferred Stock would have received
had the holder converted the Carnegie Series A Convertible Preferred

Stock into Carnegie Common Stock immediately prior to the occurrence of the
event.

Voting Rights. The holders of Carnegie Series A Convertible Preferred Stock
have full non-cumulative voting rights, share for share, with Carnegie Common
Stock and any other class or series of Carnegie's stock which at any time may
have general voting power with Carnegie Common Stock concerning any matter being
voted upon.

The approval of the holders of at least two-thirds of the shares of
Carnegie Series A Convertible Preferred Stock then outstanding is required to
amend, alter or repeal any of the provisions of Carnegie's Certificate of

Incorporation (or any certificate providing for terms of capital stock of
Carnegie) or to authorize any reclassification of Carnegie Series A Convertible
Preferred Stock, in either case so as to affect adversely the preferences,
special rights or powers of Carnegie Series A Convertible Preferred Stock,
either directly or indirectly or through a merger or consolidation with any
corporation, or to authorize any capital stock of Carnegie ranking, either as to
the payment of dividends or upon liquidation, dissolution or winding up of
Carnegie, prior to redemption or conversion of the Carnegie Series A Convertible
Preferred Stock. The approval of the holders of at least a majority of the
outstanding shares of Carnegie Series A Convertible Preferred Stock, voting as a
class, is required to increase the authorized number of shares of preferred
stock or to create, or increase the authorized number of shares of, any other
class of stock of Carnegie ranking on a parity with the Carnegie Series A
Convertible Preferred Stock as to dividends or upon liquidation, dissolution, or
winding up of Carnegie.

Liquidation Rights. The holders of Carnegie Series A Convertible Preferred
Stock are entitled to receive $10 per share (plus any declared and unpaid
preferred stock dividends) before any distribution is made to holders of
Carnegie Common Stock or any other junior stock of Carnegie in the event of the
dissolution, liquidation or winding up of Carnegie. If in any such event the

assets of Carnegie distributable among the holders of Carnegie Series A
Convertible Preferred Stock or any capital stock of Carnegie ranking on par with
the Carnegie Series A Convertible Preferred Stock are insufficient to permit
full payment, the holders of Carnegie Series A Convertible Preferred Stock and
of the capital stock of Carnegie ranking on a par with

Carnegie Series A Convertible Preferred Stock will be entitled to ratable
distribution of the available assets in accordance with the respective amounts
that would be payable to such holders if all amounts payable in respect of such
shares were paid in full. A consolidation, merger or sale of all or
substantially all of the assets of Carnegie are not considered a liquidation,
dissolution or winding up for this purpose.

Options. For information about options to purchase Carnegie Common Stock,
reference is made to "Proposal 3 -- Approval of 1995 Directors Stock Option
Plan" to be voted upon by Carnegie shareholders and "Proposal 4--Approval of the
1995 Employee Stock Option Plan" to be voted upon by Carnegie shareholders.

Transfer Agent and Warrant Agent

Carnegie's transfer agent for Common Stock and Warrant Agent for the
Warrants is Registrar and Transfer Company, with an office at 10 Commerce Drive,
Cranford, New Jersey 07016.

INFORMATION ABOUT CARNEGIE

General

Carnegie is a New Jersey business corporation and a bank holding company
registered under the BHCA. The principal activities of Carnegie are owning and
supervising CBN which engages in a commercial banking business in Mercer,
Burlington, Morris and Ocean counties, New Jersey. Carnegie directs the policies
and coordinates the financial resources of CBN. At September 30, 1995, Carnegie
had consolidated total assets of $235.1 million, total deposits of $211.5
million, total loans of $145.7 million and shareholders' equity of $20.6
million.

Business of Carnegie

Carnegie's primary business is ownership of CBN. CBN is a national bank,
which commenced business in 1988 as a state chartered commercial bank. CBN
currently operates from its main office in Princeton, New Jersey and from five
branch offices in Hamilton Township, Denville, Marlton, Montgomery and Toms
River, New Jersey. The deposits of CBN are insured by the BIF of the FDIC. CBN
is a member of the Federal Reserve System.

Carnegie conducts a general commercial banking business. Carnegie's loan

products consist primarily of commercial loans (a majority of which are secured
by mortgages on owner-occupied properties), commercial mortgages, loans to
professionals secured by business or personal assets, and to a lesser extent,
residential mortgage loans. Carnegie offers a full array of deposit accounts
including time deposits, checking and other demand deposit accounts, savings
accounts and money market

accounts. Carnegie targets small businesses, professionals, and high net worth
individuals as its prime customers, and does not engage in high volume, consumer
banking. Carnegie believes it competes successfully for its target market by
offering superior service. This service includes having loan officers intimately
involved in the loan approval process and delivering prompt responses to
customer loan applications. Because management believes its target customers are
more concerned with service and

the availability of loans than price, Carnegie does not try to be the lowest
cost source of funds in its market area. Carnegie markets its base rate for
loans at a rate which is higher than the prime rate as published in The Wall
Street Journal. CNB's rating under the Community Reinvestment Act is
satisfactory.

Service Areas

Carnegie's service areas consist of Mercer, Morris, Burlington and Ocean
counties, New Jersey. Carnegie operates its main office in Princeton, New Jersey
and five branch offices in Marlton, Denville, Hamilton Township, Montgomery and
Toms River, New Jersey. Each of these locations was selected by management based

upon the demographics of the area and a perceived need for the services rendered
by Carnegie. In addition, management of Carnegie is familiar with the business
communities in each of these market areas.

Competition

Carnegie operates in a highly competitive environment competing for
deposits and loans with commercial banks, thrifts and other financial
institutions, many of which have greater financial resources than Carnegie. Many
large financial institutions in New York City and Philadelphia compete for the
businesses of New Jersey residents and businesses located in Carnegie's primary
areas of trade. Certain of these institutions have significantly higher lending
limits than Carnegie and provide services to their customers which Carnegie does
not offer.

Management believes Carnegie is able to compete on a substantially equal
basis with its competitors because it provides responsive personalized services
through management's knowledge and awareness of Carnegie's service areas,
customers and business. Management believes that this knowledge and awareness

provide a clear business advantage in servicing the commercial and retail
banking needs of the professional communities that comprise Carnegie's service
areas.

Employees

At September 30, 1995, Carnegie employed 93 full-time
employees and one part-time employee. None of these employees is

covered by a collective bargaining agreement and Carnegie believes that its
employee relations are good.

Properties

Carnegie's main offices are located at 619 Alexander Road, Princeton, New
Jersey. Carnegie leases office space in the building.

Carnegie maintains its five branches, all of which are leased and subject
to renewal. Carnegie believes it will have no difficulty renewing each of these
leases. The table set forth below provides additional information regarding
these leases:

Branch & Location Expiration Date of Lease

Main Office: March 31, 2015

619 Alexander Road

Princeton, New Jersey 08540

Hamilton Township Branch Office: May 31, 1996

1601 Whitehorse-Mercerville Road
Mercerville, New Jersey 08619

Marlton Branch Office: December 7, 1996

6000 West Lincoln Drive
Marlton, New Jersey 08053

Denville Branch Office: December 31, 1997

125 East Main Street
Denville, New Jersey 07834

Montgomery Branch Office: August 31, 2000

One Airport Plaza
Route 206 North
Princeton, New Jersey 08540

Toms River Branch Office: April 3, 2005

910 Hooper Avenue
Toms River, New Jersey 08753

Legal Proceedings

Carnegie and CBN are periodically parties to or otherwise involved in legal
proceedings arising in the normal course of business, such as claims to enforce
liens, claims involving the making and servicing of real property loans, and
other issues incident to CBN's business. Management does not believe that there
is any pending or threatened proceeding against Carnegie or CBN which, if
determined adversely, would have a material effect on the business or financial
position of Carnegie or CBN.

Supervision and Regulation

Bank holding companies and banks are extensively regulated under both
federal and state law. These laws and regulations are intended to protect
depositors, not shareholders. To the extent that the following information
describes statutory and regulatory provisions, it is qualified in its entirety
by reference to the particular statutory and regulatory provisions. Any change

in the applicable laws or regulations may have a material effect on the business
and prospects of Carnegie and Regent.

General - Recent Regulatory Enactments

On September 29, 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act (the "Interstate Act") was enacted. The Interstate Act generally
enhances the ability of bank holding companies to conduct their banking business
across state borders. The Interstate Act has two main provisions. The first
provision generally provides that, commencing on September 29, 1995, bank
holding companies may acquire banks located in any state regardless of the
provisions of state law. These acquisitions are subject to certain restrictions,
including caps on the total percentage of deposits that a bank holding company
may control both nationally and in any single state. New Jersey law currently
allows interstate acquisitions by bank holding companies whose home state has
"reciprocal" legislation which would allow acquisitions by New Jersey based bank
holding companies.

The second major provision of the Interstate Act permits, beginning on June
1, 1997, banks located in different states to merge and continue to operate as a
single institution in more than one state. States may, by legislation passed
before June 1, 1997, opt out of the interstate bank merger provisions of the
Interstate Act. In addition, states may elect to opt in and allow interstate
bank mergers prior to June 1, 1997.

A final provision of the Interstate Act permits banks located in one state
to establish new branches in another state without obtaining a separate bank
charter in that state, but only if the state in which the branch is located has
adopted legislation specifically allowing interstate de novo branching.

It is unclear at this time whether New Jersey will opt out of the
interstate bank merger provisions of the Interstate Act or opt in at a date
earlier than June 1, 1997, or whether New Jersey will permit interstate de novo
branching. Although it is impossible to predict the impact of the Interstate Act
at this time, it will most likely enhance competition in the New Jersey
marketplace as bank holding companies located outside of New Jersey become freer
to acquire institutions located in New Jersey. The ability to operate acquired
New Jersey banks as part

of an existing bank charter rather than as a separately chartered institution
may make interstate banking more cost-efficient, and may lead to additional
acquisitions in New Jersey by out-of-state institutions.

The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") was enacted in December 1991. FDICIA was primarily designed to
provide additional financing for the FDIC by increasing its borrowing ability.
The FDIC was given the authority to increase deposit insurance premiums to repay

any such borrowing. In addition, FDICIA identifies capital standard categories
for financial institutions: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. FDICIA imposes progressively more restrictive constraints on
operations, management and capital distributions depending on the category in
which an institution is classified. Pursuant to FDICIA, undercapitalized
institutions must submit recapitalization plans, and a holding company
controlling a failing institution must guarantee such institution's compliance
with its plan. As of September 30, 1995, CBN was deemed "well capitalized" under
the regulations of the FDIC implementing FDICIA.

FDICIA also requires the various regulatory agencies to prescribe certain
non-capital standards for safety and soundness relating generally to operations
and management, asset quality and executive compensation and permits regulatory
action against a financial institution that does not meet such standards. The
federal bank regulatory agencies have proposed regulations implementing these

provisions, but have not yet formally adopted these standards.

Bank Holding Company Regulation

General. As a bank holding company registered under the BHCA, Carnegie is
subject to the regulation and supervision of the FRB. Carnegie is required to
file with the FRB annual reports and other information regarding its business
operations and those of its subsidiaries. Under the BHCA, Carnegie's activities
and those of its subsidiaries are limited to banking, managing or controlling
banks, furnishing services to or

performing services for its subsidiaries or engaging in any other activity which
the FRB determines to be so closely related to banking or managing or
controlling banks as to be properly incident thereto.

The BHCA requires, among other things, the prior approval of the FRB in any
case where a bank holding company proposes to (i) acquire all or substantially
all of the assets of any other bank, (ii) acquire direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any bank (unless
it owns a majority of such bank's voting shares) or (iii) merge or

consolidate with any other bank holding company. The FRB will not approve any
acquisition, merger, or consolidation that would have a substantially
anti-competitive effect, unless the anti- competitive impact of the proposed
transaction is clearly outweighed by a greater public interest in meeting the
convenience and needs of the community to be served. The FRB also considers
capital adequacy and other financial and managerial resources and future
prospects of the companies and the banks concerned, together with the
convenience and needs of the community to be served, when reviewing acquisitions
or mergers.

Additionally, the BHCA prohibits a bank holding company, with certain

limited exceptions, from (i) acquiring or retaining direct or indirect ownership
or control of more than 5% of the outstanding voting stock of any company which
is not a bank or bank holding company, or (ii) engaging directly or indirectly
in activities other than those of banking, managing or controlling banks, or
performing services for its subsidiaries; unless such non-banking business is
determined by the FRB to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In making such
determinations, the FRB is required to weigh the expected benefits to the
public, such as greater convenience, increased competition or gains in
efficiency, against the possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices.

There are a number of obligations and restrictions imposed on bank holding
companies and their depository institution subsidiaries by law and regulatory

policy that are designed to minimize potential loss to the depositors of such
depository institutions and the FDIC insurance funds in the event the depository
institution becomes in danger of default. Under a policy of the FRB with respect
to bank holding company operations, a bank holding company is required to serve
as a source of financial strength to its subsidiary depository institutions and
to commit resources to support such institutions in circumstances where it might
not do so absent such policy. The FRB also has the authority under the BHCA to
require a bank

holding company to terminate any activity or to relinquish control of a non-bank
subsidiary upon the FRB's determination that such activity or control
constitutes a serious risk to the financial soundness and stability of any bank
subsidiary of the bank holding company.

Capital Adequacy Guidelines for Bank Holding Companies. In January 1989,
the FRB adopted risk-based capital guidelines for bank holding companies. The
risk-based capital guidelines are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding

companies, to account for off-balance sheet exposure, and to minimize
disincentives for holding liquid assets. Under these guidelines, assets and
off-balance sheet items are assigned to broad risk categories each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance sheet items.

The minimum ratio of total capital to risk-weighted assets (including
certain off-balance sheet activities, such as standby letters of credit) is 8%.
At least 4% of the total capital is required to be "Tier I Capital," consisting
of common shareholders' equity, noncumulative perpetual preferred stock, and a
limited amount of cumulative perpetual preferred stock, less certain goodwill
items and other intangible assets. The remainder ("Tier II Capital") may consist

of (a) the allowance for loan losses of up to 1.25% of risk-weighted assets, (b)
excess of qualifying perpetual preferred stock, (c) hybrid capital instruments,
(d) perpetual debt, (e) mandatory convertible securities, and (f) subordinated
debt and intermediate-term preferred stock up to 50% of Tier I capital. Total
capital is the sum of Tier I and Tier II capital less reciprocal holdings of
other banking organizations' capital instruments, investments in unconsolidated
subsidiaries and any other deductions as determined by the FRB (determined on a
case by case basis or as a matter of policy after formal rule-making).

Bank holding company assets are given risk-weights of 0%, 20%, 50% and
100%. In addition, certain off-balance sheet items are given similar credit
conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight will apply. These computations result in the total
risk-weighted assets. Most loans are assigned to the 100% risk category, except

for performing first mortgage loans fully secured by residential property which
carry a 50% risk-weighting. Most investment securities (including, primarily,
general obligations of states or other political subdivisions of the United
States) are assigned to the 20% category, except for municipal or state revenue
bonds, which have a 50% risk-weight, and direct obligations of the U.S. Treasury
or obligations backed by the

full faith and credit of the U.S. Government, which have a 0% risk-weight. In
converting off-balance sheet items, direct credit substitutes, including general
guarantees and standby letters of credit backing financial obligations, are
given a 100% risk-weighting. Transaction-related contingencies such as bid
bonds, standby letters of credit backing nonfinancial obligations, and undrawn
commitments (including commercial credit lines with an initial maturity or more
than one year) have a 50% risk-weighting. Short-term commercial letters of
credit have a 20% risk-weighting and certain short-term unconditionally
cancelable commitments have a 0% risk-weighting.

In addition to the risk-based capital guidelines, the FRB has adopted a
minimum Tier I capital (leverage) ratio, under which a bank holding company must
maintain a minimum level of Tier I capital to average total consolidated assets
of at least 3% in the case of a bank holding company that has the highest
regulatory examination rating and is not contemplating significant growth or
expansion. All other bank holding companies are expected to maintain a leverage
ratio of at least 100 to 200 basis points above the stated minimum.

Bank Regulation

CBN is a national bank subject to the supervision of, and regular
examination by, the OCC, as well as to the supervision of the FDIC. The FDIC
insures the deposits of CBN to the current maximum allowed by law through the
BIF.

The operations of CBN are subject to state and federal statutes applicable
to banks which are members of the Federal Reserve System and to the regulations
of the FRB, the FDIC and the OCC. Such statutes and regulations relate to
required reserves against deposits, investments, loans, mergers and
consolidations, issuance of securities, payment of dividends, establishment of
branches, and other aspects of CBN's operations. Various consumer laws and
regulations also affect the operations of CBN, including state usury laws, laws
relating to fiduciaries, consumer credit and equal credit and fair credit
reporting. Under the provisions of the Federal Reserve Act, CBN is subject to
certain restrictions on any extensions of credit to Carnegie or, with certain
exceptions, other affiliates, on investments in the stock or other securities of
national banks, and on the taking of such stock or securities as collateral.
These regulations and restrictions may limit Carnegie's ability to obtain funds
from CBN for its cash needs, including funds for acquisitions, and the payment
of dividends, interest and operating expenses. Further, CBN is prohibited from

engaging in certain tying arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services. For example, CBN
may not

generally require a customer to obtain other services from CBN or Carnegie, and
may not require the customer to promise not to obtain other services from a
competitor, as a condition to an extension of credit. CBN also is subject to
certain restrictions imposed by the Federal Reserve Act on extensions of credit
to executive officers, directors, principal shareholders or any related interest
of such persons. Extensions of credit (i) must be made on substantially the same
terms (including interest rates and collateral) as, and following credit
underwriting procedures that are not less stringent than those prevailing at the
time for, comparable transactions with persons not covered above and who are not
employees and (ii) must not involve more than the normal risk of repayment or
present other unfavorable features. In addition, extensions of credit to such
persons

beyond limits set by FRB regulations must be approved by the Board of Directors.
CBN also is subject to certain lending limits and restrictions on overdrafts to
such persons. A violation of these restrictions may result in the assessment of
substantial civil monetary penalties on CBN or any officer, director, employee,
agent or other person participating in the conduct of the affairs of CBN or the
imposition of a cease and desist order.

As an institution whose deposits are insured by the FDIC, CBN also is
subject to insurance assessments imposed by the FDIC. Under current law, as
amended by FDICIA, the insurance assessment to be paid by BIF insured
institutions is as specified in schedules issued by the FDIC from time to time.
The amount of the assessment is determined in part to allow for a minimum BIF
reserve ratio of 1.25% of estimated insured deposits (or such higher ratio as
the FDIC may determine in accordance with the statute). In November 1995, the
FDIC determined that the BIF had reached the statutorily required reserve ratio
and adopted a proposal to establish a new assessment rate schedule for BIF
members of 0 to 31 basis points, with those institutions at the low end of the
assessment schedule paying only the statutorily mandated $2,000 annual insurance
premium. The actual assessment to be paid by each BIF member is based on the
institution's assessment risk classification, which is determined on whether the
institution is considered "well capitalized," "adequately capitalized," or
"under-capitalized," as those terms have been defined in applicable federal
regulations adopted to implement the prompt corrective action provision of
FDICIA, and whether such institution is considered by its supervising agency to
be financially sound or to have supervisory concerns.

CARNEGIE FINANCIAL SUMMARY AND SELECTED PER SHARE DATA
(in thousands, except per share data)

Nine Months Ended
September 30, Year Ended December 31,
----------------------- --------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share data)

Income Statement Data:

Interest income $13,698 $9,683 $13,555 $9,877 $8,217 $7,810 $6,258

Interest expense 6,183 3,781 5,149 3,639 3,451 4,151 3,676
------- ------
Net interest income 7,515 5,902 8,406 6,238 4,766 3,659 2,582

Provision for loan losses 242 447 650 429 476 296 467
------- ------ ------- ------ ------ ------ ------
Net interest income after
provision for loan losses 7,273 5,455 7,756 5,809 4,290 3,363 2,115

Non-interest income 571 376 495 471 607 293 113

Non-interest expense 5,735 4,144 6,056 4,696 3,399 2,457 1,824
------- ------ ------- ------ ------ ------ ------
Income before income taxes 2,109 1,687 2,195 1,584 1,498 1,199 404

Income tax expense 552 541 656 520 485 419 146
------- ------ ------ ------ ------
Net income $1,557 $1,146 $1,539 $1,064 $1,013 $780 $258
------- ------ ======= ====== ====== ====== ======
Per Share Data:

Net income-Primary $0.88 $1.04 $1.23 $1.08 $1.02 $0.79 $0.26

Net income-Fully Diluted 0.87 -- -- -- -- --
------
Cash dividends (1) 0.36 0.30 0.40 0.32 0.24 -- --

Book value 11.78 10.67 10.54 10.92 10.13 9.31 8.52

Weighted average shares
outstanding
-Primary 1,763,867 1,098,012 1,253,172 989,089 989,089 989,089 989,089
-Fully Diluted 1,781,863
--------- --------- ------- ------- ------- -------

Ratio of earnings to
fixed charges(2) 1.33 1.44 1.42 1.42 1.42 1.28 1.11

At December 31,
At September 30, -----------------------------------------------
1995 1994 1993 1992 1991 1990
--------------- ------ ------ ------ ------ ------
(Dollars in thousands, except per share data)

Balance Sheet Data:

Total assets $235,053 $195,654 $154,363 $119,478 $93,694 $70,352

Federal funds sold -- -- 2,350 11,345 12,775 5,255

Loans, net 145,723 138,897 116,266 80,811 58,900 48,761

Investment securities 73,107 44,920 28,728 21,496 16,880 12,857

Deposits 211,450 176,789 143,178 108,214 84,074 61,498

Shareholders' equity 20,624 18,056 10,798 10,021 9,211 8,431

Average equity to average total assets 8.91% 7.67% 7.10% 9.25% 10.851% 13.74%

Performance Ratios:

Return on average assets 0.95% 0.87% 0.81% 0.98% 0.96% 0.42%

Return on average shareholders' equity 10.63% 11.39% 11.38% 10.60% 8.86% 3.07%

Net interest margin (3) 5.04% 5.16% 5.08% 4.93% 4.85% 4.46%

Asset Quality Ratios:

Allowance for loan losses to total loans 1.11% 1.00% 0.84% 0.99% 0.96% 0.90%

Allowance for loan losses to non-accrual loans 35.68% 67.80% 30.44% 34.42% 38.64% 72.77%

Non-performing loans to total loans 3.12% 1.47% 2.75% 2.87% 2.49% 1.23%

Non-performing assets to total assets 1.96% 1.06% 2.09% 1.96% 1.82% 1.29%

Net charge-offs (recoveries) to average loans 0.00% 0.19% 0.28% 0.35% 0.29% 0.38%

Liquidity and Capital Ratios:

Dividend payout 40.40% 32.52% 26.63% 23.53% -- --

Loans to deposits 69.69% 79.36% 81.89% 75.42% 70.74% 80.01%

Tier I risk-based capital 13.25% 14.06% 9.61% 13.10% 10.00% N/A

Balance Sheet Data:

Total risk-based capital 14.28% 15.06% 10.48% 14.16% 10.60% N/A

Leverage captal 9.19% 10.47% 8.20% 8.40% 9.80% N/A

(1) Cash dividends per share have not been restated for stock dividends.

(2) The ratio of earnings to fixed charges is calculated by dividing income
from continuing operations before fixed charges and income taxes
("earnings") by fixed charges. Fixed charges consist of interest expense
and that portion of rental expense that the Company believes to be
representative of interest.

(3) Yields on tax-exempt obligations have been computed on a fully
tax-equivalent basis, assuming a Federal income tax rate of 34%.

Management's Discussion and Analysis of
Financial Condition and Results of Operations of Carnegie

Overview and Strategy

Since it commenced operations in April 1988, Carnegie has increased its
asset base at a rapid pace. Carnegie's assets have grown from $51.3 million at
December 31, 1989 to $195.7 million at December 31, 1994, a compound annual
growth rate of 30.7%. This growth has come both through Carnegie's success in
penetrating its original market in the Princeton, New Jersey area, and through
expansion into other market areas in New Jersey. Carnegie opened branch offices
in Hamilton Township in August 1989, Marlton in December 1991 and Denville in
July 1993 which, as of December 31, 1994, accounted for 18.5%, 14.4% and 9.9% of
total deposits, respectively. During the second half of 1995, Carnegie opened
new branches in Montgomery and Toms River, New Jersey. Although Carnegie's
emphasis has been on growth, Carnegie became profitable in its second quarter of
operations, and its annual net income has increased to $1.5 million for the year
ended December 31, 1994. As a result of Carnegie's success in continuing growth
while maintaining profitability, and in order to provide the shareholders with a
return on their investment, Carnegie began paying cash dividends in the first
quarter of 1992. Carnegie has continued to pay cash dividends in every quarter
since the first quarter of 1992. The dividend per share in 1993 and 1994 was
$.32 and $.40, respectively. The dividend for 1995, on an annualized basis, is
$.48 per share.

1994 was marked by an improved economy in New Jersey and Carnegie posted
significant increases in deposits, assets and net income. In order to
strategically position itself for future continued growth, a bank holding
company was organized in the second quarter of 1994 and a securities offering
was completed during the third quarter of 1994 pursuant to which Carnegie sold
690,000 Units consisting of one share of Carnegie Common Stock and one warrant
to purchase one share of Carnegie Common Stock at an exercise price of $15.09
for a period of three years from the date of issuance. As adjusted for
Carnegie's first quarter 1995 5% stock dividend, there are 724,500 warrants
outstanding at an exercise price of $14.37. Net proceeds from the securities
offering increased Carnegie's shareholders' equity by $7.9 million during the
third quarter of 1994.

Results of Operations

Nine Months Ended September 30, 1995
compared to
Nine Months Ended September 30, 1994

Net Income

Carnegie earned $1.6 million, or $0.88 per share, on a primary basis, and
$0.87 per share, on a fully diluted basis, for the nine months ended September
30, 1995 compared to $1.1 million, or $1.04 per share, on both a primary and
fully diluted basis, for the nine months ended September 30, 1994, an increase
in net income of $411 thousand, or 35.9%. The increase in net income was
primarily due to a $1.6 million, or 27.3%, increase in net interest income, a
$205 thousand, or 45.9%, decrease in the provision for loan losses, and a $195
thousand, or 51.9%, increase in non-interest income, partially offset by higher
non-interest expense. The decline in net income per share was the result of the
increase in Carnegie's average shares outstanding as a result of Carnegie's
public offering in the third quarter of 1994.

Net Interest Income and Average Balances

Interest income on a fully tax-equivalent ("FTE") basis, which adjusts for
the tax-exempt status of income earned on certain investments to express such
income as if it were taxable, increased $4.3 million, or 43.9%, to $14.1 million
for the nine months ended September 30, 1995 compared to $9.8 million for the
same period in 1994. The improvement in interest income was primarily due to
volume increases in the loan portfolio and investment securities portfolio as
Carnegie benefited from an improved economy in New Jersey and continued its
historical growth rate, which produced an increase in interest income on loans
of $1.6 million and an increase in interest income on investment securities of
$897 thousand. Interest income was further increased by $1.4 million due to rate
increases on loans during a period of rising rates.

Interest expense increased $2.4 million, or 63.2%, for the nine months
ended September 30, 1995 compared to the same prior year period. The increase in
interest expense was due primarily to rate increases which accounted for $1.7
million of the increase. The rate increases occurred primarily in the consumer
certificates of deposit and certificates of deposit over $100 thousand, and
volume increases accounting for $746 thousand, resulting primarily from volume
increases in consumer certificates of deposit of $738 thousand and certificates
of deposit over $100 thousand of $457 thousand offset by a decrease of $552
thousand attributable to volume decreases in money market accounts. These volume
increases reflect management's decision to emphasize certificates of deposit
over $100 thousand and six month consumer certificates of deposit as cost
effective sources of funds.

The following table illustrates Carnegie's consolidated average balances of
assets, liabilities and shareholders' equity for the nine-month period ended
September 30, 1995, as well as the amount of interest income/expense on related
items, and Carnegie's average interest yield for such periods. The interest

yields have been computed on an FTE basis, assuming a federal tax

rate of 34%.

Nine Months Ended
September 30, 1995
Average Interest Average
Balance Earned Rate
ASSETS (Dollars in thousands)

Earning Assets:
Federal Funds Sold . . . . . . . . . $10,639 $469 5.89%
Investment Securities:
U. S. Government & Agencies . . . 32,321 1,552 6.42%
State & Political Subdivisions (3) 18,339 1,095 7.99%
Other Securities . . . . . . . . . 2,262 100 5.91%
------- ------ -------
Total Investment Securities . . 52,922 2,747 6.94%
------- ------ -------
Loans: (1) (2)
Commercial Loans & Commercial 117,307 8,994 10.25%
Mortgages . . . . . . . . . . . .
Residential Mortgages . . . . . . 22,441 1,420 8.48%
Home Equity Loans . . . . . . . . 2,941 231 10.50%
Installment Loans . . . . . . . . 2,858 209 9.78%
------- ------ -------
Total Loans . . . . . . . . . . 145,547 10,854 9.97%
------- ------ -------
Total Earning Assets . . . . . . 209,108 14,070 9.00%

Non-Interest Earning Assets:
Loan Loss Reserve . . . . . . . . . (1,522)
Securities Available for Sale (1,532)
Valuation . . . . . . . . . . . . .
All Other Assets . . . . . . . . . . 13,071
-------
Total Assets . . . . . . . . . . . $219,125
=======

LIABILITIES & EQUITY Interest-Bearing Liabilities:
Regular Savings . . . . . . . . . . 3,284 78 3.18%
NOW . . . . . . . . . . . . . . . . 13,315 296 2.97%
Money Market Accounts . . . . . . . 66,180 2,043 4.13%
Commercial Certificates of Deposit . 35,679 1,549 5.80%
Consumer Certificates of Deposit . . 46,900 2,090 5.96%
Purchased Funds . . . . . . . . . . 2,737 127 6.20%
------- ------ -------

Total Interest-Bearing Liabilities 168,095 6,183 4.92%

------- ------ -------
Demand Deposits . . . . . . . . . . 30,656
Other Liabilities . . . . . . . . . 840

Mark-to-Market Unrealized Loss . . . (968)
Shareholders' Equity . . . . . . . . 20,502
--------
Total Liabilities & Equity . . . $219,125
========
NET INTEREST INCOME (fully taxable basis) . . . . . 7,887
Tax-Equivalent Basis Adjustment (3) . . . . . . . . (372)
------
NET INTEREST INCOME . . . . . . . . . . . . . . . . $7,515
======
NET INTEREST MARGIN (fully taxable basis) . . . . . . . . . . . . 5.04%
========

(1) Includes nonperforming loans.
(2) Included in interest income are loan fees.
(3) The tax-equivalent basis adjustment was computed based on a Federal income
tax rate of 34%.

The following table reflects the extent to which changes in interest rates
and changes in the volume of interest-earning assets and interest-bearing
liabilities have affected Carnegie's interest income and interest expense during
the periods presented. This analysis is presented on a tax equivalent basis.
Changes attributable to both volume and rate have been allocated
proportionately.

Nine Months Ended
September 30, 1995
Compared to Nine Months
Ended September 30, 1994
Increase (Decrease)
Volume Rate Net
Interest Earned On:
Federal Funds Sold . . . . . . . . . . $78 $158 $236

Investment Securities:
U. S. Government & Agencies . . . . 239 10 249
State & Political Subdivisions . . . 622 27 648
Other Securities . . . . . . . . . . 36 9 45

Total Investment Securities . . . 897 46 942

Loans: (1) (2)
Commercial Loans and Commercial
Mortgages . . . . . . . . . . . . . 1,581 1,221 2,802
Residential Mortgages . . . . . . . (29) 146 117

Home Equity Loans . . . . . . . . . 58 37 95
Installment Loans . . . . . . . . . 35 8 43
----- ----- -----
Total Loans . . . . . . . . . . . 1,645 1,412 3,057
----- ----- -----
Total Interest Income . . . . . . 2,620 1,616 4,235
----- ----- -----
Interest Paid On:
Regular Savings . . . . . . . . . . . (15) 18 3
NOW . . . . . . . . . . . . . . . . . 44 90 134
Money Market Accounts . . . . . . . . (552) 62 (490)
Commercial Certificates of Deposit . . 457 556 1,013

Consumer Certificates of Deposit . . . 738 878 1,616
Purchased Funds . . . . . . . . . . . 74 52 126
------ ----- ------
Total Interest Expense . . . . . . 746 1,656 2,402
------ ----- ------
Net Interest Income . . . . . . . $1,874 ($40) $1,833
====== ===== ======

- --------------
(1) Includes nonperforming loans.
(2) Included in interest income are loan fees.

Non-Interest Income

Total non-interest income was $571 thousand for the first nine months of
1995 compared to $376 thousand for the first nine months of 1994, an increase of
$195 thousand, or 51.9%. The increase was primarily attributable to an increase
of $175 thousand, or 111.5%, in service fees on deposits. Net investment
security losses of $2 thousand were realized during the first nine months of

1995 while no gains or losses were incurred during the same period in 1994. The
increase in service charges on deposits was primarily the result of increased
deposit accounts and management's continued effort to charge and collect
reasonable fees for services performed.

Non-Interest Expense

Total non-interest expense increased $1.6 million, or 38.4%, for the nine
months ended September 30, 1995 compared to the same period in 1994. The
increase is due primarily to increased employment expenses, as well as increases
in occupancy expenses, equipment expenses and other expenses generally
attributable to Carnegie's growth. Of this increase, employment costs increased
$631

thousand, or 34.7%, and were attributable to increases in the number of
employees from 71 full-time equivalents at September 30, 1994 to 93 full-time
equivalents at September 30, 1995, as well as merit and cost of living
adjustments.

Occupancy expense increased $261 thousand, or 52.4%, for the first nine
months of 1995 compared to the same period in 1994. The increase was
attributable to increased lease expense of $161 thousand (an increase of $27
thousand per month) incurred for the relocated and larger corporate headquarter
facilities. Furniture and equipment expenses increased $146 thousand, or 58.6%,
due primarily to depreciation on purchases of additional computer equipment and
depreciation on replacements of other furniture and equipment.

Other expenses increased $553 thousand, or 35.0%, for the first nine months
of 1995 compared to the first nine months of

1994. The increase was attributable to the continued growth of Carnegie's
deposit base, which resulted in increased supplies, communications and
professional expenses, and was partially offset by a reduction in FDIC insurance
premiums.

FDIC insurance premiums decreased by $25 thousand to $220 thousand for the
nine months ended September 30, 1995 from $245 thousand for the same period in
1994, although Carnegie's deposit base increased by 19.6% at September 30, 1995
compared to September 30, 1994. This decrease in FDIC insurance premiums was due
to a refund of $119 thousand received in September 1995 which resulted from the
recapitalization of the FDIC's Bank Insurance Fund and the subsequent reduction
in insurance premium rates.

Income Tax Expense

Carnegie recognized an income tax provision, which includes both Federal
and State taxes, of $552 thousand for the nine months ended September 30, 1995,

for an effective income tax rate of 26.2%. This compared to $541 thousand, for
an effective income tax rate of 32.1% for the same period in 1994. The reduction
in the effective tax rate is due primarily to an increase in Carnegie's
tax-exempt municipal securities portfolio.

Carnegie adopted SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan", effective for 1995. SFAS No. 114 generally requires all creditors to
account for impaired loans at the present value of the expected future cash
flows discounted at the loan's effective interest rate or at the loan's fair
value based upon the underlying collateral if the loan is collateral dependent.
The adoption of SFAS No. 114 did not have a material effect on Carnegie's
financial condition, cash flows or results of operations.

Comparison-Year Ended December 31, 1994
to Year Ended December 31, 1993
and Year Ended December 31, 1993
to Year Ended December 31, 1992

Net Income

Carnegie earned $1.5 million, or $1.23 per share, for the year ended
December 31, 1994 compared to $1.1 million, or $1.08 per share, for the year
ended December 31, 1993, an increase of $475 thousand, or 44.6%. This increase
was primarily due to a $2.2 million, or 34.8%, increase in net interest income
offset by higher non-interest expense, an increase in the provision for loan
losses and increased income tax expense. For the year ended December 31, 1993,
Carnegie earned $1.1 million, or $1.08 per share, an increase of $51 thousand,
or 5.0%, compared to the year ended December 31, 1992. This increase was
attributable to a

$1.5 million, or 30.9%, increase in net interest income which was offset by a
$1.3 million increase in non-interest expense required to service Carnegie's
expanded branch network. In addition, Carnegie reported a decrease of $136
thousand in non-interest income in 1993 compared to 1992, due primarily to a
decrease in gains on sales of securities.

Average Balances and Net Interest Income

Net interest income, the primary source of Carnegie's earnings, is the
difference between interest and fees earned on loans and other interest-earning
assets, and interest paid on deposits and other interest-bearing liabilities.
Interest-earning assets include loans to businesses and individuals, investment
securities, interest-earning deposits with other banks, and Federal funds sold
in the inter-bank market. Interest-bearing liabilities are comprised primarily
of interest-bearing demand accounts, savings accounts, money market accounts and
time deposits. Funds attracted by interest-bearing liabilities are invested in
interest-earning assets. Accordingly, net interest income depends upon the

volume and mix of interest-earning assets and interest-bearing liabilities and
the interest rates earned or paid on them.

The following table illustrates Carnegie's consolidated average balances of
assets, liabilities and shareholders' equity for the years ended December 31,
1994, 1993 and 1992, as well as the amount of interest income/expense on related
items, and Carnegie's average interest yield for such periods. The interest
yields have been computed on a fully tax-equivalent basis, assuming a Federal
income tax rate of 34%.

CARNEGIE
AVERAGE BALANCE SHEET
With Resultant Interest Income/Expense And Average Rates

Year Ended December 31,
1994 1993 1992
------------------------------- -------------------------------- -----------------------------
Average Interest Average Average Interest Average Average Interest Average
Balance Earned Rate Balance Earned Rate Balance Earned Rate
------- ------ ---- ------- ------ ----- ------- ------- -------

ASSETS
Earning Assets:
Federal Funds Sold $6,969 $290 4.16% $9,853 $293 2.97% $6,963 $234 3.36%
Investment Securities:
U.S. Government &
Agencies 27,396 1,753 6.40% 19,895 1,295 6.51% 18,022 1,382 7.67%
State & Political
Subdivisions (1) 9,596 779 8.12% 2,868 251 8.75% 2,792 268 9.60%
Other Securities 1,382 75 5.43% 548 37 6.75% 352 22 6.34%
-------- ------- ------ ------- ------ ----- ------ ----- ------
Total Investment
Securities 38,374 2,607 6.79% 23,311 1,583 6.79% 21,166 1,672 7.90%
-------- ------- ------ ------- ------ ----- ------ ----- ------
Loans: (2) (3)
Commercial Loans and
Commercial Mortgages 95,177 8,740 9.18% 67,389 6,092 9.04% 47,101 4,341 9.22%
Residential Mortgages 25,075 1,955 7.80% 22,254 1,832 8.23% 22,147 1,921 8.67%
Installment Loans 2,391 228 9.54% 1,761 162 9.17% 1,181 140 11.85%
-------- ------- ------ ------- ------ ----- ------ ----- ------
Total Loans 122,643 10,923 8.91% 91,404 8,086 8.85% 70,429 6,402 9.09%
-------- ------- ------ ------- ------ ----- ------ ----- -----
Total Earning Assets 167,986 13,820 8.23% 124,568 9,962 8.00% 98,558 8,308 8.43%
Non-Interest Earning
Assets:
Loan Loss Reserve (1,076) (858) (650)
Held For Sale Securities

Valuation (1,217) -- --
All Other Assets 10,408 8,026 5,436
-------- -------- --------
Total Assets $176,101 $131,736 $103,344
======== ======== ========
LIABILITIES & EQUITY

Interest-Bearing
Liabilities:
Savings and Money Market
Accounts $100,034 $3,747 3.75% $62,603 $2,061 3.29% $ 36,167 $1,374 3.80%

Time Deposits 37,344 1,400 3.75% 43,283 1,577 3.64% 45,582 2,065 4.53%

CARNEGIE
AVERAGE BALANCE SHEET
With Resultant Interest Income/Expense And Average Rates

Year Ended December 31,

Federal Funds Borrowed 38 2 5.26% 29 1 3.14% 461 12 2.60%
-------- ------ ----- -------- ------ ----- -------- ------ -----
Total Interest-Bearing
Liabilities $137,416 $5,149 3.75% $105,915 $3,639 3.44% $ 82,210 $3,451 4.20%
------ ------ ------
Non-Interest Bearing
Liabilities:
Demand Deposits 24,663 16,134 11,054
Other Liabilities 515 334 521
Shareholders' Equity 13,507 9,353 9,559
-------- ------- --------
Total Liabilities & Equity $176,101 $131,736 $103,344
======== ======== ========
NET INTEREST INCOME
(fully taxable basis) $8,671 $6,323 $4,857
====== ====== ======

NET INTEREST MARGIN (fully
taxable basis) 5.16% 5.08% 4.93%
===== ===== =====

- ------------
(1) The tax-equivalent basis adjustment was computed based on a Federal income
tax rate of 34%.
(2) Includes nonperforming loans.
(3) Included in interest income are loan fees.

The following table presents by category the major factors that contributed to
the changes in net interest income for each of the years ended December 31, 1994
and 1993, compared to each respective previous period. Amounts have been
computed on a fully tax-equivalent basis, assuming a Federal income tax rate of
34%.

Carnegie Volume and Rate Analysis
1994 compared to 1993 1993 compared to 1992
Increase (Decrease) Due to Increase (Decrease) Due to

-------------------------- --------------------------
Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- ---
(Dollars in thousands)
Interest Earned On:
Federal Funds Sold $ (86) $ 83 $ (3) $ 97 $(38) $ 59
Investment Securities:
U.S. Government &
Agencies 488 (30) 458 142 (229) (87)
State & Political
Subdivisions 589 (61) 528 7 (24) (17)
Other Securities 56 (18) 38 13 2 15
------ ----- ------ ------ ---- ------
Total Investment
Securities 1,133 (109) 1,024 162 (251) (89)
Loans:
Commercial Loans and
Commercial Mortgages 2,512 136 2,648 1,870 (119) 1,751
Residential Mortgages 232 (109) 123 9 (98) (89)
Installment Loans 58 8 66 69 (47) 22
------ ----- ------ ------ ---- ------
Total Loans 2,802 35 2,837 1,948 (264) 1,684
------ ----- ------ ------ ---- ------
Total Interest
Income 3,849 9 3,858 2,207 (553) 1,654
------ ----- ------ ------ ---- ------
Interest Paid On:
Savings and Money
Market Accounts 1,232 454 1,686 1,004 (317) 687
Time Deposits (216) 39 (177) (104) (384) (488)

Federal Funds Borrowed 0 1 1 (11) 0 (11)
------ ----- ------ ------ ---- ------
Total Interest
Expense 1,016 494 1,510 889 (701) 188
------ ----- ------ ------ ---- ------
Net Interest Income $2,833 $(485) $2,348 $1,318 $148 $1,466
====== ===== ====== ====== ==== ======

Interest income on an FTE basis increased $3.8 million, or 38.7%, to $13.8
million for 1994 compared to $10.0 million for 1993. The improvement in interest
income was mainly due to volume increases in the loan portfolio and investment
securities portfolio. The average balance of the loan portfolio increased $31.2
million, or 34.2%, to $122.6 million for 1994 compared to $91.4 million for
1993.

Carnegie continued its emphasis in the commercial loan and commercial mortgage
area. These loan areas increased $27.8 million, or 41.2%, from 1993. The average
balance of the investment securities portfolio increased $15.1 million, or
64.6%, to $38.4 million for 1994 compared to $23.3 million for 1993, with
approximately half of the increase in U.S. Government and Agencies Securities.
Carnegie also increased its portfolio of tax-exempt securities by $6.7 million,
or 234.6%, in an effort to support local communities and to reduce Carnegie's

tax liability.

Interest expense for the year ended December 31, 1994 increased by $1.5
million, or 41.5%, to $5.1 million from $3.6 million for the year ended December
31, 1993. The increase in interest expense was due primarily to an increase in
average interest-bearing deposits of $31.5 million, or 29.7%, to $137.4 million
for 1994 compared to average interest-bearing deposits of $105.9 million for
1993.

More specifically, average savings and money market accounts increased
$37.4 million, or 60%, partially offset by a decrease in average time deposits
of $5.9 million, or 14%. Interest expense was further increased during 1994 by
$494 thousand resulting from an increasing rate environment, specifically
affected by the repricing of money market account deposits.

In the year ended December 31, 1993, interest income on a FTE basis
increased $1.7 million, or 19.9%, to $10.0 million for the year ended December
31, 1993 from $8.3 million for the year ended December 31, 1992. This increase
was primarily caused by an increase of $1.7 million, or 26.3%, in interest and
fee income on loans, primarily in commercial loans and commercial mortgages,
partially offset by a decrease of $89 thousand, or 5.3%, in interest income
primarily on U.S. Government and Agencies securities, and an increase of $59
thousand, or 25.2%, in interest on Federal funds sold. The increase in interest
income on loans was primarily attributable to an increase of $21.0 million, or
29.8%, in average loans outstanding to $91.4 million for 1993 compared to $70.4
million for 1992. The decrease in interest on investment securities was
primarily due to a decrease in interest rates available on investment
securities, partially offset by an increase of $2.1 million, or 10.1%, in
average investment securities. The increase in interest on Federal funds sold
was due to an increase in the volume sold partially offset by a decline in
interest rate yield.

Interest expense for the year ended December 31, 1993 increased $188
thousand, or 5.4%, to $3.6 million for the year ended December 31, 1993 from
$3.5 million for the year ended December 31, 1992.

While average interest-bearing liabilities increased by $23.7 million
during 1993, the continually declining market for interest rates payable on
deposits throughout 1993 partly offset the increased interest expense required
to support the additional volume.

Carnegie's net interest margin, which measures net interest income as a
percentage of average earning assets, was 5.16%, 5.08% and 4.93% for the years
ended December 31, 1994, 1993 and 1992, respectively, due to the combination of
factors mentioned above.

Non-Interest Income

Carnegie's non-interest income consists of service fees on deposits, other
fees and commissions and gains on the sale of investment securities.

Total non-interest income was $495 thousand for 1994 compared to $471
thousand for 1993, an increase of $24 thousand, or 5.1%. Increases included $101
thousand, or 74.8%, in service fees on deposits and $68 thousand, or 35.6%, in
other fees and commissions, offset by net security gains of $145 thousand during
1993.

The increase in service charges on deposit accounts was primarily the
result of an increase in the average balance of deposits outstanding during 1994
coupled with an increase in the rates. The increase in other fees and
commissions was due to continued expansion of the branch system and an increase
in rates charged, and $57 thousand of fees and gains on sales of residential
mortgages originated by Carnegie. The operations involving the origination and
sale of residential mortgages were discontinued during the second quarter of
1994.

Non-interest income for the year ended December 31, 1993 decreased $136
thousand, or 22.4%, to $471 thousand for the year ended December 31, 1993 from
$607 thousand for the year ended December 31, 1992. The decrease was primarily
attributable to larger gains on the sales of securities which was partially
offset by increases in fee income. Carnegie realized $145 thousand from gains on
sales of securities during 1993, compared to $398 thousand in gains from such
sales during 1992.

Carnegie realized security gains during 1993 primarily due to a
restructuring of its securities portfolio directed at shortening maturities.
This restructuring was completed by December 1993.

Non-Interest Expense

Total non-interest expense increased $1.4 million, or 29.0%, to $6.1
million for 1994 from $4.7 million for 1993. Of this increase, $478 thousand was
attributable to salaries and benefits due to an increase in the number of
employees required by the opening of the Denville branch in 1993, the expansion
of Carnegie's management team, as well as merit and cost of living adjustments.

Occupancy expense increased $133 thousand, or 23.4%, due primarily to the
opening of the Denville branch in the second half of 1993. Other expenses
increased by $723 thousand, or 42.6%, due to the continued growth of Carnegie,
its deposit

base, FDIC insurance premiums, and promotional activities. Other

miscellaneous expenses increased $281 thousand, or 112.4%, primarily due to
Carnegie's payment of real estate taxes on properties collateralizing certain
non-accrual loans to maintain its first lien position.

Total non-interest expense for the year ended December 31, 1993 increased
by $1.3 million, or 38.2%, to $4.7 million for the year ended December 31, 1993
from $3.4 million for the year ended December 31, 1992. Salaries and employee
benefits comprised $2.1 million, or 44.6%, of non-interest expense for 1993, an
increase of $599 thousand over 1992. Increases in salaries and employee benefits
during this period were attributable to the hiring of additional employees to
service the new Marlton and Denville branches and general increases in employee
benefits expenses. Other non-interest expense increased $698 thousand, or 36.7%,
over the year ended December 31, 1992 due to increased amortization of
furniture, fixtures, and equipment, leasehold improvements, and increased
occupancy expenses, all of which were related to Carnegie's new branches.

Income Tax Expense

The income tax provision, which includes both Federal and state taxes, for
the years ended December 31, 1994, 1993 and 1992 was $656 thousand, $520
thousand and $485 thousand, respectively.

The increase in 1994 total tax expense was primarily the result of an
increase in operating income offset by an increase in tax-exempt investment
securities income. The effective tax rate was 29.9% in 1994, 32.8% in 1993 and
32.4% in 1992.

Return on Average Equity and Average Assets

Two industry measures of the performance by a banking institution are its
return on average assets ("ROA") and return on average equity ("ROE"). ROA
measures net income in relation to total average assets and indicates a
company's ability to employ its resources profitably. For 1994, Carnegie's ROA
was .87%, compared to .81% in 1993. ROE is determined by dividing annual net
income by average shareholders' equity and indicates how effectively a company
can generate net income on the capital invested by its shareholders. After
increasing the 1994 dividend rate by 25% compared to the 1993 rate, Carnegie's
ROE was maintained at 11.4% in 1994 and 1993.

Financial Condition

Introduction

Total assets at September 30, 1995, increased by $39.4 million, or 20.1%,
to $235.1 million compared to $195.7 million at December 31, 1994 and $154.4
million at December 31, 1993. Average loans increased to $22.9 million during
the first nine months of 1995, average investment securities increased by $14.5
million and deposits increased by $34.0 million as Carnegie continued to expand
in its existing market areas and, through the establishment of new branches,
expanded into additional market areas.

Loan Portfolio

Carnegie's loan portfolio consists of commercial mortgage loans, commercial
and financial loans, residential mortgage loans and real estate construction
loans. In addition, Carnegie makes a small number of consumer installment loans
as an accommodation to its customers. Total loans at September 30, 1995 were
$147.4 million, a 5.1%, or $7.1 million increase from December 31, 1994. Average
loans increased by $22.9 million, or 18.7%, to $145.5 million in the first nine
months of 1995 compared to the 1994 full year average. Changes in the
composition of the average loan portfolio during the period included increases
of $22.1 million in commercial loans and commercial mortgages, $307 thousand in
residential mortgages and $467 thousand in installment loans. The 23.3% increase
in commercial loans and commercial mortgages is principally attributable to the
greater penetration of the marketplace and an improvement in the general
economic environment in New Jersey. Management intends to continue to pursue
quality loans in all lending categories within Carnegie's market area.

Carnegie's net loans at December 31, 1994 totaled $138.6 million, an
increase of $22.6 million, or 19.5%, compared to net loans at December 31, 1993
of $116.0 million. Commercial and financial loans increased to $41.9 million, an
increase of $7.4 million, or 21.7%, over the December 31, 1993 balance of $34.5
million. Commercial and financial loans are primarily made to small businesses
and professionals for working capital purposes with maturities generally between
one and seven years. The majority of these loans are collateralized by real
estate consisting of single family residential properties and further secured by
personal guarantees. Carnegie generally requires that there be a loan to value
ratio not exceeding 80% on these loans. Carnegie also reviews borrowers' cash
flows in analyzing loan applications. Risks inherent in these loans include
risks that borrower's cash flow generated from its business may not be
sufficient to repay the loans, either because of general economic downturns,
downturns specific to the borrower's business or interest rate changes which
cause deterioration in a borrower's cash flow as well as risks associated with
the collateral securing the loans, such as possible deterioration in value of
the collateral or environmental contamination of the collateral. Commercial
mortgages totalled $61.2 million at December 31, 1994 verses $42.8 million at
December 31, 1993, an increase of $18.4 million, or 43.2%. Commercial mortgage
loans

are granted to professionals such as doctors, lawyers, and accountants who
purchase office condominium units for their practices and other small business
persons who purchase commercial real estate for use in their businesses.
Carnegie will generally not finance in excess of 75% of the appraised value or
the purchase price of the subject property, whichever is less. In reviewing a
borrower's qualifications, Carnegie pays particular attention to cash flow.
Risk factors associated with these loans include general economic
performance which will affect vacancy rates for commercial properties and the
ability of professionals to maintain and sustain a practice as well as the
resale value which may be yielded on a particular property. Carnegie
originates and retains residential mortgage loans. The majority of these loans
are made as accommodations to existing customers. Risks inherent in these loans
include the employment stability and earnings potential of the borrower as well
as potential resale prices associated with the collateral securing these loans.
In addition, residential mortgages bear some additional risk associated to the
personal status of the borrower, such as the borrower's continued marital status
and health. Carnegie makes construction loans to individuals with expertise
in the industry or to owner occupied projects. The loans are generally on
projects for which a sales contract has been executed and for which permanent
mortgage financing is in place. In most commercial construction projects,
Carnegie will generally lend up to 50% of the cost of the land and 85% of the
construction costs. Risks inherent with these loans include performance of the
general economy which will affect whether the sale of a project actually closes
despite its contracted status and the risk inherent with whether the
construction of a project will actually be completed and completed within
budgeted compliance. Environmental factors may affect whether a project can be
completed and the cost associated with its completion. Carnegie's net loans at
December 31, 1993 totaled $116.0 million, an increase of $35.2 million, or
43.5%, compared to $80.8 million at December 31, 1992. The increase in the loan
portfolio for the year ended December 31, 1993, is primarily attributable to
increased loan demand as Carnegie's branch system matured.

The following table summarizes the components of the loan portfolio as of
September 30, 1995, and as of December 31 for each of the years 1994 through
1990.

Loan Portfolio By Type of Loan

September 30, December 31,
----------------- -----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- -----
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
-------- ------- ------ ------- ------ ------- ------ ------- ------ ------- ------ -------

Commercial and
financial $ 41,159 27.93% $ 41,917(1)29.88% $ 34,451(1)29.38% $23,918 29.31% $21,746 36.57% $18,803 38.22%

Real Estate
Construction 11,847 8.04% 8,399 5.99% 12,277 10.47% 9,520 11.66% 4,582 7.70% 0 0.00%

Residential mortgage 24,757 16.80% 26,207 18.68% 25,386 21.65% 19,844 24.31% 17,679 29.73% 18,438 37.47%

Commercial mortgage 66,293 44.99% 61,242 43.65% 42,780 36.49% 26,768 32.80% 14,499 24.38% 11,060 22.48%

Installment 3,307 2.24% 2,532 1.80% 2,352 2.01% 1,567 1.92% 966 1.62% 901 1.83%

-------- ------- -------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Total Loans $147,363 100.00% $140,297 100.00% $117,246 100.00% $81,617 100.00% $59,472 100.00% $49,202 100.00%
======== ======= ======== ======= ======== ======= ======= ======= ======= ======= ======= =======
- --------
(1) Gives effect to Carnegie's adoption of SFAS No. 114, effective for 1995. Pursuant to SFAS No. 114, Carnegie reclassified
$300,000 in substance foreclosures as loans at the year ends 1993 and 1994.

The following table sets forth total loans by maturity and interest rate
sensitivity at September 30, 1995 and does not include those loans which are
classified as non-accrual or deferred loan fees.

Loans Outstanding - Maturity Distribution

December 31, 1994
(Dollars in thousands)
--------------------

Fixed Rate Loans:
One Year or Less
Commercial and Financial $ 2,686
Real Estate Construction 957
Residential Mortgage 0
Commercial Mortgage 1,547
Installment 209
Total $ 5,399

Over One to Five Years
Commercial and Financial $ 6,325
Real Estate Construction 183
Residential Mortgage 1,753
Commercial Mortgage 29,519
Installment 817
Total $38,598

Over Five Years
Commercial and Financial $ 1,369
Real Estate Construction 0
Residential Mortgage 6,250
Commercial Mortgage 7,192
Installment 398
Total $15,847

Total Fixed Rate Loans $ 59,844

Floating Rate Loans:
One Year or Less
Commercial and Financial $ 11,422
Real Estate Construction 5,143
Residential Mortgage 0
Commercial Mortgage 3,628
Installment 243
Total $20,437

Over One to Five Years
Commercial and Financial $ 10,865
Real Estate Construction 1,991
Residential Mortgage 0
Commercial Mortgage 15,550
Installment 39
Total $28,445

Over Five Years
Commercial and Financial $ 9,249
Real Estate Construction 125
Residential Mortgage 17,892
Commercial Mortgage 3,548

Installment 826
Total $31,641

Total Floating Rate Loans $80,523
Total Loans $140,367

Asset Quality

Various degrees of credit risk are associated with substantially all
investing activities. The lending function, however, carries the greatest risk
of loss. Risk elements include loans past due, non-accrual loans, renegotiated
loans, other real estate owned and loan concentrations. Carnegie closely
monitors its loan portfolio to minimize the risk of delinquency and problem
credits. Borrowers are advised in writing when a loan is seven days past due.
Under Carnegie's loan collection policy, an account officer makes telephone
contact with the borrower within fifteen days of the contract payment date.
Loans delinquent in excess of 90 days are placed on non-accrual status, and
previously accrued interest not collected is reversed out of Carnegie's interest
income account.

The following table summarizes the composition of Carnegie's non-performing
assets as of the dates indicated:

100

Non-Perfoming Assets and Contractually Past Due Loans

September 30, December 31,
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
Non-Performing Assets (1):
Non-accruing loans:
Real esate $2,028 $ 445 $1,410 $1,118 $ 571 $ 346
Installment 76 -- 42 -- 1 1

Commercial mortgage 2,493 1,620 1,767 1,224 911 259
Commercial and financial -- -- -- -- -- --
Real estate construction -- -- -- -- -- --
------ ------ ------ ----- ----- -----
Total non-accruing/
non-performing loans 4,597 2,065 3,219 2,342 1,483 606
------ ------ ------ ----- ----- -----
Other real estate owned -0- -0- -0- 0 266 300
------ ------ ------ ----- ----- -----
Total Non-performing
Assets 4,597 $2,065 $3,219 $2,342 $1,709 $ 906

====== ====== ======= ====== ====== =====
Contractually Past Due
Loans (2) $-- $ 4 $ 381 $ 113 $ 588 $ 567
====== ====== ======= ====== ====== =====
Non-performing loans to
total loans 3.12% 1.47% 2.75% 2.87% 2.49% 1.23%

Non-performing assets to
total assets 1.96% 1.06% 2.09% 1.96% 1.82% 1.29%
Allowance for loan losses
to non-performing loans 35.68% 67.80% 30.44% 34.42% 38.64% 72.77%

- -----------
(1) None-performing assets exclude loans classified as contractually past due 90
days or more and still accruing.
(2) Accruing loans past due 90 days or more.

101

At the dates indicated in the foregoing table, there were no concentrations of
loans exceeding 10% of Carnegie's total loans and Carnegie had no foreign loans.

As of September 30, 1995, Carnegie had total non-performing loans of $4.6
million, or 3.12% of total loans, an increase of $2.5 million over
non-performing loans of $2.1 million at December 31, 1994. At September 30,
1995, Carnegie had no loans past due 90 days or more and accruing. The increase
in non-

performing loans was primarily attributable to a default by single borrower on
two loans totalling $1.2 million. The remainder of the increase consisted of 18
separate loans with an average balance of approximately $72.2 thousand.

As of December 31, 1994, total non-accruing loans amounted to $2.1 million,
a decrease of $1.1 million, or 34.38%, over the level at December 31, 1993.
Total non-performing assets for the same period were $2.1 million and $3.2
million, respectively. This constitutes a reduction of $1.1 million, or 34.38%.

The reduction to non-performing assets was achieved while net loan charge-offs
were at a three-year low.

The ratio of non-performing loans to total loans was 1.3% versus 2.5% and
non-performing assets to total assets was 1.06% to 2.09% at December 31, 1994
versus December 31, 1993. The allowance for loan losses as a percentage of
non-performing loans
was 79.3% versus 33.6% in the prior year.

Carnegie believes that the reduction of non-performing loans is a direct
result of heightened collection efforts including the utilization of the legal
system and the improvement in economic conditions in New Jersey. Through the
increased monitoring of loans on non-accrual as well as loans that have just
gone past due, Carnegie has been able to limit additions which has improved its
ratios in this area.

If the non-accruing loans had continued to pay interest, interest income
would have increased by $204 thousand for 1994. As of December 31, 1993 and
1992, there were non-accruing loans in the aggregate amounts of $2.9 million and
$2.3 million, respectively. If the non-accruing loans in 1993 and 1992 had
continued to pay interest, interest income during 1993 would have been increased
by $197 thousand and interest income during 1992 would have been increased by
$181 thousand.

Carnegie's non-performing loans as a percentage of total loans peaked in
1992, constituting a 2.87% ratio of non-performing loans to total loans. This
ratio increased from 1990 to 1992 due to the maturation of Carnegie's loan
portfolio and a continued recession in the state of New Jersey.

102

Carnegie attempts to maintain an allowance for loan losses at a sufficient
level to provide for potential losses in the loan portfolio and off balance
sheet risks such as unused lines of credit, letters of credit, and commitments
to lend. Loan losses are charged directly to the allowance when they occur and
any recoveries are credited to the allowance. The allowance for loan losses is
increased periodically through charges to earnings in the form of a provision
for loan losses. The provision for loan

losses is determined periodically by senior management based upon consideration
of several factors including: (1) an ongoing review of the quality, mix and size
of the overall loan portfolio; (2) historical loan loss experience; (3)
evaluation of non-performing loans; (4) assessment of economic conditions and
their related effects on the existing portfolio; and (5) the amount and quality
of collateral, including guarantees, securing loans. In addition, management
takes into account the level of risk inherent in the types of loans included in
Carnegie's portfolio.

The provision for loan losses was $242 thousand, for the first nine months
of 1995, compared to $447 thousand for the comparable period of 1994, and $650
thousand, $429 thousand and $476 thousand for the years ended December 31, 1994,
1993 and 1992, respectively. The provision for loan losses for these years
reflects management's intent to continue to maintain Carnegie's allowance for
loan losses at a level consistent with the increasing size of the loan portfolio
and historical loan loss experience. The increase in the provision from 1993 to
1994 was attributable both to an increase in the size of the loan portfolio and

a change in the composition of the portfolio as commercial mortgages became a
larger component and residential mortgages declined as a percentage of the
portfolio. As a general proposition, more risk is associated with commercial
mortgages than with residential mortgages, although commercial mortgages are
generally more profitable.

The following table represents activity in the allowance for loan losses
for the nine month periods ended September 30, 1995 and 1994 and for each of the
five years ended December 31, 1994.

103

Allowance for Loan Losses

Nine Months
Ended
September 30, Year Ended December 31,
------------- ------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands)

Balance-beginning of period . . . . . . . . . . . . . $1,400 $ 980 $ 980 $ 806 $ 573 $ 441 $ 134

Provision charged to expense . . . . . . . . . . . . 242 447 650 429 476 296 466

$1,642 $1,427 1,630 1,235 1,049 737 600

Recoveries:

Commercial . . . . . . . . . . . . . . . . . . . . 6 20 50 25 3 -- --

Real Estate . . . . . . . . . . . . . . . . . . . . 36 -- 0 -- 1 -- --

Installment . . . . . . . . . . . . . . . . . . . . -- -- 0 -- 3 -- 1
------ ------ ------ ------ ------ ----- -----
Total recoveries . . . . . . . . . . . . . . . . 42 20 50 25 7 0 1
------ ------ ------ ------ ------ ----- -----

Charge-offs:

Commercial . . . . . . . . . . . . . . . . . . . . -- (153) (153) (272) (21) (153) (159)

Real estate . . . . . . . . . . . . . . . . . . . . (40) (126) (126) -- (216) -- --

Installment . . . . . . . . . . . . . . . . . . . . (4) (1) (1) (8) (13) (11) (1)

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

Total charge-offs . . . . . . . . . . . . . . . . (44) (280) (280) (280) (250) (164) (160)
------ ------ ------ ------ ------ ----- -----

Net (charge-offs) recoveries. . . . . . . . . . . . . (2) (260) (230) (255) (243) (164) (159)
------ ------ ------ ------ ------ ----- -----

Balance-end of period . . . . . . . . . . . . . . . . $1,640 $1,167 $1,400 $ 980 $ 806 $ 573 $ 441
====== ====== ====== ====== ====== ===== =====

Net charge-offs as a percentage of average loans . . . 0.00% 0.22% 0.19% 0.28% 0.35% 0.29% 0.38%

104

Allowance for loan losses to period end
loans . . . . . . . . . . . . . . . . . . . 1.11% .92 1.00% 0.84% 0.99% 0.96% 0.90%

Allowance for loan losses to non-accrual
loans . . . . . . . . . . . . . . . . . . . 35.68% 60.31% 67.80% 30.44% 34.42% 38.64% 72.77%

Recoveries . . . . . . . . . . . . . . . . 42 20 50 25 7 0 1
Charge-offs . . . . . . . . . . . . . . . . (44) (280) (280) (280) (250) (164) (160)

Allowance for loan losses, ending balance $1,640 $1,167 $1,400 $980 $806 $573 $441

105

The following table details the allocation of the allowance for loan losses
to the various categories at the periods indicated. The allocation is made for
analytical purposes and it is not necessarily indicative of the categories in
which future loan losses may occur. The total allowance is available to absorb
losses from any segment of loans.

Allocation of the Allowance for Loan Losses

September 30, December 31,
---------------------------------------
1995 1994 1993
------------------ ----------------- -----------------
Amount % Amount % Amount %

Commercial and financial $416 25.37% $447 31.93% $279 28.47%

Real estate construction 206 12.56% 130 9.29% 0 0.00%
Residential mortgage . . 144 8.78% 150 10.71% 225 22.96%

Commercial mortgage . . . 668 40.73% 502 35.86% 144 14.69%

Installment . . . . . . . 86 5.24% 36 2.57% 1 0.10%
Unallocated . . . . . . . 120 7.32% 135 9.64% 331 33.78%
------ ------ ------ ------- ----- -------
$1,640 100.00% $1,400 100.00% $980 100.00%
====== ====== ====== ======= ===== =======

Investment Securities

Carnegie's securities portfolio is comprised of U.S. Government and Federal
agency securities, the tax-exempt issues of states and municipalities, and other
securities. The investment securities portfolio generates substantial interest
income and provides liquidity for Carnegie.

Carnegie adopted SFAS 115, "Accounting for Certain Investments in Debt and
Equity Securities" as of January 1, 1994. Debt and equity securities are
classified in one of three categories and are accounted for as follows:

Securities are classified at date of purchase as securities held to
maturity based on management's intent and ability to hold them to maturity. Such
securities are stated at cost, adjusted for unamortized purchase premiums and
discounts. Securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities, which are
carried at market value. Realized gains and losses and gains and losses from
marking the portfolio to market value are included in trading revenue. At
September 30, 1995, Carnegie had no securities classified as trading securities.
Securities not classified as securities held to maturity or trading securities
are classified as securities available for sale, and are stated at fair value.
Unrealized gains and losses on securities

available for sale are excluded from results of operations, and

106

are reported as a separate component of shareholders' equity, net of taxes.
Securities classified as available for sale include securities that may be sold
in response to changes in interest rates, changes in prepayment risks, the need
to increase regulatory capital or other similar requirements. Due to this
classification, Carnegie's shareholders' equity will be affected by changing

interest rates as they affect the market price of Carnegie's securities
available for sale.

Securities Available for Sale

Average investment securities increased by $14.5 million in the first nine
months of 1995 compared to the 1994 full year average. Strong deposit growth was
used to fund loan and investment securities growth during the first nine months
of 1995.

At September 30, 1995, Carnegie classified a majority of its investment
portfolio as available for sale. Prior to January 1, 1994, such securities were
accounted for at cost net of unamortized discount or premium. At September 30,
1995, securities available for sale equaled $48.5 million, at cost, or 66.3% of
Carnegie's total securities portfolio, and at December 31, 1994, securities
available for sale equaled $29.0 million, at cost, or 60.9% of Carnegie's
securities portfolio of $47.6 million, at cost. At September 30, 1995, Carnegie
had unrealized losses of $523 thousand in its available for sale portfolio
compared to unrealized losses of $2.7 million at December 31, 1994. The average
yield on securities available for sale for the nine months ended September 30,
1995 was 6.7% and for the year ended December 31, 1994, were 6.4%.

Securities Held to Maturity

Securities held to maturity are comprised of securities of state and
political subdivisions. The held to maturity portion of Carnegie's investment
portfolio consisted of $25.1 million, or 34.3% of Carnegie's total portfolio at
September 30, 1995 and $25.1 million, or 34.3% of the total portfolio, at cost.
The average tax equivalent yield on the held to maturity portfolio for the nine
months ended September 30, 1995 was 8.0% and for the year ended December 31,
1994, was 8.1%. A significant amount of investment purchases made by Carnegie in
1994, $15.7 million, were in this category as management sought to increase its
yield through tax exempt holdings with limited risk.

The following tables present the amortized cost and market values of
Carnegie's investment securities portfolio at September 30, 1995 and for the
years ended December 31, 1994, 1993 and

1992. As described above, Carnegie adopted SFAS 115 as of January 1, 1994.
Prior to such adoption, Carnegie was not

107

required to segregate its investment portfolio into held to maturity, trading
and available for sale classifications.

Investment Securities Portfolio

At December 31, 1994(1)

Securities Held to Maturity Securities Available for Sale
--------------------------- -----------------------------
Amortized Cost Market Value Amortized Cost Market Value
-------------- ------------ -------------- ------------
(Dollars in thousands)

U.S. Government . . . . $ --- $ --- $ 7,262 $ 6,586
------- -------

Mortgage-backed
securities . . . . . $ --- $ --- 20,282 18,394
------- -------

States & Political
subdivisions . . . . 18,631 18,187 --- ---
------- -------
Other securities . . . --- --- 1,412 1,309
------- ------- ------- -------
Total investment
securities . . . . . $18,631 $18,187 $28,956 $26,289
======= ======= ======= =======
- -------------
(1) Net unrealized losses of $1.7 million, net of tax benefit of $981 thousand,
were reported as a reduction of shareholders' equity at December 31, 1994.

At September 30, 1995(1)

U.S. Government . . . . $ 999 $ 1,000 $12,501 $12,578
Mortgage-backed
securities . . . . . . 5,001 4,894 33,799 33,257
States & Political
subdivisions . . . . 19,107 19,730 --- ---

Other securities --- -- 2,223 2,165
Total investment
securities . . . . . $25,107 $25,624 $48,523(1) $48,000

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

(1)Net unrealized losses of $333 thousand, net of a tax benefit of $190
thousand, were reported as a reduction of stockholders' equity at September
30, 1995.

108

Year Ended December 31,
-------------------------
1993 1992
---- ----
Amortized Market Amortized Market
Cost Value Cost Value
---- ----- ---- -----
(Dollars in thousands)

U.S. Government . . . . . . . . . . . $6,782 $6,971 $3,476 $3,623

Mortgage-backed agencies . . . . . . 17,697 17,606 14,895 14,907
States & Political Subdivisions . . . 2,889 2,899 2,805 2,804

Other securities . . . . . . . . . . 1,360 1,354 320 317
------- ------- ------- -------
Total investment securities . . . . . $28,728 $28,830 $21,496 $21,651
======= ======= ======= =======

The following table shows the amortized costs and market values of Carnegie's
investment securities by contractual maturity as of December 31, 1994.

Maturity Schedule of Investment Securities

Year Ended December 31, 1994
-------------------------------------------------------------------
Securities Held to Maturity Securities Available for Sale
--------------------------- -----------------------------

Average Tax- Average Tax-
Amortized Market Equivalent Amortized Market Equivalent
Cost Value Yield Cost Value Yield
--------- ------ ----------- ---------- ------ -----------
(Dollars in thousands)

Due 1 year or less..... $ 90 $ 91 11.86% $ -- $ -- --%

Due after 1 year
through 5 years....... 3,163 3,144 8.06% 4,050 3,849 6.29%

Due after 5 years
through 10 years...... 11,669 11,380 8.02% 1,008 942 6.18%

Due after 10 years... 3,709 3,572 8.20% 23,898 21,498 6.85%
------- ------ ----- ------- ------ -----
Total investment
securities......... $18,631 $18,187 8.08% $28,956 $26,289 6.75%
======= ====== ===== ======= ======= =====

Deposits

Carnegie offers a variety of deposit accounts, including checking, savings,
money-market and certificates of deposit. Since 1989, Carnegie has experienced
strong growth in deposits, especially in money-market accounts and non-interest
bearing demand deposits. As of September 30, 1995, Carnegie did not have any
brokered deposits and neither solicited nor offered premiums for such deposits.

Deposits are obtained primarily from the market areas which Carnegie serves.
Carnegie believes that these market areas have

109

a higher than average disposable income and that households in these areas are
more liquid than average. The rate structure available on Carnegie's loan
products varies depending upon the totality of a customer's business
relationship with Carnegie. The major factor in determining which rates apply to
any borrowing under this structure is the amount and type of deposits a customer
has with Carnegie. The customer can obtain a reduced rate on borrowings, or
reduced points on borrowings, by having deposits equal to a certain percentage
of the borrowing in either interest or non-interest-bearing accounts with
Carnegie.

Average total deposits increased by $34.0 million, or 21.0%, to $196.0
million for the nine months ended September 30, 1995 compared to the 1994 full
year average of $162.0 million. Changes in the average deposit mix include a
$16.1 million, or 82.3%, increase in certificates of deposit over $100 thousand;
a $19.4 million, or 22.7%, decrease in money market deposit accounts; a $29.2
million, or 163.9% increase in consumer certificates of deposit; a $680
thousand, or 17.2%, decrease in regular savings; a $2.8 million, or 27.0%,
increase in NOW account deposits; and a $6.0 million, or 24.3%, increase in
non-interest bearing demand deposits.

During the first nine months of 1995, Carnegie primarily utilized growth in
certificates of deposit over $100 thousand and six-month consumer certificates
of deposit as funding sources for loan and investment securities portfolio
growth. Carnegie has found the cost of these deposits to be lower than other
available sources of funds. Deposits are obtained primarily from the market
areas which Carnegie serves. Although certificates of deposit of over $100
thousand may generally be considered to entail higher costs and potentially
increased volatility, management believes that these instruments serve as a
stable and cost-efficient source of funds for Carnegie. This is in large
measure due to Carnegie's marketing strategy for targeting professionals, small
businesses and high network individuals and in part due to Carnegie's policy of
taking into account a customer's entire relationship with Carnegie when pricing
loans. The interest rate which the borrower may receive may be less if the
borrower has significant other business relationships with Carnegie. In light
of this, Carnegie's experience has been, and expectation continues to be, that
these certificates of deposit, although of short maturity, will be renewed by
borrowers and continue as a stable funding source for Carnegie. However, in the
event these certificates of deposit were not renewed, management believes that
Carnegie has sufficient liquidity to avoid an adverse effect on Carnegie's
operations. See "- Liquidity."

Deposits at December 31, 1994 were $176.8 million, an increase of $33.6
million, or 23.5%, compared to total deposits of $143.2 million at December 31,
1993. The growth in deposits during this period was primarily due to the
expansion of Carnegie's branch system and its aggressive pricing on money market
and other savings vehicles. Deposits at December 31, 1993 were $143.2 million,
an increase of $35.0 million, or $32.3%, above total deposits of $108.2 million
at December 31, 1992.

Average savings and money market accounts increased $37.4 million, or 60%,
partially offset by a decrease in average time deposits of $5.9 million, or 14%.
Non-interest bearing demand deposits increased to $32.8 million at December 31,
1994, an increase of $10.4 million, or 46.4%, compared to non-interest bearing
demand deposits of $22.4 million at December 31, 1993. The growth in
non-interest bearing demand deposits during this period was primarily due to the
development of Carnegie's branch system and its pricing strategy on loans.
Non-interest bearing demand deposits at December 31, 1993 were $22.4 million, an
increase of $6.9 million, or 44.5%, above non-interest bearing demand deposits
of $15.5 million at December 31, 1992.

110

Time CDs over $100,000 were $29.2 million at December 31, 1994, an increase
of $8.5 million or 41.1%, above the prior year amount of $20.7 million. The
increase was primarily due to management's strategy to fund increased loan
demand in the short term with time CDs over $100,000 and replacing this funding
source with demand deposits, money market and other savings vehicles as
Carnegie's branch system matures.

The following table summarizes the components of deposit liabilities as of
September 30, 1995 and as of December 31, 1994, 1993 and 1992.

111

Deposit Liabilities

September 30 December 31,
---------------- -----------------------------------------------------

1995 1994 1993 1992
---- ---- ---- ----
Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ -------
(Dollars in thousands)

Demand . . . . . . . . . . . . $ 38,464 18.19% $ 32,809 18.56% $ 22,365 15.62% $ 15,467 14.29%

NOW accounts . . . . . . . . . 11,715 5.54% 10,275 5.81% 11,699 8.17% 4,770 4.41%

Money market deposit accounts 60,439 28.58% 85,458 48.34% 62,244 43.47% 36,023 33.29%

Other savings deposits . . . . 3,428 1.62% 3,407 1.93% 4,772 3.33% 5,838 5.39%

Time CDs over $100,000 . . . . 41,240 19.51% 29,216 16.52% 20,700 14.46% 20,156 18.63%

Other time deposits . . . . . . 56,164 26.56% 15,624 8.84% 21,398 14.95% 25,960 23.99%
-------- ------- -------- ------- --------- ------- --------- -------
Balance-end of period . . . . . $211,450 100.00% $176,789 100.00% $143,178 100.00% $108,214 100.00%
======== ======= ======== ======= ========= ======= ========= =======

112

The following table is a summary of the maturity distribution of
certificates of deposit as of September 30, 1995.

Maturity Schedule of CDs

September 30, 1995

Time CDs Over Other Time
$100,000 Deposits

Amount Percent Amount Percent

(Dollars in thousands)

Due in 90 days or less . . . $25,303 61.36% $15,530 27.65%

Due between 91 days and one 14,130 34.26% 31,355 55.83%
year . . . . . . . . . . . .

Due after one year . . . . . 1,807 4.38% 9,279 16.52%
------- ------- ------- -------
$41,240 100.00% $56,164 100.00%
======= =======

Asset and Liability Management

Management of interest rate sensitivity is an important

element of both earnings performance and maintaining sufficient liquidity. The
interest rate sensitivity gap is defined as the difference between the amount of
interest-earning assets maturing or repricing within a specific time period and
the amount of interest-bearing liabilities maturing or repricing within that
same time period. A gap is positive when the amount of interest-earning assets
maturing or repricing exceeds the amount of interest-bearing liabilities
maturing or repricing within the same period and is negative when the amount of
interest-bearing liabilities maturing or repricing exceeds the amount of
interest-earning assets maturing or repricing within the same period.
Accordingly, during a period of rising interest rates, an institution with a
negative gap position would not be in as favorable a position, compared to an
institution with a positive gap, to invest in higher yielding assets. A negative
gap may result in the yield on an institution's interest-earning assets
increasing at a slower rate than the increase in an institution's cost of
interest-bearing liabilities than if it had a positive gap. During a period of
falling interest rates, an institution with a negative gap would experience a
repricing of its interest-earning assets at a slower rate than its
interest-bearing liabilities which, consequently, may result in its net interest
income growing at a faster rate than an institution with a positive gap
position.

Carnegie's Asset/Liability Management Committee is composed of certain
directors and officers of Carnegie (the "ALCO Committee") and controls
asset/liability management procedures. The purpose of the ALCO Committee is to
review and monitor the

113

volume and mix of the interest sensitive assets and liabilities consistent with
Carnegie's overall liquidity, capital growth and profitability goals.

The following table reflects the interest sensitivity gap position of
Carnegie as of September 30, 1995.

Interest Rate Sensitivity Analysis at September 30, 1995

Maturing or Repricing in
Due in Between After Non-
90 Days 91 Days- One Interest
or Less One Year Year Bearing Total
------- -------- ----- -------- -----
(Dollars in thousands)

ASSETS:

Federal Funds Sold . . . . . . . . . . $ -- $ -- $ -- $ -- $ --

Investment securities . . . . . . . . -- -- -- -- --

Available for sale . . . . . . . . . . 48,523 -- -- -- 48,523

Held to Maturity . . . . . . . . . . . -- -- 25,107 -- 25,107

Loans . . . . . . . . . . . . . . . . 57,421 28,551 57,405 4,597 147,974

Valuation Reserves (1) . . . . . . . . (2,774) (2,774)

Non-interest earning assets . . . . . 16,223 16,223
--------- -------- ------- ------- --------
Total Assets . . . . . . . . . . . . $105,944 $28,551 $82,512 $18,046 $235,053
======== ======= ======= ======= ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits:

Money market accounts . . . . . . . $60,439 $ -- $ -- $ -- $60,439

NOW accounts . . . . . . . . . . . . -- -- 11,715 -- 11,715

Other savings deposits . . . . . . . -- -- 3,428 -- 3,428

Time CDs over $100,000 25,303 14,130 1,807 -- 41,240

Other time deposits . . . . . . . . 15,530 31,355 9,279 -- 56,164
--------- -------- ------- ------- --------
Total interest-bearing deposits . . . 101,272 45,485 26,229 -- 172,986

Short-term borrowings . . . . . . . . . . 2,000 -- -- -- 2,000

Non-interest bearing deposits . . . . . . -- -- -- 38,464 38,464

Other liabilities . . . . . . . . . . . . -- -- -- 979 979

Shareholders' equity . . . . . . . . . . -- -- -- 20,624 20,624
------- ------- ------ ------- --------
Total Liabilities and Shareholders'
Equity . . . . . . . . . . . . $103,272 $ 45,485 $26,229 $60,067 $235,053
======== ======= ======= ======= ========

Interest Rate Sensitivity Gap . . . . . . . . $2,672 $(16,934) $56,283 $(42,021)

Cumulative Gap . . . . . . . . . . . . . . . . $2,672 $(14,262) $42,021

Cumulative Gap to Total Assets . . . . . . . 1.14% (6.07)% 17.88%

- -----------------------------
(1) Valuation reserves include allowance for loan losses, deferred loan fees
and unrealized losses on securities available for sale as required by

SFAS 115.

Savings and NOW accounts are included in the "after one year" category
based upon Carnegie's historical experience that these deposits are not
sensitive to a 100 basis point increase in interest rates.

In addition to the GAP analysis, the ALCO Committee relies on computer
simulations to evaluate the impact of changes in interest rates on liquidity,
interest rate spreads/margins and operating results. The simulations forecast
Carnegie's performance in various interest rate environments. Management
believes that the simulation model is a more effective tool than a GAP analysis
since the simulation analysis can more accurately reflect the impact of rising
and declining rates on each type of interest earning asset and interest bearing
liability. Carnegie's targeted fluctuation under the simulation model calls for
a decline in net interest income of no more than 5%, given a 200 basis point
increase or decrease in interest rates. Carnegie is currently within its
targeted fluctuation range.

114

Liquidity

Among the ALCO Committee's functions is its responsibility to monitor and
coordinate all activities relating to the maintenance of liquidity and
protection of net interest income from fluctuations in market interest rates.

Liquidity is a measure of the ability to meet present and future funding
obligations and commitments. CBN liquidity is the ability to meet the borrowing
needs and withdrawal requirements of customers and to support asset growth.
Principal sources of liquidity are deposit generation, access to purchased
funds, maturities and repayments of loans and investments securities, net
interest income and fee income. In addition, CBN has established lines of credit
with correspondent banks totaling $4.0 million, which further support and
enhance liquidity and effective March 1, 1995, CBN became a member of the
Federal Home Loan Bank of New York.

The Consolidated Statements of Cash Flows present the changes in cash and
cash equivalents from operating, investing and financing activities, and show
the primary source of funds from financing activities is through deposit growth.
Total deposits increased $34.7 million and $23.7 million, respectively for the
nine months ended September 30, 1995 and 1994. During the year ended December
31, 1994, net cash provided by operating activities totaled $3.8 million and was
primarily attributable to results of operations of $1.5 million adjusted for
provisions for loan losses of $650 thousand plus the sale of other real estate
owned of $471 thousand and net proceeds from mortgages held for sale of $869
thousand. Net cash used in investing activities totaled $44.0 million and was
primarily attributable to the purchase of investment securities of $20.8 million
offset by proceeds from maturities and paydowns of $1.8 million, and a net
increase in loans made to customers of $24.2 million. Net cash provided from
financing activities totaled $41.0 million for the year ended December 31, 1994.
The primary source of these funds was an increase in internally generated
deposits of $33.6 million plus the net proceeds of $7.9 million from the
issuance of common stock, offset by cash paid for dividends of $502 thousand.

Capital Resources

Shareholders' equity increased $2.6 million, or 14.2%, at September 30,
1995 compared to December 31, 1994. This increase was due to net income of $1.6
million for the nine months ended September 30, 1995; $288 thousand in proceeds
from common stock issued on the exercise of options; the reduction of net
unrealized losses of $1.4 million (net of the tax benefit) in

Carnegie's portfolio of securities available-for-sale; and was reduced by cash
dividends paid of $629 thousand. During the first nine months of 1995, Carnegie
paid $629 thousand, or 40.4%,

115

of net income in cash dividends compared to $338 thousand, or 29.5%, for the

same period in 1994. This increase was attributable to Carnegie's securities
offering during the third quarter of 1994, pursuant to which Carnegie sold
690,000 Units, each Unit consisting of one share of Common Stock and one warrant
to purchase one share of Common Stock at an exercise price of $15.09 for a
period of three years from the date of issuance. As adjusted for Carnegie's
first quarter 1995 5% stock dividend, there are 724,500 warrants outstanding at
an exercise price of $14.37. Net proceeds from the securities offering increased
Carnegie's equity by $7.9 million during the third quarter of 1994.

In addition to the 5% stock dividend paid during the first quarter of 1995,
Carnegie increased the quarterly cash dividend from $0.10 per share to $0.12 per
share for the first and second quarters of 1995.

Carnegie's primary regulator, the FRB, has issued guidelines classifying
and defining bank holding company capital into the following components: (1)
Tier I Capital, which includes tangible shareholders' equity for common stock
and certain qualifying perpetual preferred stock, and excludes net unrealized
gains or losses on available-for-sale securities and deferred tax assets that
are dependent on projected taxable income greater than one year in the future,
and (2) Tier II Capital (Total Capital), which includes a portion of the
allowance for loan losses, certain qualifying long-term debt and preferred stock
that does not qualify for Tier I Capital. The risk-based capital guidelines
require financial institutions to maintain specific defined credit risk factors
(risk-based assets). The minimum Tier I and the combined Tier I and Tier II
capital to risk-weighted assets ratios are 4.0% and 8.0%, respectively. The FRB
has also adopted regulations which supplement the risk-based capital guidelines
to include a minimum leverage ratio of Tier I Capital to total assets of 3.0% to
5.0%. Regulations have also been issued by CBN's primary regulator, the OCC,
establishing similar ratios.

The following table summarizes the risk-based and leverage capital ratios
for Carnegie and CBN at September 30, 1995, as well as the regulatory required
minimum and "well-capitalized" capital ratios:

September 30, 1995 Regulatory Requirements

------------------ -----------------------
"Well
Carnegie CBN Minimum Capitalized"
-------- --- ------- ------------
Risk-based Capital:

Tier I capital ratio . . 13.25% 10.78% 4.00% 6.00%

116

Total capital ratio . . . 14.28% 11.82% 8.00% 10.00%

Leverage ratio . . . . . 9.19% 7.45% 3.00%- 5.00%
5.00% or greater

117

MANAGEMENT OF CARNEGIE

Directors

The following table sets forth the names of and certain other
information about the members of the Board of Directors of Carnegie:

Name and Age Principal Occupations During Director
Past Five Years Since (1)

Theodore H. Dolci, Jr., President, Ted Dolci Excavating, 1989
39 Inc.

Michael E. Golden, 51 President, First Colonial Securities 1988
Group, Inc., a stock and bond
brokerage

Thomas L. Gray, Jr., 50, President and Chief Executive 1988
Officer of Carnegie and CBN

James O. Haas, 50 (2) President, Hudson Knight Inc., a 1990
real estate and banking operations
investment company

Bruce A. Mahon, 65, Chairman of the Board of Carnegie 1988
and CBN; Retired
Chairman, McCay Real Estate Group

Joseph J. Oakes, III, 53 President, Acorn Financial Services, 1994
a financial services and insurance
brokerage firm

James E. Quackenbush, 66 Retired; formerly Managing Partner, 1988
Malesard, Quackenbush, Swift &

Company, Certified Public
Accountants

Steven L. Shapiro, 53 Vice President, Alloy, Silverstein, 1992
Shapiro, Adams, Mulford & Co.,
Certified Public Accountants

Shelley M. Zeiger, 60 Chairman, Zeiger Enterprises, Inc., 1992
an import company

Mark A. Wolters, 35 Executive Vice President of Carnegie
and CBN 1994

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

(1) Includes prior service on Board of Directors of CBN.

No director of Carnegie is also a director of any other company
registered pursuant to Section 12 of the Securities Exchange Act of
1934 or subject to the requirements of Section

(2) Effective February 21, 1996, James O. Haas resigned as a
director of Carnegie for personal reasons.

118

15(d) of such Act or any company registered as an investment company under the
Investment Company Act of 1940.

Executive Officers who are not Directors

The following table sets forth the names and certain other information about
the executive officers of Carnegie who are not members of the Board of
Directors:

Name, Age and Officer of the
Position with Principal Occupations During Corporation
the Corporation Past Five Years Since
- --------------- ---------------------------- -----------

Floyd P. Haggar, Senior Vice President and 1994
45, Senior Vice Senior Loan Officer of CBN
President of CBN (1994-present); formerly
National Bank Examiner,
Office of the Comptroller of
the Currency

Richard P. Rosa, 45, Chief Financial Officer of 1995
Chief Financial Carnegie (1995-present);
Officer formerly Chief Financial
Officer of Lakeland Savings
Bank (1991-1995) and Senior
Vice President/Treasurer,

United Jersey Bank/NorthWest

Security Ownership of Certain Beneficial
Owners and Management of Carnegie

The following table sets forth, as of September 30, 1995, certain information

concerning the ownership of shares of Carnegie Common Stock by (i) each person
who is known by Carnegie to own beneficially more than five percent (5%) of the
issued and outstanding Carnegie Common Stock, (ii) each director of Carnegie,
(iii) each named executive officer described in the section of this Joint Proxy
Statement/Prospectus captioned "Carnegie Executive Compensation", and (iv) all
directors and executive officers as a group. Except as otherwise indicated, each
individual named has sole investment and voting power with respect to the
securities shown.

Number of Shares Percent
Beneficially of
Name and Address of Beneficial Owner Owned(1) Class
- ------------------------------------ ------- -----

119

John Hancock Advisers, Inc. 94,500(2) 5.25%
101 Huntington Avenue
Boston, Massachusetts 02199

Name of Directors and Executive Officers
- ----------------------------------------

Bruce A. Mahon 23,305(3)(4) 1.32

Thomas L. Gray, Jr. 85,420(5) 4.78

Mark A. Wolters 21,855(6) 1.24

Theodore H. Dolci, Jr. 14,291(3) .81

Michael E. Golden 29,099(3)(7) 1.65

James O. Haas 21,891(3)(8) 1.24

Joseph J. Oakes, III 22,078(3)(9) 1.25

James E. Quackenbush 21,776(3)(10) 1.24

Steven L. Shapiro 13,368(3)(11) .76

Shelly M. Zeiger 12,234(3)(12) .69

============= =====
All Directors and Executive 265,011 10.13
Officers as a Group (12 persons)

(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared
investment power. It also includes shares owned (i) by a spouse,
minor children or by relatives sharing the same home, (ii) by entities
owned or controlled by the named person, and (iii) by other persons if
the named person has the right to acquire such shares within 60 days
by the exercise of any right or option. Unless otherwise noted, all
shares are owned of record and beneficially by the named person,
either directly or through the dividend reinvestment plan.

(2) Includes 45,000 shares purchasable upon the exercise of warrants which
are exercisable within 60 days. Based on the most recent Schedule 13G
filed by John Hancock Advisers, Inc. ("JHA"), JHA is a wholly-owned
subsidiary of The Berkeley Financial Group ("TBFG"), TBFG is a wholly-
owned subsidiary of John Hancock Subsidiaries, Inc. ("JHSI"), and JHSI
is a wholly-owned subsidiary of John Hancock Mutual Life Insurance
Company.

(3) Includes 5,512 shares purchasable upon the exercise of options which are
exercisable within 60 days.

120

(4) Includes 1,993 shares held by Mr. Mahon's self-directed IRA, 170 shares
owned by partnerships of which Mr. Mahon is the general partner, and 3,912
shares beneficially owned by Mr. Mahon's spouse. Also includes warrants to
purchase 1,050 shares of common stock which are exercisable within 60 days.

(5) Includes 3,115 shares held by Mr. Gray's former spouse, as guardian for his
minor son, 118 shares in a 401(K) plan, 962 shares held in a self-directed
IRA and 25,264 shares purchasable pursuant to options which are exercisable
within 60 days.

(6) Includes 12,108 shares purchasable upon the exercise of options which are
exercisable within 60 days and 897 shares held in an IRA account and 798
shares in a 401(k) plan.

(7) Includes 2,893 shares held in a profit sharing plan of which Mr. Golden is
the beneficiary, 4,738 shares in a retirement account and 1,093 shares held
in a self-directed IRA. Also includes warrants to purchase 1,575 shares of
common stock which are exercisable within 60 days.

(8) Includes 1,471 shares held by a trust of which Mr. Haas is the
beneficiary and 9,715 shares held by a corporation principally owned
by Mr. Haas.

(9) Includes 6,010 shares held in a Keogh Plan of which Mr. Oakes is the
beneficiary and 9,461 shares in a retirement account.

(10) Includes 12,680 shares held in Mr. Quackenbush's self-directed IRA. Also
includes warrants to purchase 1,050 shares of common stock which are
exercisable within 60 days.

(11) Includes 4,222 shares held by defined benefit pension plan of which Mr.
Shapiro is trustee and beneficiary and 1,207 shares held by voluntary
pension plan of which Mr. Shapiro is trustee and beneficiary.

(12) Includes 1,157 shares held by Mr. Zeiger's spouse and minor child, and
1,157 shares held jointly by Mr. Zeiger and his son.

121

Information Regarding Carnegie's Board of Directors, Executive
Officers and Committees

Attendance at Board and Committee Meetings

During the fiscal year ended December 31, 1994, the Board of Directors of
Carnegie held nine meetings. During that fiscal year, no director attended less
than 75% of the aggregate of (i) the meetings of the Board of Directors and (ii)
meetings of the committees of the Board of Directors on which such director
served.

Committees of the Carnegie Board

The Board of Directors maintained an Audit Committee (the "Audit
Committee") which consisted of Messrs. Quackenbush, Shapiro and Haas during the
fiscal year ended December 31, 1994. In addition, Mr. Oakes joined the Audit
Committee in November, 1994, when he joined Carnegie's Board of Directors. The
Audit Committee arranges for Carnegie's directors examinations through its
independent certified public accountant, reviews and evaluates the
recommendations of the directors examinations, receives all reports of
examination of Carnegie and CBN by regulatory agencies, analyzes such reports,
and reports to Carnegie's Board the results of its analysis of the regulatory
reports. The Audit Committee met six times in 1994.

The Board of Directors does not have a nominating committee.

The entire Board acts as a nominating committee.

Executive Compensation of Carnegie

The following table sets forth a summary for the last three fiscal years
of the cash and non-cash compensation awarded to, earned by, or paid to, the
Chief Executive Officer of Carnegie and each other executive officer of Carnegie
whose individual remuneration exceeded $100,000 for the last fiscal year.

122

SUMMARY COMPENSATION TABLE

Cash and Cash Equivalent Forms
of Remuneration

Long-Term
Compensation
Securities
Name and Principal Annual Annual Other Annual Underlying
Position Year Salary Bonus(1) Compensation(2) Options(#)
------------------ ---- ------ -------- --------------- ------------

Thomas L. Gray, Jr. 1994 $130,000 $97,838 $18,933 --
President and Chief
1993 $130,000 $77,160 $17,465(3) 33,682
Executive Officer

1992 $132,500 $77,700 $22,447(3) --
Mark A. Wolters, 1994 $ 80,000 $32,613 $12,872 --
Executive Vice President
1993 $ 80,000 $25,719 $ 3,476 16,142

1992 $71,346 $25,848 $ 2,857 --

(1) Bonuses earned for services rendered in the indicated years, although
payment may have been made in prior or subsequent years.

(2) Other annual compensation includes director fees, insurance premiums and the
personal use of Carnegie automobiles.

(3) In 1993 and 1992, Thomas L. Gray, Jr. received $13,950 and $15,900,
respectively, for attending meetings of the Board of Directors and special
committees of Carnegie.

Carnegie maintains the 1993 Employee Stock Option Plan which provides for
options to purchase shares of Common Stock to be issued to key employees of
Carnegie, CBN and any other subsidiaries which Carnegie may acquire or
incorporate in the future. Individual employees to whom options are granted
under the Plan are selected by the Stock Option Committee of the Carnegie Board
of Directors. The Stock Option Committee has the authority to determine the
terms and conditions of options granted under the Plan, the exercise price
therefor, and whether the options are incentive or non-statutory options.

The following table sets forth information concerning the fiscal year-end
value of unexercised options held by the executive officers of Carnegie named in
the table above. No stock options were exercised by such executive officers
during 1994. During fiscal year 1994, no stock options were granted to executive
officers of Carnegie. Options have been granted for all shares subject to the
1993 Employee Stock Option Plan.

123

AGGREGATED OPTIONS EXERCISED IN LAST FISCAL
YEAR AND FISCAL YEAR END OPTION VALUES
(Individual Grants)

Number of Securities Value of Unexercised In-
Underlying Unexercised the-Money Options at FY-
Shares Value Options at FY-End (#) End ($) (based on $11.125
Acquired on Realized Exercisable/ per share) Exercisable/
Name Exercise # $ Unexercisable Unexercisable
---- ----------- -------- ---------------------- -------------------------

Thomas L. Gray, Jr. -- -- 41,564/16,039 $83,846/0

Mark A. Wolters -- -- 11,515/7,686 $8,094/0

Compensation of Carnegie's Directors

Directors of Carnegie receive no remuneration for their service on the
Board of Directors of Carnegie. Directors of CBN, other than full-time employees
of CBN, receive a $5,000 annual retainer, payable quarterly. All directors of
CBN receive fees of $750 per Board meeting attended and $300 per committee
meeting attended. Mr. Gray receives Board meeting and Loan Committee meeting
fees and Mr. Wolters receives Board meeting fees.

Carnegie maintains a Stock Option Plan for non-employee directors (the
"Non-Employee Plan"). Under the Non-Employee Plan, 42,000 shares of Carnegie
Common Stock have been reserved for issuance, adjusted to reflect stock
dividends declared subsequent to the adoption of the Non-Employee Plan. Non-
Employee Directors of Carnegie, CBN and its subsidiaries may participate in the
Non-Employee Plan. Each participant in the Non-Employee Plan automatically
receives an option to purchase 5,000 shares of Carnegie Common Stock effective
as of the date such participant commences his service on the Board of Directors.
No option may be exercised more than ten years after the date of its grant. The
purchase price of the shares of Carnegie Common Stock subject to options under
the Non-Employee Plan is 100% of the fair market value on the date such option
is granted. Options have been granted for all shares subject to the Non-
Employee Plan.

Certain Transactions with Carnegie Management

CBN has made in the past and, assuming continued satisfaction of generally
applicable credit standards, expects to continue to make loans to directors,

executive officers and their associates (i.e. corporations or organizations for
which they serve as officers or directors or in which they have beneficial
ownership interests of ten percent or more). These loans have all been made in
the ordinary course of CBN's business on substantially the same terms, including
interest rates and

124

collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features.

Compensation Committee Interlocks and Insider Participation

The Board of Directors does not have a compensation committee. The entire
Board acts as a compensation committee. Any compensation matter concerning
Messrs. Gray and Wolters is not voted on by either individual. During fiscal
year 1994, no executive officer of Carnegie served as a director or member of
the compensation committee of another entity, one of whose executive officers
served as a director of Carnegie.

INFORMATION ABOUT REGENT

Business of Regent and the Bank

Regent is a one bank holding company registered under the BCHA. Regent was
incorporated under the laws of the Commonwealth of Pennsylvania on December 22,
1986 and on November 23, 1987 was

merged into a New Jersey corporation with the same name (and which was
incorporated on November 2, 1987), with the New Jersey corporation being the
surviving entity. Regent became a bank holding company on June 2, 1989 when it
completed the acquisition of all of the authorized capital stock of the Bank,
its only subsidiary. The Bank commenced operations on June 5, 1989. Regent
provides banking services through the Bank and does not engage in any activities
other than banking activities. The principal executive offices of Regent are
located at 1430 Walnut Street, Philadelphia, Pennsylvania 19102. Regent's
telephone number is (215) 546-6500.

The Bank, a federally-chartered national bank, is regulated by the OCC and
is a member of the Federal Reserve System. The deposits held by the Bank are
insured by the BIF of the FDIC.

For a discussion of the federal regulations applicable to Regent as a bank
holding company and the Bank as a national bank, see "Information About Carnegie
- -- Supervision and Regulation." Since Regent is a bank holding company regulated
by the FRB and the Bank is a national bank regulated by the OCC, they are

subject generally to the same laws and regulations as Carnegie and CBN.
See "Information About Carnegie--Supervision and Regulation." The Bank maintains
an outstanding rating under the Community Reinvestment Act. Inasmuch as the
Bank is located in Pennsylvania, certain matters relating to interstate banking
are governed by Pennsylvania law. In July 1995, Pennsylvania enacted legislation
by which it "opted in" to the Interstate Act. Prior to adopting this
legislation, Pennsylvania law permitted interstate acquisitions by bank holding
companies when home states had "reciprocal" legislation that allowed
acquisitions by Pennsylvania based bank holding companies. Under the Interstate
Act, the provisions requiring reciprocal authorization have been eliminated. The
new legislation, however, retained the requirement of approval by the
Pennsylvania Department of Banking with respect to any acquisition of a national
bank located in Pennsylvania, regardless of the location of the acquirer. The
Pennsylvania legislation also conditioned the authorization for interstate
branching into Pennsylvania by an out-of-state bank if a Pennsylvania chartered
institution would be permitted to establish a branch in such other state.

The Bank conducts all its banking activities through its office located at
1430 Walnut Street, Philadelphia, Pennsylvania 19102, offering a broad range of
commercial and private banking services. At September 30, 1995, the Bank had
total deposits of $192.9 million and had total loans and loans held for sale

125

outstanding of $107.2 million. Although the Bank's primary service area for
Community Reinvestment Act purposes is Center City Philadelphia, it also
services the Delaware Valley which consists of Philadelphia, Montgomery, Bucks,
Chester, Delaware, Berks, Lancaster, Northampton and Lehigh Counties in
Pennsylvania; New Castle and Kent Counties in Delaware; Cecil County in
Maryland; and Camden, Burlington, Salem, Atlantic, Ocean, Mercer, Cumberland and
Cape May Counties in New Jersey (the "Delaware Valley").

The Bank engages in the commercial banking business, serving the banking
needs of its customers with a particular focus on small and medium-sized
businesses, professionals and other individuals, with an emphasis on the
origination of loans in the $100 thousand to $2.5 million range. The Bank's
strategy in providing its services is to attempt to respond to each customer's
needs and assure that a customer will deal regularly with the same officer of
the Bank. The small and midsized business and entrepreneurial market in the
Bank's service area is large and the Bank believes it can offer the flexibility,
speed and personal attention necessary to serve this large market. The

banking and broad business experience of the officers and directors makes the
Bank particularly well-suited to serve the individualized needs of this market.

The Bank offers a wide range of deposit products, including checking
accounts, interest-bearing NOW accounts, insured money market accounts,
certificates of deposit, savings accounts and Individual Retirement Accounts.

A broad range of credit facilities are offered to the businesses and
residents of its service area, including commercial loans, home improvement
loans, mortgage loans, and home equity lines of credit. At September 30, 1995,
the Bank's maximum legal lending limit was $2.7 million per borrower.

In addition, the Bank offers safe deposit boxes, travelers' checks, money
orders, direct deposit of payroll and Social Security checks, and access to one
or more regional or national automated teller networks as well as international
services through correspondent institutions. The Bank is also empowered to offer
trust services. The Bank has the power to act as executor of wills and as a
trustee for Individual Retirement Accounts, minors and other fiduciaries. Other
trust services are provided through correspondent institutions. The Bank has
established relationships with correspondent banks and other financial
institutions in order to provide other services requested by its customers,
including requesting correspondent banks to participate in loans where the loan
amount exceeds the Bank's policies or legal lending limits.

126

There is substantial competition among financial institutions in the Bank's
service area. The Bank competes with new and established local commercial banks,
as well as numerous regionally based commercial banks. There is also competition
from out of state financial institutions, thrifts and mutually owned savings
banks and savings and loan associations. As of the date hereof, the Bank had
attracted, and believes it will continue to attract its customers from the
deposit base of such existing banks and financial institutions and from growth
in the Delaware Valley. Many such banks and financial institutions are
well-established and well-capitalized, allowing them to do more advertising and
promotion and to provide a greater range of services, including trust services.
The Bank's strategy has been and will continue to be emphasizing personalized
services, offering competitive rates to depositors and making use of commercial
and personal ties of the shareholders, directors, officers and staff to Delaware
Valley businesses and residents.

In recent years, intense market demands, economic pressures and significant
legislative and regulatory action have eroded

traditional banking industry classifications which were once clearly defined and
have increased competition among banks, as well as between banks and other
financial institutions. As a result, banks and other financial institutions have
had to diversify their services, generally increase interest paid on deposits
and become more cost effective. These events have resulted in increasing
homogeneity in the financial services offered by banks and other financial
institutions. Some of the effects on banks and other financial institutions of
these market dynamics and legislative regulatory changes include increased
customer awareness of product and service differences among competitors and

increased merger activity.

As of September 30, 1995, Regent and the Bank had a total of 38 employees.

Properties of Regent and the Bank

The Bank leases approximately 15,600 square feet of the first and second
floors and basement of 1430 Walnut Street, Philadelphia, Pennsylvania. The space
is occupied by both Regent and the Bank and serves as the Bank's sole banking
location. The first floor contains a banking lobby. The vault, together with
additional lobby and storage space is located in the basement. Executive,
administrative, and loan offices are located on the second floor. At September
30, 1995, approximately 90% of the Bank's leased total square footage was
occupied.

The property is leased with a rental expense of approximately $190,000 per
annum excluding taxes, insurance, utilities and janitorial services through May
1999. The lease provides for two 5-year renewal options at the then current

127

market rental rates, plus a right of first refusal to purchase
the premises.

Description of Regent Securities

Regent is authorized pursuant to its Certificate of Incorporation to issue
15,000,000 shares of capital stock, of which 10,000,000 shares are common stock
and 5,000,000 shares are series preferred stock.

Regent Common Stock. Regent is authorized to issue up to 10,000,000 shares
of common stock, $.10 par value per share, ("Regent Common Stock") of which
996,235 shares were outstanding as of the date of this Joint Proxy
Statement/Prospectus. Each outstanding share of Regent Common Stock is entitled
to one vote, either in person or by proxy, on all matters that may be voted upon
by the owners thereof at meetings of the shareholders.

Holders of Regent Common Stock do not have cumulative voting rights with respect
to elections of directors of Regent.

The holders of Regent Common Stock (i) have equal ratable rights to
dividends from funds legally available therefor, when, as and if declared by the
Board of Directors of Regent, (ii) are entitled to share ratably in all of the
assets of Regent available for distribution to holders of Regent Common Stock
upon liquidation, dissolution or winding up of the affairs of Regent, and (iii)
do not have preemptive or redemption provisions applicable thereto.

Since dividends from the Bank are currently Regent's sole source of income,
any restrictions on the Bank's ability to pay dividends will act as a
restriction on Regent's ability to pay dividends. Under the National Bank Act
and the regulations of the OCC applicable to the Bank, the Bank may not pay
dividends in excess of the Bank's net profits, as defined, for that year plus
the Bank's retained net profits for the preceding two years. In addition, unless
a national bank's capital surplus equals or exceeds the stated capital for its
common stock, no dividends may be declared unless the Bank makes transfers from
retained earnings to capital surplus.

Regent Preferred Stock. Regent is authorized to issue up to 5,000,000
shares of preferred stock, par value $.10 per share, in one or more series, with
such designations and such relative voting, dividend, liquidation, conversion
and other rights, preferences and limitations as shall be set forth in
resolutions providing for the issuance thereof adopted by the Board of
Directors.

As of the date of this Joint Proxy Statement/Prospectus, the five series of
preferred stock of Regent created by the Board of Directors of Regent and the
number authorized and outstanding

128

shares, respectively, of each such series are as follows: (i) 1,000,000
authorized shares of Series A Convertible Preferred Stock, $.10 par value per
share, ("Regent Series A Convertible Preferred Stock") of which 484,032 shares
are outstanding; (ii) 500,000 authorized shares of Series B Convertible
Preferred Stock, $.10 par value per share, ("Regent Series B Convertible
Preferred Stock") of which 4,270 shares are outstanding; (iii) 500,000
authorized shares of Series C Convertible Preferred Stock, $.10 par value per
share, ("Regent Series C Convertible Preferred Stock") of which 3,505 shares are
outstanding; (iv) 500,000 authorized shares of Series D Convertible Preferred
Stock, $.10 par value per share, ("Regent Series D Convertible Preferred Stock")
of which 3,880 shares are outstanding and (v) 500,000 authorized shares of
Series E Convertible Preferred Stock, $.10 par value per share, ("Regent Series
E Convertible

Preferred Stock") of which 90,548 shares are outstanding. Regent Series A
Convertible Preferred Stock through Regent Series E Convertible Preferred Stock
are sometimes hereinafter collectively referred to as "Regent Preferred Stock"
and Regent Series B Convertible Preferred Stock through Regent Series E
Convertible Preferred Stock are sometimes hereinafter collectively referred to
as "Regent Series B through Series E Convertible Preferred Stock."

The following is a brief description of the terms of the Regent Preferred
Stock, which does not purport to be complete and is subject to and qualified in
its entirety by reference to Regent's Certificate of Incorporation.

Dividends. The holders of Regent Series A Convertible Preferred Stock are
entitled to receive preferred stock dividends, payable annually, equal to 10% of
the shares of Regent Series A Convertible Preferred Stock owned at the
respective record dates, computed on the basis of one share of Regent Series B
through Series E Convertible Preferred Stock, as the case may be, for every ten
shares of Regent Series A Convertible Preferred Stock. The holders of Regent
Series A Convertible Preferred Stock received stock dividends paid in shares of
Regent Series B Convertible Preferred Stock in 1990, Regent Series C Convertible
Preferred Stock in 1991, Regent Series D Convertible Preferred Stock in 1992 and
Regent Series E Convertible Preferred Stock in 1993 and the years following.

The holders of Regent Preferred Stock are also entitled to receive cash
dividends on a noncumulative basis when, as and if declared by the Board of
Directors of Regent.

Optional Redemption. The outstanding shares of Regent Preferred Stock are
redeemable in whole or in part at the option of Regent at a price of $10 per
share plus any declared but unpaid dividends.

129

If less than all of the outstanding shares of Regent Preferred Stock not
previously called for redemption are to be redeemed, Regent will select those to
be redeemed pro rata or by lot or in such other manner as the Board of Directors
of Regent may determine. There is no mandatory redemption or sinking fund
obligation with respect to the Regent Preferred Stock.

In the event that Regent exercises its redemption option, notice of
redemption must be mailed at least 30 days but not more than 60 days before the
redemption date to each holder of record of shares of Regent Preferred Stock to
be redeemed at the address shown on the books of Regent. On and after the
redemption date, dividends cease (except for any declared but unpaid dividends)
on shares of Regent Preferred Stock called for redemption and all

rights of the holders of such shares terminate except the right to receive the
redemption price (unless Regent defaults in the payment of the redemption
price).

Conversion Rights. The shares of Regent Preferred Stock are convertible, at
the option of the holder at any time prior to the close of business on the date
fixed for any redemption called by Regent (unless Regent shall default in making
the payment due upon redemption), as follows: (i) each outstanding share of
Regent Series A Convertible Preferred Stock and Regent Series E Convertible
Preferred Stock is currently convertible into one share of Regent Common Stock
and (ii) each outstanding share of Regent Series B, Series C and Series D
Convertible Preferred Stock is currently convertible into 1.177 shares of Regent
Common Stock.

The conversion rate is subject to adjustment in the manner provided in
Regent's Certificate of Incorporation in the event of: (i) payment of certain
stock dividends, stock split-ups or combinations or other similar
recapitalizations or (ii) the issuance of certain rights or warrants to holders
of Regent Common Stock entitling them to subscribe for or purchase Regent Common
Stock at a price less than the then current market price therefor, as determined
by the terms of Regent's Certificate of Incorporation, at the time of issuance.
No adjustment in the conversion rate is required unless it would result in at
least a 1% increase or decrease in that rate; however, any adjustment not made
is carried forward.

In case of any consolidation or merger of Regent with or into any other
corporation or any sale or transfer of substantially all the assets of Regent,
Regent or any successor corporation is required to make provision that any
holder of Regent Preferred Stock will be entitled, after the occurrence of any
such event, to receive on conversion the consideration that the holder of Regent
Preferred Stock would have received had the holder converted the Regent
Preferred Stock into Regent Common Stock immediately prior to the occurrence of
the event.

130

Voting Rights. The holders of Regent Series A Convertible Preferred Stock
have full non-cumulative voting rights, share for share, with Regent Common
Stock and any other class or series of Regent's stock which at any time may have
general voting power with Regent Common Stock concerning any matter being voted
upon.

The approval of the holders of at least two-thirds of the shares of Regent
Series A Convertible Preferred Stock then outstanding is required to amend,
alter or repeal any of the provisions of Regent's Certificate of Incorporation
(or any certificate providing for terms of capital stock of Regent) or to
authorize any reclassification of Regent Series A Convertible

Preferred Stock, in either case so as to affect adversely the preferences,
special rights or powers of Regent Series A Convertible Preferred Stock, either
directly or indirectly or through a merger or consolidation with any
corporation, or to authorize any capital stock of Regent ranking, either as to
the payment of dividends or upon liquidation, dissolution or winding up of
Regent, prior to the Regent Series A Convertible Preferred Stock. The approval
of the holders of at least a majority of the outstanding shares of Regent Series
A Convertible Preferred Stock, voting as a class, is required to increase the
authorized number of shares of preferred stock or to create, or increase the
authorized number of shares of, any other class of stock of Regent ranking on a
parity with the Regent Series A Convertible Preferred Stock as to dividends or
upon liquidation, dissolution, or winding up of Regent.

The holders of shares of Regent Series B through Series E Convertible
Preferred Stock are not entitled to any voting rights on any matter, except as

required by applicable law.

Liquidation Rights. The holders of Regent Preferred Stock are entitled to
receive $10 per share (plus any declared and unpaid preferred stock dividends)
before any distribution is made to holders of Regent Common Stock or any other
junior stock of Regent in the event of the dissolution, liquidation or winding
up of Regent. If in any such event the assets of Regent distributable among the
holders of Regent Preferred Stock or any capital stock of Regent ranking on par
with the Regent Preferred Stock are insufficient to permit full payment, the
holders of Regent Preferred Stock and of the capital stock of Regent ranking on
a par with Regent Preferred Stock will be entitled to ratable distribution of
the available assets in accordance with the respective amounts that would be
payable to such holders if all amounts payable in respect of such shares were
paid in full. A consolidation, merger or sale of all or substantially all of the
assets of Regent is not considered a liquidation, dissolution or winding up for
this purpose.

131

Regent Common Stock Warrants

Regent Public Warrants. Regent has issued and outstanding 292,598 warrants
that are traded publicly (the "Regent Public Warrants") as of the date of this
Joint Proxy Statement/Prospectus. Each Regent Public Warrant, which was
exercisable prior to December 31, 1995, entitles the holder thereof
to purchase 1.177 shares of Regent Common Stock, for an aggregate of 344,387
shares of Regent Common Stock, at a purchase price of $8.50 per share. The
Regent Public Warrants would again become exercisable for a period of 30 days
after termination of the Merger Agreement if the Merger Agreement were
terminated. Of these Regent Public Warrants, Regent has issued and
outstanding to Harvey Porter, O. Francis Biondi, David W. Ring,
Abraham L. Bettinger, Barbara H. Teaford and Leonard S. Dwares
(the "Organizers") 42,500 warrants to purchase an aggregate of 50,022.5
shares of Regent Common Stock at an exercise price of $8.50 per share (the
"Regent Organizer Warrants").

Regent Underwriter Warrants. In connection with Regent's 1989 public
offering, Regent issued warrants to purchase Units consisting of one share of
Regent Common Stock and a warrant to purchase one-half share of Regent Common
Stock to Regent's managing underwriter, Hopper Soliday & Co. Inc. and its
designee (the "Regent Underwriter Warrants"). The Regent Underwriter Warrants
are exercisable for the purchase of an aggregate of 147,124 shares of Regent
Common Stock at an exercise price of $10.20 per share.

The exercise price and the number of shares purchasable under the Regent
Underwriter Warrants are subject to adjustment in the event of any subdivision,
combination or reclassification of Regent Common Stock. In the event of a
merger, consolidation or sale of substantially all of the assets of Regent,
Regent is

132

required to make adequate provision whereby the holders of the Regent
Underwriter Warrants thereafter have the right to purchase such shares of stock,
securities or assets that would have been received in exchange of shares of
Regent Common Stock purchasable under the Regent Underwriter Warrants in such
transaction had the Regent Underwriter Warrants been exercised immediately prior
to the consummation of such transaction. Regent is required to provide each
holder of the Regent Underwriter Warrants with a written notice of any such
merger, consolidation or sale at least 15 days prior to the date such
transaction is consummated.

Regent Put Option Warrants. In connection with the 10% stock dividends
issued in the form of Regent Series B Convertible Preferred Stock, Regent Series
C Convertible Preferred Stock and Regent Series D Convertible Preferred Stock,
the Organizers had the obligation to purchase such shares from the recipients at
$10 per share. Regent issued to each Organizer who was required to purchase any
such dividend shares a warrant to purchase one-half of a share of Regent Common
Stock at $8.50 per share for each share purchased. In connection with such
purchases, the Organizers received warrants to purchase an aggregate of 76,148
shares of Regent Common Stock (the "Regent Put Option Warrants"). The exercise
price and number of shares of Regent Common Stock purchasable under Regent Put
Option Warrants are subject to appropriate adjustment in the event of a stock
dividend, stock split-up, combination or similar reclassification of the Regent
Common Stock.

Regent Stock Options. The Organizers currently hold options to purchase an
aggregate of 274,241 shares of Regent Common Stock exercisable at a purchase
price of $8.50 per share (the "Regent Organizer Options"). In addition, options
to purchase an aggregate of 171,362 shares of Regent Common Stock at a purchase
price of $8.50 per share are held by employees and directors of Regent under
Regent's 1989 Employee Stock Option Plan (the "Regent Plan Options"). The
exercise price of, and number of shares of Regent Common Stock purchasable under
the Regent Organizer Options and the Regent Plan Options are subject to
appropriate adjustment in the event of a stock dividend, stock split-up,
combination or similar reclassification of the Regent Common Stock. Under the
terms of the option agreements for the Regent Plan Options, such options
terminate upon any merger or consolidation of Regent.

Extension of Expiration Date of All Regent Options and Warrants

The expiration date of the outstanding options and warrants of Regent
described in this section that would have expired before the anticipated
Effective Time of the Merger has been extended by the Board of Directors of
Regent from their current expiration date to the earlier of (a) the Effective
Time of the Merger, during which period such warrants may not be exercised

133

for the purchase of Regent Common Stock but shall represent only the right to
receive Carnegie Common Stock as provided in the Merger Agreement or (b) the
latter of (i) 30 days following the termination of the Merger Agreement during
which period such warrants may be exercised for the purchase of Regent Common
Stock in accordance with their respective terms, or (ii) the stated expiration
date of such option or warrant.

Legal Proceedings of Regent

The Bank and Shareholders Funding, Inc. (the "Debtor") are parties to a
Participation Agreement pursuant to which the Bank purchased 100% participations
in mortgage loans originated by the Debtor. The Debtor filed for bankruptcy
protection in November 1994, in the proceeding known as In Re: Shareholders
Funding, Inc., Debtor, pending in the United States Bankruptcy Court for the
Eastern District of Pennsylvania, Case No. 94-17215 SR. At approximately the
same time, James Beck (the president of the Debtor) filed an individual petition
for bankruptcy protection. Pursuant to a Motion for Relief from Stay filed on
February 24, 1995, the Bank requested, among other relief, that the court order
the Debtor to execute assignments of notes and mortgages to the Bank with
respect to approximately $7.6 million of mortgages that the Bank had purchased
and that the Debtor was obligated to resell but had failed to resell as a result
of its financial difficulties. The Debtor and the trustee objected to the Bank's
request, alleging that the mortgages may be the property of Debtor and that the
funds advanced by the Bank of approximately $7.6 million might represent
unsecured loans to the Debtor.

The parties conducted discovery in connection with the pending Motion for
Relief from Stay, including document productions and interrogatories.
Ultimately, the trustee, the creditors' committee and the Bank agreed that a
potential claim existed against the Debtor's accounting firm and the pursuit of
that claim would be beneficial to all parties. Accordingly, the Bank, the
creditors' committee and the trustee agreed to a settlement. The motion to
approve the stipulation relating to the settlement has been filed with the
Bankruptcy Court and was approved during a hearing on September 27, 1995. The
Bankruptcy Court issued an order approving the settlement on October 4, 1995. As
part of the settlement, the Bank's request to receive assignment of the $7.6
million in notes and mortgages was granted, and the Bank is in the process of
obtaining legal title to those mortgages. The Bank believes that the Bank will
be able to recover substantially all of such $7.6 million, net of debt service
payments received to date. Also, as part of the settlement, the fixed portion of
the Bank's unsecured claim has been agreed to in the amount of approximately
$1.73 million; the contingent portion of the unsecured claim has been limited to
approximately $740 thousand. As part of the settlement, the Bank has agreed to
pay to the trustee $175 thousand, which is part of the Bank's fixed claim and
may be used to pay all or part of the costs and expenses of the administration
of the estate and the Bank will lend the trustee up to $175 thousand to pay
counsel fees in litigation against the Debtor's accountant by the trustee. If
those counsel fees exceed $175 thousand, counsel has agreed to continue the
litigation on a contingency fee basis. The Bank will lend up to an additional

$50 thousand to pay the fees and expenses of

134

professionals (other than attorneys) retained by the trustee in connection with
the claim against the Debtor's accounting firm. Lastly, the Bank may make a
third loan to the trustee in an amount not to exceed $75 thousand for additional
expenses of professionals other than attorneys in connection with the litigation
against the Debtor's accountants. The loans will bear interest at the Bank's
prime rate plus one percent per annum. The Bank will make such loans available
to the trustee only after

the expense has been approved by the Bank after receipt of a financial plan
which is in form and substance satisfactory to the Bank and only after the
expense is due and owing. The indebtedness will be evidenced by notes. The
disbursement of any proceeds of the claim against the Debtor's accountants will
be disbursed as follows: first, to the payment of any administrative claims of
the trustee, the committee and/or any professionals employed by the trustee or
the committee, provided that such claims arose directly out of the litigation
against the Debtor's accountants; and second, to the payment of the Bank's
post-petition loans. As security for the full and timely payment of such
indebtedness and all other obligations of the trustee to the Bank, the trustee
granted to the Bank a continuing first lien on and security interest in the
trustee's right, title and interest in the collateral of the Debtor, subject
only to those security interests that were duly perfected on the date of the
settlement. If the litigation against the Debtor's accountant is not successful,
repayment of such indebtedness will be paid from the assets of the Debtor's
estate, to the extent such assets are available prior to the distribution to the
general creditors, but after payment of administrative expenses. The Bank's
payment to the trustee of $175,000, as part of the settlement, has been charged
to earnings in the three months ended September 30, 1995. Management believes
the Bank's loan commitments in connection with litigation against the Debtor's
accountants, which aggregate $225,000 plus an additional $75,000 which is
subject to certain conditions, are recoverable based upon its current assessment
of the outcome of this litigation. The Bank's recovery of unsecured claims
against the Debtor are primarily dependent on successful litigation against the
Debtor's accountants.

In addition to the foregoing, there continue to be other possible claims
which could be asserted against the Bank by other creditors of the Debtor
associated with the Bank's transactions with the Debtor. Additionally, in
November 1995, the agent that conducted a real estate settlement involving the
refinancing of a mortgage through the Debtor, filed a lawsuit against the Bank
seeking damages in excess of $100,000 plus any and all damages sustained which
are unspecified. The lawsuit alleges, among other things, breach of contract
and reliance on the Bank as the Debtor's warehouse lender. Management believes
that these pending and possible claims are without merit, and the Bank intends

to vigorously defend this and any future actions brought related to these
matters. However, the ultimate outcome of these matters is not presently
determinable.

Regent and the Bank are subject to various other legal actions and
proceedings, none of which is material.

135

REGENT FINANCIAL SUMMARY AND SELECTED PER SHARE DATA
(In thousands, except for per share data)

Nine Months Ended
September 30, Year Ended December 31,
----------------- -----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(in thousands, except per share data)

Income Statement
Data:

Interest income . . $15,063 $ 12,771 $17,165 $15,112 $13,519 $11,163 $11,210
Interest expense . 9,133 8,478 11,373 9,921 8,810 7,882 8,653

-------- -------- -------- ------- -------- -------- --------
Net interest income 5,930 4,293 5,792 5,191 4,709 3,281 2,557

Provision for loan
losses . . . . . . 320 35 860 450 525 525 460
-------- -------- -------- ------- -------- -------- --------
Net interest income
after provision for
loan losses . . . . 5,610 4,258 4,932 4,741 4,184 2,756 2,097
Non-interest income 74 173 202 156 70 55 43
Realized gain on
sale of securities -- -- -- -- -- 642 --
Unrealized loss on
securities held
for sale . . . . -- -- -- -- -- -- (600)
Non-interest
expense . . . . . . 5,116 2,877 4,372 3,113 2,486 2,026 1,804
-------- -------- -------- ------- -------- -------- --------
Income (loss)
before income taxes
and extraordinary item . . . . . . . 568 1,554 762 1,784 1,768 1,427 (264)

Income tax expense 192 527 259 607 601 485 --

136

Extraordinary item - utilization of
net operating loss
carry forward . . . -- -- -- -- -- 213 --
-------- -------- -------- -------- -------- -------- --------
Net income (Loss). . $ 376 $ 1,027 $ 503 $ 1,177 $ 1,167 $ 1,155 $ (264)

======== ======== ======== ======= ======== ======== ========
Earnings (loss) per share:
Primary .................. $ 0.02 $ 0.80 $ 0.22 $ 0.71 $ 0.95 $ 0.57 $ (1.07)
Fully Diluted............. NA 0.69 NA NA 0.82 NA NA
Cash Dividends............ -- -- -- -- -- -- --
Book Value Per Share....... 8.56 8.47 7.98 8.88 8.38 7.56 7.40

Selected Financial Ratios: Nine Months Ended

September 30 Year Ended December 31
----------------- --------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
Net interest margin 3.31% 2.31% 2.37% 2.49% 2.87% 2.83% 2.22%
Other expenses to total
average assets 2.79% 1.50% 1.74% 1.44% 1.47% 1.70% 2.05%
Return on average total
assets .21% .54% .20% .55% .70% .97% N/A
Return on average
shareholders' equity 3.83% 10.09% 3.89% 9.29% 10.33% 11.24% N/A
Average shareholders'
equity to average
total assets 5.38% 5.34% 5.14% 5.88% 6.67% 8.60% 8.37%
Non-performing assets to
total assets 1.34% .98% 1.68% 1.04% 2.11% 2.09% .83%
Allowance for loan losses
as a percentage of period
end loans and loans held
for sale 1.76% 1.73% 2.10% 1.84% 1.94% 1.78% 1.20%

Balance Sheet Data:

At
September 30, At December 31,
------------- -------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----

Total assets . . . $256,583 $243,450 $243,945 $204,800 $132,416 $110,185
Federal funds sold -- -- 6,000 -- 7,300 9,562
Loans, net . . . . 101,216 74,146 47,826 54,454 49,877 47,179
Investment securities . . . . 142,812 156,664 156,166 140,226 70,032 49,869
Deposits . . . . . 192,943 161,061 192,393 160,715 119,723 99,013

Shareholders' equity . . . . . . $13,528 $ 12,206 $ 13,126 $ 11,949 $ 10,782 $ 9,627

137

Management's Discussion and Analysis of
Financial Condition and Results of Operations of Regent
for the Nine Months Ended September 30, 1995

General

Regent, the holding company for the Bank, recorded net income of $376
thousand, or $.02 per share, for the first nine months of 1995 compared to $1
million, or $.80 per share for the nine months ended September 30, 1994. The
decline in net income for the first nine months of 1995 compared to the
comparable period of 1994 was due principally to an increase in the provision
for loan losses of $285 thousand and an increase in other expenses of $2.2
million, which more than offset a $1.6 million increase in net interest income.

The higher provision for loan losses and a portion of the increase in other
expenses for the nine months ended September 30, 1995 were attributable to
irregularities in residential mortgage loans purchased in 1994 from two mortgage
banking companies, both of which filed for bankruptcy protection. The
year-to-date net income for 1995 was adversely affected by the associated
professional fees and settlement costs of $399,000 incurred in resolving legal
matters relating to the assignment of the residential mortgages to Regent. See
"Information About Regent--Legal Proceedings of Regent." Expenses of $188
thousand were also incurred in 1995 for professional services in connection
with the Merger. Salaries and employee benefits and costs incurred for the
expansion and servicing of a new consumer loan program that was started at the
end of 1994 that finances automobile insurance premiums for individuals also
increased other expenses for the nine months ended September 30, 1995. See
"--Risk Elements" below. The increase in other expenses was partially offset by
a refund of premiums previously paid to the FDIC totaling $107 thousand. The
increase in net interest income was attributable to an improvement in the net
interest margin as a result of increased lending volume. The net interest margin
increased to 3.31% for the first nine months of 1995 from 2.31% for the first
nine months of 1994.

Financial Condition of Regent

Capital Adequacy

Capital adequacy standards adopted by federal banking regulators make
capital more sensitive to differences in risk profiles among banking
organizations and consider off-balance- sheet exposures in determining capital
adequacy. Various levels of risk are assigned to different categories of assets
and off- balance-sheet activities.

These standards define capital as Tier I and Tier II capital. All banks are
required to have Tier I capital of at

least 4% of risk-weighted assets and total capital of 8% of risk-
weighted assets. Tier I (Core) capital consists of common

138

shareholders' equity, non-cumulative preferred stock and retained earnings.
Tier II or total capital includes Tier I capital, cumulative preferred stock,
qualifying subordinated debt and the allowance for loan losses up to a maximum
1.25% of total risk-weighted assets. The following table presents the components
of Regent's assets and Tier I and II capital ratios at September 30, 1995 and
December 31, 1994:

September 30, December 31,
1995 1994
------------ ------------
Tier I Capital $ 14,005,043 $ 13,628,568

Allowance for possible loan losses 1,706,324 1,387,754
Qualifying subordinated debt 1,650,000 1,650,000
------------ ------------
Total Tier II capital $ 17,361,367 $ 16,666,322
============ ============

Total Risk Adjusted Assets $136,505,936 $111,020,356
============ ============

Tier I Ratio 10.26% 12.28%
Tier II Ratio 12.72% 15.01%

In addition to the risk-based requirements, regulations have been adopted
that establish a minimum leverage capital ratio of 3% of Tier I capital to total
assets. The 3% level applies to only those banks that are given the highest
composite rating under the regulators' rating system while all other banks are
expected to have 3% plus an additional cushion of at least 100 to 200 basis
points. At September 30, 1995, and December 31, 1994, Regent's leverage ratio
was 5.5% and 5.6%, respectively.

Regent's objective is to maintain its strong capital base as well as
exceeding the requirements for the Bank to be classified as "well capitalized,"
as defined by the FDIC. Management believes that Regent's capital ratios are in
excess of regulatory requirements, are adequate to support current and near term
growth, and that the Bank's ratios can be maintained above the level needed to
be considered "well capitalized."

Asset and Liability Management

Asset and liability management is the process of maximizing

net interest income within the constraints of maintaining acceptable levels of
liquidity, interest rate risk and capital. To achieve this objective, policies
and procedures have been implemented that utilize a combination of selected
investments and funding sources with various maturity structures.

139

Liquidity: Liquidity represents the ability to generate funds at reasonable
rates to meet potential cash outflows from deposit customers who need to
withdraw funds or borrowers who need available credit. The primary source of the
Bank's liquidity has been the Bank's ability to generate deposits.

Supplementing the deposit base, liquidity is available from the investment
portfolio, which consists primarily of mortgage-backed securities issued by U.S.
Government agencies and corporations. These securities enhance liquidity not
only by their marketability, but they also provide monthly principal and
interest payments.

The liquidity position is also strengthened by the establishment of credit
facilities with other banks and the Federal Home Loan Bank of Pittsburgh (FHLB).
Investment securities are required to be pledged as collateral for transactions
executed under these facilities and provide for an availability of funds on an
overnight basis. The FHLB also provides for borrowings on a fixed or floating
rate basis with specified maturities up to 20 years at costs that would be less
expensive than through the Bank's deposit generation process.

Investment Portfolio: The investment portfolio, consisting principally of
mortgage-backed securities, is coordinated with the liquidity and interest rate
sensitivity position of the Bank. With an emphasis on minimizing credit, capital
and market risk, the investment portfolio is considered an extension of loans
with the objectives of enhancing liquidity and earning a fair return. The
investments in mortgage-backed securities consist of a combination of adjustable
and fixed rate securities with an emphasis on investments with relatively short
weighted average lives. Of the total mortgage-backed portfolio with an amortized
cost of $140.9 million at September 30, 1995, $22.1 million were adjustable rate
and $118.8 million were fixed rate. The estimated weighted average life for the
mortgage-backed securities portfolio at September 30, 1995 approximated 5.4
years.

Interest Rate Sensitivity: Interest rate sensitivity is closely related to
liquidity since each is directly affected by the maturity of assets and
liabilities. Interest rate sensitivity also deals with exposure to fluctuations
in interest rates and its effect on net interest income. It is management's

objective to maintain stability in the growth of net interest

income by appropriately mixing interest sensitive assets and liabilities. One
tool used by management to gauge interest rate sensitivity is a gap analysis
which categorizes assets and liabilities on the basis of maturity date, the date
of next repricing, and the applicable amortization schedule. This analysis
summarizes the matching or mismatching of rate sensitive assets versus rate
sensitive liabilities according to specified

140

time periods and provides management with an indication of how interest income
will be impacted by changing rate scenarios. For example, an institution with
more interest sensitive assets than liabilities is said to have a positive gap.
In this example, as interest rates rise, the greater volume of assets should
reprice more rapidly than the liabilities. The net result should be an increase
in the net interest margin. Conversely, in a declining rate environment the net
interest margin should decline. If the institution has a greater volume of
interest sensitive liabilities than assets, it is said to have a negative gap.
In this event, increased interest rates would cause the greater volume of
liabilities to reprice more rapidly than assets. The net result should be a
decline in the net interest margin. Conversely, in a declining rate environment
the net interest margin should increase. In addition to the GAP analysis,
computer simulations are used to evaluate the impact of a change in interest
rates on liquidity, interest rate spreads/margins and operating results. The
simulation model is a more effective tool than a GAP analysis since the
simulation analysis can more accurately reflect the impact of rising and
declining rates on each type of interest earning asset and interest bearing
liability. The simulation is particularly more beneficial as it can better
evaluate the effects of prepayment speeds on the Bank's portfolio of
mortgage-backed securities and what impact that would have on the Bank's
liquidity and profitability. Using the result of the simulation analysis, the
Bank strives to control its interest rate risk exposure so that net interest
income does not fluctuate by more than 5% assuming that interest rates increase
or decrease by 200 basis points.

The blending of fixed and floating rate loans and investments to match the
repricing and maturity characteristics of the various funding sources is a
continuous process in an attempt to minimize fluctuations in net interest
income. An effective tool used by the Bank in this process has been the
availability and flexibility of the various FHLB advance programs, which enable
the Bank to lock in spreads when appropriate and provide an effective method of
matching fixed rate assets with a fixed rate funding source.

maturities, repricing frequencies and prepayment patterns. Floating rate assets
and liabilities are distributed based on the repricing frequency of the
instrument while fixed rate instruments are based on maturities. Mortgage-backed
securities are distributed in accordance with their repricing frequency and
estimated prepayment speeds. Deposit liabilities are distributed according to
repricing opportunities for NOW and money market accounts, maturities for
certificates of deposit and expected retention rates and interest sensitivity
for savings deposits. As the table shows, the Bank has a cumulative negative gap
for all time periods except the last. This indicates that future liquidity,
interest rate margins and operating results should be positively impacted in a
falling rate environment and negatively impacted in a rising rate environment.

0 to 3 4 to 12 1 to 3 3 to 5 After 5
Months Months Years Years Years Total
------- ------- ------ ------ ------- --------
(Dollars in thousands)

Mortgage-backed securities $ 7,578 $ 23,342 $ 52,883 $52,364 $ 4,054 $140,221
Other securities 2,195 -- -- -- 395 2,590
Mortgage loans held for sale 4,071 -- -- -- -- 4,071
Loans 45,307 22,380 6,016 8,969 21,812 104,484
-------- -------- -------- ------- ------- -------

Total Earning Assets $ 59,151 $ 45,722 $ 58,899 $61,333 $26,261 $251,366
======= ======== ======== ======= ======= ========

NOW and money market $ 10,861 $ -- $ -- $ -- $ -- $ 10,861
Savings -- -- 24,059 24,059 -- 48,118
Certificates of deposit 13,647 58,379 22,336 23,939 52 118,353
FHLB advances 37,928 -- -- -- 213 38,141
Subordinated debt -- -- 2,750 $ -- -- 2,750
Net non-interest bearing
source of funds -- -- -- -- 33,143 33,143
------- -------- -------- ------- ------- --------
Total Sources of Funds $ 62,436 $ 58,379 $ 49,145 $47,998 $33,408 $251,366
======= ======== ======== ======= ======= ========

Period Gap $ (3,285) $(12,657) $ 9,754 $13,335 $(7,147)
======= ======== ======== ======= =======

Cumulative Gap $ (3,285) $(15,942) $ (6,188) $ 7,147 --
======= ======== ======== ======= =======

141

0 to 3 4 to 12 1 to 3 3 to 5 After 5
Months Months Years Years Years Total
------- ------- ------ ------ ------- --------
(Dollars in thousands)

Cumulative Gap as % of total assets (1.3%) (6.2%) (2.4%) 2.8% -- --

Investment Portfolio

The investment portfolio of Regent includes investments classified as
held-to-maturity and available-for-sale and consists of mortgage-backed
securities and non-marketable equity securities. The mortgage-backed securities
portfolio is comprised principally of securities issued by U.S. Government
agencies and corporations, which represented 86% of the total mortgage-backed
portfolio at September 30, 1995. The remaining 14% consisted of collateralized
mortgage obligations of private issuers. The table below summarizes by major
category the amortized cost and market values of investment securities
classified as held-to-maturity and available-for-sale at September 30, 1995:

Held-to-Maturity Available-for-Sale
----------------------- ----------------------
Amortized Market Amortized Market
Cost Value Cost Value
--------- ------- --------- ------

GNMA $13,096,578 $12,663,480 $ - $ -
FHLMC 45,209,954 44,526,145 11,447,000 11,095,255
FNMA 34,225,820 33,379,852 17,958,752 17,588,669
Collateralized mortgage
obligations 19,005,398 19,005,482 - -
Non-marketable equity
securities - - 2,589,808 2,589,808
------------ ------------ ----------- -----------
$111,537,750 $109,574,959 $31,995,560 $31,273,732
============ ============ =========== ===========

The following table details the range of maturities of the total mortgage-backed
securities portfolio as of September 30, 1995 based on the weighted average life
of the securities for each classification and the weighted average yield for
each maturity period:

After 1 After 5
Within But Within But Within
l Year 5 Years 10 Years Total
-------- ----------- ----------- -----------

U.S. Agencies and
Corporations $552,091 $60,191,656 $61,194,357 $121,938,104
Collateralized mortgage
obligations 51,603 18,228,734 725,061 19,005,398
-------- ----------- ----------- ------------
$603,694 $78,420.390 $61,919,418 $140,943,502
======== =========== =========== ============

Weighted Average Yield 8.02% 6.64% 6.78%
==== ==== ====

The following table sets forth those collateralized mortgage obligations which
have a value that exceeded 10% of the Company's shareholders' equity at
September 30, 1995. These securities have an investment rating of AA or better.

Carrying Value Market Value
-------------- ------------
Bear Stearns Mortgage Securities Inc.
Series 1993-2 Class 7 $2,772,914 $2,772,952
Bear Stearns Mortgage Securities Inc.
Series 1993-2 Class 5 2,612,641 2,612,690
Bear Stearns Mortgage Securities Inc.
Series 1993-2 Class 6 1,752,343 1,752,374
Bear Stearns Mortgage Securities Inc.
Series 1993-12 Class 1B 1,956,775 1,956,720
Bear Stearns Mortgage Securities Inc.
Series 1992-04 1,840,594 1,840,661
Capstead Securities Corp.
Series 1992-C-3 1,703,928 1,703,869
Resolution Trust Corporation
Series 1991-M6 1,527,140 1,527,177
Saxon Mortgage Security Corp.
Series 1993-04 Class 1A 2,609,253 2,609,225

Gross unrealized gains and losses on mortgage-backed securities held
to maturity at September 30, 1995 were $247,811 and $2,210,518, respectively
and gross unrealized gains and losses on mortgage-backed securities
available-for-sale at September 30, 1995 were $777,343 and $55,515,
respectively. There were no sales of mortgage-backed securities during
the nine months ended September 30, 1995. Unrealized losses on the securities
generally are the result of lower than market interest rates on the underlying
mortgages contained in the securities.

At September 30, 1995, the contractual maturity of substantially all of the
Bank's mortgage-backed securities was in excess of ten years. The actual
maturity of a mortgage-backed security is less than its stated maturity due to
prepayments of the underlying mortgages. Prepayments that are different than
anticipated will affect the yield to maturity. The yield is based upon the
interest income and the amortization of any premium or discount related to the
mortgage-backed security. In accordance with generally accepted accounting
principles, premiums and discounts are amortized over the estimated lives
of the loans, which decrease and increase interest income, respectively. The
prepayment assumptions used to determine the amortization period for premiums
and discounts can significantly affect the yield of the mortgage-backed
security, and these assumptions are reviewed periodically to reflect actual
prepayments. Although prepayments of underlying mortgages depend on many
factors, including the type of mortgages, the coupon rate, the age
of mortgages, the geographical location of the underlying real estate
collateralizing the mortgages and general levels of market interest rates, the
difference between the interest rates on the underlying mortgages and the
prevailing mortgage interest rates generally is the most significant determinant
of the rate of prepayments. During periods of falling mortgage interest rates,
if the coupon rate of the underlying mortgages exceeds the prevailing
market interest rates offered for mortgage loans, refinancing generally
increases and accelerates the prepayment of the underlying mortgages
and the related security. Under such circumstances, the Bank may be
subject to reinvestment risk because to the extent that the Bank's
mortgage-backed securities amortize or prepay faster than anticipated,
the Bank may not be able to reinvest the proceeds of such repayments and
prepayments at a comparable rate. Based on simulation models, if market interest
rates decrease by 200 basis points, the weighted average life of the
mortgage-backed securities portfolio would decrease to approximately 2.9 years
from the current weighted average life of 5.4 years, and the unrealized gain on
the portfolio would be approximately $1.9 million. Conversely, if market
interest rates increased by 200 basis points, the weighted average life of the
mortgage-backed securities portfolio would increase to 6.8 years and the
unrealized loss on the portfolio would be approximately $10 million.

Mortgage-backed securities generally increase the quality of the Bank's
assets by virtue of the insurance or guarantees that back them,
are more liquid than individual mortgage loans and may be used to
collateralize borrowings or other obligations of the Bank.

Lending

Total loans, consisting of loans held for the portfolio and mortgage loans
held for sale, amounted to $108.6 million at September 30, 1995 compared to
$81.5 million at December 31, 1994. The increase of $27.1 million primarily
reflected higher commercial loan activity and consumer loans which represented
the expansion of a specialized installment loan program that finances automobile
insurance premiums. The following table details the types of loans outstanding
by category as of September 30, 1995 and December 31, 1994:

September 30, 1995 December 31, 1994
------------------ -----------------
Amount % Amount %
------ --- ------ ---

Commercial & industrial $42,607,801 41% $27,406,523 36%

Real estate:
Construction 3,910,321 4% 1,455,110 2%
Mortgages-residential 27,336,353 26% 29,252,959 38%
Mortgages-commercial 13,970,415 13% 13,550,216 18%

Consumer 16,658,627 16% 4,409,532 6%
------------ --- ----------- ---
Total Loans $104,483,517 100% $76,074,340 100%
==== ====

Less:
Unearned interest
and fees (1,353,823) (214,701)
------------ -----------
$103,129,694 $75,859,639
============ ===========

142

Mortgage loans held for sale $ 4,071,033 $ 5,387,517
=========== ===========

Real estate loans are secured primarily by first mortgages on commercial
property in which the loan-to-value ratio is 75% or less and residential
properties with a loan-to-value ratio of 80% or less. Consumer loans are
collateralized primarily by unearned automobile insurance premiums.

To meet its asset/liability objectives and to control its interest rate
sensitivity exposure, the Bank's strategy is to originate loans with floating
rates and with maturities less than five years. The following table presents the
scheduled maturities of loans that are outstanding as of September 30, 1995:

After 1
Within But Within After
1 Year 5 Years 5 Years Total
------------ ----------- ----------- ------------

Predetermined
interest rates $23,294,114 $13,628,774 $21,811,169 $58,734,057
Floating rate 24,829,188 16,868,983 4,051,289 45,749,460
------------ ----------- ----------- ------------

$48,123,302 $30,497,757 $25,862,458 $104,483,517
=========== =========== =========== ============

Risk Elements

Risk elements unique to each particular loan category are as follows:

Commercial and Industrial

Risk factors inherent in commercial and industrial loans include
economic risk which may affect borrower's ability to sustain and grow a
business; collateral risk in that an economic downturn may result in
collateral depreciation; interest rate risk in that rate changes may
outpace business cash flow; and legal risk in properly documenting and
perfecting collateralization. The Bank monitors such loans annually
with updated financial analysis.

Construction loans

Risk factors inherent in construction loans include economic risk which may
affect end purchase or use of the collateral; engineering risk which may
prevent completion of construction or result in added expense in build-out;
environmental risk in earth and water table movement; management risk in
correctly and completely monitoring construction and loan advances; and legal
risk in properly documenting each advance and ensuring collateralization. The
Bank monitors such loans to review all advances and monitor all projects.

Residential mortgages

Risk factors inherent in residential mortgage lending include economic
risk which may affect a borrower's ability to maintain a job and
financial stability; collateral risk in that an economic downturn may
result in collateral depreciation; interest rate risk in that rate
changes may outpace personal cash flow; indeterminate in that personal
factors--divorce, illness--may affect credit stability; environmental risk
in that collateral may be damaged or destroyed by natural causes; and
legal risk in properly documenting and perfecting collateralization.
Thc Bank evaluates, among other things, collateral, financial stability,
credit stability, cash flow and interest rate risk, and monitors
such loans for indications of financial decline or collateral devaluation.

Commercial mortgages

Risk factors inherent in commercial mortgage lending include economic
risk which may affect lessees' ability to pay rent, or borrower's
ability to cash-flow vacancies; collateral risk in that an economic downturn
may result in collateral depreciation; environmental risk in that
collateral may be damaged or destroyed by natural causes; interest rate
risk in that rate changes may outpace property cash flow; and legal
risk in properly documenting and perfecting collateralization. Loans
are underwritten to match lease terms, and large tenants are subject to
credit review. The Bank monitors such loans quarterly or annually with
updated inspections, lease analysis, and financial analysis.

Consumer loans

Consumer loans consist primarily of loans to individuals to finance
automobile insurance premiums. These loans have repayment terms of
nine months and are secured by the insurance policy's unearned premiums.
Risk factors include economic risk which may affect the borrower's ability
to maintain a job and financial stability; the financial strength and
stability of the insurance company underwriting the insurance and
insurance agents that originate the loans; the effectiveness of the
internal control structure to cancel the insurance on delinquent accounts
in a timely and effective manner; and legal risk in properly documenting
and perfecting the collateral.

The level of non-performing assets, consisting of non-accrual loans, loans
past due ninety days or more, and other real estate owned amounted to $3.4
million or 1.34% of total assets at September 30, 1995 compared to $4.1 million
or 1.68% of total assets at December 31, 1994. The reduction of $650 thousand in
non-performing assets resulted primarily from lower non-accrual loans as several
large non-accruing loans were fully repaid in the 1995 second quarter. The
following table details the non-performing assets as of September 30, 1995 and
December 31, 1994:

September 30, 1995 December 31, 1994
------------------ -----------------

Non-accrual loans $2,884,193 $3,685,804
Accruing loans 90 days or more
past due 545,510 393,681

Restructured loans - -
---------- ----------
Total non-performing loans 3,429,703 4,079,485
Other real estate owned - -
---------- ----------
Total non-performing assets $3,429,703 $4,079,485
========== ==========

Non-performing loans to period
end loans and loans held
for sale 3.16% 5.01%

Non-performing assets to
total assets 1.34% 1.68%

Non-performing assets to loans,
loans held for sale and other
real estate owned 3.16% 5.01%

Accrual of interest is discontinued on loans when management believes,
after considering economic and business conditions and collection efforts, that

the borrower's financial condition is such that collection of interest and
principal is doubtful. The non-accrual loans are primarily secured by various
types of real estate. Interest income not recognized due to non-accrual status

143

was $248.6 thousand for the nine months ended September 30, 1995. No interest
income was included in operating income attributable to non-accrual loans in the
same nine-month period.

Other real estate owned represents property acquired by foreclosure or deed
in lieu of foreclosure. These assets are initially reported at the lower of the
related loan balance or the fair value of the property.

Other problem loans not considered above include loans considered impaired
by Statement of Accounting Standards No. 114, "Accounting by Creditors for
Impairment of a Loan" ("SFAS No. 114"), as amended by Statement of Financial

Accounting Standards No. 118, "Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures" ("SFAS No. 118").

Under the new standard, the allowance for credit losses related to loans
that are impaired as defined by SFAS No. 114 and SFAS No. 118, is evaluated
based on the present value of expected future cash flows discounted at the
loan's effective interest rate, at the loan's observable market price or the
fair value of the collateral for certain collateral dependent loans. All loans
regardless of size and type are evaluated for impairment on an individual basis.
Prior to 1995, the allowance for credit losses related to these loans was
evaluated based on undiscounted cash flows or the fair value of the collateral
for collateral dependent loans.

Loans aggregated for evaluation under SFAS No. 114 and SFAS No. 118 are
those loans risk-rated by the Bank as Special Mention, Substandard and Doubtful,
as well as any Troubled Debt Restructure which may not be so risk-rated. As
noted above, as of September 30, 1995, there are no restructured loans.

At September 30, 1995, the recorded investment in loans that are considered
to be impaired as defined SFAS No. 114 and SFAS No. 118 was $4.4 million (of
which $2.9 million were on a non-accrual basis). Included in this amount is $4.3
million of impaired loans for which the related allowance for credit losses is
$1.3 million and $72,000 of impaired loans that as a result of write-downs do
not have an allowance for credit losses. The average recorded investment in
impaired loans during the quarter ended September 30, 1995 was approximately
$4.6 million. For approximately $800,000 of impaired loans, the reserve
evaluation was based on the expected future cash flows and the remaining $3.6
million was based on the fair value of the collateral.

As part of the quarterly review of the risk elements of the portfolio, an
evaluation is also made of the adequacy of the allowance for loan losses. In
making an assessment of the quality of the loan portfolio and the adequacy of
the allowance for loan losses, management takes into consideration such elements
as general economic conditions, industry trends, the volume of delinquencies,
specific credit review, as noted above, and other pertinent information. Based
on this evaluation, the allowance for loan losses is adjusted by the provision

which is charged against income. The following table summarizes the activity for
the nine months ended September 30, 1995 and 1994:

September 30, 1995 September 30, 1994
------------------ ------------------

Balance, beginning of period $1,713,372 $1,321,225
---------- ----------
Charge-offs:
Commercial & industrial 340 15,909
Real estate - construction - 22,492
Real estate - residential 127,679 -
------- ------

128,019 38,401
------- ------
Recoveries:
Commercial & industrial 567 81,602
Consumer 8,000 -
----- ------
Total recoveries 8,567 81,602
----- ------

Net (charge-offs) recoveries (119,452) 43,201
--------- ------
Provision charged to operations 320,000 35,000
------- ------

Balance, end of period $1,913,920 $1,399,426
========== ==========

Allowance for loan losses as a %
of year-end loans and loans
held for sale 1.76% 1.73%

Net charge-offs (recoveries)
as a % of average loans and
loans held for sale 0.18% (0.07%)

Management believes that those loans identified as non-performing are
adequately secured and the allowance for loan losses as of
September 30, 1995 is sufficient in relation to the potential risk of loss
that has been identified in the loan portfolio as of such date. Management
has allocated the allowance based on an assessment of risks within the
loan portfolio, the estimated value of underlying collateral and expected

future cash flows from borrowers.

September 30, 1995
----------------------------
% of Loans
Amount To Total Loans
-------- --------------

Commercial & Industrial $731,000 41%
Real Estate:
Construction 117,000 4
Mortgages-residential 411,000 26
Mortgages-commercial 27,000 13
Consumer -- 16
Unallocated 627,820 N/A
--------- ---------
$1,913,820 100%
--------- ---------
--------- ---------

It is not expected that the level of net charge-offs during the next
full year will vary significantly from historical levels.

Deposits

Total deposits at September 30, 1995 aggregated $192.9 million which was
$31.9 million higher than the December 31, 1994 balance of $161 million. This
increase was attributable to higher certificate of deposit balances of $68.1
million which offset the decline in statement savings balances of $35.2 million.
As illustrated in the table below, the mix of deposits has shifted to a greater
reliance on certificates of deposit as a funding source.

144

September 30, 1995 December 31, 1994
------------------ -----------------
Balance % Balance %
------- --- ------- ---

Demand $ 15,611,907 8% $ 13,641,796 8%
NOW 3,618,720 2% 4,201,594 3%
Savings 48,117,623 25% 83,335,372 52%
Money Market 7,241,841 4% 9,594,864 6%
Certificates of deposit 118,353,183 61% 50,287,846 31%

------------ ---- ------------ ----
$192,943,274 100% $161,061,472 100%
============ ==== ============ ====

Short-Term Borrowings

Short-term borrowings are used to supplement the deposit base of the Bank,
to support asset growth, to fund specific loan

programs, and as a tool in the Bank's asset/liability management process. During
1995 and 1994, the Bank has utilized its credit facilities with its
correspondent bank's and with the FHLB. The borrowings from the FHLB are secured
by the Bank's investments in mortgage-backed securities.

The following table summarizes the Bank's short-term borrowing activity for
the nine months ended September 30, 1995 and 1994:

Maximum Weighted
Balance Average Outstanding Average Interest Average
Outstanding Outstanding at any Month Rate at Rate Paid
September 30 During the Period End During Period September 30 ---------
------------ ----------------- ----------------- -----------------

1995:FHLB borrowings $37,926,981 $46,341,779 $66,155,178 6.62% 6.25%
Federal funds purchased -- 280,952 -- -- 5.92%
----------- -----------
$37,926,981 $46,622,731 6.25%
=========== ===========
1994:FHLB borrowings $43,970,817 $34,696,515 $42,581,175 5.68% 4.42%
Federal funds purchased -- 128,276 -- -- 3.46%

----------- -----------
$43,970,817 $34,824,791 4.41%
=========== ===========

Results of Operations

Net income for the nine months ended September 30, 1995 amounted to $376
thousand, or $.02 per share, compared to the $1 million, or $.80 per share,
earned in the first nine months of 1994. The lower 1995 year-to-date results
were attributable to increases in the provision for loan losses and other

expenses. The nine-month net income total, however, benefitted from higher net
interest income.

Net Interest Income

Net interest income for the nine months ended September 30, 1995 totaled
$5.9 million which was $1.6 million, or 38%, higher than net interest income in
the comparable 1994 period of $4.3 million. The year-to-date increase was
attributable to an improved net interest margin which reflected the yields on
earning assets rising faster than the cost of interest bearing liabilities. The
net interest margin rose from 2.31% for the first nine months of 1994 to 3.31%
for the same nine-month period in 1995. The yields on earning assets were higher
as a result of lower amortization of securities portfolio premiums and the

higher prime lending rate which has prevailed in 1995.

145

Additionally, a greater percentage of interest income was derived from higher
yielding loan activity. For the nine months ended September 30, 1995, interest
and fees on loans represented 50% of total interest income versus 36% in the
same 1994 period. Offsetting the benefits of the improved net interest margin,
however, was a reduction of $10 million in the amount of average earning assets.
The following is a rate/yield analysis for the nine months ended September 30,
1995 and 1994:

(Dollars in thousands) 1995 1994
Average Income/ Rate/ Average Income/ Rate/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----

Interest Earning Assets:

Federal funds sold $ - $ - -% $ 379 $ 10 3.37%
Securities 151,650 7,581 6.66% 170,097 8,150 6.39%
Loans 86,881 7,482 11.36% 78,078 4,611 7.79%
-------- ------- -------- -------
Total $238,531 $15,063 8.42% $248,554 $12,771 6.85%
======== ======= ======== =======

Interest Bearing Liabilities:
NOW accounts $ 4,185 $ 78 2.49% $ 3,200 $ 60 2.50%
Statement savings 55,014 2,000 4.86% 102,943 4,129 5.36%
Money market 9,008 258 3.83% 8,011 175 2.93%

Time deposits 96,228 4,450 6.18% 66,904 2,542 5.08%
Short-term borrowings 46,622 2,180 6.25% 34,825 1,149 4.41%
Long-term advances 93 3 6.51% 7,129 261 4.88%
Subordinated debt 2,750 164 7.98% 2,701 162 8.03%
-------- ------- -------- -------
Total 213,900 9,133 5.71% 225,713 8,478 5.02%
-------- -------
Non-Interest Bearing
Sources of Funds 24,631 22,841
-------- --------
$238,531 $248,554
======== ========

Net Interest Income/Spread $ 5,930 2.71% $ 4,293 1.83%
======= ===== ======= =====
Net Interest Margin 3.31% 2.31%
===== =====

Provision for Loan Losses

A provision for loan losses of $320 thousand was recorded for the nine
months ended September 30, 1995 compared to $35 thousand in the same period in
1994. The increase in the provision was due to the non-accrual loans that
occurred as a result of collectibility concerns for certain residential mortgage
loans purchased from two mortgage banking companies, as well as a commercial
loan extended to one of these companies.

Other Expenses

Total other expenses for the nine months ended September 30, 1995 were $5.1
million, or 78%, over the comparable 1994 period total of $2.9 million. The
primary factors that increased other expenses for the nine-month period ended
September 30, 1995 were higher salaries and employee benefit costs, professional
fees, processing and operating costs for the insurance premium finance lending
program, costs incurred in connection with resolving legal

146

matters relating to the assignment of residential mortgage loans to the Bank
and Merger related expenses. Salaries and employee benefit expenses increased by
$157.7 thousand for the first three quarters and were attributable to higher
staffing levels and benefit costs and to salary increases. Professional services
increased by $508.5 thousand for the nine months ended September 30, 1995
principally due to legal expenses incurred in connection with the workout of the
irregularities involving residential mortgage loans. In addition, legal,
accounting and advisory expenses of $188 thousand were incurred relating to
Regent's proposed Merger with Carnegie. Expenses of $1.3 million were recorded
in the nine months ended September 30, 1995 which did not occur in the

comparable 1994 period for the processing and operating of the installment loan
program for automobile insurance premium financing. An expense of $175 thousand
was also recorded in 1995 for the settlement of legal matters in connection with
the assignment of certain residential mortgage loans to Regent. The carrying
value of an asset received in satisfaction of a borrower's debt was reduced by
$50 thousand. Offsetting these increases in other expenses was a refund of $107
thousand received from the FDIC applicable to insurance premiums previously
paid.

Provision for Income Taxes

For the nine months ended September 30, 1995, income tax expense was $191.8
thousand versus $526.9 thousand for the same period in 1994. The lower provision
in 1995 reflects the decrease in pre-tax profits as the effective tax rate for
both periods was 34%.

Regent Comparison-Year Ended December 31, 1994
to Year Ended December 31, 1993
and Year Ended December 31, 1993

to Year Ended December 31, 1992

Financial Overview

Regent, the holding company for the Bank, recorded net income of $503
thousand, or $.22 per share, in 1994 compared to the net income of $1.2 million,
or $.71 per share, earned in 1993. In 1993, the Bank introduced a new lending
program directed to the mortgage banking industry. As an alternative to a
warehouse credit line, the Bank participates in the funding of individual
residential mortgage loans originated by mortgage bankers. During late 1994, two
of the mortgage banking companies involved in this program experienced financial
difficulties and subsequently filed for bankruptcy protection. At or about the
same time, the Bank learned that irregularities occurred in the origination
process at the mortgage banking companies which negatively impacted the
underlying real estate collateral of certain loans that had been funded. As a
result of these conditions, the Bank recorded charges totaling $1.1 million on a
pre-tax basis ($1.08 per common share) in the fourth quarter, which included an
additional provision for loan losses of $825 thousand. Management of the Bank is
aggressively pursuing the

147

recovery of a substantial portion of these charges through insurance claims and
other courses of action. Such recoveries, if realized, will be recorded in
future periods when received. Offsetting the effects of this non-recurring
incident was an increase in net interest income of $600 thousand, which resulted
from a higher level of average earning assets.

Total assets at December 31, 1994 were $243.5 million which was comparable
to December 31, 1993 total assets of $243.9 million. While the overall asset
size remained relatively the same, the asset mix changed as lending activity
increased by 14%. Total loans and mortgage loans held for sale increased to
$81.5 million at year end 1994 from $71.6 million at December 31, 1993. The rise
in loans was attributable to higher commercial activity and a new installment
lending program that finances automobile insurance premiums for individuals.
See "--Risk Elements" below. A continuing emphasis has been placed on loan
growth by reinvesting the cash flow from the mortgage-backed securities
portfolio into the commercial and installment programs but reducing residential
mortgage activity.

Funding sources changed significantly in 1994, particularly in the latter
half of the year. The Bank increased its borrowings from the FHLB as a
significant portion of deposit balances were withdrawn and reinvested into
higher yielding U.S. Treasury securities. As a result, the Bank's statement
savings and certificate of deposit balances decreased by 18% and 25%,
respectively. The decrease in total deposits of $31.3 million was funded by
borrowings from the FHLB at rates comparable to the rates paid by the Bank on
deposits.

In 1993, net income was $1.18 million, or $.71 per share, while net income
in 1992 was $1.17 million, or $.95 per share. The 1% increase in net income from
1992 to 1993 was attributable to an increase in net interest income and a lower
provision for loan losses. The $482 thousand increase in net interest income
resulted primarily from a higher amount of interest earning assets,
specifically, mortgage-backed securities, while the overall improvement in loan
quality enabled the provision for loan losses to be reduced by $75 thousand. Net
interest income, although increasing in 1993 versus 1992, was reduced by a
charge of $400 thousand for additional securities premium amortization recorded
in the 1993 fourth quarter. This additional premium amortization recognized the
acceleration in prepayments which occurred from the heavy volume of mortgage
refinancings. Offsetting these increases to earnings, however, were other
expenses being higher by 25%. The results of operations and per share
information is summarized in the following table:

148

% Increase (Decrease)
1994 1993 1992 1994 to 1993 1993 to 1992
---- ---- ---- ------------ ------------

Net interest income $5,791,818 $5,191,442 $4,709,404 12% 10%
Provision for loan losses 860,000 450,000 525,000 91% (14%)
Other income 201,883 155,650 70,297 30% 121%
Other expenses 4,371,776 3,113,483 2,486,145 40% 25%

---------- ---------- ----------
Pre-tax income 761,925 1,783,609 1,768,556 (57%) 1%
Income taxes 259,100 606,500 601,700 (57%) 1%
---------- ---------- ----------
Net Income $ 502,825 $1,177,109 $1,166,856 (57%) 1%
========== ========== ==========
Earnings per share:
Primary $.22 $.71 $.95

Fully diluted - - .82

Financial Condition

Capital Adequacy

Economic conditions and the regulatory environment have placed an
increasing emphasis on the capital strength of financial institutions. Capital
strength is a primary determinant in a financial institution's ability to grow,
make

acquisitions and protect against any unforeseen loss or adverse economic
condition. An evaluation of capital strength assesses how an institution's
inherent risks impact its ongoing financial net worth and focuses particularly
on asset quality, interest rate sensitivity, earnings and liquidity.

Total shareholders' equity at December 31, 1994 was $12.2 million or $920
thousand lower than shareholders' equity of $13 million at December 31, 1993.
The decrease was a result of recording a net unrealized loss on securities
available for sale of $1.4 million which exceeded Regent's net income of $503
thousand. No cash dividends were paid in 1994 or 1993 as it is management's
intention to retain its earnings for the foreseeable future in order to maintain
its capital strength and allow for growth.

These standards define capital as Tier I and Tier II capital. All banks are
required to have Tier I capital of at least 4% of risk-weighted assets and total
capital of at least 8% of risk-weighted assets. Tier I(Core) capital consists of
common shareholders' equity, non-cumulative preferred stock, and retained
earnings and excludes the effects of unrealized gains or losses on securities

available for sale. Tier II or total

149

capital includes Tier I capital, cumulative preferred stock, qualifying
subordinated debt, and the allowance for possible loan losses of up to a maximum
of 1.25% of total risk-weighted assets. The following table presents the
components of Regent's assets and Tier I and II capital ratios at December 31,
1994 and 1993:

1994 1993
------------ ------------
Tier I: Equity Capital $ 13,628,567 $ 13,125,743

Less: -- (6,401)
------------ ------------
Total Tier I Capital 13,628,567 13,119,342
Tier II: Allowance for possible loan losses 1,387,754 1,321,225
Qualifying subordinated debt 1,650,000 2,040,000
------------ ------------
Total Tier II capital $ 16,666,321 $ 16,480,567
============ ============

Total Risk Adjusted Assets $111,020,356 $105,924,683
============ ============
Tier I Ratio 12.28% 12.39%
Tier II Ratio 15.01% 15.56%

In addition to the risk-based requirements, regulations have been adopted
that establish a minimum leverage capital ratio of 3% of Tier I capital to total
assets. The 3% level applies to only those banks that are given the highest
composite rating under the regulators rating system while all other banks are
expected to have 3% plus an additional cushion of at least 100 to 200 basis
points. At December 31, 1994 and 1993, Regent's leverage ratio was 5.6% and
5.4%, respectively.

Regent's objective is to maintain its strong capital base as well as
exceeding the requirements for the Bank to be classified as "well capitalized",
as defined by the FDIC. Management believes that the Bank's capital ratios are
in excess of regulatory requirements, are adequate to support current and near
term growth, and that the Bank's ratios can be maintained above the level needed
to be considered "well capitalized."

Asset and Liability Management

Asset and liability management is the process of maximizing net interest
income within the constraints of maintaining acceptable levels of liquidity,
interest rate risk and capital. To achieve this objective, policies and
procedures have been implemented that utilize a combination of selected
investments and funding sources with various maturity structures.

Liquidity

Liquidity represents the ability to generate funds at reasonable rates to
meet potential cash outflows from deposit customers who need to withdraw funds
or borrowers who need available credit. The primary source of the Bank's
liquidity has been the Bank's ability to generate deposits.

150

The liquidity position is also strengthened by the establishment of credit
facilities with other banks and the FHLB. Investment securities are required to
be pledged as collateral for transactions executed under these facilities and
provide for

an availability of funds on an overnight basis. The FHLB also provides for
borrowings on a fixed or floating rate basis with specified maturities up to 20
years at costs that would be less expensive than through the Bank's deposit
generation process.

Investment Portfolio

The investment portfolio, consisting principally of mortgage-backed
securities, is coordinated with the liquidity and interest rate sensitivity
position of the Bank. With an emphasis on minimizing credit, capital and market
risk, the investment portfolio is considered an extension of loans with the
objectives of enhancing liquidity and earning a fair return. The investments in
mortgage-backed securities consist of a combination of adjustable and fixed rate
securities with an emphasis on investments with relatively short weighted
average lives. Of the total mortgage-backed portfolio with a carrying value of
$155.1 million at December 31, 1994, $17.9 million were adjustable rate and
$137.2 million were fixed rate. The estimated weighted average life for the
mortgage-backed securities portfolio at December 31, 1994 approximated 6.9
years.

Interest Rate Sensitivity

Interest rate sensitivity is closely related to liquidity since each is
directly affected by the maturity of assets and liabilities. Interest rate
sensitivity also deals with exposure to fluctuations in interest rates and its
effect on net interest income. It is management's objective to maintain
stability in the growth of net interest income by appropriately mixing interest
sensitive assets and liabilities. One tool used by management to gauge interest
rate sensitivity is a gap analysis which categorizes assets and liabilities on
the basis of maturity date, the date of next repricing and the applicable
amortization schedule. This analysis summarizes the matching or mismatching of
rate sensitive assets versus rate sensitive liabilities according to specified
time periods, and provides management with an indication of how interest income
will be impacted by changing rate scenarios. For example, an institution with
more interest sensitive assets than liabilities is said to have a positive gap.
In this example, as interest rates rise, the greater volume of assets should
reprice more rapidly than the liabilities. The net result should be an increase
in the net interest margin. Conversely, in a declining rate environment the net
interest margin should decline. If the institution has a greater volume of
interest sensitive liabilities than assets, it is said to have a negative gap.
In this event, increased interest rates would cause the greater volume of
liabilities to reprice more rapidly than assets. The net result should be a
decline in the net interest margin. Conversely, in a declining rate environment
the net interest margin should increase. In addition to the GAP analysis,
computer simulations are used to evaluate the impact of a change in interest
rates on liquidity, interest rate spreads/margins and operating results. The
simulation model is a more effective tool than a GAP analysis since the
simulation analysis can more accurately reflect the impact of rising and
declining rates on each type of interest earning asset and interest bearing
liability. The simulation is particularly more beneficial as it can better
evaluate the effects of prepayment speeds on the Bank's portfolio of
mortgage-backed securities and what impact that would have on the Bank's
liquidity and profitability. Using the result of the simulation analysis, the
Bank strives to control its interest rate risk exposure so that net interest
income does not fluctuate by more than 5% assuming that interest rates increase
or decrease by 200 basis points.

The blending of fixed and floating rate loans and investments to match the
repricing and maturity characteristics of the various funding sources is a
continuous process in an

151

attempt to minimize fluctuations in net interest income. An effective tool used
by the Bank in this process has been the availability and flexibility of the
various FHLB advance programs, which enable the Bank to lock-in spreads when
appropriate and provide an effective method of matching fixed rate assets with a
fixed rate funding source.

The Bank's objective is to structure its balance sheet, as outlined in the
following Interest Sensitivity table, to minimize any significant fluctuation in
net interest income. The distribution in the table is based on a combination of
maturities, repricing frequencies and prepayment patterns. Floating rate assets
and liabilities are distributed based on the repricing frequency of the
instrument while fixed rate instruments are based on maturities. Mortgage-backed
securities are distributed in accordance with their repricing frequency and
estimated prepayment speeds. Deposit liabilities are distributed according to
repricing opportunities for NOW and money market accounts, maturities for
certificates of deposit and expected retention rates and interest sensitivity
for savings deposits. As the table shows, the Bank has a cumulative negative gap
for all time periods. This indicates that future liquidity,
interest rate margins and operating results should be positively impacted in a
falling rate environment and negatively impacted in a rising rate environment.

0 to 3 4 to 12 1 to 3 3 to 5 After 5
Months Months Years Years Years Total
------ ------- ------ ------ ------- -----
(Dollars in thousands)

Mortgage-backed securities $ 8,459 $11,386 $ 46,512 $73,744 $15,000 $155,101
Other securities 3,323 -- -- -- 396 3,719
Mortgage loans held for sale 5,388 -- -- -- -- 5,388
Loans 34,220 9,236 5,151 4,961 22,506 76,074
-------- -------- -------- ------- ------- --------
Total Earning Assets $ 51,390 $ 20,622 $ 51,663 $78,705 $37,902 $240,282
======== ======== ======== ======= ======= ========

NOW and money market $ 13,796 $ -- $ -- $ -- $ -- $ 13,796
Savings 27,778 -- 27,779 27,779 -- 83,336
Certificates of Deposit 7,785 23,806 3,073 15,572 52 50,288
FHLB advances 57,637 5,400 -- -- -- 63,037
Subordinated debt -- -- -- 2,750 -- 2,750

Net non-interest bearing
sources of funds -- -- -- -- 27,075 27,075
-------- -------- -------- ------- ------- --------
Total Sources of Funds $106,996 $ 29,206 $ 30,852 $46,101 $27,127 $240,282
======== ======== ======== ======= ======= ========
Period Gap $(55,606) $(8,584) $ 20,811 $32,604 $10,775
======== ======== ======== ======= =======
Cumulative Gap $(55,606) $(64,190) $(43,379) $(10,775) $ --
======== ======== ======== ======= =======
Cumulative Gap as % of total
assets (22.8%) (26.3%) (17.8%) (4.4%) -- %
======== ======== ======== ======= =======

Investment Portfolio

152

collateralized mortgage obligations of private issuers. The table below
summarizes by major category the amortized cost of the mortgage-backed
securities available-for-sale and the carrying values of mortgage-backed
securities held-to-maturity at December 31, 1994, 1993 and 1992. Prior to the
adoption of SFAS 115 for 1994, the Bank was not required to segregate its
investment portfolio between securities available-for-sale and securities held
- -to-maturity:

153

1994 1993 1992
------------------------ ---- ----
Available Held to
for Sale Maturity
--------- --------

GNMA $ -- $ 13,804,916 $ 130,375 $ 394,959
FHLMC 12,686,878 50,078,849 77,343,996 84,493,606
FNMA 19,523,444 37,215,590 49,120,901 30,467,362
Collateralized
mortgage obligations 1,408,502 20,383,071 27,178,202 21,987,039
----------- ------------ ------------ ------------
$33,618,824 $121,482,426 $153,773,474 $137,342,966
=========== ============ ============ ============

The following table details the range of maturities of the total
mortgage-backed securities portfolio as of December 31, 1994 based on the
weighted average life of the securities for each classification and the weighted

average yield for each maturity period:

Within After 1 But After 5 But
1 Year Within 5 Years Within 10 Years Total

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

U.S. agencies and corporations $1,320,924 $118,863,857 $13,124,896 $133,309,677

Collateralized mortgage
obligations 1,620,412 16,887,853 3,283,308 21,791,573
---------- ------------ ----------- ------------
$2,941,336 $135,751,710 $16,408,204 $155,101,250
========== ============ =========== ============
Weighted Average Yield 8.04% 5.90% 7.13%

The following table sets forth those collateralized mortgage obligations
which have a carrying value that exceeded 10% of Regent's shareholders' equity
at December 31, 1994. These securities have an investment rating of AA or
better.

Carrying Value Market Value
-------------- ------------

Bear Stearns Mortgage Securities Inc.
Series 1993-2 Class 7 $2,818,466 $2,818,397
Bear Stearns Mortgage Securities Inc.
Series 1993-2 Class 5 2,836,237 2,836,153
Bear Stearns Mortgage Securities Inc.
Series 1993-2 Class 6 1,938,015 1,938,026
Bear Stearns Mortgage Securities Inc.
Series 1993-12 Class 1B 1,956,763 1,956,720
Bear Stearns Mortgage Securities Inc.
Series 1992-04 1,874,806 1,718,713
Capstead Securities Corp.
Series 1992-C-3 1,871,913 1,871,848
ML Trust XII 1,344,502 1,344,502
Resolution Trust Corporation
Series 1991-M6 1,562,992 1,373,562

154

Saxon Mortgage Security Corp. 2,833,843 2,833,911
Series 1993-04 Class 1A

Regent also makes investments in securities other than mortgage-backed
instruments and these are classified in the consolidated balance sheet as
investment securities. The following table summarizes the carrying values of
investment securities at December 31, 1994, 1993 and 1992, which approximates
the fair market values of such instruments as of such respective dates:

155

1994 1993 1992
---- ---- ----

U.S. Treasury bills $124,672 $99,860 $124,763
Non-marketable equity securities:

Federal Reserve Bank -- 300,000 300,000
FHLB -- 1,972,200 2,100,000
Other -- 20,275 36,528
-------- ---------- ----------
$124,672 $2,392,335 $2,561,291
======== ========== ==========

At December 31, 1994, non-marketable equity securities of $3,593,864 have
been classified as available-for-sale and carried at their fair market value,
which approximates their cost.

Gross unrealized gains and losses on mortgage-backed securities held to
maturity at December 31, 1994 were $14,474 and $8,307,224, respectively
and gross unrealized gains and losses on mortgage-backed securities
available for sale at December 31, 1994 were $0 and $2,156,000
respectively. There were no sales of mortgage-backed securities during 1994.
Unrealized losses on the securities generally are the result of lower than
market interest rates on the underlying mortgages contained in the securities.

At December 31, 1994, the contractual maturity of substantially all of
the Bank's mortgage-backed securities was in excess of ten years. The
actual maturity of a mortgage-backed security is less than its stated
maturity due to prepayments of the underlying mortgages. Prepayments
that are different than anticipated will affect the yield to maturity.
The yield is based upon the interest income and the amortization of any
premium or discount related to the mortgage-backed security. In

accordance with GAAP, premiums and discounts are amortized over the estimated
lives of the loans, which decrease and increase interest income, respectively.
The prepayment assumptions used to determine the amortization period for
premiums and discounts can significantly affect the yield of the mortgage-backed
security, and these assumptions are reviewed periodically to reflect actual
prepayments. Although prepayments of underlying mortgages depend on many
factors, including the type of mortgages, the coupon rate, the age of mortgages,
the geographical location of the underlying real estate collateralizing the
mortgages and general levels of market interest rates, the difference between
the interest rates on the underlying mortgages and the prevailing mortgage
interest rates generally is the most significant determinant of the rate of
prepayments. During periods of falling mortgage interest rates, if the coupon
rate of the underlying mortgages exceeds the prevailing market interest rates
offered for mortgage loans, refinancing generally increases and accelerates the
prepayment of the underlying mortgages and the related security. Under such
circumstances, the Bank may be subject to reinvestment risk because to the
extent that the Bank's mortgage-backed securities amortize or prepay faster than
anticipated, the Bank may not be able to reinvest the proceeds of such
repayments and prepayments at a comparable rate.

Mortgage-backed securities generally increase the quality of the Bank's
assets by virtue of the insurance or guarantees that back them, are
more liquid than individual mortgage loans and may be used to
collateralize borrowings or other obligations of the Bank.

Lending

Total loans, consisting of loans held for the portfolio and mortgage loans
held for sale, amounted to $81.5 million at December 31, 1994 compared to $71.6
million at December 31, 1993 and $55.5 million at December 31, 1992. The 14%
increase in 1994 activity resulted primarily from higher commercial and
industrial and commercial real estate balances, and a specialized installment
loan program that finances automobile insurance premiums. The growth of loans
held for the portfolio of $27.1 million offset the curtailment of the
residential mortgage participation program which was unfavorably affected by the
bankruptcy of two mortgage banking companies. The participation program
generated mortgage loans held for sale of $22.7 million at December 31, 1993
versus $5.4 million at December 31, 1994 and have commitments to be sold within
a period of approximately 15 to 30 days.

The mix of the loans held for the portfolio has shifted as real estate
loans comprised 58% of the loans outstanding at December 31, 1994 compared to
52% at year end 1993. The increase in the residential mortgage balances, as well
as the increase in the overall percentage of real estate loans, was the result
of retaining in the portfolio approximately $9.0 million in mortgages purchased
from the two bankrupt mortgage companies due to the expiration of purchase
commitments by investors. The underlying collateral for real estate loans is
primarily located in the Bank's market area and a significant portion is secured
by residential property. The following table details the types of loans
outstanding at December 31 for each of the past five years:

156

1994 1993 1992 1991 1990
---- ---- ---- ---- ----

Commercial & industrial $27,406,523 $23,293,946 $26,418,088 $26,227,429 $25,616,983

Real estate:
Construction 1,455,110 2,218,795 2,634,900 5,181,425 5,541,377
Mortgage-residential 29,252,959 17,358,843 18,974,537 12,483,927 12,005,360

Mortgage-commercial 13,550,216 5,700,298 7,001,507 6,651,876 4,508,119
Consumer 4,409,532 357,700 448,204 225,837 122,254
------------ ----------- ----------- ----------- ------------
$76,074,340 $48,929,582 $55,477,236 $50,770,494 $ 47,794,093
============ =========== =========== =========== ============
Mortgage loans held for sale $ 5,387,517 $22,700,892 $ - $ - $ -
============ =========== =========== =========== ============

Within After 1 But
1 Year Within 5 Years After 5 Years Total
----------- ----------- ------------- ------------

Commercial & industrial $15,721,244 $10,752,613 $932,666 $27,406,523
Real estate:
Construction 1,388,927 66,183 -- 1,455,110
Mortgages-residential 5,185,794 7,080,850 16,986,315 29,252,959
Mortgages-commercial 2,558,065 4,432,180 6,559,971 13,550,216
Consumer 4,272,625 136,907 -- 4,409,532
----------- ----------- ------------ ------------
$29,126,655 $22,468,733 $24,478,952 $76,074,340
=========== =========== =========== ===========

The table below provides a breakdown of loans as of December 31, 1994 that
have either predetermined interest rates or floating rates:

Within After 1 But
1 Year Within 5 Years After 5 Years Total
----------- ----------- ------------- ------------

Predetermined interest rates $ 9,428,888 $10,111,775 $22,506,430 $42,047,093
Floating rate 19,697,767 12,356,958 1,972,522 34,027,247
----------- ----------- ----------- ------------
$29,126,655 $22,468,733 $24,478,952 $76,074,340
=========== =========== =========== ===========

Risk Elements

Risk elements unique to each particular loan category are as follows:

Commercial and Industrial

Risk factors inherent in commercial and industrial loans include economic risk
which may affect borrower's ability to sustain and grow a business; collateral
risk in that an economic downturn may result in collateral depreciation;
interest rate risk in that rate changes may outpace business cash flow; and
legal risk in properly documenting and perfecting collateralization. The Bank
monitors such loans annually with updated financial analysis.

Construction loans

Risk factors inherent in construction loans include economic risk which may
affect end purchase or use of the collateral; engineering risk which may prevent
completion of construction or result in added expense in build-out;
environmental risk in earth and water table movement; management risk in
correctly and completely monitoring construction and loan advances; and legal
risk in properly documenting each advance and ensuring collateralization. The
Bank monitors such loans to review all advances and monitor all projects.

Residential mortgages

Risk factors inherent in residential mortgage lending include economic risk
which may affect a borrower's ability to maintain a job and financial stability;
collateral risk in that an economic downturn may result in collateral
depreciation; interest rate risk in that rate changes may outpace personal cash
flow; indeterminate in that personal factors -- divorce, illness -- may
affect credit stability; environmental risk in that collateral may be damaged or
destroyed by natural causes; and legal risk in properly documenting and
perfecting collateralization. The Bank evaluates, among other things,
collateral, financial stability, credit stability, cash flow and interest rate
risk, and monitors such loans for indications of financial decline or collateral
devaluation.

Commercial mortgages

Risk factors inherent in commercial mortgage lending include economic risk
which may affect lessees' ability to pay rent, or borrower's ability to
cash-flow vacancies; collateral risk in that an economic downturn may result in
collateral depreciation; environmental risk in that collateral may be damaged
or destroyed by natural causes; interest rate risk in that rate changes may
outpace property cash flow; and legal risk in properly documenting and
perfecting collateralization. Loans are underwritten to match lease terms, and
large tenants are subject to credit review. The Bank monitors such loans
quarterly or annually with updated inspections, lease analysis and financial
analysis.

Consumer loans

Consumer loans consist primarily of loans to individuals to finance automobile
insurance premiums. These loans have repayment terms of nine months and are
secured by the insurance policy's unearned premiums. Risk factors include
economic risk which may affect the borrower's ability to maintain a job and
financial stability; the financial strength and stability of the insurance
company underwriting the insurance and insurance agents that originate the
loans; the effectiveness of the internal control structure to cancel the
insurance on delinquent accounts in a timely and effective manner; and legal
risk in properly documenting and perfecting the collateral.

The level of non-performing assets, consisting of non-accrual loans, accruing
loans past due 90 days or more and other

real estate owned, amounted to $4.0 million, or 1.68%, of total assets at
December 31, 1994, compared to $2.5 million, or 1.04%, at December 31, 1993. The
appreciable increase was directly attributable to the residential mortgage and
commercial lending transactions involving the two bankrupt mortgage companies.
Excluding the effects of the mortgage activity, the level of non-

157

performing assets relating to the commercial lending portfolio has remained
relatively the same over the past year. The following table details the
non-performing assets at December 31, 1990 through 1994:

158

1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- --------

Non-accrual loans $3,685,804 $2,123,202 $3,055,220 $1,296,505 $915,400
Accruing loans 90 days or
more past due 393,681 420,237 314,759 489,291 -
Restructured loans -- -- -- -- --
---------- ---------- ---------- ---------- --------
Total non-performing
loans 4,079,485 2,543,439 3,369,979 1,785,796 915,400

Other real estate owned -- -- 953,304 988,000 --
---------- ---------- ---------- ---------- --------
Total non-performing
assets $4,079,485 $2,543,439 $4,323,283 $2,773,796 $915,400
========== ========== ========== ========== ========
Non-performing loans to
period end loans and
loans held for sale 5.01% 3.55% 6.07% 3.52% 1.92%
Non-performing assets to
total assets 1.68% 1.04% 2.11% 2.09% .83%
Non-performing assets to
loans, loans held for
sale and other real
estate owned 5.01% 3.55% 7.66% 5.36% 1.92%

principal is doubtful. The non-accrual loans at December 31, 1994, 1993 and 1992
are primarily secured by various types of real estate. The table below shows the
effect on interest income of placing loans on

non-accrual status for each of the three years ended December 31,
1994.
1994 1993 1992
---- ---- ----

Interest income not recognized
due to non-accrual status $211,032 $198,500 $261,374
Interest income included in
operating income attributable
to non-accrual loans $ 36,800 $ 79,900 $219,015

Other real estate owned consists of property acquired by foreclosure or
deed in lieu of foreclosure. These assets are initially reported at the lower of
the related loan balance or the fair value of the property. Management continues
to evaluate the carrying value in relation to its fair value less the estimated
costs to sell.

As part of the quarterly review of the risk elements of the portfolio, an
evaluation is also made of the adequacy of the allowance for loan losses. In
making an assessment of the quality of the loan portfolio and the adequacy of
the allowance for loan losses, management takes into consideration such elements
as general economic conditions, industry trends, the volume of delinquencies,
specific credit review, the value of underlying collateral and other pertinent
information. Based on this evaluation, the allowance for loan losses is adjusted
by the provision which is charged against income. The following table summarizes
the activity from 1990 through 1994 in the allowance for loan losses:

159

1994 1993 1992 1991 1990
---- ---- ---- ---- ----

Balance, beginning of year $1,321,225 $1,077,635 $ 905,139 $575,000 $115,000
---------- ---------- ---------- -------- --------

Charge-offs
Commercial & industrial 138,158 54,377 352,727 60,535 --
Real estate - construction 22,492 -- -- 100,000 --
Real estate - commercial -- 190,000 -- 40,000 --
Real estate - residential 355,493 -- -- -- --
Installment 36,000 -- -- -- --
---------- ---------- ---------- -------- --------

Total charge-offs 552,143 244,377 352,727 200,535 --
---------- ---------- ---------- -------- --------
Recoveries:
Commercial & industrial 84,290 3,641 223 -- --
Real estate - commercial -- 34,326 -- 5,674 --

---------- ---------- ---------- -------- --------
Total recoveries 84,290 37,967 223 5,674 --
---------- ---------- ---------- -------- --------
Net charge-offs 467,853 206,410 352,504 194,861 --
---------- ---------- ---------- -------- --------
Provision charged to
operations 860,000 450,000 525,000 525,000 460,000
---------- ---------- ---------- -------- --------
Balance, end of year $1,713,372 $1,321,225 $1,077,635 $905,139 $575,000
========== ========== ========== ======== ========
Net charge-offs as a % of
average loans and loans
held for sale .60% .37% .62% .41% --%
Allowance for loan losses
as a % of year-end loans
and loans held for sale 2.10% 1.84% 1.94% 1.78% 1.20%

The allowance for loan losses has increased by 30% from $1.3 million at
December 31, 1993 to $1.7 million at December 31, 1994. The higher allowance for
loan losses at year end 1994 was due to the increase in non-accrual loans that
occurred as a result of collectibility concerns for certain residential mortgage
loans purchased from two mortgage banking companies as well as a commercial loan
extended to one of these companies. Additions to the allowance for loan losses
in the years ended December 31, 1990 through December 31, 1994 were based upon,
among other things, the amount of net charge-offs and the level of
non-performing loans during each period.

Management believes that those loans identified as non-performing are
adequately secured and the allowance for loan losses is sufficient in relation
to the potential risk of loss that has been identified in the loan portfolio.
Management has allocated the allowance based on an assessment of risks within
the loan portfolio and the estimated value of underlying collateral. The

following table sets forth the allocation of the Bank's allowance for loan
losses for each of the five years ended December 31, 1994.

160

1994 1993 1992 1991 1990
----------------- ---------------- ----------------- --------------- ----------------
% of % of % of % of % of
Amount Total Amount Total Amount Total Amount Total Amount Total
---------- ----- ---------- ----- ---------- ----- -------- ----- -------- ------

Commercial & industrial $ -- --% $ -- --% $ -- --% $ -- --% $144,000 25%

Real estate-mortgages 750,000 44% -- -- -- -- 100,000 11% 431,000 75%

Consumer -- -- -- -- -- -- -- -- -- --

Unallocated 963,372 56% 1,321,225 100% 1,077,635 100% 805,139 89% -- --
---------- ---- ----------- ---- ---------- ---- -------- ---- --------- ----
$1,713,372 100% $1,321,225 100% $1,077,635 100% $905,139 100% $575,000 100%
========== ==== =========== ==== ========== ==== ======== ==== ========= ====

It is not expected that the level of net charge-offs during the next full
year will vary significantly from historical levels.

161

Deposits

Total deposits at December 31, 1994 aggregated $161.1 million, $31.3
million lower than at December 31, 1993. In the latter half of 1994, significant
deposit outflow occurred as many depositors reinvested maturing certificates of
deposit and available savings balances into higher yielding U.S. Treasury
securities. In an unusual occurrence, which lasted for several months in 1994
and into 1995, Treasury securities were yielding higher returns than comparable
products being offered at the Bank and other financial institutions. Despite the
decrease in total deposits, the mix of deposit balances at December 31, 1994,
1993 and 1992, as illustrated in the table below, has shifted so that the Bank
is less reliant on certificates of deposit as a funding source. Increases in
core deposit balances, including demand, NOW and money market accounts, has
enabled the Bank to be slightly less dependent on higher costing certificates of
deposit.

% of % of % of
1994 Total 1993 Total 1992 Total

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

Demand $13,641,796 8% $13,801,979 7% $7,921,435 5%
NOW 4,201,594 3% 2,833,806 1% 2,558,456 2%
Savings 83,335,372 52% 101,700,163 53% 83,741,777 52%
Money Market 9,594,864 6% 6,760,740 4% 6,691,253 4%
Certificates of

Deposit 50,287,846 31% 67,296,178 35% 59,802,109 37%
------------ ---- ------------ ---- ------------ ----
$161,061,472 100% $192,392,866 100% $160,715,030 100%
============ ==== ============ ==== ============ ====

Certificates of deposit of $100 thousand or more at December 31, 1994 of
$7.6 million had the following maturities:

Three months or less $2,241,000
Three months through six months 1,063,000
Six months through twelve months 2,224,000
Over twelve months 2,118,000
----------
$7,646,000
==========

Short-Term Borrowings

Short-term borrowings are used to supplement the deposit base of the Bank,
to support asset growth, to fund specific loan programs, and as a tool in the
Bank's asset/liability management process. During 1994, 1993 and 1992, the Bank
utilized its credit facilities with its correspondent banks and with the FHLB.
The borrowings under these facilities are secured by the Bank's mortgage-backed
securities. The following table summarizes the Bank's short-term borrowing
activity for 1994, 1993 and 1992:

162

Maximum
Outstanding Outstanding Interest Interest
Outstanding During at any Rate at Rate for
at 12/31 the Year Month-End 12/31 the Year
-------- -------- --------- ----- --------

1994: FHLB borrowings $63,037,382 $38,050,845 $63,037,382 6.32% 4.90%
Federal funds purchased -- 360,602 1,000,000 -- 4.52%
----------- -----------

$63,037,382 $38,411,447 6.32% 4.90%
=========== ===========

1993: FHLB borrowings $23,704,821 $20,466,112 $27,500,000 3.46% 3.36%
Federal funds purchased -- 138,630 2,800,000 -- 3.17%
----------- -----------
$23,704,821 $20,604,742 3.46% 3.35%
=========== ===========

1992: FHLB borrowings $23,500,000 $15,525,559 $40,000,000 3.16% 3.58%
Federal funds purchased -- 172,541 2,000,000 -- 3.32%
----------- -----------

$23,500,000 $15,698,100 3.16% 3.57%
=========== ===========

Results of Operations

Net income for 1994 amounted to $503 thousand, or $.22 per share, compared
to $1.2 million, or $.71 per share, in 1993. The decrease in 1994 profitability
resulted from a higher provision for loan losses of $410 thousand and higher
other expenses of $1.3 million, but benefitted from an increase in net interest
income of $600 thousand.

Regent's net income totaled $1.18 million in 1993 compared to $1.17 million
in 1992. The increase of 1% in 1993's earnings was the result of higher net
interest income and a lower provision for loan losses which offset an increase
in other expenses. On a per share basis, Regent earned $.71 in 1993 versus $.95
in 1992. Although net income increased by 1%, primary earnings per share
decreased by 25% as a result of an increase in the amount of common stock
equivalents included in the number of average shares outstanding. In addition,
the charge for the preferred stock dividend was higher in 1993 due to an
increase in the value of the preferred stock dividend.

Net Interest Income

A key component of Regent's profitability is net interest income which
represents the difference between interest earned on loans, securities and other
interest earning assets and the interest paid on deposits, borrowings and debt
instruments. Net interest income is coordinated with the asset/liability
management process and emphasizes maintaining acceptable levels of liquidity,
interest rate risk, and capital.

Net interest income of $5.8 million in 1994 was $600 thousand, or 12%,
higher than net interest income in 1993 of $5.2 million. The increase was
attributable to higher average balances in the investment securities and lending
portfolios, which offset a drop in yield on earning assets. The total investment
securities portfolio balance at year end 1994 was comparable to year end 1993
totals but the average 1994 balance

163

was higher. The average balance of $14.1 million was higher because a
significant amount of securities were purchased late in 1993 and early in 1994.
For the remainder of 1994, the securities decreased as the monthly cash flow
from the mortgage-backed securities was reinvested into loans. The lending
portfolio increase benefitted from the expansion of the commercial loan area and
the heavy volume generated by the mortgage participation program. Of the $21.9
million increase in

average loan balances, approximately $17.5 million was attributable to the
mortgage participation program and $3.5 million to commercial activity.
Reflecting the emphasis on increased lending activity, income earned from loans
represented 37% of total interest income in 1994 versus 29% in 1993 while
investment income decreased from 71% in 1993 to 63% in 1994.

Although the funding sources changed significantly at year end 1994
reflecting the effects of the Treasury market on retail deposit outflows in the
fourth quarter, average balances showed less drastic changes throughout the
year. Average savings balances increased by $8.6 million while average balances
of FHLB advances were higher by $13.9 million. The increase in average FHLB
advances corresponded to the increase in mortgage participations which were
required to be funded by FHLB advances.

The overall cost of funds remained relatively unchanged in 1994 at 5.09%
versus 5.11% in 1993. The lower yield on earning assets in 1994, however,
reduced the net interest rate spread from 2.13% in 1993 to 1.92% in 1994. The
net interest margin, net interest income divided by total average earning
assets, displayed a corresponding decrease from 2.49% in 1993 to 2.37% in 1994.

Net interest income of $5.2 million in 1993 was $482 thousand, or 10%,
higher than net interest income of $4.7 million in 1992. The increase was
attributable primarily to higher average mortgage-backed securities and loan
balances. Offsetting this benefit, however, was the additional premium
amortization taken on the mortgage-backed securities portfolio of $400 thousand.
This additional amortization was necessary to recognize the significant amount
of prepayments in the 1993 fourth quarter as a result of the heavy volume of
residential mortgage refinancings. Although the Bank was able to reduce its cost
of funds in 1993, it was not enough to offset a decline in earning asset yields
which were impacted by an overall decline in interest rates, the reinvestment of
the securities portfolio cash flow into lower yielding instruments, and the
additional premium amortization. Thus, the net interest rate spread of
2.13% in 1993 was lower than the net interest rate spread of 2.45% in 1992 and
the net interest margin similarly dropped from 2.87% in 1992 to 2.49% in 1993.

Provision for Loan Losses

The Bank recorded a provision for loan losses of $860 thousand in 1994,
$450 thousand in 1993 and $525 thousand in 1992. The increase in the 1994
provision was due to the increase

164

in non-accrual loans that occurred as a result of collectibility concerns for
certain residential mortgage loans purchased from two mortgage banking
companies, as well as a commercial loan extended to one of these companies. The
provision in 1993 was

lower than 1992 as a result of the decrease in the level of net
charge-offs and non-performing loans.

Other Expenses

Total other expenses for 1994 were $4.3 million, or 40%, over 1993's total
of $3.1 million. The primary factors that increased other expenses were
personnel expenses, professional fees, FDIC premiums, state and local taxes,
depreciation, advertising, costs incurred in the start-up and processing of a
new installment lending program, the write-down of the carrying value of an
asset received in satisfaction of a borrower's debt and the write-off of an
accounts receivable balance from a mortgage banking company. Salaries and
related payroll taxes and employee benefits increased by $377 thousand and were
attributable to salary increases, additional employees and higher benefit
costs. Professional services were higher by $123 thousand due to a rise in legal
costs relating to the workout of problem loans and additional audit work
performed by independent accountants. FDIC premiums increased by $69 thousand
based on the higher level of deposit balances during the year. The carrying
value of an asset received in satisfaction of a borrowers debt was reduced by
$132 thousand, and the Bank wrote-off the balance of a receivable of $113

thousand from one of the bankrupt mortgage companies. Expenses were incurred in
the fourth quarter for the start-up, processing and operational costs
associated with a new installment loan program amounting to $168 thousand. An
advertising campaign initiated for lending and deposit activity in 1994
increased advertising expenses by $48 thousand. The purchase of additional work
stations and an upgrade in computer capabilities increased depreciation expense
by $39 thousand, and state and local taxes were higher by $27 thousand.

Other expenses for 1993 totaled $3.1 million, which were 25% higher than
1992's total expenses of $2.5 million. The primary factors contributing to the
$627 thousand increase were higher personnel expenses, FDIC premiums, legal
costs, capital shares tax payment and data processing expenses. Salaries and
employee benefits increased by $236 thousand due to salary increases, larger
staff and higher benefit costs. Legal costs were higher by $132 thousand and
were attributable to services relating to the workout of problem loans. A larger
deposit base resulted in a higher FDIC assessment of approximately $85 thousand.
The Pennsylvania capital shares tax paid in 1993 was $34 thousand higher than
1992's payment. An increase in the number of deposit and loan accounts and
related transaction costs increased data processing expenses by $18 thousand.
Assessments imposed by the OCC based on asset size increased by $18 thousand
while consulting fees were higher by $30 thousand due to an increase in fees and
the use of a consulting firm to assist with the

165

analysis of the Bank's asset and liability structure and interest

rate risk.

Provision for Income Taxes

The provision for income taxes for 1994 was $259 thousand versus $607
thousand in 1993 and $602 thousand in 1992. The change in the income tax
provision over the three year period reflected the variances in pre-tax income
as the effective rate for all three periods was 34%.

Consolidated Average Balance Sheets and Rate/Yield Analysis

1994 1993 1992
----------------------------- ----------------------------- -----------------------------
Average Income/ Rate/ Average Income/ Rate/ Average Income/ Rate/
Balance Expense Yield Balance Expense Yield Balance Expense Yeld
------- ------- ----- ------- ------- ----- ------- ------- ------

ASSETS

Interest-earning assets:
Federal funds sold . . . $ 283,562 $ 9,562 3.37% $ 195,890 $ 6,898 3.52% $ 805,738 $ 32,010 3.97%
Investment securities and
securities available for
sale . . . . . . . . . . 166,476,790 10,841,050 6.51% 152,419,875 10,713,146 7.03% 106,369,054 8,689,377 8.17%
Loans and loans held for
sale . . . . . . . . . . 78,103,505 6,313,866 8.08% 56,161,328 4,392,116 7.82% 56,813,029 4,797,689 8.44%
----------- ----------- ----------- --------- ------------ ---------
Total interest- earning
assets . . . . . . . . 244,863,857 17,164,478 7.01% 208,777,093 15,112,160 7.24% 163,987,821 13,519,076 8.24%
------------ ----------- ---- ----------- ---------- ---- ----------- ---------- ----
Cash and due from banks 4,141,245 3,971,327 2,541,165
Premises and equipment,
net . . . . . . . . . . 687,614 611,634 644,425
Other assets . . . . . . . . 3,123,073 3,361,232 3,179,725
Allowance for loan losses (1,382,633) (1,220,348) (1,013,654)
------------ ------------ ------------
Total assets . . . . . $251,433,156 $215,500,938 $169,339,482
------------ ------------ ------------
------------ ------------ ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
NOW . . . . . . . . . . . . $ 3,323,519 $ 82,609 2.49% $ 2,762,220 $ 76,117 2.76% $ 2,367,974 $ 83,921 3.54%
Savings .. . . . . . . . . 100,708,463 5,411,613 5.37% 92,098,667 5,038,442 5.47% 61,129,763 3,543,651 5.80%
Money market deposits . . . 8,657,771 254,607 2.94% 6,347,863 199,892 3.15% 9,224,565 343,565 3.72%
Time deposits . . . . . . . 63,612,009 3,257,678 5.12% 61,994,112 3,400,630 5.49% 61,379,121 4,154,564 6.77%
Short-term borrowings . . . 38,411,447 1,881,337 4.90% 20,604,742 691,121 3.35% 15,698,100 560,943 3.57%
Long-term advances . . . . . 6,069,041 267,204 4.40% 10,000,000 486,060 4.86% 2,227,993 123,028 5.52%
Subordinated debt . . . . . 2,712,466 217,612 8.02% 357,356 28,456 7.96%
------------ ----------- ----------- --------- ----------- ----------
Total interest-bearing
liabilities . . . . . 223,494,716 11,372,660 5.09% 194,164,960 9,920,718 5.11% 152,027,516 8,809,672 5.79%
------------ ----------- ---- ------------ --------- ---- ----------- ---------- ----
Demand deposits . . . . . . 12,657,347 6,775,803 4,346,919
Other liabilities . . . . . 2,365,832 1,896,274 1,668,943
------------ ------------ -----------
Total liabilities . . . 238,517,895 202,837,037 158,043,378
Shareholders' equity . . . . 12,915,261 12,663,901 11,296,104
------------ ------------ -----------
Total liabilities and
shareholders' equity $251,433,156 $215,500,938 $169,339,482
------------ ------------ -----------
------------ ------------ -----------
Net interest income and
net interest spread . . . $5,791,818 1.92% $5,191,442 2.13% $ 4,709,404 2.45%
----------- ---- --------- ---- ---------- ----
----------- ---- --------- ---- ---------- ----
Net interest rate margin 2.37% 2.49% 2.87%
---- ---- ----
---- ---- ----

Volume and Rate Variance Analysis

Net interest income is affected by changes in the average interest rate
earned on earning assets and the average interest rate paid on interest-bearing
liabilities. In addition, net interest income is affected by changes in the
volume of earning assets and interest-bearing liabilities. The following table
sets forth for the years ended December 31, 1994 compared to December 31, 1993,
and December 31, 1993 to December 31, 1992, the dollar amount of increase
(decrease) in interest income and interest expense resulting from changes in the
volume of earning assets and interest-bearing liabilities and from changes in
yields and rates.

1994 Compared to 1993 1993 Compared to 1992
----------------------------------------- -----------------------------------------
Net Increase Net Increase
Volume Rate (Decrease)(1) Volume Rate (Decrease)(1)
---------- ---------- ------------- ---------- ----------- -------------

Federal funds sold $ 2,943 $ (279) $ 2,664 $ (21,834) $ (3,278) $ (25,112)
Investment securities and securities
available for sale 630,188 (502,284) 127,904 2,986,862 (963,093) 2,023,769
Loans and loans held for sale (2) 1,526,746 395,004 1,921,750 (388,153) (17,420) (405,573)
---------- --------- ---------- ---------- ----------- -----------
Total Interest Income 2,159,877 (107,559) 2,052,318 2,576,875 (983,791) 1,593,084
---------- --------- ---------- ---------- ----------- -----------
NOW accounts 12,540 (6,048) 6,492 23,220 (31,024) (7,804)
Savings deposits 460,689 (87,518) 373,171 1,681,590 (186,799) 1,494,791
Money market deposits 66,862 (12,147) 54,715 (96,071) (47,602) (143,673)
Certificates of deposit 92,564 (235,516) (142,952) 42,067 (796,001) (753,934)
Short-term borrowings 776,630 413,586 1,190,216 161,953 (31,775) 130,178
Long-term advances (348,586) 129,730 (218,856) 412,425 (49,393) 363,032
Subordinated debt 188,941 215 189,156 28,456 -- 28,456
---------- --------- ---------- ---------- ----------- -----------
Total Interest Expense 1,249,640 202,302 1,451,942 2,253,640 (1,142,594) 1,111,046
---------- --------- ---------- ---------- ----------- -----------
Net Interest Income $ 910,237 $(309,861) $ 600,376 $ 323,235 $ 158,803 $ 482,038
========== ========= ========== ========== =========== ==========
- ----------------

(1) The change in interest due to both rate and volume has been reflected in
volume and rate changes in proportion to the relationship of the absolute
dollar amounts of the change in each.

(2) Includes net loan fees of $21,697 and net loan costs of $40,112 in 1993 and
interest on non-accrual loans to the extent of interest paid of $36,860 and
$79,900 in 1994 and 1993, respectively.

INFORMATION REGARDING REGENT BOARD OF DIRECTORS
AND EXECUTIVE OFFICERS

Directors and Executive Officers

The executive officers of Regent, each of whom serves at the discretion of
the Board of Directors except as noted below, and the directors of Regent are as
follows:

Officer/Direct
Name Age Position with Regent or Since
---- --- -------------------- --------------

Harvey Porter (1)(3) 64 President, Chief 1986
Executive Officer and a
Director

David W. Ring (3) 80 Chairman of the Board and 1986
a Director

Abraham L. Bettinger (3) 60 Chairman of the Board and 1986
a Director
Barbara H. Teaford (2)(3) 48 Executive Vice President, 1986
Secretary and a Director
Leonard S. Dwares (3) 61 Assistant Treasurer and a 1986
Director

O. Francis Biondi (3) 63 Director 1986

Lance T. Funston 53 Director 1989

James J. Mooney 51 Director 1989

Edward Parnes, Ph.D. 74 Director 1989
Robert J. Reichlin 70 Director 1989
Stephen J. Carroll 44 Treasurer, Chief 1990
Financial Officer and
Accounting Officer
Nelson C. Mishkin (3) 52 Director of the Bank 1993

Harry D. Zutz 78 Director 1989

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

(1) Regent has a year-to-year employment agreement with Harvey Porter, under
which he received an annual salary of $164,479 during 1994.

(2) Regent has a year-to-year employment agreement with Barbara H.

Teaford, under which she received an annual salary of $109,300 during

1994.

(3) These persons will serve on the Board of Directors of Carnegie after the
Merger.

The following is a brief listing of the principal occupation, and certain
other affiliations of each executive officer and director of Regent.

166

Mr. Porter is presently, and has been since December 1986, the President,
Chief Executive Officer and a director of Regent. Mr. Porter has also served as
the Bank's President and Chief Executive Officer since its inception in June
1989. From 1980 to 1985, he was at various times President, Chief Executive
Officer, Vice Chairman, a control shareholder and consultant with the First
National Bank of Wilmington and from 1977 to 1983, he was a director, officer
and a control shareholder of Integrity Holding Co., its one-bank holding
company. Mr. Porter had been a practicing attorney and has been involved in
various real estate and business ventures.

Mr. Ring is presently, and has been since December 1986, the Chairman of
the Board and a director of Regent. He has also been the Chairman of the Board
of the Bank since its inception. He was formerly a consultant to, and a director
of, Larami Corporation, a toy manufacturer, a director and a control shareholder
of the First National Bank of Wilmington and a director of Integrity Holding
Co., its one-bank holding company. Mr. Ring was a director of the Port
Corporation of Philadelphia and was formerly a director and Corporate Vice
President of Tasty Baking Co.

Mr. Bettinger is presently, and has been since 1986, the
Vice Chairman of the Board of Directors and a director of Regent.
Mr. Bettinger has also served as the Vice Chairman of the Bank
since its inception in June 1989. Mr. Bettinger is the President
of Bettinger & Leech, Inc., a bank consulting firm, and Chairman
of Bettinger & Leech Financial Corp. Bettinger & Leech, Inc. has
acted as a consultant to the Bank since the commencement of
operations in June 1989. Regent paid consulting fees of approxi-
mately $70,000 to Bettinger & Leech, Inc. during 1994 and
reimbursed expenses of approximately $10,700. From 1973 to 1981,
he was a Senior Vice President of Keefe, Bruyette & Woods, Inc.,
a bank consulting and investment banking firm, where he headed
the firm's bank consulting activities. Mr. Bettinger was
formerly a Vice President with Manufacturers Hanover Trust
Company.

Mrs. Teaford is presently, and has been since 1987, the
Executive Vice President and a director of Regent. She has also

been the Executive Vice President of the Bank since its incep-

tion, and the Secretary of Regent since 1990. From 1985 through 1987, she was
Vice President and manager of the Southern Asset Based Lending District of The
Philadelphia National Bank. From 1984 to 1985, she was a Vice President in the
Regional Corporate Banking Division and from 1981 to 1984, she was a Commercial
Officer and Assistant Vice President in the Large Corporate Banking Division,
both with The Philadelphia National Bank. From 1982 to 1986, she was a director
and Secretary of the Board of Directors of the Central National Bank of
Greencastle, Indiana. Mrs. Teaford is a member of the Board of Directors of a
number of charitable and civic organizations, including the Pennsylvania
Horticultural Society and the Settlement Music School.

167

Mr. Carroll is presently, and has been since 1990, the Treasurer and Chief
Financial Officer and Accounting Officer of Regent. He has also been Senior Vice
President and Chief Financial Officer of the Bank since 1990. From December 1987
to July 1990, he was Executive Vice President and Chief Operating Officer of
Metrobank of Philadelphia, N.A. From February 1986 to December 1987, he was Vice
President of Corporate Finance with the investment banking firm of Ryan, Beck &
Co.

Mr. Dwares is presently the Assistant Treasurer and Director
of Regent. He has been a Director since 1986 and the Assistant
Treasurer since 1990. Prior to becoming the Assistant Treasurer
he acted as the Treasurer of Regent from 1986 to 1990. Mr.
Dwares is currently President and principal shareholder of
Leonard S. Dwares & Co., P.A., Certified Public Accountants. Mr.
Dwares was formerly a director of The First National Bank of
Wilmington and a member of the audit and loan committees. He is
a Chartered Financial Consultant.

Mr. Biondi is presently a director of Regent and had served as Vice
Chairman and Secretary of Regent from its inception to 1990. He has been a
senior partner with the law firm of Morris, Nichols, Arsht & Tunnell of
Wilmington, Delaware for more than five years, which firm was paid $134,300 by
Regent for professional services during 1994. From 1974 to 1983, he was a
director and a control shareholder of The First National Bank of Wilmington and
Integrity Holding Co., its one-bank holding company. Mr. Biondi is a former
member of the State of Delaware Council on Banking, former President of the
Delaware Bar Association and former City Solicitor of Wilmington, Delaware.

Mr. Funston is the President and Chief Executive Officer of
TelAmerica Media Inc., a firm specializing in the telemarketing
of various consumer products. Mr. Funston previously served as
an Assistant to the Director of the Federal Deposit Insurance
Corporation and was formerly an assistant to a member of the

Board of Governors of the Federal Reserve System.

Mr. Mooney is the Chairman and Chief Executive Officer of Atlantic Realty
Holding, Inc., a title insurance, real property appraisal and public records
research company. He was formerly the Chairman of Industrial Valley Title
Insurance Group, Philadelphia, Pennsylvania.

Dr. Parnes is the Executive Director of Philadelphia Mental
Health Clinic and the President of Walnut Mortgage Co. and
Boulevard Hotel Corporation. He is also an Assistant Clinical
Professor at Hahnemann Medical College and the Hospital of the
University of Pennsylvania.

Mr. Reichlin is the President of Zuckerman-Honickman, Inc.,
a distributor of glass and plastic containers. He is also the
Vice President of Vanguard of Pennsylvania, a manufacturer of
plastic bottles, the Chairman of the Board of Vanguard Plastics
of California, also a manufacturer of plastic bottles, and

168

Treasurer of Delta Industries, a distributor of bottles and
sprayers. Mr. Reichlin is a Trustee of Albert Einstein Medical
Center and a member of its executive committee. He is also a
former President of The Locust Club.

Mr. Zutz is Chairman of the Board of both Harry David Zutz
Insurance, Inc. and Professional Liability Insurance, Inc.,
regional insurance agencies with offices in Wilmington, Delaware
and London, England. Harry David Zutz Insurance, Inc., acting as
insurance agent, has obtained various types of insurance for
Regent since its inception in June 1989. Regent paid insurance
premiums of approximately $78,800 to Harry David Zutz Insurance,
Inc. during 1994. Mr. Zutz is a member of Lloyds of London and a
former director of the Bank of Delaware. He is also involved
with various real estate interests.

Nelson C. Mishkin is presently, and has been since 1976, a
partner of the accounting firm of Gable, Peritz, Mishkin & Co.
Mr. Mishkin was Corporate Secretary and Director of Taxes for LCA
Corporation from 1973 to 1976. Mr. Mishkin held an accounting
staff position with Price Waterhouse from 1964 to 1972. He is a
member of the American and Pennsylvania Institutes of Certified
Public Accountants.

Audit and Compensation Committees

Leonard S. Dwares, a director of Regent and the Bank, and
Nelson L. Mishkin and Paul L. Jaffe, who are directors of the

Bank, serve as the Audit Committee and the Compensation Committee
of the Board of Directors of the Bank. Regent is solely a
holding company and has no business activities other than those
conducted by the Bank. Officers of Regent are not, in such
capacities, separately compensated by Regent. The Audit

Committee acts as a liaison between the Bank's internal accounting staff and its
independent accountants and reports to the Board of Directors of the Bank with
respect to financial reporting, financial practices and the adequacy of internal
controls. The Compensation Committee considers and makes recommendations to the
Board of the Bank with respect to appropriate levels of compensation for the
officers and other executives of the Bank. Regent has no nominating committee.

Regent Executive Compensation

The following table sets forth the compensation for the years ended
December 31, 1994, 1993 and 1992 of the chief executive officer and of each
other executive officer of Regent and the Bank whose salary in 1994 exceeded
$100,000. No bonuses were paid to executive officers.

169

Summary Compensation Table
--------------------------

Annual
Compensation
Name and Principal Position Year Salary($)
- --------------------------- ---- ------------

Harvey Porter, President and 1994 164,479
Chief Executive Officer 1993 155,122
1992 130,863

Barbara H. Teaford, Executive 1994 109,300
Vice President 1993 105,000
1992 100,000

There is no other annual compensation or long-term compensation that is
required to be disclosed in the foregoing table.

Compensation for the above-named individuals is being paid pursuant to
employment agreements, the current terms of which expire in May 1996, and
thereafter automatically extend for successive one-year periods, subject to
prior written notice of termination by either individual or Regent, in each
case, no later than 90 days prior to expiration of the then current term. Such
agreements require continuation of compensation for one year to the executive's
spouse, issue or estate in the event of death. The agreements do not provide for
severance payments. These agreements will be terminated at the Effective Time of
the Merger when Mr. Porter and Mrs. Teaford will enter into employment
agreements with Carnegie. See "Proposal 1 -- The Merger--Interests of Certain
Persons in the Merger."

As of September 30, 1995, the Bank had outstanding loans to various
officers, directors, and advisory directors of Regent and the Bank and their
families and various entities of which such persons are directors and officers.
Such loans were made in the ordinary course of the Bank's business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated third parties,
and did not involve more than the normal risk of collectibility or present other
unfavorable features.

Option Grants and Exercises and Fiscal Year-End Option Values

During the fiscal year ended December 31, 1994, Regent did not grant any
stock options to any executive officer named in the Summary Compensation Table.
Regent does not grant stock appreciation rights. The following table sets forth
information with regard to unexercised options at December 31, 1994 for the
named executives, adjusted for stock dividends paid in 1992 and 1993; no options
were exercised by them in 1994.

170

Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values

Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money
Options at 12/31/94(#) Options at 12/31/94($)
----------------------- ----------------------

Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------

Harvey Porter 84,030 0 0 0
Barbara H. Teaford 41,783.5 0 0 0

Securities Ownership of Management and Principal Shareholders

The following table sets forth certain information as to security
ownership, as of September 30, 1995, with respect to (a) each person who is
known by Regent's Board of Directors to own beneficially more than 5% of
Regent's outstanding Common Stock or Series A Convertible Preferred Stock,
Regent's only voting securities, (b) each of Regent's directors, (c) each person
named in the Summary Compensation Table and (d) all of Regent's executive
officers and directors as a group.

171

Series A Convertible Warrants and
Common Stock Preferred Stock Options
------------ -------------------- ------------
Amount and Amount and Amount and
Nature of Percent Nature of Nature of
Beneficial of Beneficial Percent Beneficial
Name and Address Ownership(1) Class Ownership of Class Ownership(2)
------------ ------ ---------- -------- ------------

Abraham L. Bettinger 127,484 (3) 12.4% 4,500(4) * 59,899 (5)
845 3rd Avenue
New York, NY 10022

O. Francis Biondi 176,300 (6) 16.7% 8,433 1.7% 82,055 (7)
P.O. Box 1347
Wilmington, DE 19801-1347

Leonard S. Dwares 11,088 (8) 1.1% 200 * 9,412
300 Foulk Road
Suite One
Wilmington, DE 19803

Lance T. Funston (9) 57,860 5.6% 26,400 5.4% 11,770
2044 Spruce Street
Philadelphia, PA 19103

John Hynansky 67,677 6.7% -- -- 26,482
c/o The Winner Group
P.O. Box 954
905 Shipley Street
Wilmington, DE 19899

James J. Mooney 10,298 1.0% -- -- 7,356

Edward Parnes 26,800(10) 2.7% 2,000 * 12,005

Harvey Porter and Anna Porter(11) 209,120 18.8% 11,833(12) 2.4% 119,534(13)
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102

Robert J. Reichlin 21,798(14) 2.2% 5,000 * 8,827(15)
191 South Gulph Road
King of Prussia, PA 19406

David W. Ring 186,403(16) 17.3% 12,433 2.6% 82,597
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102

Barbara H. Teaford and

Stephen D. Teaford(12) 159,811(17) 15.0% 7,600 1.6% 77,436
c/o Regent National Bank
1430 Walnut Street
Philadelphia, PA 19102

Harry D. Zutz 18,826(18) 1.9% -- -- 9,415(19)
300 Delaware Avenue

Wilmington, DE 19899

All Directors and Executive

Officers as a Group (12 persons) 1,015,631(20) 64.9% 79,999 16.4% 491,662

- ----------------------------
*Less than 1%

(1) Includes shares of Regent Common Stock currently issued and outstanding and
shares of Regent Common Stock that may be issued upon conver-

172

sion of Regent Series A and Series E Convertible Preferred Stock and the
exercise of options and warrants exercisable within 60 days of September
30, 1995. For the purposes of this table, each share of Regent Series A and
Series E Convertible Preferred Stock is treated as convertible into one
share of Regent Common Stock. The persons listed in the table do not own
any shares of Regent Series B, Series C and Series D Convertible Preferred
Stock.

(2) Represents shares of Regent Common Stock that may be acquired by the
exercise of options and warrants exercisable with in 60 days of September
30, 1995.

(3) Includes 37,837 shares of Regent Common Stock, and 450 shares of
Regent Common Stock into which shares of Regent Series E Convertible
Preferred Stock are convertible, owned by the Trustees of Bettinger &
Leech, Inc. Profit Sharing Plan of which Mr. Bettinger is a Trustee;
10,695 shares of Regent Common Stock, and 900 shares of Regent Common
Stock into which shares of Regent Series E Convertible Preferred Stock
are convertible, owned by the Trustees of Bettinger & Leech, Inc.
Money Purchase Plan of which Mr. Bettinger is a Trustee; and 13,203
shares of Regent Common Stock owned by Bettinger & Leech Financial
Corp. of which Mr. Bettinger is a principal. Mr. Bettinger shares
voting and investment power with respect to these shares.

(4) Includes 1,500 shares owned by the Bettinger & Leech, Inc. Profit Sharing
Plan and 3,000 shares owned by Bettinger & Leech Financial Corp.

(5) Includes shares of Regent Common Stock that may be acquired by the
exercise of warrants as follows: 2,059 shares by Bettinger & Leech,
Inc.; 4,708 shares by Mr. Bettinger's wife; 12,769 shares by the
Bettinger & Leech, Inc. Profit Sharing Plan; 2,405 shares by the

Bettinger & Leech, Inc. Money Purchase Plan; and 1,177 shares by
Bettinger & Leech Financial Corp.

(6) Includes 11,166 shares of Regent Common Stock owned by Mr. Biondi's
wife in which Mr. Biondi disclaims beneficial ownership; 9,772 shares

of Regent Common Stock owned by O. Francis Biondi, Trustee for Mary
Biondi, daughter; 9,771 shares of Regent Common Stock owned by O.
Francis Biondi, Trustee for O. Francis Biondi, Jr., son; and 2,529
shares of Regent Common Stock into which shares of Regent Series E
Convertible Preferred Stock owned by Mr. Biondi are convertible.

(7) Includes shares of Regent Common Stock which may be acquired by the
exercise of options and warrants of which 5,580 shares are owned by Mr.
Biondi's wife in which Mr. Biondi disclaims beneficial ownership; 15,683
shares are owned by O. Francis Biondi, Trustee for Mary Biondi, daughter;
and 15,683 shares are owned by O. Francis Biondi, Trustee for O. Francis
Biondi, Jr., son.

(8) Includes 60 shares of Regent Common Stock into which shares of Regent
Series E Convertible Preferred Stock owned by Mr. Dwares are convertible.

173

(9) Mr. Funston and his wife own all of the shares, warrants and options set
forth on this table as joint tenants with right of survivorship, and share
voting and investment power with respect to all such securities. Includes
7,920 shares of Regent Common Stock into which shares of Regent Series E
Convertible Preferred Stock owned by Mr. Funston are convertible.

(10) Includes 600 shares of Regent Common Stock into which shares of Regent
Series E Convertible Preferred Stock owned by Mr. Parnes are convertible.

(11) Of these shares, 9,163 shares are owned jointly by Mr. Porter and his
wife and 68,590 shares are owned by Mr. Porter's wife as trustee of
Trust Under Deed dated 2/28/94 for the benefit of Mr. Porter's wife.
Mr. Porter and his wife share voting and investment power with respect
to all shares owned jointly.

(12) Of these shares, 2,900 shares are owned jointly by Mr. Porter and his
wife and 8,933 shares are owned by Mr. Porter's wife as trustee of
Trust Under Deed dated 2/28/94 for the benefit of Mr. Porter's wife.
Mr. Porter and his wife share voting and investment power with respect
to all shares owned jointly.

(13) Includes warrants to purchase 17,752 shares of Regent Common Stock
owned by Mr. Porter's wife as trustee of Trust Under Deed dated
2/28/94 for the benefit of Mr. Porter's wife and options and warrants
to purchase 84,030 owned jointly by Mr. Porter and his wife. Mr.
Porter and his wife share voting and investment power with respect to

all shares owned jointly.

(14) Includes 2,942 shares of Regent Common Stock owned by Zuckerman-

Honickman, Inc., of which Mr. Reichlin is President.

(15) Includes 1,471 shares of Regent Common Stock that may be acquired by the
exercise of warrants which are owned by Zuckerman-Honickman, Inc., of which
Mr. Reichlin is President, and includes 117 shares of Regent Common Stock
owned by Mr. Reichlin's wife, as to which he disclaims beneficial
ownership.

(16) Includes 3,729 shares of Regent Common Stock into which shares of Regent
Series E Convertible Preferred Stock owned by Mr. Ring are convertible.

(17) Mrs. Teaford and her husband, Stephen D. Teaford, own all of the shares,
warrants and options set forth on this table as tenants by the entireties
and share voting and investment power with respect to all such securities;
includes 2,280 shares of Regent Common Stock into which shares of Regent
Series E Convertible Preferred Stock owned by Mr. and Mrs. Teaford are
convertible.

(18) Includes 2,942 shares of Regent Common Stock owned by H.D. Zutz
Insurance, Inc. Profit Sharing Plan of which Mr. Zutz is a Trustee and
shares voting and investment power.

174

(19) Includes warrants to purchase 1,471 shares of Regent Common Stock that may
be acquired owned by Harry David Zutz Insurance, Inc. Profit Sharing Plan
of which Mr. Zutz is a Trustee and shares voting and investment power.

(20) Includes 18,628 shares of Regent Common Stock into which shares of Regent
Series E Convertible Preferred Stock owned by such persons are convertible.

175

PROPOSAL 2 -- AMENDMENT TO CARNEGIE'S
CERTIFICATE OF INCORPORATION TO AUTHORIZE PREFERRED STOCK

(TO BE VOTED UPON BY CARNEGIE SHAREHOLDERS)

The Carnegie Board of Directors has approved for submission to Carnegie's
shareholders the Amendment which would authorize Carnegie to issue up to
1,500,000 shares of series preferred stock (the "Preferred Stock"). A copy of
the Amendment is set forth as Appendix E to this Joint Proxy
Statement/Prospectus, and the following summary is qualified in its entirety by
reference to Appendix E. Approval of the Amendment requires the affirmative vote
of the holders of the majority of shares of Carnegie Common Stock voting at the
Carnegie Special Meeting.

The Amendment would authorize the Carnegie Board of Directors, without the
necessity of further action or authorization by the shareholders of Carnegie, to
authorize the issuance of Preferred Stock from time to time in one or more
series, and to fix the relative rights, preferences and limitations of each such
series. The Carnegie Board of Directors would be authorized to determine, among
other things, with respect to each series of Preferred Stock which may be
issued: (a) the distinctive designation and number of shares constituting such
series; (b) the dividend rates, if any, on the shares of that series and whether
dividends would be cumulative; (c) whether, and upon what terms and conditions,
the shares of that series would be redeemable; (d) whether a sinking fund would
be provided for the redemption of the series and, if so, the terms of and
amounts payable into such sinking fund; (e) whether, and upon what terms and
conditions, the shares of that series would be convertible into or exchangeable
for other securities; (f) the rights, if any, to which the shares of that series
would be entitled in the event of voluntary or involuntary dissolution or
liquidation of Carnegie; (g) whether the issuance of any additional shares of
such series or of any other series, will be subject to restrictions as to
issuance or as to the powers, rights and preferences of any such other series;
(h) whether the holders of such securities would have voting rights and the
extent of those voting rights; and (i) any other rights, preferences and
limitations of such series as the Board of Directors may deem advisable.

Pursuant to the Merger Agreement, Carnegie is required to
issue approximately 487,532 shares of Carnegie Series A
Convertible Preferred Stock to the holders of Regent Series A
Convertible Preferred Stock. The Carnegie Series A Convertible

176

Preferred Stock will have rights, privileges and terms substantially similar to
those of the Regent Series A Convertible Preferred Stock, but will be
convertible into 0.75 shares of Carnegie Common Stock and pay dividends in
Carnegie Common Stock at the rate of .075 shares of Carnegie Common Stock
semi-annually for each share held of Carnegie Series A Convertible Preferred
Stock. For a fuller description of the Carnegie Series A Convertible Preferred
Stock, see "Description of Carnegie Securities - Carnegie Preferred Stock."
Thereafter, approximately 1,012,486 shares of Carnegie Series Preferred Stock
will remain available for future issuances.

It is not possible to state the actual effects of the issuance of these
remaining 1,012,486 shares of Carnegie Preferred Stock upon the rights of
holders of Carnegie Common Stock until the Board of Directors determines the
respective rights, preferences and limitations of the holders of any series of
the Carnegie Preferred Stock. The effects of any issuance of Carnegie

Preferred Stock could include, however: (i) a reduction of the amount otherwise
available for payment of dividends on the Carnegie Common Stock, to the extent
dividends are payable on any issued shares of Carnegie Preferred Stock, and

restrictions on dividends on Carnegie Common Stock if dividends on the Carnegie
Preferred Stock are in arrears, (ii) a dilution of the voting power of Carnegie
Common Stock to the extent the Carnegie Preferred Stock has voting rights or is
convertible into Carnegie Common Stock and (iii) a restriction on the rights of
holders of Carnegie Common Stock to share in Carnegie's assets upon liquidation
until satisfaction of any liquidation preference granted to the holders of
Carnegie Preferred Stock.

Depending upon its rights and privileges and the parties to whom it is
sold, the issuance of a new class of Carnegie Preferred Stock could have the
effect of making an unsolicited acquisition of Carnegie less likely.

The issuance of preferred stock could make the potential acquisition of
Carnegie more expensive, and holders of preferred stock could be granted
certain rights such as super majority voting rights, which could make an
acquisition of Carnegie more difficult. Other than the shares of Carnegie
Series A Preferred Stock issued in the Merger, the Board of Directors of
Carnegie has no current intention to issue additional shares of preferred
stock.

The Carnegie Board of Directors recommends the Amendment, because (i) with
regard to the Carnegie Series A Convertible Preferred Stock, it is a condition
to consummation of the Merger and (ii) with regard to the remaining Carnegie
Preferred Stock, it believes that having the ability to issue such Carnegie
Preferred Stock will enhance Carnegie's financial flexibility. The Carnegie
Preferred Stock could be issued for any proper corporate purpose, including,
without limitation, raising additional working capital, and as all or part of
the consideration required for Carnegie to acquire additional financial
institutions. Since, in many instances, the Board will be able to issue the
Carnegie Preferred Stock without having to return to the shareholders for
approval, the Board will be able to react quickly to take advantage of market
opportunities or respond to potential acquisition candidates in a more timely
fashion. The Carnegie Board believes that this additional flexibility, and its
long-term benefits to Carnegie, outweighs any disadvantages to Carnegie's
shareholders.

177

Vote Required

Approval of the Amendment requires the affirmative vote of a majority of
the votes cast at the Carnegie Special Meeting, whether in person or by proxy.
THE CARNEGIE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF CARNEGIE.

PROPOSAL 3 - APPROVAL OF 1995 DIRECTORS STOCK OPTION PLAN

(TO BE VOTED UPON BY CARNEGIE SHAREHOLDERS)

The Carnegie Board of Directors has approved for submission to the
shareholders the 1995 Directors Stock Option Plan (the "Directors' Plan") set
forth as Appendix F to this Joint Proxy Statement/Prospectus. The objective of
the Directors' Plan is to assist Carnegie in attracting and retaining highly
qualified persons as directors of Carnegie and its subsidiaries and to align the
interests of such persons more closely with the interests of Carnegie's
shareholders. Although Carnegie currently maintains an option plan for its
directors, options have been granted for all of the shares issuable under such
plan. The Directors' Plan will therefore supplement the existing plan for
directors of Carnegie.

Administration

The Directors' Plan will be administered by the Board of Directors, which
will have power to designate the optionees and to determine the number of shares
subject to each option, the date of grant and the terms and conditions governing
the option. In addition, the Board is charged with the responsibility of
interpreting the Directors' Plan and making all administrative determinations
thereunder.

Eligibility

All directors of Carnegie or its subsidiaries are eligible to receive
options under the Directors' Plan, including directors of Regent who become
directors of Carnegie.

Shares Subject to the Plan

The Directors' Plan authorizes Carnegie to issue 154,000 shares of Carnegie
Common Stock pursuant to options.

The Directors' Plan provides that the number and price of shares available
for stock options and the number of shares covered by outstanding stock options
shall be adjusted equitably for stock splits, stock dividends,
recapitalizations, mergers and other changes in Carnegie Common Stock.

Termination and Amendment

178

The Directors' Plan will terminate automatically on the tenth anniversary
of the date of shareholder approval.

The Board of Directors may not amend the Directors' Plan without the
approval of Carnegie's shareholders.

Term

All options granted under the Directors' Plan will have terms of ten years,
subject to earlier termination of the option

as provided in the Directors' Plan.

Exercise Price

The Directors' Plan provides that options are to be granted at an exercise
price equal to 100% of the fair market value of the Carnegie Common Stock
purchasable upon exercise of the option on the date of the grant of the option.
Fair market value is to be determined by the Committee in good faith; provided,
however, that the plan provides that if Carnegie Common Stock is a last sale
reported over the counter security, the fair market value as of any date will be
the closing price as reported on the NASDAQ System for the prior day.

The Directors' Plan provides that the purchase price for shares acquired
pursuant to the exercise of any option is payable in full at the time of
exercise. The exercise price must be paid in cash or by certified or cashier's
check.

Exercise Period

Options granted under the Directors' Plan will remain exercisable during
their term, regardless of whether an optionee terminates his other service on
the Carnegie Board of Directors. The Directors' Plan provides that if an
optionee's membership on the Board of Directors of Carnegie ceases due to death
or disability, the optionee's executor's or administrator's right to exercise
outstanding options (in the event of death) or the optionee's right to exercise
the option (in the event of disability) will terminate upon the earlier to occur
of the expiration of the term of the option or three years after such disability
or death.

Federal Income Tax Consequences Under the Plan

The options granted under the Directors' Plan will be treated as
"non-statutory options" for federal income tax purposes unless the optionee is

also a full-time employee of Carnegie. In that case, the Board may designate
whether an option is to be a non-statutory option or an incentive or "statutory"
option under the Code (an "ISO") at the time of grant. The grant of a
non-statutory option which has no readily ascertainable fair market value at the
time it is granted is not taxable to the recipient of the option for federal
income tax purposes at the time the option is granted. The options granted under
the Directors' Plan should be considered as having no readily ascertainable fair
market value at the time of grant because they are neither tradeable on an
established market nor transferable by the recipient.

179

The recipient of a non-statutory option realizes compensation taxable as
ordinary income at the time the option is exercised or transferred. The amount
of such compensation is equal to the amount by which the fair market value of
the stock acquired upon exercise of the option exceeds the amount required

to be paid for such stock. At the time the compensation income is realized by
the recipient of the option, Carnegie is entitled to an income tax deduction in
the amount of the compensation income, provided applicable rules pertaining to
tax withholding are satisfied and the compensation represents an ordinary and
necessary business expense of Carnegie. The stock acquired upon exercise of the
option has an adjusted basis in the hands of the recipient equal to its fair
market value taken into account in determining the recipient's compensation and
a holding period commencing on the date the stock is acquired by the recipient.
At the time the stock is subsequently sold or otherwise disposed of by the
recipient, the recipient will recognize a taxable capital gain or loss measured
by the difference between the adjusted basis of the stock at the time it is
disposed of and the amount realized in connection with the transaction. The long
term or short-term nature of such gain or loss will depend upon the applicable
holding period for such stock.

For federal income tax purposes, no taxable income results to the optionee
upon the grant of an ISO or upon the issuance of shares to the optionee upon the
exercise of the option. Correspondingly, no deduction is allowed to Carnegie
upon either the grant or the exercise of an ISO.

If shares acquired upon the exercise of an ISO are not disposed of either
within the two-year period following the date the option is granted or within
the one-year period following the date the shares are issued to the optionee
pursuant to exercise of the option, the difference between the amount realized
on any disposition thereafter and the option price will be treated as a
long-term capital gain or loss to the optionee. If a disposition occurs before
the expiration of the requisite holding periods, then the lower of (i) any
excess of the fair market value of the shares at the time of exercise of the
option over the option price or (ii) the actual gain realized on disposition,
will be deemed to be compensation to the optionee and will be taxed at ordinary
income rates. In such event, Carnegie will be entitled to a corresponding
deduction from its income, provided Carnegie withholds and deducts as required

by law. Any such increase in the income of the optionee or deduction from the
income of Carnegie attributable to such disposition is treated as an increase in
income or a deduction from income in the taxable year in which the disposition
occurs. Any excess of the amount realized by the optionee on disposition over
the fair market value of the shares at the time of exercise will be treated as
capital gain.

Options Granted Subject To Approval

180

The Board of Directors of Carnegie has approved the following options to
the individuals named below:

Number of
Number of Shares Subject
Shares Subject to Non-
to Incentive Exercise Statutory Exercise
Name Options Price Options Price(1)
-------------- -------- -------------- --------

Bruce A. Mahon --- --- 19,215 $13.75
Thomas L. Gray,
Jr.(1) 17,282 $13.75 34,599 13.75
Theodore Dolci --- --- 9,607 13.75
Michael E. Golden --- --- 17,294 13.75
James O. Haas --- --- 9,607 13.75
Joseph J. Oakes,
III --- --- 9,607 13.75
James Quackenbush --- --- 9,607 13.75
Steven L. Shapiro --- --- 7,206 13.75
Mark A. Wolters(2) 12,540 13.75 -- --
Shelly M. Zeiger --- --- 7,206 13.75

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

(1) The exercise price is 100% of the closing price of the Carnegie Common
Stock on the Nasdaq National Market on September 30, 1995, the date of
grant.

(2) The options granted to Messrs. Gray and Wolters are subject to a vesting
schedule providing for 25% of the options to vest upon grant and 25% to
vest each year thereafter.

Recommendation and Vote Required for Adoption of Proposal 3

The affirmative vote of a majority of the shares of Carnegie Common Stock
voted at the Carnegie Special Meeting, whether in person or by proxy, is
required to adopt the Directors' Plan. THE CARNEGIE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 3.

181

PROPOSAL 4

APPROVAL OF THE 1995 EMPLOYEE STOCK OPTION PLAN

(TO BE VOTED UPON BY CARNEGIE SHAREHOLDERS)

The Carnegie Board of Directors has approved for submission to the
shareholders the 1995 Employee Stock Option Plan (the "Employee Plan") set forth
as Appendix G to this Joint Proxy

Statement/Prospectus. The purpose of the Employee Plan is to assist in
attracting and retaining highly qualified persons to serve as employees of
Carnegie, CBN and any subsidiaries which Carnegie may establish in the future.
In addition, the Employee Plan will help to insure that employees of Carnegie
and its subsidiaries have shared economic interest with the shareholders of
Carnegie. The Employee Plan provides for the granting of both incentive stock
options under Section 422 of the Code and non-statutory stock options. Although
Carnegie currently maintains a stock option plan for executive officers, options
have been granted for all shares authorized under that plan. The 1995 Employee
Stock Option Plan will supplement the existing employee stock option plan.

Administration

The Employee Plan will be administered by a committee designated by the
Board of Directors (the "Committee") from among the members of the Board. The
Committee shall consist of two or more directors, each of whom must be
"disinterested persons" as defined in SEC Rule 16b-3(c) under the Exchange Act.
The Committee shall have the sole authority to determine the individual
employees to whom options shall be granted, the terms and conditions of options,
and the exercise price therefor, and whether the options are incentive or
non-statutory stock options.

Eligibility

All key employees of Carnegie and its subsidiaries are eligible to
participate in the Employee Plan. The Committee, in its absolute discretion, may
select employees from those eligible to receive options. Employees of Regent who
become employees of Carnegie will be eligible to participate in the Employee
Plan.

Exercise Price

The Employee Plan provides that options are to be granted at an exercise
price of not less than 100% of the fair market value of the Carnegie Common
Stock on the date of grant if the options are incentive stock options, or if
such options are intended to be non-statutory options, such option price as may
be determined by the Committee in its discretion, but in no event less than 85%

of the fair market value of the Carnegie Common Stock on the date of grant. Fair
market value under the Employee Plan is defined in the same manner as under the
Directors' Plan. If a key

182

employee, at the time an incentive stock option is granted, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of Carnegie or a subsidiary thereof, the option price for such incentive
stock option will be not less than 110% of the fair market value of the Carnegie

Common Stock on the date of grant of such incentive stock option.

Exercise Period

The Employee Plan provides that if an optionee's service to Carnegie or its
subsidiaries terminates by reason of retirement or disability, the optionee's
right to exercise any outstanding option will terminate upon the earlier to
occur of the expiration of the term of the option or within three months, in the
case of a retirement, and within twelve months in the case of a disability or
the optionee's termination of employment. In the event of optionee's death, the
option may be exercised by the optionee's executor or administrator at any time
within the twelve months following the optionee's death, unless the option would
terminate by its terms prior to the expiration of such twelve month period. If
the optionee ceases to be an employee of Carnegie for any reason (other than
death, disability or retirement), the option granted to such optionee shall
terminate within one month of the date of the termination of his employment.

Shares Subject to the Plan

The Employee Plan authorizes Carnegie to issue 11,530 shares of Carnegie
Common Stock pursuant to options. The Employee Plan provides that the number and
price of shares available for stock options and the number of shares covered by
outstanding stock options shall be adjusted equitably for stock splits, stock
dividends, recapitalizations, mergers and other changes in Carnegie's capital
stock.

Termination and Amendment

The Employee Plan will terminate automatically on the tenth anniversary of
the date of shareholder approval. Options granted under the Employee Plan will
remain valid until their expiration.

Options Granted Subject to Approval

The Committee has granted options, subject to shareholder approval, to
certain employees of Carnegie. The following table sets forth the parties to
whom options have been granted, the number of shares subject to such options,
and the exercise price of those options:

Number of Shares
Name Subject to Options(1) Exercise Price(2)
- ---- --------------------- -----------------
Floyd Haggar 5,765 $13.75
Richard Rosa 5,765 13.75

183

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

(1) All options granted under the Employee Plan were ISOs.

(2) The exercise price is 100% of the closing price of the Carnegie Common
Stock on the Nasdaq National Market on September 30, 1995, the date of
grant.

Federal Income Tax Consequences Under the Plan

For a discussion of the federal income tax consequences under the Employee
Plan, See "Proposal 3 - Federal Income Tax
Consequences Under the Plan."

Recommendation and Vote Required for Adoption of Proposal 4

The affirmative vote of a majority of the shares of Carnegie Common Stock
voted at the Carnegie Special Meeting, whether in person or by proxy, is
required to adopt the Employee Plan. THE CARNEGIE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE "FOR" PROPOSAL 4.

LEGAL MATTERS

The legality of the Carnegie Common Stock and the Carnegie Series A
Convertible Preferred Stock to be issued in connection with the Merger will be
passed upon for Carnegie by McCarter & English, Newark, New Jersey.

EXPERTS

The consolidated balance sheets of Carnegie and its subsidiaries as of
December 31, 1994 and 1993, the consolidated statements of income, changes in
shareholders' equity and cash flows and for each of the three years in the
period ended December 31, 1994, included in this Joint Proxy
Statement/Prospectus, have been included herein in reliance upon the report of
Coopers & Lybrand L.L.P., independent auditors, given on the authority of that

firm as experts in accounting and auditing. Representatives of Coopers &
Lybrand, L.L.P. will attend the Carnegie Special Meeting and will have the
opportunity to make a statement, if they desire to do so, and will be available
to respond to any appropriate questions presented by Carnegie shareholders at
the Carnegie Special Meeting.

The consolidated audited financial statements of Regent and its

subsidiary included in this Joint Proxy Statement/Prospectus have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said

firm as experts in accounting and auditing. Representatives of Arthur Andersen
LLP will attend the Regent Special Meeting and will have the opportunity to make
a statement, if they desire to do so, and will be available to respond to any
appropriate questions presented by Regent shareholders at the Regent Special
Meeting.

184

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Carnegie Unaudited Consolidated Financial Statements: Page

Carnegie Unaudited Consolidated Balance Sheet as of
September 30, 1995 . . . . . . . . . . . . . . . . . . . . . F-

Carnegie Unaudited Consolidated Statements of Income for
the Nine Months Ended September 30, 1995 and 1994 . . . . . . F-

Carnegie Unaudited Consolidated Statements of Cash Flows for
the Nine Months Ended September 30, 1995 and 1994 . . . . . . F-

Carnegie Notes to Unaudited Consolidated Financial Statements . . . F-

Carnegie Audited Consolidated Financial Statements:

Report of Independent Public Accountants . . . . . . . . . . . . . F-

Carnegie Consolidated Balance Sheet as of December 31, 1994
and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . F-

Carnegie Consolidated Statements of Income for the Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . F-

Carnegie Consolidated Statements of Changes in Stockholders'
Equity for the Years Ended December 31, 1994, 1993 and 1992 . F-

Carnegie Consolidated Statements of Cash Flows for the Years
Ended December 31, 1994, 1993 and 1992 . . . . . . . . . . . F-

Notes to Carnegie's Consolidated Financial Statements . . . . . . . F-

Regent Unaudited Consolidated Financial Statements: Page

Regent Consolidated Balance Sheet as of September 30, 1995 . . . . F-

Regent Consolidated Statements of Income for the Nine Months
Ended September 30, 1995 and 1994 . . . . . . . . . . . . . . F-

Regent Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1995 and 1994 . . . . . . . . . . F-

Regent Notes to Unaudited Consolidated Financial Statements . . . . F-

Regent Audited Consolidated Financial Statements:

Report of Independent Public Accountants . . . . . . . . . . . . . F-

Regent Consolidated Balance Sheets as of December 31, 1994

and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . F-

Consolidated Statements of Income for the Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . F-

Regent Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 1994, 1993 and 1992 . . . . F-

Regent Consolidated Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 . . . . . . . . . . . . . . F-
Regent Notes to Consolidated Financial Statements . . . . . . . . . F-

185

Carnegie Unaudited Consolidated Financial Statements
Carnegie Consolidated Balance Sheet as of September 30, 1995

September 30,
1995
(Unaudited)
-----------

ASSETS
Cash and cash equivalents: (000's omitted)
Cash and due from banks . . . . . . . . . . . . . $9,459

Federal funds sold . . . . . . . . . . . . . . . . ---
-----
Total cash and cash equivalents 9,459
-----
Investment Securities:

Available for sale . . . . . . . . . . . . . . . . 48,000

Held to maturity (market value $25,624). . . . . . 25,107
------

Total investment securities 73,107
------
Loans, net of allowance for loan losses of $1,640 at
September 30, 1995 and $1,400 at December 31, 1994 . . 145,723

Premises and equipment, net . . . . . . . . . . . . . . 3,440

Accrued interest receivable and other assets . . . . . 3,324
-----

Total Assets $235,053
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:

Non-interest bearing demand deposits . . . . . . . $38,464
Interest bearing deposits:

Savings deposits . . . . . . . . . . . . 75,582

Other time deposits . . . . . . . . . . 56,164

Certificates of deposit
$100,000 and over. . . . . . . . . . . . 41,240
------

Total deposits $211,450

========

Short term borrowings . . . . . . . . . . . . . . . . . 2,000
Accrued interest payable and other liabilities . . . . 979
-----
Total liabilities 214,429

F-1

Commitments and contingencies

Stockholders' equity:
Common stock, no par value, authorized
5,000,000 shares; issued and outstanding
1,751,076 in 1995 and 1,631,990 in 1994 . . . . . 8,755

Capital surplus . . . . . . . . . . . . . . . . . 10,850

Undivided profits . . . . . . . . . . . . . . . . 1,352
Net unrealized holding (losses) on securities
available for sale . . . . . . . . . . . . . . . . (333)
------

Total stockholders' equity 20,624
------
Total Liabilities and Stockholders' Equity $235,053
========

See notes to consolidated financial statements

F-2

Carnegie Consolidated Statements of Income for the Nine Months
Ended September 30, 1995 and 1994
(Unaudited)

Nine Months Ended
September 30,
-------------
1995 1994
---- ----
(000's omitted
except per share
data)
Interest income:

Loans, including fees . . . . . . . . . . . . . $10,854 $7,797

Federal funds sold . . . . . . . . . . . . . . . 469 233
Investment securities:

Taxable . . . . . . . . . . . . . . . . . . 1,652 1,358

Tax-exempt . . . . . . . . . . . . . . . 723 295
------- ------
Total interest income 13,698 9,683
------- ------

Interest expense:

Savings deposits . . . . . . . . . . . . . . . . 2,417 2,770
Other time deposits . . . . . . . . . . . . . . 2,090 474

Certificates of deposit $100,000 and over . . . 1,549 536

Borrowed funds . . . . . . . . . . . . . . . . . 127 1
------- ------

Total interest expense 6,183 3,781
------- ------

Net interest income 7,515 5,902

Provision for loan losses . . . . . . . . . . . . . . 242 447
------- ------

Net interest income after
provision for loan losses . . . . . . . . . 7,273 5,455
======= ======
Non-interest income:

Service fees on deposits . . . . . . . . . . . . 332 157

Other fees and commissions . . . . . . . . . . . 241 219

Investment securities gains . . . . . . . . . . 130 ---

Investment securities losses . . . . . . . . . . (132) ---
------- ------

Total non-interest income 571 376
======= ======

Non-interest expense:

F-3

Salaries and wages . . . . . . . . . . . . . . . 1,891 1,404

Employee benefits . . . . . . . . . . . . . . . 556 412

Occupancy expense . . . . . . . . . . . . . . . 759 498

Furniture and equipment . . . . . . . . . . . . 395 249
Other . . . . . . . . . . . . . . . . . . . . . 2,134 1,581
------- ------

Total non-interest expense . . . . . . . . 5,735 4,144
------- ------

Income before income taxes 2,109 1,687

Income tax expense . . . . . . . . . . . . . . . . . 552 541
------- ------

Net income $1,557 $1,146
======= ======

Per Common Share:
Net income - primary . . . . . . . . . . . . . . $0.88 $1.04

Net income - fully diluted . . . . . . . . . . . $0.87 $1.04

Cash Dividends . . . . . . . . . . . . . . . . . $0.36 $0.30
Weighted average shares outstanding (in thousands):

Primary . . . . . . . . . . . . . . . . . . . . 1,764 1,098

Fully Diluted . . . . . . . . . . . . . . . . . 1,782 1,098

See notes to consolidated financial statements.

F-4

Carnegie Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1995 and 1994
(Unaudited)

Nine Months Ended
September 30,
-------------

1995 1994
---- ----
Cash flows operating activities: (000's omitted)

Net income . . . . . . . . . . . . . . . . . $1,557 $1,146

Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization . . . . . 361 236

Provision for loan losses . . . . . . . 242 447

Accretion of investment
discount . . . . . . . . . . . . . . . (15) (34)
Amortization of investment
premium . . . . . . . . . . . . . . . . 205 142

Proceeds from sales of
mortgages held for sale . . . . . . . . --- 2,814

Originations of mortgages held
for sale . . . . . . . . . . . . . . . --- (1,945)

Gain on sale of investment
securities . . . . . . . . . . . . . . (130) ---
Loss on sale of investment
securities . . . . . . . . . . . . . . 132 ---

Increase in accrued interest
receivable and other assets . . . . . . (695) (1,192)

Increase (decrease) in accrued
interest payable and
other liabilities . . . . . . . . . . . 170 97
--- --
Net cash provided by
operating activities 1,827 1,711
===== =====
Cash flows from investing activities:

Proceeds from sale of securities
available-for-sale . . . . . . . . . . . . . 14,527 ---

Proceeds from maturities and principal
paydowns of investment securities . . . . . 2,038 1,554

Purchase of securities available-for-

sale . . . . . . . . . . . . . . . . . . . . (36,619) (6,533)

Purchase of securities held-to-maturity . . (6,185) (8,397)

Net increase in loans made to customers . . (7,110) (11,159)

Cash collected on previously charged-off
loans . . . . . . . . . . . . . . . . . . . 42 20

Additions to premises and equipment . . . . (2,196) (171)
------- -----

F-5

Net cash used in investing activities (35,503) (24,686)
======== ========

Cash flows from financing activities:

Net increase in deposits . . . . . . . . . . 34,661 23,740
Net increase in short-term borrowings . . . 2,000 ---

Net proceeds from securities offering . . . --- 7,914

Net proceeds from common stock used on
exercise options . . . . . . . . . . . . . . 288 ---
Cash paid for dividends . . . . . . . . . . (629) (338)
----- -----

Net cash provided by financing activities 36,320 31,316
====== ======

Net change in cash and cash equivalents 2,644 8,341

Cash and cash equivalents as of beginning of year 6,815 5,982
----- -----

Cash and cash equivalents as of end of period $9,459 $14,313

Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . $6,010 $3,807

Income taxes . . . . . . . . . . . . . . . . $639 $713

See notes to consolidated financial statements.

F-6

CARNEGIE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - BASIS OF PRESENTATION

Carnegie, a bank holding company, was incorporated on October 6, 1993 with
authorized capital of 5,000,000 shares of no par common stock. On April 12, 1994
Carnegie acquired 100 percent of the shares of CBN. The financial data for 1994
includes information for CBN prior to its acquisition by Carnegie.

The consolidated condensed financial statements included herein have been
prepared without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The accompanying condensed consolidated financial statements
reflect all adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. Such adjustments
are of a normal recurring nature. These consolidated condensed financial
statements should be read in conjunction with the audited financial statements
and the notes thereto as of and for the year ended December 31, 1994. The
results for the nine months ended September 30, 1995 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1995.

Earnings per share is computed by dividing net income by the weighted average
number of common shares outstanding during each period after giving retroactive
effect to stock dividends declared. Primary and fully diluted earnings per share
include the assumed exercise of dilutive stock options and warrants, using the
treasury stock method.

The consolidated condensed financial statements include the accounts of Carnegie
and CBN, its wholly-owned subsidiary. All significant inter-company accounts and
transactions have been eliminated.

NOTE B - INVESTMENT SECURITIES

Carnegie adopted SFAS 115, "Accounting of Certain Investments in Debt and Equity
Securities" as of January 1, 1994. Debt and equity are classified in one of
three categories and are accounted for as follows:

Securities are classified as securities held to maturity based on management's
intent and Carnegie's ability to hold them to maturity. Such securities are
stated at cost, adjusted for unamortized purchase premiums and discounts.
Securities that are bought and held principally for the purpose of selling them
in the near term are classified as trading securities, which are carried at
market value. Realized gains and losses and gains and losses from marking the
portfolio to market value are included in trading revenue. Securities not
classified as securities held to maturity or trading securities are classified
as securities available for sale, and are stated at fair value. Unrealized gains
and losses on securities available for

sale are excluded from results of operations, and are reported as a separate
component of stockholders' equity, net of taxes. Securities classified as
available for sale include securities that may be sold in response to changes in
interest rates, changes in prepayment risks, the need to increase regulatory
capital or similar requirements.

Management determines the appropriate classification of securities at the time
of purchase. At September 30, 1995 and December 31, 1994, a majority of
Carnegie's investment securities was classified as available for sale. Due to
this classification, Carnegie's stockholders' equity will be affected by
changing interest rates which affect

F-7

the market price of Carnegie's securities available for sale. At September 30,
1995, no investment securities were classified as trading securities.

The following tables present the book and market values of Carnegie's investment
securities portfolio as of September 30, 1995 and December 31, 1994.

Investment Securities in Portfolio
September 30, 1995

Securities Held to Securities Held to
Maturity Maturity
------------------- -------------------
Amortized Market Amortized Market
Cost Value Cost Value
--------- ------ --------- ------
(Dollars in thousands)

U.S. Government . . . . . . . $999 $1,000 $12,501 $12,578
Mortgage-backed agencies . . 5,001 4,894 33,799 33,257

States & political
subdivisions . . . . . . . . 19,107 19,730 -- --

Other securities . . . . . . -- -- 2,223 2,165
------- ------- ------- -------
Total investment securities . $25,107 $25,624 $48,523(1) $48,000
======= ======= ======= =======

(1) Net unrealized losses of $333 thousand, net of a tax benefit of $190
thousand, were reported as a reduction of stockholders' equity at

September 30, 1995.

December 31, 1994

Securities Held to Securities Held to
Maturity Maturity
------------------ ------------------
Amortized Market Amortized Market
Cost Value Cost Value
--------- ------ --------- ------
(Dollars in thousands)
U.S. Government . . . . . . . $ --- $ --- $7,262 $6,586

Mortgage-backed agencies . . --- --- 20,282 18,394

States & political 18,631 18,187 --- ---
subdivisions . . . . . . . .
Other securities . . . . . . --- --- 1,412 1,309
------- ------- ------- -------
Total investment securities . $18,631 $18,187 $28,956(2) $26,289
======= ======= ======= =======

(2) Net unrealized losses of $1.7 million, net of a tax benefit of $981
thousand, were reported as a reduction of stockholders' equity at
December 31, 1994.

F-8

NOTE C - LOANS AND ALLOWANCE FOR LOAN LOSSES

The following table summarizes the components of the loan portfolio as of
September 30, 1995 and December 31, 1994.

Loan Portfolio By Type of Loan

September 30, 1995 December 31, 1994
------------------ -----------------
Amount % Amount %
------ ---- ------- ----
(Dollars in thousands)

Commercial and financial . . $41,159 27.9% $41,917 29.9%

Real estate construction . . 11,847 8.0% 8,399 6.0%
Residential mortgage . . . . 24,757 16.8% 26,207 18.7%

Commercial mortgage . . . . . 66,293 45.0% 61,242 43.6%

Installment . . . . . . . . . 3,307 2.3% 2,532 1.8%
-------- ------ -------- --------
$147,363 100.0% $140,297 100.0%
======== ====== ======== ========

The following tables represents activity in the allowance for loan losses for
the nine month periods ended September 30, 1995 and 1994.

Allowance for Loan Losses

Nine Months Ended
September 30,
-----------------
1995 1994
---- ----
(Dollars in thousands)

Balance - beginning of period . . . . . . . . . $1,400 $980
Charge-offs . . . . . . . . . . . . . . . . . . (44) (280)

Recoveries . . . . . . . . . . . . . . . . . . 42 20

Net (charge-offs) . . . . . . . . . . . . . . . (2) (260)
Provision for loan losses . . . . . . . . . . . 242 447
------ ------
Balance - end of period . . . . . . . . . . . . $1,640 $1,167
====== ======

F-9

NOTE D - RECENTLY ISSUED ACCOUNTING STANDARDS

Accounting by Creditors for Impairment of a Loan

In May 1993, the FASB issues SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan. SFAS No. 114 as amended by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan -- Income Recognition and Disclosures," is
effective for fiscal years beginning after December 15, 1994 and generally
requires all creditors to account for impaired loans at the present value of the
expected future cash flows discounted at the loan's effective interest rate or
at the loan's fair value based upon the underlying collateral if the loan is
collateral dependent. The adopting of SFAS No. 114 did not have a material
effect on the Company's financial condition, cash flows or results of
operations.

Factors influencing management's recognition of impairment include
decline in collateral value; lack of performance under contract loan
agreement terms, including evaluation of late payments or non-payment;
lack of performance under other creditor's agreements or obligations (ie
non-payment of taxes and non-payment of loans to other creditors);
financial decline significantly different from status at loan inception;
litigation or bankruptcy of borrower; significant change in ownership or
loss of guarantors to the detriment of credit quality. A minimal delay
or shortfall is defined by the bank as a delay of less than 90 days in
making full contractual payment, when there are no significant credit
weaknesses which will further delay or stop the borrower from repaying
principal and interest in full under original contract terms.

Loans aggregated for evaluation under FAS 114 are those loans risk-rated
by the bank as Substandard and Doubtful. At September
30, 1995, $3,011,000 loans were considered impaired to some degree, all of
which are non-accrual and collateralized measured on the fair
market value of that collateral.

All impaired loans as recognized under the above evaluation are
considered to have some probability that contract principal, interest,
or both may not be repaid in full. Non-accrual loans are those impaired
loans where management recognizes some probability that contract
principal may not be repaid in full.

Charge-off policy. An asset which no longer retains any value to the bank
will be charged off immediately. Assets whose value has depreciated will
be charged off in part. Potential recovery against these assets is
considered marginal, and recovery is expected to be long-term. All
charge-offs must be approved by management and reported to the Board of
Directors. Generally, Bank policy is to aggressively pursue any likely recovery
against charged-off assets.

Impaired loans. Management has fully adopted FAS 114. In adoption of FAS
114 all loans considered impaired by management prior to FAS 114
continued to be considered impaired, and no new loans were detected
which met FAS 114 impairment standards which were not previously
recognized.

Credit risk tables. Management does not carry loans in excess of 90 days
delinquent on accrual, and all such loans are classified and non-accrual. As
such, FAS 114 has not impacted credit risk analysis. FAS 114 analysis is done
quarterly, and supports management loan loss allocation.

Accounting policy for interest income recognition. Impaired loans may be
on accrual if management does not foresee loss of principal in part or
whole. Interest income on such loans is recorded when cash payment is
made by the borrower. Interest is not capitalized and funded by the bank
under any circumstances. Impaired loans on non-accrual are recognized as
those which may sustain some loss of principal due to impairment of
credit or collateral quality. On such loans, payments by the borrower
are recorded by the bank as a reduction of principal, and interest is
not accrued as income. Interest income will only be recognized after
principal is repaid in full.

Disclosure about Derivative Instruments and Fair Value of Financial
Instruments

In October 1994, the FASB issued SFAS No. 119, "Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments," effective for
fiscal years ending after December 15,1 994. SFAS No. 119 requires certain
disclosures about all derivative financial instruments in either the body of the
financial statements or in the accompanying notes. These disclosures include (a)
the face or contract amount (or notional principle amount if there is no face or
contract amount) and (b) the nature and terms, including, at a minimum, a
discussion of (1) the credit and market risk of those

instruments, (2) the cash requirements of those instruments, and (3)
the related accounts and policy pursuant to the requirements of APB
Opinion No. 22, Disclosure of Accounting Policies. As of September
30, 1995 the Company did not hold and was not party to any derivative
financial instruments.

NOTE E - RECLASSIFICATIONS

Certain captions in the financial statement presented for prior periods have
been reclassified to conform within the 1995 presentation. This includes the
reclassification for all periods presented, of in-substance foreclosed loans
from other real estate owned to loans.

NOTE F - MERGER

On August 30, 1995, with the approval of the Board of Directors,
Carnegie entered into an Agreement and Plan of Merger (the Agreement)
with Regent Bancshares Corp. ("Regent"). Pursuant to the Agreement,
Regent will be merged with and into Carnegie (the merger) and CBN will be merged
with and into the Bank, which will conduct business under the name Carnegie

Regent Bank, N.A. The Agreement provides, among other things, that upon the
merger, (i) each Common and Preferred Series A share of Regent will be converted
into .75 common shares and one Preferred Series A share of Carnegie,
respectively, (ii) each share of Preferred Series B, C, D and E of Regent will
be called for redemption at $10.00 per share unless previously converted into
Regent's common shares in accordance with its terms, and (iii) outstanding
options and warrants to purchase Regent's common stock will be converted into
Carnegie common stock or Carnegie options as further defined in the Agreement.
To effect the merger, the approval of a majority of voting shareholders of
Regent and Carnegie and receipt of all governmental and other required
approvals, including the approval of the Office of the Comptroller of the
Currency and the Federal Reserve Bank, are necessary. Additionally, the
agreement provides that, to effect the merger, Regent and Carnegie are subject
to the satisfaction or waiver, of various conditions as more fully described in
the Agreement.

F-10

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of
Carnegie Bancorp:

We have audited the accompanying consolidated balance sheets of Carnegie Bancorp
and subsidiary as of December 31, 1994 and 1993 and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1994. These consolidated
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Carnegie Bancorp and subsidiary as of December 31, 1994 and 1993 and the
consolidated results of their operations and their cash flow for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.

As discussed in Note 1 of notes to the consolidated financial statements, the
company changed its method of accounting for certain investment securities in
1994 and the method of accounting for income taxes in 1993.

/s/ Coopers & Lybrand L.L.P

Princeton, New Jersey
January 31, 1995

F-11

Carnegie Consolidated Balance Sheet as of December 31, 1994 and 1993

December 31,
------------
1994 1993
---- ----
(Dollars in
thousands)
ASSETS

Cash and cash equivalents:

Cash and due from banks . . . . . . . . . . . . . $6,815 $3,622
Federal funds sold . . . . . . . . . . . . . . . . --- 2,350

Total cash and cash equivalents . . . . . . . . 6,815 5,972
----- -----

Investment Securities:
Investment portfolio (market value $28,830 in 1993) --- 28,728
Available for sale . . . . . . . . . . . . . . . . 26,289 ---

Held to maturity (market value $18,187 in 1994) . 18,631 ---
------ ------
Total investment securities . . . . . . . . . . 44,920 28,728
------ ------
Loans, net of allowance for loan losses of $1,400 at
December 31, 1994 and $980 at December 31, 1993 . . . 138,597 115,966

Premises and equipment, net . . . . . . . . . . . . . 1,605 1,611

Other real estate owned . . . . . . . . . . . . . . . 300 300

Accrued interest receivable and other assets . . . . 3,417 1,786

Total Assets . . . . . . . . . . . . . . . . . . . $195,654 $154,363
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Non-interest bearing demand deposits . . . . . . . $32,809 $22,365

Interest bearing deposits:
Savings deposits . . . . . . . . . . . . . . . 99,140 78,715

Other time deposits . . . . . . . . . . . . . . 15,624 21,398

Certificates of deposit $100,000 and over . . . 29,216 20,700

------- -------
Total Deposits . . . . . . . . . . . . . . . . 176,789 143,178
------- -------
Accrued interest payable and other liabilities 809 387
------- -------
Total liabilities . . . . . . . . . . . . . . . 177,598 143,565
------- -------
F-12

Commitments and contingencies
Stockholders equity:

Common stock, no par value, authorized 5,000,000 shares in 1994; $5.00
par, authorized 1,000,000 shares in 1993; issued and outstanding 1,631,990
in 1994 and
897,305 in 1993 . . . . . . . . . . . . . . . . . . 8,160 4,487
Capital surplus . . . . . . . . . . . . . . . . . . 10,249 5,412

Retained earnings . . . . . . . . . . . . . . . . . 1,333 899

Unrealized holding losses on securities available for
sale, net . . . . . . . . . . . . . . . . . . . . . (1,686) ---
-------- --------
Total stockholders' equity . . . . . . . . . . . 18,056 10,798
--------- --------
Total Liabilities and Stockholders Equity . . . . $195,654 $154,383
======== ========

See accompanying notes to consolidated financial statements.

F-13

Carnegie Consolidated Statements of Income
For the Years Ended December 31, 1994, 1993 and 1992

Year Ended
December 31,
--------------------
1994 1993 1992
---- ---- ----
(Dollars in thousands,
except per share data)
INTEREST INCOME:
Loans, including fees . . . . . . . . . . . . . . $10,923 $8,086 $6,402

Federal funds sold . . . . . . . . . . . . . . . . 290 293 234
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . 1,828 1,332 1,404

Tax-exempt . . . . . . . . . . . . . . . . . . 514 166 177
------ ----- -----
Total interest income . . . . . . . . . . . . . 13,555 9,877 8,217
------ ----- -----
INTEREST EXPENSE:

Savings deposits . . . . . . . . . . . . . . . . . 3,747 2,061 1,374

Other time deposits . . . . . . . . . . . . . . . 625 877 1,254

Certificates of deposit $100,000 and over . . . . 777 701 823
------ ----- -----
Total interest expenses . . . . . . . . . . . . 5,149 3,639 3,451
------ ----- -----
Net Interest income . . . . . . . . . . . . . . 8,406 6,238 4,766

Provision for loan losses . . . . . . . . . . . . . . 650 429 476
------ ----- -----
Net interest income after provision for loan
losses . . . . . . . . . . . . . . . . . . . . . . 7,756 5,809 4,290
------ ----- -----
NON-INTEREST INCOME:
Service fees on deposits . . . . . . . . . . . . . 236 135 111

Other fees and commissions . . . . . . . . . . . . 259 191 98

Investment securities gains, net . . . . . . . . . --- 145 398
------ ----- -----
Total non-interest income . . . . . . . . . . . 495 471 607
------ ----- -----
NON-INTEREST EXPENSE:
Salaries and wages . . . . . . . . . . . . . . . . 1,999 1,693 1,220

Employee benefits . . . . . . . . . . . . . . . . 573 401 275

Occupancy Expense . . . . . . . . . . . . . . . . 701 568 421

Furniture and equipment . . . . . . . . . . . . . 362 336 189

F-14

Other real estate owned . . . . . . . . . . . . . --- --- 21

Other . . . . . . . . . . . . . . . . . . . . . . 2,421 1,698 1,273
------ ------ ------
Total non-interest expense . . . . . . . . . . 6,056 4,696 3,399
------ ------ ------
Income before income taxes . . . . . . . . . . 2,195 1,584 1,498

Provision for income taxes . . . . . . . . . . . . . 656 520 485
------ ------ ------
Net Income . . . . . . . . . . . . . . . . . . . $1,539 $1,064 $1,013
------ ------ ------
PER COMMON SHARE:
Net income . . . . . . . . . . . . . . . . . . . $1.23 $1.08 $1.02
------ ------ ------
Weighted average shares outstanding (in
thousands) . . . . . . . . . . . . . . . . . . 1,253 989 989
------ ------ ------

See accompanying notes to consolidated financial statements.

F-15

Carnegie Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended December 31, 1994, 1993 and 1992

Unrealized
Holding
Losses on
Securities
Available Total
Common Capital Retained for Sale, Stockholders'
Stock Surplus Earning Net Equity
------ -------- ------- -------- ------------
(Dollars in Thousands)

BALANCE, December 31, 1992 . $4,274 $5,136 $611 $--- $10,021

5% stock dividend issued
(42,503 shares) . . . . . . 213 276 (489) --- ---

Net income . . . . . . . . --- --- 1,064 --- 1,064
Cash dividend ($.32 per
share) . . . . . . . . . . --- --- (287) --- (287)
------ ------ ------ ------ -------
BALANCE, December 31, 1993 . $4,487 $5,412 $899 $--- $10,798

5% stock dividend issued
(44,685 shares) . . . . . 223 380 (603) --- ---

Net income . . . . . . . . --- --- 1,539 --- ---

Cash dividend ($.40 per
share) . . . . . . . . . . --- --- (502) --- (502)

Issuance of 690,000
common shares . . . . . . 3,450 4,457 --- --- 7,907

Fair value adjustment -
securities available for
sale, net . . . . . . . . --- --- --- (1,686) (1,686)

------ ------ ------ -------- -------
BALANCE, December 31, 1994 . $8,160 $10,249 $1,333 $(1,686) $18,056
------ ------ ------ -------- -------

See accompanying notes to consolidated financial statements.

F-16

Carnegie Consolidated Statements of Cash Flow
For the Years Ended December 31, 1994, 1993 and 1992

Year Ended December 31,
----------------------
1994 1993 1992
---- ---- ----
(Dollars in Thousands)
Cash flow from operating activities:
Net Income . . . . . . . . . . . . . . . . . $1,539 $1,064 $1,013

Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation and amortization . . . . . . 324 324 180

Provision for loan losses . . . . . . . . 650 429 476

Accretion of investment discount . . . . (40) (17) (63)

Amortization of investment premium . . . 178 117 78

Gain on sale of investment securities . . --- (145) (398)

Loss on disposal of equipment . . . . . . 18 --- 2

Increase in deferred taxes . . . . . . . (302) (190) (113)

Proceeds from sales of mortgages held for
sale . . . . . . . . . . . . . . . . . . 2,814 508 ---

Organizations of mortgages held for sale. . (1,945) (1,608) ---

Increase in accrued interest receivable
and other assets . . . . . . . . . . . . (342) (246) (55)

Increase (decrease) in accrued interest
payable and other liabilities . . . . . . 422 44 (66)
-------- -------- --------

Net cash provided by operating
activities . . . . . . . . . . . . . 3,316 280 1,054

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

Cash flows from investing activities:

Proceeds from sale of investment securities. . --- 6,386 13,523

Proceeds from a maturities and paydown of

investment securities . . . . . . . . . . . 1,806 3,011 600

Purchase of investment securities . . . . . --- (16,584) (18,356)

F-17

Purchase of securities available-for-sale. . (5,460) --- ---

Purchase of securities held-to-maturity . . (15,349) --- ---

Net increase in loans made to customers . . . (24,201) (34,509) (22,394)

Cash collected on previously charged
off loans . . . . . . . . . . . . . . . . 51 25 7

Additions to premises and equipment . . . . (336) (817) (374)

Proceeds from sale of premises and
equipment . . . . . . . . . . . . . . . . --- --- 17

Sale of other real estate owned . . . . . 471 --- 226

Purchase of other real estate owned . . . . (471) (300) ---
-------- -------- --------

Net cash used in investing activities . . . (43,489) (42,788) (26,751)
-------- -------- --------

Cash flows from financing activities:

Net increase in deposits . . . . . . . . . . 33,611 34,964 24,141

Gross proceeds from common stock issued . . 9,056 --- ---

Financing costs of common stock issued . . . (1,149) --- ---

Cash paid for dividends . . . . . . . . . . (502) (287) (203)

(Decrease in) proceeds from securities sold
under repurchase agreements . . . . . . . . --- (900) 900
-------- -------- --------
Net cash provided by financing activities.. 41,016 33,777 24,838
-------- -------- --------
Net change in cash and cash equivalents . . . . 843 (8,731) (859)

Cash and cash equivalents as of beginning
of year . . . . . . . . . . . . . . . . . . 5,972 14,703 15,562
-------- -------- --------
Cash and cash equivalents as of end
of year . . . . . . . . . . . . . . . . . . $6,815 $5,972 $14,703
-------- -------- --------
Cash paid during the period for:

Interest . . . . . . . . . . . . . . . . . . $5,122 $3,614 $3,493

Income taxes . . . . . . . . . . . . . . . . $929 $641 $757

See accompanying notes to consolidated financial statements.

F-18

Notes to Carnegie's Consolidated Financial Statements

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Carnegie Bancorp ("Carnegie"), a bank holding company, was incorporated on
October 6, 1993 with authorized capital of 5,000,000 shares of no par value
common stock. On April 12, 1994, the Company acquired 100 percent of the shares
of Carnegie Bank, N.A. ("CBN"). The transaction was accounted for in a manner
similar to that of a pooling of interests. The consolidated financial statements
presented for the years ended December 31, 1994, 1993 and 1992 reflect
information for CBN prior to its acquisition by Carnegie.

The accounting and reporting policies of Carnegie follow generally accepted
accounting principles and general practices applicable to both the banking and
bank related industries. The policies which materially affect the determination
of financial position, results of operation and cash flow are summarized below.

Principles of Consolidation - The consolidated financial statements include the
accounts of Carnegie and CBN, its wholly owned subsidiary. All significant
intercompany accounts and transactions have been eliminated.

Reclassifications - Certain amounts in the financial statements presented for
prior periods have been reclassified to conform with 1994 presentation.

Statement of Cash Flows - The statement of cash flows is presented using the
indirect method of presentation. Cash equivalents, for the purposes of this
statement are defined as cash and due from banks and other short term
investments with an original maturity of 90 days or less.

Investment Securities - Effective January 1, 1994 Carnegie adopted Statement of

Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities", ("SFAS 115"). SFAS 115 requires that an enterprise
classify its investments in debt securities as either securities held to
maturity (carrying amount equals amortized costs), securities available for sale
(carrying amounts equal estimated fair value; unrealized gains and losses
recorded in a separate component of stockholders' equity) or trading securities
(carrying amount equals estimated fair value; unrealized gains and losses
included in the determination of net income).

Carnegie has evaluated all of its investments in debt securities and has
classified them as either held to maturity or available for sale. Premiums and
discounts on these securities are amortized or accredit on a basis that
approximates the effective yield method. Realized gains and losses from sale of
securities held to maturity and securities available for sale are determined on
a specific identification cost basis.

Prior to the adoption of SFAS 115, Carnegie has classified its investments in
debt securities as investment securities, that were carried at amortized costs.

Loans - Loans are stated at principal amounts outstanding, net of unearned
discount and net deferred loan origination fees and costs. Interest income on
loans is accrued and credited to interest income monthly as earned. Loan
origination fees and certain direct loan origination costs are deferred and the
net amount is amortized as an adjustment of the related loan's yield. Net loan
fees are generally amortized over the contractual lives of the related loans.

Loans are reported as non-accrual if they are past due as to principal or
interest payments for a period of more than ninety days. Exceptions may be made
if a loan is adequately collateralized and in the process of collection. At the
time a loan is placed on a non-accrual status, previously accrued and
uncollected interest is reversed

F-19

against interest income in the current period. Only after collection of loan
principal is assured in interest on such loans recognized as income. A loan is
returned to an accrual status when factors indicating doubtful collectibility no
longer exist and the borrower has performed satisfactorily under the contractual
terms of the loan for a period not less than six months.

SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", requires that
impaired loans be measured at the present value of expected future cash flow by
discounting those cash flows generally at the loan's effective interest rate.
This statement also requires troubled debt restructurings involving a
modification of terms to be remeasured on a discounted basis. Carnegie will
adopt this statement in 1995 and expects the impact of its implementation will
not be material.

Allowance for Loan Losses - An allowance for loan losses is generally
established through charges to earnings in the form of a provision for loan
losses. Loans which are determined to be uncollectible are charged against the
allowance account and subsequent recoveries, if any, are credited to the
account. In establishing an appropriate allowance, an assessment of the loan
portfolio including past loan experience, economic conditions and other factors
that, in management's judgment, warrants current recognition, are considered. In
addition, various regulatory agencies, as in integral part of their examination
process, periodically review CNB's allowance for loan losses. Such agencies may
require CBN to recognize additions to the allowance based on their judgements of
information available to them at the time of their examination.

Other Real Estate Owned - Other real estate owned includes property

acquired through foreclosure or that meets certain criteria to be considered as

in- substance foreclosure and is carried at the lower of cost of fair value less
costs to dispose. When the property is acquired, any excess of the loan balance
over the fair value less costs to dispose is charged to the allowance for loan
losses. Subsequent write-downs, if any, are included in non-interest expense.
Carrying costs associated with the operation and maintenance of the property are
expenses as incurred through current income and included in the other expense
category.

Premises and Equipment, net - Premises and equipment are stated at cost, less
accumulated depreciation and amortization. Depreciation is computed on a
straight-line basis over the estimated useful lives of the assets. Leasehold
improvements are amortized on a straight-line basis over the shorter of the
terms of the leases or the estimated useful lives of the improvements.
Expenditures for maintenance and repairs are charged to expenses as incurred.
Gains and losses on dispositions are reflected in current operations.

Income Taxes - SFAS 109 "Accounting for Income Taxes" requires a change from the
deferred method of accounting for income taxes of APB Opinion to the asset and
liability method of accounting for income taxes. Under the asset and liability
method of SFAS 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liability and their respective
tax basis. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which temporary
differences which are inherent in the tax filing process, are expected to be
recovered or settled. Under SFAS 109, the effect on deferred tax assets and
liabilities of a change in the tax rate is recognized in income in the current
period that includes the enacted date. During 1993, Carnegie's adoption of SFAS
109 did not have a material impact on its consolidated financial statements.

Deferred income taxes are provided for certain items of income and expense which
enter into the determination of income for financial reporting purposes in
different periods than for income tax purposes. These differences

F-20

relate primarily to the provision for loan loss, depreciation expense,
recognition of fee income, and amortization of costs capitalized for tax
purposes.

Earnings Per Share - Earnings per share is computed by dividing net income by
the weighted average number of common shares outstanding during each year after
giving retroactive effect to stock dividends declared. Common stock options and
warrants outstanding have been omitted from weighted average shares outstanding
as they are not material.

(2) CASH AND DUE FROM BANKS

Carnegie maintains various deposits in other banks. At December 31, 1994 and
1993 average cash balances reserved to meet Federal Regulatory requirements of
$615,000 and $404,000 respectively, were maintained at the Federal Reserve Bank
of Philadelphia.

(3) INVESTMENT SECURITIES

The following is a comparative summary of investment securities at December 31:

Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---- ---- ------ -----
(Dollars in Thousands)

1994
Securities available for sale:
U.S. Government . . . . . . . . . . $7,262 $--- $(676) $6,586

Mortgage-backed agencies . . . . . . 20,282 --- (1,888) 18,394

Other securities . . . . . . . . . . 1,412 --- (103) 1,309
------- ---- ------- -------
$28,956 $--- $(2667) $26,289
------- ---- ------- -------

F-21

Securities held to maturity:
Obligations of State and Political
Subdivisions . . . . . . . . . . . . $18,631 $26 $(470) $18,187

1993

U.S. Government . . . . . . . . . . $6,782 $254 $(65) $6,971

Mortgaged backed agencies . . . . . 17,697 109 (200) 17,606

Obligations of State and Political
Subdivisions . . . . . . . . . . . . 2,889 19 (9) 2,899

Other securities . . . . . . . . . . 1,360 --- (6) 1,354
------- ---- ------- -------
$28,728 $382 $(280) $28,830
------- ---- ------- -------

F-22

At December 31, 1994 a maturity distribution of the amortized cost and market
values of the investment securities is as follows:

Year Ended December 31, 1994

Securities Held to Securities Available
Maturity for Sale
-------------------- --------------------
Amortized Market Amortized Market
Cost Value Cost Value
-------- ------- ------- ------
(Dollars in Thousands)

Due 1 year or less . . . . . . $90 $91 $--- $---

Due after 1 year through
5 years . . . . . . . . . . 3,163 3,144 4,050 3,849

Due after 5 years through 10 11,669 11,380 1,008 942
years . . . . . . . . . . . .

Due after 10 years . . . . . . 3,709 3,572 23,601 21,201

Federal Reserve Bank stock . . --- --- 297 297
------- ------- ------- -------
$18,631 $18,187 $28,956 $26,289

Securities held to maturity and available for sale of $31,224,000 as of December
31, 1994 and securities with amortized cost of $23,222,000 as of December 31,
1993 were pledged to secure public deposits and for other purposes as required
or permitted by law.

(4) LOANS

Loans at December 31, 1994 and 1993 consist of the following

1994 1995
---- ----
(Dollars in thousands)
Commercial and financial . . . . $41,917 $34,451

Real estate construction . . . . 8,399 12,277

Residential mortgage . . . . . . 25,907 25,086

Commercial mortgage . . . . . . . 61,242 42,780

Installment . . . . . . . . . . . 2,532 2,532

Total loans . . . . . . . . . 139,997 116,946

Less allowance for loan losses . 1,400 980

Loans, net . . . . . . . . . . $138,597 $115,966

Included in loans receivable at December 31, 1994 and 1993 are loans amounting
to $1,765,000 and $2,919,000 respectively, on which the accrual of interest has
been suspended. Interest income that would have been accrued had these loans
been current aggregated $204,000 and $197,000 at December 31, 1994 and 1993,
respectively.

F-23

As of December 31, 1994 and 1993 the Bank had no loans to any single customer
that exceeded 10% of CBN's loan portfolio.

(5) ALLOWANCE FOR LOAN LOSSES

An analysis of the allowance for loan losses for 1994, 1993 and 1992 is as
follows:

1994 1993 1992
---- ---- ----
(Dollars in Thousands)
Balance, beginning of year . . . $980 $806 $573

Provision charged to operations . 650 429 476

Recoveries . . . . . . . . . . . 51 25 7

Loans charged off . . . . . . . . (281) (280) (250)

Balance, end of year . . . . . . $1,400 $980 $806

(6) LOANS TO RELATED PARTIES

Loans to related parties include loans made to certain officers, directors and
their affiliated interests. Carnegie believes it has not entered into any
transactions with these individuals or entities in which the terms and
conditions were less favorable to Carnegie than they would have been for similar
transactions with other borrowers. Included in loans to related parties at
December 31, 1994 are loans to a director, totalling approximately $516,000
which are classified as substandard. At December 31, 1994 these loans are
current as to payment of principal and interest

An analysis of the activity of such related party loans for 1994 is as follows:

1994
----
(Dollars in Thousands)

Balance, beginning of year . . . . $4,970

Additions . . . . . . . . . . . 1,227

Payments . . . . . . . . . . . . (1,552)

Balance, end of year . . . . . . . $4,645

F-24

(7) PREMISES AND EQUIPMENT

The components of premises, furniture and equipment at December 31 were as
follows:

(Dollars in Thousands)

Leasehold improvements . . . . . . . . $1,103 $1,075
Furniture and equipment . . . . . . . . 1,566 1,297

2,669 2,372

Less accumulated depreciation and 1,064 761
amortization . . . . . . . . . . . .
Premises and equipment, net . . . . $1,605 $1,611

(8) INCOME TAXES

As discussed in Note 1, Summary of Significant Accounting Policies, Carnegie
adopted SFAS No. 109 as of January 1, 1993. The cumulative effect of this change
in accounting principle was immaterial to the net income of Carnegie and is
therefore not reported separately in the consolidated statement of operations
for the year ended December 31, 1993.

The components of the provision for income tax expense are as follows:

Year Ended December 31,

-------------------------------
1994 1993 1992
---- ---- ----
(Dollars in Thousands)
Current:

Federal . . . . . . . . . . . . . . $814 $628 $530

State and local . . . . . . . . . . 143 82 68
---- ---- ----
Total current taxes . . . . . . . 957 710 598

Deferred:

Federal . . . . . . . . . . . . . . (226) (155) (88)

State and local . . . . . . . . . . (75) (35) (25)
---- ---- ----
Total deferred income taxes . . . (301) (190) (113)

Total . . . . . . . . . . . . . . $656 $520 $485
==== ==== ====
F-25

A reconciliation between the reported income tax expense and the amount computed
by multiplying income before income taxes by the Federal statutory income tax
rate is as follows:

1994 1993 1992
---- ---- ----
(Dollars in Thousands)

Expected statutory income tax expense. . $745 $539 $509

Increase (decrease) in taxes resulting from:

State taxes on income, net of federal 45 31 29
tax benefit . . . . . . . . . . . .

Tax-exempt income, net . . . . . . . (175) (56) (54)

Other, net . . . . . . . . . . . . . 41 6 1
---- ---- ----
Total income tax provision . . . $656 $520 $485
==== ==== ====

Deferred tax assets and liabilities as of December 31, 1994 and 1993 consisted

of the following:

1994 1993
---- ----
(Dollars in Thousands)

Deferred tax assets

Allowance for possible loan losses . . . $561 $312

Loan fees . . . . . . . . . . . . . . . 250 164

Loan interest income . . . . . . . . . . 66 81

Other . . . . . . . . . . . . . . . . . 58 59
---- ----
Total deferred tax assets . . . . . . 935 616

Deferred tax liabilities . . . . . . . . . (67) (50)
---- ----
Net deferred tax assets . . . . . . . $868 $566
==== ====

Net deferred tax assets are included in other assets as of December 31, 1994 and
1993. There was no valuation allowance recorded for deferred tax assets at
December 31, 1994 or 1993.

F-26

(9) OTHER NON-INTEREST EXPENSE

Other non-interest expense for the years ended December 31, consisted of the
following:

1994 1993 1992
---- ---- ----
(Dollars in Thousands)

Stockholder relations . . . . . . . . . $418 $399 $271

Professional and other fees . . . . . . . 523 329 256

Business development . . . . . . . . . . 226 184 154

FDIC assessment insurance . . . . . . . . 338 251 192

Advertising . . . . . . . . . . . . . . . 172 84 34

Directors' and Advisory Board fees . . . 213 201 182

Other . . . . . . . . . . . . . . . . . . 531 250 184
------ ------ ------
$2,421 $1,698 $1,273
====== ====== ======

(10) COMMITMENTS AND CONTINGENCIES

Future minimum lease payments under non-cancellable operating leases at December
31, 1994 are as follows:

(Dollars in thousands)
Year ending December 31,

1995 . . . . . . . . . . . $622

1996 . . . . . . . . . . . 706

1997 . . . . . . . . . . . 661

1998 . . . . . . . . . . . 621

1999 . . . . . . . . . . . 621

Thereafter . . . . . . . . 9,471
------
Total minimum lease
payments . . . . . . . 12,702

======

The lease agreements on Carnegie's branch provide for the payment of real estate
taxes and other expenses in addition to the base rent which is subject to annual
escalation based upon a consumer price index.

Rental expense amounted to $336,000 for 1994, $414,000 for 1993 and $348,000 for
1992. During 1994 the property on which Carnegie's corporate headquarters is
located was condemned by the State of New Jersey for highway construction.
Management has determined the relocation costs to the office and compensation
for

F-27

existing leasehold improvements in the current facilities to be partially
reimbursable by the State and prior landlord, and has accrued for the estimated
unreimbursed amount.

Carnegie is subject to claims and lawsuits which arise primarily in the ordinary
course of business. Based upon information currently available and advice
received from legal counsel representing Carnegie in connection with such claims
and lawsuits, it is the opinion of Management that the disposition or ultimate
determination of such claims and lawsuits will not have a material adverse
effect on the consolidated financial position or consolidated statements of
operations of Carnegie.

(11) CAPITAL COMPLIANCE

The following table summarizes the risk-based and leverage capital ratios for
Carnegie and Carnegie Bank, N.A. ("CBN") at December 31, 1994, as well as the
required minimum regulatory capital ratios:

Minimum Regulatory
December 31, 1994 Requirements

Carnegie CBN
Risk-based capital:

Tier 1 capital ratio . . . 14.06% 11.05% 4.00%

Total capital ratio. . . . 15.06 11.98 8.00

Leverage ratio . . . . . . . 10.47 8.22 3.00-5.00

(12) BENEFIT PLANS

Savings Plan - In 1994 Carnegie approved a savings plan under Section 401(k) of
the Internal Revenue Code. All full-time employees over the age of twenty-one
who have completed one year of continuous employment with Carnegie are eligible
to participate in the plan. Under the plan, employee contributions of up to 6%
of gross salary are matched in part or total at the discretion of Carnegie. Such
matching becomes vested when the employee reaches five years of credited
service.

Total savings plan expense was $9,000 for 1994.

Stock Option Plans - Carnegie maintains stock option plans, pursuant to which an
aggregate of 148,383 shares of common stock have been reserved for issuance to
certain key employees and the directors of Carnegie and its subsidiary. Under
these plans, the options were granted at the fair market value of Carnegie's
common stock on the date of grant, become exercisable at the rate of 25% per
year commencing with the date of grant, and expire not more than ten years after
the date of grant.

F-28

Options Outstanding

Shares Price Per Share
------ ---------------

Balance, December 31, 1991
(32,643 shares exercisable) . . 37,969 $9.07-10.50

Additional options issued -
5% stock dividend . . . . . . . 6,723 ---

Cancelled . . . . . . . . . . . (1,102) $10.00

Balance, December 31, 1992
(35,587 shares exercisable) . . 38,763 $8.64-10.00

Additional options issued -
5% stock dividend . . . . . . . 1,674 ---

Cancelled . . . . . . . . . . . (5,250) $10.00

Balance, December 31, 1993
(34,897 shares exercisable) . . . 35,187 $8.23-9.53

Granted . . . . . . . . . . . . . 99,408 11.50

Additional options issued -
5% stock dividend (Note 16) . . 7,065 ---

(112,112 shares exercisable) . . 141,318 $7.84 - 10.95

Additional options issued -
5% stock dividend . . . . . . . 1,896 ---

Balance, December 31, 1994 . . . . 148,383 $7.47-10.43

(13) DIVIDEND LIMITATIONS

Funds for the payment of cash dividends by Carnegie are derived from dividends
paid by CBN to Carnegie. Accordingly, restrictions on CBN's ability to pay cash
dividends directly affect the payment of cash dividends by Carnegie. CBN is
subject to certain limitations on the amount of cash dividends that it may pay
under the National Bank Act. The approval of bank regulatory authorities is

required if dividends declared in any year by a national bank exceed the bank's
net profits for that combined with the retained profits of the bank for the two
immediately preceding years. At December 31, 1994 CBN could declare dividends
aggregating approximately $2,796,000 without regulatory approval.

(14) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK OR
CONCENTRATIONS OF CREDIT RISK

Carnegie is a party to financial instruments with off-balance sheet risk
transacted in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit and
standby letters of credit, which are conditional commitments issued by the
company to guarantee the

F-29

performance of an obligation or service of a customer to a third party. Those
instruments involved, to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the financial statements.

Credit policies and procedures for commitments to extend credit and standby
letters of credit are the same as those applicable to loans and the credit risk
associated with these instruments is considered in

management's assessment of the adequacy of the allowance for loan
losses.

Carnegie's predominant focus has been in commercial lending within the state of

New Jersey. As a result, CBN's credit risk is concentrated in the state of New
Jersey and is dependent on general economics of the state as well as housing and
commercial development starts, building occupancy rates and real estate values.

Financial instruments whose contract amounts represent credit risk which are not
reflected in the accompanying financial statements as of December 31, 1994 and
1993 consist of the following:

1994 1993
---- ----
(Dollars in Thousands)

Commercial and other unused
commitments . . . . . . . . . . $21,430 $11,810

Home equity unused lines. . . . 2,336 2,079

Standby letters of credit. . . . 2,986 1,887

(15) STOCK OFFERING

On August 16, 1994, Carnegie issued, through a public offering 690,000 units.
Each unit consisted of one share of common stock and one warrant to purchase one
share of common stock at an exercise price of $15.09 for a period of three years
from the date of issuance. After giving retroactive effect for the stock
dividend declared in January, 1995, there were 724,500 warrants outstanding at
an exercise price of $14.37 for each outstanding warrant.

(16) SUBSEQUENT EVENT

In January 1995, the Board of Directors declared both a cash dividend and stock
dividend. Stockholders of record on February 14, 1995 will receive a 5% stock
dividend on March 15, 1995. Stockholders of record on February 15, 1995 will
receive a $.12 per share dividend on March 15, 1995. Weighted average shares
outstanding and earnings per share have been adjusted to reflect the dividend.

F-30

REGENT BANCSHARES CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)

ASSETS September 30,
1995
-------------

Cash and due from banks $ 4,929,325

Investment securities available
for sale 31,273,732

Mortgage-backed securities
held to maturity (market value
of $109,574,959) 111,537,750

Mortgage loans held for sale 4,071,033
Loans, net of unearned interest and
loan costs 103,129,694
Less: Allowance for loan losses (1,913,920)
-------------
Net loans 101,215,774
Premises and equipment, net 665,981
Accrued interest receivable 1,694,470
Prepaid expenses and other assets 1,195,037
------------
Total Assets $256,583,102
============

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
Non-interest bearing $15,611,907
Interest bearing:
NOW and money market 10,860,561
Savings 48,117,623
Certificates of deposit 118,353,183
------------
Total Deposits 192,943,274
Advances from Federal Home Loan Bank of 38,140,585
Pittsburgh
Subordinated debentures 2,750,000
Accrued interest payable 4,301,902
Other liabilities 4,918,986
------------
Total Liabilities 243,054,747
------------

Commitments and Contingencies
Shareholders' Equity:
Preferred stock, $.10 par value, 5,000,000
shares authorized

Series A, 487,532 shares issued and
outstanding; entitled to $4,875,320 in
involuntary liquidation 48,753

F-31

Series B, 4,270 shares issued and
outstanding; entitled to $42,700 in
involuntary liquidation 427

Series C, 3,515 shares issued and
outstanding; entitled to $35,150 in

involuntary liquidation 351

Series D, 4,775 shares issued and
outstanding; entitled to $47,750 in
involuntary liquidation 478

Series E, 99,273 shares issued and
outstanding; entitled to $992,730 in
involuntary liquidation 9,927

Common Stock, $.10 par value, 10,000,000 97,927
shares authorized, 979,274 shares issued and
outstanding
Capital surplus 13,300,872
Retained earnings 546,308
Net unrealized loss on securities available
for sale (476,688)
------------
Total Shareholders' Equity 13,528,355
------------
Total Liabilities & Shareholders' Equity $256,583,102
============

See notes to unaudited consolidated financial statements.

F-32

REGENT BANCSHARES CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)

1995 1994
---- ----
Interest Income:
Loans, including fees $7,482,226 $4,611,396
Investment securities 7,581,244 8,149,617
Federal funds sold -- 9,562
---------- ----------
Total interest income 15,063,470 12,770,575
---------- ----------
Interest Expense:
Deposits 6,785,615 6,906,112
Short-term borrowings 2,179,974 1,149,306

Long-term debt 167,697 422,622
---------- ----------
Total interest expense 9,133,286 8,478,040
---------- ----------
Net interest income 5,930,184 4,292,535
Provision for loan losses 320,000 35,000
---------- ----------
Net interest income after

provision for loan losses 5,610,184 4,257,535
---------- ----------
Other income:
Service charges on deposit
accounts 56,160 91,365
Other 17,900 81,957
---------- ----------
Total other income 74,060 173,322
---------- ----------
Other Expenses:
Salaries and employee benefits 1,278,726 1,121,069
Professional services 833,988 325,524
Rent 130,391 131,708
Other occupancy expense 123,464 87,863
Depreciation and amortization 133,750 106,001
Insurance 238,921 372,360

Litigation settlement 175,000 --
Auto insurance premium
finance servicing 975,840 63,785
Other 1,225,889 668,223

---------- ----------
Total other expenses 5,115,969 2,876,533
---------- ----------
Income before income taxes 568,275 1,554,324
Provisions for income taxes 191,800 526,900
---------- ----------
NET INCOME 376,475 1,027,424
Preferred stock dividends 360,147 236,610
---------- ----------
Earnings for common stock $16,328 $790,814
========== ==========
Earnings per common share:
Primary: $.02 $.80

Fully diluted -- $.69
Weighted average number of shares 1,048,059 982,490
========== ==========

See accompanying notes to unaudited consolidated financial statements.

F-33

REGENT BANCSHARES CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)

1995 1994
---- ----
Cash Flows from Operating Activities:
Net Income $376,475 $1,027,424
Adjustments to reconcile net income to net
cash provided by operating activities -
Provision for loan losses 320,000 35,000
Depreciation and amortization 133,750 106,001
Net amortization of premiums and
discounts on investment securities and
investment securities available for
sale 468,635 1,087,132
Decrease in net deferred loan costs 1,139,122 157,345
(Increase) decrease in accrued interest
receivable 256,774 (174,106)
Decrease in other assets 647,947 290,595
Increase in accrued interest payable 2,061,834 742,706
Increase in other liabilities 2,762,999 425,041
Purchases of mortgage loans held for
sale (38,677,832)(265,875,699)
Proceeds from sales of mortgage loans
held for sale 39,994,316 267,006,232
------------ ------------

Total adjustments 9,107,545 3,800,247
------------ ------------

Net cash provided by operating
activities 9,484,020 4,827,671
------------ ------------

Cash Flows From Investing Activities:
Net increase in loans (28,528,629) (10,372,934)

Purchases of mortgage-backed and
investment securities held to maturity -- (46,483,957)

Principal collected on investment and
mortgage-backed securities 10,088,975 31,910,515

Principal collected on investment
securities available-for-sale 4,116,335 8,004,589

Net decrease in U.S. Treasury bills
with maturities of less than three

months 124,672 99,860

Net decrease in federal funds sold -- 6,000,000
Purchases of premises and equipment (143,230) (168,701)
------------ ------------

Net cash used in investing
activities (14,341,877) (11,010,628)
------------ ------------

Cash Flows From Financing Activities:
Net (decrease) increase in total
deposits 31,881,802 (3,512,558)

Net (decrease) increase in advances
from Federal Home Loan Bank of
Pittsburgh with maturities of
less than three months (30,111,797) 9,865,996
Advances from Federal Home Loan
Bank of Pittsburgh with maturities
greater than three months 10,215,000 --
Maturities of Advances from Federal
Home Loan Bank of Pittsburgh with
maturities greater than three months (5,000,000) --

Proceeds from issuance of subordinated
debentures -- 200,000
------------ ------------

Net cash provided by financing
activities 6,985,005 6,553,438
------------ ------------
Net increase (decrease) in cash and cash
equivalents 2,127,148 370,481
Cash and cash equivalents, beginning of
year 2,802,177 6,719,903
------------ ------------
Cash and cash equivalents, end of period $4,929,325 $7,090,384
============ ============
Supplemental Disclosure of Cash Flow
Information:
Cash paid during the period for:
Interest $7,071,452 $7,735,334
Income taxes 100,000 310,000
Supplemental Schedule of Non-Cash
Investing and Financial Activity:
Issuance and declaration of preferred
stock as dividends $308,712 $395,829
Conversion of preferred stock to common
stock 5,486 4,297

See accompanying notes to unaudited consolidated financial statements.

F-34

REGENT BANCSHARES CORP. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements

1. In the opinion of Regent, the accompanying unaudited financial statements
contain all adjustments (including normal recurring accruals) necessary to
present fairly the financial position of Regent as of September 30, 1995 and
its results of operations for the nine months ended September 30, 1995 and
1994 and its cash flows for the nine months ended September 30, 1995 and
1994.

2. Results of operations for the nine months ended September 30, 1995 are not
necessarily indicative of the results to be expected for the full year.

3. Earnings per common share for all periods presented is based on the
weighted averaged number of common shares outstanding and common stock
equivalents, after consideration of preferred stock dividends. Common
stock equivalents include the Series B, Series C, Series D and Series E
Convertible Preferred Stock. For the nine months ended September 30,
1995 and 1994, the weighted average number of common shares included
114,056 and 94,989 shares, respectively, attributable to common stock
equivalents. The earnings per common share does not assume the exercise
of stock options or warrants as common stock equivalents since such
exercise would be anti-dilutive. Fully diluted earnings per share assumes
the conversion of preferred stock. However, for the nine months ended
September 30, 1995, the resulting calculation is anti-dilutive and is
therefore not presented herein. For the nine months ended September 30,
1994, 1,499,868 shares were used in the calculation.

4. Contingencies

Regent is subject to various legal actions and proceedings. In the
bankruptcy proceeding of a mortgage banking company for which the Bank
funded individual residential mortgages, the Bank has requested the court
to order the debtor to execute assignments of notes and mortgages to the
Bank with respect to approximately $7,600,000 of mortgages which the Bank
had purchased and which the debtor was obligated to resell but had failed
to resell as a result of its financial difficulties. Such mortgages were
recorded by the Bank as of September 30, 1995. The debtor had objected to
the Bank's request, alleging that the mortgages may be the property of the
debtor and that the funds advanced by the Bank of approximately $7,600,000
might represent unsecured loans to the debtor. In this event, it is
management's belief that the Bank's claims in these proceedings represent a
substantial portion of all claims against the debtor.

In October, 1995, the U.S. Bankruptcy Court issued an order approving the
settlement of the matter. As part of the settlement, the Bank's request to
receive assignment of notes and mortgages of approximately $7,600,000 was
granted and the trustee and creditor's committee agreed not to object to

the Bank's unsecured claims against the debtor in the bankruptcy
proceedings. Additionally, the Bank agreed to pay the trustee $175,000 and
will lend the trustee up to an additional $175,000 to pay counsel fees in
connection with litigation by the trustee against a third party. The Bank
also agreed to make an additional loan up to $50,000 and a third loan of
$75,000, (subject to certain conditions), to pay fees and expenses of
professionals (other than attorneys) in connection with the claim against
the third party. The loans will bear interest at the Bank's prime rate plus
one percent per annum, and will be secured by a continuing first lien on,
and security interest in (after administrative expenses, as defined), the
trustee's right, title and interest in the assets of the debtor's
bankruptcy estate. The Bank's payment to the trustee of $175,000, has been
charged to expense in the three months ended September 30, 1995. Management
believes the Bank's loan commitments under the settlement are recoverable
based upon its current assessment of the outcome of the litigation against
the third party. The Bank's unsecured claims against the debtor approximate
$2.5 million, with recovery primarily dependent on successful litigation
against the third party.

There continues to be possible claims which may be made against the Bank
by other creditors associated with the Bank's transactions with the debtor.
Such claims have not been formally asserted to date. Additionally, in
November 1995, the agent that conducted a real estate settlement involving
the refinancing of a mortgage through the debtor, filed a lawsuit against
the Bank seeking damages in excess of $100,000 plus any and all damages
sustained which are unspecified. The lawsuit alleges, among other things,
breach of contract and reliance on the Bank as the debtor's warehouse
lender. Management believes that these pending and possible claims are
without merit, and the Bank intends to vigorously defend this and any
future actions brought related to these matters. However, the ultimate
outcome of these matters is not presently determinable and, accordingly, no
adjustments have been made in the accompanying consolidated financial
statements.

In the opinion of management, after discussions with legal counsel, the
resolution of each of these matters is not expected to have a material
adverse effect on the Company's consolidated financial condition or
results of operations.

5. Adoption of Statement of Financial Accounting Standards No. 114 and
SFAS No. 118.

Allowance for Loan Losses

The Bank adopted Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan" ("SFAS No. 114")
as amended by Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan--Income Recognition
and Disclosures" ("SFAS No. 118") effective January 1, 1995. Under the
new standard, the 1995 allowance for credit losses related to loans that
are impaired as defined by SFAS No. 114 and SFAS No. 118 is evaluated based

on the present value of expected future cash flows discounted at the loan's
effective interest rate, at the loan's observable market price or the fair
value of the collateral for certain collateral dependent loans. Furthermore,
in-substance foreclosures are classified as loans and are stated
at the lower of cost or fair value. All loans regardless of size and type are
evaluated for impairment on an individual basis. Prior to 1995, the allowance
for credit losses related to these loans was evaluated based on undiscounted
cash flows or the fair value of the collateral for collateral dependent
loans. The adoption of SFAS No. 114 and SFAS No. 118 did not have a
material effect on the Company's financial condition, cash flows or results
of operations.

Factors influencing management's recognition of impairment include decline
in collateral value; lack of performance under contract loan agreement
terms, including evaluation of late payments or non-payment; lack of
performance under other creditor's agreements or obligations (i.e.
non-payment of taxes, non-payment of loans to other creditors); financial
decline significantly different from status at loan inception; litigation
or bankruptcy of borrower; significant change in ownership or loss of
guarantors to the detriment of credit quality. A minimal delay or shortfall
is defined by the Bank as a delay of less than 90 days in making full
contractual payment, when there are no significant credit weaknesses which
will further delay or stop the borrower from repaying principal and
interest in full under original contract terms.

Loans aggregated for evaluation under SFAS No. 114 and SFAS No. 118 are
those loans risk-rated by the Bank as Special Mention, Substandard and
Doubtful, as well as any Troubled Debt Restructure which may not be so
risk-rated. As of September 30, 1995, there are no restructured loans.

The allowance for loan losses is maintained at a level believed adequate by
management to absorb potential losses in the loan portfolio. Management's
determination of the adequacy of the allowance is based on the risk
characteristics of the portfolio, past loan loss experience, local economic
conditions, and such other relevant factors. The allowance is increased by
provisions for loan losses charged against income and is reduced by net
charge-offs. The allowance is based on management's estimates, and actual
losses may vary from the current estimates. These estimates are reviewed
periodically, and, as adjustments become necessary, they are reported in
earnings in the periods in which they become known.

At September 30, 1995, the recorded investment in loans that are considered
to be impaired as defined by SFAS No. 114 and SFAS No. 118 was $4.4 million
(of which $2.9 million were on a non-accrual basis). Included in this
amount is $4.3 million of impaired loans for which the related allowance
for credit losses is $1.2 million and $72,000 of impaired loans that as a
result of write-downs do not have an allowance for credit losses. The average
recorded investment in impaired loans during the quarter ended September
30, 1995 was approximately $4.6 million. For approximately $800,000 of
impaired loans, the reserve evaluation was based on the expected future

cash flows and the remaining $3.6 million was based on the fair value of
the collateral.

An asset which no longer retains any value to the Bank will be charged-off
immediately. Assets whose value has depreciated will be charged-off in
part. Potential recovery against these assets is considered marginal, and
recovery is expected to be long-term. Bank policy is to aggressively pursue
any likely recovery against charged-off assets.

Interest Income Recognition

The Bank applies all payments received on non-accrual loans to principal
until such time as the principal is paid off, after which time any additional
payments received are recognized as interest income. For the quarter ended
September 30, 1995, the Bank did not recognize any interest income using
the cash basis of income recognition.

Interest income is accrued on other impaired loans based on the loans
contractual interest rate and its recorded investment. For the quarter
ended September 30, 1995, the Bank recognized income of approximately
$46,000 on these loans. With the exception of one loan for $311,000, which
was greater than 90 days delinquent, these loans were current. Other loans
totaling $234,000 which were delinquent 90 days or more and accruing
interest income are not considered impaired loans as it is management's
opinion that the contractual principal and interest payments will be
collected in full.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To The Shareholders and Board of Directors
of Regent Bancshares Corp. and Subsidiary:

We have audited the accompanying consolidated balance sheets of Regent
Bancshares Corp. (a New Jersey corporation) and subsidiary as of December 31,
1994 and 1993, and the related consolidated statements of income, shareholders'
equity and cash flows for each of the three years in the period ended December
31, 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Regent Bancshares
Corp. and subsidiary as of December 31, 1994 and 1993, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1994, in conformity with generally accepted accounting principles.

As more fully discussed in Note 12, a dispute has arisen in the bankruptcy
proceedings of a mortgage banking company for which the Bank previously funded
individual residential mortgages regarding legal ownership of mortgages in which
the Bank acquired a 100% beneficial interest as participant. As more fully
discussed in Note 20, subsequent to March 22, 1995, the date of our original
report, this dispute was settled; however, there continue to be pending claims
and other possible claims which may be made against the Bank by other creditors
associated with the Bank's transactions with the mortgage banking company.
Management believes that these claims are without merit; however, the ultimate
outcome of these matters is not presently determinable and, accordingly, no
adjustments have been made in the accompanying consolidated financial
statements.

As described in Note 2 of the consolidated financial statements, the Company
changed its method of accounting for investments in debt and equity securities.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Philadelphia, Pa.,
March 22, 1995

(except with respect to the
matters discussed in Note 20,
as to which the date is
December 15, 1995)

Consolidated Balance Sheets
December 31
-----------
ASSETS 1994 1993
---- ----

Cash and due from banks $2,802,177 $6,719,903
Federal funds sold - 6,000,000
Investment securities available for sale 35,056,688 -
Investment securities at cost, which approximates
market value 124,672 2,392,335
Mortgage-backed securities held to maturity
(market value of $113,189,677
and $154,656,304, respectively) 121,482,427 153,773,474
Mortgage loans held for sale 5,387,517 22,700,892
Loans, net of unearned interest and loan costs 75,859,639 49,147,127
Less: Allowance for loan losses (1,713,372) (1,321,225)
------------ ------------

Net loans 74,146,267 47,825,902
------------ ------------

Accrued interest receivable 1,951,244 1,967,645
Premises and equipment, net 656,501 621,335
Prepaid expenses and other assets
(including net deferred taxes of
$1,358,100 and $399,300, respectively) 1,842,984 1,943,182
------------ ------------

Total assets $243,450,477 $243,944,668
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:
Non-interest bearing $13,641,796 $13,801,979
Interest bearing:
NOW and money market 13,796,458 9,594,546
Savings 83,335,372 101,700,163
Certificates of deposit 50,287,846 67,296,178
------------ ------------

Total deposits 161,061,472 192,392,866

Advances from Federal Home Loan Bank of Pittsburgh 63,037,382 34,104,821
Subordinated debentures 2,750,000 2,550,000
Accrued interest payable 2,240,068 1,585,785

Other liabilities 2,155,987 185,453
------------ ------------

Total liabilities 231,244,909 230,818,925
------------ ------------

Commitments and Contingencies

Shareholders' equity:
Preferred stock, $.10 par value,
5,000,000 shares authorized,
Series A, 515,678 and 529,700 shares issued
and outstanding; entitled to $5,156,780 in
involuntary liquidation 51,568 52,970

Series B, 4,650 and 4,970 shares issued and
outstanding; entitled to $46,500 in
involuntary liquidation 465 497

Series C, 4,036 and 4,672 shares issued and
outstanding; entitled to $40,360 in
involuntary liquidation 404 467

Series D, 4,886 and 5,076 shares issued and
outstanding; entitled to $48,860 in
involuntary liquidation 488 508

Series E, 73,365 and 42,915 shares issued and
outstanding; entitled to $733,650 in
involuntary liquidation 7,337 4,292
------------ ------------

60,262 58,734

Common stock, $.10 par value - 10,000,000
shares authorized, 924,409 and 887,594 issued
and outstanding 92,441 88,759
Capital surplus 12,997,321 12,606,702
Retained earnings 478,544 371,548
Net unrealized loss on investment securities
available for sale (1,423,000) -
------------ ------------

Total shareholders' equity 12,205,568 13,125,743
------------ ------------

Total liabilities and shareholders' equity $243,450,477 $243,944,668

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

The accompanying notes are an integral part of these consolidated financial
statements.

Consolidated Statements of Income

Year Ended December 31
----------------------
1994 1993 1992
---- ---- ----

Interest income:
Loans, including fees $6,313,866 $4,392,116 $4,797,689
Investment securities held for sale - 50,454 485,374
Investment securities and securities
available for sale 10,841,050 10,662,692 8,204,003
Federal funds sold 9,562 6,898 32,010
---------- ---------- ----------

Total interest income 17,164,478 15,112,160 13,519,076
---------- ---------- ----------

Interest expense:
Deposits 9,006,507 8,715,081 8,125,701
Short-term borrowings 1,857,622 691,121 560,943
Long-term debt 508,531 514,516 123,028
---------- ---------- ----------

Total interest expense 11,372,660 9,920,718 8,809,672
---------- ---------- ----------

Net interest income 5,791,818 5,191,442 4,709,404

Provision for loan losses 860,000 450,000 525,000
---------- ---------- ----------

Net interest income after
provision for loan losses 4,931,818 4,741,442 4,184,404
---------- ---------- ----------

Other income:
Service charges on deposit accounts 102,452 85,581 58,417
Other 99,431 70,069 11,880
---------- ---------- ----------

Total other income 201,883 155,650 70,297
---------- ---------- ----------

Other expenses:
Salaries and employee benefits 1,449,481 1,072,102 835,890
Professional services 560,441 436,956 276,142
Rent 173,865 173,959 173,855
Other occupancy expense 118,460 105,334 97,832

Depreciation and amortization 157,301 127,562 109,336

FDIC assessment and other insurance 505,927 424,914 359,233

Other 1,406,301 772,656 633,857
---------- ---------- ----------

Total other expenses 4,371,776 3,113,483 2,486,145
---------- ---------- ----------

Income before provision for income taxes 761,925 1,783,609 1,768,556
Provision for income taxes 259,100 606,500 601,700
---------- ---------- ----------

NET INCOME 502,825 1,177,109 1,166,856

Preferred stock dividends 287,222 516,457 316,600
---------- ---------- ----------
Earnings for common stock $215,603 $660,652 $850,256
========== ========== ==========

Earnings per common share:
Primary $.22 $.71 $.95
Fully diluted - - .82

Weighted average number of
shares outstanding 989,611 927,482 894,876

The accompanying notes are an integral part of these consolidated financial
statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY FOR THE
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992

Net Unrealized Loss
Retained On Investment
Preferred Stock Common Stock Earnings Securities
--------------- ------------ Capital (Accumulated Available
Shares Amount Shares Amount Surplus Deficit) For Sale Total
------ ------ ------ ------ ------- ---------- ------------ -----

Balance,
December 31, 1991 687,801 $68,781 662,627 $66,263 $11,568,580 $(921,846) $ - $10,781,778
Issuance of
preferred stock
as dividends - - - - (27,705) 27,705 -
Issuance of
common stock
as dividends - - 7,354 735 181,702 (182,437) -

Conversion of
preferred stock
to common stock (103,796) (10,381) 106,710 10,671 (290) - -
Net income - - - - - 1,166,856 1,166,856
--------- -------- ------- ------- ------------ ---------- --------- -----------

Balance,
December 31,
1992 584,005 58,400 776,691 77,669 11,722,287 90,278 - 11,948,634
Issuance of
preferred stock
as dividends 52,967 5,297 - - 425,084 (430,381) -
Issuance of
common stock
as dividends - - 57,287 5,729 459,729 (465,458) -
Conversion of
preferred stock
to common
stock (49,639) (4,963) 53,616 5,361 (398) - -
Net income - - - - - 1,177,109 1,177,109
--------- -------- ------- ------- ------------ ---------- ----------- -----------

Balance,
December 31,
1993 587,333 58,734 887,594 88,759 12,606,702 371,548 - 13,125,743
Issuance of

preferred stock
as dividends 51,912 5,191 - - 390,638 (395,829) -
Conversion of
preferred stock
to common stock (36,630) (3,663) 36,815 3,682 (19) - -
Net unrealized
loss on investment
securities available
for sale - - - - - - (1,423,000) (1,423,000)
Net income - - - - - 502,825 502,825
--------- -------- ------- ------- ------------ ---------- ----------- -----------

Balance,
December 31,
1994 602,615 $60,262 924,409 $92,441 $12,997,321 $478,544 $(1,423,000) $12,205,568
========= ======== ======= ======= ============ ======== =========== ===========

The accompanying notes are an integral part of these consolidated financial
statements.

Consolidated Statements of Cash Flows

Year Ended December 31
----------------------
1994 1993 1992
---- ---- ----

Cash flows from operating activities:
Net income $502,825 $1,177,109 $1,166,856
Adjustments to reconcile net income
to net cash provided
by operating activities:

Provision for loan losses 860,000 450,000 525,000
Depreciation and amortization 157,301 127,562 109,336

Net amortization of premiums and
accretion of discounts on
investment securities and
investment securities available
for sale 1,248,214 1,116,244 600,307

Loss on sale of other real estate - 10,800 -

Increase (decrease) in unearned
interest/net deferred loan fees 432,246 (163,450) (42,104)

Decrease (increase) in accrued
interest receivable 16,401 (37,282) (634,572)

Decrease (increase) in prepaid
expenses and other assets 826,797 (1,443,393) (299,119)

Increase (decrease) in accrued
interest payable 654,283 143,416 (178,504)

Increase (decrease) in other
liabilities 1,970,534 (8,831) (96,769)

Purchases of mortgage loans
held for sale (301,014,991) (113,076,908) -

Proceeds from sales of

mortgage loans held for sale 318,328,366 90,376,016 -
---------- ----------- -----------

Total adjustments 23,479,151 (22,505,826) (16,425)
---------- ----------- -----------

Net cash provided by (used in)
operating activities 23,981,976 (21,328,717) 1,150,431
---------- ----------- -----------

Cash flows from investing activities:
Net (increase) decrease in loans (27,612,611) 6,341,244 (5,059,246)

Purchase of investment
securities (47,491,857) (77,808,413) (108,718,219)

Principal collected on mortgage
-backed and investment securities 34,639,562 60,727,658 37,873,988

Principal collected on investment
securities available-for-sale 8,974,915 -- --

Net (increase) decrease in U.S.
Treasury bills with maturities
less than three months (24,812) 24,903 49,750

Net decrease (increase) in
Federal funds sold 6,000,000 (6,000,000) 7,300,000

Purchases of premises and equipment (186,066) (106,691) (69,728)

Proceeds from sale of other real
estate owned - 942,504 322,355
---------- ----------- -----------

Net cash used in investing
activities (25,700,869) (15,878,795) (68,301,100)
----------- ----------- -----------

Cash flows from financing activities:
Net (decrease) increase in demand,
NOW, savings and money
market deposits (14,323,062) 24,183,767 52,199,897

Net (decrease) increase in
certificates of deposit (17,008,332) 7,494,069 (11,207,545)

Net increase (decrease) in advances
from Federal Home Loan Bank
of Pittsburgh with original
maturities less than three months 15,532,561 (1,395,179) 23,500,000

Advances from Federal Home Loan
Bank of Pittsburgh with maturities
greater than three months 15,000,000 5,000,000 7 ,000,000

Maturities of advances from Federal
Home Loan Bank of Pittsburgh with
maturities greater than
three months (1,600,000) -- --

Proceeds from issuance of
subordinated debentures 200,000 2,550,000 -
---------- ----------- -----------

Net cash (used in)
provided by financing
activities (2,198,833) 37,832,657 71,492,352
---------- ----------- -----------

Net (decrease) increase in cash
and cash equivalents (3,917,726) 625,145 4,341,683

Cash and cash equivalents,
beginning of year 6,719,903 6,094,758 1,753,075
---------- ----------- -----------

Cash and cash equivalents,
end of year $2,802,177 $6,719,903 $6,094,758

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

Supplemental disclosure of cash flow information: Cash paid during the year for:
Interest $9,081,749 $7,729,084 $6,398,894
Income taxes 510,000 930,000 782,000

Supplemental schedule of non-cash
investing and financing activity:
Issuance of preferred stock
as dividends $395,829 $430,381 $ -
Issuance of common stock as
dividends - 465,458 182,437
Addition of other real estate

owned - - 287,659
Conversion of preferred
stock to common stock 3,663 4,963 10,381

The accompanying notes are an integral part of these consolidated financial
statements.

REGENT NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF BUSINESS

Regent Bancshares Corp. ("Regent") is a bank holding company organized under the
laws of the State of New Jersey and engages in commercial banking business
through its wholly-owned subsidiary, Regent National Bank (the Bank), a
nationally chartered bank insured by the Federal Deposit Insurance Corporation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies of Regent and its subsidiary conform to generally
accepted accounting principles. The more significant accounting policies are
summarized below.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Regent and the
Bank. All material intercompany accounts and transactions have been eliminated
in consolidation.

INVESTMENT PORTFOLIO

The Financial Accounting Standards Board issued a pronouncement that required
Regent to change its method of accounting for certain investments in debt
securities beginning January 1, 1994. Held-to-maturity securities are to be
recorded at amortized cost; trading securities are to be recorded at fair value,
with unrealized gains and losses included in income; and available-for-sale
securities are to be recorded at fair value, with unrealized gains and losses
excluded from income and reported as a separate component of shareholders'
equity. At January 1, 1994, mortgage-backed and non-marketable equity securities
with a fair value of approximately $43,903,000 were classified as available for
sale and the related unrealized gains, net of applicable income taxes, were
$171,000. At December 31, 1994, mortgage-backed and non-marketable equity
securities with a fair value of $35,056,688 have been recorded as available for
sale in the accompanying consolidated balance sheet and related unrealized
losses, net of applicable income taxes, of $1,423,000, have been recorded as a
reduction to shareholders' equity. There are no trading account securities and
all other securities have been classified as held to maturity.

Mortgage-backed securities and other investment securities classified as
held-to-maturity are acquired as investments with the intent and ability to
maintain the securities in the portfolio until maturity. These securities are
stated at cost adjusted for amortization of premiums and accretion of discounts,
using a method that approximates the effective yield method.

Investment securities at December 31, 1994 primarily include U.S. Treasury

bills while the balance at December 31, 1993 includes U.S. Treasury bills and
non-marketable equity investments in the Federal Reserve Bank of Philadelphia
and the Federal Home Loan Bank of Pittsburgh (FHLB). These securities are stated
at cost which approximates fair market value.

Gains and losses on the sale of all securities are computed using the specific
identification basis and are recorded on a trade date basis.

During 1993, the actual prepayments of mortgage-backed securities differed from
the estimated prepayments previously assumed in the calculation of the premium
amortization as a result of declining interest rates. Regent adjusted the
amortization based on the actual prepayments and in consideration of anticipated
future prepayments. This additional amortization totalled $400,000 and is
included in the consolidated statements of income as a reduction of interest
income from investment securities.

MORTGAGE LOANS HELD FOR SALE

Mortgage loans held for sale are carried at the lower of aggregate cost or
market as determined by outstanding commitments from investors. At December 31,
1993, the Bank has amounts receivable of approximately $972,000 from certain
brokers that originate mortgage loans for the Bank. These amounts receivable are
included as prepaid expenses and other assets in the accompanying consolidated
balance sheets.

LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are stated at the amount of the unpaid principal balance, net of unearned
interest and deferred loan fees/costs. Interest on loans is recognized on the
daily principal amount outstanding.

Accrual of interest is discontinued on loans when management believes, after
considering economic and business conditions and collection efforts, that the
borrower's financial condition is such that collection of interest and principal
is doubtful. Non-accrual loans are restored to accrual status when there has
been a sustained period of repayment performance and all principal and interest
that is contractually due is reasonably assured of repayment.

The allowance for loan losses is maintained at a level believed adequate by
management to provide for potential losses based upon an evaluation of known and
inherent risks attendant with the loan portfolio. Management's determination of
the adequacy of the allowance is based on the risk characteristics of the
portfolio, past loan loss experience, local economic conditions, and other
relevant factors. The allowance is increased by provisions for loan losses
charged against income. The provision is based on management's estimates, and
actual

losses may vary from the current estimates. These estimates are reviewed
periodically, and, as adjustments become necessary, they are reported in
earnings in the periods in which they become reasonably estimable.

OTHER REAL ESTATE OWNED

Other real estate owned consisting of property acquired by foreclosure or deed
in lieu of foreclosure is initially recorded at the lower of the related loan
balance or the fair value of the property at the date acquired. These assets are
subsequently carried at the lower of this new basis or the fair value less
estimated costs to sell. Costs relating to the development and improvement of
the property are capitalized, whereas those related to holding the property are
charged to expense.

The Financial Accounting Standards Board has issued a pronouncement that
requires Regent to change its method of accounting for impairment of certain
loans beginning January 1, 1995. Certain impaired loans must be measured based
on the present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's observable
market price or the fair value of the collateral if the loan is collateral
dependent. Loans foreclosed in-substance will no longer be accounted for as
foreclosed property; rather, a loan for which foreclosure is probable will
continue to be accounted for as a loan until actual foreclosure has occurred.
Management is evaluating the provisions of this pronouncement, and, while the
effect has not been quantified, management believes that it will not have a
material effect on the Company's consolidated financial position or results of
operations.

LOAN ORIGINATION FEES AND COSTS

Loan origination fees, net of certain direct loan origination costs of closed
loans, are deferred and amortized over the life of the related loans as an
adjustment to yield.

PREMISES AND EQUIPMENT

Premises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation of furniture and fixtures is computed using the
straight-line method over the estimated useful lives which range from 3 to 10
years. Leasehold improvements are amortized using the straight-line method over
the lesser of their estimated useful lives or the term of their respective
leases. Repairs and maintenance are expensed as incurred, and renewals and
betterments are capitalized.

FEDERAL INCOME TAXES

Effective January 1, 1993, Regent adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109).
The statement requires the recording of deferred taxes based on the

estimated future tax effects of differences between the financial statement and
income tax bases of assets and liabilities using the enacted marginal tax rate.
Deferred income tax expense or credits are based on the changes in the asset or
liability from period to period. Prior to January 1, 1993, deferred income tax
expenses or credits were recorded to reflect the tax consequences of timing
differences between the recording of income and expenses for financial reporting
purposes and for purposes of filing federal income tax returns at income tax
rates in effect when the differences arose.

EARNINGS PER COMMON SHARE

Earnings per common share for all periods presented is based on the weighted
average number of common shares outstanding after consideration of preferred
stock dividends. Common stock equivalents include the Series B, Series C, Series
D and Series E Convertible Preferred Stock. The weighted average number of
common shares attributable to common stock equivalents includes 89,339, 60,238,
and 63,918 shares for the years ended December 31, 1994, 1993 and 1992. The
earnings per common share does not assume the exercise of stock options or
warrants as common stock equivalents since such exercise would be antidilutive.

Earnings per common share assuming full dilution does not consider the exercise
of stock options or warrants since such exercise would be antidilutive. The
conversion of preferred stock and all common stock equivalents is considered in
the calculation. However, for the years ended December 31, 1994 and 1993, the
resulting calculation is antidilutive and is therefore not presented herein.
Regent accrues on a quarterly basis the preferred stock dividend that is payable
annually each year. This accrual is considered only for purposes of the earnings
per common share calculation and is computed using the estimated market price of
the preferred stock at the financial reporting date. The accrual is changed as
necessary to reflect dividends declared and changes in market price.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents include cash on
hand and amounts due from banks. The statements of cash flows present the net
amounts of cash receipts and cash payments associated with loan and deposit
transactions.

3. RESTRICTED CASH BALANCES

The Bank is required to maintain reserves in the form of cash balances with the
Federal Reserve Bank against its deposit liabilities. Reserves of $250,000 and
$59,000 were required to be held with the Federal Reserve Bank at December 31,
1994 and December 31, 1993.

4. INVESTMENT PORTFOLIO

Investment securities available for sale at December 31, 1994 are as follows:

December 31, 1994
-------------------------------------------------------------------------------------
Estimated
Principal Unamortized Unearned Carrying Unrealized Unrealized Market
Balance Premiums Discounts Value Gains Losses Value
--------- ----------- --------- -------- ---------- ---------- ---------

FHLMC $12,359,696 $327,182 $ - $12,686,878 $ - $725,000 $11,961,878
FNMA 18,916,479 637,645 30,680 19,523,444 - 1,367,000 18,156,444

Collateralized
mortgage
obligations 1,409,300 - 798 1,408,502 - 64,000 1,344,502
----------- -------- ------- ----------- ---- ---------- -----------
$32,685,475 $964,827 $31,478 33,618,824 - 2,156,000 31,462,824
=========== ======== =======

Non-
marketable
equity
securities 3,593,864 - - 3,593,864
----------- ---- ---------- -----------

$37,212,688 $ - $2,156,000 $35,056,688
=========== ==== ========== ===========

Mortgage-backed securities held to maturity at December 31, 1994 and 1993, are as follows:

December 31, 1994
--------------------------------------------------------------------------------------
Estimated
Principal Unamortized Unearned Carrying Unrealized Unrealized Market
Balance Premiums Discounts Value Gains Losses Value
--------- ----------- --------- -------- ---------- ---------- ---------

GNMA $13,192,150 $612,766 $- $13,804,916 $- $1,423,375 $12,381,541
FHLMC 48,439,779 1,884,286 245,216 50,078,849 14,474 3,315,868 46,777,455
FNMA 36,072,650 1,203,708 60,768 37,215,590 - 3,099,220 34,116,370

Collateralized
mortgage
obligations 19,781,772 614,957 13,657 20,383,072 - 468,761 19,914,311

------------ ---------- -------- ------------ ------- ---------- ----------
$117,486,351 $4,315,717 $319,641 $121,482,427 $14,474 $8,307,224 $113,189,677

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

December 31, 1993
---------------------------------------------------------------------------------------
Estimated
Principal Unamortized Unearned Carrying Unrealized Unrealized Market
Balance Premiums Discounts Value Gains Losses Value
--------- ----------- --------- ----------- ---------- ---------- ------------

GNMA $121,510 $8,865 $- $130,375 $- $6,021 $124,354
FHLMC 74,802,377 2,800,385 258,766 77,343,996 817,632 378,978 77,782,650
FNMA 47,184,210 1,957,504 20,813 49,120,901 239,650 313,595 49,046,956

Collateralized
mortgage
obligations 26,484,270 825,144 131,212 27,178,202 696,570 172,428 27,702,344
------------ ---------- -------- ------------ ---------- -------- ------------
$148,592,367 $5,591,898 $410,791 $153,773,474 $1,753,852 $871,022 $154,656,304
============ ========== ======== ============ ========== ======== ============

In accordance with Regent's policy to hold all mortgage-backed securities to
maturity, there were no sales of mortgage-backed securities during 1994 or 1993.

Expected maturities of mortgage-backed securities will differ from contractual
maturities because borrowers may have the right to prepay obligations with or
without prepayment penalties. The contractual maturities of these securities
range from 10 to 40 years.

The Bank has established credit arrangements with financial institutions.
Mortgage-backed securities will serve as collateral for any transactions
executed under these arrangements. The maximum level of funds available is
approximately $11,000,000. Additionally, the Bank has the ability to borrow on a
short and long- term basis from the FHLB an amount not exceeding 85% to 90% of
the fair market value of these securities. Borrowings under this arrangement at
December 31, 1994 would require that investment securities of approximately
$71,000,000 be pledged as collateral. Securities with a carrying value of
$2,378,000 were pledged to secure public deposits.

The amortized cost and estimated market value of debt securities at
December 31, 1994, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may

have the right to call or prepay obligations with or without call or
prepayment penalties.

Estimated
Amortized Market
Cost Value
--------- ----------
Held to Maturity
Due in one year or less $ 124,672 $ 124,672
Due after one year through five years - -
Due after five years through ten years - -
Due after ten years - -
------------ ------------
124,672 124,672
Mortgage-backed securities 121,482,427 113,189,677
------------ ------------
$121,607,099 $113,314,349
============ ============
Available for Sale
Due after one year through five years $ - $ -
Due after five years through ten years - -
------------ ------------
- -
Mortgage-backed securities 33,618,824 31,462,824
------------ ------------
$ 33,618,824 $ 31,462,824
============ ============

The carrying cost and market values of investment securities as of December 31,
1994 and 1993 follows

1994 1993

------------------------ ------------------------
Carrying Market Carrying Market
Cost Value Cost Value
-------- ------ -------- ------

U.S. Treasury
bills $124,672 $124,672 $ 99,860 $ 99,860

Non-marketable
equity
investments - - 2,292,475 2,292,475
-------- -------- ---------- ----------

$124,672 $124,672 $2,392,335 $2,392,335
======== ======== ========== ==========

5. LOANS

A summary of the loan portfolio as of December 31, 1994 and 1993 follows:

1994 1993
---- ----

Commercial & industrial loans $27,406,523 $23,293,946
Real estate:
Construction 1,455,110 2,218,795
Mortgages - residential 29,252,959 17,358,843
Mortgages - commercial 13,550,216 5,700,298
Consumer loans 4,409,532 357,700
----------- -----------

76,074,340 48,929,582

Unearned interest/
net deferred loan costs (214,701) 217,545
----------- -----------

$75,859,639 $49,147,127
=========== ===========

Non-accrual loans were $3,685,804 and $2,123,202 at December 31, 1994 and 1993,
respectively. Interest income of approximately $211,000, $198,500 and $261,400
was not recognized as operating income due to the non-accrual status of loans
during 1994, 1993 and 1992, respectively. At December 31, 1994 and 1993, loans
totalling $393,681 and $420,237, respectively, were

past due 90 days or more and continue to accrue interest income.

In 1993, the Bank introduced a new lending program directed to the mortgage

banking industry. As an alternative to a warehouse credit line, the Bank
participates in the funding of individual residential mortgage loans originated
by the mortgage banker. During late 1994, two of the mortgage banking companies
involved in this program experienced financial difficulties and subsequently
filed for bankruptcy protection. At or about the same time, the Bank learned
that irregularities occured in the origination process at the mortgage banking
companies which negatively impacted the underlying real estate collateral of
certain loans that had been funded. As a result of these conditions, the Bank
recorded charges totaling $1,067,000 on a pre-tax basis ($1.08 per common share)
in the fourth quarter, which includes an additional provision for loan losses of
$825,000.

At December 31, 1994 and 1993, there were $3,539,143 and $3,530,597,
respectively, of loans outstanding to directors, principal shareholders and
executive officers and their affiliated interests. During 1994, new loans of
$1,989,159 were made and repayments totalled $1,980,613. Such loans are made in
the ordinary course of business at the Bank's normal credit terms and do not
present more than a normal risk of collection.

6. ALLOWANCE FOR LOAN LOSSES

A summary of the activity in the allowance for loan losses for the years ended
December 31, 1994, 1993, and 1992 follows:

1994 1993 1992
---- ---- ----

Balance, beginning of year $1,321,225 $1,077,635 $ 905,139
Provision charged to
operating income 860,000 450,000 525,000
Loans charged-off (552,143) (244,377) (352,727)
Recoveries of loans previously

charged-off 84,290 37,967 223
---------- ---------- ----------
Balance, end of year $1,713,372 $1,321,225 $1,077,635
========== ========== ==========

7. PREMISES AND EQUIPMENT

A summary of premises and equipment as of December 31, 1994 and 1993 follows:

1994 1993
---- ----

Furniture and fixtures $731,132 $550,691
Leasehold improvements 490,160 484,535
--------- ---------

1,221,292 1,035,226
Less - Accumulated depreciation

and amortization 564,791 413,891
--------- ---------
Premises and equipment, net $656,501 $621,335
========= =========

8. CERTIFICATES OF DEPOSIT

At December 31, 1994, 1993, and 1992, certificates of deposit outstanding with a
face value greater than or equal to $100,000 totalled approximately $7,646,000,
$7,374,000, and $9,057,000, respectively. Interest expense for the years then
ended relating to those certificates was approximately $143,900, $212,800, and
$429,000, respectively.

9. ADVANCES FROM FEDERAL HOME LOAN
BANK OF PITTSBURGH

A summary of the advances from the FHLB at December 31, 1994 and 1993 follows:

December 31, 1994
---------------------------------------
Interest
Amount Maturity Rate
------- -------- --------

Short-term: $34,637,382 11/2/95 6.61%
4,000,000 2/17/95 6.13%
4,000,000 2/27/95 6.18%
2,000,000 4/3/95 6.17%
5,000,000 5/26/95 5.88%
3,400,000 11/20/95 5.38%
5,000,000 12/18/95 5.89%
5,000,000 12/19/95 5.89%
-----------
Total Advances $63,037,382

===========

December 31, 1993
--------------------------------------
Interest
Amount Maturity Rate
-------- -------- --------

Short-term: $1,600,000 11/18/94 5.05%
22,104,821 12/31/94 3.35%
-----------

Total short-term 23,704,821
-----------

Long-term: 2,000,000 4/3/95 6.17%
3,400,000 11/20/95 5.38%
5,000,000 5/26/95 3.44%
-----------

Total long-term 10,400,000
-----------
Total Advances $34,104,821
===========

Advances from the FHLB are collateralized by mortgage-backed securities at an
amount not exceeding 85% to 90% of the fair market value of these securities.

10. SUBORDINATED DEBENTURES

Subordinated debentures consist of 7 3/4% notes due September 30, 1998. These
notes are subordinated to rights of any senior debt consisting of certain
obligations to banks and other financial institutions which may be incurred.

11. INCOME TAXES

As of January 1, 1993, Regent adopted the provisions of SFAS No. 109. The
cumulative effect of adopting this change was not material, and accordingly, has
been reflected in the consolidated statements of income as part of the income
tax provision for the year ended December 31, 1993. Prior year financial
statements have not been restated to reflect the new accounting method.

The provision for income taxes for the years ended December 31, 1994, 1993 and
1992 follows:

1994 1993 1992
---- ---- ----

Current $484,900 $643,500 $652,700
Deferred (225,800) (37,000) (51,000)
-------- -------- --------
$259,100 $606,500 $601,700
======== ======== ========

Regent's effective tax rate does not differ significantly from the federal
statutory rate of 34%.

Deferred taxes are determined based on the estimated future tax effects of
differences between the financial statement and tax bases of assets and
liabilities given the provisions of the enacted tax laws. The tax effect of
significant temporary differences representing deferred tax assets and
liabilities are as follows:

December 31, December 31,
1994 1993
------------ ------------

Loan loss reserve $582,000 $449,200
Depreciation 11,900 3,100
Unrealized loss on
investment securities
available for sale 733,000 -
Other 31,200 21,000
---------- --------
Total gross assets 1,358,100 473,300
---------- --------
Deferred loan fee - (74,000)
--------
Total gross liabilities - (74,000)
---------- --------
Net deferred tax asset $1,358,100 $399,300
========== =========

Management of Regent believes that the existing net temporary differences will
reverse during periods in which Regent generates net taxable income. The
deferred tax asset is included in prepaid expense and other assets on the
consolidated balance sheets.

At December 31, 1994, an income tax receivable of $255,444 is recorded and
included in prepaid expenses and other assets in the accompanying consolidated
balance sheets.

12. COMMITMENTS AND CONTINGENCIES

Regent has a 10-year noncancelable lease agreement for its banking
facility. This agreement expires on May 31, 1999. Future minimum lease

payments as of December 31, 1994 in connection with the lease are:

Year Ending December 31 Amount
---------

1995 $189,660
1996 189,660
1997 189,660
1998 189,660
1999 81,005

Thereafter -
--------
Total minimum payments required $839,645
========

Regent incurred rent expense of $173,865, $173,959 and $173,855 in 1994, 1993
and 1992, respectively. The lease has an initial term of ten years and options
to renew for two terms of five years each. Rental payments for the option period
commencing June 1, 1999, will be based upon fair market value. The lease also
requires Regent to pay its pro rata share of all operating expenses such as
maintenance, insurance, taxes, etc.

Regent is subject to various legal actions and proceedings. In the bankruptcy
proceeding of a mortgage banking company for which the Bank funded individual
residential mortgages, the Bank has requested the court to order the debtor to
execute assignments of notes and mortgages to the Bank with respect to
approximately $7,600,000 of mortgages which the Bank had purchased and which the
debtor was obligated to resell but had failed to resell as a result of its
financial difficulties. Such mortgages were recorded by the Bank as of December
31, 1994. The debtor has objected to the Bank's request, alleging that the
mortgages may be the property of the debtor and that the funds advanced by the
Bank of approximately $7,600,000 might represent unsecured loans to the debtor.
In this event, it is management's belief that the Bank's claims in these
proceedings represent a substantial portion of all claims against the debtor.

The Bank expects to establish in these proceedings that in each case the Bank
acquired ownership of each mortgage and did not make a loan to the debtor, and
intends to vigorously oppose any argument by the debtor that the transactions
should be characterized as loans to the debtor. In the opinion of management,
after discussion with legal counsel, the resolution of these matters is not
expected to have a material adverse effect on Regent's consolidated financial
condition or results of operations.

13. SIGNIFICANT GROUP CONCENTRATIONS
OF RISK

Approximately 58% and 52% of the total loans outstanding at December 31, 1994
and 1993, respectively, are real estate loans and the collateral is primarily
located in the various counties surrounding Philadelphia. Regent is able to
decrease its credit exposure by an amount equal to the appraised value of the
collateral.

14. RELATED PARTIES

Regent incurred professional fees of $560,441, $436,956 and $276,142 in 1994,
1993 and 1992, respectively. Included in these amounts were approximately
$270,000, $167,000 and $108,900 in 1994, 1993 and 1992, respectively, of fees
paid to law firms that have representatives who are members of the Board of
Directors of Regent or the Bank.

Regent paid insurance premiums of approximately $78,800, $79,700 and $81,800
during 1994, 1993 and 1992, respectively, to an insurance brokerage agency whose
president is also a member of the Board of Directors of Regent.

Regent paid consulting fees of approximately $80,700, $76,300 and $56,900 during
1994, 1993 and 1992, respectively, to an investment consulting firm whose
president is also a member of the Board of Directors of Regent.

15. FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK

Regent is a party to financial instruments with off-balance-sheet risk in the
normal course of business to meet the financing needs of its customers. These
financial instruments include commitments to extend credit and letters of
credit, which involve, to varying degrees, elements of credit and interest rate
risk that are not recognized in the consolidated balance sheets.

Exposure to credit loss in the event of non-performance by the other party to
the financial instrument for commitments to extend credit is represented by the
contractual or notional amount of those instruments. The Company uses the same
credit policies in making commitments as it does for on-balance-sheet
instruments.

Regent had outstanding loan origination commitments to originate variable and
fixed rate loans aggregating approximately $350,000 and $3,986,000 at December
31, 1994 and 1993, respectively. These commitments expire at various dates
within 75 days subsequent to December 31, 1994, and 90 days subsequent to
December 31, 1993 and the fixed rate commitments carry rates of interest of
10.5% at December 31, 1994 and 8.75% to 10.0% at December 31, 1993. Commitments
to extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the commitment agreement. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since a portion of the commitments are expected to
expire without being drawn upon, the total commitments do not necessarily
represent future cash requirements. Regent evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral, obtained if
deemed necessary by Regent upon the extension of credit, is based on
management's credit evaluation of the counterparty. Collateral for most
commercial commitments varies but may include accounts receivable, inventory,
property, plant and equipment, and income-producing commercial properties.
Collateral for secured consumer commitments consists of liens on residential
real estate.

Commitments under outstanding standby letters of credit were $487,000 at
December 31, 1994 and $621,000 at December 31, 1993. Standby letters of
credit are instruments issued by Regent which guarantee the beneficiary
payment by Regent in the event of default by Regent's customer in the
nonperformance of an obligation of service. Most standby letters of credit are
extended for one-year periods. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities
to customers. Regent holds collateral supporting those commitments for which
collateral is deemed necessary primarily in the form of certificates of
deposit and liens on real estate.

Commitments under lines of credit exist as the borrower has not used the full
amount of the approved line of credit. Collateral for most commitments under
commercial lines of credit varies but may include accounts receivable,
inventory, property, plant and equipment, and income-producing commercial
properties. Amounts available for use under existing lines of credit were
$6,807,000 and $3,850,000 at December 31, 1994 and 1993, respectively.

16. SHAREHOLDERS' EQUITY

Prior to the public offering of securities by Regent in 1989, the organizers of
Regent purchased 101,000 shares of common stock at $10 per share. These shares
contain warrants to purchase up to 59,438 shares of common stock at $8.50 per
share at December 31, 1994 and 1993, respectively. The warrants expire on
December 31, 1995. In addition, Regent granted options to the organizers to
purchase an aggregate of 264,825 shares of common stock at December 31, 1994 and

1993, respectively. These options are exercisable at a price of $8.50 per share
and expire on May 23, 1996.

In connection with the public offering, 500,196 units were purchased which
consisted of one share of Regent's common stock and one-half warrant. Each whole
warrant entitles the holder to purchase 1.177 shares of common stock at a price
of $8.50 per share at December 31, 1994 and 1993, respectively and expires on
December 31, 1995.

Also in connection with Regent's 1989 public offering, Regent issued warrants to
purchase units consisting of one share of Regent Common Stock and a warrant to
purchase one-half share of Regent common stock to Regent's managing underwriter,
Hopper Soliday & Co., Inc. and its designee (the "Regent Underwriter Warrants").
The Regent Underwriter Warrants were exercisable for the purchase of an
aggregate of 147,124 shares of Regent common stock at an exercise price of
$10.20 per share at December 31, 1994 and 1993, respectively. The warrants
expire December 31, 1995.

In April 1989, Regent established a Stock Option Plan which provides for the
granting of incentive and nonqualified stock options to certain officers,
directors, founders and key employees. Currently, a maximum of 211,860 shares of
Regent's common stock may be issued, with no more than 153,010 shares granted to
directors, founders and director/officers of the Bank and no more than 58,850
shares granted to nondirector/officers of the Bank. Options are granted at a
price not less than 100% of the fair market value of the common stock at date of
grant and must be exercised within five years from date of grant, with certain
restrictions. At December 31, 1994 and 1993, options for 151,539 shares, were
outstanding at $8.50 per share. No options were exercised during 1994 or 1993.

In June 1989, Regent sold 530,000 shares of Series A Convertible Preferred
Stock. The preferred stock is convertible, at the option of the holder, into
Regent's common stock on a share-for-share basis. The Series A Convertible
Preferred Stock is redeemable at Regent's option at $10.00 per share, plus
declared but unpaid dividends. Holders of the Regent Series A Preferred Stock
are entitled to receive a $10.00 per share liquidation preference before any
payment is made to common stockholders.

The Series B through Series E Convertible Preferred Stock is redeemable in whole
or in part at the option of Regent, at a price of $8.50 per share, plus declared
but unpaid dividends.

In July 1994 and 1993, Regent issued 51,912 and 52,967 shares, respectively, of
Series E, and in May 1992, 1991, and 1990, Regent issued 52,996 shares of Series
D, 52,996 shares of Series C, and 52,998 shares of Series B Convertible
Preferred Stock, representing a 10% stock dividend to holders of Series A
Convertible Preferred Stock. The fair market value of the 51,912 and 52,967
shares issued of Series E stock of $395,829 and $430,381, respectively, the

52,996 shares issued of Series D stock of $357,750, the 52,996 shares issued of
Series C stock of $264,980 and the 52,998 shares of Series B stock of $490,250
has been charged to retained earnings (accumulated deficit). Each share of
Series B, C and D stock is convertible into 1.177 shares of common stock and
each share of Series E stock is convertible into one share of common stock.

In connection with the 10% stock dividend issued in the form of Series B through
Series D preferred stock, the organizers had the obligation to purchase these
shares from the recipients at $10 per share. Regent has issued to each organizer
who was required to purchase any share of the stock dividend a warrant to
purchase one-half of a share of common stock at $8.50 per share for each share
of preferred stock purchased. The warrants are exercisable for a period of five
years from the date of issue at a purchase price of $8.50 per share. In
connection with the issuance of the Series B, C and D Convertible Preferred
Stock, warrants for the purchase of 24,977, 25,319 and 25,852 shares,
respectively, have been issued to the organizers.

In July 1993 and May 1992, Regent paid 7% and 10% common stock dividends
resulting in the issuance of an additional 57,287 and 67,592 shares,
respectively, of common stock. In connection with preferred stock, options, and
warrants, approximately 1,512,000 shares have been reserved for issuance upon
exercise or conversion in accordance with the antidilution and adjustment
provisions of the various issues. Per share data and the weighted average number
of shares outstanding for all periods presented in the consolidated statements
of income have been adjusted to reflect the payment of the common stock
dividend.

17. DIVIDEND AND LOAN LIMITATIONS

The dividends that may be paid by a subsidiary bank to the parent company are
subject to certain legal limitations. Under such limitations, $1,866,000 are
currently available for the payment of dividends by the Bank to Regent at
December 31, 1994.

Under current Federal Reserve regulations, the Bank is limited in the amount it
may loan to Regent, unless the loans are secured by specific obligations. At
December 31, 1994, the maximum amount available for transfer from the Bank to
Regent in the form of loans approximated 10% of consolidated net assets.

18. REGENT BANCSHARES CORP. (PARENT COMPANY ONLY) FINANCIAL INFORMATION

CONDENSED BALANCE SHEETS

December 31
-----------------------------------
ASSETS 1994 1993
---- ----

Cash $100 $100

Other investment securities 134,147 107,446
Other assets 126,113 45,294
Investment in subsidiary 14,748,926 15,549,739
----------- -----------
Total assets $15,009,286 $15,702,579

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

LIABILITIES AND SHAREHOLDERS' EQUITY

Other liabilities $53,718 $26,836
Subordinated debentures 2,750,000 2,550,000
Shareholders' equity 12,205,568 13,125,743
----------- -----------
Total liabilities and shareholders'
equity $15,009,286 $15,702,579
=========== ===========

CONDENSED STATEMENTS OF INCOME

Year Ended December 31
----------------------------------
1994 1993 1992
---- ---- ----

Dividend from subsidiary $250,000 - -
Interest income 4,312 3,896 6,288
-------- ---------- ----------
Total income 254,312 3,896 6,288
-------- ---------- ----------

Expenses:
Interest 217,612 28,456 -
Other 43,363 43,177 45,230
-------- ---------- ----------

Total expenses 260,975 71,633 45,230
-------- ---------- ----------

(6,663) (67,737) (38,942)

Income tax benefit (87,300) (23,000) (13,300)
-------- ---------- ----------

Income (loss) before equity in undistributed
net income of subsidiary 80,637 (44,737) (25,642)

Equity in undistributed net income

of subsidiary 422,188 1,221,846 1,192,498
-------- ---------- ----------

Net income $502,825 $1,177,109 $1,166,856
======== ========== ==========

CONDENSED STATEMENTS OF CASH FLOWS

Year Ended December 31
----------------------------------
1994 1993 1992
---- ---- ----

Cash flows from operating activities:
Net income $502,825 $1,177,109 $1,166,856
Adjustments to reconcile
net income to
net cash provided
by (used in)
operating
activities:

Increase in other assets (80,819) (23,257) (13,537)
Equity in undistributed net
income of subsidiary (422,188) (1,221,846) (1,192,498)
Increase (decrease)
in other liabilities 26,883 26,836 (1,946)
--------- ----------- -----------

Total adjustments (476,124) (1,218,267) (1,207,981)
--------- ----------- -----------

Net cash provided by (used in)
operating activities 26,701 (41,158) (41,125)

--------- ----------- -----------
Cash flows from investing activities:
Decrease (increase) in
investment securities (26,701) 41,158 25,909
Increase in investment in subsidiary (200,000) (2,550,000) -
--------- ----------- -----------

Net cash (used in) provided by
investing activities (226,701) (2,508,842) 25,909
--------- ----------- -----------

Cash flows from financing activities:
Issuance of subordinated debentures 200,000 2,550,000 -
--------- ----------- -----------

Net decrease in cash - - (15,216)

Cash, beginning of year 100 100 15,316
--------- ----------- -----------

Cash, end of year $100 $100 $100
========= =========== ===========

19. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:

CASH AND FEDERAL FUNDS SOLD: The carrying amounts for cash and federal
funds sold approximate the fair values of those assets.

MORTGAGE-BACKED SECURITIES AND INVESTMENT SECURITIES: Fair values are based on
quoted market prices, if available. If quoted market prices are not available,
then fair values are based on quoted market prices of comparable instruments.

LOANS: For floating rate loans that reprice frequently and with no significant
change in credit risk, fair values are based on carrying values. The fair values
of certain mortgage loans are based on quoted market prices of similar loans
sold in conjunction with securitization transactions. The fair values for fixed
rate commercial real estate and commercial and industrial loans are estimated by
discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar terms and credit quality.

MORTGAGE LOANS HELD FOR SALE: Due to their short-term nature, the carrying
amount of mortgage loans held for sale approximates fair value.

DEPOSIT LIABILITIES: The fair value of demand deposits, NOW and savings
accounts, and money market deposits is the amount payable on demand at the
reporting date. Fair values for fixed rate certificates of deposit are estimated
using discounted cash flows based on rates currently offered for deposits of
similar remaining maturities.

ADVANCES FROM FHLB: The carrying amount of short-term advances approximates
their fair values. Rates currently available for advances with similar terms and
remaining maturities are used to estimate the fair value of long-term advances.

SUBORDINATED DEBENTURES: Rates currently available to the Company for debt
with similar terms and remaining maturities are used to estimate fair
value.

OFF-BALANCE-SHEET INSTRUMENTS: The carrying amount of off-balance-sheet
instruments approximates their fair value as these commitments are short-term
and are primarily variable rate agreements.

The estimated fair value of the Company's financial instruments at
December 31, 1994 and 1993 follows:

1994 1993
--------------- ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- --------- -----
(Dollars in thousands)
Financial assets:

Cash $ 2,802 $ 2,802 $ 6,720 $ 6,720
Investment securities 125 125 2,392 2,392

Investment securities
available for sale 35,057 35,057 -- --
Mortgage-backed securities
held to maturity 121,482 113,190 153,773 154,656
Loans, net 74,146 73,618 47,826 47,937
Mortgage loans held for sale 5,388 5,388 22,701 22,701
Federal funds sold -- -- 6,000 6,000

Financial laibilities:
Deposits 161,061 160,678 192,393 193,114
Advances from FHLB 63,037 62,951 34,105 34,217
Subordinated debentures 2,750 2,438 2,550 2,432

Off-Balance Sheet Instruments:

(Notional amounts)
Commitments to extend credit 350 350 3,986 3,986
Letters of credit 487 487 621 621
Commitments under lines of
credit 6,807 6,807 3,850 3,850

20. Subsequent Events

On August 30, 1995, with the approval of the Board of Directors, the
Company and the Bank entered into an Agreement and Plan of Merger (the
Agreement) with Carnegie Bancorp (Carnegie) and its wholly-owned subsidiary,

Carnegie Bank, N.A. (CBN). Pursuant to the Agreement, the Company wil be merged
with and into Carnegie (the merger), and CBN will be merged with and into
the Bank, which will conduct business under the name Carnegie Regent Bank, N.A.
The Agreement provides, among other things, that upon the merger (i), each
Common and Preferred Series A share of the Company will be converted into .75
common shares and one Preferred Series A share of Carnegie, respectively, (ii)
each share of Preferred Series B,C,D and E of the Company will be called for
redemption at $10.00 per share unless previously converted into the Company's
common shares in accordance with its terms, and (iii) outstanding options and
warrants to purchase the Company's common stock will be converted into Carnegie
common stock or Carnegie options as further defined in the Agreement. To effect
the merger, the approval of a majority of voting shareholders of the Company
and Carnegie and receipt of all governmental and other required approvals,
including the approval of the Office of the Comptroller of the Currency and the
Federal Reserve Bank, is necessary. Additionally, the agreement provides that,
to effect the merger, the Company and Carnegie are subject to the satisfaction,
or waiver, of various conditions as more fully described in the Agreement.

In October, 1995, the U.S. Bankruptcy Court issued an order approving the
settlement of the matter discussed in Note 12. As part of the settlement, the
Bank's request to receive assignment of notes and mortgages of approximately
$7,600,000 was granted and the trustee and creditor's committee agreed not to
object to the Bank's unsecured claims against the debtor in the bankruptcy
proceedings. Additionally, the Bank agreed to pay the trustee $175,000 and will
lend the trustee up to an additional $175,000 to pay counsel fees in connection
with litigation by the trustee against a third party. The Bank also agreed to
make an additional loan up to $50,000 and a third loan of $75,000, (subject to
certain conditions), to pay fees and expenses of professionals (other than
attorneys) in connection with the claim against the third party. The loans will
bear interest at the Bank's prime rate plus one percent per annum, and will be
secured by a continuing first lien on, and security interest in (after
administrative expenses, as defined), the trustee's right, title and interest in
the assets of the debtor's bankruptcy estate. The Bank's payment to the trustee
of $175,000, has been charged to expense in the three months ended September 30,
1995. Management believes the Bank's loan commitments under the settlement are
recoverable based upon its current assessment of the outcome of the litigation
against the third party. The Bank's unsecured claims against the debtor
approximate $2.5 million, with recovery primarily dependent on successful
litigation against the third party.

There continues to be possible claims which may be made against the Bank
by other creditors associated with the Bank's transactions with the debtor. Such
claims have not been formally asserted to date. Additionally, in November 1995,
the agent that conducted a real estate settlement involving the refinancing of a
mortgage through the debtor, filed a lawsuit against the Bank seeking damages in
excess of $100,000 plus any and all damages sustained which are unspecified. The
lawsuit alleges, among other things, breach of contract and reliance on the Bank
as the debtor's warehouse lender. Management believes that these pending and
possible claims are without merit, and the Bank intends to vigorously defend
this and any future actions brought related to these matters. However, the
ultimate outcome of these matters is not presently determinable and,
accordingly, no adjustments have been made in the accompanying consolidated
financial statements.

In the opinion of management, after discussions with legal counsel, the
resolution of each of these matters is not expected to have a material adverse
effect on the Company's consolidated financial condition or results of
operations.

APPENDIX A

AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of August
30, 1995 (this "Agreement"), is by and among Carnegie Bancorp, a New Jersey
corporation and registered bank holding company ("Carnegie"), Carnegie Bank,
N.A., a national banking association ("CBN"), Regent Bancshares Corp., a New
Jersey corporation and registered bank holding company ("Regent") and Regent
National Bank, a national banking association ("Bank").

Carnegie desires to merge with Regent (the "Merger") and Regent's Board of
Directors has determined, based upon the terms and conditions hereinafter set
forth, that the Merger is in the best interests of Regent and its stockholders.
The Merger will be accomplished by merging Regent with and into Carnegie with
Carnegie as the surviving corporation and, at the same time, merging the Bank
with and into CBN with CBN as the surviving bank, and holders of Regent
securities receiving the consideration hereinafter set forth. The Boards of
Directors of Regent, Carnegie, the Bank and CBN have duly adopted and approved
this Agreement and the Boards of Directors of Carnegie and Regent have directed
that it be submitted to their respective stockholders for approval. This
Agreement amends and restates the terms of that certain Agreement and Plan of
Merger executed by the parties hereto as of August 30, 1995.

Accordingly, the parties hereto agree as follows:

ARTICLE I

THE MERGER

1.1. The Merger. Subject to the terms and conditions of this Agreement, at

the Effective Time (as hereafter defined), Regent shall be merged with and into
Carnegie in accordance with the New Jersey Business Corporation Act and Carnegie
shall be the surviving corporation (the "Surviving Corporation"). Immediately
following the Effective Time, the Bank shall be merged with and into CBN as
provided in Section 1.7 hereof.

1.2. Effect of the Merger. At the Effective Time (as hereafter defined),
the Surviving Corporation shall be considered the same business and corporate
entity as each of Regent and Carnegie and thereupon and thereafter, all the
property, rights, powers and franchises of each of Regent and Carnegie shall
vest in the Surviving Corporation and the Surviving Corporation shall be subject
to and be deemed to have assumed all of the debts,

liabilities, obligations and duties of each of Regent and Carnegie and shall
have succeeded to all of each of their relationships, fiduciary or otherwise, as
fully and to the same extent as if such property rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been originally
acquired, incurred or entered into by the Surviving Corporation.

1.3. Certificate of Incorporation. Except as required by
Section 2.2 hereof, the Certificate of Incorporation of Carnegie
as it exists immediately prior to the Effective Time shall not be

-2-

amended by the Merger, but shall continue as the Certificate of Incorporation of
the Surviving Corporation until otherwise amended as provided by law.

1.4. By-laws. The By-laws of Carnegie as they exist
immediately prior to the Effective Time shall continue as the
By-laws of the Surviving Corporation until otherwise amended as
provided by law.

1.5. Directors and Officers. As of the Effective Time, the Surviving
Corporation shall have fourteen (14) directors, which shall consist of seven (7)
directors designated by the Board of Directors of Carnegie from the current
members of the Board of Directors of Carnegie and seven (7) directors designated
by the Board of Directors of Regent from the current members of the Board of
Directors of Regent or the Bank, each to hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation and until
his successor is duly elected or appointed or his earlier death, resignation or
removal. The directors of the Surviving Corporation designated by Regent shall
be Messrs. Bettinger, Biondi, Dwares, Porter and Ring and Ms. Teaford. The Board
of Directors of the Surviving Corporation agrees, subject to satisfaction of its
fiduciary duties, to (i) nominate for reelection as directors of the Surviving
Corporation at its 1996 Annual Meeting of Stockholders each of Carnegie's and
Regent's designees as the initial directors of the Surviving Corporation as
specified herein and (ii) recommend to the stockholders of the Surviving
Corporation and otherwise use its

-3-

best efforts to cause the election of such nominees. The Surviving Corporation
shall have the officers set forth on Schedule 1.5, annexed hereto and such other
officers as may be appointed by the Board of Directors of the Surviving
Corporation from time to time.

1.6. Effective Time and Closing. The Merger shall become
effective (and be consummated) upon the filing of a Certificate
of Merger with the Secretary of State of the State of New Jersey

or at such later time as is specified in the Certificate of Merger. The term

"Effective Time" shall mean the date and time when the Merger becomes effective.
A closing (the "Closing") shall take place prior to the Effective Time at 10:00
a.m., not later than ten (10) days following the receipt of all necessary
regulatory and governmental approvals and consents and the expiration of all
statutory waiting periods in respect thereof and the satisfaction or waiver of
the conditions to the consummation of the Merger specified in Article VI hereof
(other than the delivery of certificates, opinions and other instruments and
documents to be delivered at the Closing), but in no event prior to 181 days
from the date of this Agreement, at Carnegie's main office or at such other
place, time or date as Carnegie and Regent may mutually agree upon. Immediately
following the Closing, a Certificate of Merger shall be filed with the New
Jersey Secretary of State.

1.7. The Bank Merger. Immediately following the Effective
Time, the Bank shall be merged with and into CBN (the "Bank

-4-

Merger") in accordance with the provisions of the National Bank Act, as amended,
and CBN shall be the surviving bank (the "Surviving Bank"). In order to
facilitate the Bank Merger, CBN shall take all steps necessary to relocate its
main office to the main office of the Bank in accordance with the provisions of
Section 30 of the National Bank Act, 12 U.S.C. Sec. 30. Upon the consummation of
the Bank Merger, the separate corporate existence of the Bank and CBN shall be
merged into and continued in the Surviving Bank and such Surviving Bank shall be
deemed to be the same corporation as each bank participating in the Bank Merger.
All rights, franchises and interests of the Bank and CBN in and to every type of
property and choses in action shall be transferred to and vested in the
Surviving Bank by virtue of the Bank Merger, and the Surviving Bank shall hold
and enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and interests
in every fiduciary capacity, in the same manner and to the same extent as such
rights, franchises and interests were held or enjoyed by any one of the merging
banks at the time of the Bank Merger. Upon the consummation of the Bank Merger,
the Articles of Association of CBN shall become the Articles of Association of
the Surviving Bank as amended so that the name of the Surviving Bank shall be
"Carnegie Regent Bank, N.A." and the By-laws of CBN immediately prior to the
Effective Time shall become the by-laws of the Surviving Bank. The Surviving
Bank shall have twelve (12) directors, which shall consist of six (6)

-5-

directors appointed by Carnegie from among the current members of the Board of
Directors of Carnegie and six (6) directors appointed by Regent, each to hold
office in accordance with the

Articles of Association and By-laws of the Surviving Bank and until his
successor is elected or appointed or his earlier death, resignation or removal.
The directors of the Surviving Bank appointed by Regent shall be Messrs.
Bettinger, Dwares, Mishkin, Porter and Ring and Ms. Teaford. The Surviving Bank

shall have the officers set forth on Schedule 1.7(a), annexed hereto, and other
officers as may be appointed by the Board of Directors of the Surviving Bank
from time to time. In connection with the execution of this Agreement, the Bank
and CBN shall execute and deliver a separate merger agreement (the "Bank Merger
Agreement") in the form of Schedule 1.7(b), annexed hereto, for delivery to the
OCC (as hereafter defined) for approval of the Bank Merger.

ARTICLE II
CONVERSION OF REGENT SECURITIES

2.1. Extension of Certain Regent Securities. Promptly after the date
hereof, Regent shall take all necessary steps to extend the expiration date of
all outstanding Regent Options and Regent Warrants (in each case as hereinafter
defined) to the extent required from their current expiration date, so that, as
extended, the expiration date of such options and warrants shall be the earlier
to occur of the Effective Time of the Merger, during which period such options
and warrants may not be

-6-

exercised for the purchase of Regent Common Stock but shall represent only the
right to receive Carnegie Common Stock as provided in Section 2.2 hereof, or
thirty (30) days after the termination of this Agreement, during which period
(i.e., the thirty (30) days commencing on the termination of this Agreement)
such warrants and options may be exercised for the purchase of Regent Common
Stock in accordance with their respective terms.

2.2. Regent Securities. Each security of Regent, issued and outstanding
immediately prior to the Effective Time, shall by virtue of the Merger and
without any action on the part of Carnegie, Regent or the holder thereof, be
canceled and extinguished and be converted into the right to receive, upon the
surrender of the certificate or other instrument representing such security,
either shares of Carnegie Common Stock, no par value ("Carnegie Common Stock")
or Carnegie Series A Convertible Preferred Stock, $0.10 par value ("Carnegie
Preferred Stock") as follows:

(a) Regent Common Stock. Each share of the common stock, $0.10 par value of
Regent (the "Regent Common Stock") (other than Dissenting Shares as hereinafter
defined) shall by virtue of the Merger and without any action on the part of
Carnegie, Regent or the holder thereof, be canceled and extinguished and be
converted into the right to receive upon the surrender of the certificate
representing such share .75 shares of Carnegie Common Stock, (the "Conversion
Rate").

-7-

(b) Regent Series A Preferred Stock. Each outstanding share of Regent's
Series A Preferred Stock, par value $0.10 per share (the "Regent Series A
Preferred Stock") (other than Dissenting Shares as hereinafter defined) shall by

virtue of the Merger and without any action on the part of Carnegie, Regent or
the holder thereof, be canceled and extinguished and be converted into the right
to receive, upon surrender of the certificate representing such share, one share
of Carnegie Preferred Stock (the "Preferred Conversion Rate") with substantially
the same terms, rights and conditions as the Regent Series A Preferred Stock,
except that such Carnegie Preferred Stock shall be: (i) convertible into 0.75
shares of Carnegie Common Stock (the "Conversion Price") and (ii) entitled to
receive an annual dividend at the rate of 0.075 shares of Carnegie Common Stock
for each share of Carnegie Preferred Stock held, in each case subject to
adjustment as provided in Carnegie's Certificate of Incorporation.

(c) Regent Series B, C, D and E Preferred Stock. Regent shall, promptly
after the meeting of Regent stockholders referred to in Section 5.7 hereof,
provide notice of redemption to the holders of its Series B, C, D, and E
Preferred Stock in accordance with their respective terms.

(d) Organizer Options. At the Effective Time, each
outstanding option to purchase Regent Common Stock granted to the
organizers of Regent (collectively, the "Organizer Options")
shall by virtue of the Merger and without any action on the part

-8-

of Carnegie, Regent or the holder thereof, be canceled and extinguished and
converted into a newly issued option (collectively, the New Options") to
purchase 0.637213 shares of Carnegie Common Stock at an exercise price equal to
the weighted average exercise price of all outstanding options to purchase
Carnegie Common Stock held by officers and directors of Carnegie at the date of
this Agreement, specifically including those certain options granted by Carnegie
to its officers and directors on June 28, 1995 (the "June Options"). Such New
Options shall otherwise have the same terms and conditions, including expiration
date, as the June Options. As part of the Carnegie stockholders meeting referred
to in Section 5.7 hereof, Carnegie shall submit to its stockholders, and
recommend that such stockholders vote for approval of, a new stock option plan
covering the New Options required to be granted hereunder.

(e) Organizer Warrants. At the Effective Time, each
warrant to purchase shares of Regent Common Stock issued by
Regent to the organizers of Regent (collectively, the "Organizer
Warrants") shall by virtue of the Merger and without any action

on the part of Carnegie, Regent or the holder thereof, be canceled and
extinguished and converted into the right to receive, upon surrender of the
certificate representing such Organizer Warrants, .24325 shares of Carnegie
Common Stock.

(f) Underwriter Options. At the Effective Time, those
certain options to purchase shares of Regent Common Stock and
warrants to purchase Regent Common Stock issued by Regent to

-9-

Hopper Soliday & Co., Inc. and David W. Fields in connection with the initial
public offering of Regent's securities (collectively, the "Underwriter Options")
shall, by virtue of the Merger and without any action on the part of Carnegie,
Regent or the holders thereof, be canceled and extinguished and be converted
into the right to receive, upon the surrender of the certificates or instruments
representing such Underwriter Options, one share of Carnegie Common Stock for
each 19.645 shares of Regent Common Stock purchasable pursuant to the
Underwriter Options and upon exercise of the warrants purchasable pursuant to
the Underwriter Options.

(g) Other Regent Securities. At the Effective Time, (i) each then
outstanding option to purchase Regent Common Stock held by officers, directors
or employees of Regent (collectively, the "Regent Stock Options") issued under
the stock option plans of Regent disclosed pursuant to Section 3.2 hereof, (ii)
each then outstanding warrant to purchase shares of Regent Common Stock issued
by Regent to the general public as part of the initial public offering of
Regent's securities (collectively, the "Public Warrants") and (iii) each then
outstanding warrant to purchase shares of Regent Common Stock issued to the
organizers of Regent in connection with the issuance of the Regent Series B, C
and D Preferred Stock (collectively, the "Put Option Warrants") shall, by virtue
of the Merger and without any action on the part of Carnegie, Regent or the
holder thereof, be canceled and extinguished and be converted into the right to
receive, upon the

-10-

surrender of the certificates or instruments representing such warrants or
options, one share of Carnegie Common Stock for each 7.5 shares of Regent Common
Stock theretofore purchasable upon the exercise of such Regent Stock Options,
Public Warrants or Put Option Warrants.

(h) No fractional shares of Carnegie Common Stock will be issued, and in
lieu thereof, each holder of a Regent security who would otherwise be entitled
to a fractional interest in a share of Carnegie Common Stock will receive an
amount in cash determined by multiplying such fractional interest in a share of
Carnegie Common Stock by the average closing price of Carnegie Common Stock on
the NASDAQ National Market System on the first ten (10) trading days of the
fifteen (15) days preceding the

Effective Time. All shares of Carnegie Common Stock to which any holder of a
Regent security would otherwise be entitled will be aggregated for purposes of
determining whether or not such security holder is entitled to a fractional
share interest.

(i) Adjustments. In case Carnegie shall at any time or times between the
date of this Agreement and the Effective Time, either (i) pay a dividend or make
any other distribution payable on Carnegie Common Stock in capital stock of
Carnegie or (ii) subdivide or combine the outstanding shares of Carnegie Common
Stock, by reclassification or otherwise, or issue by reclassification of

Carnegie Common Stock, any shares of capital stock of Carnegie, then in each
such case, the Conversion Rate, the Preferred Conversion Rate and the Conversion
Price shall be

-11-

proportionately increased or decreased, as the case may be, effective upon the
record date for any such dividend or distribution or effective immediately after
the effective date of such subdivision, combination or reclassification.

2.3. Exchange of Securities.

(a) Regent and Carnegie shall hereafter appoint a mutually acceptable party
to act as the exchange agent for purposes of effecting the conversion of Regent
securities as set forth above (the "Exchange Agent"). As soon as practicable
after the Effective Time, the Exchange Agent shall mail to each holder of record
(a "Record Holder") of a Regent security, a mutually agreed upon letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates or other instruments representing any Regent
security (a "Certificate") shall pass, only upon delivery of the Certificates to
the Exchange Agent), and instructions for use in effecting the surrender of the
Certificates in exchange for Carnegie Common Stock, Carnegie Preferred Stock or
New Options, as the case may be, (and cash in lieu of fractional shares) as
provided in Section 2.3 hereof. Upon surrender of a Certificate for exchange and
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, the Record Holder shall be entitled to promptly receive in
exchange for such Certificate the Carnegie Common Stock, Carnegie Preferred
Stock or New Options, as the case may be, as provided in Section 2.2 hereof and
the Certificates so surrendered shall be canceled.

-12-

The Exchange Agent shall not be obligated to deliver or cause to be delivered to
any Record Holder the Carnegie Common Stock, Carnegie Preferred Stock or New
Options, as the case may be, to which such Record Holder would otherwise be
entitled until such Record Holder surrenders the Certificate for exchange or, in
default thereof, an appropriate Affidavit of Loss and Indemnity Agreement and/or
a bond as may be reasonably required in each

case by Carnegie. Notwithstanding the time of surrender of the Certificates,
Record Holders shall be deemed stockholders of Carnegie for all purposes from
the Effective Time, except that Carnegie shall withhold the payment of dividends
from any Record Holder until such Record Holder effects the exchange of
Certificates for Carnegie Common Stock, Carnegie Preferred Stock and New
Options. Such Record Holder shall receive such withheld dividends, without
interest, upon effecting the share exchange.

(b) After the Effective Time, there shall be no transfers on the stock
transfer books of Regent of the shares of Regent Common Stock, Regent Preferred

Stock (as hereafter defined) or Regent Warrants (as hereafter defined) which
were outstanding immediately prior to the Effective Time and, if any
Certificates representing such shares are presented for transfer, they shall be
canceled and exchanged for Carnegie Common Stock or Carnegie Preferred Stock.

(c) If issuance of the Carnegie Common Stock and Carnegie Preferred Stock
pursuant to Section 2.3 hereof is to be made in a name other than that in which
the Certificate surrendered in

-13-

exchange therefor is registered, it shall be a condition of such payment that
the Certificate so surrendered shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and otherwise in proper form for transfer,
and that the person requesting such payment shall pay to the Exchange Agent in
advance any transfer or uother taxes required by reason of the payment to a
person other than that of the registered holder of the Certificate surrendered,
or required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.

2.4. Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, any holder of Regent Common Stock, Regent Series A Preferred Stock,
Regent Series B, C, D and E Preferred Stock (with the Regent Series A Preferred
Stock, the "Regent Preferred Stock") or Carnegie Common Stock shall have the
right to dissent in the manner provided in Section 14A:11-2 of the New Jersey
Business Corporation Act (the "NJBCA"), and if all necessary requirements of
Section 14A:11-2 of the NJBCA are met, such dissenting stockholders shall be
entitled to payment of the fair value of their shares in accordance with the
provisions of Section 14A:11-3 of the NJBCA ("Dissenting Shares"), provided,
however, that (i) if any holder of Dissenting Shares shall subsequently withdraw
his demand for appraisal of such shares with the written consent of Regent or
the Surviving Corporation, or (ii) if any holder of Dissenting Shares fails to
present his certificates for his Dissenting Shares pursuant to Section 14A

-14-

11-2(6) of the NJBCA, unless a court of competent jurisdiction for good and
sufficient cause shown, shall otherwise direct or (iii) the fair value of the
Dissenting Shares is not agreed upon as provided in Section 14A:11-6 of the
NJBCA and no judicial action for the determination of the fair value of such
shares is commenced in a Superior Court in the State of New Jersey within the
time period provided by Section 14A:11-7, the right to appraisal of such shares
shall be forfeited and, if the Dissenting Shares are Regent Common Stock or
Regent Preferred Stock, such shares shall thereupon be deemed to have been
converted into the right to receive and to have become exchangeable for, as of
the Effective Time, the shares of Carnegie Common Stock and Carnegie Preferred
Stock as provided for in Section 2.2.

2.5. Carnegie Shares. The shares of Carnegie Common Stock outstanding at
the Effective Time, other than Dissenting Shares, shall not be affected by the
Merger, but along with the additional shares of Carnegie Common Stock to be
issued as provided in Section 2.2 hereof, shall become the outstanding common
stock of the Surviving Corporation.

-15-

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF REGENT

References herein to "Regent Disclosure Schedule" shall mean all of the
disclosure schedules required by this Article III, dated as of the date hereof
and referenced in this Agreement, which have been delivered on the date hereof
by Regent to Carnegie. Regent hereby represents and warrants to Carnegie as
follows:

3.1. Corporate Organization.

(a) Regent is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey. Regent has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of Regent and the Regent Subsidiaries
taken as a whole. Regent is registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended ("BHCA").

(b) Each of the Subsidiaries of Regent is listed in the
Regent Disclosure Schedule ("Regent Subsidiary"). The term

-16-

"Regent Subsidiary", when used in this Agreement, means any corporation, joint
venture, association, partnership, trust or other entity in which Regent has,
directly or indirectly, at least a 50% equity interest or acts as a general
partner. Each Regent Subsidiary is duly organized, validly existing and in good
standing under the laws of its state of incorporation. The Bank is a national
banking association whose deposits are insured by the Bank Insurance Fund
("BIF") of the Federal Deposit Insurance Corporation ("FDIC") to the fullest
extent permitted by law. Each Regent Subsidiary has the corporate power and
authority to own or lease all of its properties and assets and to carry on its

business as it is now being conducted and is licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a material adverse effect on the business, operations, assets or
financial condition of Regent and the Regent Subsidiaries taken as a whole. The
Regent Disclosure Schedule sets forth true and complete copies of the
Certificate of Incorporation and By-laws of Regent and each Regent Subsidiary as
in effect on the date hereof. Except as set forth in the Regent Disclosure
Schedule, Regent does not own or control, directly or indirectly, any equity
interest in any corporation, company, association, partnership, joint venture or
other entity

-17-

and owns no real estate, except real estate used for its banking
premises.

3.2. Capitalization. The authorized capital stock of Regent consists of
10,000,000 shares of par value $0.10 per share Regent Common Stock and 5,000,000
shares of par value $0.10 per share preferred stock ("Regent Preferred Stock").
As of June 30, 1995, there were 928,596 shares of Regent Common Stock issued and
outstanding and no shares issued and held in treasury. As of June 30, 1995,
there were issued and outstanding 514,578 shares of Regent Series A Preferred
Stock, 4,360 shares of Regent Series B Preferred Stock, 3,996 shares of Regent
Series C Preferred Stock, 4,866 shares of Regent Series D Preferred Stock and
122,137 shares of Regent Series E Preferred Stock and no shares of Regent
Preferred Stock were issued and held by the treasury. As of June 30, 1995,
pursuant to the Regent Option Plans, there were 129,470 shares of Regent Common
Stock issuable upon exercise of outstanding Regent options granted to officers
and directors of Regent and the Bank, 41,892 shares of Regent Common Stock

issuable upon exercise of outstanding Regent options granted to employees of
Regent and the Bank and 264,825 shares of Regent Common Stock issuable upon
exercise of outstanding Regent Options granted to organizers of Regent. As of
June 30, 1995, Regent was obligated to issue an aggregate of 147,124 shares of
Regent Common Stock upon exercise of the Underwriter Options. The Organizer
Options, the Regent Stock Options and the Underwriter Options are hereinafter
collectively referred to as the "Regent

-18-

Options". The Organizer Warrants, the Public Warrants and the Put Option
Warrants are hereinafter collectively referred to as the "Regent Warrants". As
of June 30, 1995, Regent was obligated to issue 429,951 shares of Regent Common
Stock upon exercise of the Regent Warrants. The Regent Disclosure Schedule sets
forth true and complete copies of the Regent Option Plans, each outstanding
Regent Option, each effective warrant agreement governing a series of warrants
and each form of warrant outstanding. All issued and outstanding shares of

Regent Common Stock and Regent Preferred Stock, and all issued and outstanding
shares of capital stock of each Regent Subsidiary, have been duly authorized and
validly issued, are fully paid, and nonassessable. The authorized capital stock
of the Bank consists of 2,000,000 shares of common stock, $1.00 par value. All
of the outstanding shares of capital stock of each Regent Subsidiary are owned
by Regent and are free and clear of any liens, encumbrances, charges,
restrictions or rights of third parties. Except for the Regent Options and the
Regent Warrants, neither Regent nor any Regent Subsidiary has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of Regent or any Regent Subsidiary or any securities representing
the right to purchase or otherwise receive any shares of such capital stock or
any securities convertible into or representing the right to purchase

-19-

or subscribe for any such shares, and there are no agreements or understandings
with respect to voting of any such shares.

3.3. Authority; No Violation.

(a) Subject to the approval of this Agreement and the transactions
contemplated hereby by the stockholders of Regent, and subject to the parties
obtaining all necessary regulatory approvals, Regent and the Bank have full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Boards of Directors of Regent and the Bank in accordance with the Articles of
Association of

the Bank, the Certificate of Incorporation of Regent and applicable laws and
regulations. The execution and delivery of the Bank Merger Agreement has been
duly and validly approved by the Board of Directors of the Bank in accordance
with the Articles of Association of the Bank and applicable laws and
regulations. Except for the approvals described in paragraph (b) below, no other
corporate proceedings on the part of Regent or the Bank are necessary to
consummate the transactions contemplated hereby (except for the approval by
Regent of the Bank Merger Agreement as the sole stockholder of the Bank). This
Agreement has been duly and validly executed and delivered by Regent and the
Bank, and constitutes valid and binding obligations of Regent and the Bank,
enforceable against Regent

-20-

and the Bank in accordance with its terms, subject to the approval of Regent's
stockholders and further subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws, now or
hereafter in effect, affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is sought at a proceeding

at law or in equity.

(b) Neither the execution and delivery of this Agreement by Regent and the
Bank, nor the consummation by Regent and the Bank of the transactions
contemplated hereby in accordance with the terms hereof, or compliance by Regent
and the Bank with any of the terms or provisions hereof, will (i) violate any
provision of Regent's Certificate of Incorporation or the Bank's Articles of
Association or other governing instrument or By-laws of Regent or the Bank, (ii)
assuming that the consents and approvals set forth below are duly obtained,
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Regent or the Bank or any of their respective
properties or assets, or (iii) except as set forth in the Regent Disclosure
Schedule, violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of Regent or the Bank under any

-21-

of the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Regent or the Bank is a party, or by which either or both of them or any
of their respective properties or assets may be bound or affected except, with
respect to (ii) and (iii) above, such as individually and in the aggregate will
not have a material adverse effect on the business, operations, assets or
financial condition of Regent and

the Regent Subsidiaries taken as a whole, and which will not prevent or delay
the consummation of the transactions contemplated hereby. Except for consents
and approvals of or filings or registrations with or notices to the Comptroller
of the Currency ("OCC"), the Federal Reserve Board (the "FRB"), the Securities
and Exchange Commission ("SEC"), the Secretary of State of the State of New
Jersey, the Commonwealth of Pennsylvania, and the stockholders of Regent and
Carnegie, no consents or approvals of or filings or registrations with or
notices to any third party or any public body or authority are necessary on
behalf of Regent or the Bank in connection with (x) the execution and delivery
by Regent and the Bank of this Agreement (y) the consummation by Regent of the
Merger and by Regent and the Bank of the other transactions contemplated hereby
and (z) the execution and delivery by the Bank of the Bank Merger Agreement and
the consummation by the Bank of the Bank Merger and the other transactions
contemplated thereby.

3.4. Financial Statements.

-22-

(a) The Regent Disclosure Schedule sets forth copies of the consolidated
statements of condition of Regent as of December 31, 1993 and 1994, and the

related consolidated statements of income, stockholders' equity and cash flows
for the periods ended December 31 in each of 1992, 1993 and 1994, in each case
accompanied by the audit report of Arthur Andersen, LLP, independent public
accountants with respect to Regent, and the unaudited consolidated statements of
condition and related consolidated statements of income, stockholders' equity
and cash flows of Regent for the six-month period ended June 30, 1995 as filed
with the SEC on Form 10-Q (collectively, the "Regent Financial Statements"). The
Regent Financial Statements (including the related notes) have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, and fairly present the consolidated
financial condition of Regent and the Regent Subsidiaries as of June 30, 1995,
and the related consolidated statements of income, stockholders' equity and cash
flows fairly present the results of the consolidated operations, changes in
stockholders' equity and cash flows of Regent and the Regent Subsidiaries for
the period ended June 30, 1995, subject to normal and recurring year-end audit
adjustments.

(b) The books and records of Regent and the Regent Subsidiaries have been
and are being maintained in material compliance with applicable legal and
accounting requirements, and reflect only actual transactions.

-23-

the notes thereto), as of June 30, 1995, neither Regent nor any of the Regent
Subsidiaries had any liabilities, whether absolute, accrued, contingent or
otherwise material to the business, operations, assets or financial condition of
Regent and the Regent Subsidiaries taken as a whole. Since June 30, 1995 and to
the date hereof, neither Regent nor any of the Regent Subsidiaries has incurred
any liabilities except in the ordinary course of their respective businesses as
conducted on the date hereof and consistent with prudent banking practice,
except as specifically contemplated by this Agreement or the Regent Disclosure
Schedule.

3.5. Brokers and Fees. Neither Regent nor any of the Regent Subsidiaries
nor any of their respective directors or officers has employed any broker or
finder or incurred any liability for any broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement and the Bank Merger Agreement. There are no fees (other than time
charges billed at usual and customary rates) payable to any consultants,
including lawyers and accountants, in connection with the Merger or which would
be triggered by consummation of the Merger or the termination of the services of
such consultants by Regent or any of the Regent Subsidiaries other than (a) fees
which will be payable by Regent to Janney Montgomery Scott Inc. for its fairness
opinion. A copy of the

-24-

agreement with Janney Montgomery Scott Inc. is set forth in the
Regent Disclosure Schedule.

3.6. Absence of Certain Changes or Events.

(a) Except as disclosed in the Regent Disclosure Schedule, there has not
been any material adverse change in the business, operations, assets or
financial condition of Regent and the Regent Subsidiaries on a consolidated
basis since June 30, 1995 and to Regent's knowledge, no facts or conditions
exist which Regent believes will cause or are likely to cause such a material
adverse change in the future, other then those political and economic factors
affecting the banking industry in general and that do not uniquely affect Regent
and the Bank.

(b) Except as set forth in the Regent Disclosure Schedule, neither Regent
nor any of the Regent Subsidiaries has taken or permitted any of the actions set
forth in Section 5.2 hereof between June 30, 1995 and the date hereof and Regent
and the Regent Subsidiaries have conducted their respective businesses only in
the ordinary course as conducted on the date hereof and consistent with prudent
banking practice.

3.7. Legal Proceedings. Except as disclosed in the Regent

Disclosure Schedule, neither Regent nor any of the Regent Subsidiaries is a
party to any, and there are no pending or, to Regent's knowledge, threatened,
legal, administrative, arbitral or other proceedings, claims, actions or
governmental investigations of any nature against Regent or any of the Regent
Subsidiaries which individually or in the aggregate will have, or

-25-

could reasonably be expected to have, a material adverse effect on the financial
condition, results of operations, business or prospects of Regent and the Regent
Subsidiaries taken as a whole. Except as disclosed in the Regent Disclosure
Schedule, neither Regent nor any of the Regent Subsidiaries is a party to any
order, judgment or decree entered against Regent or any Regent Subsidiary in any
lawsuit or proceeding.

3.8. Taxes and Tax Returns.

(a) Except as set forth in the Regent Disclosure Schedule, Regent and each
Regent Subsidiary have duly filed (and until the Effective Time will so file)
all returns, declarations, reports, information returns and statements
("Returns") required to be filed by them in respect of any federal, state and
local taxes (including withholding taxes, penalties or other payments required)
and each has duly paid (and until the Effective Time will so pay) all such taxes
due and payable, other than taxes or other charges which are being contested in
good faith (and disclosed to Carnegie in writing). Regent and each Regent
Subsidiary have established (and until the Effective Time will establish) on

their books and records reserves that are adequate for the payment of all
federal, state and local taxes not yet due and payable, but are incurred in
respect of Regent or any Regent Subsidiary through such date. None of the
federal income tax returns of Regent and its Subsidiaries have been examined by
the Internal Revenue Service (the "IRS"). Except as set forth in the Regent
Disclosure Schedule, the applicable state income tax

-26-

returns of Regent and the Regent Subsidiaries have been examined by the
applicable authorities (or are closed to examination due to the expiration of
the statute of limitations) and no deficiencies were asserted as a result of
such examinations which have not been resolved and paid in full. To the
knowledge of Regent, there are no audits or other administrative or court
proceedings presently pending nor any other disputes pending, or claims asserted
for, taxes or assessments upon Regent or any of the Regent Subsidiaries, nor has
Regent or any of the Regent Subsidiaries given any currently outstanding waivers
or comparable consents regarding the application of the statute of limitations
with respect to any taxes or tax Returns.

(b) Except as set forth in the Regent Disclosure Schedule,

neither Regent nor any of the Regent Subsidiaries (i) has requested any
extension of time within which to file any tax Return which Return has not since
been filed, (ii) is a party to any agreement providing for the allocation or
sharing of taxes, (iii) is required to include in income any adjustment pursuant
to Section 481(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
by reason of a voluntary change in accounting method initiated by Regent or any
Regent Subsidiary (nor does Regent have any knowledge that the IRS has proposed
any such adjustment or change of accounting method) or (iv) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.

3.9. Employee Benefit Plans.

-27-

(a) Neither Regent nor any of the Regent Subsidiaries maintains or
contributes to any "employee pension benefit plan" within the meaning of Section
3(2)(A) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Except as disclosed in the Regent Disclosure Schedule, neither Regent
nor any Regent subsidiaries maintains or contributes to any "employee welfare
benefit plan", within the meaning of Section 3(1) of ERISA ("Regent Welfare
Plans"), "multiemployer plan", within the meaning of Sections 3(37) and
4001(a)(3) of ERISA, stock option plan, stock purchase plan, deferred
compensation plan, severance plan, bonus plan, employment agreement or other
similar plan, program or arrangement.

(b) Regent has delivered to Carnegie a complete and accurate copy of each

of the following with respect to each of the Regent Welfare Plans: (1) plan
document, summary plan description, and summary of material modifications (if
not available, a detailed description of the foregoing); (2) trust agreement or
insurance contract, if any; (3) most recent IRS determination letter, if any;
(4) most recent actuarial report, if any; and (5) most recent annual report on
Form 5500.

(c) Each of the Regent Welfare Plans and each other plan and arrangement
identified on the Regent Disclosure Schedule has been operated in compliance in
all material respects with the provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all other
applicable governmental laws and regulations.

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(d) To the best knowledge of Regent, no non-exempt prohibited transaction,
within the meaning of Section 4975 of the Code or Section 406 of ERISA, has
occurred with respect to any of the Regent Welfare Plans.

(e) Except as disclosed in the Regent Disclosure Schedule,

there are no pending, or, to the best knowledge of Regent, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the Regent Welfare Plans, any trusts related thereto or any other
plan or arrangement identified in the Regent Disclosure Schedule.

(f) Except as disclosed in the Regent Disclosure Schedule, no Regent
Welfare Plan provides medical or death benefits (whether or not insured) beyond
an employee's retirement or other termination of service, other than coverage
mandated by law.

(g) Except with respect to customary health, life and disability benefits
or as disclosed in the Regent Disclosure Schedule, there are no unfunded
benefits obligations which are not accounted for by reserves shown on the
financial statements of Regent and established under GAAP, or otherwise noted on
such financial statements.

(h) With respect to each Regent Welfare Plan that is funded wholly or
partially through an insurance policy, there will be no liability of Regent or
any Regent Subsidiary as of the Effective Time under any such insurance policy
or ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or

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contingent liability arising wholly or partially out of events occurring prior
to the Effective Time.

(i) Except as agreed to by Carnegie in writing, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or

former employee of Regent or any Regent Subsidiary to severance pay,
unemployment compensation or any similar payment or (ii) accelerate the time of
payment, vesting, or increase the amount, of any compensation due to any current
employee or former employee under any Regent Welfare Plan.

3.10. Reports.

(a) Each communication mailed by Regent to its stockholders since January
1, 1990 and each annual, quarterly or special report, proxy statement or other
such communication, as of its date, complied in all material respects with all
applicable statutes, rules and regulations enforced or promulgated by the
applicable regulatory agency and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
disclosures as of a later date shall be deemed to modify disclosures as of an
earlier date.

(b) Regent and the Bank have, since January 1, 1990, duly filed with the
OCC, the FRB and the SEC in correct form the monthly, quarterly and annual
reports required to be filed under

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applicable laws and regulations, and Regent promptly will deliver or make
available to Carnegie accurate and complete copies of such reports. The Regent
Disclosure Schedule lists all examinations of Regent or the Bank conducted by
either the OCC or the FRB since January 1, 1990, and the dates of any responses
thereto submitted by Regent or the Bank.

3.11. Regent and Bank Information. Except for the pro forma financial
information reflecting the combined operations of Regent and Carnegie, the
information relating to Regent and the Bank, this Agreement and the transactions
contemplated hereby to be contained in the Proxy Statement/Prospectus (as
defined in Section 5.6(a) hereof) to be delivered to the stockholders of Regent
and Carnegie in connection with the solicitation of their approval of this
Agreement and the transactions contemplated hereby, as of the date the Proxy
Statement/Prospectus is mailed to the stockholders of Regent and Carnegie, and
up to and including the date of the respective meetings of stockholders of
Regent and Carnegie to which such Proxy Statement/Prospectus relates, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.

3.12. Compliance with Applicable Law.

(a) General. Except as set forth in the Regent Disclosure
Schedule, each of Regent and the Regent Subsidiaries hold all
material licenses, franchises, permits and authorizations

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necessary for the lawful conduct of its business under and pursuant to each, and
has complied with and is not in default in any respect under any applicable law,
statute, order, rule, regulation, policy and/or guideline of any federal, state
or local governmental authority relating to Regent or the Bank (other than where
such defaults or non-compliances will not, alone or in the aggregate, result in
a material adverse effect on the business, operations, assets or financial
condition of Regent and the Regent Subsidiaries taken as a whole) and Regent has
not received notice of violation of, and does not know of any violations of, any
of the above.

(b) CRA. Without limiting the foregoing, the Bank has complied in all
material respects with the Community Reinvestment Act ("CRA") and Regent has no
reason to believe that any person or group would object to the consummation of
the Merger due to

the CRA performance of or rating of the Bank. Except as listed on the Regent
Disclosure Schedule, no person or group has adversely commented upon the Bank's
CRA performance.

3.13. Certain Contracts.

(a) Except as disclosed in the Regent Disclosure Schedule neither Regent
nor any Regent Subsidiary is a party to or bound by any contract or
understanding (whether written or oral) with respect to the employment or
termination of any present or former officers, employees, directors or
consultants. The Regent Disclosure Schedule sets forth true and correct copies
of all employment agreements or termination agreements with officers,

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employees, directors, or consultants to which Regent or any
Regent Subsidiary is a party.

(b) Except as disclosed in the Regent Disclosure Schedule, (i) as of the

date of this Agreement, neither Regent nor any Regent Subsidiary is a party to
or bound by any commitment, agreement or other instrument which is material to
the business, operations, assets or financial condition of Regent and the Regent
Subsidiaries taken as a whole (ii) no commitment, agreement or other instrument
to which Regent or any Regent Subsidiary is a party or by which any of them is
bound limits the freedom of Regent or any Regent Subsidiary to compete in any
line of business or with any person, and (iii) neither Regent nor any Regent
Subsidiary is a party to any collective bargaining agreement.

(c) Except as disclosed in the Regent Disclosure Schedule, neither Regent
nor any Regent Subsidiary nor, to the knowledge of Regent, any other party
thereto, is in default in any material respect under any material lease,

contract, mortgage, promissory note, deed of trust, loan or other commitment or
arrangement.

3.14. Properties and Insurance.

(a) Regent and the Regent Subsidiaries have good and, as to owned real
property, marketable title to all material assets and properties, whether real
or personal, tangible or intangible, reflected in Regent's consolidated balance
sheet as of December 31, 1994, or owned and acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of for

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fair value in the ordinary course of business since December 31, 1994), subject
to no encumbrances, liens, mortgages, security interests or pledges, except (i)
those items that secure liabilities that are reflected in such balance sheet or
the notes thereto or incurred in the ordinary course of business after the

date of such balance sheet, (ii) statutory liens for amounts not yet delinquent
or which are being contested in good faith, (iii) such encumbrances, liens,
mortgages, security interests, pledges and title imperfections that are not in
the aggregate material to the business, operations, assets, and financial
condition of Regent and the Regent Subsidiaries taken as a whole, (iv) pledges
of assets to secure public deposits and (v) with respect to owned real property,
title imperfections noted in title reports delivered to Carnegie prior to the
date hereof. Regent and the Regent Subsidiaries as lessees have the right under
valid and subsisting leases to occupy, use, possess and control all property
leased by them in all material respects as presently occupied, used, possessed
and controlled by them.

(b) The Regent Disclosure Schedule lists all policies of insurance covering
business operations and all insurable properties and assets of Regent and the
Regent Subsidiaries showing all risks insured against, in each case under valid,
binding and enforceable policies or bonds, with such amounts and such
deductibles as are specified. As of the date hereof, neither Regent nor any of
the Regent Subsidiaries has received any notice of cancellation or notice of a
material amendment of

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any such insurance policy or bond or is in default under such policy or bond, no
coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.

3.15. Minute Books. The minute books of Regent and the Regent Subsidiaries
contain accurate records of all meetings and other corporate action held of
their respective stockholders and boards of directors (including committees of
their respective boards of directors).

3.16. Environmental Matters. Except as disclosed in the Regent Disclosure
Schedule, neither Regent nor any of the Regent Subsidiaries has received any
written notice, citation, claim, assessment, proposed assessment or demand for
abatement alleging that Regent or any of the Regent Subsidiaries (either
directly or as a successor-in-interest in connection with the enforcement of
remedies to realize the value of properties serving as collateral for
outstanding loans) is responsible for the correction or clean-up of any
condition material to the business, operations, assets or financial condition of
Regent and the Regent Subsidiaries taken as a whole. Except as disclosed in the
Regent Disclosure Schedule, Regent has no knowledge that any toxic or hazardous
substances or materials have been emitted, generated, disposed of or stored on
any property owned or leased by Regent or any of the Regent Subsidiaries in any
manner that violates or, after the lapse of time may violate, any presently
existing federal, state or local law or regulation governing or pertaining to
such substances and materials, the violation of which would

-35-

have, or would reasonably be expected to have, a material adverse effect on the
business, operations, assets or financial condition of Regent and the Regent
Subsidiaries taken as a whole.

3.17. Reserves. As of the date hereof, the reserve for loan and lease
losses disclosed in the Regent Financial Statements is adequate based upon past
loan loss experiences and potential losses in the current portfolio to cover all
known or anticipated loan losses.

3.18. No Parachute Payments. No officer, director, employee or agent (or
former officer, director, employee or agent) of Regent or any Regent Subsidiary
is entitled now, or will or may be entitled to as a consequence of this
Agreement or the Merger or the Bank Merger, to any payment or benefit from
Regent, a Regent Subsidiary, Carnegie or CBN (as the legal successors to Regent
or the Bank) which if paid or provided would constitute an "excess parachute
payment", as defined in Section 280G of the Code or the regulations promulgated
thereunder.

3.19. Disclosure. There are no material facts concerning the business,
operations, assets or financial condition of Regent or the Regent Subsidiaries
which have not been disclosed to Carnegie which could have a material adverse
effect on the business, operations or financial condition of Regent and the
Regent Subsidiaries taken as a whole. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF CARNEGIE

References herein to the "Carnegie Disclosure Schedule" shall mean all of
the disclosure schedules required by this Article IV, dated as of the date
hereof, which have been delivered on the date hereof by Carnegie to Regent.
Carnegie hereby represents and warrants to Regent as follows:

4.1. Corporate Organization.

(a) Carnegie is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Jersey. Carnegie has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned

or leased by it makes such licensing or qualification necessary, except where
the failure to be so licensed, qualified or in good standing would not have a
material adverse effect on the business, operations, assets or financial
condition of Carnegie and CBN taken as a whole. Carnegie is registered as a bank
holding company under the BHCA.

(b) CBN is duly organized, validly existing and in good standing as a
national banking association whose deposits are insured by the Bank Insurance
Fund of the FDIC to the fullest extent permitted by law. Except for CBN and
Carnegie Investments

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Corporation, there is no corporation, joint venture, association, partnership,
trust or other entity in which Carnegie has, directly or indirectly, at least a
50% equity interest or acts as a general partner. CBN has the corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted and is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a material adverse effect on the business, operations, assets or
financial condition of Carnegie and CBN taken as a whole. The Carnegie
Disclosure Schedule sets forth true and complete copies of the Certificate of
Incorporation and By-laws of Carnegie. Except for real estate used for its
banking premises and except as set forth on the Carnegie Disclosure Schedule,
Carnegie owns no real estate.

4.2. Capitalization. The authorized capital stock of Carnegie consists
solely of 5,000,000 shares of Carnegie Common Stock. As of June 30, 1995, there
were 1,750,866 shares of Carnegie Common Stock issued and outstanding. Since
June 30, 1995 to and including the date of this Agreement, no additional shares

of Carnegie Common Stock have been issued except in connection with exercises of
options granted under the 1993 Employee Stock Option Plan of Carnegie and the
1993 Non-Employee

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Stock Option Plan of Carnegie (the "Carnegie Option Plans") or upon exercise of
the outstanding warrants issued by Carnegie (the "Carnegie Warrants"). As of
June 30, 1995, except for 262,661 shares of Carnegie Common Stock then issuable
upon exercise of outstanding stock options granted pursuant to the Carnegie
Option Plans, and except for 724,290 shares issuable upon exercise of the
Warrants, there were no shares of Carnegie Common Stock issuable upon the
exercise of outstanding stock options or otherwise. The Carnegie Disclosure
Schedule sets forth true and complete copies of the Carnegie Option Plans and of
each

outstanding Carnegie Option and Carnegie Warrant. All issued and outstanding
shares of Carnegie Common Stock, and all issued and outstanding shares of
capital stock of CBN, have been duly authorized and validly issued, are fully
paid, nonassessable and free of preemptive rights, and are free and clear of all
liens, encumbrances, charges, restrictions or rights of third parties. The
authorized capital stock of CBN consists of 1,000,000 shares of Common Stock,
$5.00 par value. All of the outstanding shares of capital stock of CBN are owned
by Carnegie free and clear of any liens, encumbrances, charges, restrictions or
rights of third parties. Except for the options referred to above under the
Carnegie Option Plans and the Carnegie Warrants, and subject to stockholder
approval of the June Options and the New Options, neither Carnegie nor CBN has
or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the transfer, purchase or

-39-

issuance of any shares of capital stock of Carnegie or CBN or any securities
representing the right to purchase or otherwise receive any shares of such
capital stock or any securities convertible into or representing the right to
purchase or subscribe for any such shares, and there are no agreements or
understandings with respect to voting of any such shares.

4.3. Authority; No Violation.

(a) Subject to the approval of this Agreement and the transactions
contemplated hereby by the stockholders of Carnegie and CBN and subject to the
parties obtaining all necessary regulatory approvals, Carnegie and CBN have full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Boards of Directors of Carnegie and CBN in accordance with the Certificate of
Incorporation of Carnegie, the Articles of Association of CBN and applicable

laws and regulations. The execution and delivery of the Bank Merger Agreement
has been duly and validly approved by the Board of Directors of CBN in
accordance with the Articles of Association of CBN and applicable laws and
regulations. Except for the approval of the Merger by the stockholders of
Carnegie, no other corporate proceedings on the part of Carnegie and CBN are
necessary to consummate the transactions contemplated hereby (except for the
approval by Carnegie of the Bank Merger

-40-

Agreement). This Agreement has been duly and validly executed
and delivered by Carnegie and CBN and subject to the approval of
Carnegie's stockholders, constitutes a valid and binding
obligation of Carnegie and CBN, enforceable against Carnegie and

CBN in accordance with its terms.

(b) Neither the execution and delivery of this Agreement nor the
consummation by Carnegie and CBN of the transactions contemplated hereby in
accordance with the terms hereof, or compliance by Carnegie and CBN with any of
the terms and provisions hereof, will (i) violate any provision of the
Certificate of Incorporation of Carnegie, the Articles of Association of CBN or
the Bylaws of Carnegie or CBN, (ii) assuming that the consents and approvals set
forth below are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Carnegie
or CBN or any of their respective properties or assets, or (iii) except as set
forth in the Carnegie Disclosure Schedule, violate, conflict with, result in a
breach of any provision of, constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of Carnegie or CBN under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Carnegie or

-41-

CBN is a party, or by which Carnegie or CBN or both of them, or any of their
respective properties or assets may be bound or affected, except, with respect
to (ii) and (iii) above, such as individually and in the aggregate will not have
a material adverse effect on the business, operations, assets or financial
condition of Carnegie and CBN taken as a whole, and which will not prevent or
delay the consummation of the transactions contemplated hereby. Except for the
approval of the stockholders of Regent and Carnegie and except for consents and
approvals of or filings or registrations with or notices to the OCC, the FRB,
the Secretary of State of New Jersey, the SEC, or applicable state securities
bureaus or commissions, no consents or approvals of or filings or registrations
with or notices to any third party or any public body or authority are necessary
on behalf of Carnegie or CBN in connection with (a) the execution and delivery
by Carnegie or CBN of this Agreement, (b) the consummation by Carnegie of the

Merger and the other transactions contemplated hereby and (c) the execution and
delivery by CBN of the Bank Merger Agreement and the consummation by CBN of the
Bank Merger and other transactions contemplated thereby. To the best of
Carnegie's knowledge, no fact or condition exists which Carnegie has reason to
believe will prevent it or CBN from obtaining the aforementioned consents and
approvals.

4.4. Financial Statements.

(a) Carnegie has previously delivered to Regent copies of
the consolidated statements of financial condition of Carnegie as

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of December 31, 1993 and 1994, the related consolidated statements of income,
changes in stockholders' equity and of cash flows for the periods ended December
31 in each of the three fiscal years 1992 through 1994, in each case accompanied
by the audit report of Coopers & Lybrand, LLP, independent public accountants
with respect to Carnegie, and the unaudited consolidated statements of condition
of Carnegie as of June 30, 1995, and the related unaudited consolidated
statements of income, changes in stockholders' equity and cash flows for the six
months then ended as reported in Carnegie's Quarterly Report on Form 10-Q, filed
with the SEC under the Securities Exchange Act of 1934 (the "1934 Act")
(collectively, the "Carnegie Financial Statements"). The Carnegie Financial
Statements (including the related notes), have been prepared in accordance with
GAAP consistently applied during the periods involved, and fairly present the
consolidated financial condition of Carnegie and CBN as of the respective dates
set forth therein, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows (including the related notes, where
applicable) fairly present the results of the consolidated operations and
changes in stockholders' equity and of cash flows of Carnegie and CBN for the
respective fiscal periods set forth therein.

(b) The books and records of Carnegie and CBN have been and are being
maintained in material compliance with applicable legal

-43-

and accounting requirements, and reflect only actual transactions.

(c) Except as and to the extent reflected, disclosed or reserved against in
the Carnegie Financial Statements (including the notes thereto), as of June 30,
1995 neither Carnegie nor CBN had or has, as the case may be, any obligation or
liability, whether absolute, accrued, contingent or otherwise, material to the
business, operations, assets or financial condition of Carnegie and CBN taken as
a whole. Since June 30, 1995, and to the date hereof, neither Carnegie nor CBN
has incurred any liabilities, except in the ordinary course of their respective
businesses as conducted on the date hereof and consistent with prudent banking
practice, except as specifically contemplated by this Agreement.

4.5. Brokers and Fees. Neither Carnegie nor CBN nor any of
their respective directors or officers has employed any broker or
finder or incurred any liability for any broker's or finder's
fees or commissions in connection with any of the transactions
contemplated by this Agreement and the Bank Merger Agreement.
There are no fees (other than time charges billed at usual and

customary rates) payable to consultants, including lawyers and accountants, in
connection with this transaction or which could be triggered by consummation of
this transaction or the termination of the services of such consultants by
Carnegie or CBN other than fees which will be payable by Carnegie to Capital
Consultants of Princeton, Inc. ("Capital Consultants") for its

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fairness opinion. A copy of the agreement with Capital
Consultants is set forth in the Carnegie Disclosure Schedule.

4.6. Absence of Certain Changes or Events. (a) There has not been any
material adverse change in the business, operations, assets or financial
condition of Carnegie and CBN taken as a whole since June 30, 1995, and to
Carnegie's knowledge, no fact or condition exists which Carnegie believes will
cause or is likely to cause such a material adverse change in the future, other
than those political and economic factors affecting the banking industry in
general and that do not uniquely affect Carnegie or CBN.

(b) Except as set forth in the Carnegie Disclosure Schedule, since June 30,
1995 neither Carnegie nor CBN has taken or permitted any of the actions set
forth in Section 5.2 hereof and Carnegie and CBN have conducted their businesses
in the ordinary course as conducted on the date hereof and consistent with
prudent banking practice.

4.7. Carnegie and CBN Information. The information relating to Carnegie and
CBN, this Agreement and the transactions contemplated hereby to be contained in
the Registration Statement and Proxy Statement/Prospectus (as defined in Section
5.6(a) hereof) to be delivered to the stockholders of Regent and Carnegie in
connection with the solicitation of their approval of this Agreement and the
transactions contemplated hereby, as of the date of the mailing of the Proxy
Statement/Prospectus to the stockholders of Regent and Carnegie, and up to and
including the

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date of the respective meetings of stockholders of Carnegie and Regent to which
such Proxy Statement/Prospectus relates, will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

4.8. Capital Adequacy. At the Effective Time, after taking
into effect the Merger and the Bank Merger and the transactions
contemplated hereunder, Carnegie and CBN will have sufficient
capital to satisfy all applicable regulatory capital
requirements.

4.9. Carnegie Securities. At the Effective Time, the Carnegie Common Stock,
Carnegie Preferred Stock and New Options to be issued pursuant to the terms of
Section 2.3, when so issued, shall be duly authorized, validly issued, fully
paid, and non-assessable, free of preemptive rights and free and clear of all
liens, encumbrances or restrictions created by or through Carnegie, with no
personal liability attaching to the ownership thereof. The Carnegie Common
Stock, Carnegie Preferred Stock and New Options to be issued shall be free of
any restrictions imposed by Carnegie except those imposed under Section 5.16.

4.10. Legal Proceedings. Except as disclosed in the
Carnegie Disclosure Schedule, neither Carnegie nor CBN is a party
to any, and there are no pending or, to Carnegie's knowledge,
threatened, legal, administrative, arbitral or other proceedings,
claims, actions or governmental investigations of any nature

-46-

against Carnegie or CBN which individually or in the aggregate will have, or
could reasonably be expected to have a material adverse effect on the business,
results of operations, prospects or financial condition of Carnegie and CBN
taken as a whole. Except as disclosed in the Carnegie Disclosure Schedule,
neither Carnegie nor CBN is a party to any order, judgment or decree entered
against Carnegie or CBN in any lawsuit or proceeding which individually or in
the aggregate will have, or could reasonably be expected to have, a material
adverse effect on the businesses, financial condition, results of operations or
prospects of Carnegie and CBN taken as a whole.

4.11. Taxes and Tax Returns. (a) Carnegie and CBN have duly filed (and
until the Effective Time will so file) all Returns required to be filed by them
in respect of any federal, state and local taxes (including withholding taxes,
penalties or other payments required) and each has duly paid (and until the
Effective Time will so pay) all such taxes due and payable, other than taxes or
other charges which are being contested in good faith and disclosed to Regent in
writing. Carnegie and CBN have established (and until the Effective Time will
establish) on their books and records reserves that are adequate for the payment
of all federal, state and local taxes not yet due and payable, but are incurred
in respect of Carnegie and CBN through such date. Except as set forth in the
Carnegie Disclosure Schedule, the federal income tax returns of Carnegie and CBN
have been examined by the IRS (or are closed to examination due to the

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expiration of the applicable statute of limitations), and no deficiencies were

asserted as a result of such examinations which have not been resolved and paid
in full.

(b) Except as set forth in the Carnegie Disclosure

Schedule, the applicable state income tax returns of Carnegie and CBN have been
examined by the applicable authorities (or are closed to examination due to the
expiration of the statute of limitations) and no deficiencies were asserted as a
result of such examinations which have not been resolved and paid in full. To
the knowledge of Carnegie, there are no audits or other administrative or court
proceedings presently pending, or claims asserted for, taxes or assessments upon
Carnegie or CBN, nor has Carnegie or CBN given any currently outstanding waiver
or comparable consents regarding the application of the statute of limitations
with respect to any state taxes or state tax returns.

4.12. Employee Benefit Plans. (a) Neither Carnegie nor CBN has contributed
to any "employee pension benefit plans," as such term is defined in Section 3 of
ERISA (the "Carnegie Pension Plans"), "employee welfare benefit plans" as such
term is defined in Section 3 of ERISA (the "Carnegie Welfare Plans") or
"multiemployer plan" as defined in Sections 3(37) and 4001(a)(3) of ERISA.
Except as described in the Carnegie Disclosure Schedule, neither Carnegie nor
CBN maintains or contributes to any stock option plan, stock purchase plan,
deferred compensation plan, severance plan, bonus plan, employment agreement or
other similar plan, program or arrangement.

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(b) Carnegie has delivered to Regent a complete and accurate copy of each
of the following with respect to each of the Carnegie Welfare Plans: (1) plan
document, summary plan description, and summary of material modifications (if
not available, a detailed description of the foregoing); (2) trust agreement or
insurance contract, if any; (3) most recent IRS determination letter, if any;
(4) most recent actuarial report, if any; and (5) most recent annual report on
Form 5500.

(c) Each of the Carnegie Welfare Plans and each other plan and arrangement
identified on the Carnegie Disclosure Schedule has been operated in compliance
in all material respects with the provisions of ERISA, the Code, all
regulations, rulings and announcements promulgated or issued thereunder, and all
other applicable governmental laws and regulations.

(d) To the best knowledge of Carnegie, no non-exempt prohibited
transaction, within the meaning of Section 4975 of the Code or Section 406 of
ERISA, has occurred with respect to any of the Carnegie Welfare Plans.

(e) Except as disclosed in the Carnegie Disclosure Schedule, there are no
pending, or, to the best knowledge of Carnegie, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
Carnegie Welfare Plans, any trusts related thereto or any other plan or
arrangement identified in the Carnegie Disclosure Schedule.

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(f) Except as disclosed in the Carnegie Disclosure Schedule, no Carnegie
Welfare Plan provides medical or death benefits (whether or not insured) beyond
an employee's retirement or other termination of service, other than coverage
mandated by law.

(g) Except with respect to customary health, life and disability benefits
or as disclosed in the Carnegie Disclosure Schedule, there are no unfunded
benefits obligations which are not accounted for by reserves shown on the
financial statements of Carnegie and established under GAAP, or otherwise noted
on such financial statements.

(h) With respect to each Carnegie Welfare Plan that is funded wholly or
partially through an insurance policy, there will be no liability of Carnegie or
any Carnegie Subsidiary as of the Effective Time under any such insurance policy
or ancillary agreement with respect to such insurance policy in the nature of a
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring prior
to the Effective Time.

(i) Except as agreed to by Regent in writing, the consummation of the
transactions contemplated by this Agreement will not (i) entitle any current or
former employee of Carnegie or any Carnegie Subsidiary to severance pay,
unemployment compensation or any similar payment or (ii) accelerate the time of
payment, vesting, or increase the amount, of any compensation

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due to any current employee or former employee under any Carnegie
Welfare Plan.

4.13. Reports.

(a) Each communication mailed by Carnegie, or by CBN prior to the formation
of Carnegie, to its stockholders since January 1, 1990, and each annual,
quarterly or special report, proxy statement or other such communication, as of
its date, complied in all material respects with all applicable statutes, rules
and regulations enforced or promulgated by the applicable regulatory agency and
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided that disclosures as of a later date shall be
deemed to modify disclosures as of an earlier date.

(b) Carnegie and CBN have, since January 1, 1990, duly filed with the OCC
the FRB and the SEC (since the formation of

Carnegie) in correct form the monthly, quarterly and annual reports required to
be filed under applicable laws and regulations, and Carnegie promptly will
deliver or make available to Regent accurate and complete copies of such
reports. The Carnegie Disclosure Schedule lists all examinations of Carnegie or
CBN conducted by either the OCC or the FRB since January 1, 1990, and the dates
of any responses thereto submitted by Carnegie or CBN.

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4.14. Compliance with Applicable Law. (a) Except as set forth in the
Carnegie Disclosure Schedule, each of Carnegie and CBN hold all material
licenses, franchises, permits and authorizations necessary for the lawful
conduct of its business under and pursuant to each, and has complied with and is
not in default in any respect under any, applicable law, statute, order, rule,
regulation, policy and/or guideline of any federal, state or local governmental
authority relating to Carnegie or CBN (other than where such default or
non-compliance will not result, alone or in the aggregate, in a material adverse
effect on the business, operations, assets or financial condition of Carnegie
and CBN taken as a whole) and Carnegie has not received notice of any violation
of, and does not know of any violation of, any of the above.

(b) Without limiting the foregoing, CBN has complied in all material
respects with CRA and Carnegie has no reason to believe that any person or group
would object to the consummation of the Merger due to the CRA performance of or
rating of CBN. Except as listed on the Carnegie Disclosure Schedule, no person
or group has adversely commented upon CBN's CRA performance.

4.15. Certain Contracts. (a) Except as disclosed in the
Carnegie Disclosure Schedule, neither Carnegie nor CBN is a party
to or bound by any contract or understanding (whether written or
oral) with respect to the employment or termination of any
present or former officers, employees, directors or consultants.
The Carnegie Disclosure Schedule sets forth true and correct

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copies of all employment agreements or termination agreements with officers,
employees, directors or consultants to which Carnegie or CBN is a party,

(b) Except as disclosed in the Carnegie Disclosure Schedule, (i) as of the
date of this Agreement, neither Carnegie nor CBN is a party to or bound by any
commitment, agreement or other instrument which is material to the business,
operations, assets or financial condition of Carnegie and CBN taken as a whole,
which, if entered into after the date of this Agreement, would require the
consent of Regent pursuant to Section 5.2 hereof, (ii) no commitment, agreement
or other instrument to

which Carnegie or CBN is party or by which either of them is bound limits the
freedom of Carnegie or CBN to compete in any line of business or with any person
and (iii) neither Carnegie nor CBN is party to any collective bargaining
agreement.

(c) Except as disclosed in the Carnegie Disclosure Schedule, neither
Carnegie nor CBN nor, to the knowledge of Carnegie, any other party thereto, is
in default in any material respect under any material lease, contract, mortgage,
promissory note, deed of trust, loan or other commitment or arrangement.

4.16. Properties and Insurance.

(a) Carnegie and CBN have good and, as to owned real property, marketable
title to all material assets and properties, whether real or personal, tangible
or intangible, reflected in Carnegie's consolidated balance sheet as of December
31, 1994, or owned and acquired subsequent thereto (except to the extent that

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such assets and properties have been disposed of for fair value in the ordinary
course of business since December 31, 1994) subject to no encumbrances, liens,
mortgages, security interests or pledges, except (i) those items that secure
liabilities that are reflected in such balance sheet or the notes thereto which
were incurred in the ordinary course of business after the date of such balance
sheet, (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets and financial condition of Carnegie
and CBN taken as a whole, (iv) pledges of assets to secure public deposits and
(v) with respect to owned real property, title imperfections noted in title
reports delivered to Regent prior to the date hereof. Carnegie and CBN as
lessees have the right under valid and subsisting leases to occupy, use, possess
and control all property leased by them in all material respects as presently
occupied, used, possessed and controlled by them.

(b) The Carnegie Disclosure Schedule lists all policies of insurance
covering business operations and all insurable properties and assets of Carnegie
and CBN are insured for their benefit showing all risks insured against, in each
case under valid, binding and enforceable policies or bonds, with such
deductibles as specified. As of the date hereof, neither Carnegie nor CBN has
received any notice of cancellation or notice of a material amendment of any
such insurance policy or

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bond or is in default under such policy or bond, no coverage thereunder is being
disputed and all material claims thereunder have been filed in a timely fashion.

4.17. Minute Books. The minute books of Carnegie and CBN
contain accurate records of all meetings and other corporate
action held of their respective stockholders and Boards of
Directors (including committees of their respective Boards of
Directors).

4.18. Environmental Matters. Except as disclosed in the Carnegie Disclosure
Schedule, neither Carnegie nor CBN has received any written notice, citation,
claim, assessment, proposed assessment or demand for abatement alleging that
Carnegie or CBN (either directly or as a successor-in-interest in connection
with the enforcement of remedies to realize the value of properties serving as
collateral for outstanding loans) is responsible for the correction or clean-up
of any condition material to the business, operations, assets or financial
condition of Carnegie and CBN taken as a whole. Except as disclosed in the
Carnegie Disclosure Schedule, Carnegie has no knowledge that any toxic or
hazardous substances or materials have been emitted, generated, disposed of or
stored on any property owned or leased by Carnegie or CBN in any manner that
violates or, after the lapse of time may violate, a presently existing federal,
state or local law or regulation governing or pertaining to such substances and
materials, the violation of which would have a material adverse effect on the
business,

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operations, assets or financial condition of Carnegie and CBN
taken as a whole.

4.19. Reserves. As of the date hereof, the reserve for loan and lease
losses disclosed in the Carnegie Financial Statements is adequate based upon
past loan loss experiences and potential losses in the current portfolio to
cover all known or anticipated loan losses.

4.20. No Parachute Payments. No officer, director, employee or agent (or
former officer, director, employee or agent) of Carnegie or CBN is entitled now,
or will or may be entitled as a consequence of this Agreement or the Merger or
the Bank Merger, to any payment or benefit from Carnegie or CBN which, if paid
or provided, would constitute an "Excess Parachute Payment" as defined in
Section 280G of the Code or the regulations promulgated thereunder.

4.21. Disclosures. There are no material facts concerning the business,
operations, assets or financial condition of Carnegie or CBN which have not been
disclosed to Regent which could have a material adverse effect on the business,
operations or financial condition of Carnegie and CBN taken as a whole. No
representation or warranty contained in Article IV of this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements

herein not misleading.

ARTICLE V

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COVENANTS OF THE PARTIES

5.1. Conduct of the Business of Regent. During the period from the date of
this Agreement to the Effective Time, (a) Regent shall, and shall cause each of
the Regent Subsidiaries to and (b) Carnegie shall and shall cause CBN to, except
as contemplated by this Agreement or as consented to by Carnegie or Regent, as
the case may be, conduct its respective business and engage in transactions
permitted hereunder only in the ordinary course thereof as conducted on the date
hereof and consistent with prudent banking practice. Regent and Carnegie shall
each also shall use their respective best efforts to (i) preserve their
respective business organizations and that of their respective Subsidiaries
intact, (ii) keep available to itself the present services of their respective
employees and those of their respective Subsidiaries, provided that neither
Regent nor Carnegie nor any of their respective Subsidiaries shall be required
to take any unreasonable or extraordinary act or any action which would conflict
with any other term of this Agreement, and (iii) preserve for Regent and
Carnegie the goodwill of their respective customers and those of their
respective Subsidiaries and others with whom business relationships exist.

5.2. Negative Covenants and Dividend Covenants.

Regent agrees with Carnegie and Carnegie agrees with Regent that, from the
date hereof to the Effective Time, except as otherwise approved by Carnegie in
writing or as permitted or

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required by this Agreement with respect to actions by Regent, and except as
otherwise approved by Regent in writing or as permitted or required by this
Agreement with respect to actions by Carnegie, it will not, nor will it permit
any of its respective Subsidiaries to:

(a) change any provision of its Certificate of
Incorporation or By-laws or any similar governing documents;

(b) except for the issuance of Regent Common Stock or Carnegie Common
Stock pursuant to the present terms of the outstanding Regent Options or
Carnegie Options, as the case may be, and the Regent Warrants or upon the
conversion of outstanding shares of Regent Preferred Stock or the Carnegie
Warrants, as the case may be, change the number of shares of

its authorized or issued common or preferred stock or issue or grant any
option, warrant, call, commitment, subscription, right to purchase or
agreement of any character relating to the authorized or issued capital
stock of Regent or any Regent Subsidiary or Carnegie or any Carnegie

Subsidiary, as the case may be, or any securities convertible into shares
of such stock, or split, combine or reclassify any shares of its capital
stock, or declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, other than Regent's regular dividends as set forth in
the Regent Disclosure Schedule and other than Carnegie's regular dividends
as set forth in the

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Carnegie Disclosure Schedule, or redeem or otherwise acquire any shares of
such capital stock; provided, however, that this Section shall not prohibit
Regent from extending the term of the Regent Options and Regent Warrants as
required under Section 2.1 hereof, or redeeming the Regent Series B, C, D
and E Preferred Stock as required under Section 2.2 hereof;

(c) grant any severance or termination pay (other than pursuant to
policies of Regent or Carnegie, as the case may be, in effect on the date
hereof and disclosed to Carnegie in the Regent Disclosure Schedule or to
Regent in the Carnegie Disclosure Schedule, as the case may be, or as
agreed to by Carnegie in writing or Regent in writing, as the case may be)
to, or enter into or amend any employment agreement with, any of its
directors, officers or employees; adopt any new employee benefit plan or
arrangement of any type or amend any such existing benefit plan or
arrangement; or award any increase in compensation or benefits to its
directors, officers or employees except with respect to salary increases in
the ordinary course of business and consistent with past practices and
policies;

(d) sell or dispose of any substantial amount of assets or incur any
significant liabilities other than in the ordinary course of business
consistent with past practices and policies;

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(e) make any capital expenditures outside of the ordinary course of
business other than pursuant to binding commitments existing on the date
hereof and other than expenditures necessary to maintain existing assets in
good repair;

(f) file any applications or make any contract with
respect to branching or site location or relocation;

(g) agree to acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any
business or entity;

(h) make any material change in its accounting methods or practices,

other than changes required in accordance with generally accepted
accounting principles;

(i) take any action that would result in any of the representations
and warranties contained in Article III of this Agreement not being true
and correct in any material respect at the Effective Time; or

(j) agree to do any of the foregoing.

5.3. Acquisition Transactions. (a) Regent and Carnegie each agree with the
other that, prior to the Effective Time, it shall not, and shall not authorize
or permit any of its Subsidiaries or any of its or its Subsidiaries' directors,
officers, employees, agents or representatives, directly or indirectly, to
solicit, initiate, facilitate or encourage (including by way of furnishing or
disclosing non-public information) any inquiries or the making of any proposal
with respect to any merger, consolidation or

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other business combination involving it or its Subsidiaries or the acquisition
of all or substantially all of the assets or capital stock of it and its
Subsidiaries taken as a whole, or any similar transaction (an "Acquisition
Transaction") or negotiate, explore or otherwise engage in substantive
discussions with any person (other than in the case of Regent, Carnegie, CBN or
their respective directors, officers, employees, agents and representatives and
other than, in the case of Carnegie, Regent, the Bank or their respective
directors, officers, employees, agents and representatives) with respect to any
Acquisition Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement; provided that
Regent and Carnegie each may, in response to an unsolicited written proposal
with respect to an Acquisition Transaction from a third party, furnish
information to, and negotiate, explore or otherwise engage in substantive
discussions with such third party, and enter into any such agreement,
arrangement or understanding, in each case only if the Regent Board of
Directors, in the case of Regent, or the Carnegie Board of Directors, in the
case of Carnegie, determines in good faith by a majority vote, after
consultation with its financial advisers and its outside legal counsel, that
failing to take such action would create a reasonable possibility of a breach of
the fiduciary duties of its Board of Directors in connection with

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seeking an Acquisition Transaction that is more favorable to its
stockholders than the Merger.

(b) Regent and Carnegie each shall promptly advise the other in writing of
the receipt of any inquiries or proposals relating to an Acquisition

Transaction, unless Regent's Board of Directors, in the case of Regent, or
Carnegie's Board of Directors, in the case of Carnegie, determines in good faith
by a majority vote, after consultation with its outside legal counsel, that
taking such action would create a reasonable possibility of a breach of the
fiduciary duties of its Board of Directors in connection with seeking an
Acquisition Transaction that is more favorable to its stockholders than the
Merger.

5.4. Current Information. During the period from the date
of this Agreement to the Effective Time, Regent and Carnegie will
cause one or more of their respective designated representatives
to confer on a monthly or more frequent basis with
representatives of Carnegie or Regent, as the case may be,
regarding Regent's or Carnegie's, as the case may be, business,
operations, properties, assets and financial condition and
matters relating to the completion of the transactions
contemplated herein. Without limiting the foregoing, after
granting any loan or extension of credit by renewal or otherwise,
Regent and Carnegie will send to Carnegie or Regent, as the case
may be, a description (i.e., a copy of the loan offering) for
each new loan or extension of credit, and each renewal of an
existing loan or extension of credit, in excess of $750,000. As

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soon as reasonably available, but in no event more than 45 days after the end of
each fiscal quarter (other than the last fiscal quarter of each fiscal year)
ending after the date of this Agreement, Regent will deliver to Carnegie the
Bank's call reports filed with the FDIC and Regent's quarterly reports on Form
10-Q as filed with the SEC under the 1934 Act, and Carnegie will deliver to
Regent CBN's call reports as filed with the FDIC and Carnegie's quarterly
reports on Form 10-Q, as filed with the SEC under the 1934 Act. As soon as
reasonably available, but in no event more than 90 days after the end of each
fiscal year, Regent will deliver to Carnegie and Carnegie will deliver to Regent
their respective audited Annual Reports, in each case as filed on Form 10-K with
the SEC under the 1934 Act.

5.5. Access to Properties and Records; Confidentiality.

(a) Regent and the Bank shall permit Carnegie and its representatives, and
Carnegie and CBN shall permit Regent and its representatives, reasonable access
to their respective properties, and shall disclose and make available to
Carnegie and its representatives or Regent and its representatives as the case
may be, all books, papers and records relating to their

respective assets, stock ownership, properties, operations, obligations and
liabilities, including, but not limited to, all books of account (including the
general ledger), tax records, minute books of directors' and stockholders'
meetings, organizational documents, By-laws, material contracts and agreements,

filings with any regulatory authority, independent

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auditors' work papers (subject to the receipt by such auditors of a standard
access representation letter), litigation files, plans affecting employees, and
any other business activities or prospects as Carnegie and its representatives
or Regent and its representatives may reasonably request. Neither party shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer or would
contravene any law, rule, regulation, order or judgment. The parties will use
their best efforts to obtain waivers of any such restriction and in any event
make appropriate substitute disclosure arrangements under circumstances in which
the restrictions of the preceding sentence apply.

(b) All information furnished by the parties hereto prior to the date
hereof in connection with transactions contemplated by this Agreement or
pursuant hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby and shall be treated as the sole property of the party
delivering the information until consummation of the Merger contemplated hereby
and, if such Merger shall not occur, each party and each party's advisors shall
destroy, or at the request of the other party, return to the other party all
documents or other materials containing, reflecting or referring to such
information, will not retain any copies of such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other

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commercial purposes. The obligation to keep such information confidential shall
continue for five years from the date the proposed Merger is abandoned but shall
not apply to (i) any information which (A) the party receiving the information
can establish by convincing evidence was already in its possession prior to the
disclosure thereof to it by the other party; (B) was then generally known to the
public; (C) became known to the public through no fault of the party receiving
such information; or (D) was disclosed to the party receiving such information
by a third party not bound by an obligation of confidentiality; or (ii)
disclosures pursuant to a legal requirement or in accordance with an order of a
court of competent jurisdiction.

5.6. Regulatory Matters.

(a) For the purposes of holding the meetings of Carnegie and Regent
stockholders referred to in Section 5.7 hereof and registering or otherwise
qualifying under applicable federal and state securities laws Carnegie Common
Stock, Carnegie Preferred Stock and New Options to be issued to the holders of
Regent Common Stock, Regent Preferred Stock, Regent Options and Regent Warrants
in connection with the Merger, the parties hereto shall cooperate in the

preparation and filing by Carnegie of a Registration Statement with the SEC on
Form S-4 which shall include an appropriate proxy statement and prospectus
satisfying all applicable requirements of applicable state and federal laws,
including the Securities Act of 1933, as amended (the "1933 Act"), the 1934 Act
and applicable state securities laws and the

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rules and regulations thereunder. (Such proxy statement and prospectus in the
form mailed by Carnegie and Regent to their respective stockholders together
with any and all amendments thereof or supplements thereto, is herein referred
to as the "Proxy Statement/Prospectus" and the various documents to be filed by
Carnegie under the 1933 Act with the SEC to register for sale the Carnegie
Common Stock, Carnegie Preferred Stock and New Options to be issued to the
holders of Regent Common Stock, Regent Preferred Stock, Regent Options and
Regent Warrants, including the Proxy Statement/Prospectus, are referred to
herein as the "Registration Statement").

(b) Carnegie shall furnish information concerning Carnegie and CBN as is
necessary in order to cause the Proxy Statement/Prospectus, insofar as it
relates to Carnegie and CBN, to comply with Section 5.6(a) hereof. Carnegie
agrees promptly to advise Regent if at any time prior to the Carnegie and Regent
stockholders meetings referred to in Section 5.7 hereof, any information
provided by Carnegie in the Proxy Statement/ Prospectus becomes incorrect or
incomplete in any material respect and to provide Regent with the information
needed to correct such inaccuracy or omission. Carnegie shall furnish such
information as may be necessary in order to cause the Proxy
Statement/Prospectus, insofar as it relates to Carnegie and CBN, to comply with
Section 5.6(a) hereof after the mailing thereof to Carnegie's and Regent's
stockholders.

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(c) Regent shall furnish Carnegie with such information concerning Regent
and the Bank as is necessary in order to cause the Proxy Statement/Prospectus,
insofar as it relates to Regent and the Bank, to comply with Section 5.6(a)
hereof. Regent agrees promptly to advise Carnegie if, at any time prior to the
Carnegie and Regent stockholders meetings referred to in Section 5.6(a) hereof,
information provided by Regent in the Proxy Statement/Prospectus becomes
incorrect or incomplete in any material respect and to provide Carnegie with the
information

needed to correct such inaccuracy or omission. Regent shall furnish Carnegie
with such supplemental information as may be necessary in order to cause the
Proxy Statement/Prospectus, insofar as it relates to Regent and the Bank, to
comply with Section 5.6(a) hereof after the mailing thereof to Carnegie's and
Regent's stockholders.

(d) Carnegie shall as promptly as practicable make such filings as are
necessary in connection with the offering of the Carnegie Common Stock, Carnegie

Preferred Stock and New Options with applicable state securities agencies and
shall use all reasonable efforts to qualify the offering of the Carnegie Common
Stock, Carnegie Preferred Stock and New Options under applicable state
securities laws at the earliest practicable date. Regent shall promptly furnish
Carnegie with such information regarding the Regent stockholders as Carnegie
requires to enable it to determine what filings are required hereunder. Regent
authorizes Carnegie to utilize in such filings the information concerning

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Regent and the Bank provided to Carnegie in connection with, or contained in,
the Proxy Statement/Prospectus. Carnegie shall furnish Regent with copies of all
such filings and keep Regent advised of the status thereof. Carnegie shall as
promptly as practicable file the Registration Statement containing the Proxy
Statement/Prospectus with the SEC, and shall promptly furnish copies to Regent
of all communications, oral or written, with the SEC concerning the Registration
Statement and the Proxy Statement/Prospectus.

(e) Carnegie shall cause the Carnegie Common Stock, Carnegie Preferred
Stock to be issued in connection with the Merger and pursuant to the New Options
to be included for quotation on the National Association of Securities Dealers
National Market System.

(f) The parties hereto will cooperate with each other and use their best
efforts to prepare all necessary documentation, to effect all necessary filings
and to obtain all necessary permits, consents, approvals and authorizations of
all third parties and governmental bodies necessary to consummate the
transactions contemplated by this Agreement as soon as possible, including,
without limitation, obtaining the approval of their respective stockholders and
obtaining those approvals required by the OCC and the FRB. The parties shall
each have the right to review in advance all information relating to the other,
as the case may be, and any of their respective subsidiaries, which appears in
any filing made with, or written material submitted to, any third

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party or governmental body in connection with the transactions
contemplated by this Agreement.

(g) Each of the parties will promptly furnish each other with copies of
written communications received by them or any of their respective subsidiaries
from, or delivered by any of the foregoing to, any governmental body in respect
of the transactions contemplated hereby.

5.7. Approval of Stockholders. Each of Carnegie and Regent will (a) take
all steps necessary duly to call, give notice of, convene and hold meetings of
their respective stockholders as soon as reasonably practicable for the purpose
of securing the approval by such stockholders of this Agreement and the
transactions contemplated hereby (b) subject to the right of the Board of

Directors of Regent or Carnegie to withdraw or modify such recommendations if
such Board of Directors determines that it is required to do so in its exercise
of its fiduciary duties and other legal obligations after consultation with
counsel, recommend to their respective stockholders approval of this Agreement
and the transactions contemplated hereby and use their best efforts to obtain,
as promptly as practicable, such approvals, and (c) cooperate and consult with
each other with respect to each of the foregoing matters. In connection
therewith, each director of Regent and Carnegie agrees, subject to the exercise
of his fiduciary duties after consultation with counsel, (i) to vote in favor of
the Merger, and (ii) take such action as is necessary or is reasonably required
by Carnegie, in

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the case of Regent, or Regent, in the case of Carnegie, to
consummate the Merger.

5.8. Further Assurances. Subject to the terms and conditions herein
provided and to the fiduciary duties of the Boards of Directors of the parties
hereto and applicable law, each of the parties hereto agrees to use reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions to Closing and to consummate and make
effective the transactions contemplated by this Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated by this Agreement and using its best
efforts to prevent the breach of any representation, warranty, covenant or
agreement of such party contained or referred to in this Agreement and to
promptly remedy the same. Nothing in this Section 5.8 shall be construed to
require any party to participate in any threatened or actual legal,
administrative or other proceedings (other than proceedings, actions or
investigations to which it is otherwise a party or subject or threatened to be
made a party or subject) in connection with consummation of the transactions
contemplated by this Agreement unless such party shall consent in advance and in

writing to such participation and the other party agrees to

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reimburse and indemnify such party for and against any and all
costs and damages related thereto.

5.9. Public Announcements. The parties hereto shall consult with each other
in the development and before the distribution of all news releases and other
public disclosures with respect to this Agreement or any of the transactions
contemplated hereby, and shall not issue any such press release or other public
disclosure prior to such consultation except as may be otherwise required by law
or regulation or by obligations pursuant to any listing arrangement with any
national securities exchange.

5.10. Failure to Fulfill Conditions. In the event that Carnegie or Regent
determines that a material condition to its obligation to consummate the
transactions contemplated hereby cannot be fulfilled on or prior to September
30, 1996 and that it will not waive that condition, it will promptly notify the
other party. Except for any acquisition or merger discussions Carnegie or Regent
may enter into with other parties, unless the Board of Directors of Regent or
Carnegie determines in good faith, after consultation with outside legal
counsel, that taking such action would create a reasonable possibility of a
breach of the fiduciary duties of such Board of Directors in connection with
seeking an Acquisition Transaction that is more favorable to the stockholders of
that party than the Merger, Regent and Carnegie will promptly inform the other
of any facts applicable to Regent or Carnegie, respectively, or their respective
directors or officers, that would be likely to prevent or materially delay

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approval of the Merger by any governmental authority or which would otherwise
prevent or materially delay completion of the Merger.

5.11. Disclosure Supplements. From time to time prior to the Effective
Time, each party hereto will promptly supplement or amend (by written notice to
the other) its respective Disclosure Schedules delivered pursuant hereto with
respect to any matter hereafter arising which, if existing, occurring or known
at the date of this Agreement, would have been required to be set forth or
described in such Disclosure Schedules or which is necessary to correct any
information in such Disclosure Schedules which has been rendered materially
inaccurate thereby. For the purpose of determining satisfaction of the
conditions set forth in Article VI, no supplement or amendment to such
Disclosure Schedules shall correct or cure any warranty which was untrue when
made, but supplements or amendments may be used to disclose subsequent facts or
events to maintain the truthfulness of any warranty.

5.12. Transaction Expenses of Regent. Regent shall advise
Carnegie and Carnegie shall advise Regent, monthly of all
out-of-pocket expenses which Regent or Carnegie, as the case may
be, has incurred in connection with this transaction.

5.13. Closing. The parties hereto shall cooperate and use
reasonable efforts to try to cause the Effective Time to occur on
or before June 30, 1996.

5.14. Employment Matters. Carnegie shall enter into
employment agreements, effective upon the Effective Time, with

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Mr. Thomas L. Gray to serve as President of the Surviving Corporation and the

Surviving Bank for a period of three (3) years, with Mr. Harvey Porter to serve
as the President of the Regent Division of the Surviving Bank for a term of
three (3) years, with Ms. Barbara Teaford to serve as an executive
vice-president of the Surviving Bank for a period of three (3) years and with
Mr. Mark Wolters to serve as an executive vice-president of the Surviving Bank
for a period of three (3) years. Such employment agreements shall provide for
compensation not less than that received by each such party in their current
position, and shall have such other terms as shall be mutually agreeable to the
parties. In addition, Carnegie shall enter into consulting agreements, effective
upon the Effective Time, with Messrs. Abraham Bettinger, David Ring and Bruce
Mahon to provide services to the Surviving Corporation and the Surviving Bank.
Such consulting agreements shall provide that such parties shall receive
compensation not less than the compensation that they currently receive, shall
have terms of two (2) years, and shall have other provisions that the parties
shall find mutually acceptable.

5.15. Tax-Free Reorganization. Neither Carnegie nor Regent shall
intentionally take, fail to take or cause to be taken or not be taken, any
action within its control, whether before or after the Effective Time, which
would disqualify the Merger as a "reorganization" within the meaning of Section
368(a) of the Code.

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5.16. Affiliates.

(a) Promptly, but in any event within two weeks, after the execution and
delivery of this Agreement, Regent shall deliver to Carnegie a letter
identifying all persons whom, to the knowledge of Regent, may be deemed to be
affiliates of Regent under Rule 145 of the 1933 Act, including without
limitation all directors and executive officers of Regent.

(b) Each person who may be deemed an affiliate of Regent under Rule 145 of
the 1933 Act shall execute a letter substantially in the form of Schedule 5.16
hereto agreeing to be bound by the restrictions of Rule 145.

5.17. Agreement of Certain Regent Holders. Within 21 days of the date of
this Agreement, Regent shall: (a) deliver to Carnegie a written agreement
executed by each organizer of Regent and (b) use its best efforts to cause each
other Director and executive officer of Regent to execute and deliver to
Carnegie a written agreement, in each case to the effect that, each such party
agrees with Regent and Carnegie that prior to the Effective Time, such party
will not exercise any Regent Warrants or Regent Options held by such party, and
instead such party shall receive the consideration provided for under Section
2.2 in exchange for such securities. Such agreement shall be in form reasonably
satisfactory to counsel for Carnegie and Regent.

5.18. Indemnification; Directors and Officers' Insurance.

(a) Carnegie agrees that all rights to indemnification or
exculpation now existing in favor of the directors, officers,

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employees and agents of Regent and the Regent Subsidiaries as provided in their
respective charters or By-laws or otherwise in effect as of the date hereof with
respect to matters occurring prior to the Effective Time shall survive the
Merger and shall continue in full force and effect. To the maximum extent
permitted by the NJBCA, such indemnification shall be mandatory rather than
permissive and the Surviving Corporation shall advance expenses in connection
with such indemnification.

(b) In addition to the rights provided for in Section 5.18(a) hereof, and
not in limitation thereof, Carnegie shall indemnify, defend and hold harmless
each present and former director, officer, employee and agent of Regent and the
Regent Subsidiaries ("Indemnified Parties") to the fullest extent permitted by
law for all claims, losses, damages, liabilities, costs, judgments and amounts
paid in settlement, including advancement of expenses (including attorneys'
fees) as incurred in respect of any threatened, pending or contemplated claim,
action, suit or proceeding, whether criminal, civil, administrative or
investigative, including, without limitation, any action by or on behalf of any
or all security holders of Regent or by or in the right of Regent or the
Surviving Corporation, or investigation relating to any action or omission by
such party in its capacity as such (including service to any other entity, plan,
trust or the like at Regent's request) occurring on or prior to the Effective
Time (including, without

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limitation, any which arise out of or relate to the transactions
contemplated by this Agreement).

(c) Carnegie shall maintain in effect for not less than six years from the
Effective Time the policies of directors' and officers' liability insurance most
recently maintained by Regent, provided that Carnegie may substitute therefor
policies with reputable and financially sound carriers of at least the same
coverage containing terms and conditions which are no less advantageous for so
long as such substitution does not result in gaps or lapses in coverage, with
respect to claims arising from or relating to matters occurring prior to the
Effective Time; provided that in no event shall Carnegie be required to expend
more than an amount per year equal to 250% of the current annual premiums paid
by Regent (the "Premium Amount") to maintain or procure insurance coverage
pursuant hereto and further provided that if Carnegie is unable to obtain the
insurance called for by this Section 5.18(c), Carnegie shall obtain as much
comparable insurance as is available for the Premium Amount per year. Carnegie
shall pay all expenses (including attorneys' fees) that may be incurred by any
Indemnified Party in enforcing the indemnity and other obligations provided for
in this Section 5.18.

(d) In the event that Carnegie or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or

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substantially all of its properties and assets to any person, then and in each
such case, proper provisions shall be made so that the successors and assigns of
Carnegie shall assume its obligations as set forth in this Section 5.18.

(e) The provisions of this Section 5.18 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his heirs and his
personal representatives.

5.19 Employee Benefits. Carnegie agrees that, for a period of at least
three years following the Effective Time, Carnegie shall maintain, and shall
cause the Surviving Bank to maintain, benefit plans for the employees of Regent
and the Regent Subsidiaries with terms that, in the aggregate, are substantially
equivalent to or better than those in the benefit plans now in place for such
employees, to the extent permitted under laws and regulations in force from time
to time; to the extent appropriate to carry out the foregoing, Carnegie agrees
that, following the Effective Time, employees of Regent and the Regent
Subsidiaries shall be eligible to participate in the compensation and benefit
plans of Carnegie and CBN on a basis comparable to that of similarly situated
employees of Carnegie and CBN.

ARTICLE VI

CLOSING CONDITIONS

6.1. Conditions of Each Party's Obligations under this
Agreement. The respective obligations of each party under this
Agreement to consummate the Merger shall be subject to the

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satisfaction, or, where permissible under applicable law, waiver at or prior to
the Effective Time of the following conditions:

(a) Approval of Stockholders; SEC Registration. This Agreement and the
transactions contemplated hereby shall have been approved by the requisite vote
of the stockholders of each of Carnegie and Regent; in furtherance thereof, the
stockholders of Carnegie shall have approved an amendment to Carnegie's
Certificate of Incorporation providing for Carnegie Preferred Stock as required
under Section 2.2 hereof. The Registration Statement shall have been declared

effective by the SEC and shall not be subject to a stop order or any threatened
stop order, and the issuance of the Carnegie Common Stock, the Carnegie
Preferred Stock and the New Options shall have been qualified in every state
where such qualification is required under the applicable state securities laws.
The Carnegie Common Stock, the Carnegie Preferred Stock and the New Options to
be issued in connection with the Merger shall have received approval to be
included for quotation on the National Association of Securities Dealers
National Market System.

(b) Regulatory Filings. All necessary regulatory or governmental approvals
and consents (including without limitation any required approval of the OCC and
the FRB) required to consummate the transactions contemplated hereby shall have
been obtained without any term or condition which would materially impair the
value of Regent and the Bank, taken as a whole, to Carnegie or which would
materially impair the value of the

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Carnegie Common Stock, Carnegie Preferred Stock, and the New Options to the
holders of shares of Regent Common Stock, Regent Preferred Stock, Regent Options
or Regent Warrants and who will receive such Carnegie securities pursuant to
Article II hereof. All conditions required to be satisfied prior to the
Effective Time by the terms of such approvals and consents shall have been
satisfied; and all statutory waiting periods in respect thereof shall have
expired.

hereto or a third party that would have the effect of preventing completion of
the Merger; no suit, action or other proceeding shall be pending or threatened
by any governmental body in which it is sought to restrain or prohibit the
Merger or the Bank Merger; and no suit, action or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit the Merger or the Bank Merger or obtain other substantial
monetary or other relief against one or more parties hereto in connection with
this Agreement and which Carnegie or Regent determines in good faith, based upon
the advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger or the Bank Merger.

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(d) Tax-Free Exchange. Carnegie and Regent shall have received an opinion,
satisfactory to Carnegie and Regent, of McCarter & English, counsel for
Carnegie, to the effect that the transactions contemplated hereby will result in
a reorganization (as defined in Section 368(a) of the Code), and accordingly (i)
no gain or loss will be recognized for federal income tax purposes by Carnegie,

Regent, CBN or the Bank to the extent such entities receive and/or distribute
property (including stock and/or securities) which may be received or
distributed on a tax free basis in a reorganization under Section 368(a) or the
Code and (ii) no gain or loss will be recognized for federal income tax purposes
by the stockholders of Regent who exchange their shares of Regent Common Stock
for Carnegie Common Stock or Regent Series A Preferred Stock for Carnegie
Preferred Stock (except to the extent that cash is received in lieu of
fractional shares of Carnegie Common Stock or is paid to holders of Dissenting
Shares), (iii) the basis of any Carnegie Common Stock and Carnegie Preferred
Stock received by the holders of Regent Common Stock and Regent Series A
Preferred Stock will be, in each instance, the same as the basis of the Regent
Common Stock and Regent Series A Preferred Stock surrendered in exchange
therefor and (iv) the holding period of any Carnegie Common Stock or Carnegie
Preferred Stock received by the holders of Regent Common Stock or Regent Series
A Preferred Stock surrendered in exchange therefor will include the holding
period for the Regent Common Stock and Regent Series A Preferred Stock
surrendered therefor.

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6.2. Conditions to the Obligations of Carnegie under this Agreement. The
obligations of Carnegie under this Agreement shall be further subject to the
satisfaction or waiver, at or prior to the Effective Time, of the following
conditions:

(a) Representations and Warranties; Performance of
Obligations of Regent and Bank. The representations and

warranties of Regent contained in this Agreement shall be true and correct in
all material respects on the Closing Date as though made on and as of the
Closing Date. Regent shall have performed in all material respects the
agreements, covenants and obligations necessary to be performed by it prior to
the Closing Date. With respect to any representation or warranty which as of the
Closing Date has required a supplement or amendment to the Regent Disclosure
Schedule to render such representation or warranty true and correct as of the
Closing Date, the representation and warranty shall be deemed true and correct
as of the Closing Date only if (i) the information contained in the supplement
or amendment to the Regent Disclosure Schedule related to events occurring
following the execution of this Agreement and (ii) the facts disclosed in such
supplement or amendment would not either alone, or together with any other
supplements or amendments to the Regent Disclosure Schedule, materially
adversely affect the representation as to which the supplement or amendment
relates.

(b) Consents. Carnegie shall have received the written
consents of any person whose consent is required under the

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applicable instrument in order for Regent or a Regent Subsidiary to enter into

and consummate the transactions contemplated by this Agreement.

(c) Opinion of Counsel. Carnegie shall have received an opinion of Duane,
Morris & Heckscher, counsel to Regent, dated the date of the Closing, in form
and substance reasonably satisfactory to Carnegie, covering the matters set
forth on Schedule 6.2 hereto and any other matters reasonably requested by
Carnegie.

(d) Bank Action. Each of Regent and the Bank shall have
taken all necessary corporate action to effectuate the Bank
Merger immediately following the Effective Time.

(e) Certificates. Regent shall have furnished Carnegie with such
certificates of its officers or other documents to evidence fulfillment of the
conditions set forth in this Section 6.2 as Carnegie may reasonably request.

(f) Fairness Opinion. Carnegie shall have received an opinion from Capital
Consultants, dated as of the date the Proxy Statement/Prospectus is mailed to
the shareholders of Carnegie, to the effect that, in its opinion, the Merger, on
the terms provided for hereunder, is fair to the Stockholders of Carnegie from a
financial point of view, and such opinion shall not have been withdrawn prior to
the Effective Time.

(g) Shareholders Funding Litigation. Regent's claims in
that certain action pending in the United States Bankruptcy Court
for the Eastern District of Pennsylvania entitled In Re:

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Shareholders Funding, Inc., shall be settled in a manner mutually acceptable to
Regent and Carnegie, the terms of which settlement shall be set forth in the
August 30, 1995 letter agreed to by Carnegie and Regent.

(h) Regent's Fourth Quarter Results. For the quarter ended December 31,
1995, Regent shall have net income, as adjusted to exclude securities gains and
losses and other extraordinary items, including fees and costs associated with
the Merger, legal fees, increases in its loan loss provision and other costs
incurred in connection with the Shareholders Funding litigation and as adjusted
to include the effect of the decrease in FDIC insurance premiums for the fourth
quarter of 1995, of at least $368,000. Except as otherwise specified herein,
such net income shall be calculated in accordance with GAAP consistently
applied.

(i) Exercise of Dissenters Rights. In the aggregate, not more than 10% of
the holders of Carnegie Common Stock, Regent Common Stock and Regent Series A
Preferred Stock combined shall have exercised their dissenters rights of
appraisal pursuant to N.J.S.A. 14A:11-1 et seq.

(j) Redemption of Regent Series B, C, D and E Preferred Stock. Prior to or

simultaneously with the Effective Time, Regent shall have completed the
redemption of the Series B, C, D and E Preferred Stock as required by Section
2.2(c) hereof.

6.3. Conditions to the Obligations of Regent under this
Agreement. The obligations of Regent under this Agreement shall

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be further subject to the satisfaction or waiver, at or prior to
the Effective Time, of the following conditions:

(a) Representations and Warranties; Performance of Obligations of Carnegie.
The representations and warranties of Carnegie contained in this Agreement shall
be true and correct in all material respects on the Closing Date as though made
on and as of the Closing Date. Carnegie shall have performed in all material
respects, the agreements, covenants and obligations to be performed by it prior
to the Closing Date. With respect to any representation or warranty which as of
the Closing Date has required a supplement or amendment to the Carnegie
Disclosure Schedule to render such representation or warranty true and correct
as of the Closing Date, the representation and warranty shall be deemed true and
correct as of the Closing Date only if (i) the information contained in the
supplement or amendment to the Carnegie Disclosure Schedule related to events
occurring following the execution of this Agreement and (ii) the facts disclosed
in such supplement or amendment would not either alone,

or together with any other supplements or amendments to the Carnegie Disclosure
Schedule, materially adversely affect the representation as to which the
supplement or amendment relates.

(b) Opinion of Counsel to Carnegie. Regent shall have received an opinion
of McCarter & English, counsel to Carnegie, dated the date of the Closing, in
form and substance reasonably satisfactory to Regent, covering the matters set
forth on

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Schedule 6.3 hereto and any other matters reasonably requested by Regent.

(c) Fairness Opinion. Regent shall have received an opinion from Janney
Montgomery Scott Inc. as of the date of this Agreement, to the effect that, in
its opinion, the consideration to be received by the holders of Regent
securities hereunder is fair to such holders from a financial point of view, and
such opinion shall not have been withdrawn prior to the Effective Time.

(d) Certificates. Carnegie shall have furnished Regent with such
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 6.3 as Regent may
reasonably request.

(e) Bank Action. Each of Carnegie and CBN shall have taken
all necessary corporate action to effectuate the Bank Merger
immediately following the Effective Time.

(f) Carnegie's 1995 Results. For the twelve months ended December 31, 1995,
Carnegie shall have had net income, excluding securities gains and other
extraordinary items, including fees and costs associated with the Merger, of at
least $2.1 million. Such net income shall be calculated in accordance with GAAP,
consistently applied.

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ARTICLE VII

TERMINATION, AMENDMENT AND WAIVER

7.1. Termination. This Agreement may be terminated prior to
the Effective Time, whether before or after approval of this
Agreement by the stockholders of Carnegie or Regent:

(a) By mutual written consent of the Board of Directors of
Carnegie and Regent hereto.

(b) By Carnegie or Regent (i) if the Effective Time shall not have occurred
on or prior to September 30, 1996 or (ii) if a vote of the stockholders of
Carnegie or Regent is taken and either the Carnegie or Regent stockholders fail
to approve this Agreement at their respective meetings (or any adjournment
thereof) held for such purpose, unless in each case the failure of such
occurrence shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth herein to be performed
or observed by such party (or the directors of Regent or Carnegie) at or before
the Effective Time.

(c) By Carnegie or Regent upon written notice to the other if any
application for regulatory or governmental approval necessary to consummate the
Merger and the Bank Merger and the other transactions contemplated hereby shall
have been denied or withdrawn at the request or recommendation of the applicable
regulatory agency or governmental authority or by Carnegie upon written notice
to Regent if any such application is approved with conditions which materially
impair the value of Regent and the

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Bank, taken as a whole, to Carnegie, or which would materially impair the value

of the shares of Carnegie Common Stock, Preferred Stock, Warrants, or Options to
be issued to the holders of Regent Common Stock, Preferred Stock, Warrants or
Options and who will receive Carnegie Securities pursuant to Article II
hereof.

(d) By Carnegie if (i) there shall have occurred a material adverse change
in the business, operations, assets, or financial condition of Regent and the
Bank taken as a whole from that disclosed by Regent on the date of this
Agreement, or (ii) there was a material breach in any representation, warranty,
covenant, agreement or obligation of Regent hereunder, or (iii) if, after giving
effect to all required purchase accounting and market valuation adjustments to
Regent's balance sheet, the transactions contemplated hereby would reduce
Carnegie's tangible per share book value by more than $1.50 compared to
Carnegie's tangible per share book value at the month end preceding the
Effective Time.

(e) By Regent, if (i) there shall have occurred a material adverse change
in the business, operations, assets or financial condition of Carnegie and CBN
taken as a whole from that disclosed by Carnegie on the date of this Agreement,
or (ii) there was a material breach in any representation, warranty, covenant,
agreement or obligation of Carnegie hereunder.

(f) By Carnegie or Regent if any condition to Closing specified under
Article VI hereof applicable to such party cannot

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reasonably be met after giving the other party a reasonable opportunity to cure
any such condition.

(g) By Carnegie, if the Board of Directors of Regent shall (i) withdraw,
modify or change its recommendation or approval in respect of this Agreement in
a manner adverse to Carnegie or (ii) approve or recommend any proposal other
than by Carnegie in respect of an Acquisition Transaction.

(h) By Regent, if the Board of Directors of Carnegie shall (i) withdraw,
modify or change its recommendation or approval in respect of this Agreement in
a manner adverse to Regent or (ii) approve or recommend any proposal other than
by Regent in respect of an Acquisition Transaction.

(i) Assuming Carnegie shall not have contravened Section 5.3 hereof, by
Carnegie, to allow Carnegie to enter into an Agreement in respect of an
Acquisition Transaction.

(j) Assuming Regent shall not have contravened Section 5.3 hereof, by
Regent, to allow Regent to enter into an agreement in respect of an Acquisition
Transaction.

7.2. Effect of Termination. In the event of the termination and abandonment

of this Agreement by either Carnegie or Regent pursuant to Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party or its officers, directors or stockholders except for
Sections 5.5 and 8.1 hereof. Nothing contained herein, however, shall relieve
any party from any liability for any breach of this Agreement.

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7.3. Amendment. This Agreement may be amended by mutual action taken by the
parties hereto at any time before or after adoption of this Agreement by the
holders of Regent securities and the stockholders of Carnegie but, after any
such adoption, no amendment shall be made which reduces or changes the rate or
form of the consideration to be delivered to the holders of Regent securities
without the approval of such holders. This Agreement may not be amended except
by an instrument in writing signed on behalf of Carnegie and Regent.

7.4. Extension; Waiver. The parties may, at any time prior to the Effective
Time of the Merger, (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; or (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in

writing signed on behalf of such party against which the waiver is sought to be
enforced.

ARTICLE VIII

MISCELLANEOUS

8.1. Expenses.

(a) Whether or not the Merger is consummated and except as otherwise
provided in this Section 8.1, all costs and expenses incurred in connection with
this Agreement and the transactions

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contemplated by this Agreement shall be paid by the party
incurring the cost or expense.

(b) Carnegie agrees to pay Regent a fee in immediately available funds
equal to $1,000,000 upon the termination of this Agreement by Carnegie pursuant
to Section 7.1(i) hereof or by Regent pursuant to Section 7.1(h) hereof.

(c) Regent agrees to pay Carnegie a fee in immediately available funds
equal to $1,000,000 upon the termination of this Agreement by Regent pursuant to
Section 7.1(j) hereof or by Carnegie pursuant to Section 7.1(g) hereof.

8.2. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by telecopier with confirming copy sent the same day by registered or
certified mail, postage prepaid, as follows:

(a) If to Carnegie, to:

Carnegie Bancorp
619 Alexander Road
Princeton, New Jersey 08540
Attn: Thomas L. Gray, President
Telecopier No. 609-452-2492

Copy to:

McCarter & English
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102
Attn: Michael Horn, Esq.
Telecopier No. (201) 624-7070

(b) If to Regent, to:

Regent Bancshares Corp.

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1430 Walnut Street
Philadelphia, Pennsylvania 19102
Attn: Harvey Porter, President
Telecopier No. (215) 546-5790

Copy to:

Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, Pennsylvania 19103
Attn: Frederick W. Dreher, Esq.
Telecopier No. (215) 979-1213

or such other addresses as shall be furnished in writing by any party, and any
such notice or communications shall be deemed to have been given as of the date
so delivered or telecopied and mailed.

8.3. Parties in Interest. This Agreement shall be binding upon and shall

inure to the benefit of the parties hereto and their respective successors and
permitted assigns. No assignment of this Agreement may be made except upon the
written consent of the other parties hereto.

8.4. Entire Agreement. This Agreement, which includes the Disclosure
Schedules hereto and the other documents, agreements and instruments executed
and delivered pursuant to or in connection with this Agreement, contains the
entire Agreement between the parties hereto with respect to the transactions
contemplated by this Agreement and supersedes all prior negotiations,
arrangements or understandings, written or oral, with respect thereto, including
the Letter of Intent.

8.5. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the
same agreement and each of which shall be deemed an original.

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8.6. Governing Law. This Agreement shall be governed by the
laws of the State of New Jersey, without giving effect to the
principles of conflicts of laws thereof.

8.7. Descriptive Headings. The descriptive headings of this
Agreement are for convenience only and shall not control or
affect the meaning or construction of any provision of this
Agreement.

8.8 Non-Survival of Representations and Warranties. The

representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement. This Section 8.8 shall not
limit any covenant or agreement of the parties hereto which, by its terms,
contemplates performance after the Effective Time.

IN WITNESS WHEREOF, Carnegie, CBN, the Bank and Regent have
caused this Agreement to be executed by their duly authorized
officers as of the day and year first above written.

ATTEST: CARNEGIE BANCORP

By: By:
Chairman and Chief Executive
Officer

ATTEST: CARNEGIE BANK, N.A.

By: By:
President and Chief Executive
Officer

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ATTEST: REGENT BANCSHARES CORP.

By: By:
President and Chief Executive
Officer

ATTEST: REGENT NATIONAL BANK

By: By:
President and Chief Executive
Officer

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DRAFT

[Letterhead of Capital Consultants of Princeton, Inc.]

December , 1995

Board of Directors
Carnegie Bancorp
619 Alexander Road
Princeton, New Jersey 08540

Members of the Board:

Carnegie Bancorp ("CARNEGIE") has entered into a Merger Agreement and a
Plan of Merger, amended and restated ("AGREEMENT") with Regent Bancshares Corp.
("REGENT") which provides for CARNEGIE to acquire all of the outstanding REGENT
Common and Preferred Stock ("MERGER") on the terms and subject to the conditions
set forth in the AGREEMENT.

The MERGER is subject to approval of shareholders of both CARNEGIE and
REGENT and regulatory authorities and the AGREEMENT provides REGENT will be
merged with and into CARNEGIE and holders of REGENT securities will be entitled
to receive CARNEGIE Common and Preferred Stock as follows:

(a) each share of REGENT Common Stock will be converted
into 0.75 shares of CARNEGIE Common Stock;

(b) each share of REGENT Series A Convertible Preferred Stock will be
converted into one share of a newly authorized Series A of CARNEGIE
Convertible Preferred Stock which will be convertible into 0.75 share
of CARNEGIE Common Stock;

(c) each share of REGENT Series B, Series C, and Series D
Convertible Preferred Stock will be called for
redemption in accordance with its terms at $10.00 per
share not later than 30 days prior to the anticipated
Effective Time of the Merger, unless theretofore
converted in accordance with its terms into 1.177 share
of REGENT Common Stock which would be converted in the

MERGER into 0.75 shares of CARNEGIE Common Stock;

(d) each share of REGENT's Series E Convertible Preferred Stock will be
called for redemption in accordance with its terms at $10.00 per share
not later than 30 days prior to the anticipated Effective Time of the
MERGER, unless theretofore converted in accordance with its terms into
one share of REGENT Common stock which would be converted in the
MERGER into 0.75 shares of CARNEGIE

Common Stock;

(e) outstanding options to purchase an aggregate of 274,241 shares of
REGENT Common Stock held by the organizers of REGENT will be converted
into New Options to purchase an aggregate of 174,750 shares of
CARNEGIE Common Stock;

(f) outstanding warrants to purchase an aggregate of 50,022 shares of
REGENT Common Stock held by the organizers of REGENT will be converted
into an aggregate of 12,168 shares of CARNEGIE Common Stock;

(g) outstanding options to purchase an aggregate of 147,124 shares of
REGENT Common Stock held by the underwriter of REGENT's initial public
offering, will be converted into an aggregate of 7,483 shares of
CARNEGIE Common Stock; and

(h) all other outstanding options and warrants to purchase REGENT Common
Stock will be converted into CARNEGIE Common Stock at the rate of one
share of CARNEGIE Common Stock for each option and warrant
representing rights to purchase 7 1/2 shares of REGENT Common Stock.

No fractional shares of CARNEGIE Common Stock will be issued. Cash will be
paid for fractional shares of CARNEGIE Common Stock to which holders of REGENT
securities would be otherwise entitled, determined in the manner provided in the
AGREEMENT.

You have requested our opinion as to whether the consideration offered to
REGENT in the MERGER is fair, from a financial point of view, to the
shareholders of CARNEGIE.

Capital Consultants of Princeton, Inc. ("CAPITAL CONSULTANTS"), as a
customary part of its investment banking business, is engaged in the valuation
of commercial banking and thrift institutions and their securities in connection
with mergers and acquisitions, private placements and valuations for estate,
corporate and other purposes.

In arriving at our opinion, we have reviewed and analyzed, among other
things; (i) the AGREEMENT, (ii) the CARNEGIE Registration Statement on Form S-4,
filed with respect to the securities to be issued in the MERGER, (iii) publicly
available information relating to CARNEGIE and REGENT including their respective
annual reports to shareholders for the years ended December 31, 1992 through

1994, Annual Reports on Form 10-K filed with the Securities and Exchange
Commission ("SEC") for the years ended December 31, 1992 through 1994 with
regard to REGENT and for the year ended December 31, 1994 with regard to
CARNEGIE, the Consolidated Statement of Financial Condition as of December 31,

1994, 1993 and 1992 and the related Consolidated Statements of Income, Changes
in Shareholders' Equity and Cash Flows for the three year period ended December
31, 1994 included therein, and the quarterly reports to shareholders and
Quarterly Reports on Form 10-Q filed with the SEC for the periods ended March
31, 1995, and June 30, 1995 and September 30, 1995; (iv) certain historical
operating and financial information provided to CAPITAL CONSULTANTS by the
managements of CARNEGIE and REGENT; (v) historical and current market data for
the CARNEGIE Common Stock and the REGENT Common and Preferred Stock; (vi) the
publicly available financial data and stock market performance data of publicly
traded banking and thrift institutions which CAPITAL CONSULTANTS deemed
generally comparable to CARNEGIE and REGENT; (vii) the nature and terms of
recent acquisitions and merger transactions involving banking institutions and
bank and thrift holding companies that CAPITAL CONSULTANTS considered reasonably
similar to CARNEGIE and REGENT in financial character, operating character,
historical performance, geographic market and economy; and (viii) such other
studies, analyses, inquiries and reports as CAPITAL CONSULTANTS deemed
appropriate. In addition, CAPITAL CONSULTANTS conducted meetings with members of
senior management of CARNEGIE and REGENT for purposes of reviewing the future
prospects of CARNEGIE and REGENT. CAPITAL CONSULTANTS evaluated the pro forma
ownership of the CARNEGIE Common Stock by REGENT security holders, relative to
the pro forma contribution of REGENT'S assets, deposits, equity and earnings to
the pro forma resulting company in the MERGER. CAPITAL CONSULTANTS also took
into account its experience in other transactions, as well as its knowledge of
the banking and thrift industries and its experiences in securities valuations.

While we have taken care in our investigation and analysis, we have relied
upon and assumed the accuracy, completeness and fairness of the financial and
other information provided to us or publicly available, and have not attempted
to verify same. We have not made or obtained any independent evaluations or
appraisals of any properties, assets or liabilities of CARNEGIE or REGENT.

In conducting our analysis and arriving at our opinion, we have considered
such financial and other factors as we have deemed appropriate in the
circumstances. In rendering our opinion, we have assumed that in the course of
obtaining the necessary regulatory approvals for the MERGER, no conditions will
be imposed that will have a material adverse effect on the contemplated benefits
of the MERGER on a pro forma basis to CARNEGIE. Our opinion is necessarily based
upon market, economic, and other conditions as they exist and can be evaluated
as of the date of this letter.

Based upon and subject to the foregoing, it is our opinion as investment
bankers that the consideration to be paid to REGENT in the MERGER is fair, from
a financial point of view, to the shareholders of CARNEGIE.

This opinion does not represent investment advice or a recommendation to
the current shareholders of CARNEGIE or REGENT, or any other party regarding the
valuation of the common and preferred shares of CARNEGIE or REGENT for potential
purchase.

Very truly yours,

CAPITAL CONSULTANTS OF PRINCETON, INC.

APPENDIX C

[LETTERHEAD OF JANNEY MONTGOMERY SCOTT INC.]

___________ , 1995

Board of Directors
Regent Bancshares Corp.
1430 Walnut Street
Philadelphia, Pennsylvania 19102

Members of the Board:

Regent Bancshares Corp., ("Regent") and Carnegie Bancorp. ("Carnegie") have
entered into an Agreement providing for the proposed merger ("Proposed Merger")
of Regent with and into Carnegie. The terms of the Proposed Merger are set forth
in the Agreement and Plan of Merger (the "Agreement") dated August 30, 1995, and
provide that holders of Regent securities receive the consideration
("Consideration") as set forth in Section 2.2 of the Agreement. You have
requested our opinion, from a financial point of view, as to the fairness of the
Consideration to be received in the Proposed Merger by the holders of Regent's
securities (being understood as Regent Common Stockholders, Regent Preferred
Stockholders, Regent Optionholders, and Regent Warrantholders as such terms are
described in the Agreement).

Janney Montgomery Scott Inc., as part of its investment banking business,
regularly is engaged in the valuation of assets, securities and companies in
connection with various types of asset and security transactions, including
mergers, acquisitions, private placements and valuations for various other
purposes, and in the determination of adequate consideration in such
transactions.

In arriving at our opinion, we have, among other things: (i) reviewed the
historical financial performances, current financial positions and general
prospects of Regent and Carnegie, (ii) reviewed the Agreement, (iii) reviewed
and analyzed stock market performance of Regent and Carnegie, (iv) considered
the terms and conditions of the Proposed Merger between Regent and Carnegie as
compared with the terms and conditions of comparable bank mergers and
acquisitions, (v) met and/or communicated with certain members of Regent's and
Carnegie's senior management to discuss their respective operations, historical
financial statements, and future prospects, and (vi) conducted such other
financial analyses, studies and investigations as we deemed appropriate.

Our opinion is given in reliance on information and representations made or
given by Regent and Carnegie, and their respective officers, directors,
auditors, counsel and other agents, and on filings, releases and other
information issued by Regent and Carnegie including financial statements,
financial projections, and stock price data as well as certain information from
recognized independent sources. We have not independently verified the
information concerning Regent and Carnegie nor other data which we have
considered in our review and, for purposes of the opinion set forth below, we
have assumed and relied upon the accuracy and completeness of all such
information and data. Additionally, we assume that the Proposed Merger is, in
all respects, lawful under applicable law.

With regard to financial and other information relating to the general prospects
of Regent and Carnegie, we have assumed that such information has been
reasonably prepared and reflects the best currently available estimates and
judgments of the managements of Regent and Carnegie as to Regent's and
Carnegie's most likely future performance. In rendering our opinion, we have
assumed that in the course of obtaining the necessary regulatory approvals for
the Proposed Merger, and in preparation of the final proxy statement, no
conditions will be imposed that will have a material adverse effect on the
contemplated benefits of the Proposed Merger to Regent.

Our opinion is based upon information provided to us by the managements of
Regent and Carnegie, as well as market, economic, financial, and other
conditions as they exist and can be evaluated only as of the date hereof and
speaks to no other period. Our opinion pertains only to the financial
consideration of the Proposed Merger and does not constitute a recommendation to
the Board of Regent and does not constitute a recommendation to Regent's
shareholders as to how such shareholders should vote on the Agreement.

Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Consideration is fair, from a financial point of view, to the
holders of Regent's securities.

Sincerely,

JANNEY MONTGOMERY SCOTT INC.

APPENDIX D

SECTION 14A:11-3 OF THE NEW JERSEY
BUSINESS CORPORATION ACT

N.J.S.A. 14A:11-1. Right of shareholders to dissent. (1)
Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions.

(a) any plan of merger or consolidation to which the
corporation is a party, provided that, unless the certificate of
incorporation otherwise provides

(i) a shareholder shall not have the right to dissent
from any plan of merger or consolidation with respect to
shares

(A) of a class or series which is listed on a
national securities exchange or is held of record by not less
than 1,000 holders on the record date fixed to determine the
shareholders entitled to vote upon the plan of merger or
consolidation; or

(B) for which, pursuant to the plan of merger or
consolidation, he will receive (x) cash, (y) shares,
obligations or other securities which, upon consummation of
the merger or consolidation, will either be listed on a
national securities exchange or held of record by not less
than 1,000 holders, or (z) cash and such securities;

(ii) a shareholder of a surviving corporation shall not have
the right to dissent from a plan of merger, if the merger did not
require for its approval the vote of such shareholders as provided in
section 14A:10-5.1 or in subsections 14A:10-3(4), 14A:10-7(2) or
14A:10-7(4); or

(b) any sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation not in the usual or regular
course of business as conducted by such corporation, provided that, unless the
certificate of incorporation otherwise provides, the shareholder shall not have
the right to dissent

(i) with respect to shares of a class or series which, at the
record date fixed to determine the shareholders entitled to vote upon
such transaction, is listed on a national securities exchange or is
held of record by not less than 1,000 holders; or

(ii) from a transaction pursuant to a plan of dissolution of
the corporation which provides for distribution of substantially all of
its net assets to shareholders in accordance with their respective

interests

within one year after the date of such transaction, where such
transaction is wholly for

(A) cash; or

(B) shares, obligations or other securities which, upon
consummation of the plan of dissolution will either be listed
on a national securities exchange or held of record by not
less than 1,000 holders; or

(iii) from a sale pursuant to an order of a court
having jurisdiction.

(2) Any shareholder of a domestic corporation shall have the right to
dissent with respect to any shares owned by him which are to be acquired
pursuant to section 14A:10-9.

(3) A shareholder may not dissent as to less than all of the shares
owned beneficially by him and with respect to which a right of dissent exists. A
nominee or fiduciary may not dissent on behalf of any beneficial owner as to
less than all of the shares of such owner with respect to which the right of
dissent exists.

(4) A corporation may provide in its certificate of incorporation that
holders of all its shares, or of a particular class or series thereof, shall
have the right to dissent from specified corporate actions in addition to those
enumerated in subsection 14A:11-1(1), in which case the exercise of such right
of dissent shall be governed by the provisions of this Chapter.

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N.J.S.A. 14A:11-2. Notice of dissent; demand for payment; endorsement
of certificates. (1) Whenever a vote is to be taken, either at a meeting of
shareholders or upon written consents in lieu of a meeting pursuant to section

14A:5-6, upon a proposed corporate action from which a shareholder may dissent
under section 14A:11-1, any shareholder electing to dissent from such action
shall file with the corporation before the taking of the vote of the
shareholders on such corporate action, or within the time specified in paragraph
14A:5-6(2)(b) or 14A:5-6(2)(c), as the case may be, if no meeting of
shareholders is to be held, a written notice of such dissent stating that he
intends to demand payment for his shares if the action is taken.

(2) Within 10 days after the date on which such corporate action takes
effect, the corporation, or, in the case of a merger or consolidation, the
surviving or new corporation, shall give written notice of the effective date of
such corporate action, by certified mail to each shareholder who filed written
notice of dissent pursuant to subsection 14A:11-2(1), except any who voted for
or consented in writing to the proposed action.

(3) Within 20 days after the mailing of such notice, any shareholder to
whom the corporation was required to give such notice and who has filed a
written notice of dissent pursuant to this section may make written demand on
the corporation, or, in the case of a merger or consolidation, on the surviving
or new corporation, for the payment of the fair value of his shares.

(4) Whenever a corporation is to be merged pursuant to section
14A:10-5.1 or subsection 14A:10-7(4) and shareholder approval is not required
under subsections 14A:10-5.1(5) and 14A:10-5.1(6), a shareholder who has the
right to dissent pursuant to section 14A:11-1 may, not later than 20 days after
a copy or summary of the plan of such merger and the statement required by
subsection 14A:10-5.1(2) is mailed to such shareholder, make written demand on
the corporation or on the surviving corporation, for the payment of the fair
value of his shares.

(5) Whenever all the shares, or all the shares of a class or series,
are to be acquired by another corporation pursuant to section 14A:10-9, a
shareholder of the corporation whose shares are to be acquired may, not later
than 20 days after the mailing of notice by the acquiring corporation pursuant
to paragraph 14A:10-9(3)(b), make written demand on the acquiring corporation
for the payment of the fair value of his shares.

(6) Not later than 20 days after demanding payment of his shares
pursuant to this section, the shareholder shall submit the certificate or
certificates representing his shares to the corporation upon which such demand
has been made for notation thereon that such demand has been made, whereupon
such

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certificate or certificates shall be returned to him. If shares represented by a
certificate on which notation has been made shall be transferred, each new
certificate issued therefor shall bear similar notation, together with the name
of the original dissenting holder of such shares, and a transferee of such
shares shall acquire by such transfer no rights in the corporation other than
those which the original dissenting shareholder had after making a demand for
payment of the fair value thereof.

(7) Every notice or other communication required to be given or made by
a corporation to any shareholder pursuant to this Chapter shall inform such
shareholder of all dates prior to which action must be taken by such shareholder
in order to perfect his rights as a dissenting shareholder under this Chapter.

N.J.S.A. 14A:11-3. "Dissenting shareholder" defined; date
for determination of fair value. (1) A shareholder who has made
demand for the payment of his shares in the manner prescribed by
subsection 14A:11-2(3), 14A:11-2(4) or 14A:11-2(5) is hereafter
in this Chapter referred to as a "dissenting shareholder."

(2) Upon making such demand, the dissenting shareholder shall cease to
have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights of a dissenting shareholder under this
Chapter.

(3) "Fair value" as used in this Chapter shall be
determined

(a) As of the day prior to the day of the meeting of
shareholders at which the proposed action was approved or as of the day
prior to the day specified by the corporation for the tabulation of
consents to such action if no meeting of shareholders was held; or

(b) In the case of a merger pursuant to section 14A:10- 5.1 or
subsection 14A:10-7(4) in which shareholder approval is not required,
as of the day prior to the day on which the board of directors approved
the plan of merger; or

(c) In the case of an acquisition of all the shares or all the
shares of a class or series by another corporation pursuant to section
14A:10-9, as of the day prior to the day on which the board of
directors of the acquiring corporation authorized the acquisition, or,
if a shareholder vote was taken pursuant to section 14A:10-12, as of
the day provided in paragraph 14A:11-3(3)(a).

In all cases, "fair value" shall exclude any appreciation or
depreciation resulting from the proposed action.

-4-

N.J.S.A. 14A:11-4. Termination of right of shareholder to
be paid the fair value of his shares. (1) The right of a
dissenting shareholder to be paid the fair value of his shares
under this Chapter shall cease if

(a) he has failed to present his certificates for notation as
provided by subsection 14A:11-2(6),unless a court having jurisdiction,
for good and sufficient cause shown, shall otherwise direct;

(b) his demand for payment is withdrawn with the
written consent of the corporation;

provided in this Chapter and no action for the determination of fair
value by the Superior Court is commenced within the time provided in
this Chapter;

(d) the Superior Court determines that the shareholder
is not entitled to payment for his shares;

(e) the proposed corporate action is abandoned or
rescinded; or

(f) a court having jurisdiction permanently enjoins or
sets aside the corporate action.

(2) In any case provided for in subsection 14A:11-4(1), the rights of
the dissenting shareholder as a shareholder shall be reinstated as of the date
of the making of a demand for payment pursuant to subsections 14A:11-2(3),
14A:11-2(4) or 14A:11-2(5) without prejudice to any corporate action which has
taken place during the interim period. In such event, he shall be entitled to
any intervening preemptive rights and the right to payment of any intervening
dividend or other distribution, or, if any such rights have expired or any such
dividend or distribution other than in cash has been completed, in lieu thereof,
at the election of the board, the fair value thereof in cash as of the time of
such expiration or completion.

-5-

N.J.S.A. 14A:11-5. Rights of dissenting shareholder. (1) A

dissenting shareholder may not withdraw his demand for payment of
the fair value of his shares without the written consent of the
corporation.

(2) The enforcement by a dissenting shareholder of his right to receive
payment for his shares shall exclude the enforcement by such dissenting
shareholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in subsection 14A:11-4(2) and except that
this subsection shall not exclude the right of such dissenting shareholder to
bring or maintain an appropriate action to obtain relief on the ground that such
corporate action will be or is ultra vires, unlawful or fraudulent as to such
dissenting shareholder.

N.J.S.A. 14A:11-6. Determination of fair value by agreement. (1) Not
later than 10 days after the expiration of the period within which shareholders
may make written demand to be paid the fair value of their shares, the
corporation upon which such demand has been made pursuant to subsections 14A:11-
2(3), 14A:11-2(4) or 14A:11-2(5) shall mail to each dissenting shareholder the
balance sheet and the surplus statement of the corporation whose shares he
holds, as of the latest available date which shall not be earlier than 12 months
prior to the making of such offer and a profit and loss statement or statements
for not less than a 12-month period ended on the date of such balance sheet or,
if the corporation was not in existence for such 12-month period, for the

portion thereof during which it was in existence. The corporation may accompany
such mailing with a written offer to pay each dissenting shareholder for his
shares at a specified price deemed by such corporation to be the fair value
thereof. Such offer shall be made at the same price per share to all dissenting
shareholders of the same class, or, if divided into series, of the same series.

(2) If, not later than 30 days after the expiration of the 10-day
period limited by subsection 14A:11-6(1), the fair value of the shares is agreed
upon between any dissenting shareholder and the corporation, payment therefor
shall be made upon surrender of the certificate or certificates representing
such shares.

N.J.S.A. 14A:11-7. Procedure on failure to agree upon fair value;
commencememt of action to determine fair value. (1) If the fair value of the
shares is not agreed upon within the 30-day period limited by subsection
14A:11-6(2), the dissenting shareholder may serve upon the corporation upon
which such demand has been made pursuant to subsections 14A:11-2(3), 14A:11-2(4)
or 14A:11-2(5) a written demand that it commence an action in the Superior Court
for the determination of the fair value of the shares. Such demand shall be
served not later than 30 days after

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the expiration of the 30-day period so limited and such action shall be
commenced by the corporation not later than 30 days after receipt by the
corporation of such demand, but nothing herein shall prevent the corporation
from commencing such action at any earlier time.

(2) If a corporation fails to commence the action as provided in
subsection 14A:11-7(1), a dissenting shareholder may do so in the name of the
corporation, not later than 60 days after the expiration of the time limited by
subsection 14A:11-7(1)in which the corporation may commence such an action.

N.J.S.A. 14A:11-8. Action to determine fair value;
jurisdiction of court; appointment of appraiser. In any action
to determine the fair value of shares pursuant to this Chapter:

(a) The Superior Court shall have jurisdiction and may
proceed in the action in a summary manner or otherwise;

(b) All dissenting shareholders, wherever residing, except
those who have agreed with the corporation upon the price to be paid
for their shares, shall be made parties thereto as an action against
their shares quasi in rem;

(c) The court in its discretion may appoint an appraiser to
receive evidence and report to the court on the question of fair value,
who shall have such power and authority as shall be specified in the

order of his appointment; and

(d) The court shall render judgment against the corporation
and in favor of each shareholder who is a party to the action for the
amount of the fair value of his shares.

N.J.S.A. 14A:11-9. Judgment in action to determine fair
value. (1) A judgment for the payment of the fair value of
shares shall be payable upon surrender to the corporation of the
certificate or certificates representing such shares.

(2) The judgment shall include an allowance for interest at such rate
as the court finds to be equitable, from the date of the dissenting
shareholder's demand for payment under subsections 14A:11-2(3), 14A:11-2(4) or
14A:11-2(5) to the day of payment. If the court finds that the refusal of any
dissenting shareholder to accept any offer of payment, made by the corporation
under section 14A:11-6, was arbitrary, vexatious or otherwise not in good faith,
no interest shall be allowed to him.

N.J.S.A. 14A:11-10. Costs and expenses of action. The costs
and expenses of bringing an action pursuant to section 14A:11-8
shall be determined by the court and shall be apportioned and

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assessed as the court may find equitable upon the parties or any of them. Such
expenses shall include reasonable compensation for and reasonable expenses of
the appraiser, if any, but shall exclude the fees and expenses of counsel for
and experts employed by any party; but if the court finds that the offer of
payment made by the corporation under section 14A:11-6 was not made in good
faith, or if no such offer was made, the court in its discretion may award to
any dissenting shareholder who is a party to the action reasonable fees and
expenses of his counsel and of any experts employed by the dissenting
shareholder.

N.J.S.A. 14A:11-11. Disposition of shares acquired by corporation. (1)
The shares of a dissenting shareholder in a transaction described in paragraph
14A:11-1(1)(b) and the shares of a dissenting shareholder of the surviving
corporation in a merger shall become reacquired by the corporation which issued
them upon the payment of the fair value of shares. Such shares shall be
cancelled if reacquired out of stated capital or if the plan of merger so
requires; otherwise they shall become treasury shares.

(2) In a merger or consolidation, if the surviving or new corporation
pays out of surplus the fair value of the shares of dissenting shareholders of
the merged or constituent corporation, the shares of the surviving or new
corporation into which such shares would have been converted under the plan of
merger or consolidation shall become treasury shares of such corporation, unless
the plan shall provide otherwise.

(3) In an acquisition of shares pursuant to section 14A:10-9, the
shares of a dissenting shareholder shall become the property of the acquiring

corporation upon the payment by the acquiring corporation of the fair value of
such shares. Such payment may be made, with the consent of the acquiring
corporation, by the corporation which issued the shares, in which case the
shares so paid for shall become reacquired by the corporation which issued them
and shall be cancelled.

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APPENDIX E

CERTIFICATE OF AMENDMENT
TO THE CERTIFICATE OF INCORPORATION
OF
CARNEGIE BANCORP

Dated: As of ( , 1995)

Pursuant to the provisions of Section 14A:9-2(4) and Section
14A:9-4(3), Corporations, General, of the New Jersey Statutes, the undersigned
corporation executes the following Certificate of Amendment to its Certificate
of Incorporation:

1. The name of the corporation is CARNEGIE BANCORP (the
"Corporation").

2. The following amendments to the Certificate of Incorporation were
approved by the directors on the ___ day of ______, 1995 and duly adopted by the
shareholders of the corporation on the ____ day of _______, 199___:

RESOLVED: that Article V of the Certificate of Incorporation is
amended to read in its entirety as follows:

ARTICLE V
CAPITAL STOCK

(A) The total authorized capital stock of the Corporation shall be
6,500,000 shares, consisting of 5,000,000 shares of Common Stock and 1,500,000
shares of Preferred Stock which may be issued in one or more classes or series.
The shares of Common Stock shall constitute a single class and shall be without
nominal or par value. The shares of Preferred Stock of each class or series
shall be without nominal or par value, except that the amendment authorizing the
initial issuance of any class or series, adopted by the Board of Directors as
provided herein, may provide that shares of any class or series shall have a
specified par value per share, in which event all of the shares of such class or
series shall have the par value per share so specified.

(B) The Board of Directors of the Corporation is expressly authorized
from time to time to adopt and to cause to be executed

and filed without further approval of the shareholders amendments to this
Certificate of Incorporation authorizing the issuance of one or more classes or
series of Preferred Stock for such consideration as the Board of Directors may
fix. In an amendment authorizing any class or series of Preferred Stock, the

Board of Directors is expressly authorized to determine:

(a) The distinctive designation of the class or series and the
number of shares which will constitute the class or series,
which number may be increased or decreased (but not below the
number of shares then outstanding in that class or above the
total shares authorized herein) from time to time by action of
the Board of Directors.

(b) The dividend rate of the shares of the class or series,
whether dividends will be cumulative, and, if so, from what
date or dates;

(c) The price or prices at which, and the terms and
conditions on which, the shares of the class or series
may be redeemed at the option of the Corporation;

(d) Whether or not the shares of the class or series will be
entitled to the benefit of a retirement or sinking fund to be
applied to the purchase or redemption of such shares and, if
so entitled, the amount of such fund and the terms and
provisions relative to the operation thereof;

(e) Whether or not the shares of the class or series will be
convertible into, or exchangeable for, any other shares of
stock of the Corporation or other securities, and if so
convertible or exchangeable, the conversion price or prices,
or the rates of exchange, and any adjustments thereof, at
which such conversion or exchange may be made, and any other
terms and conditions of such conversion or exchange;

(f) The rights of the shares of the class or series in
the event of voluntary or involuntary liquidation,
dissolution or winding up of the Corporation;

(g) Whether or not the shares of the class or series will have
priority over, parity with, or be junior to the shares of any
other class or series in any respect, whether or not the
shares of the class or series will be entitled to the benefit
of limitations restricting the issuance of shares of any other
class or series having priority over or on parity with the
shares of such class or series and whether or not the shares
of the class or series are entitled to restrictions on the
payment of dividends on, the making of other distributions in
respect of, and the purchase or

redemption of shares of any other class or series of Preferred
Stock or Common Stock ranking junior to the shares of the
class or series;

(h) Whether the class or series will have voting rights, in

addition to any voting rights provided by law, and if so, the
terms of such voting rights; and

(i) Any other preferences, qualifications, privileges, options
and other relative or special rights and limitations of that
class or series.

3. The number of shares of common stock entitled to vote on the amendments
was ________ shares. ____________ shares of common stock voted for the
amendments, _______ shares of common stock voted against the amendments and
________ shares of common stock abstained from voting on the amendments.

IN WITNESS WHEREOF the undersigned has caused this
certificate to be executed by its duly qualified officer as of the date and year
first written above.

CARNEGIE BANCORP

By:__________________________
Thomas L. Gray, Jr.
President and Chief
Executive Officer

APPENDIX F

CARNEGIE BANCORP

1995 DIRECTOR STOCK OPTION PLAN

Section 1. Purpose

The Carnegie Bancorp 1995 Director Stock Option Plan (the
"Plan") is hereby established to foster and promote the long-term success of
Carnegie Bancorp (the "Corporation") and its shareholders by providing directors
with an equity interest in the Corporation. The Plan will assist the Corporation
in attracting and retaining the highest quality of experienced persons as
directors and in aligning the interests of such directors more closely with the
interests of the Corporation's shareholders.

Section 2. Definitions

Capitalized terms not specifically defined elsewhere herein
shall have the following meaning:

"Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.

"Board" means the Board of Directors of the Corporation.

"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated thereunder.

"Committee" means the Stock Option Committee of the Board (or
any successor committee of the Board responsible for administering the Plan),
which shall consist of two or more directors to administer the Plan and perform
the functions set forth herein. The Committee may consist of the entire Board.

"Common Stock" or "Stock" means the common stock, no par
value, of the Corporation.

"Corporation" means Carnegie Bancorp and any present or future
subsidiary corporations of Carnegie Bancorp (as defined in Section 424 of the
Code) or any successor to such corporations.

"Disability" shall mean permanent and total disability which
if the Director were an employee of the Corporation would be treated as a total
disability under the term of the Corporation's long-term disability plan for
employees as in effect from time to time; provided, however, with respect to a
Participant who has been granted an Incentive Stock Option such term shall have
the meaning set forth in Section 422(c)(6) of the Code.

"Fair Market Value" means, with respect to shares of Common

Stock, the fair market value as determined by the Committee in good faith and in
a manner established by the Committee from time to time; provided, however, so
long as the shares of Common Stock are last sale reported over the counter
securities, then the

"fair market value" of such shares on any date shall be the closing price
reported in the consolidated reporting system, on the business day immediately
preceding the date in question, as reported on the NASDAQ system.

"Incentive Stock Option" means an option to purchase shares of
Common Stock granted to a Participant under the Plan which is intended to meet
the requirements of Section 422 of the Code.

"Non-Qualified Stock Option" means an option to purchase
shares of Common Stock granted to a Participant under the Plan which is not
intended to be an Incentive Stock Option.

"Option" means an Incentive Stock Option or a Non-
Qualified Stock Option.

"Participant" means a member of the Board of Directors of the
Corporation or its subsidiaries selected by the Committee to receive an Option
under the Plan.

"Plan" means the Carnegie Bancorp 1995 Director Stock
Option Plan.

"Retirement" means termination of employment in
accordance with the retirement provisions of any retirement or

pension plan maintained by the Corporation or any of its subsidiaries.

Section 3. Administration

(a) The Plan shall be administered by the Committee. Among
other things, the Committee shall have authority, subject to the terms of the

Plan to grant Options, to determine the individuals to whom and the time or
times at which Options may be granted, and to determine the terms and conditions
of any Option granted hereunder, and the exercise price thereof.

(b) Subject to the other provisions of the Plan, the Committee

shall have authority to adopt, amend, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, to interpret the provisions of the Plan
and any Option and to decide all disputes arising in connection with the Plan.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole and
absolute discretion. The Committee's decision and interpretations shall be final
and binding. Any action of the Committee with respect to the administration of
the Plan shall be taken pursuant to a majority vote or by the unanimous written
consent of its members.

(c) The Committee may employ such legal counsel, consultants
and agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent.

Section 4. Eligibility and Participation

Members of the Board of Directors of the Corporation shall be
eligible to participate in the Plan. The Participants under the Plan shall be
selected from time to time by the Committee, in its sole discretion, from among
those eligible, and the Committee shall determine in its sole discretion the
numbers of shares to be covered by the Option or Options granted to each
Participant. Options intended to qualify as Incentive Stock Options shall be
granted only to persons who are eligible to receive such options under Section
422 of the Code.

Section 5. Shares of Stock Available for Options

(a) The maximum number of shares of Common Stock which may be
issued and purchased pursuant to Options granted under the Plan is 154,000,
subject to the adjustments as provided in Section 5 and Section 7, to the extent
applicable. If an Option granted under this Plan expires or terminates before
exercise or is forfeited for any reason, without a payment in the form of Common

Stock being granted to the Participant, the shares of Common Stock subject to
such Option, to the extent of such expiration, termination or forfeiture, shall
again be available for subsequent Option grant under Plan. Shares of Common
Stock issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.

(b) In the event that the Committee determines, in its sole
discretion, that any stock dividend, stock split, reverse stock split or

combination, extraordinary cash dividend, creation of a class of equity
securities, recapitalization, reclassification, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below Fair
Market Value, or other similar transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits or potential benefits
intended to be granted or made available under the Plan to Participants, the
Committee shall have the right to proportionately and appropriately adjust
equitably any or all of (i) the maximum number and kind of shares of Common
Stock in respect of which Options may be granted under the Plan to Participants,
(ii) the number and kind of shares of Common Stock subject to outstanding
Options held by Participants, and (iii) the exercise price with respect to any
Options held by Participants, without changing the aggregate purchase price as
to which such Options remains exercisable, and if considered appropriate, the

Committee may make provision for a cash payment with respect to any outstanding
Options held by a Participant, provided that no adjustment shall be made
pursuant to this Section if such adjustment would cause the Plan to fail to
comply with Section 422 of the Code with regard to any Incentive Stock Options
granted hereunder. No fractional Shares shall be issued on account of any such
adjustment.

(c) Any adjustments under this Section will be made by the
Committee, whose determination as to what adjustments, if any, will be made and
the extent thereof will be final, binding and conclusive.

Section 6. Options

(a) Subject to Federal and state statutes then applicable and
the provisions of the Plan, the Committee may grant Incentive Stock Options to
directors who are also officers of the Corporation and Non-Qualified Stock
Options to all directors and determine the number of shares to be covered by
each Option, the Option price therefor, the term of the Option, and the other
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with

Section 422 of the Code. Anything in the Plan to the contrary notwithstanding,
no term of the Plan relating to Incentive Stock Options shall be interpreted,
amended

or altered, nor shall any discretion or authority granted to the Committee under
the Plan be so exercised, so as to disqualify the Plan, or without the consent
of the Participant, any Incentive Stock Option granted under the Plan pursuant
to Section 422 of the Code.

(b) The Option price per share of Common Stock purchasable
under an Option shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant. If the Participant owns or is deemed to own
(by reason of the attribution rules applicable under Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the
Corporation or any subsidiary or parent corporation of the Corporation and an
Incentive Stock Option is granted to such Participant, the Option price shall be
not less than 110% of Fair Market Value of the Common Stock on the date of
grant.

(c) No Option shall be exercisable more than ten (10) years
after the date the Option is granted. If a Participant owns or is deemed to own
(by reason of the attribution rules of Section 424(d) of the Code) more than 10%
of the total combined voting power of all classes of stock of the Corporation or
any subsidiary or parent corporation of the Corporation and an Incentive Stock
Option is granted to such Participant, such Option shall not be exercisable
after the expiration of five (5) years from the date of grant.

(d) No shares of Common Stock shall be delivered pursuant to
any exercise of an Option until payment in full of the Option price therefor is
received by the Corporation. Such payment may be made in whole or in part in
cash or by certified or bank check or, to the extent permitted by the Committee
at or after the grant of the Option, by delivery of shares of Common Stock owned
by the Participant valued at their Fair Market Value on the date of delivery, or
such other lawful consideration as the Committee may determine.

(e) Unless otherwise determined by the Committee at the time

of grant of an Option, with a regard to any Option granted to a director who is
also an officer of the Corporation, in the event such Participant's employment
with the Corporation terminates by reason of death or Disability, any Option
granted to such Participant which is then outstanding may be exercised at any
time prior to the expiration of the term of such Option or within twelve (12)
months following the Participant's termination of employment by reason of death
or Disability, whichever period is shorter.

(f) Unless otherwise determined by the Committee at the time
of grant of an Option, with regard to any Option granted to a director who is
also an officer of the Corporation, in the event the Participant's employment
with the Corporation terminates for any reason other than death or Disability,
any Option granted to such Participant which is then outstanding may be
exercised until

the expiration of the term of such Option, or in the case of the Participant's
termination of employment for reasons other than death, Disability or
Retirement, within one (1) month of such termination, or in the case of the
Participant's Retirement, within three (3) months of such Retirement, whichever
period is shorter.

(g) In the event the membership on the Board of a director who
is not also an officer of the Corporation ceases all Options then held and
exercisable by such director may be exercised at any time prior to the
expiration of the stated term of such Option.

(h) No Option shall be transferable by the Participant
otherwise than by will or by the laws of descent and distribution, and all
Options shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's appointed guardian or legal representative. A
Participant shall notify the Committee in writing in the event that he disposes
of Common Stock acquired upon exercise of an Incentive Stock Option within the
two-year period following the date the Incentive Stock Option was granted or
within the one-year period following the date he received Common Stock upon the
exercise of an Incentive Stock Option and shall comply with any other
requirements imposed by the Corporation in order to enable the Corporation to
secure the related income tax deduction to which it will be entitled in such
event under the Code.

(i) The Committee may in its sole discretion, (i) accelerate
the date or dates on which all or any particular Option or Options granted under
the Plan may be exercised or (ii) extend the dates during which all or any
particular Option or Options granted under the Plan may be exercised; provided,
however, that no such extension shall be permitted if it would cause the Plan to
fail to comply with Section 422 of the Code.

(j) The aggregate Fair Market Value of shares of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by a Participant who is an employee of the Corporation during one calendar year
(under all plans of the Corporation and its parent and subsidiary corporations)
shall not exceed the sum of One Hundred Thousand Dollars ($100,000.00). Such
aggregate Fair Market Value shall be determined as of the date such Option is
granted.

Section 7. General Provisions Applicable to Options

(a) Each Option under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Plan as the Committee considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable tax and regulatory laws and

accounting principles.

(b) Each Option may be granted alone, in addition to or in
relation to any other Option. The terms of each Option need not be identical,
and the Committee need not treat Participants uniformly. Except as otherwise
provided by the Plan or a particular Option, any determination with respect to
an Option may be made by the Committee at the time of grant or at any time
thereafter.

(c) In the event of a consolidation, reorganization, merger or
sale of all or substantially all of the assets of the Corporation in each case
in which outstanding shares of Common Stock are exchanged for securities, cash
or other property of any other corporation or business entity or in the event of
a liquidation of the Corporation, the Committee may, in its discretion, provide
for any one or more of the following actions, as to outstanding options: (i)
provide that such options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate

thereof), provided that any such options substituted for Incentive Stock Options
shall meet the requirements of Section 424(a) of the Code, (ii) upon written
notice to the Participants, provide that all unexercised options will terminate
immediately prior to the consummation of such transaction unless exercised (to
the extent then exercisable) by the Participant within a specified period
following the date of such notice, (iii) in the event of a merger under the
terms of which holders of the Common Stock of the

Corporation will receive upon consummation thereof a cash payment for each share
surrendered in the merger (the "Merger Price"), make or provide for a cash
payment to the Participants equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such outstanding Options
(to the extent then exercisable at prices not in excess of the Merger Price) and
(B) the aggregate exercise price of all such outstanding Options in exchange for
the termination of such Options, and (iv) provide that all or any outstanding
Options shall become exercisable in full immediately prior to such event.

(d) The Participant shall pay to the Corporation, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Options under the Plan no later than the date
of the event creating the tax liability. In the Committee's sole discretion, a
Participant (other than a Section 16 Participant, who shall be subject to the
following sentence) may elect to have such tax obligations paid, in whole or in
part, in shares of Common Stock, including shares retained from the Option

creating the tax obligation. With respect to Section 16 Participants, upon the
issuance of shares of Common Stock in respect of an Option, such number of
shares issuable shall be reduced by the number of shares necessary to satisfy
such Section 16 Participant's federal, and where applicable, state withholding
tax obligations. For withholding tax purposes, the value of the shares of Common
Stock shall be the Fair Market Value

on the date the withholding obligation is incurred. The Corporation may, to the
extent permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to the Participant.

(e) For purposes of the Plan, the following events shall
not be deemed a termination of employment of a Participant:

(i) a transfer to the employment of the

Corporation from a subsidiary or from the Corporation to a
subsidiary, or from one subsidiary to another, or

(ii) an approved leave of absence for military
service or sickness, or for any other purpose approved by the
Corporation, if the Participant's right to reemployment is
guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or
if the Committee otherwise so provides in writing.

(f) The Committee may at any time, and from time to time,
amend, modify or terminate the Plan or any outstanding Option held by a
Participant, including substituting therefor another Option of the same or a
different type, changing the date of exercise or realization, and converting an
Incentive Stock Option to a Non-Qualified Stock Option, provided that the
Participant's

consent to each action shall be required unless the Committee determines that
the action, taking into account any related action, would not materially and
adversely affect the Participant.

Section 8. Miscellaneous

(a) No person shall have any claim or right to be granted an
Option, and the grant of an Option shall not be construed as giving a
Participant the right to continued employment or service on the Corporation's
Board of Directors. The Corporation expressly reserves the right at any time to
dismiss a Participant free from any liability or claim under the Plan, except as
expressly provided in the applicable Option.

(b) Nothing contained in the Plan shall prevent the
Corporation from adopting other or additional compensation
arrangements.

(c) Subject to the provisions of the applicable Option, no
Participant shall have any rights as a shareholder (including, without
limitation, any rights to receive dividends, or non cash distributions with
respect to such shares) with respect to any shares of Common Stock to be
distributed under the Plan until he or she becomes the holder thereof.

(d) Notwithstanding anything to the contrary expressed in this
Plan, any provisions hereof that vary from or conflict with any applicable
Federal or State securities laws (including any regulations promulgated
thereunder) shall be deemed to be modified to conform to and comply with such
laws.

(e) No member of the Board of Directors or the Committee shall
be liable for any action or determination taken or granted in good faith with
respect to this Plan nor shall any member of the Board of Directors or the
Committee be liable for any agreement issued pursuant to this Plan or any grants
under it. Each member of the Board of Directors and the Committee shall be
indemnified by the Corporation against any losses incurred in such
administration of the Plan, unless his action constitutes serious and willful
misconduct.

(f) Subject to the approval of the shareholders of the
Corporation, the Plan shall be effective on June 25, 1995. Prior to such
approval, Options may be granted under the Plan expressly subject to shareholder
approval.

(g) The Board may amend, suspend or terminate the Plan or any
portion thereof at any time, provided that no amendment shall be granted without
shareholder approval if such approval is necessary to comply with any applicable
tax laws or regulatory requirement.

(h) Options may not be granted under the Plan after June 24,
2005, but then outstanding Options may extend beyond such date.

(i) To the extent that State laws shall not have been
preempted by any laws of the United States, the Plan shall be construed,
regulated, interpreted and administered according to the other laws of the State
of New Jersey.
17

APPENDIX G

CARNEGIE BANCORP

1995 EMPLOYEE STOCK OPTION PLAN

Section 1. Purpose

The purpose of the Carnegie Bancorp 1995 Employee Stock Option
Plan is to enable Carnegie Bancorp (the "Corporation") to attract, retain and
motivate its key employees and to enable key employees to participate in the
long-term growth of the Corporation by providing for or increasing the
proprietary interests of such persons in the Corporation thereby assisting the
Corporation to achieve its long-range goals.

Section 2. Definitions

Capitalized terms not specifically defined elsewhere herein
shall have the following meaning:

"Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder.

"Board" means the Board of Directors of the Corporation.

"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated thereunder.

"Committee" means the Stock Option Committee of the Board (or
any successor committee of the Board responsible for administering the Plan),
which shall consist of two or more directors, each of whom shall be a
"disinterested person" within the meaning of Rule 16b-3(c) under the Act, to
administer the Plan and perform the functions set forth herein.

"Common Stock" or "Stock" means the common stock, no par
value, of the Corporation.

"Corporation" means Carnegie Bancorp and any present or future
subsidiary corporations of Carnegie Bancorp (as defined in Section 424 of the
Code) or any successor to such corporations.

"Disability" means total disability as determined in
accordance with the terms of the Corporation's long-term disability plan (or, if
the Corporation has no such plan, its retirement plan) as in effect from time to

time; provided, however, with respect to a Participant who has been granted an
Incentive Stock Option such term shall have the meaning set forth in Section
422(c)(6) of the Code.

"Fair Market Value" means, with respect to shares of Common
Stock, the fair market value as determined by the Committee in good faith and in
a manner established by the Committee from time to time; provided, however, so
long as the shares of Common

Stock are last sale reported over the counter securities, then the "fair market
value" of such shares on any date shall be the closing price reported in the
consolidated reporting system, on the business day immediately preceding the
date in question, as reported on the NASDAQ system.

"Incentive Stock Option" means an option to purchase shares of
Common Stock granted to a Participant under the Plan which is intended to meet
the requirements of Section 422 of the Code.

"Non-Qualified Stock Option" means an option to purchase
shares of Common Stock granted to a Participant under the Plan which is not
intended to be an Incentive Stock Option.

"Option" means an Incentive Stock Option or a Non-
Qualified Stock Option.

"Participant" means a person selected by the Committee to
receive an Option under the Plan.

"Plan" means the Carnegie Bancorp 1995 Employee Stock
Option Plan.

"Retirement" means termination of employment in
accordance with the retirement provisions of any retirement or

pension plan maintained by the Corporation or any of its
subsidiaries.

Section 3. Administration

(a) The Plan shall be administered by the Committee. Among
other things, the Committee shall have authority, subject to the terms of the
Plan to grant Options, to determine the individuals to whom and the time or

times at which Options may be granted, and to determine the terms and conditions
of any Option granted hereunder, and the exercise price thereof.

(b) Subject to the other provisions of the Plan, the Committee
shall have authority to adopt, amend, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, to interpret the provisions of the Plan
and any Option and to decide all disputes arising in connection with the Plan.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem appropriate to carry the Plan into effect, in its sole and
absolute discretion. The Committee's decision and interpretations shall be final
and binding. Any action of the Committee with respect to the administration of
the Plan shall be taken pursuant to a majority vote or by the unanimous written
consent of its members.

Section 4. Eligibility and Participation

Officers and other key employees of the Corporation (excluding
officers and employees who are also directors) who are from time to time
responsible for the management, growth and protection of the business of the
Corporation, shall be eligible to participate in the Plan. The Participants
under the Plan shall be selected from time to time by the Committee, in its sole
discretion, from among those eligible, and the Committee shall determine in its
sole discretion the numbers of shares to be covered by the Option or Options
granted to each Participant. Options intended to qualify as Incentive Stock
Options shall be granted only to persons who are eligible to receive such
options under Section 422 of the Code.

Section 5. Shares of Stock Available for Options

(a) The maximum number of shares of Common Stock which may be
issued and purchased pursuant to Options granted under the Plan is 11,530,
subject to the adjustments as provided in Section

5 and Section 7, to the extent applicable. If an Option granted under this Plan
expires or terminates before exercise or is forfeited for any reason, without a
payment in the form of Common Stock being granted to the Participant, the shares

of Common Stock subject to such Option, to the extent of such expiration,
termination or forfeiture, shall again be available for subsequent Option grant
under Plan. Shares of Common Stock issued under the Plan may consist in whole or
in part of authorized but unissued shares or treasury shares.

(b) In the event that the Committee determines, in its sole
discretion, that any stock dividend, stock split, reverse stock split or
combination, extraordinary cash dividend, creation of a class of equity
securities, recapitalization, reclassification, reorganization, merger,
consolidation, split-up, spin-off, combination, exchange of shares, warrants or
rights offering to purchase Common Stock at a price substantially below Fair
Market Value, or other similar transaction affects the Common Stock such that an
adjustment is required in order to preserve the benefits or potential benefits
intended to be granted or made available under the Plan to Participants, the
Committee shall have the right to proportionately and appropriately adjust
equitably any or all of (i) the maximum number and kind of shares of Common
Stock in respect of which Options may be granted under the Plan to Participants,
(ii) the number and kind of shares of Common Stock subject to outstanding
Options held by Participants, and (iii) the

exercise price with respect to any Options held by Participants, without
changing the aggregate purchase price as to which such Options remains
exercisable, and if considered appropriate, the Committee may make provision for
a cash payment with respect to any outstanding Options held by a Participant,
provided that no adjustment shall be made pursuant to this Section if such
adjustment would cause the Plan to fail to comply with Section 422 of the Code
or with Rule 16b-3 of the Act. No fractional Shares shall be issued on account
of any such adjustment.

(c) Any adjustments under this Section will be made by the
Committee, whose determination as to what adjustments, if any, will be made and
the extent thereof will be final, binding and conclusive.

Section 6. Options

(a) Subject to Federal and state statutes then applicable and
the provisions of the Plan, the Committee may grant Incentive Stock Options and
Non-Qualified Stock Options and determine the number of shares to be covered by

each Option, the Option price therefor, the term of the Option, and the other
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code. Anything in the Plan to the contrary notwithstanding,
no term of the Plan

relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted to the Committee under the Plan be
so exercised, so as to disqualify the Plan, or without the consent of the
Participant, any Incentive Stock Option granted under the Plan pursuant to
Section 422 of the Code.

(b) The Option price per share of Common Stock purchasable
under an Option shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant with respect to Incentive Stock Options, and
shall be the price determined by the Committee, which may be less than, equal to
or greater than the Fair Market Value of the Common Stock on the date of grant
but in no event less than 85% of the Fair Market Value of the Common Stock, with
respect to Non-Qualified Stock Options. If the Participant owns or is deemed to
own (by reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of the
Corporation or any subsidiary or parent corporation of the Corporation and an
Incentive Stock Option is granted to such Participant, the Option price shall be
not less than 110% of Fair Market Value of the Common Stock on the date of
grant.

(c) No Option shall be exercisable more than ten (10)
years after the date the Option is granted. If a Participant owns
or is deemed to own (by reason of the attribution rules of Section

424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Corporation or any subsidiary or parent corporation of
the Corporation and an Incentive Stock Option is granted to such Participant,
such Option shall not be exercisable after the expiration of five (5) years from
the date of grant.

at or after the grant of the Option, by delivery of shares of Common Stock owned
by the Participant valued at their Fair Market Value on the date of delivery, or
such other lawful consideration as the Committee may determine.

(e) Unless otherwise determined by the Committee at the time
of grant of an Option, in the event a Participant's employment with the
Corporation terminates by reason of death or Disability, any Option granted to
such Participant which is then outstanding may be exercised at any time prior to
the expiration of the term of such Option or within twelve (12) months following
the Participant's termination of employment by reason of death or Disability,
whichever period is shorter.

(f) Unless otherwise determined by the Committee at the time
of grant of an Option, in the event the Participant's employment with the
Corporation terminates for any reason other than death or Disability, any Option
granted to such Participant which is then outstanding may be exercised until to
the expiration of the term of such Option, or in the case of the Participant's
termination of employment for reasons other than death, Disability or
Retirement, within one (1) month of such termination, or in the case of the
Participant's Retirement, within three (3) months of such Retirement, whichever
period is shorter.

(g) No Option shall be transferable by the Participant
otherwise than by will or by the laws of descent and distribution, and all
Options shall be exercisable during the Participant's lifetime only by the
Participant or the Participant's appointed guardian or legal representative. A
Participant shall notify the Committee in writing in the event that he disposes
of Common Stock acquired upon exercise of an Incentive Stock Option within the
two-year period following the date the Incentive Stock Option was granted or
within the one-year period following the date he received Common Stock upon the
exercise of an Incentive Stock Option and shall comply with any other
requirements imposed by the Corporation in order to enable the Corporation to
secure the related income tax deduction to which it will be entitled in such
event under the Code.

(h) The Committee may in its sole discretion, (i) accelerate
the date or dates on which all or any particular Option or Options granted under
the Plan may be exercised or (ii) extend the dates during which all or any

particular Option or Options granted under the Plan may be exercised; provided,
however, that no such extension shall be permitted if it would cause the Plan to
fail to comply with Section 422 of the Code or with Rule 16b-3 of the Act.

(i) The aggregate Fair Market Value of shares of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by a Participant who is an employee of the Corporation during one calendar year
(under all plans of the Corporation and its parent and subsidiary corporations)
shall not exceed the sum of One Hundred Thousand Dollars ($100,000.00). Such
aggregate Fair Market Value shall be determined as of the date such Option is
granted.

Section 7. General Provisions Applicable to Options

(a) Notwithstanding any other provision of the Plan, in order
to qualify for the exemption provided by Rule 16b-3 of the Act, any Common Stock
acquired by a Participant subject to Section 16 of the Act (a "Section 16
Participant") upon exercise of an Option may not be sold for six (6) months
after the date of grant of the Option. The Committee shall have no authority to

take any

action if the authority to take such action, or the taking of such action, would
disqualify the Plan from the exemption provided by Rule 16b-3 of the Act.

(b) Each Option under the Plan shall be evidenced by a writing
delivered to the Participant specifying the terms and conditions thereof and
containing such other terms and conditions not inconsistent with the provisions
of the Plan as the Committee considers necessary or advisable to achieve the
purposes of the Plan or comply with applicable tax and regulatory laws and
accounting principles.

(c) Each Option may be granted alone, in addition to or in
relation to any other Option. The terms of each Option need not be identical,
and the Committee need not treat Participants uniformly. Except as otherwise
provided by the Plan or a particular Option, any determination with respect to
an Option may be made by the Committee at the time of grant or at any time
thereafter.

(d) In the event of a consolidation, reorganization, merger or
sale of all or substantially all of the assets of the Corporation in each case
in which outstanding shares of Common Stock are exchanged for securities, cash
or other property of any other corporation or business entity or in the event of
a liquidation of the Corporation, the Committee may, in its

discretion, arrange for any one or more of the following actions to be taken, as
to outstanding options: (i) provide that such options shall be assumed, or
equivalent options shall be substituted, by the acquiring or succeeding
corporation (or an affiliate thereof), provided that any such options
substituted for Incentive Stock Options shall meet the requirements of Section
424(a) of the Code, (ii) upon written notice to the Participants, provide that
all unexercised options will terminate immediately prior to the consummation of
such transaction unless exercised (to the extent then exercisable) by the
Participant within a specified period following the date of such notice, (iii)
in the event of a merger under the terms of which holders of the Common Stock of
the Corporation will receive upon consummation thereof a cash payment for each
share surrendered in the merger (the "Merger Price"), make or provide for a cash
payment to the Participants equal to the difference between (A) the Merger Price
times the number of shares of Common Stock subject to such outstanding Options
(to the extent then exercisable at prices not in excess of the Merger Price) and
(B) the aggregate exercise price of all such outstanding Options in exchange for
the termination of such Options, and (iv) provide that all or any outstanding
Options shall become exercisable in full immediately prior to such event.

(e) The Committee may grant Options under the Plan in

substitution for options held by employees of another corporation
who become employees of the Corporation, or a subsidiary of the

Corporation, as the result of a merger or consolidation of the employing
corporation with the Corporation or a subsidiary of the Corporation, or as a
result of the acquisition by the Corporation, or one of its subsidiaries, of
property or stock of the employing corporation. The Corporation may direct that
substitute options be granted on such terms and conditions as the Committee
considers appropriate in the circumstances.

(f) The Participant shall pay to the Corporation, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Options under the Plan no later than the date
of the event creating the tax liability. In the Committee's sole discretion, a
Participant (other than a Section 16 Participant, who shall be subject to the
following sentence) may elect to have such tax obligations paid, in whole or in
part, in shares of Common Stock, including shares retained from the Option
creating the tax obligation. With respect to Section 16 Participants, upon the
issuance of shares of Common Stock in respect of an Option, such number of
shares issuable shall be reduced by the number of shares necessary to satisfy

such Section 16 Participant's federal, and where applicable, state withholding
tax obligations. For withholding tax purposes, the value of the shares of Common
Stock shall be the Fair Market Value on the date the withholding obligation is
incurred. The Corporation may, to the extent permitted by law, deduct any such

tax obligations from any payment of any kind otherwise due to the
Participant.

(g) For purposes of the Plan, the following events shall
not be deemed a termination of employment of a Participant:

(i) a transfer to the employment of the
Corporation from a subsidiary or from the Corporation to a
subsidiary, or from one subsidiary to another, or

For purposes of the Plan, employees of a subsidiary of the
Corporation shall be deemed to have terminated their employment on the date on

which such subsidiary ceases to be a subsidiary of the Corporation.

(h) The Committee may at any time, and from time to time,
amend, modify or terminate the Plan or any outstanding Option held by a
Participant, including substituting therefor another

Option of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Non-Qualified Stock
Option, provided that the Participant's consent to each action shall be required
unless the Committee determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

Section 8. Miscellaneous

(a) No person shall have any claim or right to be granted an
Option, and the grant of an Option shall not be construed as giving a
Participant the right to continued employment. The Corporation expressly
reserves the right at any time to dismiss a Participant free from any liability
or claim under the Plan, except as expressly provided in the applicable Option.

(b) Nothing contained in the Plan shall prevent the
Corporation from adopting other or additional compensation
arrangements for its employees.

shares of Common Stock to be distributed under the Plan until he or she becomes
the holder thereof.

under it. Each member of the Board of Directors and the Committee shall be
indemnified by the Corporation against any losses incurred in such
administration of the Plan, unless his action constitutes serious and willful
misconduct.

(g) The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment

shall be granted without shareholder approval if such approval is necessary to
comply with any applicable tax laws or regulatory requirement, including any
requirements for exemptive relief under Section 16(b) of the Act.

(h) Options may not be granted under the Plan after June 24,
2005, but then outstanding Options may extend beyond such date.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. Indemnification of Directors and Officers

Article VII of the Registrant's Certificate of Incorporation requires the
Registrant to indemnify its officers, directors, employees and agents, and any
other persons serving at the request of the Registrant as an officer, director,
employee or agent of another corporation, association, partne rship, joint
venture, trust or other enterprise, against expenses (including attorneys' fees,
judgments, fines and amounts paid in settlement) incurred in connection with any
pending or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, with respect to which such officer, director,
employee agent or other person is a party, or is threatened to be made a party,
to the full extent permitted by the New Jersey Business Corporation Act
("NJBCA").

Section 14A:3-5 of NJBCA gives a corporation the power, without a specific

authorization in its certificate of incorporation or by-laws, to indemnify a
director, officer, employee or agent (a "corporate agent") against expenses and
liabilities incurred in connection with certain proceedings, involving the
corporate agent by reason of his being or having been such a corporate agent,
provided that with regard to a proceeding other than one by or in the right of
the corporation, the corporate agent must have acted in good faith and in the
manner reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal proceeding, such corporate agent
had no reasonable cause to believe his conduct was unlawful. In such proceeding,

termination of a proceeding by judgment, order, settlement, conviction or upon
plea of nolo contendere or its equivalent does not of itself create a
presumption that any such corporate agent failed to meet the above applicable
standards of conduct. The indemnification provided by NJBCA does not exclude any
rights to which a corporate agent may be entitled under a certificate of
incorporation, by-law, agreement, vote of shareholders or otherwise. No
indemnification, other than that required when a corporate agent is successful
on the merits or otherwise in any of the above proceedings shall be allowed if
such indemnification would be inconsistent with a provision of the certificate
of incorporation, a by-law or a resolution of the board of directors or of the
shareholders, an agreement or other proper corporate action in effect at the
time of the accrual of the alleged cause of action which prohibits, limits or
otherwise conditions the exercise of indemnification powers by the corporation
or the rights of indemnification to which a corporate agent may be entitled.

II-1

ITEM 21. Exhibits and Financial Statement Schedules

(a) Exhibits

* 2 Amended and Restated Agreement and Plan of Merger, dated as of August
30, 1995, by and among the Registrant, Regent Bancshares Corp.,
Carnegie Bank, N.A. and Regent National Bank (Annexed as Appendix A to
the Joint Proxy Statement/Prospectus included in the Registration
Statement).

** 3(a) Certificate of Incorporation.

** 3(b) Articles of Association of Carnegie Bank, N.A.

** 3(c) Bylaws of Registrant.

* 3(d) Proposed Amendment to Article V of Registrant's
Certificate of Incorporation (Annexed as Appendix E to the Joint Proxy
Statement Prospectus included in the Registration Statement).

* 5 Opinion of McCarter & English

8 Tax Opinion of McCarter & English

* 10(a) 1995 Directors Stock Option Plan of Registrant
(Annexed as Appendix F to the Joint Proxy Statement/Prospectus

included in this Registration Statement)

* 10(b) 1995 Employee Stock Option Plan of Registrant (Annexed as Appendix G
to the Joint Proxy Statement/Prospectus included in this Registration
Statement)

* 10(c) Form of Consulting Agreement between Registrant and Bettinger &
Leach, Inc.

* 10(d) Form of Consulting Agreement between Registrant and David W. Ring

10(e) Form of Consulting Agreement between Registrant and Bruce A. Mahon

* 10(f) Form of Employment Agreement between Registrant and Barbara H.
Teaford

* 10(g) Form of Employment Agreement between Registrant and Mark A. Wolters

II-2

* 10(h) Form of Employment Agreement between Registrant and Thomas L. Gray,
Jr.

* 10(i) Form of Employment Agreement between Registrant and Harvey Porter

23(a) Consent of Coopers & Lybrand L.L.P.

* 23(b) Consent of Janney Montgomery Scott

* 23(c) Consent of Capital Consultants of Princeton

23(d) Consent of Arthur Andersen LLP

* 23(e) Consent of McCarter & English (see Exhibit 5).

* 24 Power of Attorney

* 99(a) Consent of Nelson Mishkin to serve as director of
Registrant

* 99(b) Consent of David W. Ring to serve as director of
Registrant

* 99(c) Consent of O. Francis Biondi to serve as director of
Registrant

* 99(d) Consent of Harvey Porter to serve as director of
Registrant

* 99(e) Consent of Abraham L. Bettinger to serve as director of
Registrant

* 99(f) Consent of Barbara H. Teaford to serve as director of
Registrant

* 99(g) Consent of Leonard S. Dwares to serve as director of
Registrant

* 99(h) Form of Proxy for Regent Special Meeting

* 99(i) Form of Proxy for Carnegie Special Meeting

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

*Previously filed.

** Incorporated by reference to the Registrant's Registration Statement on
Form S-4, Registration No. 33-72088.

II-3

(b) Financial Statement Schedules

Schedules are omitted for the reason that they are not required or are
not applicable, or the required information is shown in the financial statements
of the Registrant or notes thereto.

The opinions of Capital Consultants of Princeton, Inc. and Janney
Montgomery Scott Inc.are included as Appendix B and C, respectively, to the
Joint Proxy Statement/Prospectus included in this Registration Statement.

ITEM 22. Undertakings

The undersigned Registrant hereby undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 the ("Act");

(ii) Reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information in the registration statement; and

(iii) Include any material information with respect to the aggregate
the plan of distribution not previously disclosed in the registration statement

or any material change to such information in the registration statement.

(2) For determining liability under the Act, each post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.

II-4

In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.

The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.

II-5

SIGNATURES

In accordance with the requirements of the Securities Act, the registrant
has duly authorized this Amendment No. 1 to the Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Princeton, State of New Jersey on March 4, 1996.

CARNEGIE BANCORP

BY: /s/ THOMAS L. GRAY
------------------------------
Thomas L. Gray, Jr.
President and
Chief Executive Officer

In accordance with the requirements of the Securities Act, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacity and on the dates indicated:

NAME TITLE DATE

/s/ THOMAS L. GRAY President, Chief Executive MARCH 4, 1996
- ---------------------- Officer and Director
Thomas L. Gray, Jr. (Principal Executive Officer)

/s/ RICHARD P. ROSA Senior Vice President MARCH 4, 1996
- ----------------------- and Chief Financial Officer
Richard P. Rosa (Principal Financial Office
and Principal Accounting Officer)

/s/ BRUCE A. MAHON* Director and Chairman MARCH 4, 1996

- ----------------------- of the Board
Bruce A. Mahon

/s/ MICHAEL E. GOLDEN* Director MARCH 4, 1996
- ------------------------
Michael E. Golden

/s/ THEODORE H. DOLCI, JR.*
- -----------------------------
Theodore H. Dolci, Jr. Director MARCH 4, 1996

/s/ JOSEPH J. OAKES, III*
- ---------------------------
Joseph J. Oakes, III Director MARCH 4, 1996

/s/ JAMES E. QUACKENBUSH*
- ---------------------------
James E. Quackenbush Director MARCH 4, 1996

/s/ STEVEN L. SHAPIRO*
- ------------------------
Steven L. Shapiro Director MARCH 4, 1996

/s/ MARK A. WOLTERS*
- ----------------------
Mark A. Wolters Director MARCH 4, 1996

/s/ SHELLY M. ZIEGER*
- -----------------------
Shelly M. Zeiger Director MARCH 4, 1996

- ----------
* Executed pursuant to a power of attorney in favor of Thomas L. Gray.

II-7