Prepared by R.R. Donnelley Financial -- AGREEMENT & PLAN OF REORGANIZATION

Exhibit 2

AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE

THIS AGREEMENT AND PLAN OF REORGANIZATION AND SHARE EXCHANGE (this “Agreement”), made and entered into as of June 20, 2002, by and between Alamance National Bank, a banking corporation organized under the laws of the United States of America and having its principal place of business in the City of Graham, Alamance County, North Carolina (the “Bank”), and United Financial, Inc., a North Carolina business corporation (the “Holding Company”).

W I T N E S S E T H

WHEREAS, the Boards of Directors of the Bank and the Holding Company believe that it is in the best interests of their respective shareholders that the Bank be reorganized into a bank holding company structure pursuant to which the shareholders of the Bank (collectively, the “Shareholders” and individually, a “Shareholder”) would receive shares of the common stock of the Holding Company in exchange for their shares of Bank common stock.

NOW, THEREFORE, in consideration of the mutual promises and conditions herein contained, the Bank and the Holding Company hereby mutually agree to an exchange of shares on the terms and conditions and in the manner and on the basis hereinafter provided:

1. THE EXCHANGE.

(a) The name of the corporation whose shares will be acquired is “Alamance National Bank” and the name of the acquiring corporation is “United Financial, Inc.”

(b) At the Effective Time (as defined in Section 2 below), upon the terms and subject to the conditions set forth in this Agreement, and in accordance with Section 215a-2 of the National Bank Act (the “Act”), each share of the $5 par value common stock of the Bank (“Bank Stock”) shall be exchanged (the “Exchange”) for one (1) share of the $1.00 par value common stock of the Holding Company (all such shares of Holding Company common stock issued to the Shareholders, collectively, the “Shares”).

(c) As soon as possible after the Effective Time, the Holding Company shall furnish to each Shareholder transmittal forms and written instructions with respect to the Exchange. Until shares of the Bank Stock are surrendered for exchange in accordance with this Agreement, each outstanding certificate which, prior to the Effective Time, represented shares of Bank Stock, shall for all purposes evidence only the exchange rights established pursuant to this Agreement or, if applicable, the rights described in Paragraph 3 of this Agreement. The Holding Company may in its discretion elect not to treat any such unsurrendered shares as shares of common stock of the Holding Company for purposes of the payment of dividends or other distributions. If the Holding Company in its discretion so elects, then unless and until any outstanding certificate evidencing Bank Stock shall be so surrendered, no dividends payable to the holders of common stock of the Holding Company shall be paid to the holder of the unsurrendered Bank Stock certificate; provided, however, upon surrender and exchange of each

outstanding certificate evidencing Bank Stock for a certificate evidencing outstanding common stock of the Holding Company, there shall be paid to the holder thereof the amount, without interest, of all dividends and other distributions, if any, which theretofore were declared and became payable, but were not paid, with respect to said shares.

(d) At the Effective Time, all shares of common stock of the Holding Company outstanding immediately prior to the Effective Time shall be redeemed from the holder(s) thereof for the sum of $ 1.00 per share.

2. CLOSING; EFFECTIVE TIME. Consummation of the Exchange and the other transactions contemplated by this Agreement shall take place at such time and date as the Holding Company and the Bank shall determine (the “Closing”); however, the Exchange shall take place no later than the last business day of the month preceding the month in which the 2003 annual meeting will be held. The Exchange shall become effective at the time specified in Articles of Share Exchange to be filed with the Secretary of State of North Carolina (the “Effective Time”).

3. RIGHTS OF DISSENTING SHAREHOLDERS. Any Shareholder who has not voted for the Exchange at the meeting of Shareholders called to consider the Exchange, and who has given notice in writing at or prior to such meeting that he or she dissents from the Exchange, and who complies with the provisions of Section 215a of the Act, shall be entitled to receive the fair value of the shares held by him or her. Upon the receipt of any notice of a Shareholder’s intent to assert dissenters’ rights pursuant to the Act, the Bank and the Holding Company shall establish an escrow fund (the “Escrow Fund”) from which all payments, whether before or after the Effective Time, necessary with respect to the exercise of such dissenters’ rights shall be made. The Escrow Fund and all payments of dissenters’ rights shall be made in accordance with the applicable state and federal law.

4. LOST, DESTROYED, OR STOLEN CERTIFICATES. Shareholders whose certificates evidencing shares of Bank Stock have been lost, destroyed or stolen shall be entitled to receive certificates evidencing Shares for which such shares of Bank Stock were exchanged pursuant to this Agreement in compliance with the provisions of the Holding Company’s bylaws.

5. STOCK OPTION AND OTHER PLANS. At the Effective Time, all outstanding options under the Bank’s existing stock option plans (“Plans”) shall be converted into options to acquire the number of shares of common stock of the Holding Company that the holders of such options were entitled to acquire of Bank Stock immediately prior to the Exchange on the same terms and conditions as set forth in the Plans.

6. OBLIGATIONS OF THE PARTIES PENDING THE EFFECTIVE TIME. The Bank and the Holding Company shall, as soon as practicable take the following action:

(a) This Agreement shall be duly submitted to the Shareholders of the Bank and the sole shareholder of the Holding Company for the purpose of considering and acting upon the Exchange in the manner required by law and their respective articles of incorporation and bylaws. The Bank and the Holding Company shall use their best efforts to obtain the requisite

approval of their shareholders for the Exchange and the transactions contemplated by this Agreement, and the Bank and the Holding Company shall, through their respective officers, execute and file with the appropriate regulatory authorities, including the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency, such applications, exhibits, documents and papers as shall be necessary or appropriate to secure approval of this Agreement, the Exchange and the other transactions contemplated hereby, as required by applicable statutes, rules and regulations;

(b) The Holding Company shall use its best efforts to cause the issuance of common stock of the Holding Company made pursuant to this Agreement and the Exchange to be qualified or exempted under the Securities Act of 1933, as amended, and the Blue Sky Laws of each state in which it deems such qualification or exemption to be required;

(c) Until the Effective Time, neither the Bank nor the Holding Company shall dispose of its assets except in the ordinary and normal course of business.

7. CONDITIONS PRECEDENT TO THE EXCHANGE. The Exchange shall be subject to the satisfaction of the following conditions:

(a) Ratification and confirmation of this Agreement by approval of two-thirds of the Shareholders and by approval of the sole shareholder of the Holding Company as required by law;

(b) Approvals by the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency to the Exchange and the transactions related thereto;

(d) Receipt of a favorable opinion with respect to the tax consequences of the proposed Exchange from the Bank’s counsel; and

(e) Expiration of any waiting period required by any supervisory authority.

8. TERMINATION. This Agreement may be terminated prior to the Effective Time for any of the following reasons by written notice by either the Bank or the Holding Company to the other upon authorization by resolution adopted by either Board of Directors:

(a) Any condition precedent contained in Paragraph 7 has not been fulfilled or waived;

(b) Any action, suit, proceeding, or claim has been instituted, made or threatened, relating to the proposed Exchange that makes consummation of the Exchange inadvisable in the opinion of the Board of Directors of either the Bank or the Holding Company;

(c) The Board of Directors of the Bank determines that the holders of a sufficient number of shares of Bank Stock have dissented from the Exchange so that consummation of the Exchange is not in the best interests of the Bank;

(d) A determination by the Board of Directors of either the Bank or the Holding Company that consummation of the Exchange is inadvisable in the opinion of such Board of Directors.

9. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the parties with respect to the transactions contemplated hereby.

10. EFFECT OF AGREEMENT. The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the United States of America.

IN WITNESS WHEREOF, the Bank and the Holding Company have caused this Agreement to be executed by their duly authorized officers and their corporate seals to be affixed hereto as of the date first above written.

UNITED FINANCIAL, INC.

By:		/s/ WILLIAM M. GRIFFITH, JR.
		William M. Griffith, Jr., President

ATTEST:

/S/ WILLIAM E. SWING, JR.

William E. Swing, Jr., Secretary

[corporate seal]

ALAMANCE NATIONAL BANK

By:		/s/ WILLIAM M. GRIFFITH, JR.
		William M. Griffith, Jr., President

ATTEST:

/S/ KAREN S. OLDHAM

Karen S. Oldham, Secretary

[corporate seal]