Preview | Agreement and Plan of Merger |

dated as of
October 31, 2005

by and between

MERCANTILE FINANCIAL CORPORATION

and

PEOPLES COMMUNITY BANCORP, INC.

TABLE OF CONTENTS

RECITALS		1

ARTICLE I CERTAIN DEFINITIONS		1
1.01	Certain Definitions	1

ARTICLE II THE MERGER		8
2.01	The Parent Merger	8
2.02	The Subsidiary Merger	9
2.03	Closing of Parent Merger	9
2.04	Effective Date and Effective Time	9

ARTICLE III CONSIDERATION; EXCHANGE PROCEDURES		9
3.01	Merger Consideration	9
3.02	Fixed Assets	10
3.03	Rights as Shareholders; Share Transfers	10
3.04	Fractional Shares	10
3.05	Exchange Procedures	11
3.06	Anti-Dilution Provisions and Other Adjustments	12

ARTICLE IV ACTIONS PENDING CONSUMMATION OF MERGER		12
4.01	Forbearances of Mercantile	12
4.02	Forbearances of PCBI	15

ARTICLE V REPRESENTATIONS AND WARRANTIES		16
5.01	Disclosure Schedules	16
5.02	Standard	17
5.03	Representations and Warranties of Mercantile	17
5.04	Representations and Warranties of PCBI	28

ARTICLE VI COVENANTS		35
6.01	Reasonable Best Efforts	35
6.02	Shareholder Approval	35
6.03	Registration Statement	36
6.04	Press Releases	37
6.05	Access; Information	37
6.06	No Solicitation	38
6.07	Notice	39
6.08	Certain Policies	39
6.09	Regulatory Compliance	39
6.10	NASDAQ Listing	39
6.11	Regulatory Applications	40
6.12	Indemnification; Directors and Officers Liability Insurance	40
6.13	Employment Matters; Employee Benefits	42
6.14	Notification of Certain Matters	44
6.15	Accounting and Tax Treatment	44

AGREEMENT AND PLAN OF MERGER, dated as of October 31, 2005 (this Agreement), by and between Mercantile Financial Corporation, a unitary thrift holding company organized under the laws of the State of Ohio (Mercantile) and Peoples Community Bancorp Inc., a Maryland corporation (PCBI).

RECITALS

A. Mercantile. Mercantile is a unitary thrift holding company organized under the laws of the State of Ohio, having its principal place of business in Cincinnati, Ohio. Mercantile Savings Bank (Mercantile Bank) is an Ohio chartered stock savings and loan association and wholly owned subsidiary of Mercantile.

B. PCBI. PCBI is a Maryland corporation, having its principal place of business in West Chester, Ohio. Peoples Community Bank (Peoples Bank) is a federally-chartered stock savings bank and wholly owned subsidiary of PCBI.

C. Mergers; Board Action. The respective Boards of Directors of each of PCBI and Mercantile have determined that it is in the best interests of their respective companies and their respective shareholders to consummate the strategic business combinations provided for herein.

D. Intentions of the Parties. It is the intention of the parties to this Agreement that the business combinations contemplated hereby shall be treated as a reorganization under Section 368 of the Internal Revenue Code of 1986, as amended (the Code).

E. As a condition and inducement to the willingness of PCBI to enter into this Agreement, certain stockholders of Mercantile (the Mercantile Stockholders) are concurrently entering into a Stockholder Agreement with PCBI (the Stockholder Agreement), in substantially the form attached hereto as Exhibit A, pursuant to which, among other things, such shareholders agree to vote their shares of Mercantile Common Shares (as defined below) in favor of this Agreement and the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants, representations, warranties and agreements contained herein the parties agree as follows:

ARTICLE I

Certain Definitions

1.01 Certain Definitions. The following terms are used in this Agreement with the meanings set forth below:

Acquisition Proposal means any tender or exchange offer, proposal for a merger, consolidation or other business combination involving Mercantile or Mercantile Bank or any proposal or offer to acquire in any manner a substantial equity interest in, or a substantial portion of the assets or deposits of, Mercantile

or Mercantile Bank, other than the Merger and the related transactions contemplated by this Agreement.

Agreement means this Agreement, as amended or modified from time to time in accordance with Section 9.02.

Agreement to Merge has the meaning set forth in Section 2.02.

Average PCBI Price means the arithmetic mean of the PCBI Prices for the period beginning the day following the date of this Agreement and ending on the day which is the fifth (5^th) trading day prior to the Effective Date (the Valuation Period).

Average Peer Group Price means the arithmetic mean of the Peer Group Prices for the Valuation Period.

Book Value means the value at which a Fixed Asset is carried on the balance sheet of Mercantile or Mercantile Bank as of the date of sale of such Fixed Asset.

Business Day means any day other than a Saturday, Sunday, a legal holiday or a day on which banks located in Cincinnati, OH are authorized or required by government action to close.

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6.16	No Breaches of Representations and Warranties	44
6.17	Consents	45
6.18	Reserved	45
6.19	Correction of Information	45
6.20	Modification Agreements	45
6.21	Lease	45

ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER		45
7.01	Conditions to Each Partys Obligation to Effect the Merger	45
7.02	Conditions to Obligation of Mercantile	46
7.03	Conditions to Obligation of PCBI	47

ARTICLE VIII TERMINATION		48
8.01	Termination	48
8.02	Effect of Termination and Abandonment, Enforcement of Agreement	49

ARTICLE IX MISCELLANEOUS		49
9.01	Survival	49
9.02	Waiver; Amendment	49
9.03	Counterparts	50
9.04	Governing Law	50
9.05	Expenses	50
9.06	Notices	51
9.07	Entire Understanding; No Third Party Beneficiaries	52
9.08	Interpretation; Effect	52
9.09	Waiver of Jury Trial	52