SECURITIES AND
EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM 10-KSB



[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934



For the fiscal year ended June 30, 2001 OR



[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934



Commission File Number: 0-22842



FIRST BANCSHARES, INC.

(Exact name of registrant as specified in its
charter)



Missouri                                  43-1654695

(State or other jurisdiction of                                (I.R.S. Employer

incorporation or organization)                             Identification No.)



142
E. First Street

Mountain Grove, Missouri                                              65711

(Address of principal executive offices)                           (Zip Code)



Registrant's telephone number, including area code:  (417) 926-5151



Securities registered pursuant to Section 12(b) of the Act: None



Securities registered pursuant to Section 12(g) of the Act:



Common Stock, par value $0.01 per share

(Title of Class)



Indicate by check mark whether the registrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. YES x 
NO



Indicate by check mark whether disclosure of
delinquent filers pursuant to Item 405 of Regulation S-B is not contained
herein, and will not be contained, to the best of the Registrant's knowledge, in
definitive proxy or other information statements incorporated by reference in
Part III of this Form 10-KSB or any amendments to this Form 10-KSB.  / X /



The registrant's revenues for the fiscal year ended June 30, 2001 were
$16,896,000.



As of September 27, 2001, there were outstanding
1,791,059 shares of the registrant's Common Stock.  The registrant's voting
stock is traded over-the-counter and is listed on the Nasdaq Stock Market ("Nasdaq/NMS")
under the symbol "FBSI."  The aggregate market value of the voting stock held by nonaffiliates of the registrant, based on the closing sales price of the
registrant's common stock as quoted on the Nasdaq/NMS on September 27, 2001, was
$14,396,000. For purposes of this calculation, officers and directors of the
registrant, the Employee Stock Ownership Plan and the Management Recognition
Plan are considered affiliates of the registrant.



DOCUMENTS INCORPORATED BY
REFERENCE



1.  Portions of Annual Report to Stockholders for
the   lFiscal Year Ended June 30, 2001. (Parts I and II)



2.  Portions of Proxy Statement for the 2001 Annual
Meeting of Stockholders. (Part III)



Transitional Small Business
Disclosure Format (check one)

Yes  No X



PART I  Item 1. Business  General  First Bancshares, Inc. ("First Bancshares" or
  the "Company"), a Missouri corporation, was incorporated on September 30, 1993
  for the purpose of becoming the holding company for First Home Savings Bank
  ("First Home" or the "Savings Bank") upon the Savings Bank's conversion from a
  state-chartered mutual to a state-chartered stock savings and loan association
  ("Conversion"). The Conversion was completed on December 22, 1993. At June 30,
  2001, the Company had consolidated total assets of $221.0 million, total
  customer deposits of $162.4 million and stockholders' equity of $25.2 million.
  While the Company owns a title insurance agency through a subsidiary and some
  rental real estate, it is not engaged in any significant activity other than
  holding the stock of First Home. Accordingly, the information set forth in
  this report, including consolidated financial statements and related data,
  relates primarily to the Savings Bank.  The
  Savings Bank is a Missouri-chartered, federally insured stock savings and loan
  association organized in 1911. The Savings Bank conducts its business from its
  home office in Mountain Grove and nine full service branch facilities in
  Marshfield, Ava, Gainesville, Sparta, Theodosia, Crane, Galena, Kissee Mills
  and Rockaway Beach, Missouri. The deposits of the Savings Bank are insured up
  to applicable limits by the Savings Association Insurance Fund ("SAIF") of the
  Federal Deposit Insurance Corporation ("FDIC").  The Savings Bank provides its customers with a
  full array of community banking services. The Savings Bank is primarily
  engaged in the business of attracting deposits from the general public and
  using such deposits, together with other funding sources, to invest in
  one-to-four family residential mortgage loans and, to a lesser extent,
  multi-family residential, consumer, and commercial mortgage loans, including
  home equity loans, for its loan portfolio, as well as for mortgage-backed and
  U.S. Government and agency securities and other assets. At June 30, 2001, the
  Savings Bank's net loans were $190.4 million, or 86.1% of consolidated total
  assets, including $123.8 million, or 64.00% of total loans secured by
  one-to-four family properties (not including second mortgages), $48.4 million,
  or 25.05% of total loans secured by other real estate and $12.8 million of
  consumer loans, or 6.64% of total loans. As discussed in following areas,
  adjustable rate mortgage ("ARM") loans account for approximately 98% of loans
  secured by real estate and 87% of the total loan portfolio.  In March
  1998, the Savings Bank purchased two bank branch offices from NationsBank. The
  branches are located in Crane and Galena, Missouri. As part of the agreement,
  the Savings Bank assumed customer deposits of $17.4 million and other
  liabilities of $60,000 in exchange for loans of $4.8 million, premises and
  equipment of $300,000, cash of $11.3 million and other assets of $70,000. The
  Savings Bank paid a premium of $1.0 million for the loans purchased and the
  customer deposits assumed. The acquisition was recorded using the purchase
  method of accounting. At June 30, 2001, the premium paid for the branches was
  being amortized on a straight-line basis over 15 years. Results of operations
  of the branches acquired are included in the accompanying consolidated
  financial statements since the date of acquisition.  1   Market Area  The Savings Bank is
  headquartered in the town of Mountain Grove, in Wright County, Missouri. 
  Wright County has a population of approximately 17,000 and its economy is
  highly diversified, with an emphasis on the beef and dairy industry. The
  Savings Bank's market area is predominantly rural in nature and its deposit
  taking and lending activities primarily encompass Wright, Webster, Douglas,
  Christian, Ozark, Stone and Taney counties. Companies in the area include
  Hutchens Steel, Paramont Cap, Arlee Home Fashions, Copeland Corporation, and
  Fordick Corporation. The Savings Bank also transacts a significant amount of
  business in Texas and Greene counties, Missouri. The area, especially Ozark
  County due to its proximity to the Norfolk and Bull Shoals lakes, has
  experienced a rather slow but steady growth from retirees. Economic conditions
  in the Savings Bank's market area have been stable.  Selected Consolidated
  Financial Information  This information is
  incorporated by reference to pages 4 and 5 of the 2001 Annual Report to
  Stockholders ("Annual Report") attached hereto as Exhibit 13.   2




Yields Earned and Rates Paid  The
  earnings of the Savings Bank depend largely on the spread between the yield on
  interest-earning assets (primarily loans and investments) and the cost of
  interest-bearing liabilities (primarily deposit accounts and FHLB advances),
  as well as the relative size of the Savings Bank's interest-earning assets and
  interest-bearing liability portfolios.  The following table sets forth, for the periods
  indicated, information regarding average balances of assets and liabilities as
  well as the total dollar amounts of interest income from average
  interest-earning assets and interest expense on average interest-bearing
  liabilities, resultant yields, interest rate spread, net interest margin, and
  ratio of average interest-earning assets to average interest-bearing
  liabilities. Average balances for a period have been calculated using the
  average monthly balances for the period.  3




Years Ended June 30,2001
      
      
      2000
      
      
      1999Interest
      
      
      
      
      Interest
      
      
      
      
      InterestAverage
      and
      Yield/
      
      
      Average
      and
      Yield/
      
      
      Average
      and
      Yield/Balance(2)
      Dividends
      Cost
      
      
      Balance(2)
      Dividends
      Cost
      
      
      Balance(2)
      Dividends
      Cost(Dollars in thousands)Interest-earning assets:Loans(1). . . . . . . . . . . . . . . . .
      . . . . . . . . . .
      $183,714
      $15,340
      8.35
      %
      
      $162,647
      $13,115
      8.06
      %
      
      $150,968
      $12,185
      8.07
      %Mortgage-backed securities. . . . . . . .
      . . . . .
      410
      28
      6.83
      
      
      497
      34
      6.84
      
      
      
      44
      6.95Investment securities. . . . . . . . . .
      . . . . . . . .
      7,543
      440
      5.83
      
      
      7,497
      442
      5.90
      
      
      6,216
      423
      6.81Daily interest-bearing deposits . . . . .
      . . . . .
      7,582
      280
      3.69
      
      
      6,310
      259
      4.10
      
      
      9,360
      332
      3.55Federal funds sold. . . . . . . . . . . .
      . . . . . . . .
      125
      8
      6.40
      
      
      280
      15
      5.36
      
      
      229
      10
      4.37Total interest-earning assets. . . . .
      . . . . . .
      199,374
      16,096
      8.07
      
      
      177,231
      13,865
      7.82
      
      
      167,406
      12,994
      7.76Non-interest earning assets. . . . . . . .
      . . . . . .Office properties and equipment, net. . .
      . . .
      4,487
      
      
      
      
      3,708
      
      
      
      
      3,488Real estate, net . . . . . . . . . . . .
      . . . . . . . . . .
      2,463
      
      
      
      
      1,656
      
      
      
      
      1,007Other non-interest earning assets . . . .
      . . . .
      5,462
      
      
      
      
      4,962
      
      
      
      
      4,381Total assets . . . . . . . . . . . . .
      . . . . . . . . . .
      $211,786
      
      
      
      
      $187,557
      
      
      
      
      $176,282Interest-bearing liabilities:Passbook accounts. . . . . . . . . . . .
      . . . . . . . .
      $ 10,607
      322
      3.04
      
      
      $ 10,399
      317
      3.05
      
      
      $  9,102
      277
      3.04NOW and Super Saver accounts. . . . . . .
      . .
      43,904
      1,279
      2.91
      
      
      46,027
      1,394
      3.03
      
      
      43,075
      1,301
      3.02Certificates of deposit. . . . . . . . .
      . . . . . . . .
      94,623
      5,655
      5.98
      
      
      93,664
      5,125
      5.47
      
      
      88,786
      4,851
      5.46Total deposits. . . . . . . . . . . .
      . . . . . . . . .
      149,134
      7,256
      4.87
      
      
      150,090
      6,836
      4.55
      
      
      140,963
      6,429
      4.56Other interest-bearing liabilities. . . .
      . . . . .
      30,155
      1,872
      6.21
      
      
      6,485
      421
      6.49
      
      
      4,452
      270
      6.07Total interest-bearing liabilities. .
      . . . . . .
      179,289
      9,128
      5.09
      
      
      156,575
      7,257
      4.64
      
      
      145,415
      6,699
      4.61Non-interest bearing liabilities:Other liabilities. . . . . . . . . . . .
      . . . . . . . . . .
      7,555Total liabilities. . . . . . . . . . .
      . . . . . . . . . .
      186,844Stockholders' equity. . . . . . . . . . . .
      . . . . . . .
      24,942Total liabilities andstockholders' equity. . . . . . . .
      . . . . . . . .
      $211,786
      
      
      
      
      $187,557
      
      
      
      
      $176,282Net interest income. . . . . . . . . . . .
      . . . . . . . .
      
      $ 6,968
      
      
      
      
      $   6,608
      
      
      
      
      $ 6,295Interest rate spread. . . . . . . . . . . .
      . . . . . . . .
      
      
      
      %
      
      
      3.18
      % >
      
      
      3.15
      %Net interest margin. . . . . . . . . . . .
      . . . . . . . .
      
      
      3.49
      %
      
      
      3.73
      %
      
      
      3.76Ratio of average interest-earningassets to average interest-bearing liabilities. . . . . . . . . . .
      . . . . . . . . . __________________ (1) 
  Average balances include nonaccrual loans and loans 90 days or more past due.
  The corresponding interest up to the date of nonaccrual status has been
  included in the "Interest and Dividends" column. (2) 
  Average balances for a period have been calculated using the average monthly
  balances for the respective year. 4




Yields Earned and Rates Paid  The following table sets
  forth (on a consolidated basis) for the periods and at the date indicated, the
  weighted average yields earned on the Company's and First Home's assets, the
  weighted average interest rates paid on First Home's liabilities, together
  with the net yield on interest-earning assets.  At June 30,
      Years Ended
      June 30,
      >2001
      
      
      2001
      
      
      2000
      
      
      1999Weighted
      average yield on loan portfolio. . . . . . . . . . . . . .
      8.40
      %
      
      8.35
      %
      
      8.06
      %
      
      8.07
      %Weighted
      average yield on mortgage-backedsecurities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . . . .
      6.87
      
      
      6.83
      
      
      6.84
      
      
      6.95Weighted
      average yield on investment securities. . . . . . . .
      4.78
      
      
      5.83
      
      
      5.90
      
      
      6.81Weighted
      average yield on interest-bearing deposits . . . . .
      3.61
      
      
      3.69
      
      
      4.10
      
      
      3.55Weighted
      average yield on federal funds sold. . . . . . . . . .
      N/A
      
      
      6.40
      
      
      5.36
      
      
      4.37Weighted
      average yield on all interest-earning assets. . . . .
      7.95
      
      
      8.07
      
      
      7.82
      
      
      7.76Weighted
      average rate paid on total deposits. . . . . . . . . . .
      4.58
      
      
      4.87
      
      
      4.55
      
      
      4.56Weighted
      average rate paid on FHLB advances. . . . . . . . .
      5.66
      
      
      6.21
      
      
      6.49
      
      
      6.07Weighted
      average rate paid on all interest-bearing
      liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      4.76
      
      
      5.09
      
      
      4.64
      
      
      4.61Interest
      rate spread (spread between weightedaverage
      rate on all interest-earning assetsand all
      interest-bearing liabilities). . . . . . . . . . . . . . . . . .
      3.19
      
      
      2.98
      
      
      3.18
      
      
      3.15Net interest
      margin (net interest income(expense)
      as a percentage of averageinterest-earning assets). . . . . . . . . . . . . . . . . . . . . . . . .
      .
      N/A
      
      
      3.49
      
      
      3.73
      
      
      3.76     5




Rate/Volume Analysis  The following table sets
  forth the effects of changing rates and volumes on net interest income of the
  Company and Savings Bank.  Information is provided with respect to (i) effects
  on interest income attributable to changes in volume (changes in volume
  multiplied by prior rate); (ii) effects on interest income attributable to
  changes in rate (changes in rate multiplied by prior volume); (iii) changes in
  rate/volume (change in rate multiplied by change in volume); and (iv) the net
  changes (the sum of the previous columns).  Years Ended June 30,
      
      Years Ended June 30,2001 Compared to 2000
      
      2000 Compared to 1999Increase/(Decrease)
      
      Increase/(Decrease)Due
      to
      
      Due
      toRate/
      
      
      
      
      
      
      
      Rate/Volume
      
      Rate
      
      Volume
      
      Net
      
      Volume
      
      Rate
      
      Volume
      
      Net(In
      thousands)Interest-earning assets:Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      $1,699
      
      $
      466
      
      $ 
      60
      
      $2,225
      
      $
      944
      
      $
      (14)
      
      $
      -
      
      $
      930Mortgage-backed securities. . . . . . . . . . . . . . .
      (6)
      
      (0)
      
      0
      
      (6)
      
      (9)
      
      (1)
      
      -
      
      (10)Investment securities. . . . . . . . . . . . . . . . . . . .
      3
      
      (5)
      
      (0)
      
      (2)
      
      87
      
      (57)
      
      (11)
      
      19Daily interest-earning deposits. . . . . . . . . . . .
      52
      
      (26)
      
      (5)
      
      21
      
      (108)
      
      52
      
      (17)
      
      (73)Federal funds sold. . . . . . . . . . . . . . . . . . . . . .
      (8)
      
      3
      
      (2)
      
      (7)
      
      2
      
      2
      
      1
      
      5Total net change in income oninterest-earnings assets. . . . . . . . . . . . . . . . . .
      1,740
      
      438
      
      53
      
      2,231
      
      916
      
      (18)
      
      (27)
      
      871Interest-bearing liabilities:Interest-bearing deposits. . . . . . . . . . . . . . . . .
      (44)
      
      467
      
      (3)
      
      420
      
      416
      
      (14)
      
      5
      
      407FHLB advances. . . . . . . . . . . . . . . . . . . . . . . .
      1,536
      
      (18)
      
      (67)
      
      1,451
      
      123
      
      19
      
      9
      
      151Total net change in expense onInterest-bearing deposits. . . . . . . . . . . . . . . . .
      1,492
      
      449
      
      (70)
      
      1,871
      
      539
      
      5
      
      14
      
      558Net
      change in net interest income. . . . . . . . . . .
      $ 
      248
      
      $
      (11)
      
      $
      123
      
      $ 
      360
      
      $
      377
      
      $
      (23)
      
      $
      (41)
      
      $
      313   (1)  Includes interest on loans 90 days or more past due. 6




Interest Rate Sensitivity of Net Portfolio Value  The table below measures interest rate risk by
  estimating the change in market value of the Savings Bank's assets,
  liabilities, and off-balance sheet contracts in response to an instantaneous
  change in the general level of interest rates. The procedure for measuring
  interest rate risk was developed by the Office of Thrift Supervision ("OTS")
  to replace the "gap" analysis (the difference between interest-earning assets
  and interest-bearing liabilities that mature or reprice within a specific time
  period) used previously by the OTS. The model first estimates the level of the
  Savings Bank's market value of portfolio equity ("MVPE") (market value of
  assets, less market value of liabilities, plus or minus the market value of
  any off-balance sheet items) under the current rate environment. In general,
  market values are estimated by discounting the estimated cash flows of each
  instrument by appropriate discount rates. The model then recalculates the
  Savings Bank's MVPE under different interest rate scenarios. The change in
  MVPE under the different interest rate scenarios provides a measure of the
  Savings Bank's exposure to interest rate risk. The data presented below is as
  of June 30, 2001.  7




|                                            |  | -300               |  | -200            |  | -100            |  |              |  | +100         |  | +200         |  | +300        
|------------------------------------------- |  | ------------------ |  | --------------- |  | --------------- |  | ------------ |  | ------------ |  | ------------ |  | ------------
|                                            |  | Basis              |  | Basis           |  | Basis           |  | No           |  | Basis        |  | Basis        |  | Basis       
|                                            |  | Points             |  | Points          |  | Points          |  | Change       |  | Points       |  | Points       |  | Points      
|                                            |  | (In
    thousands)
|ASSETS                                      |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|Mortgage loans and                          |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|securities. . . . . . . . . . . . . . .     |  | $  
    175,099    |  | $  
    173,561 |  | $  
    172,310 |  | $171,131     |  | $169,897     |  | $168,431     |  | $166,362    
|Non-mortgage loans. . . . . . .             |  | 22,348             |  | 22,025          |  | 21,714          |  | 21,415       |  | 21,125       |  | 20,845       |  | 20,575      
|Cash,
    deposits and                      |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|securities. . . . . . . . . . . . . . .     |  | 18,088             |  | 18,015          |  | 17,943          |  | 17,872       |  | 17,802       |  | 17,732       |  | 17,663      
|Premises and                                |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|equipment. . . . . . . . . . . . . .        |  | 6,336              |  | 6,335           |  | 6,336           |  | 6,335        |  | 6,336        |  | 6,336        |  | 6,336       
|Other
    assets. . . . . . . . . . . . . . |  | 5,599              |  | 6,999           |  | 8,267           |  | 9,537        |  | 10,558       |  | 11,585       |  | 12,660      
|TOTAL. . . . . . . . . . . . . . . . .      |  | $  
    227,470    |  | $  
    226,935 |  | $  
    226,570 |  | $226,290     |  | $225,718     |  | $224,929     |  | $223,596    
|                                            |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|LIABILITIES                                 |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|Deposits. . . . . . . . . . . . . . . . .   |  | $  
    165,605    |  | $  
    164,930 |  | $  
    164,273 |  | $163,630     |  | $163,001     |  | $162,391     |  | $161,791    
|Borrowings. . . . . . . . . . . . . .       |  | 37,656             |  | 35,435          |  | 33,755          |  | 32,592       |  | 31,851       |  | 31,318       |  | 30,867      
|Other
    liabilities. . . . . . . . . . .  |  | 675                |  | 675             |  | 675             |  | 675          |  | 674          |  | 674          |  | 674         
|TOTAL. . . . . . . . . . . . . . . . .      |  | $  
    203,936    |  | $  
    201,040 |  | $  
    198,703 |  | $196,897     |  | $195,526     |  | $194,383     |  | $193,332    
|                                            |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|MARKET VALUE OF                             |  |                    |  |                 |  |                 |  |              |  |              |  |              |  |             
|PORTFOLIO EQUITY. . . .                     |  | $   
    23,534    |  | $   
    25,895 |  | $   
    27,867 |  | $
    29,393 |  | $
    30,192 |  | $
    30,546 |  | $
    30,264



8



Lending
  Activities  General.
  The principal lending activity of the Savings Bank is the origination of
  conventional mortgage loans for the purpose of purchasing, constructing or
  refinancing one-to-four family owner occupied homes within its primary market
  area.  In an attempt to diversify its lending portfolio, however, the Savings
  Bank also originates nonresidential real estate loans, consumer loans, mobile
  home loans, home improvement loans, commercial loans, business loans, student
  loans and loans secured by savings accounts.  In addition to loans within the
  Savings Bank's primary market area, the Savings Bank also has originated 25
  one-to-four family home loans, four land loans and one commercial real estate
  loan in Texas, Arkansas, and Tennessee.  The aggregate balance of these 30
  loans at June 30, 2001 was $1.3 million.  These loans were performing
  according to the scheduled terms at June 30, 2001.  At June 30, 2001 the Savings Bank's net loans
  receivable totaled approximately $190.4 million representing approximately
  86.14% of consolidated total assets.  Since 1973, the Savings Bank has
  primarily originated ARM loan products.  At June 30, 2001, ARM loans accounted
  for $169.2 million or 87.48% of the total loan portfolio and 98.24% of loans
  secured by real estate.  The Savings Bank focuses on serving the needs of its
  local community and strongly believes in a lending philosophy that stresses
  individual customer service and flexibility in meeting the needs of its
  customers.  Loan Portfolio Analysis. style="font-size: 11.0pt; font-family: Times New Roman; letter-spacing: -.1pt"> 
  The following table sets forth the composition of the Savings Bank's loan
  portfolio by type of loan and type of security as of the dates indicated. 
  Construction loans are included in the residential and commercial loan types. 
  The Savings Bank does not account for construction loans separate from
  residential and commercial loans.  style="letter-spacing:-.1pt">9




At June 30,2001
      
      2000
      
      1999
      
      1998
      
      1997Amount
      
      Percent
      
      Amount
      
      Percent
      
      Amount
      
      Percent
      
      Amount
      
      Percent
      
      Amount
      
      Percent(Dollars in
      thousands)Type of Loan:Residential. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . . . . .
      $123,758
      
      64.00
      %
      
      $118,929
      
      66.44
      %
      
      $113,075
      
      72.14
      %
      
      $112,404
      
      74.74
      %
      
      $105,700
      
      76.82
      %Commercial
      or industrial real estate. . . . . . . . . . . . . . . . .
      30,839
      
      15.95
      
      
      28,575
      
      15.96
      
      
      15,850
      
      10.11
      
      
      11,615
      
      7.72
      
      
      10,876
      
      7.90Land. . . .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      .
      12,526
      
      6.48
      
      
      9,029
      
      5.05
      
      
      8,407
      
      5.36
      
      
      8,727
      
      5.80
      
      
      6,828
      
      4.97Second
      mortgage loans. . . . . . . . . . . . . . . . . . . . . . . . . . .
      5,076
      
      2.62
      
      
      5,082
      
      2.84
      
      
      4,991
      
      3.19
      
      
      4,910
      
      3.27
      
      
      4,278
      
      3.11Total
      mortgage loans. . . . . . . . . . . . . . . . . . . . . . . . . . .
      172,199
      
      89.05
      
      
      161,615
      
      90.29
      
      
      142,323
      
      90.80
      
      
      137,656
      
      91.53
      
      
      127,682
      
      92.80Other Loans:Automobile
      loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      7,772
      
      4.02
      
      
      6,517
      
      3.64
      
      
      5,270
      
      3.36
      
      
      5,724
      
      3.81
      
      
      4,334
      
      3.15Savings
      account loans. . . . . . . . . . . . . . . . . . . . . . . . . . . .
      1,685
      
      0.87
      
      
      1,646
      
      0.92
      
      
      1,944
      
      1.24
      
      
      1,662
      
      1.10
      
      
      1,301
      
      0.94Mobile home
      loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      1,302
      
      0.67
      
      
      1,319
      
      0.74
      
      
      1,346
      
      0.86
      
      
      1,135
      
      0.75
      
      
      743
      
      0.54Other
      consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      2,080
      
      1.08
      
      
      2,317
      
      1.29
      
      
      1,552
      
      0.99
      
      
      1,847
      
      1.23
      
      
      1,373
      
      1.00Commercial
      business. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      8,344
      
      4.31
      
      
      5,582
      
      3.12
      
      
      4,314
      
      2.75
      
      
      2,372
      
      1.58
      
      
      2,162
      
      1.57Total
      other loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      21,183
      
      10.95
      
      
      17,381
      
      9.71
      
      
      14,426
      
      9.20
      
      
      12,740
      
      8.47
      
      
      9,913
      
      7.20Total
      loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      193,382
      
      100.00
      %
      
      178,996
      
      100.00
      %
      
      156,749
      
      100.00
      %
      
      150,396
      
      100.00
      %
      
      137,595
      
      100.00
      %Add:Unamortized
      deferred loan costs,net of
      origination fees. . . . . . . . . . . . . . . . . . . . . . . . . . .
      288
      
      
      
      
      267
      
      
      
      
      217
      
      
      
      
      167
      
      
      
      
      107Less:Undisbursed
      loans in process. . . . . . . . . . . . . . . . . . . . . . .
      2,622
      
      
      
      
      3,797
      
      
      
      
      2,810
      
      
      
      
      3,629
      
      
      
      
      3,117Allowance
      for possible loanlosses. .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      .
      696
      
      
      
      
      597
      
      
      
      
      540
      
      
      
      
      528
      
      
      
      
      481Total loans
      receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . .
      $190,352
      
      
      
      
      $174,869
      
      
      
      
      $153,616
      
      
      
      
      $146,406
      
      
      
      
      $134,104  10




At June 30,2001
      
      2000
      
      1999
      
      1998
      
      1997Amount
      
      Percent
      
      Amount
      
      Percent
      
      Amount
      
      Percent
      
      Amount
      
      Percent
      
      Amount
      
      Percent(Dollars in
      thousands)Type of
      Security:Residential
      real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . .Second
      mortgage loans. . . . . . . . . . . . . . . . . . . . . . . . . .
      $  3,233
      
      1.67
      %
      
      $  3,366
      
      1.88
      %
      
      $   3,746
      
      2.39
      %
      
      $  3,884
      
      2.58
      %
      
      $  3,805
      
      2.77
      %One-to-four
      family. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      123,758
      
      64.00
      
      
      118,929
      
      66.44
      
      
      113,075
      
      72.14
      
      
      112,404
      
      74.74
      
      
      105,700
      
      76.82Multi-family. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . . . .
      1,797
      
      0.93
      
      
      1,774
      
      0.99
      
      
      1,535
      
      0.98
      
      
      1,085
      
      0.72
      
      
      1,119
      
      0.81Commercial
      or industrial realestate.
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      .
      30,734
      
      15.89
      
      
      28,381
      
      15.86
      
      
      15,437
      
      9.85
      
      
      11,422
      
      7.60
      
      
      10,123
      
      7.36Land. . . .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      12,677
      
      6.56
      
      
      9,165
      
      5.12
      
      
      8,530
      
      5.44
      
      
      8,861
      
      5.89
      
      
      6,935
      
      5.04Commercial or
      industrialassets.
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      .
      8,344
      
      4.31
      
      
      5,582
      
      3.12
      
      
      4,314
      
      2.75
      
      
      2,372
      
      1.58
      
      
      2,162
      
      1.57Automobile.
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      7,772
      
      4.02
      
      
      6,517
      
      3.64
      
      
      5,270
      
      3.36
      
      
      5,724
      
      3.81
      
      
      4,334
      
      3.15Savings
      accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      1,685
      
      0.87
      
      
      1,646
      
      0.92
      
      
      1,944
      
      1.24
      
      
      1,662
      
      1.10
      
      
      1,301
      
      0.94Mobile
      homes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      1,302
      
      0.67
      
      
      1,319
      
      0.74
      
      
      1,346
      
      0.86
      
      
      1,135
      
      0.75
      
      
      743
      
      0.54Other
      consumer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      2,080
      
      1.08
      
      
      2,317
      
      1.29
      
      
      1,552
      
      0.99
      
      
      1,847
      
      1.23
      
      
      1,373
      
      1.00Total. .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      193,382
      
      100.00
      %
      
      178,996
      
      100.00
      %
      
      156,749
      
      100.00
      %
      
      150,396
      
      100.00
      %
      
      137,595
      
      100.00
      %Add:Unamortized
      deferred loan costs,net of
      origination fees. . . . . . . . . . . . . . . . . . . . . . . . . . .
      288
      
      
      
      
      267
      
      
      
      
      217
      
      
      
      
      167
      
      
      
      
      107Less:Undisbursed
      loans in process. . . . . . . . . . . . . . . . . . . . . .
      937
      
      
      
      
      652
      
      
      
      
      932
      
      
      
      
      1,514
      
      
      
      
      1,185Due to
      borrowers on constructionloans. .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      1,685
      
      
      
      
      3,145
      
      
      
      
      1,878
      
      
      
      
      2,115
      
      
      
      
      1,932Allowance
      for possible loanlosses. .
      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      696
      
      
      
      
      597
      
      
      
      
      540
      
      
      
      
      528
      
      
      
      
      481Total loans
      receivable, net. . . . . . . . . . . . . . . . . . . . . . . . .
      $190,352
      
      
      
      
      $174,869
      
      
      
      
      $ 153,616
      
      
      
      
      $146,406
      
      
      
      
      $134,104  11




One-to-Four Family Residential Loans style="font-size: 11.0pt; font-family: Times New Roman; letter-spacing: -.1pt">.
  The primary lending activity of the Savings Bank has been the origination of
  mortgage loans to enable borrowers to purchase existing homes, to construct
  new one-to-four family homes or refinance existing debt on their homes. 
  Management believes that this policy of focusing on single-family residential
  mortgage loans has been successful in contributing to interest income while
  keeping delinquencies and losses at a minimum.  At June 30, 2001,
  approximately $123.8 million, or 64.00% of the Savings Bank's gross loan
  portfolio, consisted of loans secured by one-to-four family residential real
  estate.  The Savings Bank presently originates ARM loans
  secured by one-to-four family properties with loan terms of 10 to 30 years. 
  Since 1973, the Savings Bank has originated almost exclusively ARM loan
  products. Initially, ARM loans were indexed to the Savings Bank's cost of
  money.  In 1979, the Savings Bank discontinued the use of the indexed ARM
  loans and changed to its current policy of non-indexed ARMs, which generally
  allows, but does not require, the Savings Bank to adjust the interest rate
  once a year, up or down, not to exceed 1% per year.  Loans of this nature
  originated after 1988 generally are limited to a 6% maximum increase over the
  life of the loan.  The Savings Bank does not charge points on ARM
  loans.  In addition, the Savings Bank does not charge appraisal fees.  It
  quotes an interest rate, or base rate, with no points and gives the borrower
  the option, if desired, to pay a 1% fee, but obtain the loan at 1% below the
  Savings Bank's base rate for the first year of the loan.  Construction
  borrowers can pay a 2% fee and receive a 2% reduction in the initial interest
  rate for the first year of the loan.  The Savings Bank funds most of its loan
  commitments in a relatively short period of time.  If a commitment expires,
  the Savings Bank will generally renew the commitment upon request.  The Savings Bank underwrites ARMs based on an
  assumed 1% per year interest rate increase.  The Savings Bank's policy to
  adjust the interest rate once a year within 1% is a self-imposed limit. The
  Savings Bank's experience has been that most of its borrowers can manage an
  increased payment resulting from a 1% increase; however, an increase of over
  1% may put a strain on the borrowers' ability to repay.  As a result, the
  potential for a substantial increase in interest payments on the Savings
  Bank's ARM loans is lessened as is the likelihood of delinquencies and
  defaults.  The Savings Bank's lending policies generally limit the maximum loan-to-value
  ratio on adjustable rate residential mortgage loans to 85% of the lesser of
  the appraised value or purchase price of the underlying residential property. 
  The Savings Bank requires title insurance or an abstract extension and
  attorney's opinion, fire and casualty coverage and a flood zone determination
  on all mortgage loans originated or purchased.  All of the Savings Bank's real
  estate loans contain "due on sale" clauses.  The Savings Bank personnel
  prepare all property evaluations at no expense to the borrower unless the
  property is outside its normal lending territory or the loan exceeds $250,000,
  in which event, independent appraisers are utilized.  At June 30, 2001 the
  maximum loan-to-value ratio on loans to local borrowers was generally 85%. 12   At June 30, 2001, the Savings Bank had $5.8
  million in interim construction loans in its portfolio with maximum loan to
  value ratios of 80% to 85%.  Most of these loans are residential construction
  loans for single- or multi-family dwelling units.  All of these loans
  automatically convert into permanent residential real estate loans.  Multi-Family Residential Loans.
  At June 30, 2001, approximately $1.8 million, or .93% of the Savings Bank's
  gross loan portfolio consisted of 10 loans secured by multi-family residential
  real estate.  Multi-family real estate loans are generally originated at 80%
  of the appraised value of the property or selling price, whichever is less,
  and carry adjustable rate mortgages with the principal amortized over 10 to 30
  years.  Loans secured by multi-family real estate are generally larger and
  involve a greater degree of risk than one-to-four family residential loans. 
  In addition, multi-family real estate loans carry risks similar to those
  associated with commercial real estate lending.  See " -- Consumer and
  Commercial Business Loans."  The Savings Bank's largest multi-family
  residential loan was a $536,000 loan made in early 1999 with a balance at June
  30, 2001 of $491,000.  The loan is secured by a 24-unit apartment complex in
  Taney County, Missouri (near Branson) with a $565,500 appraisal along with an
  assignment of a $105,000 promissory note.  At June 30, 2001, only one of the
  ten loans was not performing according to its scheduled terms.  See
  "-Non-Performing Assets and Delinquencies."  Land and Commercial Real Estate Loans
  The Savings Bank had land and commercial real estate loans outstanding of
  $43.4 million, or 22.45%, at June 30, 2001.  The commercial real estate loans
  originated by the Savings Bank amounted to $30.7 million, or 15.89%, and are
  primarily secured by commercial buildings.  Land loans on property located
  primarily in the Savings Bank's primary market area amounted to $12.7 million
  or 6.56% of the total loan portfolio at June 30, 2001.  The Savings Bank's
  land loans generally are secured by farm land used in beef or dairy operations
  and involve the risks associated with general agricultural conditions relative
  to those areas of agriculture.  The Savings Bank does not actively solicit or originate commercial real estate
  loans.  The Savings Bank's largest commercial real estate loan was a $900,000
  line of credit, with a June 30, 2001 balance of $826,000 established to fund a
  beef cattle operation.  The loan is secured by two farms in Ozark County,
  Missouri with just over 2,000 acres and a combined appraisal of $1,038,000. 
  The loan is performing according to its scheduled terms. Of primary
  concern in commercial real estate lending is the borrower's creditworthiness
  and the feasibility and cash flow potential of the property.  Loans secured by
  income properties are generally larger and involve greater risks than
  residential mortgage loans because payments on loans secured by income
  properties are often dependent on successful operation or management of the
  properties.  As a result, repayment of such loans may be subject, to a greater
  extent than residential real estate loans, to supply and demand in the market
  in the type of property securing the loan and therefore, may be subject to
  adverse conditions in the real estate market or the economy.  If the cash flow
  from the project is reduced, the borrowers' ability to repay the loan may be
  impaired.  13   Consumer and Commercial Business Loans.
  The Savings Bank's consumer loans consist of car loans, appliance dealer
  loans, mobile home loans, savings account loans, and various other consumer
  loans.  At June 30, 2001, the Savings Bank's consumer
  loans totaled approximately $12.8 million, or 6.64% of the Savings Bank's
  total loans.  Subject to market conditions, management expects to continue to
  market and originate consumer loans as part of its strategy to provide a wide
  range of personal financial services to its depository customer base and as a
  means to enhance the interest rate sensitivity of the Savings Bank's
  interest-earning assets and its interest rate spread.  The Savings Bank also purchases consumer loans
  from two local appliance dealers.  The loans are made by the appliance dealers
  to the dealers' customers.  At June 30, 2001, the loans amounted to $144,000. 
  Reserves for losses maintained by the dealers at June 30, 2001 totaled
  $23,000.  These loans are originated by the dealers and are assigned, with
  recourse, to the Savings Bank.  Payments are made directly to the dealers by
  the borrower and any losses are borne by the dealer rather than the Savings
  Bank.  The Savings Bank obtains and reviews regularly updated financial
  statements of the appliance dealers and monitors the individual loans
  purchased.  The Savings Bank's procedures for underwriting
  consumer loans include an assessment of the applicant's payment history on
  other debts and ability to meet existing obligations and payments on the
  proposed loan.  Although the borrower's creditworthiness is a primary
  consideration, the underwriting process also includes a comparison of the
  value of the security, if any, to the proposed loan amount.  Consumer loans
  entail greater risk than do residential mortgage loans, particularly in the
  case of consumer loans which are unsecured or secured by rapidly depreciating
  assets such as automobiles, mobile homes, boats and recreational vehicles.  In
  such cases, any repossessed collateral for a defaulted consumer loan may not
  provide an adequate source of repayment of the outstanding loan balance as a
  result of the greater likelihood of damage, loss or depreciation.  The
  remaining deficiency often does not warrant further substantial collection
  efforts against the borrower.  In addition, consumer loan collections are
  dependent on the borrower's continuing financial stability, and thus are more
  likely to be adversely affected by job loss, divorce, illness or personal
  bankruptcy.  Furthermore, the
application of
  various federal and state laws, including federal and state bankruptcy and
  insolvency laws, may limit the amount which can be recovered on such loans. 
  Such loans may also give rise to claims and defenses by a consumer loan
  borrower against an assignee of such loans such as the Savings Bank, and a
  borrower may be able to assert against such assignee claims and defenses that
  it has against the seller of the underlying
  collateral.  Historically, the Savings Bank has had a low level of
  delinquencies on its consumer loans.  See"-- Non-Performing Assets and
  Delinquencies."  At

  June 30, 2001, only $284,000 of the Savings Bank's consumer loan portfolio was
  90 days or more past due.  Commercial business loans consist of commercial loans with no real estate as
  security, business equipment loans, farm equipment loans and cattle loans.  As
  of June 30, 2001, 2000 and 1999, these loans totaled $8.3 million, $5.6
  million and $4.3 million, respectively.  The ratio of these other loans as a
  percent of total loans increased during the three years ended June 30, 2001 to
  4.31%, 3.12% and 2.75%, respectively.  These ratios are an indication that the
  Savings Bank does not particularly emphasize loans of this type, but may make
  such loans for well qualified customers.  There have been no losses from First
  Home originated loans in the "other loans" category in the past three fiscal
  years.  Second Mortgage Loans.
  The Savings Bank offers adjustable rate second mortgage loans that are usually
  made on the security of the borrower's residence.  Loans normally do not
  exceed 80% to 85% of the appraised value of the residence, less the
  outstanding principal of the first mortgage, and have terms of up to 20 to 25
  years requiring monthly payments of principal and interest.  At June 30, 2001,
  second mortgage loans amounted to $3.2 million, or 1.67% of total loans of the
  Savings Bank.  Subprime Lending.

  The Savings Bank does not engage in subprime real


  estate or consumer lending.  14




Loan Maturity and
  Repricing  The following
  table sets forth certain information at

  June 30, 2001 regarding the dollar amount of loans maturing in the
  Savings Bank's portfolio based on their contractual terms to maturity, but
  does not include scheduled payments or potential prepayments.  Demand loans,
  loans having no stated schedule of repayments and no stated maturity, are
  reported as due in one year or less.  Mortgage loans which have adjustable
  rates are shown as maturing at their next repricing date.  Loan balances do
  not include undisbursed loan proceeds, unearned discounts, unearned income and
  allowance for loan losses. After One
      Year
      
      After 3 Years
      
      After 5 YearsWithin One
      Year
      
      Through 3
      Years
      
      Through 5
      Years
      
      Through 10
      Years
      
      Beyond 10
      Years
      
      Total(In
      thousands)Real estate
      mortgage. . . . . . . . . . . . . . . . . . .
      
      $    125,768
      
      $       516
      
      $        13
      
      $        163
      
      $        531
      
      $ 126,991Commercial
      real estate. . . . . . . . . . . . . . . . .
      
      32,385
      
      56
      
      -
      
      90
      
      -
      
      32,531Land. . . . .
      . . . . . . . . . . . . . . . . . . . . . . . . . . .
      
      12,677
      
      -
      
      -
      
      -
      
      -
      
      12,677Mobile home.
      . . . . . . . . . . . . . . . . . . . . . . . .
      
      1,293
      
      9
      
      -
      
      -
      
      -
      
      1,302Automobile. .
      . . . . . . . . . . . . . . . . . . . . . . . .
      
      7,593
      
      59
      
      120
      
      -
      
      -
      
      7,772Savings
      account loans. . . . . . . . . . . . . . . . . .
      
      1,386
      
      216
      
      52
      
      5
      
      26
      
      1,685Other
      consumer. . . . . . . . . . . . . . . . . . . . . . .
      
      1,915
      
      165
      
      -
      
      -
      
      -
      
      2,080Commercial
      business. . . . . . . . . . . . . . . . . . .
      
      8,201
      
      44
      
      8
      
      -
      
      91
      
      8,344Total
      loans. . . . . . . . . . . . . . . . . . . . . . . .
      
      $    191,218
      
      $     1,065
      
      $       193
      
      $        258
      
      $        648
      
      $ 193,382  The following table sets forth the dollar amount of all loans due one year
  after
 >June 30, 2001, all of
  which have fixed interest rates. FixedRates(In
      thousands)Real estate mortgage. . . . .
      
      $   709Commercial real estate. . . .
      
      146Land. . . . . . . . . . . . . . . . .
      
      -Mobile home. . . . . . . . . . .
      
      9Automobile. . . . . . . . . . . .
      
      179Savings account loans. . . .
      
      299Other consumer. . . . . . . . .
      
      165Commercial business. . . . .
      
      143Total. . . . . . . . . . . . . . .
      
      $
      1,650  15




The following table sets
  forth scheduled contractual amortization of loans and mortgage-backed
  securities at June 30, 2001 and the dollar amount of such loans and
  mortgage-backed securities at the date they are scheduled to mature after one
  year which have fixed or adjustable interest rates.  Demand loans, loans
  having no stated schedule of repayments and no stated maturity are reported as
  due in one year or less. At

     June 30, 2001Commercial
      
      
      
      Mortgage-Mortgage
      
      Consumer
      
      Business
      
      Total
      
      BackedLoans
      
      Loans
      
      Loans
      
      Loans
      
      Securities(In
      thousands)Amounts due:Within one year. . . . . . . . . . .
      $ 
      7,334
      
      $
      4,832
      
      $4,445
      
      $
      16,611
      
      $    -After one year
      
      
      
      
      
      
      
      -
      
      -through three years. . . . . . . .
      1,683
      
      3,708
      
      1,753
      
      7,144
      
      -After three years
      
      
      
      
      
      
      -
      
      -through five years. . . . . . . . .
      2,417
      
      3,105
      
      1,476
      
      6,998
      
      8After five years. . . . . . . . . . . .
      160,765
      
      1,194
      
      670
      
      162,629
      
      363Total. . . . . . . . . . . . . . . . .
      $172,199
      
      $12,839
      
      $8,344
      
      $193,382
      
      $371Interest rate termson amounts due afterone year:Fixed. . . . . . . . . . . . . . . . . .
      $    855
      
      $   652
      
      $ 
      143
      
      $ 
      1,650
      
      $ 
      65Adjustable. . . . . . . . . . . . . .
      164,010
      
      7,355
      
      3,756
      
      175,121
      
      306Total. . . . . . . . . . . . . . . . .
      $164,865
      
      $
      8,007
      
      $3,899
      
      $176,771
      
      $371  Mortgage Loan Solicitation and Processing.
  The Savings Bank's main source of loans is from referrals from current or
  prior borrowers, limited walk-ins and contact and relationships with real
  estate agents.   Once a mortgage loan application is received, a credit and
  property analysis is completed including obtaining a credit report from local
  reporting agencies, verification of income and deposits through mail or direct
  contact, asset and liability verification as required and an evaluation of the
  property offered as collateral.  Real estate evaluations are completed by
  board approved staff personnel.  The application is then submitted for
  underwriting by designated staff members and forwarded to a loan officer for
  review and action along with the underwriter's recommendations.  Decisions are
  generally made within a week.  Loans in excess of $250,000 are approved by the
  Board of Directors and loans less than that amount are approved by authorized
  officers or a loan officer of the Savings Bank.  Loan Originations, Purchases and Sales
  Loans are originated to meet or exceed the applicable underwriting
  requirements of the Savings Bank.  The Savings Bank has never sold loans in
  the secondary market.  The Savings Bank has occasionally purchased loans
  from other financial institutions or two local appliance dealers, as discussed
  above.  See "-- Consumer and Commercial Business Loans."  The Savings Bank did
  not purchase any mortgage loans during 2001.  16




The
  following table shows total mortgage loans originated, purchased, sold and
  repaid during the periods indicated.  Years Ended June 30,2001
      
      2000
      
      1999(In
      thousands)Total mortgage loans at beginning of period. . . . . . . . .
      $161,615
      
      $142,323
      
      $
      137,656Loans originated:One-to-four family residential. . . . . . . . . . . . . . . . . .
      
      34,615
      
      38,075
      
      37,155Multi-family residential and commercial real estate. .
      10,435
      
      13,104
      
      6,832Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . .
      
      5,975
      
      5,093
      
      3,194Total loans originated. . . . . . . . . . . . . . . . . . . . . . .
      
      51,025
      
      56,272
      
      47,181Loans purchased:One-to-four family residential. . . . . . . . . . . . . . . . . .
      
      -
      
      -
      
      49Multi-family residential and commercial real estate. .
      -
      
      -
      
      -Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . .
      
      -
      
      -
      
      29Participation loans. . . . . . . . . . . . . . . . . . . . . . . . . . .
      
      -
      
      -
      
      -Total loans purchased. . . . . . . . . . . . . . . . . . . . . . .
      
      -
      
      -
      
      78Loans sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . .
      
      -
      
      -
      
      -Mortgage loan principal repayments. . . . . . . . . . . . . .
      
      39,972
      
      36,818
      
      42,467Other-loans charged off ortransferred to other real estate(1). . . . . . . . . . . . . . . .
      
      469
      
      162
      
      125Total other activity. . . . . . . . . . . . . . . . . . . . . . . . .
      
      469
      
      162
      
      125Total gross mortgage loans at end of period. . . . . . . . .
      $172,199
      
      $161,615
      
      $
      142,323Total mortgage-backed certificates at beginning ofPeriod. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      . .
      
      $    449
      
      $    550
      
      $     703Mortgage-backed purchased. . . . . . . . . . . . . . . . . . . .
      
      -
      
      -
      
      -Mortgage-backed sold. . . . . . . . . . . . . . . . . . . . . . . . .
      
      -
      
      -
      
      -Principal repayments. . . . . . . . . . . . . . . . . . . . . . . . . .
      
      (87)
      
      (100)
      
      (143)Amortization of premiums. . . . . . . . . . . . . . . . . . . . .
      
      -
      
      -
      
      -Adjustment to market value. . . . . . . . . . . . . . . . . . . .
      
      14
      
      (1)
      
      (10)Total mortgage-backed at end of period. . . . . . . . . . .
      
      $    376
      
      $    449
      
      $     550  ------------- (1)   Loans transferred to
  other real estate amounted to $449,000, $142,000 and $99,000 during fiscal
  2001, 2000 and 1999, respectively.  Mortgage loans charged off amounted to
  $20,000, $20,000 and $26,000 during fiscal 2001, 2000 and 1999, respectively.  17




Loan Commitments
The Savings Bank issues commitments for adjustable rate one-to-four family
residential mortgage loans that are honored for up to a maximum of 30 days from
approval.  If the commitment expires, it is generally renewed upon request
without penalty or expense to the borrower at the current market rate.  The
Savings Bank had outstanding net loan commitments of approximately $451,000 at
June 30, 2001.  See Note 14 of the Notes to the Consolidated Financial
Statements.



Loan Origination and Other Fees
The Savings Bank does not charge points on ARM mortgage loans.  Instead, it
quotes an interest rate, or base rate, with no points and gives the borrower the
option, if desired, to pay a 1% fee, but obtain the loan at 1% below the Savings
Bank's base rate at the time the loan is issued.  Subsequent increases in the
loan's interest rate are based upon the reduced rate rather than the base rate. 
Construction borrowers can pay a 2% fee and receive a 2% reduction in the
initial rate.  Current accounting standards require fees received (net of
certain loan origination costs) for originating loans to be deferred and
amortized into interest income over the contractual life of the loan.  Net
deferred fees associated with loans that are sold are recognized as income at
the time of sale.  The Savings Bank had $288,000 net deferred loan costs at June
30, 2001.



Non-Performing Assets and Delinquencies
The Savings Bank generally institutes collection procedures when a monthly
payment is two to four weeks delinquent.  A first notice is generally mailed to
the borrower, or a phone call made.  If necessary, a second notice follows at
the end of the next two week period.  In most cases, delinquencies are cured
promptly; however, if the Savings Bank is unable to make contact with the
borrower to obtain full payment, or, if that is not possible, work out a
repayment schedule, a notice to commence foreclosure may be mailed to the
borrower.  The Savings Bank makes every reasonable effort, however, to work with
delinquent borrowers.  Understanding that borrowers sometimes cannot make
payments because of illness, loss of employment, etc., the Savings Bank will
attempt to work with delinquent borrowers who are communicating and cooperating
with the Savings Bank.



The Savings Bank institutes the same collection procedures for non-mortgage
loans.



The Board of Directors is informed on a monthly basis as to the status of all
mortgage and non-mortgage loans that are delinquent 60 days or more, as well as
the status on all loans currently in foreclosure or owned by the Savings Bank
through foreclosure.



The table below sets forth the amounts and categories of non-performing assets
in the Savings Bank's loan portfolio at the dates indicated.  Loans are placed
on non-accrual status only when the Savings Bank determines there is little, if
any, likelihood they will be repaid.  The loans are fully reserved at that time,
through appropriate loss reserves and are kept on the books as long as some
principal is being repaid.  The Savings Bank has no reserves for uncollected
interest and does not accrue interest on the non-accrual loans.  The Savings
Bank would have recorded interest income of $4,300 annually on non-accrual loans
during the years ended June 30, 2001, 2000 and 1999, respectively, if such loans
had been performing during such periods.  The Savings Bank did not recognize
interest income on loans after being placed on a non-accrual basis during the
years ended June 30, 2001, 2000 and 1999.



Accruing loans contractually past due 90 days or more have increased over the
past year.  The vast majority of the remaining past due loans are well secured,
and the borrowers are making payments and working with Savings Bank personnel to
bring their loans current.



18





The following table sets forth information with respect to the Savings Bank's
non-performing assets at the dates indicated.  At the dates shown, the Savings
Bank had no restructured loans within the meaning of SFAS 15.

|                                                          |        | At
    June 30,       
|--------------------------------------------------------- | ------ | ----------------------
|                                                          |        | 2001                  
|                                                          |        | (Dollars in thousands)
|Loans
    accounted for on                                |        |                       
|a
    nonaccrual basis                                    |        |                       
|Real estate:                                              |        |                       
|Residential. . . . . . . . . . . . . . . . . . . .        |        | $      -              
|Commercial. . . . . . . . . . . . . . . . . . .           |        | -                     
|Commercial business. . . . . . . . . . . . .              |        | 40                    
|Consumer. . . . . . . . . . . . . . . . . . . . . .       |        | 9                     
|Total. . . . . . . . . . . . . . . . . . . . . . . .      |        | $  
    49            
|                                                          |        |                       
|Accruing loans which are contractually                    |        |                       
|past due 90 days or more:                                 |        |                       
|Real estate:                                              |        |                       
|Residential. . . . . . . . . . . . . . . . . . . .        |        | $1,623                
|Commercial. . . . . . . . . . . . . . . . . . .           |        | 1,038                 
|Commercial business. . . . . . . . . . . . .              |        | 552                   
|Consumer. . . . . . . . . . . . . . . . . . . . . .       |        | 275                   
|Total. . . . . . . . . . . . . . . . . . . . . . . .      |        | $3,488                
|                                                          |        |                       
|Total of nonaccrual and                                   |        |                       
|90 days past due loans. . . . . . . . . . . .             | $3,537 |                       
|                                                          |        |                       
|Real
    estate owned. . . . . . . . . . . . . . . . . .  |        | 193                   
|                                                          |        |                       
|Other
    non-performing assets. . . . . . . . . .        | -      |                       
|Slow
    home loans (60 to 90 days                        |        |                       
|delinquent). . . . . . . . . . . . . . . . . . . . . .    |        | 995                   
|Total non-performing assets. . . . . . .                  | $4,725 |                       
|                                                          |        |                       
|Total
    loans delinquent 90 days                        |        |                       
|or
    more to net loans. . . . . . . . . . . . . . .     |        | 1.86%                 
|                                                          |        |                       
|Total
    loans delinquent 90 days                        |        |                       
|or
    more to total consolidated                         |        |                       
|assets. . . . . . . . . . . . . . . . . . . . . . . . . . |        | 1.60%                 
|                                                          |        |                       
|Total
    non-performing assets                           |        |                       
|to
    total consolidated                                 |        |                       
|assets. . . . . . . . . . . . . . . . . . . . . . . . . . |        | 2.14%                 



22

Asset Classification.
  The OTS has adopted various regulations regarding problem assets of savings
  institutions.  The regulations require that each insured institution review
  and classify its assets on a regular basis.  In addition, in connection with
  examinations of insured institutions, OTS examiners have authority to identify
  problem assets and, if appropriate, require them to be classified.  There are
  three classifications for problem assets: substandard, doubtful and loss. 
  Substandard assets must have one or more defined weaknesses and are
  characterized by the distinct possibility that the insured institution will
  sustain some loss if the deficiencies are not corrected.  Doubtful assets have
  the weaknesses of substandard assets with the additional characteristic that
  the weaknesses make collection or liquidation in full on the basis of
  currently existing facts, conditions and values questionable, and there is a
  high possibility of loss.  An asset classified loss is considered
  uncollectible and of such little value that continuance as an asset of the
  institution is not warranted.  If an asset or portion thereof is classified
  loss, the insured institution must either establish specific allowances for
  loan losses for the full amount of the portion of the asset classified as loss
  or charge off such amount.  All or a portion of general loan loss allowances
  established to cover possible losses related to assets classified substandard
  or doubtful may be included in determining an institution's regulatory
  capital, while specific valuation allowances for loan losses generally do not
  qualify as regulatory capital.  At June 30, 2001 and 2000 the aggregate amounts of the Savings Bank's
  classified assets as determined by the Savings Bank, and of the Savings Bank's
  general and specific loss allowances and charge-offs, were as follows:  At June 30,2001
      
      2000(In
      thousands)Loss. . . .
      . . . . . . . . . . . . . . .
      
      $   70
      
      $   76Doubtful. .
      . . . . . . . . . . . . . .
      
      162
      
      149Substandard
      assets. . . . . . . . .
      
      1,600
      
      2,047Total
      classified assets. . . . .
      $1,832
      
      $2,272General loss
      allowances. . . . .
      $  337
      
      $  307Specific
      loss allowances. . . . .
      359
      
      290Total
      loss allowances. . . . .
      $  696
      
      $  597Charge-offs.
      . . . . . . . . . . . . .
      
      $   61
      
      $   37  23 The Savings Bank does not use a special mention category in its loan
  classification process.  Loans classified as substandard, therefore, include
  all loans for which any perceived weakness occurs even if no possibility has
  arisen that a loss will occur if the weakness is not corrected.  The Savings
  Bank's policy is to classify as substandard, for example, any loan,
  irrespective of payment record or collateral value, when a bankruptcy filing
  occurs, a divorce petition is filed, the pay record becomes erratic (i.e.,
  miss one monthly payment, but make a double payment the next month), a
  borrower moves from the area, a major illness occurs, or a loan becomes
  contractually delinquent by two monthly payments.  The Savings Bank's further policy is not to remove a loan from a substandard
  classification, again, irrespective of pay record or collateral value, until
  those perceived weaknesses are cured.  Because of this stringent
  classification policy, the June 30, 2001 substandard classification totals
  included $962,000 of loans that were current in their payment obligations.  The following is a discussion of the Savings Bank's largest substandard loan
  at June 30, 2001:  An area borrower instituted bankruptcy proceedings early
  last year at which point the loan was classified substandard.  A discharge was
  obtained by the end of last year.  Since the borrower has made all required
  monthly payments this year, the loan, with a $142,000 balance and secured with
  real estate evaluated at $200,000, will be removed from the substandard
  classification at the end of this quarter.  Real Estate Owned.

  Real estate acquired by the Savings Bank as a result of foreclosure or by deed
  in lieu of foreclosure is classified as real estate owned until it is sold. 
  When property is acquired, the unpaid principal balance of the related loan
  plus foreclosure costs are compared to the property's appraised alue.  The
  property is then directly written down to the lower of cost or fair value. 
  Subsequently, the property is carried at the lower of cost or net realizable
  value with any adjustments made through the establishment of a specific
  reserve.  At June 30, 2001, two properties were held as real estate owned with
  a value of $193,000.  At June 30, 2000, no property was held as real estate
  owned.  Reserve for Loan Losses  The Savings Bank's loan personnel, at least monthly, evaluate the need to
  establish reserves for losses on loans based on estimated losses on specific
  loans when a finding is made that a decline in value has occurred.  Such
  evaluation includes a review of all loans for which full collectibility may
  not be reasonably assured and considers, among other matters, historical loss
  experience, the level and trend of delinquent and classified loans, current
  and anticipated economic; and real estate conditions and the composition of
  the loan portfolio. These provisions for losses are charged against earnings
  in the year they are established.   The Savings Bank had reserves for loan
  losses at June 30, 2001, 2000 and 1999 of approximately $696,000, $597,000 and
  $540,000, respectively.  24 Management believes that loan loss reserves were adequate at June 30, 2001. 
  However, if the underlying facts and circumstances of the loan portfolio
  change in the future, the adequacy of the allowance for loan losses will be
  addressed and, if need be, adjusted accordingly.  While the Savings Bank believes it has established its existing allowance for
  loan losses in accordance with GAAP, there can be no assurance that
  regulators, in reviewing the Savings Bank's loan portfolio, will not request
  the Savings Bank to significantly increase its allowance for loan losses.  Any
  material increase in reserves may adversely affect the Savings Bank's
  financial condition and earnings.  25




The following table sets forth an analysis of the Savings Bank's gross reserve
  for possible loan losses for the periods indicated.  Where specific loan loss
  reserves have been established, any difference between the loss reserve and
  the amount of loss realized has been charged or credited to current income.  At June 30,2001
      
      2000
      
      1999
      
      1998
      
      1997(Dollars in
      thousands)Allowance at
      beginning of period. . . . . . . . . . . . . . . . . . .
      
      $     597
      
      $       540
      
      $     528
      
      $     482
      
      $        
      520Provision
      for loan losses. . . . .
      
      153
      
      89
      
      84
      
      66
      
      71Recoveries:Residential real estate. . . . . .
      
      5
      
      -
      
      -
      
      12
      
      -Commercial
      real estate. . . . .
      
      -
      
      -
      
      -
      
      -
      
      -Consumer.
      . . . . . . . . . . . . .
      
      1
      
      5
      
      -
      
      -
      
      5Commercial
      business. . . . . .
      
      -
      
      -
      
      -
      
      -
      
      -Total
      recoveries. . . . . . . . .
      
      6
      
      5
      
      -
      
      12
      
      5Charge offs:Residential real estate. . . . . .
      
      20
      
      20
      
      14
      
      5
      
      8Commercial
      real estate. . . . .
      
      -
      
      -
      
      12
      
      -
      
      -Consumer.
      . . . . . . . . . . . . . .
      
      37
      
      17
      
      46
      
      27
      
      31Commercial
      business. . . . . . .
      
      3
      
      -
      
      -
      
      -
      
      75Total
      charge offs. . . . . . . . .
      
      60
      
      37
      
      72
      
      32
      
      114Net
      charge offs. . . . . . . . . .
      
      54
      
      32
      
      72
      
      20
      
      109Allowance at end of period
      
      $     696
      
      $       597
      
      $     540
      
      $     528
      
      $        
      482Ratio of
      allowance to total
      loans
      outstanding at the endof the
      period. . . . . . . . . . . . . .
      0.36%
      
      0.33%
      
      0.34%
      
      0.35%
      
      0.35%Ratio of net
      charge offs to average loansoutstanding during the period. .
      
      0.03%
      
      0.02%
      
      0.05%
      
      0.01%
      
      0.09%  26




Allowance for Loan Losses by Category  At June 30,2001
      
      
      2000
      
      
      1999
      
      
      1998
      
      
      1997%
      
      
      
      
      
      
      %
      
      
      
      
      
      
      %
      
      
      
      
      
      
      %
      
      
      
      
      
      
      %%
      
      of Gross
      
      
      
      
      %
      
      of Gross
      
      
      
      
      %
      
      of Gross
      
      
      
      
      %
      
      of Gross
      
      
      
      
      %
      
      of Grossof Out-
      
      Loans in
      
      
      
      
      of Out-
      
      Loans in
      
      
      
      
      of Out-
      
      Loans in
      
      
      
      
      of Out-
      
      Loans in
      
      
      
      
      of Out-
      
      Loans instanding
      
      Category
      
      
      
      
      standing
      
      Category
      
      
      
      
      standing
      
      Category
      
      
      
      
      standing
      
      Category
      
      
      
      
      standing
      
      CategoryLoans in
      
      to Gross
      
      
      
      
      Loans in
      
      to Gross
      
      
      
      
      Loans in
      
      to Gross
      
      
      
      
      Loans in
      
      to Gross
      
      
      
      
      Loans in
      
      to GrossAmount
      
      Category
      
      Loans
      
      
      Amount
      
      Category
      
      Loans
      
      
      Amount
      
      Category
      
      Loans
      
      
      Amount
      
      Category
      
      Loans
      
      
      Amount
      
      Category
      
      Loans(Dollars in
      thousands)Real estate
      -- mortgage:Residential. . . . . . . . . . . . . . . . . . . . . . . .
      $  193
      
      0.16
      %
      64.00
      %
      
      $  195
      
      0.16
      %
      66.44
      %
      
      $  198
      
      0.18
      %
      72.14
      %
      
      $  195
      
      0.17
      %
      74.74
      %
      
      $  174
      
      0.16
      %
      76.82Commercial.
      . . . . . . . . . . . . . . . . . . . . . .
      127
      
      0.41
      
      15.95
      
      
      112
      
      0.39
      
      15.96
      
      
      70
      
      0.44
      
      10.11
      
      
      69
      
      0.59
      
      7.72
      
      
      60
      
      0.55
      
      7.9Land. . . .
      . . . . . . . . . . . . . . . . . . . . . . . .
      23
      
      0.18
      
      6.48
      
      
      17
      
      0.18
      
      5.05
      
      
      16
      
      0.19
      
      5.36
      
      
      20
      
      0.23
      
      5.80
      
      
      15
      
      0.22
      
      4.97Second
      mortgage loans. . . . . . . . . . . . . .
      14
      
      0.28
      
      2.62
      
      
      14
      
      0.27
      
      2.84
      
      
      13
      
      0.26
      
      3.19
      
      
      12
      
      0.24
      
      3.27
      
      
      9
      
      0.21
      
      3.11Consumer. . .
      . . . . . . . . . . . . . . . . . . . . . .
      203
      
      1.58
      
      6.64
      
      
      170
      
      1.45
      
      6.59
      
      
      163
      
      1.61
      
      6.45
      
      
      161
      
      1.55
      
      6.89
      
      
      156
      
      2.01
      
      5.63Commercial
      business. . . . . . . . . . . . . . . .
      136
      
      1.63
      
      4.31
      
      
      89
      
      1.59
      
      3.12
      
      
      80
      
      1.85
      
      2.75
      
      
      71
      
      2.99
      
      1.58
      
      
      68
      
      3.15
      
      1.57Total
      allowance forloan
      losses. . . . . . . . . . . . . . . . . . . . .
      $  696
      
      0.36
      %
      100.00
      %
      
      $  597
      
      0.33
      %
      100.00
      %
      
      $  540
      
      0.34
      %
      100.00
      %
      
      $  528
      
      0.35
      %
      100.00
      %
      
      $  482
      
      0.35
      %
      100.00    27




Investment Activities  Savings and loan associations have authority to invest in various types of
  liquid assets, including United States Treasury obligations, securities of
  various Federal agencies and of state and municipal governments, deposits at
  the FHLB-Des Moines, certificates of deposit of federally insured
  institutions, certain bankers' acceptances and federal funds.  Subject to
  various restrictions, savings institutions may also invest a portion of their
  assets in commercial paper, corporate debt securities and mutual funds, the
  assets of which conform to the investments that federally chartered savings
  institutions are otherwise authorized to make directly.  Savings institutions
  are also required to maintain minimum levels of liquid assets which vary from
  time to time.  See "REGULATION OF FIRST HOME ‐- Federal Home Loan Bank
  System."  The Savings Bank may decide to increase its liquidity above the
  required levels depending upon the availability of funds and comparative
  yields on investments in relation to return on loans.  Routine short-term investment decisions are made by the President and Chief
  Executive Officer, who acts within policies established by the Board of
  Directors, and are reported monthly to the Board.  Those investments include
  federally insured certificates of deposit, FHLB term time obligations, bankers
  acceptances, treasury obligations and U.S. Government agencies.  All other
  investments including, but not limited to, mortgage-backed securities, bank
  qualifying municipal tax exempt bonds, corporate bonds or other longer term
  obligations require prior Board approval.  Securities are purchased for
  investment purposes.  The goals of the Savings Bank's investment policy are to
  select investments based on safety first, flexibility second and
  diversification third.  In addition, as a result of the concern with interest
  rate risk exposure, there has been a focus on short-term investments.  At June
  30, 2001, the Company's and the Savings Bank's securities investment portfolio
  totaled $4.0 million and consisted primarily of federal agency obligations
  securities, mutual funds, and municipal bonds.  For further information
  concerning the Savings Bank's investment and mortgage-backed securities
  portfolio, see Notes  2, 3 and 4 of the Notes to the Consolidated Financial
  Statements.  29




Investment Securities Analysis  The following table sets forth the Company's and the Savings Bank's investment
  securities portfolio at carrying value at the dates indicated. At
      June 30,2001
      
      
      2000
      
      >
      1999Book
      >
      Percent of
      
      
      Book
      
      Percent of
      
      >
      Book
      
      Percent ofValue(1)
      
      Portfolio
      
      
      Value(1)
      
      Portfolio
      
      
      Value(1)
      
      Portfolio(Dollars in thousands)Debt securities:U.S.
      government treasury andobligations of U.S.government agencies. . . . . . . . . . . . . . . . .
      $       -
      
      -
      %
      
      $2,653
      
      39.91
      %
      
      $2,172
      
      37.33
      %Auto and student loan pools. . . . . . . . . . . . .
      16
      
      0.40
      
      
      23
      
      0.34
      
      
      34
      
      0.58State and political subdivisions. . . . . . . . . . .
      1,317
      
      32.83
      
      
      1,634
      
      24.58
      
      
      1,510
      
      25.96Total debt securities. . . . . . . . . . . . . . . . . .
      1,333
      
      33.23
      
      
      4,310
      
      64.83
      
      
      3,716
      
      63.87Equity securities:Federal Home Loan Bankstock. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      1,091
      
      27.20
      
      
      1,072
      
      16.13
      
      
      1,058
      
      18.18Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      1,587
      
      39.57
      
      
      1,266
      
      19.04
      
      
      1,044
      
      17.95Total equity securities. . . . . . . . . . . . . . . .
      2,678
      
      66.77
      
      
      2,338
      
      35.17
      
      
      2,102
      
      36.13Total investment securities. . . . . . . . . . . . .
      $4,011
      
      100.00
      %
      $6,648
      
      100.00
      %
      $5,818
      
      100.00
      %  ------------------------- (1)  The market value of the Company's and the Savings Bank's investment
  securities portfolio amounted to $4.83 million, $6.62 million and $5.81
  million at June 30, 2001, 2000 and 1999, respectively.  At June 30, 2001, the
  market value of the principal component of the Company's and the Savings
  Bank's investment securities portfolio which were equity securities in
  financial institutions was $1.6 million.  The following table sets forth the maturities and weighted average yields of
  the debt securities in the Company's and the Savings Bank's investment
  securities portfolio at June 30, 2001.  Less Than
      
      
      One
      to
      
      
      Five to
      
      
      Over TenOne
      Year
      
      
      Five Years
      
      
      Ten
      Years
      
      
      YearsAmount
      
      Yield
      
      
      Amount
      
      Yield
      
      
      Amount
      
      Yield
      
      
      Amount
      
      Yield(Dollars in thousands)U.S.
      government treasury andobligations of U.S.
      $
      -
      
      -
      %
      $
      -
      
      -
      %
      $
      -
      
      -
      %
      $
      -
      
      -
      %government agencies. . . . . . . . . . . . . . . . .Student loan pool. . . . . . . . . . . . . . . . . . . . .
      16
      
      4.60
      
      
      -
      
      -
      
      
      -
      
      -
      
      
      -
      
      -State and political subdivisions. . . . . . . . . . .
      220
      
      5.03
      
      
      962
      
      4.76
      
      
      135
      
      5.01
      
      
      -
      
      -Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
      $
      236
      
      5.00
      
      
      $
      962
      
      4.76
      
      
      $
      135
      
      5.01
      
      
      $
      -
      
      -  30 At June 30, 2001, the Savings Bank held no security which had an aggregate
  book value in excess of 10% of the Company's stockholders' equity.  Mortgage-Backed Securities. To supplement lending activities in previous
  periods of deposit growth and/or declining loan demand, the Savings Bank has
  invested in residential mortgage-backed securities.  Because of strong
  local loan demand, however, no mortgage-backed securities have been purchased
  in the past six years.  Although such securities are held for investment,
  they can serve as collateral for borrowings and, through repayments, as a
  source of liquidity.  For information regarding the carrying and market
  values of the Savings Bank's mortgage-backed securities portfolio, see Note 4
  of the Notes to Consolidated Financial Statements.  The Savings Bank has
  invested in federal agency securities issued by Federal Home Loan Mortgage
  Corporation ("FHLMC"), Federal
  National Mortgage Association ("FNMA") and Government National Mortgage
  Association ("GNMA").  As of June 30, 2001, 82% of the outstanding balance of
  the mortgage-backed securities had adjustable rates of interest.  As of June 30, 2001, the Savings Bank's portfolio included $376,000 of
  mortgage-backed securities purchased as investments to supplement the Savings
  Bank's mortgage lending activities.  The FHLMC, FNMA and GNMA certificates are modified pass-through
  mortgage-backed securities that represent undivided interests in underlying
  pools of fixed-rate, or certain types of adjustable-rate, single-family
  residential mortgages issued by these government-sponsored entities.  As a
  result, the interest rate risk characteristics of the underlying pool of
  mortgages, such as fixed- or adjustable-rate, as well as prepayment risk, are
  passed on to the certificate holder.  FHLMC and FNMA provide the certificate
  holder a guarantee of timely payments of interest and ultimate collection of
  principal, whether or not they have been collected.  GNMA's guarantee to the
  holder of timely payments of principal and interest is backed by the full
  faith and credit of the U.S. government.  Mortgage-backed securities generally
  yield less than the loans that underlie such securities, because of the cost
  of payment guarantees or credit enhancements that reduce credit risk.  In
  addition, mortgage-backed securities are more liquid than individual mortgage
  loans and may be used to collateralize obligations of the Savings Bank.  The Savings Bank has incorporated into its investment policy the regulatory
  requirements set forth in the OTS TB 52, which deals with the selection of
  securities dealers, securities policies, unsuitable investment practices and
  mortgage derivative products.  31   Deposit Activities and Other Sources of Funds  General. 
  Deposits and loan repayments are the major source of the Savings Bank's funds
  for lending and other investment purposes.  Loan repayments are a relatively
  stable source of funds, while deposit inflows and outflows and loan
  prepayments are significantly influenced by general interest rates and money
  market conditions.  Borrowings may be used on a short-term basis to compensate
  for reductions in the availability of funds from other sources.  They may also
  be used on a longer term basis for general business purposes.  Deposit Accounts. 
  Deposits are attracted from within the Savings Bank's primary market area
  through the offering of a broad selection of deposit instruments, including
  negotiable order of withdrawal ("NOW") accounts, money market accounts,
  regular savings accounts, certificates of deposit and retirement savings
  plans.  Deposit account terms vary according to the minimum balance required,
  the time periods the funds must remain on deposit and the interest rate, among
  other factors.  In determining the terms of its deposit accounts, the Savings
  Bank considers the rates offered by its competition, profitability to the
  Savings Bank, matching deposit and loan products and its customer preferences
  and concerns.  The Savings Bank generally reviews its deposit mix and pricing
  weekly, and adjusts it as necessitated by liquidity needs, the gap position
  and competition.  Management believes deposits should remain relatively stable
  to decreasing slightly, net of interest credited, attributable to withdrawals
  as depositors seek increased yields on alternative investments in the
  marketplace.  32




The following table sets forth information concerning the Savings Bank's time
  deposits and other interest-bearing deposits at June 30, 2001.  WeightedAverage
      
      
      
      
      
      
      
      
      
      PercentageInterest
      
      
      
      
      
      Minimum
      
      
      
      of
      TotalRate
      
      Term
      
      Category
      
      Amount
      
      Balance
      
      Deposits(Dollars in thousands)0.00%
      
      None
      
      Non-interest bearing
      
      $  
      -
      
      $ 
      6,864
      
      4.23
      %2.18%
      
      None
      
      NOW
      accounts
      
      25
      
      22,715
      
      13.983.78%
      
      None
      
      Super Saver accounts
      
      1
      
      19,403
      
      11.942.79%
      
      None
      
      Super NOW accounts
      
      300
      
      4,751
      
      2.923.00%
      
      None
      
      Savings accounts
      
      -
      
      11,981
      
      7.38Certificates of deposit4.44%
      
      3
      months
      Fixed term, fixed rate
      
      500
      
      3,148
      
      1.944.76%
      
      6
      months
      Fixed term, fixed rate
      
      500
      
      16,412
      
      10.105.56%
      
      12
      months
      Fixed term, fixed rate
      
      500
      
      20,700
      
      12.745.83%
      
      18
      months
      Fixed term, fixed rate
      
      500
      
      2,584
      
      1.595.75%
      
      24
      months
      Fixed term, fixed rate
      
      500
      
      5,063
      
      3.125.65%
      
      30
      months
      Fixed term, fixed rate
      
      500
      
      1,471
      
      0.915.81%
      
      36
      months
      Fixed term, fixed rate
      
      500
      
      2,301
      
      1.425.67%
      
      48
      months
      Fixed term, fixed rate
      
      500
      
      694
      
      0.436.00%
      
      60
      months
      Fixed term, fixed rate
      
      500
      
      6,217
      
      3.836.23%
      
      72
      months
      Fixed term, fixed rate
      
      500
      
      76
      
      0.055.22%
      
      120
      months
      Fixed term, fixed rate
      
      500
      
      21
      
      0.01various
      
      various
      
      Fixed term, adjustable rate
      500
      
      16,391
      
      10.09various
      
      various
      
      Jumbo certificates
      
      100,000
      
      21,646
      
      13.32$162,438
      
      100.00
      %  The following table indicates the amount of the Savings Bank's jumbo
  certificates of deposit by time remaining until maturity as of letter-spacing:-.1pt">June 30, 2001 Jumbo
  certificates of deposit require minimum deposits of $100,000 and rates paid on
  such accounts are negotiable.  JumboCertificatesMaturity
      Period
      
      of Deposit(In
      thousands)Three months
      or less. . . . . .
      
      $ 5,156Three
      through six months. . .
      4,370Six through
      twelve months. .
      5,814Over twelve
      months. . . . . . .
      
      6,306Total.
      . . . . . . . . . . . . . .
      
      $21,646  33




Time
  Deposits by Rates  The following table sets forth the time deposits in the Savings Bank
  classified by rates as of the dates indicated.  At June 30,2001
      
      2000
      
      1999(In
      thousands)2.00 -
      4.49%. .
      
      $ 4,981
      
      $   463
      
      $ 4,0024.50 -
      5.49%. .
      
      41,467
      
      19,461
      
      61,6895.50 -
      6.49%. .
      
      42,472
      
      70,093
      
      19,1466.50 -
      7.49%. .
      
      7,804
      
      5,857
      
      4,705Over 7.49%.
      .
      
      -
      
      -
      
      210Total. . . .
      . . ..
      
      $96,724
      
      $95,874
      
      $89,752  The following table sets forth the amount and maturities of time deposits at
  June 30, 2001.  Amount DuePercentof
      TotalLess than
      
      1-2
      
      2-3
      
      3-4
      
      After
      
      
      
      CertificateOne
      Year
      
      Years
      
      Years
      
      Years
      
      4
      Years
      
      Total
      
      Accounts(Dollars in thousands)2.00 - 4.49%. . .
      $
      4,852
      
      $    129
      
      $     -
      
      $ 
      -
      
      $      -
      
      $ 
      4,981
      
      5.15
      %4.50 - 5.49%. . .
      32,471
      
      6,420
      
      1,677
      
      665
      
      234
      
      41,467
      
      42.875.50 - 6.49%. . .
      24,517
      
      5,251
      
      5,055
      
      7,228
      
      421
      
      42,472
      
      43.916.50 - 7.49%. . .
      4,978
      
      586
      
      434
      
      1,382
      
      424
      
      7,804
      
      8.07Over 7.49%. . .
      -
      
      -
      
      -
      
      -
      
      -
      
      -
      
      -Total. . . . . . . . .
      $66,818
      
      $12,386
      
      $7,166
      
      $9,275
      
      $1,079
      
      $96,724
      
      100.00
      %  34




Deposit Flow  The following table sets forth the balances of savings deposits in the various
  types of savings accounts offered by the Savings Bank at the dates indicated.  At June 30,2001
      
      2000
      
      1999Percent
      
      
      
      
      
      Percent
      
      
      
      
      
      PercentOf
      
      Increase
      
      
      
      Of
      
      Increase
      
      
      
      OfAmount
      
      Total
      
      (Decrease)
      
      Amount
      
      Total
      
      (Decrease)
      
      Amount
      
      Total(Dollars in
      thousands)Non-interest
      bearing. . . . . . . . . . . . . .
      
      $   6,864
      
      4.23
      %
      $   1,122
      
      $  5,742
      
      3.69
      %
      $     596
      
      $  5,146
      
      3.40
      %NOW checking.
      . . . . . . . . . . . . . . . . .
      
      22,715
      
      13.98
      
      2,668
      
      20,047
      
      12.88
      
      2,042
      
      18,005
      
      11.91Regular
      savings accounts. . . . . . . . . .
      
      11,981
      
      7.38
      
      1,627
      
      10,354
      
      6.65
      
      147
      
      10,207
      
      6.75Super Saver
      accounts. . . . . . . . . . . . .
      
      19,403
      
      11.94
      
      828
      
      18,575
      
      11.93
      
      (2,846)
      
      21,421
      
      14.17Super NOW
      accounts. . . . . . . . . . . . .
      
      4,751
      
      2.92
      
      (318)
      
      5,069
      
      3.26
      
      (1,610)
      
      6,679
      
      4.42Fixed-rate
      certificates which
      
      
      
      
      
      -mature (1):
      
      
      
      
      
      -Within 1
      year. . . . . . . . . . . . . . . . .
      
      61,040
      
      37.58
      
      (1,447)
      
      62,487
      
      40.14
      
      761
      
      61,726
      
      40.82After 1
      year, but within 2 years. . .
      
      7,653
      
      4.71
      
      (237)
      
      7,890
      
      5.07
      
      524
      
      7,366
      
      4.87After 2
      years, but within 5 years. .
      
      8,012
      
      4.93
      
      (1,852)
      
      9,864
      
      6.34
      
      3,638
      
      6,226
      
      4.12Thereafter. . . . . . . . . . . . . . . . . . . .
      
      21
      
      0.01
      
      (5)
      
      26
      
      0.02
      
      (7)
      
      33
      
      0.02Adjustable-rate certificates. . . . . . . . .
      
      19,998
      
      12.32
      
      4,391
      
      15,607
      
      10.02
      
      1,206
      
      14,401
      
      9.52Total
      certificates. . . . . . . . . . . . . . . . .
      
      96,724
      
      59.55
      
      850
      
      95,874
      
      61.59
      
      6,122
      
      89,752
      
      59.35Total. . . . . . . . . . . . . . . . . . . . . .
      
      $ 162,438
      
      100.00
      %
      $   6,777
      
      $155,661
      
      100.00
      %
      $  4,451
      
      $151,210
      
      100.00
      %    ________________ (1)  At June 30, 2001, 2000 and 1999, jumbo certificates of deposit amounted
  to $21.6 million, $20.7 million and $18.1 million, respectively, and IRAs
  equaled $19.0 million, $16.6 million and $15.6 million at those dates,
  respectively.  35




The following table sets forth the savings activities of the Savings Bank for
the periods indicated.



|                                                   |  | Years Ended
    June 30,
|-------------------------------------------------- |  | ------------------------
|                                                   |  | 2001                    
|                                                   |  | (In thousands)          
|Beginning
    balance. . . . . . . . . . . . .     |  | $ 155,661               
|Net increase
    (decrease) before                 |  |                         
|interest
    credited. . . . . . . . . . . . . .   |  | 551                     
|Interest
    credited. . . . . . . . . . . . . . . |  | 6,226                   
|Net increase
    in                                |  |                         
|savings
    deposits. . . . . . . . . . . . . .    |  | 6,777                   
|                                                   |  |                         
|Ending
    balance. . . . . . . . . . . . . . . .  |  | $ 162,438               
|                                                   |  |                         



In the unlikely event the Savings Bank is
liquidated, depositors will be entitled to full payment of their deposit
accounts prior to any payment being made to the stockholders of the Savings
Bank.  Substantially all of the Savings Bank's depositors are residents of the
State of Missouri.



Borrowings. 
Savings deposits are the primary source of funds for the Savings Bank's lending
and investment activities and for its general business purposes.  The Savings
Bank also relies on advances from the FHLB-Des Moines to supplement its supply
of lendable funds and to meet deposit withdrawal requirements.  The FHLB-Des
Moines has served as the Savings Bank's primary borrowing source.  Advances from
the FHLB-Des Moines are typically secured by the Savings Bank's first mortgage
loans.  These advances require monthly payments of interest only  with principal
due at maturity and have fixed rates.  The short-term advances require interest
payable at maturity.  Two long-term advances requires monthly payment of
principal and interest.  These advances were obtained in response to the Savings
Bank's recent strong loan demand and limited deposit growth.



36







The following tables set forth certain information
concerning the Savings Bank's borrowings at the dates and for the periods
indicated.



|                                                     |  | At June 30,                |  
|---------------------------------------------------- |  | -------------------------- | -
|                                                     |  | 2001                       |  
|Weighted
    average rate paid on                    |  |                            |  
|FHLB
    advances. . . . . . . . . . . . . . . . . . |  | 5.66                       | %
|                                                     |  |                            |  
|                                                     |  |                            |  
|                                                     |  |                            |  
|                                                     |  | Years Ended
    June 30,   |  
|                                                     |  | 2001                       |  
|                                                     |  | (Dollars in
    thousands) |  
|Maximum
    amounts of FHLB advances                 |  |                            |  
|outstanding
    at any month end. . . . . . .        |  | $37,819                    |  
|Approximate
    average FHLB advances                |  |                            |  
|outstanding. . . . . . . . . . . . . . . . . . . . . |  | 30,136                     |  
|Approximate
    weighted average rate paid           |  |                            |  
|on FHLB
    advances. . . . . . . . . . . . . . .    |  | 6.21                       | %
|                                                     |  |                            |  



The FHLB-Des Moines functions as a central reserve
bank providing credit for savings and loan associations and certain other member
financial institutions.  As a member, the Savings Bank is required to own
capital stock in the FHLB-Des Moines and is authorized to apply for advances on
the security of such stock and certain of its mortgage loans and other assets
(principally securities which are obligations of,  or guaranteed by, the United
States) provided certain standards related to creditworthiness have been met. 
Advances are made pursuant to several different programs.  Each credit program
has its own interest rate and range of maturities.  Depending on the program,
limitations on the amount of advances are based either on a fixed percentage of
an institution's retained earnings or on the FHLB's assessment of the
institution's creditworthiness.  The FHLB-Des Moines determines specific lines
of credit for each member institution.



Subsidiary Activities



Fybar Service Corporation ("Fybar") is a Missouri
corporation wholly owned by the Savings Bank.  Fybar owns five rental
properties.  One is an office building in Mountain Grove, Missouri called "The
Shannon Centre" which is adjacent to the Savings Bank's drive-in and is
currently 70% occupied.  The second property is is a duplex in Ozark, Missouri
which is 100% occupied.  The third is a single family residence in Gainesville,
Missouri which is currently occupied.  The fourth property is a commercial
building in Mountain Grove, Missouri and is fully occupied.  The fifth is a
single family residence in Mountain Grove, Missouri and is also currently
occupied.



37







Fybar serves as Trustee on all the Savings Bank's deeds of trust, is a
registered agent and receives limited income from credit life and accident and
health policies written in conjunction with the Savings Bank's loans.



At June 30, 2001, the Savings Bank had an investment in Fybar of $551,000.



South Central Missouri Title, Inc., is a Missouri
corporation wholly owned by First Bancshares, Inc. South Central is a licensed
agent for the purpose of selling title insurance and also providing real estate
closing services.  It is currently operating profitably with offices in three
counties.

REGULATION OF FIRST HOME  As a Missouri-chartered and federally insured
  savings and loan association, First Home is subject to extensive regulation. 
  Lending activities and other investments must comply with various statutory
  and regulatory capital requirements.  The Savings Bank is regularly examined
  by its state and federal regulators and files periodic reports concerning the
  Savings Bank's activities and financial condition.  The Savings Bank's
  relationship with its depositors and borrowers is also regulated to a great
  extent by federal and state laws, especially in such matters as the ownership
  of savings accounts and the form and content of the Savings Bank's mortgage
  documents.  Missouri Savings and Loan
  Law  General.  As a Missouri-chartered savings and loan association, First Home
  derives its authority from, and is governed by, the provisions of the Missouri
  Savings and Loan Law ("Missouri Law") and regulations of the Missouri Division
  of Finance ("Division").  The Director of the Missouri Division of Finance
  ("Director") proposes regulations which must then be approved, amended,
  modified or disapproved by the State Savings and Loan Commission
  ("Commission").  Missouri Law and the resulting regulations are administered
  by the Director.  Investments and Accounts.  Missouri Law and regulations impose
  restrictions on the types of investments and loans that may be made by a
  Missouri-chartered institution, generally bringing these restrictions into
  parity with the regulation of federally chartered institutions.  The manner of
  establishing accounts and evidencing the same is prescribed, as are the
  obligations of the institution with respect to withdrawals from accounts and
  redemption of accounts.  The Director may also impose or grant the same
  restrictions, duties and powers concerning deposits as are applicable to
  federal institutions under federal rules and regulations.  Branch Offices.  Under Missouri Law, no institution may establish a branch
  office or agency without the prior written approval of the Director.  The
  Director reviews the proposed location, the functions to be performed at the
  office, the estimated volume of business, the estimated annual expense of the
  office and the mode of payments.  Decisions of the Director may be appealed to
  the Commission.  The relocation or closing of any office is subject to
  additional regulation and in certain circumstances may require prior approval.  38    Merger or Consolidation.  Missouri Law permits the merger or consolidation
  of savings institutions, subject to the approval by the Director, when the
  Director finds that such merger or consolidation is equitable to the members
  or account holders of the institutions and will not impair the usefulness and
  success of other properly conducted institutions in the community.  Mergers or
  consolidations of mutual institutions must also be approved by a majority of
  the members of each institution.  Stock institutions must obtain shareholder
  approval pursuant to the Missouri statutes relating to general and business
  corporations.  Holding Companies.  Missouri Law requires a savings and loan holding
  company and its subsidiaries to register with the Director within 60 days of
  becoming a savings and loan holding company.  Following registration it is
  subject to examination by the Division and thereafter must file certain
  reports with the Director.  A savings and loan holding company may acquire
  control of an institution of another savings and loan holding company upon
  application and prior written approval of the Director.  The Director, in
  reviewing the application, must determine if such acquisition is consistent
  with the interests of maintaining a sound financial system and that the
  acquisition does not afford a basis for supervisory objection.  Examination.  Periodic reports to the Division must be made by each
  Missouri-chartered institution. The Division conducts and supervises the
  examination of state-chartered institutions.  Supervision.  The Director has general supervisory authority over
  Missouri-chartered institutions and upon the Director's finding that an
  institution is violating the provisions of its articles of incorporation, its
  bylaws or any law of the state, or is conducting business in an unsafe or
  injurious manner, the Director may order the institution to discontinue such
  violation or practice, and to conform with all the requirements of law.  The
  Director may demand and take possession of the institution, if the institution
  fails to comply with the Director's order, if the Director determines that the
  institution is insolvent, in an unsafe condition or conducting business in an
  unsafe manner, or if the institution refuses to submit to examination or
  inspection by the Division.  Federal Regulation of
  Savings Banks  The OTS
  has extensive authority over the operations of all insured savings
  associations.  As part of this authority, First Home is required to file
  periodic reports with the OTS District Director and is subject to periodic
  examinations by the OTS and the FDIC.  The OTS and FDIC have extensive
  discretion in their supervisory and enforcement activities and examination
  policies, including policies with respect to the classification of assets and
  the establishment of adequate loan loss reserves for regulatory purposes.  Any
  change in these policies, whether by the OTS, the FDIC or Congress, could have
  a materials adverse impact on the Company.  The OTS has established a schedule for the
  assessment of fees upon all savings associations to fund the operations of the
  OTS.  A schedule of fees has also been established for the various types of
  applications and filings made by savings associations with the OTS.  The
  general assessment, to be paid on a semi-annual basis, is computed upon the
  savings association's total assets, including consolidated subsidiaries, as
  reported in the association's latest quarterly thrift financial report. 
  Savings associations that (unlike the Savings Bank) are classified as "troubled" (i.e., having a supervisory rating of
  "4" or "5" or subject to a conservatorship) are required to pay a 50% premium over the standard
  assessment.  For the first half of 2001, the Savings Bank's assessment under
  the semi-annual assessment procedure was $27,000.  Based on the current
  assessment rates published by the OTS and First Home's total assets of
  approximately $214.8 million at March 31, 2001, First Home will be required to
  pay a semi-annual assessment of approximately $28,000 for the second half of
  calendar year 2001.  In addition, the investment and lending
  authority of the Savings Bank is prescribed by federal laws and regulations,
  and the Savings Bank is prohibited from engaging in any activities not
  permitted by such laws and regulations.  These laws and regulations generally
  are applicable to all federally chartered savings associations and many also
  apply to state-chartered savings associations.  Among other things, OTS regulations provide that
  no savings association may invest in corporate debt securities not rated in
  one of the four highest rating categories by a nationally recognized rating
  organization.  In addition, the HOLA provides that loans secured by
  nonresidential real property may not exceed 400% of regulatory capital,
  subject to increase by the OTS on a case-by-case basis.  First
  Home is subject to limitations on the aggregate amount of loans that it can
  make to any one borrower, including related entities.  Federal law provides
  that savings institutions are generally subject to the national bank limit on
  loans to one borrower. A savings institution may not make a loan or extend
  credit to a single or related group of borrowers in excess of 15% of its
  unimpaired capital and surplus.  An additional amount may be lent, equal to
  10% of unimpaired capital and surplus, if secured by specified
  readily‐marketable collateral.  At June 30, 2001, the Savings Bank's limit on
  loans to one borrower was $3.4 million.  At June 30, 2001, the Savings Bank's
  largest single loan to one borrower was $826,000, which was performing
  according to its original terms.  At June 30, 2001, First Home was in
  compliance with applicable loans-to-one borrower limitations.  Potential Operational
  Restrictions Associated with Regulatory Oversight  The Savings Bank is subject to extensive
  regulation, supervision and examination by the OTS, as its chartering
  authority and primary federal regulator, and by the FDIC, which insures its
  deposits up to applicable limits.  The Savings Bank is a member for the FHLB
  System and is subject to certain limited regulations promulgated by the Board
  of Governors of the Federal Reserve System ("Federal Reserve").  As the
  holding company of the Savings Bank, the Company also is subject to regulation
  and oversight by the OTS.  Such regulation and supervision govern the
  activities in which an institution can engage and is intended primarily for
  the protection of the insurance fund and depositors.  Regulatory authorities
  have been granted extensive discretion in connection with their supervisory
  and enforcement activities which are intended to strengthen the financial
  condition of the banking industry, including the imposition of restrictions on
  the operation of an institution, the classification of assets by the
  institution and the adequacy of an institution's allowance for loan losses. 
  Any change in such regulation and oversight, whether by the OTS, the FDIC or
  Congress, could have a material impact on the Company, the Savings Bank and
  their respective operations.  Office of Thrift
  Supervision  The OTS is an office in the Department of the
  Treasury subject to the general oversight of the Secretary of the Treasury. 
  Among other functions, the OTS issues and enforces regulations affecting
  federally-insured savings associations and regularly examines these
  institutions.  Federal Deposit Insurance Corporation  The FDIC is an independent federal agency
  established originally to insure the deposits, up to prescribed statutory
  limits, of federally insured banks and to preserve the safety and soundness of
  the banking industry.  The FDIC maintains two separate insurance funds:  the
  BIF and the SAIF. The Savings Bank's accounts are insured by the FDIC under
  the SAIF to the maximum extent permitted by law.  As insurer of deposits, the
  FDIC has examination, supervisory and enforcement authority over all savings
  associations.  Under applicable regulations, the FDIC assigns
  an institution to one of three capital categories based on the institution's
  financial information, as of the reporting period ending seven months before
  the assessment period. The capital categories are: well-capitalized,
  adequately capitalized, or undercapitalized.  The FDIC also places an institution  in one of
  three supervisory subcategories within each capital group.  The supervisory
  subgroup to which an institution is assigned is based on a supervisory
  evaluation provided to the FDIC by the institution's primary federal regulator
  and information that the FDIC determines to be relevant to the institution's
  financial condition and the risk posed to the deposit insurance funds.  An
  institution's assessment rate depends on the capital category and supervisory
  category to which it is assigned with the most well-capitalized, healthy
  institutions receiving the lowest rates.  Effective January 1, 1997, the premium schedule
  for BIF and SAIF insured institutions ranged from 0 to 27 basis points. 
  However, SAIF and BIF insured institutions are required to pay a Financing
  Corporation assessment in order to fund the interest on bonds issued to
  resolve thrift failures in the 1980s.  This amount is currently equal to about
  2.1 basis points for each $100 in domestic deposits for both BIF and SAIF
  members.  These assessments, which are revised quarterly based upon the level
  of BIF and SAIF deposits, will continue until the bonds mature in the year
  2015.  41     The FDIC is authorized to raise the assessment
  rates in certain circumstances.  The FDIC has exercised this authority several
  times in the past and may raise insurance premiums in the future.  If such
  action is taken by the FDIC, it could have an adverse effect on the earnings
  of First Home.  Under the FDIA, the FDIC may terminate insurance
  of deposits upon a finding that the institution has engaged in unsafe or
  unsound practices, is in an unsafe or unsound condition to continue operations
  or has violated any applicable law, regulation, rule, order or condition
  imposed by the FDIC or the OTS.  Management of First Home does not know of any
  practice, condition or violation that might lead to termination of deposit
  insurance.  Federal Home Loan Bank System  The FHLB System, consisting of 12 FHLBs, is
  under the jurisdiction of the Federal Housing Finance Board ("FHFB").  The
  designated duties of the FHFB are to:  supervise the FHLBs; ensure that the
  FHLBs carry out their housing finance mission; ensure that the FHLBs remain
  adequately capitalized and able to raise funds in the capital markets; and
  ensure that the FHLBs operate in a safe and sound manner.  First Home, as a member of the FHLB-Des Moines,
  is required to acquire and hold shares of capital stock in the FHLB-Des Moines
  equal to the greater of (i) 1.0% of the aggregate outstanding principal amount
  of residential mortgage loans, home purchase contracts and similar obligations
  at the beginning of each year, or (ii) 1/20 of its advances (borrowings) from
  the FHLB-Des Moines.  First Home complied with this requirement with an
  investment in FHLB-Des Moines stock of $1.9 million at June 30, 2001.  Among other benefits, the FHLB provides a
  central credit facility primarily for member institutions.  It is funded
  primarily from proceeds derived from the sale of consolidated obligations of
  the FHLB System.  It makes advances to members in accordance with policies and
  procedures established by the FHFB and the Board of Directors of the FHLB-Des
  Moines.  At June 30, 2001, the Savings Bank had $32.3 million of advances from
  the FHLB-Des Moines.   42    Prompt Corrective Action  The OTS is required to take certain supervisory
  actions against undercapitalized savings associations, the severity of which
  depends upon the institution's degree of undercapitalization.  Generally, an
  institution that has a ratio of total capital to risk‐weighted assets of less
  than 8%, a ratio of Tier I (core) capital to risk‐weighted assets of less than
  4%, or a ratio of core capital to total assets of less than 4% (3% or less for
  institutions with the highest examination rating) is considered to be "undercapitalized."  An institution that has a total risk‐based capital ratio
  less than 6%, a Tier I capital ratio of less than 3% or a leverage ratio that
  is less than 3% is considered to be "significantly undercapitalized" and an
  institution that has a tangible capital to assets ratio equal to or less than
  2% is deemed to be "critically undercapitalized."  Subject to a narrow
  exception, the OTS is required to appoint a receiver or conservator for a
  savings institution that is "critically undercapitalized."  OTS regulations
  also require that a capital restoration plan be filed with the OTS within 45
  days of the date a savings institution receives notice that it is
  "undercapitalized," "significantly undercapitalized" or "critically
  undercapitalized."  Compliance with the plan must be guaranteed by any parent
  holding company in an amount of up to the lesser of 5% of the institution's
  assets or the amount which would bring the institution into compliance with
  all capital standards.  In addition, numerous mandatory supervisory actions
  become immediately applicable to an undercapitalized institution, including,
  but not limited to, increased monitoring by regulators and restrictions on
  growth, capital distributions and expansion.  The OTS also could take any one
  of a number of discretionary supervisory actions, including the issuance of a
  capital directive and the replacement of senior executive officers and
  directors.  At June 30, 2001, First Home was a "well
  capitalized" institution under the prompt corrective action regulations of the OTS.  Standards for Safety and Soundness.The federal banking regulatory
  agencies have prescribed, by regulation, standards for all insured depository
  institutions relating to: (i) internal controls, information systems and
  internal audit systems; (ii) loan documentation; (iii) credit underwriting;
  (iv) interest rate risk exposure; (v) asset growth; (vi) asset quality; (vii)
  earnings; and (viii) compensation, fees and benefits ("Guidelines").  The
  Guidelines set forth the safety and soundness standards that the federal
  banking agencies use to identify and address problems at insured depository
  institutions before capital becomes impaired.  If the OTS determines that the 
  Savings Bank fails to meet any standard prescribed by the Guidelines, the
  agency may require the Savings Bank to submit to the agency an acceptable plan
  to achieve compliance with the standard.  Management is aware of no conditions
  relating to these safety and soundness standards which would require
  submission of a plan of compliance.  43    Qualified Thrift Lender Test.  All savings associations, including First
  Home, are required to meet a qualified thrift lender test to avoid certain
  restrictions on their operations.  This test requires a savings association to
  have at least 65% of its portfolio asset, as defined by regulation, in
  qualified thrift investments on a monthly average for nine out of every 12
  months on a rolling basis.  As an alternative, the savings association may
  maintain 60% of its assets in those assets specified in Section 7701(a)(19) of
  the Code.  Under either test, such assets primarily consist of residential
  housing related loans and investments.  At June 30, 2001, First Home met the
  test and its qualified thrift lender percentage was 87.13%.  Any savings association that fails to meet the
  qualified thrift lender test must convert to a national bank charter, unless
  it requalifies as a qualified thrift lender and thereafter remains a qualified
  thrift lender.  If an association does not requalify and converts to a
  national bank charter, it must remain SAIF-insured until the FDIC permits it
  to transfer to the BIF.   If such an association has not yet requalified or
  converted to a national bank, its new investments and activities are limited
  to those permissible for both a savings association and a national bank, and
  it is limited to national bank branching rights in its home state.  In
  addition, First Home is immediately ineligible to receive any new FHLB
  borrowings and is subject to national bank limits for payment of dividends. 
  If such association has not requalified or converted to a national bank within
  three years after the failure, it must divest of all investments and cease all
  activities not permissible for a national bank.  In addition, it must repay
  promptly any outstanding  FHLB borrowings, which may result in prepayment
  penalties.  If any association that fails the qualified thrift lender test is
  controlled by a holding company, then within one year after the failure, the
  holding company must register as a bank holding company and become subject to
  all restrictions on bank holding companies.  Capital Requirements  Federally insured savings associations, such as
  the Savings Bank, are required to maintain a minimum level of regulatory
  capital. The OTS has established capital standards, including a tangible
  capital requirement, a leverage ratio (or core capital) requirement and a
  risk‐based capital requirement applicable to such savings associations.  44  The capital regulations require tangible capital
  of at least 1.5% of adjusted total assets (as defined by regulation). At June
  30, 2001, the Savings Bank had tangible capital of $20.5 million, or 9.5% of
  adjusted total assets, which is approximately $17.3 million above the minimum
  requirement of 1.5% of adjusted total assets in effect on that date. At June
  30, 2001, the Savings Bank had $649,000 in intangible assets.  The capital
  standards also require core capital equal to at least 3% to 4% of adjusted
  total assets, depending on an institution's supervisory rating. Core capital
  generally consists of tangible capital.  At June 30, 2001, the Savings Bank
  had core capital equal to $20.5 million, or 9.5% of adjusted total assets,
  which is $11.8 million above the minimum leverage ratio requirement of 4% as
  in effect on that date.  The OTS
  risk‐based requirement requires savings associations to have total capital of
  at least 8% of risk‐weighted assets. Total capital consists of core capital,
  as defined above, and supplementary capital.  Supplementary capital consists
  of certain permanent and maturing capital instruments that do not qualify as
  core capital and general valuation loan and lease loss allowances up to a
  maximum of 1.25% of risk‐weighted assets. Supplementary capital may be used to
  satisfy the risk‐based requirement only to the extent of core capital.  In determining the amount of risk‐weighted
  assets, all assets, including certain off‐balance sheet items, are multiplied
  by a risk weight, ranging from 0% to 100%, based on the risk inherent in the
  type of asset.  For example, the OTS has assigned a risk weight of 50% for
  prudently underwritten permanent one‐to‐four family first lien mortgage loans
  not more than 90 days delinquent and having a loan‐to‐value ratio of not more
  than 80% at origination unless insured to such ratio by an insurer approved by
  FNMA or FHLMC.  On June 30, 2001, the Savings Bank had total
  risk‐based capital of a approximately $20.8 million, including $20.5 million
  in core capital and $337,000 in qualifying supplementary capital, and
  risk‐weighted assets of $167.3 million, or total capital of 12.4% of
  risk‐weighted assets.  This amount was $13.4 million above the 8% requirement
  in effect on that date.   45  The OTS  is authorized to impose capital
  requirements in excess of these standards on individual associations on a
  case‐by‐case basis. The OTS and the FDIC are authorized and, under certain
  circumstances required, to take certain actions against savings associations
  that fail to meet their capital requirements. The OTS is generally required to
  take action to restrict the activities of an "undercapitalized association"
  (generally defined to be one with less than either a 4% core capital ratio, a
  4% Tier 1 risked‐based capital ratio or an 8% risk‐based capital ratio). Any
  such association must submit a capital restoration plan and until such plan is
  approved by the OTS may not increase its assets, acquire another institution,
  establish a branch or engage in any new activities, and generally may not make
  capital distributions.  The OTS is authorized to impose the additional
  restrictions that are applicable to significantly undercapitalized
  associations.  The OTS is also generally authorized to
  reclassify an association into a lower capital category and impose the
  restrictions applicable to such category if the institution is engaged in
  unsafe or unsound practices or is in an unsafe or unsound condition.  The imposition by the OTS or the FDIC of any of
  these measures on the Company or the Savings Bank may have a substantial
  adverse effect on their operations and profitability.  The following
  table presents the Savings Bank's capital levels as of June 30, 2001.  At June 30, 2001Percent ofAmount
      
      Assets(Dollars in thousands)Tangible capital. . . . .
      . .
      
      $20,506
      
      9.5
      %Minimum requiredtangible capital. . . .
      . .
      3,253
      
      1.5Excess. . . . . . . . . .
      . . . .
      
      $17,253
      
      8.0
      %Core capital. . . . . . .
      . . .
      
      $20,506
      
      9.5
      %Minimum required corecapital. . . . . . . .
      . . . . .
      
      8,673
      
      4.0Excess. . . . . . . . . .
      . . . .
      
      $11,833
      
      5.5
      %Risk-based capital. . . .
      .
      
      $20,811
      
      12.4
      %Minimum risk-basedcapital requirement. .
      .
      13,384
      
      8.0Excess. . . . . . . . . .
      . . . .
      
      $ 7,427
      
      4.4
      %  46  Limitations on Capital
  Distributions  OTS regulations impose various restrictions on
  savings institutions with respect to their ability to make distributions of
  capital, which include dividends, stock redemptions or repurchases, cash-out
  mergers and other transactions charged to the capital account.  Any savings
  association that fails to meet the QTL test must convert to a national bank
  charter, unless it requalifies as a QTL and thereafter remains a QTL.  If an
  association does not requalify and converts to a national bank charter, it
  must remain SAIF‐insured until the FDIC permits it to transfer to the BIF.  If
  such an association has not yet requalified or converted to a national bank,
  its new investments and activities are limited to those permissible for both a
  savings association and a national bank, and it is limited to national bank
  branching rights in its home state.  In addition, the association is
  immediately ineligible to receive any new FHLB borrowings and is subject to
  national bank limits for payment of dividends.  If such association has not
  requalified or converted to a national bank within three years after the
  failure, it must divest of all investments and cease all activities not
  permissible for a national bank.  In addition, it must repay promptly any
  outstanding FHLB borrowings, which may result in prepayment penalties.  If any
  association that fails the QTL test is controlled by a holding company, then
  within one year after the failure, the holding company must register as a bank
  holding company and become subject to all restrictions on bank holding
  companies.  Investment Rules  Under the HOLA, savings institutions are
  generally subject to the national bank limit on loans to one borrower. 
  Generally, this limit is 15% of the Savings Bank's unimpaired capital and
  surplus, plus an additional 10% of unimpaired capital and surplus, if such
  loan is secured by readily-marketable collateral, which is defined to include
  certain financial instruments and bullion.  The OTS by regulation has amended
  the loans to one borrower rule to permit savings associations meeting certain
  requirements, including capital requirements, to extend loans to one borrower
  in additional amounts under circumstances limited essentially to loans to
  develop or complete residential housing units.  At June 30, 2001, the largest
  loans by the Savings Bank outstanding to any one borrower, including related
  entities, was $1,142,000.  First Home has a working relationship with a local
  closely-held corporation that buys, sells, develops, rents and manages real
  estate in our area.  At June 30, 2001, there were 20 separate loans secured by
  20 different pieces of real estate, with a combined evaluation of $1.60
  million.  All loans are personally endorsed and guaranteed by the corporate
  owners.  These loans were performing in accordance with their terms at that
  date.  Activities of Savings
  Associations and Their Subsidiaries  When a savings association establishes or
  acquires a subsidiary or elects to conduct any new activity through a
  subsidiary that the association controls, the savings association shall notify
  the FDIC and the OTS 30 days in advance and provide the information each
  agency may, by regulation, require.  Savings associations also must conduct
  the activities of subsidiaries in accordance with existing regulations and
  orders.  The OTS may determine that the continuation by a
  savings association of its ownership control of, or its relationship to, the
  subsidiary constitutes a serious risk to the safety, soundness or stability of
  the association or is inconsistent with sound banking practices or with the
  purposes of the FDIA.  Based upon that determination, the FDIC or the OTS has
  the authority to order the savings association to divest itself of control of
  the subsidiary.  The FDIC also may determine by regulation or order that any
  specific activity poses a serious threat to the SAIF.  If so, it may require
  that no SAIF member engage in that activity directly.  Accounting and Regulatory
  Standards  An OTS policy statement applicable to all
  savings associations clarifies and re-emphasizes that the investment
  activities of a savings association must be in compliance with approved and
  documented investment policies and strategies, and must be accounted for in
  accordance with generally accepted accounting principles.  Under the policy
  statement, management must support its classification of an accounting for
  loans and securities (i.e., whether held for investment, sale or trading) with
  appropriate documentation.  First Home is in compliance with these amended
  rules.  The OTS has adopted an amendment to its
  accounting regulations, which may be made more stringent than generally
  accepted accounting principles by the OTS, to require that transactions be
  reported in a manner that best reflects their underlying economic substance
  and inherent risk and that financial reports must incorporate any other
  accounting regulations or orders prescribed by the OTS.  Investment Portfolio Policy  OTS supervisory policy requires that securities
  owned by thrift institutions must be classified and reported in accordance
  with GAAP consistent with the institution's intent to trade,
  available-for-sale or held-to-maturity.  Trading securities are acquired
  principally for the purpose of near term sales.  Such securities are reported
  at fair value and unrealized gains and losses are included in income.  49  Securities which are designated as
  held-to-maturity are designated as such because the investor has the ability
  to hold these securities to maturity.  Such securities are reported at
  amortized cost.  All other securities are designated as
  available-for-sale, a designation which provides the investor with certain
  flexibility in managing its investment portfolio.  Such securities are
  reported at fair value; net unrealized gains and losses are excluded from
  income and reported net of applicable income taxes as a separate component of
  stockholders' equity.  The Savings Bank has adopted a reporting policy that
  complies with these OTS requirements.  Transactions with Affiliates  Savings associations must comply with Sections
  23A and 23B of the Federal Reserve Act relative to transactions with
  affiliates in the same manner and to the same extent as if the savings
  association were a Federal Reserve member bank. Generally, transactions
  between a savings association or its subsidiaries and its affiliates are
  required to be on terms as favorable to the association as transactions with
  non‐affiliates. In addition, certain of these transactions, such as loans to
  an affiliate, are restricted to a percentage of the association's capital. 
  Affiliates of the Savings Bank include the Company and any company which is
  under common control with the Savings Bank.  In addition, a savings
  association may not lend to any affiliate engaged in activities not
  permissible for a bank holding company or acquire the securities of most
  affiliates.  The OTS has the discretion to treat subsidiaries of savings
  associations as affiliates on a case by case basis.  Certain transactions with directors, officers or
  controlling persons are also subject to conflict of interest regulations
  enforced by the OTS.  These conflict of interest regulations and other
  statutes also impose restrictions on loans to such persons and their related
  interests.  Among other things, such loans must be made on terms substantially
  the same as for loans to unaffiliated individuals.  REGULATION OF FIRST BANCSHARES  General  First Bancshares is a unitary savings and loan
  holding company subject to regulatory oversight of the OTS.  Accordingly, the
  Company is registered with the OTS and subject to OTS regulations,
  examinations, supervision and reporting requirements.  The Company is required
  to file certain reports with, and otherwise comply with the regulations of,
  the OTS and the Securities and Exchange Commission.  As a subsidiary of a
  savings and loan holding company, the Savings Bank is subject to certain
  restrictions in its dealings with the Company and with other companies
  affiliated with the Company and also are subject to regulatory requirements
  and provisions as federal institutions.  New Legislation.  On November
  12, 1999, the Gramm‐Leach‐Bliley Financial Services Modernization Act of 1999
  was signed into law.  The purpose of this legislation is to modernize the
  financial services industry by establishing a comprehensive framework to
  permit affiliations among commercial banks, insurance companies, securities
  firms and other financial service providers. Generally, the Act:  (a)        repeals the historical restrictions and eliminates many federal and
  state law barriers to affiliations among banks, securities firms, insurance
  companies and other financial service providers;  (b)        provides a uniform framework for the functional regulation of the
  activities of banks, savings institutions and their holding companies;  (c)        broadens the activities that may be conducted by national banks,
  banking subsidiaries of bank holding companies and their financial
  subsidiaries;  (d)        provides an enhanced framework for protecting the privacy of
  consumer information;  (e)        adopts a number of provisions related to the capitalization,
  membership, corporate governance and other measures designed to modernize the
  FHLB system;  (f)        modifies the laws governing the implementation of the Community
  Reinvestment Act; and  (g)        addresses a variety of other legal and regulatory issues affecting
  day‐to‐day operations and long‐term activities of financial institutions.  Acquisitions  Federal
  law and OTS regulations issued thereunder generally prohibit a savings and
  loan holding company, without prior OTS approval, from acquiring more than 5%
  of the voting stock of any other savings association or savings and loan
  holding company or controlling the assets thereof.  They also prohibit, among
  other things, any director or officer of a savings and loan holding company,
  or any individual who owns or controls more than 25% of the voting shares of
  such holding company, from acquiring control of any savings association not a
  subsidiary of such savings and loan holding company, unless the acquisition is
  approved by the OTS.  Activities  As a
  unitary savings and loan holding company, the Company generally is not subject
  to activity restrictions.  If the Company acquires control of another savings
  association as a separate subsidiary, it would become a multiple savings and
  loan holding company, and the activities of the Company and any of its
  subsidiaries (other than the Savings Bank or any other SAIF-insured savings
  association) generally become subject to additional restrictions.  There
  generally are more restrictions on the activities of a multiple savings and
  loan holding company than on those of a unitary savings and loan holding
  company.  Federal law provides that, among other things, no multiple savings
  and loan holding company or subsidiary thereof which is not an insured
  association shall commence or continue for more than two years after becoming
  a multiple savings and loan association holding company or subsidiary thereof,
  any business activity other than:  (i) furnishing or performing management
  services for a subsidiary insured institution, (ii) conducting an insurance
  agency or escrow business, (iii) holding, managing, or liquidating assets
  owned by or acquired from a subsidiary insured institution, (iv) holding or
  managing properties used or occupied by a subsidiary insured institution, (v)
  acting as trustee under deeds of trust, (vi) those activities previously
  directly authorized by regulation as of March 5, 1987 to be engaged in by
  multiple holding companies or (vii) those activities authorized by the Federal
  Reserve Board as permissible for bank holding companies, unless the OTS by
  regulation, prohibits or limits such activities for savings and loan holding
  companies.  Those activities described in (vii) above also must be approved by
  the OTS prior to being engaged in by a multiple savings and loan holding
  company.  Qualified Thrift Lender
  Test.  If the Savings Bank fails the qualified thrift
  lender test, within one year the Company must register as, and will become
  subject to, the significant activity restrictions applicable to bank holding
  companies.  See "Regulation of First Home ‐‐ Qualified Thrift Lender Test" for
  information regarding the Savings Bank's qualified thrift lender test.   TAXATION Federal Taxation  General.  The Corporation and the Savings Bank report their income on a
  fiscal year basis using the accrual method of accounting and will be subject
  to federal income taxation in the same manner as other corporations with some
  exceptions, including particularly the Savings Bank's reserve for bad debts
  discussed below.  The following discussion of tax matters is intended only as
  a summary and does not purport to be a comprehensive description of the tax
  rules applicable to the Savings Bank or the Corporation.  Bad
  Debt Reserve.Historically, savings institutions such as the Savings Bank
  which met certain definitional tests primarily related to their assets and the
  nature of their business ("qualifying thrift") were permitted to establish a
  reserve for bad debts and to make annual additions thereto, which may have
  been deducted in arriving at their taxable income.  The Savings Bank's
  deductions with respect to "qualifying real property loans," which are
  generally loans secured by certain interest in real property, were computed
  using an amount based on the Savings Bank's actual loss experience, or a
  percentage equal to 8% of the Savings Bank's taxable income, computed with
  certain modifications and reduced by the amount of any permitted additions to
  the non-qualifying reserve.  Due to the Savings Bank's loss experience, the
  Savings Bank generally recognized a bad debt deduction equal to 8% of taxable
  income.  In August 1996, the provisions repealing the
  current thrift bad debt rules were passed by Congress as part of  "The Small
  Business Job Protection Act of 1996."  The new rules eliminate the 8% of
  taxable income method for deducting additions to the tax bad debt reserves for
  all thrifts for tax years beginning after December 31, 1995.  These rules also
  require that all institutions recapture all or a portion of their bad debt
  reserves added since the base year (last taxable year beginning before January
  1, 1988).  The Savings Bank has previously recorded a deferred tax liability
  equal to the bad debt recapture and as such the new rules will have no effect
  on the net income or federal income tax expense.  For taxable years beginning
  after December 31, 1995, the Savings Bank's bad debt deduction will be
  determined under the experience method using a formula based on actual bad
  debt experience over a period of years or, if the Savings Bank is a "large"
  association (assets in excess of $500 million) on the basis of net charge-offs
  during the taxable year.  The new rules allow an institution to suspend bad
  debt reserve recapture for the 1996 and 1997 tax years if the institution's
  lending activity for those years is equal to or greater than the institutions
  average mortgage lending activity for the six taxable years preceding 1996
  adjusted for inflation.  For this purpose, only home purchase or home
  improvement loans are included and the institution can elect to have the tax
  years with the highest and lowest lending activity removed from the average
  calculation.  If an institution is permitted to postpone the reserve
  recapture, it must begin its six year recapture no later than the 1998 tax
  year.  The unrecaptured base year reserves will not be subject to recapture as
  long as the institution continues to carry on the business of banking.  In
  addition, the balance of the pre-1988 bad debt reserves continue to be subject
  to provisions of present law referred to below that require recapture in the
  case of certain excess distributions to shareholders.  Distributions.To the extent that the Savings Bank makes "nondividend
  distributions" to the Corporation that are considered as made:  (I) from the
  reserve for losses on qualifying real property loans, to the extent the
  reserve for such losses exceeds the amount that would have been allowed under
  the experience method; or (ii)  from the supplemental reserve for losses on
  loans ("Excess Distributions"),then an amount based on the amount distributed
  will be included in the Savings Bank's taxable income.  Nondividend
  distributions include distributions in excess of the Savings Bank's current
  and accumulated earnings and profits, distributions in redemption of stock,
  and distributions in partial or complete liquidation.  However, dividends
  paid out of the Savings Bank's current or accumulated earnings and profits, as
  calculated for federal income tax purposes, will not be considered to result
  in a distribution from the Savings Bank's bad debt reserve.  Thus, any
  dividends to the Corporations that would reduce amounts appropriated to the
  Savings Bank's bad debt reserve and deducted for federal income tax purposes
  would create a tax liability for the Savings Bank.  The amount of
  additional taxable income attributable to an Excess Distribution is an amount
  that, when reduced by the tax attributable to the income, is equal to the
  amount of the distribution.  Thus, if, the Savings Bank makes a "nondividend distribution,"
  then approximately one and one-half times the amount so used would be
  includable in gross income for federal income tax purposes, assuming a 35%
  corporate income tax rate (exclusive of state and local taxes).  See
  "REGULATION" for limits on the payment of dividends by the Savings Bank.  The
  Savings Bank does not intend to pay dividends that would result in a recapture
  of any portion of its tax bad debt reserve.  Corporate Alternative Minimum Tax.The Code imposes a tax on
  alternative minimum taxable income ("AMTI") at a rate of 20%.  The excess of the tax bad
  debt reserve deduction using the percentage of taxable income method over the
  deduction that would have been allowable under the experience method is
  treated as a preference item for purposes of computing the AMTI.  In addition,
  only 90% of the AMTI can be offset by net operating loss carryovers.  AMTI is
  increased by an amount equal to 75% of the amount by which the Savings Bank's
  adjusted current earnings exceeds its AMTI (determined without regard to this
  preference and prior to reduction for net operating losses).  For taxable
  years beginning after December 31, 1986, and before January 1, 1996, an
  environmental tax of .12% of the excess of AMTI (with certain modification)
  over $2.0 million was imposed on corporations, including the Savings Bank,
  whether or not an Alternative Minimum Tax ("AMT") was paid.  Dividends-Received Deduction and Other Matters.The Corporation may
  exclude from its income 100% of dividends received from the Savings Bank as a
  member of the same affiliated group of corporations.  The corporate
  dividends-received deduction is generally 70% in the case of dividends
  received from unaffiliated corporations with which the Corporation and the
  Savings Bank will not file a consolidated tax return, except that if the
  Corporation or the Savings Bank owns more than 20% of the stock of a
  corporation distributing a dividend, then 80% of any dividends received may be
  deducted.  Other
  Federal Tax Matter.Other changes in the federal tax system could also
  affect the business of the Savings Bank.  These changes include limitations on
  the deduction for personal interest paid or accrued by individual taxpayers,
  limitations on the deductibility of losses attributable to investment in
  certain passive activities and limitations on the deductibility of
  contributions to individual retirement accounts.  The Savings Bank does not
  believe these changes will have a material effect on its operations.  There have
  not been any IRS audits of the Savings Bank's Federal income tax returns
  during the past five years.  Missouri Taxation  Missouri-based thrift institutions, such as the Savings Bank, are subject to a
  special financial institutions tax, based on net income without regard to net
  operating loss carryforwards, at the rate of 7% of net income.  This tax is in
  lieu of certain other state taxes on thrift institutions, on their property,
  capital or income, except taxes on tangible personal property owned by the
  Savings Bank and held for lease or rental to others and on real estate,
  contributions paid pursuant to the Unemployment Compensation Law of Missouri,
  social security taxes, sales taxes and use taxes.  In addition, First Home is
  entitled to credit against this tax all taxes paid to the State of Missouri or
  any political subdivision except taxes on tangible personal property owned by
  the Savings Bank and held for lease or rental to others and on real estate,
  contributions paid pursuant to the Unemployment Compensation Law of Missouri,
  social security taxes, sales and use taxes, and taxes imposed by the Missouri
  Financial Institutions Tax Law.  Missouri thrift institutions are not subject
  to the regular state corporate income tax.  There have
  not been any audits of the Savings Bank's state income tax returns during the
  past five years.  For
  additional information regarding taxation, see Notes 1 and 10 of the Notes to
  the Consolidated Financial Statements.  Competition  The
  Savings Bank has been, and continues to be, a community-oriented savings
  institution offering a variety of financial resources to meet the needs of
  Wright, Webster, Douglas, Ozark , Christian, Stone and Taney counties,
  Missouri.  The Savings Bank also transacts a significant amount of business in
  Texas and Greene counties, Missouri.  The Savings Bank's deposit gathering and
  lending activities are concentrated in these market areas.  The Savings Bank's
  offices are located in Mountain Grove, Marshfield, Ava, Gainesville, Sparta,
  Theodosia, Crane, Galena, Kissee Mills and Rockaway Beach, Missouri.  The
  Savings Bank is the only thrift institution located in Wright County,
  Missouri.  The Savings Bank faces strong competition in the attraction of
  savings deposits and in the origination of loans.  Its most direct competition
  for savings deposits and loans has historically come from other thrift
  institutions and from commercial banks located in its primary market area,
  some with a state-wide or regional presence.  Additionally, the Savings Bank
  faces significant competition from the FSA and Farm Credit System and other
  financial entities in lending.  The Savings Bank also competes with securities
  firms, credit unions, money market funds and mutual funds in raising
  deposits.  Management
  considers the Savings Bank's reputation for financial strength and customer
  service as its major competitive advantage in attracting and retaining
  customers in its market area.  The Savings Bank also believes it benefits from
  its community orientation as well as its relatively high core deposit base.  Personnel  As of June
  30, 2001, the Savings Bank had 93 full-time employees and 12 part-time
  employees.  The Savings Bank believes that employees play a vital role in the
  success of a service company and that the Savings Bank's relationship with its
  employees is good.  The employees are not represented by a collective
  bargaining unit.  55




Item 2.  Properties  The
  following table sets forth information regarding the Savings Bank's offices as
  of June 30, 2001.  Net
      
      Land
      
      BuildingYear
      
      Book Value
      
      Owned/
      
      Owned/
      
      SquareLocation
      
      County
      
      Opened
      
      as of
      6/30/01
      
      Leased
      
      Leased
      
      FootageMain Office
      
      
      
      (Dollars in
      thousands)142 East First Street
      
      Wright
      
      1911
      
      $   569
      
      Owned
      
      Owned
      
      9,800Mountain Grove, Missouri 65711Branch Offices1208 N. Jefferson Street
      
      Douglas
      
      1978
      
      368
      
      Owned
      
      Owned
      
      3,500Ava, Missouri  65608103 South Clay Street
      
      Webster
      
      1974
      
      386
      
      Owned
      
      Owned
      
      4,200Marshfield, Missouri  65706203 Elm Street
      
      Ozark
      
      1992
      
      689
      
      Owned
      
      Owned
      
      3,600Gainesville, Missouri  656557164 Highway 14 East
      
      Christian
      1995
      
      272
      
      Owned
      
      Owned
      
      3,000Sparta, Missouri  65753Business Highway 160
      
      Ozark
      
      1997
      
      67
      
      Leased
      
      Leased
      
      1,200Theodosia, Missouri  65761123 Main Street
      
      Stone
      
      1998
      
      254
      
      Owned
      
      Owned
      
      3,800Crane, Missouri  65633South Side of Square
      
      Stone
      
      1998
      
      67
      
      Owned
      
      Owned
      
      1,600Galena, Missouri  6565620377 US Highway 160
      
      Taney
      
      2000
      
      653
      
      Owned
      
      Owned
      
      2,250Forsyth, Missouri  656532536 State Highway 176
      
      Taney
      
      2000
      
      493
      
      Owned
      
      Owned
      
      2,500Rockaway Beach, Missouri  65740Drive-in FacilitiesRoute 60 and Oakland
      
      Wright
      
      1986
      
      172
      
      Owned
      
      Owned
      
      1,200Mountain Grove, Missouri  65711223 West Washington
      
      Webster
      
      1993
      
      193
      
      Owned
      
      Owned
      
      1,100Marshfield, Missouri  65706   56




Item 3.  Legal
  Proceedings  In the opinion of management, the Savings Bank
  is not a party to any pending claims or lawsuits that are expected to have a
  material adverse effect on the Savings Bank's financial condition or
  operations.  Periodically, there have been various claims and lawsuits
  involving the Savings Bank mainly as a defendant, such as claims to enforce
  liens, condemnation proceedings on properties in which the Savings Bank holds
  security interests, claims involving the making and servicing of real property
  loans and other issues incident to the Savings Bank's business.  Aside from
  such pending claims and lawsuits which are incident to the conduct of the
  Savings Bank's ordinary business, the Savings Bank is not a party to any
  material pending legal proceedings that would have a material adverse effect
  on the financial condition or operations of the Savings Bank.  Item 4.    Submission of Matters to a Vote of Security Holders  No matters were
  submitted to a vote of security holders during the fourth quarter of the
  fiscal year ended June 30, 2001.  PART II  Item 5.     Market for the Registrant's Common Equity and Related
  Stockholder Matters  The information contained in the section
  captioned "Common Stock Information" in the Annual Report is incorporated
  herein by reference.  Item 6.     Management's Discussion and Analysis of Financial Condition and
  Results of Operation  The information contained in the section
  captioned "Management's Discussion and Analysis of Financial Condition and
  Results of Operations" in the Annual Report is incorporated herein by
  reference.  57   Item 7.     Financial
  Statements  Independent Auditors Report* (a)  
  Consolidated Statements of Financial Condition as of June 30, 2001 and 2000* (b)  
  Consolidated Statements of Income For the Years Ended June 30, 2001, 2000 and
  1999* (c)  
  Consolidated Statements of Stockholders' Equity For the Years Ended June 30,
  2001, 2000 and 1999* (d)  
  Consolidated Statements of Cash Flows For the Years Ended June 30, 2001, 2000
  and 1999* (e)  
  Notes to Consolidated Financial Statements*  * Contained in the Annual Report to Stockholders filed as an exhibit hereto
  and incorporated herein  by reference.  All schedules have been omitted as the
  required information is either inapplicable or  contained in the Consolidated
  Financial Statements or related Notes contained in the Annual Report to
  Stockholders.  Item 8.     Changes in and Disagreements With Accountants on Accounting
  and Financial Disclosure  No disagreement with the Company's independent accountants on accounting and
  financial disclosure has occurred during the past 24 months.




PART III  Item 9.     Directors, Executive Officers, Promoters and Control Persons;
  Compliance with Section 16(a) of the Exchange Act ----------------------------------------------------------------------- The
  information contained under the section captioned "Proposal I -- Election of
  Directors" in the Proxy Statement is incorporated herein by reference.  The
  following table sets forth certain information with respect to the executive
  officers of the Company, each of whom holds the same positions with the
  Company and each of whom holds the same positions with the Savings Bank.  Name
      Age(1)
      PositionStephen H. Romines
      59
      President and Chief Executive OfficerCharles W. Schumacher
      49
      Senior Vice-PresidentPeter M. Medlen
      45
      Executive Vice PresidentSusan J. Uchtman
      38
      Chief Financial Officer _________________ (1)  As of June 30, 2001.  The
  principal occupation of each executive officer of the Company is set forth
  below.  All of the officers listed above have held positions with or been
  employed by the Company for five years unless otherwise stated.  All executive
  officers reside in Mountain Grove, Missouri, unless otherwise stated.  There
  are no family relationships among or between the executive officers, unless
  otherwise stated.  Stephen
  H. Romines joined the Savings Bank in 1973 and has served as Chairman of
  the Board, President and Chief Executive Officer of the Savings Bank since
  1978.  Mr. Romines is the brother-in-law of Mr. Medlen, Executive Vice
  President of First Home.  Charles
  W. Schumacherjoined the Savings Bank in 2000 as the Senior Vice
  President.  Previously, Mr. Schumacher was the Executive Vice President and
  CEO of Northwoods State Bank in Iowa from 1992-2000.  Peter
  M. Medlen has been employed by First Home since 1985 and currently serves
  as Executive Vice President.  Mr. Medlen also serves as President of the
  Savings Bank's wholly owned subsidiary, Fybar Service Corp.  Mr. Medlen is a
  past President of the Mountain Grove Jaycees and past Treasurer of the
  Mountain Grove Central Business District.  He is a past Board member of the
  HI-FI-MO, a Missouri not-for-profit elderly housing association.  Mr. Medlen
  is married to Mr. Stephen H. Romines' sister.  Susan
  J. Uchtman has been employed by First Home since June of 1994.  Mrs.
  Uchtman, a CPA, was previously employed by Kirkpatrick Phillips & Miller,
  CPAs, P.C., the Company's independent auditors, from September 1985 through
  May 1994.  The
  information contained under the section captioned "Compliance with Section
  16(a) of the Exchange Act" in the Proxy Statement is incorporated herein by
  reference.  Item 10.  Executive Compensation  The
  information contained under the section captioned "Proposal I -- Election of
  Directors" in the Proxy Statement is incorporated herein by reference.  Item 11.  Security Ownership of Certain Beneficial Owners and Management  (a)  
  Security Ownership of Certain Beneficial Owners  Information required by this item is incorporated herein by reference to the
  section captioned "Voting Securities and Security Ownership of Certain
  Beneficial Owners and Management" of the Proxy Statement.  (b)   Security Ownership of Management  Information required by this item is incorporated herein by reference to the
  sections captioned "Voting Securities and Security Ownership of Certain
  Beneficial Owners and Management" and "Proposal I - Election of Directors" of
  the Proxy Statement.  (c)  
  Changes in Control  The
  Company is not aware of any arrangements, including any pledge by any person
  of securities of the Company, the operation of which may at a subsequent date
  result in a change in control of the Company.




59   Item 12.  Certain Relationships and Related Transactions The information required by this item is
  incorporated herein by reference to the section captioned "Proposal I  --
  Election of Directors -- Certain Transactions."  PART IV  Item 13.  Exhibits, List Reports on Form 8-K  (a)     Exhibits  3.1   Articles of Incorporation of First Bancshares, Inc.*  3.2   Bylaws of First Bancshares, Inc.*  10.1   Employment Agreement with Stephen H. Romines**  10.2   First Home Savings Bank 1994 Employee Stock Ownership Plan*  10.3   First Bancshares, Inc. 1993 Stock Option Plan***  10.4   First Home Savings Bank Management Recognition and Development Plan***  10.5   Employment Agreement with Charles W. Schumacher  13.    Annual Report to Stockholders  21.    Subsidiaries of the Registrant  23.   
  Auditors' Consent  (b)   
  Report on Form 8-K  No Forms
  8-K were filed during the quarter ended June 30, 2001   ------------------- *     Incorporated by
  reference to the Corporation's Registration Statement on Form S-1 File No.
  33-69886.  **    Incorporated by reference to the Corporation's 1994 Annual Meeting Proxy
  Statement dated September 14, 1994.  ***(incorporated by reference to the Form 10KSB filing for the fiscal year
  ended June 30, 1995)  60




SIGNATURES  Pursuant to the
  requirements of section 13 or 15(d) of the Securities Exchange Act of 1934,
  the registrant has duly caused thisreport to be signed on its behalf by the
  undersigned, thereunto duly authorized.  FIRST BANCSHARES, INC.   Date:  September 28,
  2001                                                                       By:
  /s/ Stephen H. Romines -------------------------- Stephen H. Romines Chairman of the Board, President and Chief Executive Officer (Duly Authorized Representative)  Pursuant to the requirements of the Securities
  Exchange Act of 1934, this report has been signed below by the following
  persons on behalf of the registrant and in the capacities and on the dates
  indicated.   By: /s/ Stephen H.
  Romines                                                               
         September 28, 2001 ------------------------------- Stephen H. Romines Chairman of the Board,
  President, Chief Executive Officer
  (Principal Executive Officer)  By:/s/ Susan J.
  Uchtman                                                              
               September 28, 2001 ------------------------------- Susan J. Uchtman Chief Financial Officer  By:                                                       2001 --------------------------------- Harold F. Glass Director   By:/s/ Almeta
  Hardebeck                                                                        
  September 28, 2001 ---------------------------------- Almeta Hardebeck Director   By:/s/ John G.
  Moody                                            
                                   September 28, 2001 ----------------------- John G. Moody Director   By:                                                   , 2001 -------------------------              --------- --- Dr. James F. Moore Director </page>      Exhibit 10.5 Employment Agreement with Charles W. Schumacher    EMPLOYMENT AGREEMENT  THIS AGREEMENT entered into this fifth day of September, 2000 between First
  Home Savings Bank (the "Bank"), and Charles Schumacher (the "Employee"), it is
  agreed as follows:  1.  TERM.  The initial term of employment under this Agreement shall be for
  the period commencing September 5, 2000 and ending September 4, 2003.  2.  BASE COMPENSATION.  The Bank agrees to pay the Employee during the term of
  this Agreement a salary at the rate of $95,000.00 per annum, payable in cash
  not less frequently than every two weeks.  3.  EMPLOYMENT.  The Employee shall render such duties as the Board of
  Directors may from time to time reasonable direct.  4.         a.  PARTICIPATION IN RETIREMENT AND MEDICAL PLANS.  The Employee
  shall be entitled to participate in any plan of the Bank relating to pension,
  profit-sharing, or other retirement benefits and medical coverage or
  reimbursement plans that the Bank may adopt for the benefit of its employees.  b.  EMPLOYEE BENEFITS; EXPENSES.  The Employee shall
  be eligible to participate in any frings benefits that may be or become
  applicable to the Bank's employees, including participation in a stock option
  or incentive plan adopted by the Board of Directors, and any other benefits
  that are commensurate with the responsibilities and functions to be performed
  by the Employee.  5.         a.  NONCOMPETITION.  The Employee shall devote his/her full time
  and best efforts to the performance of his/her employment under this
  Agreement.  During the term of this Agreement, the Employee shall not, at any
  time or place, either directly or indirectly, engage in any business or
  activity in competition with the business affairs or interests of the Bank or
  be a director, officer, or employee of, or consultant to any bank, savings and
  loan association, credit union, or similar thrift, savings bank or institution
  in the area described on Attachment A.  b.  The Employee shall not work for, nor be employed
  by, any financial institution in any county where the Bank has an office for a
  period of one year following the Employee's termination of employment, for any
  reason, from the Bank.  c.  Nothing in the foregoing subparagraphs in this
  paragraph 5 shall be determined to prevent or limit the right of the Employee
  to invest in the capital stock or other securities of any business dissimilar
  from that of Holding Company or solely as a passive investor in any business.  d.  In the event of violation by the Employee of this
  Agreement for loyalty and noncompetition, the Employee will be subject to
  damages and because of the relationship of employer and employee, it is hereby
  agreed injunctive relief is necessary for employer to enforce these provisions
  of the Agreement to protect its business and good will.  6.  STANDARD.  The Employee shall perform his/her duties under this
  Agreement in accordance with such reasonable standards expected of employees
  with comparable positions in comparable organizations and as may be
  established from time to time by the Board of Directors of the Bank and its
  subsidiaries.  7.  TERMINATION AND TERMINATION PAY.  This Agreement shall be terminated upon the following occurrences:  a.  The death of the Employee during the term of this
  Agreement, in which event the Employee's estate shall be entitled to receive
  the compensation due the Employee through the last day of the calendar month
  in which his/her death shall have occurred.  b.  This Agreement may be terminated at any time by a decision
  of the Board of Directors of the Bank for conduct not constituting termination
  for "Just Cause," or by the Employee upon sixty (60) days written notice to
  the Bank, as the case may be.  In the event this Agreement is terminated by
  the Board of Directors without Just Cause, the Bank shall be obligated to
  continue to pay the Employee his/her salary up to the date of termination of
  the term of this Agreement.  In the event this agreement is terminated by the
  Employee, the compensation and benefits will be terminated upon the effective
  date of the employment termination or as may otherwise be determined by the
  Board of Directors.  c.  The Bank reserves the right to terminate this Agreement at
  any time for Just Cause.  Termination for "Just Cause" shall mean termination
  for personal dishonesty, incompetence, willful misconduct, breach of a
  fiduciary duty involving personal profit, intentional failure to perform
  stated duties, willful violation of any law, rule or regulation (other than a
  law, rule or regulation relating to a traffic violation or similar offense),
  final cease-and-desist order, termination under the provisions of
  subparagraphs (d) and (e) below, or material breach of any provisions of this
  Agreement.  Subject to the provisions of paragraph 9 hereof, in the event this
  Agreement is terminated for Just Cause, the Bank shall only be obligated to
  continue to pay the Employee his/her salary up to the date of the termination.  d.  (i) 
  If the Employee is suspended and/or temporarily prohibited from participating
  in the conduct of the Bank's affairs by a notice served under Section 8 (e)
  (3) or (g) (1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C. 1818 (e) (3) and (g) (1), the Bank's obligations under the
  Agreement shall be suspended as of the date of service, unless stayed by
  appropriate proceedings.  If the charges in the notice are dismissed, the Bank
  may in its discretion (a) pay the Employee all or part of the compensation
  withheld while its contract obligations were suspended and (b) reinstate (in
  whole or in part) any of its obligations that were suspended.  (ii)  If the Employee is removed and/or
  permanently prohibited from participating in the conduct of the Bank's affairs
  by an order issued under Section 8 (e) (4) or (g) (1) of FDIA (12 U.S.C. 1818
  (e) (4) or (g) (1), all obligations of the Bank under the Agreement shall
  terminate as of the effective date of the order, but vested rights of the
  contracting parties shall not be affected.  e.  If the Bank is in default (as defined in Section 3 (x) (1)
  of the FDIA), all obligations under this Agreement shall be terminated as of
  the date of default, but this paragraph shall not affect any vested rights of
  the parties.  f.  All obligations under this Agreement may be terminated:  (i) 
  by the Director of the Office of Thift Supervision (the "Director") or his or
  her designee at the time of the Federal Deposit Insurance Corporation or the
  Resolution Trust Corporation enters into an agreement to provide assistance to
  or on behalf of the Bank under the authority contained in Section 13 (c) of
  the FDIA and (ii)  by the Director, or his or her designee at the time the
  Director of such designee approves a supervisory merger to resolve problems
  related to operation of the Bank or when the Bank is determined by the
  Director to be in an unsafe or unsound condition.  Any rights of the partieis
  that have already vested, however, shall not be affected by such action.  g.  If, after a
  "Change of Control" (as hereinafter defined)
  of the Bank or the Holding Company, the Bank shall terminate the employment of
  the Employee during the period of employment under this Agreement for any
  reason other than Just Cause, as defined in paragraph 9 (c), or otherwise
  change the present capacity or circumstances in which the Employee is employed
  as set forth in paragraph 3 of this Agreement, or cause a reduction in the
  Employee's responsibilities or authority or compensation or other benefits
  provided under this Agreement without the Employee's written consent, then the
  Bank shall promptly pay to the Employee an amount equal to the product of 2.99
  times the Employee's "base amount" as defined in Section 280G (b) (3) of the
  Internal Revenue Code of 1986, as amended.  (i).  The Bank shall pay all legal fees and expenses which
  the employee may incur as a result of the Bank's contesting the validity or
  enforceability of this Agreement that results in a legal judgement in favor or
  legal settlement.  If judgement is rendered in favor of the Bank, the Employee
  shall pay the Bank's legal fees and all expenses.  (ii).  The Employee shall be required to mitigate the amount
  of any payment provided for in this Agreement by seeking other comparable
  employment and any amounts received from the employment by the Employee shall
  offset the obligations of the Bank hereunder.  8.  CHANGE OF CONTROL.  Paragraph 7 (g) shall be become operative upon the
  occurrence of a Change of Control of the Holding Company.  Upon a Change of
  Control of the Holding Company, those special termination provisions shall
  become operative immediately.  A "Change of Control": shall be deemed to have
  occurred, if at any time during the period of employment set forth in
  paragraph 1 of the Agreement:  (i)  any person or persons acting in concert
  has or have, respectively, beneficial ownership of 25% or more of the Holding
  Company's Common Stock, (ii)  during any period of 24 consecutive months,
  individuals who at the beginning of such period constitute the Bank's or the
  Holding Company's Board of Directors cease for any reason to constitute at
  least a majority of the Board, unless the election of each director who was
  not a director at the beginning of such period has been approved in advance by
  directors representing at least two-thirds of the directors then in office who
  were directors at the beginning of the period, or (iii)  a merger, acquisition
  or other business combination involving the Bank or the Holding Company has
  occurred which results in an acquisition of the Bank or the Holding Company. 
  Upon a Change of Control of the Holding Company, those special termination
  provisions shall become operative immediately.  9.  EXPENSES TO ENFORCE AGREEMENT.  In the event any dispute shall arise
  between the Employee and the Bank as to the terms or interpretation of this
  Agreement, whether instituted by formal legal proceedings or otherwise,
  including any action taken by Employee in defending against any action taken
  by the Bank, the prevailing party shall be reimbursed for all costs and
  expenses, including reasonable attorney's fees, arising from such dispute,
  proceedings or actions.  10.  SUCCESSOR AND ASSIGNS.  (a)  This Agreement shall insure to the
  benefit of and be binding upon any corporate or other successor of the Bank
  which shall acquire, directly or indirectly, by merger, consolidation,
  purchase or otherwise, all or substantially all of the assets of the Bank.  b.  Since the Bank is contracting for the unique and personal
  skills of the Employee, the Employee shall be precluded from assigning or
  delegating his/her rights hereunder without first obtaining written consent of
  the Bank.  11.  AMENDMENTS.  No amendments or additions to this Agreement shall be
  binding unless in writing and signed by the parties hereto, except as herein
  otherwise provided.  12.  APPLICABLE LAW.  This Agreement shall be governed in all respects
  whether as to validity, construction, capacity, performance or otherwise, by
  the law of Missouri, except to the extent that Federal law shall be deemed to
  apply.  This Agreement is intended to comply with the requirements of 12 CFR
  Section 563.39 and to the extent it conflicts with the provisions of that
  Section, Section 563.39 shall control.  Any payments made the Employee
  pursuant to this Agreement, or otherwise, are subject to and conditioned upon
  their compliance with 12 U.S.C. Section 1828 (k) and any regulations
  promulgated thereunder.  13.  SEVERABILITY.  The provisions of this Agreement shall be deemed
  severable and the invalidity or unenforceability of any provision shall not
  affect the validity or enforceability of the other provisions hereof.  Dated this Fifth day of September, 2000 by:    /s/Charles Schumacher          _________             _/s/ Stephen H.
  Romines__________________ Charles
  Schumacher                                                First Home Savings
  Bank by Stephen
  H. Romines, President     Exhibit 13  Annual Report to Stockholders










TABLE OF CONTENTS







|                                                                                                    | Page
|--------------------------------------------------------------------------------------------------- | ----
|                                                                                                    |     
|Letter to
    Stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . . . | 1   
|Business of the
    Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        | 3   
|Selected
    Consolidated Financial Information. . . . . . . . . . . . . . . . . . .                | 4   
|Management's
    Discussion and Analysis of Financial Condition                                     |     
|and Results of
    Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          | 6   
|Independent
    Auditors' Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         | 15  
|Consolidated
    Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . .            | 16  
|Notes to
    Consolidated Financial Statements. . . . . . . . . . . . . . . . . . .                 | 21  
|Common Stock
    Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           | 45  
|Directors and
    Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . | 46  
|Corporate
    Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
    . .  | 47  

Dear Stockholder:



At first glance, fiscal year 2001
might appear somewhat disappointing as net income dropped from $2.0 million to
$1.8 million, nudging earnings per share from $1.06 to $1.00. Upon closer
examination, however, a significant portion of the reduction in net income came
directly from an investment in the future. In particular, the expenses
associated with adding valuable new senior management at the main office, as
well as personnel and equipment at two new branches, are expected to produce
long-term dividends.