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, 2000  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, 2000
were $14,526,000.

    As of September 25, 2000, there were outstanding 1,884,852 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 25, 2000, was $13,187,000. 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 Fiscal Year
      Ended June 30, 2000. (Parts I and II)

2.  Portions of Proxy Statement for the 2000 Annual Meeting of
      Stockholders. (Part III)

Transitional Small Business Disclosure Format (check one)
                       Yes     No  X
                          ----   -----
</page>

                               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, 2000, the Company had
consolidated total assets of $199.1 million, total customer deposits
of $155.7 million and stockholders' equity of $24.5 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, 2000, the Savings Bank's net loans were
$174.9 million, or 87.8% of consolidated total assets, including
$118.9 million, or 66.44% of total loans secured by one-to-four
family properties, $42.7 million, or 23.85% of total loans secured
by other real estate and $11.8 million of consumer loans, or 6.59% of
total loans.  As discussed in following areas, ARM loans account for
approximately 99% of loans secured by real estate and 89% 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.
The premium paid for the branches is being amortized on a straight-
line basis over 15 years.  Results of operations of the branches
acquired are included in the accompanying financial statements since
the dates of acquisition.

                                  1
<PAGE>

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 Rawlings.  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 2000 Annual Report to Stockholders  ("Annual Report")
attached hereto as Exhibit 13.


                                    2
<PAGE>



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
</page>

<TABLE>
<CAPTION>
                                                                       Years Ended June 30,
                                     -----------------------------------------------------------------------------------------
                                                 2000                           1999                           1998
                                     ---------------------------   ---------------------------   -----------------------------
                                                Interest                       Interest                      Interest
                                     Average      and      Yield/   Average       and    Yield/   Average     and       Yield/
                                     Balance(2) Dividends   Cost    Balance(2) Dividends  Cost    Balance(2) Dividends   Cost
                                     ---------  ---------  ------   ---------  ---------  ----    ---------  --------   ------
                                                                      (Dollars in thousands)
<S>                                      <C>        <C>      <C>        <C>      <C>      <C>         <C>        <C>     <C>
Interest-earning assets:
 Loans(1)............................ $162,647  $13,115    8.06%    $150,968  $12,185    8.07%    $142,405  $11,626    8.16%
 Mortgage-backed securities..........      497       34    6.84          633       44    6.95          751       51    6.79
 Investment securities...............    7,497      442    5.90        6,216      423    6.81       11,872      873    7.35
 Daily interest-bearing deposits.....    6,310      259    4.10        9,360      332    3.55        5,898      213    3.61
 Federal funds sold..................      280       15    5.36          229       10    4.37          172        8    4.65
                                      --------   ------             --------  -------            ---------  -------
    Total interest-earning assets....  177,231   13,865    7.82      167,406   12,994    7.76      161,098   12,771    7.93
Non-interest earning assets:
 Office properties and equipment, net    3,708                         3,488                         3,016
 Real estate, net....................    1,656                         1,007                           939
 Other non-interest-earning assets...    4,962                         4,381                         5,230
                                     ---------                      --------                      --------
   Total assets...................... $187,557                      $176,282                      $170,283
                                      ========                      ========                      ========

Interest-bearing liabilities:
 Passbook accounts................... $ 10,399      317    3.05     $  9,102      277    3.04     $  6,435      195    3.03
 NOW and Super Saver accounts........   46,027    1,394    3.03       43,075    1,301    3.02       34,462    1,003    2.91
 Certificates of deposit.............   93,664    5,125    5.47       88,786    4,851    5.46       84,219    4,810    5.71
                                      --------    -----             --------   ------              -------    -----
   Total deposits....................  150,090    6,836    4.55      140,963    6,429    4.56      125,116    6,008    4.80
 Other interest-bearing liabilities..    6,485      421    6.49        4,452      270    6.07       16,398	      997    6.08
                                      --------   ------             --------   ------              -------    -----
   Total interest-bearing liabilities  156,575    7,257    4.64      145,415    6,699    4.61      141,514    7,005    4.95
Non-interest-bearing liabilities:
 Other liabilities...................    6,584                         6,502                         5,211
                                     ---------                      --------                      --------
   Total liabilities.................  163,159                       151,917                       146,725

Stockholders' equity.................   24,398                        24,365                        23,558
                                     ---------                      --------                      --------
   Total liabilities and
     stockholders' equity.............$187,557                      $176,282                     $170,283
                                      ========                      =========                    ========
Net interest income...................           $6,608                         $6,295                       $5,766
                                                 ======                         ======                       ======
Interest rate spread..................                     3.18%                          3.15%                        2.98%

Net interest margin...................                     3.73%                          3.76%                        3.58%
Ratio of average interest-earning
 assets to average interest-
 bearing liabilities..................   113%                           115%                        114%
__________________
(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.
</TABLE>
                                                                        4
</page>

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.

<TABLE>
<CAPTION>

                                                    At June 30,       Years Ended June 30,
                                                        2000         2000     1999     1998
                                                    ----------       -----    -----    -----
<S>                                                     <C>          <C>       <C>     <C>

Weighted average yield on loan portfolio..............  8.22         8.06%    8.07%    8.16%
Weighted average yield on mortgage-backed
  securities..........................................  6.93         6.84     6.95     6.79
Weighted average yield on investment securities.......  5.99         5.90     6.81     7.35
Weighted average yield on interest-bearing deposits...  6.18         4.10     3.55     3.61
Weighted average yield on federal funds sold..........  6.87         5.36     4.37     4.65
Weighted average yield on all interest-
  earning assets......................................  8.08         7.82     7.76     7.93
Weighted average rate paid on total deposits..........  4.87         4.55     4.56     4.80
Weighted average rate paid on FHLB advance............  7.00         6.49     6.07     6.08
Weighted average rate paid on all interest
 -bearing liabilities.................................  5.10         4.64     4.61     4.95
Interest rate spread (spread between weighted
 average rate on all interest-earning assets
 and all interest-bearing liabilities)................  2.98         3.18     3.15     2.98
Net interest margin (net interest income
  (expense) as a percentage of average
  interest-earning assets)............................   N/A         3.73     3.76     3.58
</TABLE>



                                                         5
</page>


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).
<TABLE>
<CAPTION>
                                      Years Ended June 30,                 Years Ended June 30,
                                       2000 Compared to 1999               1999 Compared to 1998
                                         Increase (Decrease)                 Increase (Decrease)
                                                 Due to                             Due to
                                   ----------------------------------    -------------------------------
                                                       Rate/                               Rate/
                                    Volume     Rate    Volume   Net       Volume   Rate    Volume    Net
                                    -------   ------   ------  -----      -------  ----   --------  -----
                                                              (In thousands)
<S>                                    <C>       <C>     <C>     <C>        <C>     <C>     <C>      <C>
Interest-earning assets:
 Loans(1)..........................   $  944   $ (14)   $ --   $  930     $  698   $(129)   $(10)  $  559
 Mortgage-backed securities........       (9)     (1)     --      (10)        (8)      1      --       (7)
 Investment securities.............       87     (57)    (11)      19       (416)    (64)     30     (450)
 Daily interest-bearing deposits...     (108)     52     (17)     (73)       125      (4)     (2)     119
 Federal funds sold................        2	      2       1        5          3      (1)     --        2
                                    ---------  ------   -----  -------    -------   -----   -----  -------
Total net change in income on
 interest-earning assets...........      916     (18)    (27)     871        402    (197)     18      223
                                     -------   ------   -----  -------    -------   ------  -----  -------

Interest-bearing liabilities:
 Interest-bearing deposits.........      416     (14)      5      407        760    (300)    (39)    421
 FHLB advances.....................      123      19       9      151       (726)     (2)      1    (727)
                                      -------   -----    ----    -----     ------   -----    -----   -----

Total net change in expense on
 interest- bearing liabilities.....      539       5      14      558         34    (302)    (38)   (306)
                                      ------  ------   -----   ------     ------  ------  ------  ------
Net change in net interest income..   $  377  $  (23)  $ (41)  $  313     $  368   $ 105  $   56  $  529
                                      ======  ======= =======  ======     ======  ======  ======  ======
</TABLE>

(1)  Includes interest on loans 90 days or more past due.
                                                   6
</page>


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, 2000.

                                    7
<PAGE>
<TABLE>
<CAPTION>

                           -300        -200      -100                 +100       +200       +300
                           Basis      Basis     Basis        No       Basis       Basis     Basis
                           Points     Points    Points     Change     Points      Points    Points
                          -------    -------   --------    -------    -------   --------   --------
                                                (In thousands)
<S>                          <C>        <C>        <C>        <C>       <C>         <C>        <C>
ASSETS
Mortgage loans and
 securities.............  $163,776   $161,912   $160,401   $158,952   $157,062   $154,665   $151,832
Non-mortgage loans......    17,871     17,773     17,678     17,585     17,495     17,406     17,320
Cash, deposits and
 securities.............    14,616     14,528     14,439     14,311     14,172     14,035     13,902
Premises and
 equipment..............     4,644      4,644      4,644      4,644      4,644      4,644      4,644
Other assets............     2,181      3,297      4,686      6,049      7,326      8,526      9,675
                          ---------  --------  ---------  ---------   --------   --------   ---------
TOTAL...................  $203,088   $202,154   $201,848   $201,541   $200,699   $199,276   $197,373
                          =========  =========  =========  ========   ========   ========   ========

LIABILITIES
Deposits................  $157,475   $156,787   $156,114   $155,453   $154,811   $154,184   $153,574
Borrowings..............    18,714     18,523     18,343     18,173     18,012     17,859     17,714
Other liabilities.......       929        929        929        929        929        929        929
                          --------   --------   --------   --------   --------   --------   --------
TOTAL...................  $177,118   $176,239   $175,386   $174,555   $173,752   $172,972   $172,217
                          ========   ========   ========   ========   ========   ========   ========


MARKET VALUE OF
 PORTFOLIO EQUITY.........$ 25,970   $ 25,915   $ 26,462   $ 26,986   $ 26,947   $ 26,304   $ 25,156
                          ========   ========   ========   ========   ========   ========   ========
</TABLE>
                                                            8

</page>
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 26 one-to-four family home loans, one condominium loan, two
land loans and one commercial real estate loan in Texas, Arkansas, and
Colorado.  The aggregate balance of these 29 loans at June 30, 2000
was $1.1 million.  These loans were performing according to the
scheduled terms at June 30, 2000.

     At June 30, 2000 the Savings Bank's net loans receivable
totaled approximately $174.9 million representing approximately
85.95% of consolidated total assets.  Since 1973, the Savings Bank
has primarily originated ARM loan products.  At June 30, 2000, ARM
loans accounted for $159.8 million or 89.27% of the total loan
portfolio and 98.87% 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.  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.

                                 9
<PAGE>


<TABLE>
<CAPTION>
                                                                           At June 30,
                              -----------------------------------------------------------------------------------------------------
                                     2000                 1999                 1998                 1997                 1996
                               -----------------    -----------------    -----------------    -----------------   -----------------
                                Amount   Percent     Amount   Percent     Amount   Percent     Amount   Percent    Amount   Percent
                              ---------  -------    --------  -------    --------  -------    --------  -------    --------  -------
                                                                     (Dollars in thousands)
<S>                              <C>       <C>         <C>       <C>        <C>      <C>        <C>       <C>         <C>      <C>
Type of Loan:
------------

 Residential.................  $118,929   66.44%    $113,075   72.14%    $112,404   74.74%    $105,700   76.82%   $ 95,534   77.44%
 Commercial..................    28,575   15.96       15,850   10.11       11,615    7.72       10,876    7.90       9,159    7.42
 Land........................     9,029    5.05        8,407    5.36        8,727    5.80        6,828    4.97       5,781    4.69
 Second mortgage loans.......     5,082    2.84        4,991    3.19        4,910    3.27        4,278    3.11       3,727    3.02
                               --------   -----     --------   -----     --------  ------    ---------   ------   --------   -----
   Total mortgage loans......   161,615   90.29      142,323   90.80      137,656   91.53      127,682   92.80     114,201   92.57
                               --------   -----     --------   -----     --------  ------    ---------   -----    --------   -----

Other Loans:
 Automobile loans............     6,517    3.64        5,270    3.36        5,724    3.81        4,334    3.15       4,184    3.39
 Savings account loans.......     1,646    0.92        1,944    1.24        1,662    1.10        1,301    0.94       1,282    1.04
 Mobile home loans...........     1,319    0.74        1,346    0.86        1,135    0.75          743    0.54         745    0.60
 Other consumer..............     2,317    1.29        1,552    0.99        1,847    1.23        1,373    1.00         916    0.75
 Commercial business.........     5,582    3.12        4,314    2.75        2,372    1.58        2,162    1.57       2,035    1.65
                               --------   -----     --------  ------      -------  ------     --------  ------    --------  ------
   Total other loans.........    17,381    9.71       14,426    9.20       12,740    8.47        9,913    7.20       9,162    7.43
                               --------   -----     --------  ------      -------  ------     --------  -------   --------  ------

   Total loans...............   178,996  100.00%     156,749  100.00%     150,396  100.00%     137,595  100.00%    123,363  100.00%
                               --------  =======    --------  =======     -------  =======     -------  =======   --------  ======

Add:

 Unamortized deferred loan costs,
  net of origination fees....       267                  217                  167                  107                 70

Less:
 Undisbursed loans in process     3,797                2,810                 3,629               3,117             4,133
 Allowance for possible loan
   losses....................       597                  540                   528                 481               520
                               --------             --------               -------             -------           -------
Total loans receivable, net..  $174,869             $153,616              $146,406            $134,104          $118,780
                               ========             ========              ========             =======           =======
</TABLE>
                                                                             10
</page>


<TABLE>
<CAPTION>

                                                                     At June 30,
                             ------------------------------------------------------------------------------------------------
                                   2000               1999                 1998                 1997               1996
                             ----------------    ----------------     ----------------     ----------------   ----------------
                              Amount  Percent     Amount  Percent      Amount  Percent      Amount  Percent     Amount  Percent
                             -------  -------    -------  -------     -------  -------     -------  -------   --------  -------
                                                                 (Dollars in thousands)


Type of Security:
<S>                                <C>     <C>         <C>     <C>           <C>    <C>          <C>      <C>        <C>     <C>
Residential real estate
  Second mortgage loans......  $  3,366   1.88%     $  3,746   2.39%     $  3,884   2.58%     $  3,805   2.77%    $  3,356  2.72%
  One-to-four family.........   118,929  66.44       113,075  72.14       112,404  74.74       105,700  76.82       95,534  77.44
  Multi-family...............     1,774   0.99         1,535   0.98         1,085   0.72         1,119   0.81        1,190   0.97
Commercial or industrial real
    estate...................    28,381  15.86        15,437   9.85        11,422   7.60        10,123   7.36        8,283   6.71
Land.........................     9,165   5.12         8,530   5.44         8,861   5.89         6,935   5.04        5,838   4.73
Commercial or industrial
    assets...................     5,582   3.12         4,314   2.75         2,372   1.58         2,162   1.57        2,035   1.65
Automobile...................     6,517   3.64         5,270   3.36         5,724   3.81         4,334   3.15        4,184   3.39
Savings accounts.............     1,646   0.92         1,944   1.24         1,662   1.10         1,301   0.94        1,282   1.04
Mobile homes.................     1,319   0.74         1,346   0.86         1,135   0.75           743   0.54          745   0.60
Other........................     2,317   1.29         1,552   0.99         1,847   1.23         1,373   1.00          916   0.75
                               --------  -----       -------  -----        ------  -----        ------  -----      -------  -----

   Total.....................   178,996 100.00%      156,749 100.00%      150,396 100.00%      137,595 100.00%     123,363 100.00%
                                        =======              =======              =======              =======             =======

Add:

 Unamortized deferred loan costs,
 net of origination fees.......     267                  217                  167                  107                  70

Less:
 Undisbursed loans in process..     652                  932                1,514                1,185               1,535
 Due to borrowers on construction
   loans......................    3,145                1,878                2,115                1,932               2,598
 Allowance for possible loan
   losses.....................      597                  540                  528                  481                 520
                               --------             --------             --------              -------             --------

 Total loans receivable, net.  $174,869             $153,616             $146,406             $134,104            $118,780
                               ========             ========             ========              =======              =======
</TABLE>
                                                            11
</page>

     One-to-Four Family Residential Loans. 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, 2000, approximately $118.9 million, or 66.44% 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 by
the Savings Bank. 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, 2000 the maximum loan-to-value ratio on
loans to local borrowers was generally 85%.
                                 12
<PAGE>
     At June 30, 2000, the Savings Bank had $5.1 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, 2000, approximately
$1.8 million, or .99% of the Savings Bank's gross loan portfolio
consisted of 12 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."

     At June 30, 2000, the Savings Bank's largest multi-family
residential loan was a $510,000 loan secured by a 24-unit apartment complex
in Taney County, Missouri and a $105,000 note receivable.  At June 30, 2000,
only one of the twelve 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, the majority of which are
ARM products, outstanding of $37.5 million at June 30, 2000.  The
commercial real estate loans originated by the Savings Bank amounted
to $28.4 million and are primarily secured by commercial buildings.
Land loans on property located primarily in the Savings Bank's
primary market area amounted to $9.2 million or 5.12% of the total
loan portfolio at June 30, 2000.  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.

     At June 30, 2000, the Savings Bank's largest commercial real
estate loan was a $595,000 loan secured by an automobile dealership
building located in its market area which was performing according
to its 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
</page>

     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, 2000, the Savings Bank's consumer loans totaled
approximately $11.8 million, or 6.59% 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, 2000, the loans amounted to
$158,000.  Reserves for losses maintained by the dealers at June 30,
2000 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 beyond obtaining a
deficiency judgment.  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

                                       14
</page>
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, 2000, only
$266,000 of the Savings Bank's consumer loan portfolio was 90 days or
more past due.

     Other loans consist of commercial loans with no real estate as
security, business equipment loans, farm equipment loans and cattle
loans.  As of June 30, 2000, 1999 and 1998, these loans totaled $5.6
million, $4.3 million and $2.4 million, respectively.  The ratio of
other loans as a percent of total loans increased during
the three years ended June 30, 2000 to 3.12%, 2.75%
and 1.58%, 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,
2000, second mortgage loans amounted to $3.4 million, or 1.88% of
total loans of the Savings Bank.

                                       15
</page>


Loan Maturity and Repricing

     The following table sets forth certain information at June 30,
2000 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.
<TABLE>
<CAPTION>
                                            After One Year   After 3 Years    After 5 Years
                          Within One Year  Through 3 Years  Through 5 Years  Through 10 Years  Beyond 10 Years     Total
                          ---------------  ---------------  ---------------  ----------------  ---------------   ---------
                                                     (Dollars in thousands)
<S>                              <C>            <C>              <C>                <C>              <C>            <C>
Real estate mortgage.........  $121,331        $  374           $    9            $    89          $   492       $122,295
Commercial real estate.......    30,043            --               --                100               12         30,155
Land.........................     9,085            36               44                 --               --          9,165
Mobile home..................     1,297            11               11                 --               --          1,319
Automobile...................     6,436            69               12                 --               --          6,517
Savings account loans........     1,553            65               --                 --               28          1,646
Other consumer...............     2,235            82               --                 --               --          2,317
Commercial business..........     5,509            64                                  --                9          5,582
                               --------         -----            ------            -------         -------      ---------
     Total loans.............  $177,489       $   701            $  76           $    189          $   541       $178,996
                               ========       =======            ======           ========         ========      ========
</TABLE>
     The following table sets forth the dollar amount of all loans
due one year after June 30, 2000, all of which have fixed interest
rates.
<TABLE>
<CAPTION>
                                   Fixed
                                   Rates
                                  -------
                               (In thousands)
<S>                                  <C>
Real estate mortgage.........     $  793
Commercial real estate.......        112
Land.........................         80
Mobile home..................         22
Automobile...................         72
Savings account loans........         91
Other consumer...............         80
Commercial business..........         72
                                  ------
     Total                        $1,322
                                  ======
</TABLE>
                                                                         16
</page>

     The following table sets forth scheduled contractual
amortization of loans and mortgage-backed securities at June 30,
2000 and the dollar amount of such loans and mortgage-backed
securities at the date which 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.

<TABLE>
<CAPTION>
                                           At June 30, 2000
                              -----------------------------------------------------
                                                     Commercial           Mortgage-
                              Mortgage    Consumer    Business     Total    Backed
                               Loans       Loans       Loans       Loans  Securities
                              --------    --------   ----------   ------  ----------
                                                  (In thousands)
<S>                             <C>         <C>          <C>        <C>       <C>

Amounts due:
 Within one year...........  $ 11,979     $4,376      $3,272      $ 19,627    $ --
 After one year
  through three years......     1,406      3,586         818         5,810      --
 After three years
  through five years.......     3,056      2,676         926         6,658      13
 After five years..........   145,174      1,161         566       146,901     444
                             --------     ------      ------      --------   -----
     Total.................  	$161,615    $11,799      $5,582      $178,996    $457
                             ========     ======      ======      ========    ====

Interest rate terms
 on amounts due after
 one year:
   Fixed...................  $    985     $  265      $   72      $  1,322    $ 89
   Adjustable..............   148,651      7,158       2,238       158,047     368
                             -------     ------      ------       --------    ----
      Total................  $149,636     $7,423      $2,310      $159,369    $457
                             ========     ======      ======      ========    ====
</TABLE>


     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.

                               17
<PAGE>

     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 three local appliance dealers,
as discussed above.  See "-- Consumer and Commercial Business
Loans."  The Savings Bank did not purchase any mortgage
loans during 2000.

                                    18
</page>

The following table shows total mortgage loans originated, purchased,
sold and repaid during the periods indicated.

<TABLE>
<CAPTION>
                                                                 Years Ended June 30,
                                                      --------------------------------------
                                                        2000           1999           1998
                                                      --------        --------       -------
                                                             (In thousands)
<S>                                                     <C>             <C>            <C>
Total mortgage loans at beginning of period.........  $142,323       $137,656       $127,682
Loans originated:                                     --------       --------       --------
 One-to-four family residential.....................    38,075         37,155         34,141
 Multi-family residential and commercial real estate    13,104          6,832          3,977
 Land...............................................     5,093          3,194          3,769
                                                      --------       --------       --------
   Total loans originated...........................    56,272         47,181         41,887

Loans purchased:
 One-to-four family residential.....................        --             49          2,115
 Multi-family residential and commercial real estate        --             --            590
 Land...............................................        --             29             71
 Participation loans................................        --             --             --
                                                       -------         ------        -------
   Total loans purchased............................        --             78          2,776

Loans sold..........................................        --             --             --

Mortgage loan principal repayments..................    36,818          42,467        34,643
                                                      --------        --------      --------

Other-loans charged off or
 transferred to other real estate(1)................       162             125           46
                                                      --------         --------     -------
   Total other activity.............................       162             125           46
                                                      --------         --------     -------

Total gross mortgage loans at end of period.........  $161,615        $142,323     $137,656
                                                      ========        ========      =======

Total mortgage-backed certificates at beginning of
 period.............................................  $    550        $    703      $   828
Mortgage-backed purchased...........................        --              --           --
Mortgage-backed sold................................        --              --           --
Principal repayments................................      (100)           (143)        (123)
Amortization of premiums............................        --              --           --
Adjustment to market value..........................        (1)            (10)          (2)
                                                      --------        --------      -------
Total mortgage-backed at end of period..............  $    449        $    550      $   703
                                                      ========        ========      ========
</TABLE>
-------------
(1)   Loans transferred to other real estate amounted to $142,000,
$99,000 and $41,000 in 2000, 1999 and 1998, respectively.  Mortgage
loans charged off amounted to $20,000, $26,000 and $5,000 in 2000,
1999 and 1998, respectively.

                                       19
</page>

     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 $500,000 at June 30, 2000.  See Note 15 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 $267,000 net
deferred loan costs at June 30, 2000.

     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



                                    20
<PAGE>
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, 2000, 1999 and 1998, 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, 2000, 1999
and 1998.

     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.

                                       21
</page>

     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.
<TABLE>
<CAPTION>
                                                    At June 30,
                                     ------------------------------------------
                                      2000     1999     1998     1997     1996
                                     ------   ------   ------   ------   ------
                                               (Dollars in thousands)
<S>                                    <C>      <C>      <C>      <C>      <C>
Loans accounted for on
 a nonaccrual basis:
  Real estate:
   Residential....................  $   --    $   --   $   --   $   --   $ --
   Commercial.....................      --        --       --       --     --
  Commercial business.............      40        40       48       48    121
  Consumer........................       9        15        9        9      9
                                    ------    ------   ------   ------   ----
      Total.......................  $   49    $   55   $   57   $   57   $130
                                    ======    ======   ======   ======   ====

Accruing loans which are contractually
 past due 90 days or more:
  Real estate:
   Residential....................  $1,536    $  718   $1,321   $  461   $ 548
   Commercial.....................     737       315      306      152       4
  Commercial business.............      83        99      201       12      29
  Consumer........................     333       227      255      122     108
                                    ------    ------   ------   ------    ----

       Total......................  $2,689    $1,359   $2,083   $  747   $ 689
                                    ======    ======   ======   ======   =====
  Total of nonaccrual and
   90 days past due loans.........  $2,738    $1,414   $2,140   $  804   $ 819

Real estate owned.................      --        --       --      114      --

Other non-performing assets.......      --        --       --       --      --
Slow home loans (60 to 90 days
 delinquent)......................     750       537      700      602     446
                                    ------    ------   ------    -----    ----
   Total non-performing assets....  $3,488    $1,951   $2,840   $1,520   $1,265
                                    ======   =======   ======   ======   =====
Total loans delinquent 90 days
  or more to net loans............   1.57%     0.92%    1.46%    0.56%    0.58%

Total loans delinquent 90 days
  or more to total consolidated
  assets..........................   1.38      0.79     1.24     0.46     0.48

Total non-performing assets
 to total consolidated
  assets..........................   1.75      1.09     1.65     0.93     0.88
</TABLE>
                                       22
</page>

     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, 2000 and 1999 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:
<TABLE>
<CAPTION>
                                               At June 30,
                                       ----------------------
                                          2000          1999
                                        -------     ---------
                                            (In thousands)
<S>                                       <C>           <C>

Loss...........................          $   76      $    94
Doubtful.......................             149           59
Substandard assets.............           2,047        1,864
                                         -------      -------
  Total classified assets......          $2,272       $2,017
                                         ======       ======

General loss allowances........          $  307       $  267
Specific loss allowances.......             290	          273
                                         ------       ------
   Total allowances                      $  597       $  540
                                         ======       ======
Charge-offs....................         $   37       $   72
                                         ======       ======
</TABLE>

                                   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, 2000 substandard classification totals included $436,000 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, 2000:  Because of health reasons, a
loan with a current balance due, principal and interest, of
approximately $206,000 is past due and classified substandard.  The
loan is secured by the borrower's home with a $160,000 appraisal,
a rental house with an evaluation of $40,000 and an assigned $49,600
(as of June 30) annuity.  The borrowers plan to sell their home and
move into the rental house to significantly reduce debt and improve
cash flow.  This has taken more time than they anticipated.

     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
value.  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, 2000
and 1999, 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, 2000, 1999 and 1998 of
approximately $597,000, $540,000 and $528,000, respectively.

                                       24
</page>
Management believes that loan loss reserves were adequate at
June 30, 2000.  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
</page>

     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.
<TABLE>
<CAPTION>
                                                          Years Ended June 30,
                                             ---------------------------------------------
                                               2000      1999     1998      1997      1996
                                             ------     -----    -----      -----    -----
                                                        (Dollars in thousands)
<S>                                           <C>         <C>      <C>        <C>      <C>
Allowance at beginning of period...........    $540      $528     $482       $520     $442
Provision for loan losses..................      89        84       66         71       79
Recoveries:
 Residential real estate...................      --        --       12         --       --
 Commercial real estate....................      --        --       --         --       --
 Consumer..................................       5        --       --          5       --
 Commercial business.......................      --        --       --         --       --
                                               ----     -----     ----      -----     ----
   Total recoveries........................       5        --       12          5       --
                                               ----     -----     ----      -----     ----

Charge offs:
 Residential real estate...................      20        14        5          8       --
 Commercial real estate....................      --        12       --         --       --
 Consumer..................................      17        46       27         31        1
 Commercial business.......................      --        --       --         75       --
                                              -----      ----     ----       ----     ----
   Total charge offs.......................      37        72       32        114        1
                                              -----      ----     ----       ----     ----
   Net charge offs.........................      32        72       20        109        1
                                              -----      ----     ----       ----     ----
    Allowance at end of period.............    $597      $540     $528       $482     $520
                                               ====      ====     ====       ====     ====
Ratio of allowance to total loans
 outstanding at the end of the period......   0.33%     0.34%    0.35%      0.35%      0.42%
Ratio of net charge offs to average loans
 outstanding during the period.............   0.02%     0.05%    0.01%      0.09%       --

                                       26
</page>

Allowance for Loan Losses by Category

</TABLE>
<TABLE>
<CAPTION>
                                                                     At June 30,
                          -------------------------------------------------------------------------------------------------
                                       2000                1999                   1998                   1997
                          -----------------------  -----------------------  ---------------------  -----------------------
                                              %                       %                        %                       %
                                    %      of Gross         %      of Gross         %      of Gross         %      of Gross
                                  of Out-  Loans in       of Out-  Loans in       of Out-  Loans in       of Out-  Loans in
                                 standing  Category      standing  Category      standing  Category      standing  Category
                                 Loans in  to Gross      Loans in  to Gross      Loans in  to Gross      Loans in  to Gross
                           Amount Category Loans   Amount Category Loans   Amount Category Loans   Amount Category Loans
                           ------ -------- -----   ------ -------- -----  ------- -------- -----   ------ -------- -------
                                                                (Dollars in thousands)
<S>                         <C>      <C>    <C>     <C>     <C>     <C>      <C>     <C>     <C>    <C>     <C>      <C>
Real estate -- mortgage:
  Residential........... $  195  0.16%   66.44%    $198  0.18%   72.14%    $195  0.17%   74.74%    $174  0.16%   76.82%
  Commercial............    112  0.39    15.96       70  0.44    10.11       69  0.59     7.72       60  0.55     7.90
  Land..................     17  0.18     5.05       16  0.19     5.36       20  0.23     5.80       15  0.22     4.97
  Second mortgage loans.     14  0.27     2.84       13  0.26     3.19       12  0.24     3.27        9  0.21     3.11
Consumer................    170  1.45     6.59      163  1.61     6.45      161  1.55     6.89      156  2.01     5.63
Commercial business.....     89  1.59     3.12       80  1.85     2.75       71  2.99     1.58       68  3.15     1.57
                         ------         -------   -----         -------   -----         ------    -----         ------
   Total allowance for
      loan losses....... $  597  0.33%  100.00%    $540  0.34%  100.00%    $528  0.35%  100.00%    $482  0.35%   100.00%
                         ======         =======    =====        ======     =====        =======    =====         =======
</TABLE>
<TABLE>
<CAPTION>
                             At June 30,
                                1996
                      ------------------------
                                           %
                                  %     of Gross
                               of Out-  Loans in
                              standing  Category
                              Loans in  To Gross
                      Amount  Category  Loans
                      ------  --------  -------
<S>                     <C>      <C>      <C>
Real estate--mortgage:
  Residential......  $ 179     0.19%    77.44%
  Commercial.......     61     0.67      7.42
  Land.............      9     0.16      4.69
  Second mortgage loans  8     0.21      3.02
Consumer...........    159     2.23      5.78
Commercial business    104     5.11      1.65
                     -----             ------
  Total allowance for
    loan losses     $  520     0.42%   100.00%
                    ======             =======
</TABLE>

                                                       27
</page>

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.

     The Savings Bank is required under federal regulations to
maintain a minimum amount of liquid assets and is also permitted
to make certain other securities investments.  See "REGULATION OF
FIRST HOME" herein and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and
Capital Resources" in the Annual Report.  The balance of the Savings
Bank's investments in short-term securities in excess of regulatory
requirements reflects management's response to the significant
percentage of deposits with short maturities.  At June 30, 2000
the Savings Bank's regulatory liquidity was 7.1% which is
significantly in excess of the required 4%.  It is the intention of
management to hold securities with short maturities in the Savings
Bank's investment portfolio in order to enable the Savings Bank to
match more closely the interest-rate sensitivities of its assets and
liabilities.

     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

                                 28
<PAGE>
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 and are to be held until
maturity.  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, 2000, the Company's and the Savings Bank's
securities investment portfolio totaled $6.6 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  3, 4 and 5 of the Notes to the
Consolidated Financial Statements.

                                       29
</page>

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.
<TABLE>
<CAPTION>
                                                     At June 30,
                                  --------------------------------------------------------
                                         2000             1999             1998
                                  -----------------  -----------------  -------------------
                                    Book  Percent of  Book   Percent of  Book    Percent of
                                  Value(1) Portfolio Value(1) Portfolio  Value(1) Portfolio
                                  -------  --------- -------- ---------  -------  ---------
                                                  (Dollars in thousands)
<S>                                <C>        <C>      <C>        <C>     <C>       <C>
Debt securities:
Domestic corporate bonds.........$     --      --%   $    --       --%   $   --      --%
U.S. government treasury and
  obligations of U.S.
  government agencies............   2,653   39.91      2,172    37.33     1,699   34.87
Auto and student loan pools......      23    0.34         34     0.58        63    1.30
State and political subdivision..	   1,634   24.58      1,510    25.96     1,050   21.55
                                 --------  ------    -------  -------   -------  ------
  Total debt securities..........   4,310   64.83      3,716    63.87     2,812   57.72
                                 --------   -----     ------    -----    ------   -----
Equity securities:
Federal Home Loan Bank
  stock..........................   1,072   16.13      1,058    18.18     1,058   21.71
Other............................   1,266   19.04      1,044    17.95     1,002   20.57
                                  -------   -----    -------   ------    -------   ----
  Total equity securities........   2,338   35.17      2,102    36.13     2,060   42.28
                                  -------  ------    -------   ------    -------  -----
Total investment securities       $ 6,648  100.00%   $ 5,818   100.00%  $ 4,872  100.00%
                                  =======  =======   =======   =======  =======  =======
</TABLE>
-------------------------
(1)  The market value of the Company's and the Savings Bank's
     investment securities portfolio amounted to $6.62 million,
     $5.81 million and $4.89 million at June 30, 2000, 1999 and
     1998, respectively.  At June 30, 2000, the market value of the
     principal components of the Company's and the Savings Bank's
     investment securities portfolio which were obligations of U.S.
     Government securities was $2.65 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, 2000.

<TABLE>
<CAPTION>
                                      Less Than          One to       Five to           Over Ten
                                      One Year         Five Years     Ten Years           Years
                                   --------------   --------------   --------------   --------------
                                    Amount  Yield    Amount  Yield    Amount  Yield    Amount  Yield
                                   -------  -----   -------  -----   -------  -----   -------  -----
                                                         (Dollars in thousands)
<S>                                   <C>    <C>      <C>     <C>      <C>     <C>       <C>    <C>
U.S. government treasury and
  obligations of U.S.
  government agencies.............  $   --    --      $,653   6.17%      $ --    --     $   --   --

Auto and student loan pools.......      --    --         23   6.84         --   --          --   --

State and political subdivisions..     263  5.07      1,079   4.77        292  5.13         --   --
                                    ------            -----              -----          -------
   Total..........................  $  263  5.07     $3,755   5.77       $292  5.13     $   --   --
                                    ------           ------              -----          -------
</TABLE>
                                       30
</page>
     At June 30, 2000, 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 5 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, 2000, 79% of the outstanding balance of the mortgage-
backed securities had adjustable rates of interest.

     As of June 30, 2000, the Savings Bank's portfolio included
$449,000 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
<PAGE>


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
</page>

     The following table sets forth information concerning the
Savings Bank's time deposits and other interest-bearing deposits
at June 30, 2000.
<TABLE>
<CAPTION>
Weighted
Average                                                                        Percentage
Interest                                              Minimum                   of Total
 Rate           Term      Category                     Amount      Balance      Deposits
--------      --------    -------------              ---------    ---------    ----------
                                                               (In thousands)
<S>              <C>          <C>                       <C>         <C>           <C>
0.00%           None      Non-interest bearing        $  --       $ 5,742         3.69%
2.21%           None      NOW accounts                   25        20,047        12.88
3.78%           None      Super Saver accounts            1        18,575        11.93
2.80%           None      Super NOW accounts            300         5,069         3.26
3.00%           None      Savings accounts               --        10,354         6.65

                Certificates of Deposit
                -----------------------
5.64%           3 months  Fixed term, fixed rate        500         3,133         2.01
5.87%           6 months  Fixed term, fixed rate        500        15,525         9.97
5.72%          12 months  Fixed term, fixed rate        500        23,589        15.15
5.58%          18 months  Fixed term, fixed rate        500         3,016         1.94
5.47%          24 months  Fixed term, fixed rate        500         5,477         3.52
5.57%          30 months  Fixed term, fixed rate        500         1,439         0.92
5.75%          36 months  Fixed term, fixed rate        500         2,552         1.64
5.82%          48 months  Fixed term, fixed rate        500           838         0.54
5.98%          60 months  Fixed term, fixed rate        500         6,483         4.17
6.24%          72 months  Fixed term, fixed rate        500            74         0.05
5.22%          120 months Fixed term, fixed rate        500            21         0.01
various        various    Fixed term, adjust rate       500        13,009         8.36
various        various    Jumbo certificates        100,000        20,718        13.31
                                                                 --------       -------
                          TOTAL                                  $155,661       100.00%
                                                                 ========       =======
</TABLE>
     The following table indicates the amount of the Savings Bank's
jumbo certificates of deposit by time remaining until maturity as of
June 30, 2000.  Jumbo certificates of deposit require minimum
deposits of $100,000 and rates paid on such accounts are negotiable.
<TABLE>
<CAPTION>
                                          Jumbo
                                      Certificates
Maturity Period                        of Deposits
---------------                       -------------
                                      (In thousands)
<S>                                        <C>
Three months or less                     $5,681
Three through six months                  3,256
Six through twelve months                 4,955
Over twelve months                        6,826
                                        -------
     Total                              $20,718
                                        =======
</TABLE>
                                                              33
</page>

Time Deposits by Rates

    The following table sets forth the time deposits in the Savings
Bank classified by rates as of the dates indicated.
<TABLE>
<CAPTION>
                                     At June 30,
                       ------------------------------------
                         2000         1999           1998
                       ---------  ------------   ----------
                                 (In thousands)
<S>                       <C>          <C>            <C>
2.00 - 4.49%.......... 	$   463      $  4,002       $   785
4.50 - 5.49%..........  19,461        61,689        41,051
5.50 - 6.49%..........  70,093        19,146        36,970
6.50 - 7.49%..........  	 5,857         4,705         9,896
Over   7.49%..........      --           210           263
                       -------      --------       -------
Total................. $95,874       $89,752       $88,965
                       =======       =======       =======
</TABLE>

    The following table sets forth the amount and maturities of time
deposits at June 30, 2000.
<TABLE>
<CAPTION>
                                                 Amount Due
                          --------------------------------------------------
                                                                                          Percent
                                                                                          of Total
                          Less Than     1-2      2-3       3-4        After              Certificate
                           One Year    Years    Years     Years      4 Years     Total     Accounts
                          ---------   -------  --------  --------    --------   --------  ---------
                                                 (In thousands)
<S>                           <C>        <C>       <C>      <C>        <C>        <C>        <C>
2.00 - 4.49%               $   463   $     --  $     --  $    --    $   --      $   463      0.48%
4.50 - 5.49%.............   16,615      1,291       595      920        40       19,461     20.30
5.50 - 6.49%.............   47,052     10,447     5,622    4,332     2,640       70,093     73.11
6.50 - 7.49%.............    2,873      1,350       468      340       826        5,857      6.11
Over 7.49%...............       --         --        --       --        --           --        --
                           -------   --------  --------  -------    ------      -------    ------
Total....................  $67,003    $13,088    $6,685   $5,592    $3,506      $95,874    100.00%
                           =======    =======    ======   ======   =======      =======    =======
</TABLE>
                                                              34
</page>


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.
<TABLE>
<CAPTION>

                                                                            At June 30,
                                     -----------------------------------------------------------------------------------
                                                  2000                           1999                       1998
                                     ----------------------------    -----------------------------    -----------------
                                                Percent                         Percent                         Percent
                                                   of     Increase                 of    Increase                  of
                                        Amount    Total  (Decrease)     Amount    Total  (Decrease)     Amount    Total
                                      --------  -------  ---------    ---------  ------  ---------     --------  ------
                                                                               (Dollars in thousands)
<S>                                      <C>       <C>       <C>          <C>       <C>      <C>          <C>       <C>
Non-interest bearing................. $  5,742     3.69%   $   596     $  5,146   3.40%   $   683       $ 4,463    3.17%
NOW checking.........................   20,047    12.88      2,042       18,005  11.91      2,870        15,135   10.73
Regular savings accounts.............   10,354     6.65        147       10,207   6.75      2,094         8,113    5.75
Super Saver accounts.................   18,575    11.93     (2,846)      21,421  14.17      3,871        17,550   12.44
Super NOW accounts...................    5,069     3.26     (1,610)       6,679   4.42       (154)        6,833    4.85
Fixed-rate certificates which
 mature (1):
  Within 1 year......................   62,487    40.14        761       61,726  40.82      3,806        57,920   41.06
  After 1 year, but within 2 years...    7,890     5.07        524        7,366   4.87     (3,595)       10,961    7.77
  After 2 years, but within 5 years..    9,864     6.34      3,638        6,226   4.12       (159)        6,385    4.53
  Thereafter.........................       26     0.02         (7)          33   0.02          6            27    0.01
 Adjustable rate certificates........   15,607    10.02      1,206       14,401   9.52	        729        13,672    9.69
                                      --------   ------     ------     --------  -----     --------    --------  -------
Total certificates...................   95,874    61.59      6,122       89,752  59.35        787        88,965   63.06
                                      --------   ------     ------     --------  -----     --------    --------  ------
     Total........................... $155,661   100.00%   $ 4,451     $151,210 100.00%   $10,151      $141,059  100.00%
                                      ========   =======   ========    ======== =======    ========    ========  =======
</TABLE>

________________
(1)  At June 30, 2000, 1999 and 1998, jumbo certificates of deposit
amounted to $20.7 million, $18.1 million and $14.6 million,
respectively, and IRAs equaled $16.6 million, $15.6 million and $15.8
million at those dates, respectively.

                                                                        35
</page>

     The following table sets forth the savings activities of the
Savings Bank for the periods indicated.
<TABLE>
<CAPTION>
                                       Years Ended June 30,
                               ---------------------------------
                                  2000        1999        1998
                               ---------    --------    --------
                                        (In thousands)
<S>                                 <C>         <C>         <C>
Beginning balance............  $151,210     $141,059    $117,685
                               --------     --------    --------

Net increase (decrease) before
 interest credited...........    (1,266)       5,274      19,089

Interest credited............     5,717        4,877       4,285
                               --------     --------    --------

Net increase in
 savings deposits............     4,451       10,151      23,374
                               --------     --------    --------

Ending balance...............  $155,661     $151,210    $141,059
                               ========     ========     =======
</TABLE>

     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
<PAGE>



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

<TABLE>
<CAPTION>
                                              At June 30,
                                            -----------------
                                            2000         1999
                                            -----       ------
<S>                                         <C>           <C>
Weighted average rate paid on
     FHLB advances........................  7.00%        5.85%


                                           Years Ended June 30,
                                           --------------------
                                             2000          1999
                                           --------       ------
                                           (Dollars in thousands)
Maximum amounts of FHLB advances
   outstanding at any month end........... $17,900      $ 5,700
Approximate average FHLB advances
   outstanding............................   6,485        4,452
Approximate weighted average rate paid
   on FHLB advances.......................    6.49%        6.07%
</TABLE>

     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 100% 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.  Two properties mentioned in the 1999 Form
10-KSB have been sold.  These were the apartments and a duplex located
in Ava, Missouri and a modular home near Mansfield, Missouri.

                                    37
<PAGE>


     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, 2000, the Savings Bank had an investment in Fybar of
$401,000.

     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
<PAGE>


     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.  When these examinations are conducted by the OTS or the
FDIC, the examiners may require the Savings Bank to provide for
higher general or specific loan loss reserves.  Financial
institutions in various regions of the United States have been
called upon by examiners to write down assets and to establish
increased levels of reserves, primarily as a result of perceived
weaknesses in real estate values and a more restrictive regulatory
climate.

     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

                             39
<PAGE>

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 2000, the Savings
Bank's assessment under the semi-annual assessment procedure was
$23,000.  Based on the current assessment rates published by the
OTS and First Home's total assets of approximately $190.0 million
at March 31, 2000, First Home will be required to pay a semi-annual
assessment of approximately $24,000 for the second half of calendar
year 2000.

     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.  Applicable regulations generally do not permit loans-to-
one borrower to exceed 15% of unimpaired capital and surplus,
provided that loans in an amount equal to an additional 10% of
unimpaired capital and surplus also may be made to a borrower if
the loans are fully secured by readily marketable securities.  The
OTS by regulation has amended the loans-to-one borrower rule to
permit savings associations meeting certain requirements, including
fully phased-in 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, 2000, 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

                               40
<PAGE>


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 insured institutions 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 six basis points for each
$100 in domestic deposits for SAIF members while BIF insured
institutions pay an assessment equal to about 1.50 basis points for
each $100 in domestic deposits.  These assessments, which may be
revised based upon the level of BIF and SAIF deposits, will continue
until the bonds mature in the year 2015.

                                       41
</page>



     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 $1.1 million at June 30, 2000.

     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, 2000, the Savings
Bank had $17.9 million of advances from the FHLB-Des Moines.

Liquidity Requirements

Under OTS regulations, each savings institution is required to
maintain an average daily balance of specified liquid assets equal
to a monthly average of not less than a specified percentage of its
net withdrawable accounts deposit plus short-term borrowings.  This
liquidity requirement is currently 4%, but may be changed from time
to time by the OTS to any amount within the range of 4% to 10%.
Monetary penalties may be imposed for failure to meet liquidity
requirements. The Savings Bank has never been subject to monetary
penalties for failure to meet its liquidity requirements.

                                 42
<PAGE>


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, 2000, 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
<PAGE>


     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, 2000,
First Home met the test and its qualified thrift lender percentage
was 68.79%.

     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
</page>


     The capital regulations require tangible capital of at least
1.5% of adjusted total assets (as defined by regulation). At
June 30, 2000, the Savings Bank had tangible capital of $20.1
million, or 10.3% of adjusted total assets, which is approximately
$17.2 million above the minimum requirement of 1.5% of adjusted
total assets in effect on that date. At June 30, 2000, the Savings
Bank had $767,000 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, 2000, the Savings Bank had core capital equal
to $20.1 million, or 10.3% of adjusted total assets, which is $12.3
million above the minimum leverage ratio requirement of 3% 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, 2000, the Savings Bank had total risk-based
capital of a approximately $20.4 million, including $20.1 million
in core capital and $307,000 in qualifying supplementary capital,
and risk-weighted assets of $ 145.3 million, or total capital of
14.0% of risk-weighted assets.  This amount was $8.7 million above
the 8% requirement in effect on that date.


                                     45
<PAGE>

      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, 2000.
<TABLE>
<CAPTION>

                                 At June 30, 2000
                               -------------------
                                          Percent of
                                Amount      Assets
                               --------   ---------
                              (Dollars in thousands)
<S>                             <C>           <C>

Tangible capital.............  $20,124       10.3%
Minimum required
 tangible capital............    2,935        1.5
                               -------      ------
Excess.......................  $17,189        8.8%
                               =======      ======

Core capital.................  $20,124       10.3%
Minimum required core
 capital.....................    7,826        4.0
                               -------       -----
Excess.......................  $12,298        6.3%
                               =======       =====

Risk-based capital...........  $20,397       14.0%
Minimum risk-based
 capital requirement.........   11,627        8.0
                               -------       -----
Excess.......................  $ 8,770        6.0%
                               =======       =====
</TABLE>

                              46
<PAGE>


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.

     Generally, savings institutions, such as First Home, that
before and after the proposed distribution meet their capital
requirements, may make capital distributions during any calendar
year equal to the greater of 100% of net income for the year-to-
date plus 50% of the amount by which the lesser of the
institution's tangible, core or risk-based capital exceeds its
capital requirement for such capital component, as measured at
the beginning of the calendar year, or 75% of their net income
for the most recent four quarter period.  However, an institution
deemed to be in need of more than normal supervision by the OTS
may have its dividend authority restricted by the OTS.  First Home

                                  47
<PAGE>
may pay dividends in accordance with this general authority.

     Savings institutions proposing to make any capital distribution
need only submit written notice to the OTS 30 days prior to such
distribution.  Savings institutions that do not, or would not meet
their current minimum capital requirements following a proposed
capital distribution, however, must obtain OTS approval prior to
making such distribution.  The OTS may object to the distribution
during that 30-day period based on safety and soundness concerns.
See "-- Capital Requirements."

     The OTS has proposed regulations that would revise the current
capital distribution restrictions.  Under the proposal, a savings
institution may make a capital distribution without notice to the
OTS, unless it is a subsidiary of a holding company, provided that
it has a regulatory rating in the two top categories, is not of
supervisory concern, and would remain adequately capitalized, as
defined in the OTS prompt corrective action regulations, following
the proposed distribution.  Savings institutions that would remain
adequately capitalized following the proposed distribution but do
not meet the other noted requirements must notify the OTS 30 days
prior to declaring a capital distribution.  The OTS stated it will
generally regard as permissible that amount of capital distributions
that do not exceed 50% of the institution's excess regulatory
capital plus net income to date during the calendar year.  A
savings institution may not make a capital distribution without
prior approval of the OTS and the FDIC if it is undercapitalized
before, or as a result of, such a distribution.  As under the
current rule, the OTS may object to a capital distribution if it
would constitute an unsafe or unsound practice.  No assurance may
be given as to whether or in what form the regulations may be
adopted.

     At June 30, 2000, the Savings Bank met the criteria to be
designated a Tier 1 association and, consequently, could at its
option (after prior notice to, and no objection made by, the OTS)
distribute up to 100% of its net income during the calendar year
plus 50% of its surplus capital ratio at the beginning of the
calendar year less any distributions previously paid during the year.

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

                                       48
</page>
complete residential housing units.  At June 30, 2000, the largest
loans by the Savings Bank outstanding to any one borrower, including
related entities, was $891,000.  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,
2000, there were 13 separate loans secured by 13 different pieces of
real estate, with a combined evaluation of $1.25 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
<PAGE>
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 ("Sections 23A and 23B") 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, Sections 23A and 23B:  (i) limit the extent to
which the insured association or its subsidiaries may engage in
certain covered transactions with an affiliate to an amount equal
to 10% of such institution's capital and surplus and place an
aggregate limit on all such transactions with affiliates to an
amount equal to 20% of such capital and surplus, and (ii) require
that all such transactions be on terms substantially the same, or
at least as favorable to the institution or subsidiary, as those
provided to a non-affiliate.  The term "covered transaction"
includes the making of loans, purchase of assets, issuance of a
guaranty and similar other types of transactions.

     Three additional rules apply to savings associations:  (i) a
savings association may not make any loan or other extension of
credit to an affiliate unless that affiliate is engaged only in
activities permissible for bank holding companies;  (ii) a savings
association may not purchase or invest in securities issued by an
affiliate (other than securities of a subsidiary); and (iii) the OTS
may, for reasons of safety and soundness, impose more stringent
restrictions on savings associations but may not exempt transactions
from or otherwise abridge Section 23A or 23B.  Exemptions from
Section 23A or 23B may be granted only by the Federal Reserve Board,
as is currently the case with respect to all FDIC-insured banks.
The Savings Bank has not been significantly affected by the rules
regarding transactions with affiliates.

                        REGULATION OF FIRST BANCSHARES

     First Bancshares is a unitary savings and loan holding company
within the meaning of the Home Owners' Loan Act of 1933, as amended
("HOLA").  As such, 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.

Acquisitions

     The HOLA and OTS regulations issued thereunder generally
prohibit a savings and loan holding company, without prior OTS

                               50
<PAGE>
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) would become subject to such restrictions
unless such other associations each qualify as a qualified thrift
lender ("QTL") and were acquired in a supervisory acquisition.

     If the Savings Bank fails the QTL test, the Company must obtain
the approval of the OTS prior to continuing after such failure,
directly or through its other subsidiaries, any business activity
other than those approved for multiple savings and loan holding
companies or their subsidiaries.  In addition, within one year of
such failure the Company must register as, and will become subject
to, the restrictions applicable to bank holding companies.  The
activities authorized for a bank holding company are more limited
than are the activities authorized for a unitary or multiple savings
and loan holding company.  See "-- Qualified Thrift Lender Test."

     The Company must obtain approval from the OTS before acquiring
control of more than 5% of the voting shares of any other SAIF-
insured association.  Such acquisitions generally are prohibited if
they result in a multiple savings and loan holding company
controlling savings associations in more than one state.  However,
such interstate acquisitions are permitted based on specific state
authorization or in a supervisory acquisition of a failing savings
association.

Affiliate Restrictions

The affiliate restrictions contained in Sections 23A and 23B of
the Federal Reserve Act apply to all federally insured savings
associations and any such "affiliate."  A savings and loan holding
company, its subsidiaries and any other company under common control
are considered affiliates of the subsidiary savings association
under the HOLA.  Generally, Sections 23A and 23B:  (i) limit the
extent to which the insured association or its subsidiaries may
engage in certain covered transactions with an affiliate to an amount
equal to 10% of such institution's capital and surplus, and contain
an aggregate limit on all such transactions with all affiliates to
20% of such capital and surplus, and (ii) require that all such
transactions be on terms substantially the same, or at least as
favorable to the institution or subsidiary, as those provided to a
non-affiliate.  The term "covered transaction" includes the making
of loans, purchase of assets, issuance of a guarantee and similar
other types of transactions.  Also, a savings association may not
make any loan to an affiliate unless the affiliate is engaged only
in activities permissible for bank holding companies.  Only the
Federal Reserve may grant exemptions from the restrictions of

                                       51
</page>
Sections 23A and 23B.  The OTS, however, may impose more stringent
restrictions on savings associations for reasons of safety and
soundness.

Qualified Thrift Lender Test

     The HOLA requires any savings and loan holding company that
controls a savings association that fails the QTL test, as explained
under "REGULATION OF FIRST HOME -- Qualified Thrift Lender Test,"
must, within one year after the date on which the association ceases
to be a QTL, register as and be deemed a bank holding company subject
to all applicable laws and regulations.

                                    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
made 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

                                       52
</page>
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

                                 53
<PAGE>
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 recent 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 11 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 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

                                  54
<PAGE>
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, 2000, the Savings Bank had 80 full-time employees
and 14 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
</page>

Item 2.  Properties
<TABLE>
     The following table sets forth information regarding the Savings Bank's offices as of June 30, 2000.

<CAPTION>
                                                   Net         Land     Building
                                        Year    Book Value    Owned/     Owned/     Square
Location                     County    Opened  as of 6/30/00  Leased     Leased     Footage
---------------------       --------   ------   ----------    ------     ------     -------
                                           (Dollars in thousands)
<S>                           <C>       <C>         <C>        <C>          <C>          <C>
Main Office
-----------

142 East First Street        Wright      1911      $555        Owned     Owned        9,800
Mountain Grove, Missouri  65711

Branch Offices
--------------

1208 N. Jefferson Street      Douglas     1978      241        Owned     Owned        2,800
Ava, Missouri  65608

103 South Clay Street         Webster     1974      413        Owned     Owned        4,200
Marshfield, Missouri  65706

Highway 5 and Highway 160     Ozark       1992      717        Owned     Owned        3,600
Gainesville, Missouri  65655

7164 Highway 14 East          Christian   1995      292        Owned     Owned        3,000
Sparta, Missouri  65753

Business Highway 160          Ozark       1997       76        Leased    Leased       1,200
Theodosia, Missouri  65761

123 Main Street
Crane, Missouri  65633       Stone        1998      275        Owned     Owned        3,800

South Side of Square
Galena, Missouri  65656      Stone        1998       71        Owned     Owned        1,600

Drive-in Facilities
--------------------

Route 60 and Oakland          Wright        1986    158        Owned     Owned        1,200
Mountain Grove, Missouri  65711

223 West Washington           Webster       1993     190       Owned     Owned        1,100
Marshfield, Missouri  65706

*The Kissee Mills and Rockaway Beach branch offices were opened after June 30, 2000.

</TABLE>
                                                              56
</page>


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, 2000.

                                    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
<PAGE>

Item 7.     Financial Statements

     Independent Auditors Report*
     (a)   Consolidated Statements of Financial Condition as of
             June 30, 2000 and 1999*
     (b)   Consolidated Statements of Income For the Years Ended
             June 30, 2000, 1999 and 1998*
     (c)   Consolidated Statements of Stockholders' Equity For the
             Years Ended June 30, 2000, 1999 and 1998*
     (d)   Consolidated Statements of Cash Flows For the Years
             Ended June 30, 2000, 1999 and 1998*
     (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)    Position
--------             ------     --------

Stephen H. Romines     58       President and Chief Executive Officer
Charles W. Schumacher  48       Senior Vice-President
Peter M. Medlen        44       Executive Vice President
Susan J. Uchtman       37       Chief Financial Officer

_________________
(1)  As of June 30, 2000.

     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

                                 58
<PAGE>
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.

     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
</page>

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
                   (incorporated by reference to the Form 10KSB
                   filing for the fiscal year ended June 30, 1995)

            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**

            13.    Annual Report to Stockholders

            21.    Subsidiaries of the Registrant

            23.    Auditors' Consent

            27.    Financial Data Schedule

     (b)    Report on Form 8-K

            No Forms 8-K were filed during the quarter ended
              June 30, 2000


-------------------
*     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.

                                       60
</page>

                                   SIGNATURES

     Pursuant to the requirements of section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                      FIRST BANCSHARES, INC.


Date:  September 28, 2000             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, 2000
   -------------------------------
    Stephen H. Romines
    Chairman of the Board, President, Chief
    Executive Officer (Principal Executive Officer)

By:/s/ Susan J. Uchtman                     September 28, 2000
    -------------------------------
    Susan J. Uchtman
    Chief Financial Officer

By:                                                       2000
   ---------------------------------
    Harold F. Glass
    Director


By:/s/ Almeta Hardebeck                     September 28, 2000
   ----------------------------------
    Almeta Hardebeck
    Director


By:/s/ John G. Moody                      September 28, 2000
   -----------------------
    John G. Moody
    Director


By:                                                   , 2000
   -------------------------              --------- ---
    Dr. James F. Moore
    Director
</page>


















                                   Exhibit 13

                       Annual Report to Stockholders


</page>



                      (LOGO of FIRST BANCSHARES, INC.)

                         FIRST BANCSHARES, INC.



                            2000 ANNUAL REPORT


</page>


                              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.............................46
             Directors and Officers...............................47
             Corporate Information................................48

</page>

Dear Stockholder:

{Column graph of Earning per share:  1996-$0.48,
    1997-$0.65, 1998-$.90, 1999-$.90 and 2000-$1.06}

     One year later, the media attention and hype surrounding Y2K
seems a distant, if not amusing, memory.  Not only was our computer
system easily able to make the transition from 1999 to 2000 without
incident, but fiscal year 2000  proved to be a profitable year for
stockholders.  With net income rising to $2.0 million, earnings per
share increasing to $1.06 and stockholders' equity increasing
slightly to a healthy $24.5 million, fiscal year 2000 was a very
good year indeed.

{Column graph of book value per share:  1996-$9.35,
    1997-$10.17, 1998-$11.01, 1999-$11.75 and 2000-$12.81}

     During the fiscal year ended June 30, 2000, First Bancshares,
Inc. repurchased 191,685 shares of stock.  That reduction, somewhat
offset by Bank employees exercising options, resulted in a 153,765
decrease in the number of outstanding shares.  Since stockholders'
equity only increased slightly, book value per share increased from
$11.75 to $12.81.  At August 31, 2000 remaining repurchase
authority, under our eighth repurchase plan, was 30,423 shares.

{Column graph of total assets:  1996-$143,671,000,
   1997-$163,973,000, 1998-$172,173,000,1999-$178,721,000 and
   2000-$199,086,000}

     A $21.3 million increase in net loan growth fueled an increase
of $20.4 million in total assets during the fiscal year.  Since net
deposits only increased $4.5 million, we increased Federal Home Loan
Bank advances by $15.7 million to fund the loan growth.

     First Bancshares, Inc. paid its 26th quarterly dividend on
June 30, 2000.  A $.04 per share dividend, to be paid on
September 30, 2000, has been announced.

     While no new branches were added during the fiscal year ended
June 30, 2000, two new branches have been added in the past two
months.  With the addition of Kissee Mills, which opened in a
leased modular facility on July 3, 2000, and Rockaway Beach, which
opened in a temporary rented facility August 14, we now have ten
full service facilities.  Current plans are to begin building a
new facility, pictured on the back cover, at Kissee Mills later
this year.  Rockaway Beach will move into permanent quarters
purchased from Bank of America later this year.  As of August 31st,
2000, 233 new deposit accounts, totaling just over $400,000 had been
opened at the two new branches.

</page>

{Column graph of customer deposit accounts:  1996-$105,960,
   1997-$117,685, 1998-$141,059, 1999-$151,210 and 2000-155,661,000
   and net loans receivable:  1996-$118,780, 1997-$134,104,
   1998-$146,406, 1999-$153,616 and 2000-$174,869,000}

     As noted in the 1999 annual report, the Gainesville post office
project has been completed.  In addition to that project, in late
1999 a rental house and an office building were purchased in
Mountain Grove.  Just last month, construction of a small retail
shopping center in Sparta, Missouri was completed.  The lead tenant
in the Mountain Grove office building is the Missouri Division of
Family Services and Dollar General is the lead tenant in Sparta.
Collectively, the four rental properties cost almost $1.5 million
and generate $157,000 in gross annual rent.

     One disappointment during the fiscal year was our attempt to
implement internet banking.  Frankly, the system we began testing
late last fall has not yet produced a level of performance that
meets our standards.  In the event satisfactory results are not
obtained within the very near future, we plan to change systems.
While we will always strive to emphasize our traditional friendly
personal service, we do want to make the convenience of internet
banking available for our customers.

     On a much more positive note, however, I am pleased to announce
that Charles W. Schumacher joined First Home Savings Bank as Senior
Vice President on September 5, 2000.  Charlie, as he likes to be
known, has almost 20 years of banking experience.  His most recent
position was Chief Executive Officer and Senior Loan Officer with
Northwood's State Bank in Northwood, Iowa.  His presence
significantly strengthens our management team and better positions
First Home for the future.

     Our primary goal as we begin fiscal year 2001 is to expand our
core business within the ten branch locations we now have in place.
We will, of course, continue to look for ways to grow our business
and enhance stockholder value.



                                       Sincerely,
                                       /s/ Stephen H. Romines
                                       Stephen H. Romines
                                       President




</page>
Business of the Corporation


     First Bancshares, Inc. ("Holding Company" 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 conversion of First
Home from a Missouri mutual to a Missouri stock savings and loan
association.  That conversion was completed on December 22, 1993.  At
June 30, 2000, the Company had total consolidated assets of $199.1
million and consolidated stockholders' equity of $24.5 million.

     While the Company owns a title insurance agency through a
subsidiary and some rental real estate, it is not engaged in any
significant business activity other than holding the stock of First
Home.  Accordingly, the information set forth in the report,
including consolidated financial statements and related data, applies
primarily to First Home.

     First Home is a Missouri-chartered, federally-insured stock
savings bank organized in 1911.  The Savings Bank is regulated by the
Missouri Division of Finance and the Office of Thrift Supervision
("OTS").  Its deposits are insured up to applicable limits by the
Savings Association Insurance Fund ("SAIF") of the Federal Deposit
Insurance Corporation.  First Home also is a member of the Federal
Home Loan Bank ("FHLB") System.

     First Home 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.  A map of those locations is shown on the
front cover.  First Home provides its customers with a full array of
community banking services.  It is primarily engaged in the business
of attracting deposits from, and making loans to, the general public.
It emphasizes one-to-four family residential mortgage loans and, to a
lesser extent, multi-family residential, consumer, commercial and
home equity loans.  First Home also invests in mortgage-backed U. S.
Government and agency securities and other assets.

     At June 30, 2000, First Home's total gross loans were $179.0
million, or 89.9% of total consolidated assets, including $122.3
million, or 68.3% of total gross loans secured by one-to-four family
properties and $39.3 million, or 22.0% of total gross loans secured by
other real estate.  Of the loans secured by real estate, over 95.0%
are adjustable-rate loans.

                                  3
</page>


                  SELECTED CONSOLIDATED FINANCIAL INFORMATION

     The following table sets forth certain information concerning
the consolidated financial position and operating results of the
Company as of and for the dates indicated.  The Company is primarily
in the business of directing, planning and coordinating the business
activities of First Home. The consolidated data is derived
in part from, and should be read in conjunction with, the
Consolidated Financial Statements of the Company and its subsidiaries
presented herein.
<TABLE>
<CAPTION>
                                                        At June 30,
                                   ---------------------------------------------------
                                     2000       1999       1998        1997      1996
                                   ---------   --------   -------    --------  --------
<S>                                   <C>         <C>        <C>         <C>       <C>
                                                  (Dollars in thousands)
FINANCIAL CONDITION DATA:

Total assets                        $199,086   $178,721   $172,173   $163,973   $143,671
Loans receivable, net                174,869    153,616    146,406    134,104     118,780
Mortgage-backed certificates             449        550        703        828     2,831
Cash, interest-bearing deposits
  and investment securities           15,618     17,749     18,941     24,408    18,236
Federal funds sold                       320        245         -          -            --
Customer deposits                    155,661    151,210    141,059    117,685    105,960
Borrowed funds                        17,900      2,200      5,700     23,555     13,555
Stockholders' equity                  24,477     24,249     24,365     22,207    23,729

<CAPTION>
                                                      Years Ended June 30,
                                    ----------------------------------------------------
                                       2000        1999      1998        1997     1996
                                     --------    --------   -------    --------  -------
<S>                                     <C>          <C>       <C>         <C>      <C>
                                                    (Dollars in thousands)
OPERATING DATA:

Interest income                      $ 13,865    $ 12,994   $12,771     $11,695   $10,113
Interest expense                        7,257       6,699     7,005       6,493     5,661
                                     --------     -------    ------     -------    ------
Net interest income                     6,608       6,295     5,766       5,202     4,452
Provision for loan losses                  89          84        66          71       80
                                     --------     -------     ------     -------   -------
Net interest income after provision
  for loan losses                       6,519       6,211      5,700      5,131     4,372
Gains (losses) on investments and
   mortgage-backed securities              -           23         11        187       (6)
Noninterest income, excluding gains
  (losses) on securities                1,065         900        755        527       465
Noninterest expense                     4,443       4,254      3,729      3,648     3,045
                                      -------     -------    -------    -------    ------
Income before taxes                     3,141       2,880      2,737      2,197     1,786

Income taxes                            1,121       1,062        892        784       631
                                       ------      ------     ------    -------     ------
Net income                           $  2,020    $  1,818   $  1,845   $  1,413   $ 1,155
                                     ========    ========   ========   ========   =======
Basic earnings per share               $ 1.06      $ 0.90     $ 0.90     $ 0.65     $ 0.48
                                     ========    ========   ========   ========    =======
                                  4
</page>

<CAPTION>
                                             At or For the Years Ended June 30,
                                     ----------------------------------------------------
                                       2000        1999      1998        1997     1996
KEY OPERATING RATIOS:                --------    --------  --------    --------  ------
<S>                                    <C>         <C>       <C>          <C>      <c.
Return on average assets               1.08%       1.03%     1.08%       0.91%    0.85%
Return on average equity               8.28        7.46      7.83        6.24     4.90
Average equity to average assets      13.01       13.82     13.83       14.65    17.31
Interest rate spread for period        3.18        3.15      2.98        2.85     2.60
Net interest margin for period         3.73        3.76      3.58        3.53     3.40
Non-interest expense to average assets 2.37        2.41      2.19        2.36     2.23
Average interest-earning assets to
  interest-bearing liabilities       113.00      115.00    114.00      115.00   119.00
Allowance for loan losses to total
  loans at end of period               0.33        0.34      0.35        0.35     0.42
Net charge-offs to average outstanding
  loans during the period              0.02        0.05      0.02        0.09     0.01
Ratio of non-performing assets to
  total assets                         1.36        1.06      1.02        0.93     0.88
Ratio of loan loss reserves to
  non-performing assets               22.87       28.48     29.93       31.68    41.02

Dividend payout ratio                 15.09       15.56     12.22       16.13       21.05

<CAPTION>
                                                          At June 30,
                                   -------------------------------------------------------
                                       2000        1999      1998        1997     1996
                                    ---------   ---------  ---------   --------  -------
OTHER DATA:
<S>
Number of:
  Loans outstanding                    6,138       5,676      5,545      4,999      4,712
  Deposit account                     22,067      21,038     20,127     15,447     13,264
  Full service offices                     8           8          8          6           5
                                  5
</page>

                   MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


General

     Management's discussion and analysis of financial condition and
results of operations is intended to assist in understanding the
financial condition and results of operations of the Company.  The
information contained in this section should be read in conjunction
with the Consolidated Financial Statements, the accompanying Notes to
Consolidated Financial Statements and the other sections contained in
this report.

     Management's Discussion and Analysis ("MD&A") and other portions
of this report contain certain "forward-looking statements" concerning
the future operations of the Company.  Management desires to take
advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 and is including this statement for the
express purpose of availing the Company of the protections of such safe
harbor with respect to all "forward-looking statements" contained in
our Annual Report.  We have used "forward-looking statements" to
describe future plans and strategies, including our expectations of
the Company's future financial results.  Management's ability to
predict results or the effect of future plans or strategies is
inherently uncertain.  Factors which could affect actual results
include interest rate trends, the general economic climate in the
Company's market area and the country as a whole, the ability of
the Company to control costs and expenses, the ability of the Company
to efficiently incorporate acquisitions into its operations,
competitive products and pricing, loan delinquency rates,
and changes in federal and state regulation.  These factors should
be considered in evaluating the "forward-looking statements," and
undue reliance should not be placed on such statements.

Operating Strategy

     The primary goals of management are to minimize risk, improve
profitability and promote growth.  Operating results depend primarily
on net interest income, which is the difference between the income
earned on its interest-earning assets, such as loans and investments,
and the cost of its interest-bearing liabilities, consisting of
deposits and borrowings.  Net income is also affected by, among other
things, provisions for loan losses and operating expenses.  Operating
results are also significantly affected by general economic and
competitive conditions, primarily changes in market interest rates,
governmental legislation and policies concerning monetary and fiscal
affairs and housing, as well as financial institutions and the
attendant actions of the regulatory authorities.  Management's strategy
is to strengthen First Home's presence in, and expand the boundaries
of, its primary market area.

     Management has implemented various general strategies designed to
continue profitability while maintaining safety and soundness.  Primary
among those strategies are emphasizing one-to-four family lending,
maintaining asset quality and managing interest-rate risk.  It is
anticipated, subject to market conditions, that no changes will be made
in these strategies.

     Emphasizing One-to-Four Family Lending.  Historically, First Home
has been predominantly a one-to-four family residential lender.  Single
family residential loans constituted 58% of mortgage loans originated
during fiscal 2000, 66% of 1999 mortgage loan originations and 69% of
1998 mortgage loan originations.  While the percent of loans secured
by single family residences has gradually declined over the past
three years, there has been a corresponding gradual increase in
loans made within our normal lending territory that are secured by
farms and commercial real estate.  First Home has worked to achieve a
reputation within its local lending territory for prompt, efficient and
courteous service during both the loan origination and servicing
processes.

                                  6
<PAGE>
     Maintaining Asset Quality.  First Home strongly emphasizes
maintaining asset quality through sound underwriting, constant
monitoring and effective collection techniques.  At June 30, 2000,
First Home's ratio of non-performing assets to total assets was 1.36%.
This ratio was 1.06% at June 30, 1999.  Actual loan losses, net of
recoveries, of loans originated by First Home were $32,000 for the year
ended June 30, 2000.  During the year ended June 30, 1999, actual loan
losses, net of recoveries, of loans originated by First Home were
$44,000.  Actual loan losses, net of recoveries, of loans originated
were $19,400 for the year ended June 30, 1998.

     Managing Interest-Rate Risk.  First Home relies primarily on
adjustable interest rate loans to minimize the inherent risks of
interest rate changes.  All long-term mortgage loans originated since
1973 have had adjustable rates rather than fixed rates.  Further, with
few exceptions, the majority of other loans including, but not limited
to, car loans, commercial loans, cattle loans and personal loans that
have maturities exceeding two years also have adjustable rates rather
than fixed rates.  All loans originated by First Home have been
retained in its portfolio.  No loans have been sold in the secondary
mortgage market.  To further minimize interest rate risk, First Home
maintains a short-term investment portfolio.

Fiscal Year Ended June 30, 2000 Compared to June 30, 1999

     Net Income.  Net income for the fiscal year ended June 30, 2000
increased $202,000 to $2,020,000 from $1,818,000 for the fiscal year
ended June 30, 1999.  Total interest income increased $871,000
and noninterest income increased $165,000.  Those items were offset
by a $558,000 increase in interest expense, a $189,000 increase in
noninterest expense, an increase in income taxes of $59,000, a
$23,000 decrease in gains on investments and a $5,000 increase in
provision for loan losses.

     Net Interest Income.  Net interest income was $6,608,000 for
the fiscal year ended June 30, 2000, an increase of $313,000, or
5.0%, from $6,295,000 for the fiscal year ended June 30, 1999.  An
$871,000 increase in total interest income was reduced by a
$558,000 increase in interest expense.

     Interest Income.  Total interest income for the year ended
June 30, 2000 increased $871,000, or 6.7%, to $13,865,000 from
$12,994,000 for the fiscal year ended June 30, 1999.  Interest
income from loans receivable increased $930,000, or 7.6%.  This
increase resulted from a $21,253,000 increase in net loans
receivable slightly offset by a decrease in the annualized yield
from 8.07% for the year ended June 30, 1999 to 8.06% for the year
ended June 30, 2000.  The slight decrease in the annualized yield
was attributable to a reduction that occurred in early 1999 in
interest rates charged on existing adjustable rate loans.  That
trend was reversed, beginning in early 2000, with higher interest
rates being charged on new and existing adjustable rate loans.

     Interest income from investment securities increased $19,000,
or 4.51%, as a higher average balance was maintained in investment
securities and certificates of deposits purchased.  The annual
yield on the investments was lower, however, due to lower interest
rates and more investment in tax-exempt securities.

     Interest income from other interest-earning assets decreased
$68,000, or 20.0%.  The increased loan demand reduced the amount of
funds maintained in the other interest-earning accounts.  The
decrease in interest income due to lower volume was partially offset
by a higher interest rate earned on these accounts.

     Interest income from mortgage-backed securities decreased
$10,000 as principal repayments were received on these securities
and no new securities were purchased.

     Interest Expense. Interest expense for the year ended June 30,
2000, increased $558,000, or 8.3%, to $7,257,000 from $6,699,000 for
the year ended June 30, 1999.  Higher average customer deposits
created $419,000 of the increase.  This was partially offset by a
decrease in the average rate paid from 4.56% for the year ended
June 30, 1999 to 4.55% for the year ended June 30, 2000.  The
$151,000 remainder of the increase in total interest


                                  7
<PAGE>

expense resulted from a higher balance in, and a higher average rate
paid on, FHLB advances.  Additional FHLB advances were necessary to
fund loan growth.  The rising interest rate environment caused these
funds to be borrowed at rates higher than the previous year.

     Provision for Loan Losses.  Provision for loan losses for the
year ended June 30, 2000 was $89,000 compared to $84,000 for the
year ended June 30, 1999.  The increase of $5,000, or 6.2%, was
attributable to the increase in loans outstanding.  Actual loan
charge-offs, net of recoveries, of First Home originated loans were
$32,000 for the year ended June 30, 2000 compared to $44,000 for the
year ended June 30, 1999.

     Noninterest Income.  Noninterest income increased $142,000, or
15.4% from $923,000 for the fiscal year ended June 30, 1999 to
$1,065,000 for the year ended June 30, 2000.  Service charge and
other fee income increased $90,000, or 16.0%, as the number of
checking accounts increased and additional service and activity
charges were paid.

      With the completion of the post office at Gainesville and the
purchase of additional investment real estate, rental income from
real estate operations increased $72,000.

     In-house printing of checks for First Home customers
contributed $22,000 to noninterest income.  Prior to the summer
of 1999, all customer check orders were sent to an outside vendor.
First Home received a small fee for the orders, however, it had to
pay the vendor for checks provided to customers at no charge.  The
in-house check printing system enables the Bank to process check
orders more quickly and provide them to customers in a matter of
days.  The expenses associated with the check printing system are
discussed below in the "-Noninterest Expense" section.

     Gains on investment securities decreased $23,000 from
June 30, 1999, since there were no sales of investment securities
during the fiscal year ended June 30, 2000.  Information regarding
the June 30, 1999 gains is provided below under "-Gain on Investment
and Mortgage-backed Securities."  Further, since there were no
significant property sales during the year ended June 30, 2000,
gains on the sale of property and equipment decreased to $4,000.
Title insurance commissions earned by South Central Missouri Title,
Inc. remained basically constant during the fiscal year.

     Noninterest Expense.  For the fiscal year ended June 30, 2000,
noninterest expense was $4,443,000, an increase of $189,000, or 4.5%
from $4,254,000 for the fiscal year ended June 30, 1999.
Increases in other noninterest expense, occupancy and equipment and
compensation and employee benefits were partially offset by the
reduction of FDIC deposit insurance premiums.

     Other noninterest expense increased $89,000, or 8.8%.  Included
in that increase was $20,000 for additional advertising costs,
postage expense rose $16,000, telephone expense increased $6,000 and
office supplies $9,000.  The overall increase in noninterest expense
also included a $34,000 reduction in losses on checking accounts as
a reserve for that amount established at the end of the previous
year was reversed.  Charitable contributions increased $11,000
during the year ended June 30, 2000.  Several local charities were
able, however, to provide Missouri Neighborhood Assistance Tax
Credits.  Those credits allowed a portion of the contributions as a
credit on the Missouri tax return.

     The in-house check printing system previously discussed reduced
the expense for checks provided free of charge to customers by
$34,000.  This was offset by a $51,000 increase in check printing
costs.  The net $17,000  expense increase was more than offset by
the $22,000 increase discussed above in "-Noninterest Income."

     Occupancy and equipment expense increased by $85,000, or 14.5%.
The largest increase was in depreciation expense.  Computer equipment
replacements and upgrades added $39,000 to depreciation.  The
purchase of investment rental real estate increased depreciation by
$15,000 and the completion of existing location remodeling projects
added $10,000.

                                 8
<PAGE>

     Maintenance expense for computer equipment and software,
security systems and office equipment increased by $22,000.  The
purchase of rental real estate created a $13,000 increase in the
related repairs and maintenance expense.  The replacement of several
small office machines in three locations increased furniture and
equipment expense by $8,000.  Those increases were partially offset
by an $18,000 decrease in computer expense.

     There was a $41,000, or 1.6% increase in the area of
compensation and employee benefits.  The primary components were
$68,000 for annual pay rate increases, $61,000 for providing
employees with partial reimbursement for the purchase of home
personal computers and a $42,000 increase in group health insurance
costs to add existing personnel who met the health plan coverage
requirements during the year.

     The Employee Stock Ownership Plan ("ESOP") is a significant
component of compensation and employee benefits.  The average fair
market value of the Company's common stock decreased during the year
ended June 30, 2000 which in turn reduced the expense for the ESOP
by $87,000.  This treatment is required by the American Institute
of Certified Public Accountant's Statement of Position 93-6,
"Employer's Accounting for Employee Stock Ownership Plans."  The
statement requires the recording of shares released from the ESOP
to be recorded at the average fair market value for the period.

     There were also decreases in compensation and employee benefits
of $17,000 relating to the capitalization of estimated loan
personnel costs in accordance with Statement of Financial Accounting
Standards No. 91, "Accounting for Nonrefundable Fees and Costs
Associated with Originating or Acquiring Loans and Initial Direct
Costs of Lease." Management Recognition Plan expense decreased
$31,000 as all of the granted shares became fully vested and
distributed during the prior year.

     The reduction of FDIC deposit insurance premiums created a
$26,000 decrease even though deposits increased slightly.  Legal
fees decreased $9,000, the expense for gifts given to new customers
for opening checking accounts decreased $11,000 and accounting and
auditing fees decreased $13,000.

     Gain on Investments and Mortgage-backed Securities.  As noted
in "-Noninterest Income," gains on investments and mortgage-backed
securities decreased $23,000 from June 30, 1999, since there were
no sales of investment securities during the year ended June 30,
2000.  Common stock was sold during the year ended June 30, 1999 for
$137,000 which resulted in a $37,000 pretax gain.  That gain was
offset by $14,000 to complete the write-off of a pool of automobile
loans purchased.

     Income Taxes.  Income tax expense for the year ended June 30,
2000 was $1,121,000, an increase of $59,000, or 5.56%.  This was a
lower percentage increase than the increase in income before taxes
due to the additional tax deduction for the fair market value of
stock options exercised by employees and directors during the fiscal
year.

     Net Interest Margin. Net interest margin for the year ended
June 30, 2000 was 3.73%, a slight decrease from 3.76% for the year
ended June 30, 1999.  An increase in the average balance of loans
(which have a higher yield than the other earning assets) compared
to total interest earning assets created an overall increase in the
yield on interest earning assets.  This increase was more than
offset by an increase in the average balance and related cost of
FHLB borrowings to create the decrease in the net interest margin.

Fiscal Year Ended June 30, 1999 Compared to June 30, 1998

     Net Income.  Net income for the fiscal year ended June 30, 1999
remained basically constant at $1,818,000 compared to $1,845,000 for
the fiscal year ended June 30, 1998.  Total interest income increased
$223,000, noninterest income increased $157,000 and total interest
expense decreased $306,000.  These items were more than offset by a
$525,000 increase in noninterest expense, an increase in income taxes
of $170,000 and an increase in provision for loan losses of $18,000.

                                  9
<PAGE>
     Net Interest Income.  During the fiscal year ended June 30, 1999,
net interest income was $6,295,000, an increase of $529,000, or 9.2%,
from $5,766,000 for the fiscal year ended June 30, 1998.  A $223,000
increase in total interest income was enhanced by a $306,000 decrease
in interest expense.

     Interest Income.  Total interest income increased $223,000, or
1.7%, to $12,994,000 for the fiscal year ended June 30, 1999 from
$12,771,000 for the fiscal year ended June 30, 1998.  Interest income
from loans receivable increased $559,000, or 4.8%.  This increase was
largely attributable to a $7,210,000 increase in net loans receivable.
Offsetting the increase resulting from the growth in net loans
receivable was a decrease in the annualized yield from 8.16% for the
year ended June 30, 1998 to 8.07% for the year ended June 30, 1999.
This was a result of the continued decrease in interest rates on
existing loans with adjustable rate features.

     Interest income from other interest-earning assets increased
$122,000, or 55.6%.  A higher balance was maintained in
interest-earning accounts as the FHLB became the correspondent bank in
late 1998.  FHLB pays interest on daily funds deposited which allows
interest to be earned sooner than with the previous correspondent bank.
Interest income from investment securities decreased $450,000, or
51.2%, as a result of a lower average balance maintained in investment
securities and certificates of deposits purchased along with lower
interest rates on investments.  The majority of government agency
securities purchased in the previous two years contained early
redemption provisions which were exercised by the respective agency.
Interest income from mortgage-backed securities decreased $7,000 as
principal repayments were received on these securities and no new
securities were purchased.

     Interest Expense.  For the year ended June 30, 1999, interest
expense decreased $306,000, or 4.4%, to $6,699,000 from $7,005,000 for
the year ended June 30, 1998.  The increased interest expense related
to higher average customer deposits was more than offset by a lower
average rate paid on those deposits and a $727,000 reduction in
interest expense on FHLB advances.  The average interest rate paid on
customer deposits was 4.56% for the year ended June 30, 1999 compared
to 4.7% for the year ended June 30, 1998.  FHLB interest expense
decreased  as FHLB advances totaling $3.5 million were repaid during
the fiscal year at their respective maturity dates.

     Provision for Loan Losses.  Provision for loan losses for the year
ended June 30, 1999 was $84,000 compared to $66,000 for the year ended
June 30, 1998.  Provision for loan losses were increased by $18,000, or
27.3%, since actual losses and total loans outstanding both increased.
Actual loan charge-offs, net of recoveries, of First Home originated
loans were $44,000 for the year ended June 30, 1999 compared to $19,000
for the year ended June 30, 1998.

     Noninterest Income.  Noninterest income was $923,000 for the
fiscal year ended June 30, 1999.  This was a $157,000, or 20.5%
increase, from $766,000 for the year ended June 30, 1998.  Service
charge and other fee income increased $55,000, or 10.8%.  As in
previous years, the increase was primarily a result of the checking
account program begun in July 1995, which continues to create an
increase in customer deposit accounts.  Also contributing to the
increase was service charges and fees on the deposit accounts acquired
as part of the purchase of the two branches from NationsBank which was
completed in March 1998.

     Insurance commissions for the fiscal year ended June 30, 1999 were
$196,000 compared to $81,000 for the fiscal year ended June 30, 1998.
The $115,000 increase was attributable to title insurance commissions
earned by South Central Missouri Title, Inc. which opened in November
1997.  In addition to increased business at the Hartville, Missouri
office, branch offices of the title company were opened in Marshfield
and Ava, Missouri.  Other increases to noninterest income were
$6,000 from real estate operations and $6,000 from other income.

     Gains on the sale of property and equipment decreased $37,000.
The fiscal year ended June 30, 1998 included a $51,000 gain from the
sale of the assets of Lawson & Lawson Insurance Agency.  The only
significant gain, totalling $22,000, in fiscal 1999 was from the sale
of real estate held for investment.

                                  10
<PAGE>
     Gains on investment securities and mortgage-backed securities
increased by $12,000 from $11,000 for the fiscal year ended June 30,
1998 to $23,000 for the year ended June 30, 1999.  Information
regarding this increase is provided under "-Gain on Investment and
Mortgage-backed Securities.

     Noninterest Expense.  During the fiscal year ended June 30, 1999,
noninterest expense increased $525,000, or 14.1%.  The majority of the
increase was in the area of compensation and employee benefits which
increased $289,000, or 12.7%.  The primary components of this increase
were $144,000 for salaries and related payroll taxes for staff at the
Crane and Galena branches purchased in March 1998, $64,000 for salaries
and related payroll taxes for South Central Missouri Title, Inc.
personnel and $109,000 for hiring of additional personnel and regular
annual payroll increases for existing personnel.

     Group health insurance expense also increased $81,000.  The
increase resulted from the addition of the Crane and Galena personnel
in March 1998 and existing personnel meeting the health plan coverage
requirements.

     The average fair market value of the Company's common stock
decreased during the year ended June 30, 1999 which in turn reduced the
expense for the Employee Stock Ownership Plan ("ESOP") by $51,000.
This treatment is required by the American Institute of Certified
Public Accountant's Statement of Position 93-6, "Employer's Accounting
for Employee Stock Ownership Plans."  The statement requires the
recording of shares released from the ESOP to be recorded at the
average fair market value for the period.

There were also decreases in compensation and employee benefits of
$37,000 relating to the capitalization of estimated loan personnel
costs in accordance with Statement of Financial Accounting Standards
No. 91, "Accounting for Nonrefundable Fees and Costs Associated with
Originating or Acquiring Loans and Initial Direct Costs of Lease.
Management Recognition Plan expense decreased $21,000 as all of the
granted shares became fully vested and distributed during the year.

     Occupancy and equipment expense increased $98,000 from $491,000
for the fiscal year ended June 30, 1998 to $589,000 for the fiscal year
ended June 30, 1999.  Addition of the Crane and Galena  branches in
March 1998 raised normal occupancy and equipment expenses by $31,000.
Operation of South Central Missouri Title, Inc. for an entire year and
the addition of two additional locations for the title company were
responsible for $15,000 of the increase.  A new computer system
installed in January 1998 and an upgrade of the check sorting machine
also caused increases in depreciation and maintenance expenses of
$39,000.  Additions of furniture and equipment at existing branches
during the year created a $7,000 increase in depreciation expense.  The
Marshfield branch underwent a renovation to provide additional space
which increased expenses by $5,000.

     Professional fees increased $47,000 including $30,000 additional
accounting and audit fees incurred in late 1998 and a $17,000 increase
in the accrual for the 1999 audit.  The FDIC insurance premiums on
deposit accounts increased $11,000 due to additional accounts and the
addition of the Crane and Galena deposit accounts.

     There was a $22,000 decrease in advertising and promotional
expense attributable to the elimination of additional expenses
promoting the purchase of the Crane and Galena branches and a
lower number of gifts given to new customers.

     During the year ended June 30, 1999, other noninterest expense
increased $102,000.  The majority of the increase was amortization
of the premium paid to NationsBank for the purchase of the loans and
deposits at the Crane and Galena branches.  This expense increased
$101,000 which includes $50,000 for an additional write-off to
reflect purchased accounts that were closed by the customers since
the branches were acquired by First Home.

     Correspondent bank service charges increased $22,000 as deposit
activity with the correspondent banks increased in connection with new
accounts and the addition of the Crane and Galena branches.  During
late 1998, correspondent bank processing was moved to the FHLB.  The
service charges are slightly higher at the FHLB; however, interest is

                                  11
<PAGE>
paid on collected balances which more than offsets the service charges.
Related courier service costs also increased by $11,000 due to the
deposits being transported to St. Louis rather than Springfield,
Missouri.

     The addition of Crane and Galena also created a total of $20,000
increase in the following expenses:  free checks to customers,
insurance, regulatory assessments, dues and employee education.

     Commitment of a $10,000 contribution to a local YMCA and
additional contributions for which Missouri Neighborhood Assistance
Tax Credit were issued created a $25,000 increase in charitable
contributions.  Postage expense increased $21,000 attributable to a
slight rate increase and the increase in statement mailings due to
new accounts acquired at Crane and Galena.  Implementation of
Telebanker, First Home's automated informational telephone banking
system, currently handling 5,000 to 7,000 calls per month, raised
telephone costs by $18,000.

     There was a decrease in nonoperating expenses of $31,000 due to
the elimination of the Crane and Galena acquisition costs.  A $92,000
decrease in loss on checking accounts included a $34,000 reserve
established in June 1998 for items deposited with the correspondent
bank for which First Home had not received credit.  The entry was
reversed in October 1998 when the posting of these items was corrected.
The remainder of the decrease was attributable to extremely
insignificant deposit account losses during the year.

     Gain on Investments and Mortgage-backed Securities.  As noted in
Noninterest Income," gains on investments and mortgage-backed
securities increased $12,000.  Common stock was sold during the year
ended June 30, 1999 for $137,000 which resulted in a $37,000 pretax
gain.  The gain was offset by $14,000 to complete the write-off of a
pool of automobile loans purchased.  During the year ended June 30,
1998, common and preferred stocks were sold for $232,000 resulting in a
pretax gain of $41,000.  The gain was offset by $30,000 in write-downs
on the automobile loan pool.

     Income Taxes.  Income tax expense increased $170,000.  This was a
higher percentage increase than the increase in income before taxes due
to the additional tax deduction for the fair market value of stock
options exercised by employees during early 1998.

     Net Interest Margin.  Net interest margin was 3.76% for the year
ended June 30, 1999, an increase of .18% from 3.58% for the year ended
June 30, 1998.  A decrease in the yield on loans attributable to the
reduction in rates on adjustable-rate loans combined with a decline in
the yield on investment securities created a decrease in the yield on
interest-earning assets.  This decrease was more than offset by a
decrease in the cost of customer deposits and borrowings to create the
increase in the net interest margin.


Financial Condition

     General.  During the year ended June 30, 2000, net loans
receivable increased $21.3 million.  The growth was funded primarily
with an increase in FHLB advances of $15.7 million along with $4.5
million in deposit growth.  Property and equipment increased $1.2
million while cash decreased $2.7 million.

     Total Assets.  Total assets increased $20.4 million, or 11.4%
during the year ended June 30, 2000.  The $21.3 million increase in
net loans receivable and $1.2 million increase in property and
equipment was somewhat offset by the $2.7 million decrease in cash
and cash equivalents.  Investment securities available-for-sale also
increased $700,000.

     Cash and Cash Equivalents.  Cash and cash equivalents was $8.0
million at June 30, 2000, a $2.7 million decrease from $10.7 million
at June 30, 1999.

     Certificates of Deposit.  Certificates of deposit purchased as
investments of $1.2 million at June 30, 1999 decreased $200,000 to
$1.0 million at June 30, 2000.

                             12
<PAGE>

     Investment Securities.  The purchase of bonds in excess of
regular scheduled maturities of  investment securities created a
$800,000 increase from $5.8 million at June 30, 1999 to $6.6 million
at June 30, 2000.

     Mortgage-backed Securities.  Mortgage-backed securities of
$550,000 at June 30, 1999 decreased $101,000 to $449,000 at June 30,
2000.  This decrease was the result of regular principal repayments.

     Loans Receivable.  Net loans receivable increased $21.3 million,
or 13.9%, during the year from $153.6 million at June 30, 1999 to
$174.9 million at June 30, 2000.  The net loan increase was funded
from the increase in customer deposits, reduction in cash and cash
equivalents and, primarily, FHLB advances.

     Non-accrual Loans.  Non-accrual loans remained basically
constant at $55,000 at June 30, 1999 compared to $49,000 at June 30,
2000.

     Nonperforming Assets.   Nonperforming assets increased to $2.4
million at June 30, 2000 compared to $1.9 million at June 30, 1999.
At June 30, 2000, nonperforming assets was comprised of 201 loans.
At least one monthly payment was received during the quarter ended
June 30, 2000 on 182 of those loans which had ending balances
totaling $2.3 million.

     Customer Deposits and Borrowings.  Customer deposits were $155.7
million at June 30, 2000, an increase of $4.5 million, or 2.9%, from
$151.2 million at June 30, 1999.  The increase resulted from normal
growth at existing locations.  Additional FHLB advances of $15.7
million were needed to fund loan growth during the year.  FHLB
advances were $17.9 million at June 30, 2000 compared to $2.2
million at June 30, 1999.

     Stockholders' Equity.  Stockholders' equity increased slightly
to $24.5 million at June 30, 2000 from $24.2 million at June 30,
1999.  The increase was the result of net income of $2.0 million,
$388,000 in unearned compensation adjustments and $190,000 from the
exercise of stock options offset by $2.0 million for the repurchase
of treasury stock and $300,000 for payment of dividends.  At June 30,
2000, shares of stock outstanding had been reduced to 1,910,137
from 2,063,902 shares outstanding at June 30, 1999.


     Liquidity and Capital Resources.  First Home's primary sources of
funds are deposits, proceeds from principal and interest payments on
loans, mortgage-backed securities, investment securities, net
operating income and FHLB advances.  While maturities and scheduled
amortization of loans and mortgage-backed securities are a
predictable source of funds, deposit flows and mortgage prepayments
are greatly influenced by general interest rates, economic conditions
and competition.

     The primary investing activity of First Home is the origination of
mortgage loans.  Mortgage loans originated by First Home have increased
each year at $56.3 million, $47.2 million and $41.9 million for the
years ended June 30, 2000, 1999 and 1998, respectively.  Other
investing activities include the purchase of investment securities,
which totaled $1.1 million, $2.8 million and $1.7 million for the years
ended June 30, 2000, 1999 and 1998.  These activities were funded
primarily by deposit growth, principal repayments on loans,
mortgage-backed securities, other investment securities, and FHLB
advances.

     OTS regulations require First Home to maintain an adequate level
of liquidity to ensure the availability of sufficient funds to support
loan growth and deposit withdrawals, to satisfy financial commitments
and to take advantage of investment opportunities.  First Home's
sources of funds include deposits, principal and interest payments from
loans and mortgage-backed securities and investments, and FHLB
advances.  During fiscal years 2000, 1999 and 1998, First Home used its
sources of funds primarily to fund loan commitments and to pay maturing
savings certificates and deposit withdrawals.  At June 30, 2000, First
Home had approved loan commitments totaling $500,000 and
undisbursed loans in process totaling $3.8 million.

                                13
<PAGE>

     Liquid funds necessary for the normal daily operations of First
Home are maintained in three working checking accounts, a daily time
account with the FHLB - Des Moines and in Federal funds.  It is the
Savings Bank's current policy to maintain adequate collected balances
in those three checking accounts to meet daily operating expenses,
customer withdrawals, and fund loan demand.  Funds received from daily
operating activities are deposited, on a daily basis, in one of the
working checking accounts and transferred, when appropriate to daily
time, Federal funds or used to reduce FHLB advances to enhance
interest income.

     At June 30, 20000, certificates of deposit amounted to $95.9
million, or 61.6%, of First Home's total deposits, including $67.0
million which were scheduled to mature by June 30, 2001.  Historically,
First Home has been able to retain a significant amount of its deposits
as they mature.  Management of First Home believes it has adequate
resources to fund all loan commitments by savings deposits and FHLB
advances and that it can adjust the offering rates of savings
certificates to retain deposits in changing interest rate environments.

     Currently, the OTS requires a savings institution to maintain an
average daily balance of liquid assets (cash and eligible investments)
equal to at least 4% of the average daily balance of its net
withdrawable deposits and short-term borrowings. First Home's liquidity
ratios were 7.1%, 8.2% and 16.3% at June 30, 2000, 1999 and 1998,
respectively. First Home consistently maintains liquidity levels in
excess of regulatory requirements, and believes this is an appropriate
strategy for proper asset and liability management.

     OTS regulations require First Home to maintain specific amounts of
capital.  As of June 30, 2000, First Home was in compliance with all
the regulatory capital requirements which were effective as of such
date, with tangible, core and risk-based capital ratios of 10.3%, 10.3%
and 14.0%, respectively.  These ratios exceed the 1.5%, 4.0% and 8.0%,
respectively, capital ratios required by OTS regulations.  In addition,
the OTS amended its capital regulations which require savings
institutions to maintain specified amounts of regulatory capital based
on the estimated effects of changes in market rates and which could
further increase the amount of regulatory capital required to be
maintained by the Savings Bank.  See Note 16 of the Notes to
Consolidated Financial Statements.

     Impact of New Accounting Standards.  See Note 1 of the Notes to
Consolidated Financial Statements.

     Effect of Inflation and Changing Prices.  The Consolidated
Financial Statements and related financial data presented herein have
been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and
operating results in terms of historical dollars, without considering
the changes in relative purchasing power of money over time due to
inflation.  The primary impact of inflation on operations of First Home
is reflected in increased operating costs.  Unlike most industrial
companies, virtually all the assets and liabilities of a financial
institution are monetary in nature.  As a result, interest rates
generally have a more significant impact on a financial institution's
performance than do general levels of inflation.  Interest rates do not
necessarily move in the same direction or to the same extent as the
prices of goods and services.  During the current interest rate
environment, management believes that the liquidity and the maturity
structure of First Home's assets and liabilities are critical to the
maintenance of acceptable profitability.

                                  14
<PAGE>
{LOGO OF KIRKPATRICK, PHILLIPS & MILLER, CPAs, A PROFESSIONAL
    CORPORATION}


                      INDEPENDENT AUDITORS' REPORT
                      ----------------------------


To the Board of Directors and Stockholders
First Bancshares, Inc. and Subsidiaries
Mountain Grove, Missouri

We have audited the accompanying consolidated statements of financial
condition of First Bancshares, Inc. and Subsidiaries as of June 30,
2000 and 1999, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in
the period ended June 30, 2000.  These consolidated financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and perform
these audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of First Bancshares, Inc. and Subsidiaries as of June 30,
2000 and 1999, and the results of operations and its cash flows
for each of the three years in the period ended June 30, 2000, in
conformity with generally accepted accounting principles.


/s/ Kirkpatrick, Phillips & Miller

August 3, 2000
Springfield, Missouri
</page>



</TABLE>
<TABLE>
<CAPTION>
                                  FIRST BANCSHARES, INC.  AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                              - - - - - - - - - - - - - - - - - - - - - - - -
                                         June 30, 2000 and 1999
                                                                               2000              1999
                                                                         -------------      -------------
ASSETS
------
<S>                                                                           <C>                  <C>
Cash and cash equivalents, including interest-bearing accounts
    of $5,230,883 in 2000 and $8,032,183 in 1999                          $  7,961,552      $  10,721,664
Certificates of deposit                                                      1,009,000          1,209,000
Federal funds sold                                                             320,000            245,000
Investment securities available-for-sale, at fair value                      3,918,241          3,216,799
Investment securities held-to-maturity (estimated fair value of
    $1,633,150 in 2000 and $1,529,597 in 1999)                               1,657,197          1,543,948
Investment in Federal Home Loan Bank stock, at cost                          1,072,200          1,057,600
Mortgage-backed certificates available-for-sale,
   at fair value                                                               448,559            550,296
Loans receivable held-for-investment, net                                  174,868,666        153,615,936
Accrued interest receivable                                                  1,067,411            772,474
Prepaid expenses                                                               130,105             91,414
Commissions and other receivables                                                   -             152,605
Property and equipment, less accumulated depreciation
   and valuation reserve                                                     5,853,832          4,651,801
Intangible assets, less accumulated amortization                               767,256            885,236
Other assets                                                                    11,762              7,725
                                                                         -------------      -------------
    Total assets                                                         $ 199,085,781      $ 178,721,498
                                                                         =============      =============

  LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------
Customer deposits                                                        $ 155,661,444      $ 151,209,747
Advances from Federal Home Loan Bank                                        17,899,616          2,200,000
Other borrowed funds                                                            25,637                 -
Income taxes payable - current                                                  59,109            196,103
Deferred income taxes, net                                                     183,703            194,572
Accrued expenses                                                               779,237            672,023
                                                                         -------------      -------------
    Total liabilities                                                      174,608,746        154,472,445
                                                                         -------------      -------------
Preferred stock, $.01 par value; 2,000,000 shares authorized,
   none issued                                                                     -              -
Common stock, $.01 par value; 8,000,000 shares authorized,
   issued 2,756,716 in 2000 and 2,718,796 in 1999, outstanding
   1,910,137 in 2000 and 2,063,902 in 1999                                      27,567         27,188
Paid-in capital                                                             16,635,851     16,244,473
Retained earnings - substantially restricted                                20,081,051     18,362,321
Treasury stock, at cost - 846,579 shares in 2000 and
   654,894 shares in 1999                                                  (11,891,593)    (9,873,113)
Unearned compensation                                                         (305,221)      (491,031)
Accumulated other comprehensive loss                                           (70,620)       (20,785)
                                                                          ------------  -------------
    Total stockholders' equity                                              24,477,035     24,249,053
                                                                          ------------  -------------
    Total liabilities and stockholders' equity                           $ 199,085,781  $ 178,721,498
                                                                         =============  =============
</TABLE>
                            The accompanying notes are an integral part of the
                                     consolidated financial statements
                                                     16
</page>

                               FIRST BANCSHARES, INC.  AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF INCOME
                                - - - - - - - - - - - - - - - - - - - -
                               Years Ended June 30, 2000, 1999 and 1998
<TABLE>
<CAPTION>

                                                       2000             1999           1998
                                                   ------------    ------------    -----------
<S>                                                   <C>               <C>            <C>
Interest Income:
  Loans receivable                                 $ 13,115,112    $ 12,185,082    $11,626,193
  Investment securities                                 442,209         423,128        873,623
  Mortgage-backed and related securities                 34,086          43,704         51,100
  Other interest-earning assets                         273,587         341,946        219,763
                                                   ------------    ------------    -----------
      Total interest income                          13,864,994      12,993,860     12,770,679
                                                   ------------    ------------    -----------

Interest Expense:
  Customer deposits                                   6,835,911       6,429,120      6,008,164
  Borrowed funds                                        421,688         270,131        996,913
                                                    -----------     -----------    -----------
      Total interest expense                          7,257,599       6,699,251      7,005,077
                                                    -----------     -----------    -----------

      Net interest income                             6,607,395       6,294,609      5,765,602

Provision for loan losses                                88,725          83,549         65,955
                                                    -----------      ----------    -----------
      Net interest income after
        provision for loan losses                     6,518,670       6,211,060      5,699,647
                                                    -----------     -----------    -----------
Noninterest Income:
  Service charges and other fee income                  653,769         563,778        508,635
  Gain on investment securities and
     mortgage-backed securities                              -           22,766         11,444
  Gain on sale of property and equipment                  3,916          18,277         55,269
  Loan origination and commitment fees                    7,574           6,880          6,905
  Income from real estate operations                    173,334         101,188         95,115
  Insurance commissions                                 193,280         196,594         81,458
  Other                                                  32,953          13,554          6,995
                                                    -----------     -----------     ----------
      Total noninterest income                        1,064,826         923,037        765,821
                                                    -----------     -----------     ----------
Noninterest Expense:
  Compensation and employee benefits                  2,611,595       2,570,546      2,281,341
  Occupancy and equipment                               674,674         589,454        491,294
  Deposit insurance premiums                             59,828          85,483         74,777
  Other                                               1,096,791       1,008,201        881,257
                                                    -----------     -----------     ----------
     Total noninterest expense                        4,442,888       4,253,684      3,728,669
                                                    -----------     -----------    -----------
      Income before taxes                             3,140,608       2,880,413      2,736,799

Income Taxes                                          1,121,060       1,062,028        891,316
                                                    -----------     -----------    -----------
      Net income                                    $ 2,019,548     $ 1,818,385    $ 1,845,483
                                                    ===========     ===========    ===========
      Basic earnings per share                      $    1.06       $     .90      $     .90
                                                    ===========     ===========    ===========
      Diluted earnings per share                    $    1.02       $     .86      $     .85
                                                    ===========     ===========    ===========

</TABLE>
                         The accompanying notes are an integral part of the
                                    consolidated financial statements
                                                    17
</page>


<TABLE>
                                                FIRST BANCSHARES, INC. AND SUBSIDIARIES
                                       CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                       - - - - - - - - - - - - - - - - - - - - - - - - -
                                                    Years Ended June 30, 2000, 1999 and 1998
<CAPTION>                  Common                                                                Accumulated
                                   Stock                                                                  Other          Total
                             ------------------    Paid-in       Retained     Treasury      Unearned    Comprehensive  Stockholders'
                              Shares     Amount     Capital       Earnings       Stock     Compensation Income (Loss)   Equity
                            ---------  --------  -----------  ------------  -----------   -------------  ----------  -----------
<S>                            <C>         <C>       <C>           <C>          <C>            <C>          <C>           <C>
Balance at June 30, 1997     1,091,554   $15,585  $15,250,480   $15,211,828  $(7,429,669)   $(  977,466) $  135,886   $22,206,644
Comprehensive income
  Net income                        -         -            -      1,845,483           -              -           -      1,845,483
  Other comprehensive income,
    net of tax:
    Change in unrealized gain
    (loss) on securities
    available-for-sale, net of
    deferred income taxes of
    $(20,535)                       -         -            -             -            -              -       (34,965)     (34,965)
    Less:  reclassification
    adjustment, net of deferred
    income taxes of $(15,223)       -         -            -             -            -              -       (25,921)     (25,921)
                                                                                                                    -------------
      Total Comprehensive Income                                                                                        1,784,597
                                                                                                                    -------------
  Proceeds from exercise of
     stock options              32,342       324      265,361            -            -              -           -        265,685
  Cash dividends ($.11 per share)   -         -            -       (223,153)          -              -           -       (223,153)
  100% stock dividend        1,102,704    11,027           -        (11,027)          -              -           -             -
  Purchase of treasury stock
    at cost                    (13,000)       -            -             -      (234,507)            -           -       (234,507)
  Vesting of MRP stock              -         -            -             -            -          55,250          -         55,250
  Release of ESOP shares            -         -       322,454            -            -         187,700          -        510,154
                             ---------  --------  -----------   -----------  ------------   ------------   ---------   -----------
Balance June 30, 1998        2,213,600    26,936   15,838,295    16,823,131   (7,664,176)      (734,516)     75,000    24,364,670
Comprehensive Income
Net income                          -         -            -      1,818,385           -              -           -      1,818,385
Other comprehensive income,
    net of tax:
    Change in unrealized gain
    (loss) on securities
    available-for-sale, net of
    deferred income taxes of
    $(42,490)                       -         -            -             -            -              -      (72,347)      (72,347)
    Less:  reclassification
    adjustment, net of deferred
    income taxes of $(13,765)       -         -            -             -            -              -      (23,438)      (23,438)
                                                                                                                    -------------
      Total Comprehensive Income                                                                                        1,722,600
                                                                                                                    -------------
  Proceeds from exercise of
     stock options              25,220       252      125,848            -            -              -           -        126,100
  Cash dividends ($.14 per share)   -         -            -       (279,195)          -              -           -       (279,195)
  Purchase of treasury stock
    at cost                   (174,918)       -            -             -    (2,208,937)            -           -     (2,208,937)
  Vesting of MRP stock              -         -            -             -            -          56,250          -         56,250
  Release of ESOP shares            -         -       280,330            -            -         187,235          -        467,565
                             ---------  --------  -----------   -----------  ------------   ------------   ---------   -----------
Balance June 30, 1999        2,063,902    27,188   16,244,473    18,362,321   (9,873,113)      (491,031)    (20,785)   24,249,053
                                                                                                                       -----------
Comprehensive Income
Net income                          -         -            -      2,019,548           -              -           -      2,019,548
Other comprehensive income,
    net of tax:
    Change in unrealized gain
    (loss) on securities
    available-for-sale, net of
    deferred income taxes of
    $(33,936)                       -         -            -             -            -              -       (49,835)     (49,835)
                                                                                                                    -------------
      Total Comprehensive Income                                                                                        1,969,713
                                                                                                                    -------------
  Proceeds from exercise of
     stock options              37,920       379      189,221            -            -              -           -        189,600
  Cash dividends ($.16 per share)   -         -            -       (300,818)          -              -           -       (300,818)
  Purchase of treasury stock
    at cost                   (191,685)       -            -             -    (2,018,480)            -           -     (2,018,480)
Release of ESOP shares            -         -       202,157            -            -         185,810          -          387,967
                             ---------  --------  -----------   -----------  ------------   ------------   ---------   -----------
Balance at June 30, 2000     1,910,137   $27,567  $16,635,851   $20,081,051 $(11,891,593)   $(305,221)     $(70,620)  $24,477,035
                             =========   =======  ===========   ===========   ============    ==========     ========= ============


              The accompanying notes are an integral part of the consolidated financial statements
</TABLE>
                                                 18
</page>
<TABLE>
                                FIRST BANCSHARES, INC. AND SUBSIDIARIES
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                - - - - - - - - - - - - - - - - - - -
                               Years Ended June 30, 2000, 1999 and 1998
<CAPTION>
                                                        2000            1999           1998
                                                   ------------    ------------   ------------
<S>                                                     <C>              <C>            <C>
Cash flows from operating activities:
  Net income                                       $  2,019,548    $  1,818,385   $  1,845,483
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation                                      342,147         278,802        223,681
      Amortization                                      117,980         117,980         18,183
      Premiums and discounts on mortgage-backed
        securities and investment securities              1,265            (229)        (9,690)
      Loss on loans, net of recoveries                   88,725          83,549         65,955
      Unrealized loss on investment securities               -           14,437         30,000
      Gain on sale of investment securities
           and mortgage-backed securities                    -          (37,203)       (41,444)
      Gain on sale of equipment                          (9,723)        (18,777)        (1,813)
      Gain on sale of intangible assets                      -               -         (49,829)
      (Gain) loss on sale of real estate owned            5,807             500         (3,627)
      Vesting of MRP shares                                  -           56,250         55,250
      Release of ESOP shares                            387,967         467,565        510,154
      Net change in operating accounts:
        Accrued interest receivable and other assets   (185,060)       (201,800)        51,214
        Deferred loan costs                             (50,082)        (49,886)       (59,487)
        Accrued expenses                                107,214         (33,319)       391,485
        Deferred income taxes                            23,067         (42,891)        29,963
        Income taxes payable - current                 (136,994)        121,417         69,663
                                                    ------------    ------------   ------------
          Net cash from operating activities          2,711,861       2,574,780      3,125,141
                                                    ------------    ------------   ------------
Cash flows from investing activities:
  Purchase of investment securities
    available-for-sale                                 (783,999)     (1,833,406)    (1,644,900)
  Purchase of investment securities held-to-maturity   (338,000)       (984,389)      (105,000)
  Purchase of Federal Home Loan Bank stock              (14,600)             -              -
  Proceeds from maturities of investment securities
    available-for-sale                                      646       1,100,454     12,900,450
  Proceeds from maturities of investment securities
    held-to-maturity                                    223,486         540,140        563,759
  Proceeds from sale of investment securities
    available-for-sale                                       -          137,203        231,948
  Proceeds from sale of Federal Home Loan Bank stock         -               -         206,200
  Net change in certificates of deposit                 200,000         996,000       (701,000)
  Net increase in federal funds sold                    (75,000)       (245,000)            -
  Net change in loans receivable                    (21,433,598)     (7,342,126)    (7,561,466)
  Proceeds from principal payments and maturities
    of mortgage-backed certificates                      99,877         142,031        122,405
  Purchases of property and equipment                (1,667,081)       (728,561)      (496,056)
  Proceeds from sale of property and equipment          132,626         114,250         11,761
  Proceeds from sale of intangible assets                    -               -          80,000
  Net proceeds from sale of real estate owned           136,418          98,370        158,461
  Net cash received in acquisition of
    branches                                                 -               -      11,274,501
                                                    ------------    ------------   ------------
       Net cash from (used in) investing activities (23,519,225)     (8,005,034)    15,041,063
                                                    ------------    ------------   ------------8
                                                         20
</page>

                                      FIRST BANCSHARES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                 - - - - - - - - - - - - - - - - - - - - - - - - -
                                      Years Ended June 30, 2000, 1999 and 1998

                                                       2000             1999         1998
                                                  -------------   -------------   ------------
Cash flows from financing activities:
  Net change in demand deposits, savings accounts,
    and certificates of deposit                    $  4,451,697    $ 10,150,999   $  5,947,762
  Payments on borrowed funds                         (2,015,547)     (3,500,000)   (18,055,000)
  Proceeds from borrowed funds                       17,740,800              -         200,000
  Proceeds from issuance of common stock                189,600         126,100        252,715
  Cash dividends paid                                  (300,818)       (279,195)      (223,153)
  Purchase of treasury stock                         (2,018,480)     (2,208,937)      (234,507)
                                                   -------------   -------------   ------------
      Net cash from (used in) financing activities   18,047,252       4,288,967    (12,112,183)
                                                   ------------    -------------   ------------

Net increase (decrease) in cash and cash equivalents (2,760,112)     (1,141,287)     6,054,021

Cash and cash equivalents -
  beginning of period                                10,721,664      11,862,951      5,808,930
                                                   ------------     -----------     -----------
Cash and cash equivalents -
  end of period                                    $  7,961,552    $ 10,721,664   $ 11,862,951
                                                   ============    ============   =============

Supplemental disclosures of cash flow information:

  Cash paid during the year for:
    Interest on deposits and
      other borrowings                             $  7,169,376    $  6,739,175   $  6,541,148
    Income taxes                                      1,221,103         905,286        798,195


Supplemental schedule of non-cash investing and
  financing activities:
  Loans and other real estate
    charged off to reserve                         $    31,842    $     71,565   $     19,414
  Loans transferred to real estate
    acquired in settlement of loans                    142,225          98,870         41,058

</TABLE>




                     The accompanying notes are an integral part of the
                             consolidated financial statements
                                            20
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Nature of business - First Bancshares, Inc., a Missouri
        corporation, was organized on September 30, 1993 for the
        purpose of becoming a unitary savings and loan holding
        company for First Home Savings Bank.  The Savings Bank is
        primarily engaged in providing a full range of banking and
        mortgage services to individual and corporate customers in
        southern Missouri.  It also provided insurance brokerage
        activities through a subsidiary corporation until September
        1997.  The Company and Savings Bank are also subject
        to the regulation of certain federal agencies and undergo
        periodic examinations by those regulatory authorities.  In
        November of 1997, South Central Missouri Title, Inc. was
        formed as a subsidiary corporation of First Bancshares, Inc.
        South Central is a licensed agent to sell title insurance and
        also provides real estate sales closing services.

     Use of estimates - Management uses estimates and assumptions in
        preparing these financial statements in accordance with
        generally accepted accounting principles.  Those estimates and
        assumptions affect the reported amounts of assets and
        liabilities, the disclosure of contingent assets and
        liabilities, and the reported revenues and expenses.  Actual
        results could vary from the estimates that were used.

        Material estimates that are particularly susceptible to
        significant change relate to the determination of the
        allowance for loan losses and the valuation of real estate
        acquired in connection with foreclosures or in satisfaction of
        loans.

        While management uses available information to recognize losses
        on loans and foreclosed real estate, future additions to the
        allowances may be necessary based on changes in local economic
        conditions.  In addition, regulatory agencies, as an integral
        part of their examination process, periodically review the
        Savings Bank's allowances for loan losses and foreclosed real
        estate.  Such agencies may require the Savings Bank to
        recognize additions to the allowances based on their judgments
        about information available to them at the time of their
        examination.

     Principles of consolidation - The accompanying consolidated
        financial statements include the accounts of First
        Bancshares, Inc. and its wholly-owned subsidiaries, the
        Savings Bank and South Central Missouri Title, Inc., and
        Fybar Service Corporation, a wholly-owned subsidiary of the
        Savings Bank.  In consolidation, all significant intercompany
        balances and transactions have been eliminated.

     Consolidated statements of cash flows - For purposes of the
        consolidated statements of cash flows, cash consists of cash
        on hand and deposits with other financial institutions which
        are unrestricted as to withdrawal or use.  Cash equivalents
        include highly-liquid instruments with an original maturity of
        three months or less.

                                  21
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

     Investment securities and mortgage-backed certificates -
        Securities are classified in accordance with Statement of
        Financial Accounting Standards ("SFAS") No. 115, "Accounting
        for Certain Investments in Debt and Equity Securities," which
        establishes three classifications of investment securities:
        held-to-maturity, trading and available-for-sale.  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.  At June
        30, 2000 and 1999, the Company had no securities designated as
        trading securities.  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.  Gains or losses on sales of securities
        are recognized in operations at the time of sale and are
        determined by the difference between the net sales proceeds
        and the cost of the securities using the specific
        identification method, adjusted for any unamortized premiums
        or discounts.  Premiums or discounts are amortized or accreted
        to income using the interest method over the period to
        maturity.


     Loans receivable - Loans receivable are stated at their principal
        amount outstanding, net of deferred loan origination and
        commitment fees and certain direct costs, which are recognized
        over the contractual life of the loan as an adjustment of the
        loan's yield.  Interest income on loans is recognized on an
        accrual basis.

        The accrual of interest on impaired loans is discontinued when it
        is determined that the payment of interest or principal is
        doubtful of collection, or when interest or principal is past
        due 90 days or more, except when the loan is well secured and
        in the process of collection.  Any accrued but uncollected
        interest previously recorded on such loans is generally
        reversed in the current period and interest income is
        subsequently recognized upon collection.  Cash collections
        subsequently received are applied against outstanding
        principal until the loan is considered fully collectible,
        after which cash collections are recognized as interest
        income.

        The Company reports the change in present value of the expected
        future cash flows related to impaired loans as an increase or
        decrease in bad debt expense.


                                  22
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998


(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

     Property and equipment and related depreciation - Property and
        equipment has been stated at cost except as discussed in
        Note (8).  Depreciation has been principally computed by
        applying the following methods and estimated lives:

                 Category         	Estimated Life       Method
        ---------------------     --------------     ----------
        Automobiles                    5 Years   Straight-line and
                                                  declining-balance
        Office furniture, fixtures               Straight-line and
           and equipment            3-10 Years	    declining-balance
        Buildings                  15-40 Years   Straight-line and
                                                  declining-balance
        Investment real estate     15-40 Years   Straight-line

        Maintenance and repairs are charged to expense.
        Improvements which extend the lives of the respective
        assets are capitalized.  When property or equipment is
        sold or otherwise disposed of, the cost and related
        accumulated depreciation are removed from the respective
        accounts and the resulting gain or loss is reflected in
        income.

     Intangible assets - Intangible assets have been recorded by the
        Savings Bank in connection with the acquisition of two
        branches from NationsBank, which is discussed further in Note
        (2). The premium paid by the Savings Bank for the branches is
        being amortized on a straight-line basis over fifteen years.
        Amortization expense relating to this premium was $117,980,
        $117,980 and $17,000 in 2000, 1999 and 1998, respectively.
        During the years ended June 30, 2000 and 1999 amortization
        expense includes a $50,000 write-down due to the loss of
        customers that were acquired from NationsBank.

        Intangible assets were also recorded by Fybar Service Corporation
        in connection with the acquisition of Lawson and Lawson
        Insurance Agency, Inc. during October, 1991.  In September,
        1997, the intangible assets of Lawson and Lawson were sold.
        Amortization expense relating to these intangible assets
        amounted to $1,183 in 1998.

     Income taxes - The Company files a consolidated federal income tax
        return with its wholly-owned subsidiaries.  The income tax
        effect of timing differences in reporting transactions for
        financial reporting and income tax purposes is reflected in
        the financial statements as deferred income taxes.

        Income taxes are accounted for under the asset and liability
        method in accordance with SFAS No. 109, "Accounting for Income
        Taxes."  Under this method, deferred income taxes are
        recognized for temporary differences by applying enacted
        statutory rates applicable to future years to differences
        between the financial statement carrying amounts and the tax
        basis of existing assets and liabilities.  The effect on
        deferred taxes of a change in tax rates is recognized in
        income in the period that includes the enactment date.


                                  23
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

     Allowance for loan losses - The Savings Bank maintains an
        allowance for loan losses to absorb possible future losses
        that may be realized on its loan portfolio.  In conjunction
        with a review of the loan portfolio, the allowance for loan
        losses is evaluated and adjusted at least quarterly.  In
        evaluating the allowance for loan losses, management considers
        various factors including 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.  Losses incurred upon
        initial acquisition of real estate owned through foreclosure
        are charged to the allowance for loan losses.

        Special reserves are established for any impaired loan for
        which the recorded investment in the loan exceeds the
        measured value of the loan.  The values of loans subject to
        impairment valuation are determined based on the present
        value of expected future cash flows, the market price of the
        loans, or the fair values of the underlying collateral if the
        loan is collateral dependent.

     Real estate owned - Real estate acquired in the settlement of
        loans, including in-substance foreclosures, is recorded at the
        lower of the remaining balance or estimated fair value less
        the estimated costs to sell the asset.  Any write down at the
        time of foreclosure is charged against the allowance for loan
        losses.  Subsequently, net expenses related to holding the
        property and declines in the market value are charged against
        income.  Gains on sales are determined on the specific
        identification method and are credited to income when the
        property is sold.

     Loan origination fees and costs - Loan origination fees and costs
        are recorded in accordance with SFAS No. 91, "Accounting for
        Nonrefundable Fees and Costs Associated with Originating or
        Acquiring Loans and Initial Direct Costs of Leases."  Under
        SFAS No. 91, loan origination fees and certain direct loan
        origination costs are deferred and recognized in interest
        income over the contractual lives of the related loans using
        the interest method.  When a loan is paid-off or sold, the
        unamortized balance of these deferred fees and costs is
        recognized in income.


     Real estate held for investment - Real estate properties held for
        investment are carried at the lower of cost, including cost of
        improvements incurred subsequent to acquisition, or net
        realizable value.  Costs relating to the development and
        improvement of property are capitalized, whereas costs
        relating to the holding of the property are expensed.

     Advertising costs - The Company expenses non-direct response
        advertising costs as they are incurred.

                                  24
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)


     Stock Dividend - On December 30, 1997, the Company's Board of
        Directors declared a two-for-one stock split (in the form of a
        100% stock dividend) of First Bancshares, Inc. common stock to
        stockholders of record on January 16, 1998, payable on January
        30, 1998.  Common stock was increased and retained earnings
        was reduced for the aggregate par value of the shares issued.
        The stated par value of each share was not changed from $.01.

        All per share amounts and average shares outstanding have been
        restated to reflect the aforementioned stock dividend.

     Earnings per share - Basic earnings per share excludes dilution
        and is computed by dividing net income available to common
        stockholders by the weighted average number of common shares
        outstanding during the period.  Diluted earnings per share
        reflects the potential dilution that could occur if
        securities or other contracts to issue common stock were
        exercised or resulted in the issuance of common stock that
        would share in the earnings of the Company.  Dilutive
        potential common shares are added to weighted average shares
        used to compute basic earnings per share.  The number of
        shares that would be issued from the exercise of stock options
        has been reduced by the number of shares that could have been
        purchased from the proceeds at the average market price of the
        Company's stock.

     Comprehensive income - The Company adopted SFAS No. 130,
        "Reporting Comprehensive Income," as of July 1, 1998.
        Accounting principles generally require that recognized
        revenue, expenses, gains and losses be included in net
        income.  Although certain changes in assets and liabilities,
        such as unrealized gains and losses on available-for-sale
        securities, are reported as a separate component of the
        equity section of the balance sheet, such items, along with
        net income, are components of comprehensive income.  The
        adoption of SFAS No. 130 had no effect on the Company's net
        income or shareholders' equity.

     New accounting standards - In June 1998, FASB issued SFAS
        No. 133, "Accounting for Derivative Instruments and
        Hedging Activities," which establishes accounting and
        reporting standards for derivative instruments, including
        certain derivative instruments embedded in other contracts,
        (collectively referred to as derivatives) and for hedging
        activities.  It requires that an entity recognize all
        derivatives as either assets or liabilities in the statement
        of financial position and measure those instruments at fair
        value.  In June 1999, SFAS No. 133 was amended by SFAS No.
        137, "Accounting for Derivative Instruments and Hedging
        Activities - Deferral of the Effective Date of FASB
        Statement No. 133" which deferred the effective date to the
        first quarter of fiscal years beginning after June 15, 2000.
        In June 2000, SFAS No. 133 was amended by SFAS No. 138,
        "Accounting for Certain Derivative Instruments and Certain
        Hedging Activities" which adds guidance related to accounting
        for derivative instruments and hedging activities.  The
        adoption of this standard is not expected to have a material
        impact on the Company.

                                  25
</page>

               FIRST BANCSHARES, INC AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     -----------------------------------------------------

     Reclassifications - Certain accounts in the prior-years'
        consolidated financial statements have been reclassified for
        comparative purposes to conform with the presentation in the
        current-year consolidated financial statements.

(2)  ACQUISITION

     In March 1998, the Savings Bank purchased two bank branch
     offices from NationsBank.  The branches are located at Crane
     and Galena, Missouri.  As part of the agreement, the Savings
     Bank assumed customer deposits of $17,426,254 and other
     liabilities of $65,000 in exchange for loans of $4,787,311,
     premises and equipment of $341,197, cash of $11,274,501 and
     other assets of $68,029.  The Savings Bank paid a premium of
     $1,020,216 for the loans purchased and customer deposit
     accounts assumed.  The acquisition was recorded using the
     purchase method of accounting.  Results of operations of the
     branches acquired are included in the accompanying financial
     statements since the date of acquisition.

(3)  INVESTMENT SECURITIES

     As discussed in Note (1), the Company has designated certain
     securities as available-for-sale.  A summary of the investment
     securities available-for-sale at June 30, 2000 is as follows:
<TABLE>
<CAPTION>
                                                                                Estimated
                                        Amortized        Gross Unrealized          Fair
                                           Cost         Gains       Losses         Value
                                      ------------   ----------   ----------   --------------
<S>                                        <C>           <C>           <C>            <C>
     United States Government and
       Federal Agencies obligations   $  2,700,000   $       -    $   47,207    $   2,652,793
     Mutual funds                           32,998        1,898           -            34,896
     Common and preferred stocks         1,277,443          930       47,821        1,230,552
                                     -------------   ----------   -----------   -------------
         Total                        $  4,010,441   $    2,828   $   95,028    $   3,918,241
                                      ============   ==========   ===========   =============
</TABLE>

     The amortized cost and estimated market value of debt securities
     available-for-sale at June 30, 2000 are summarized below by
     contractual terms to maturity.  Expected maturities will differ
     from contractual maturities because borrowers may have the right
     to call or prepay obligations with or without call or prepayment
     penalties.
<TABLE>
<CAPTION>
                                             Amortized        Estimated
                                                Cost          Fair Value
                                           -------------    -------------
<S>                                              <C>              <C>
     Due after one year through five years     2,700,000        2,652,793
                                            ============     ============
</TABLE>
     There were no sales of investment securities available-for-
     sale during the year ended June 30, 2000.


                                  26
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(3)  INVESTMENT SECURITIES - (CONTINUED)

     A summary of investment securities held-to-maturity at
     June 30, 2000 is as follows:

<TABLE>
<CAPTION>

                                                                                  Estimated
                                       Amortized         Gross Unrealized            Fair
                                          Cost         Gains          Losses         Value
                                      ------------    ---------     ----------    -----------
           <S>                            <C>           <C>             <C>             <C>
     Obligations of states and
       political subdivisions          $ 1,633,796    $   1,737     $  25,784     $ 1,609,749
     Auto and student loan pools            23,401           -             -           23,401
                                       -----------    ---------     ----------    -----------
        Total                          $ 1,657,197    $   1,737     $  25,784     $ 1,633,150
                                      ============    =========     ==========    ===========
</TABLE>

     Auto and student loan pools are stated at net realizable value
     in 2000, 1999 and 1998.  The auto loan pool was written down to
     its estimated net realizable value because, in the opinion of
     management, the decline in market value of that security is
     considered to be other than temporary.  The amount of the
     losses, $14,437 and $30,000 for 1999 and 1998, respectively,
     have been charged to operations.

     The amortized cost and estimated market value of investment
     securities held-to-maturity at June 30, 2000, by contractual
     maturity, are shown below.  Expected maturities will differ
     from contractual maturities because borrowers may have the
     right to call or prepay obligations with or without call or
     prepayment penalties.

<TABLE>
<CAPTION>

                                              Amortized        Estimated
                                                 Cost          Fair Value
                                            ------------     ------------
<S>                                               <C>              <C>
     Due in one year or less                 $   263,000      $   262,956
     Due after one year through five years     1,102,197        1,087,101
     Due after five years through ten years      292,000          283,093
                                             -----------      -----------
         Total                               $ 1,657,197      $ 1,633,150
                                             ===========      ===========
</TABLE>

     A summary of the investment securities available-for-sale at
June 30, 1999 is as follows:

<TABLE>
<CAPTION>
                                                                                  Estimated
                                        Amortized       Gross Unrealized             Fair
                                           Cost        Gains        Losses           Value
                                       -----------   ----------  -----------     ------------
<S>                                        <C>           <C>          <C>              <C>
     United States Government and
         Federal Agencies obligations  $ 2,200,000   $       -    $   27,611      $ 2,172,389
     Mutual funds                           33,644        3,072           -            36,716
     Common and preferred stocks           981,406       26,288           -         1,007,694
                                       -----------   ----------   -----------     ------------
         Total                         $ 3,215,050   $   29,360   $   27,611      $ 3,216,799
                                       ===========   ==========   ===========     ===========
</TABLE>

     Proceeds from the sales of common stock held as available-for-
     sale during the year ended June 30, 1999 were $137,203.  A
     gain of $37,203 was recognized on these sales.

     Proceeds from the sales of common and preferred stock held as
     available-for-sale during the year ended June 30, 1998 were
     $231,948.  A gain of $41,444 was recognized on these sales.

                               27
</page>
               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(3)  INVESTMENT SECURITIES - (CONTINUED)


     A summary of investment securities held-to-maturity at June 30,
     1999 is as follows:
<TABLE>
<CAPTION>
                                                                                 Estimated
                                        Amortized        Gross Unrealized           Fair
                                           Cost        Gains         Losses         Value
                                       -----------   ----------   -----------    ------------
<S>                                         <C>          <C>            <C>           <C>
     Obligations of states and
       political subdivisions          $ 1,510,061    $   7,839    $  22,190      $ 1,495,710
     Auto and student loan pools            33,887           -            -            33,887
                                       -----------    ---------    ----------     -----------
        Total                          $ 1,543,948    $   7,839    $  22,190      $ 1,529,597
                                       ===========    =========    ==========     ===========
</TABLE>


     The book value of securities pledged as collateral, to secure
     public deposits was $2,101,358 at June 30, 2000 and $1,340,450 at
     June 30, 1999.  The approximate fair value of pledged securities
     was $2,065,485 at June 30, 2000and $1,327,067 at June 30, 1999.

(4)  INVESTMENT IN FEDERAL HOME LOAN BANK STOCK

     Investment in stock of the Federal Home Loan Bank is required
     by law of every Federally-insured savings institution.  No
     ready market exists for this stock and it has no quoted market
     value.  However, redemption of this stock has been at par value.

     The Savings Bank, as a member of the Federal Home Loan Bank of
     Des Moines, is required to acquire and hold shares of capital
     stock in the Federal Home Loan Bank of Des Moines in an amount
     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 Federal Home
     Loan Bank of Des Moines.  The Savings Bank is in compliance with
     this requirement with an investment in Federal Home Loan Bank of
     Des Moines stock of $1,072,200 at June 30, 2000.

(5)  MORTGAGE-BACKED SECURITIES

     The amortized cost and estimated market values of mortgage-
     backed securities available-for-sale as of June 30, 2000 are
     summarized below:
<TABLE>
<CAPTION>
                                                                                   Estimated
                                        Amortized        Gross Unrealized             Fair
                                           Cost        Gains           Losses         Value
                                        ----------    ---------     ---------     -----------
<S>                                          <C>          <C>           <C>            <C>
     FHLMC certificates                 $  169,987    $     647      $  3,773      $  166,861
     FNMA certificates                     226,307           -          6,283        220,024
     GNMA certificates                      60,487        1,187            -          61,674
                                        ----------    ----------     ---------     ----------
       Total                            $  456,781    $   1,834      $ 10,056      $  448,559
                                        ==========    =========      =========     ==========
</TABLE>


                                  28
<PAGE>
               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(5)  MORTGAGE-BACKED SECURITIES (CONTINUED)


     The amortized cost and estimated market values of mortgage-
     backed securities available-for-sale as of June 30, 1999 are
     summarized below:
<TABLE>
<CAPTION>
                                                                                   Estimated
                                        Amortized        Gross Unrealized             Fair
                                           Cost        Gains           Losses         Value
                                        ----------    ---------     ---------     -----------
<S>                                          <C>          <C>           <C>            <C>
     FHLMC certificates                 $  213,495    $     849      $  3,421      $  210,923
     FNMA certificates                     273,498           -          5,280        268,218
     GNMA certificates                      69,665        1,490            -          71,155
                                        ----------    ----------     ---------     ----------
       Total                            $  556,658    $   2,339      $  8,701      $  550,296
                                        ==========    =========      =========     ==========
</TABLE>

(6)  LOANS RECEIVABLE

     Loans receivable at June 30 consist of the following:
<TABLE>
<CAPTION>
                                                 2000            1999
                                           -------------   --------------
<S>                                             <C>               <C>
     First mortgage loans                  $ 156,532,562    $ 137,331,895
     Loans to depositors, secured by
       savings accounts                        1,646,102        1,944,489
     Consumer and automobile loans             9,750,918        8,054,123
     Second mortgage loans                     5,081,954        4,990,937
     Other loans                               5,984,339        4,427,739
                                             -----------    -------------
        Total gross loans                    178,995,875      156,749,183
     Reserve for loan losses                    (596,951)        (540,068)
     Loans in process                         (3,797,139)      (2,809,979)
     Unamortized deferred loan costs, net
       of origination fees                       266,881          216,800
                                            ------------     ------------
        Net loans receivable               $ 174,868,666    $ 153,615,936
                                           =============    =============
</TABLE>

     Activity in the allowance for loan losses is summarized as
     follows for the years ended June 30:
<TABLE>
<CAPTION>
                                                  2000             1999
                                              ----------        ---------
<S>                                                <c.              <C>
     Balance at beginning of year              $ 540,068        $ 528,084
     Provision charged to income                  88,725           83,549
     Charge-offs                                 (36,665)         (71,907)
     Recoveries                                    4,823              342
                                              ----------        ---------
       Balance at end of year                  $ 596,951        $ 540,068
                                               =========        =========
</TABLE>
     The Savings Bank primarily grants first mortgage loans to
     customers throughout southern Missouri.  The loans are
     typically secured by real estate or personal property.

                              29
<PAGE>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(6)  LOANS RECEIVABLE (CONTINUED)
     ----------------------------

     As of June 30, 2000 and 1999, the total recorded investment in
     impaired loans was $49,446 and $55,110 respectively,as
     recognized in conformity with SFAS No. 114, as amended by SFAS
     No. 118.  This amount was subject to allowances for credit
     losses of $49,446 and $55,110, as of June 30, 2000 and 1999,
     respectively.  During 2000 and 1999, the average recorded
     investment in impaired loans was $55,110.  There was no
     interest income recognized in 2000 and 1999 on
     impaired loans.

(7)  ACCRUED INTEREST RECEIVABLE

     Accrued interest receivable at June 30 is summarized as follows:
<TABLE>
<CAPTION>
                                                  2000            1999
                                             -----------       ----------
<S>                                              <C>               <C>
     Investment securities                    $   74,698       $   56,860
     Mortgage-backed securities                    8,799            8,799
     Loans receivable                            983,914          706,815
                                              ----------       ----------
          Total                               $1,067,411       $  772,474
                                              ==========       ==========
</TABLE>

(8)  PROPERTY AND EQUIPMENT

     Property and equipment at June 30 consists of the following:
<TABLE>

<CAPTION>
                                                              2000
                                       ------------------------------------------------------
                                                       Accum.       Valuation
         Category                          Cost        Deprec.       Reserve          Net
   ----------------------------        -----------   ----------     ---------     -----------
<S>                                         <C>          <C>            <C>             <C>
     Land                              $   609,683   $       -      $      -      $   609,683
     Buildings                           3,226,687    1,009,626            -        2,217,061
     Office furniture,
       fixtures and equipment            1,794,798      930,352            -          864,446
     Automobiles                           163,959       74,292            -           89,667
     Investment real estate              2,557,697      213,575      271,147        2,072,975
                                       -----------   ----------     ---------     -----------
         Total                         $ 8,352,824  $ 2,227,845    $ 271,147      $ 5,853,832
                                       ===========  ===========     =========     ===========
</TABLE>

<TABLE>
<CAPTION>
                                                              1999
                                      ------------------------------------------------------
                                                      Accum.        Valuation
           Category                       Cost        Deprec.        Reserve           Net
     ------------------------          -----------  ----------      ---------    ------------
<S>                                         <C>          <C>             <C>            <C>
     Land                              $   470,777  $       -       $      -     $    470,777
     Buildings                           3,162,798     915,073             -        2,247,725
     Office furniture,
       fixtures and equipment            1,920,399   1,113,592             -          806,807
     Automobiles                           117,047      58,263             -           58,784
     Investment real estate              1,538,397     199,542        271,147       1,067,708
                                       -----------  ----------      ---------    ------------
         Total                         $ 7,209,418  $2,286,470      $ 271,147    $  4,651,801
                                       ===========  ==========      =========    ============
</TABLE>

                                            30
<PAGE>



               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(8)  PROPERTY AND EQUIPMENT (CONTINUED)
     ----------------------------------

     Depreciation charges to operations for the years ended June 30,
     2000, 1999 and 1998 were $342,147, $278,802, and $223,681,
     respectively.  The depreciation policies followed by the
     Company are described in Note (1).

     A valuation reserve was established in a prior year for certain
     investment real estate to adjust the property to its net
     realizable value.

(9)  CUSTOMER DEPOSITS

     A summary of deposit accounts at June 30 is as follows:

<TABLE>
<CAPTION>
                                                         2000                      1999
                                                --------------------     ----------------------
                                                    Amount      %              Amount      %
                                                ------------  ------     --------------  ------
<S>                                                  <C>        <C>            <C>         <C>
     Noninterest-bearing checking               $  5,741,754    3.7%     $   5,145,977    3.4%
     Interest-bearing checking                    25,115,653   16.1         24,683,993   16.3

     Super Saver money market                     18,575,407   11.9         21,420,529   14.2

     Savings                                      10,354,220    6.7         10,206,759    6.8
     Certificates of Deposit:                     95,874,410   61.6         89,752,489   59.3
                                                ------------   -----     -------------  -----

          Total                                $ 155,661,444  100.0%     $ 151,209,747  100.0%
                                               =============  ======     ============= ======
</TABLE>
     The aggregate amount of jumbo certificates of deposit with a
     minimum denomination of $100,000 was $20,718,114 and $18,102,733
     at June 30, 2000 and 1999, respectively.

     At June 30, 2000, scheduled maturities of certificates of
     deposit are as follows:

<TABLE>
<CAPTION>
<S>                                                  <C>
                      2001                     $  67,002,681
                      2002                        13,087,854
                      2003                         6,685,633
                      2004                         5,591,527
                      2005 and later               3,506,715
                                               -------------
                                               $  95,874,410
                                               =============
</TABLE>

(10) ADVANCES FROM FEDERAL HOME LOAN BANK

     The advances listed below were obtained from the Federal Home
     Loan Bank of Des Moines and secured by Federal Home Loan Bank
     stock, loans, investment securities and deposit accounts.
     Interest is payable monthly.  Advances from the Federal Home
     Loan Bank at June 30 are summarized as follows:



                                  31
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(10)  ADVANCES FROM FEDERAL HOME LOAN BANK (CONTINUED)
      -----------------------------------------------
<TABLE>
caption>
                                                           2000             1999
                                                      ------------     ------------
<S>                                                        <C>               <C>
     Three year; 5.85% fixed; matures November 1999   $         -         2,000,000

     One month; 6.57% fixed; interest payable at
      maturity; matures July 2000                        2,500,000               -

     Three month; 6.76% fixed; interest payable at
      maturity; matures August 2000                      1,000,000               -

     Three month; 6.74% fixed; interest payable at
      maturity; matures September 2000                   1,000,000               -

     One year; 7.41% adjustable daily; interest paid
      daily; matures October 2000                        2,900,000               -

     One year; 6.08% fixed; interest payable monthly;
      matures October 2000                                 150,000               -

     Seven month; 7.01% fixed; interest payable monthly;
      matures December 2000                              2,000,000               -

     Nine month; 6.95% fixed; interest payable monthly;
      matures March 2001                                 4,500,000               -

     One year; 7.10% fixed; interest payable monthly
      matures May 2001                                   1,000,000               -

     Eighteen month; 6.68% fixed; interest payable
      monthly; matures July 2001                           300,000               -

     Two year; 7.34% fixed; interest payable monthly;
      matures May 2002                                   1,500,000               -

     Five year; 5.90% fixed; interest payable monthly;
      matures January 2003                                 200,000          200,000

     Fifteen year; 7.20% fixed; $3,731 due monthly
      including interest; matures November 2014            400,940               -

     Fifteen year; 7.80% fixed; $4,249 due monthly
      including interest; matures May 2015                 448,676               -
                                                      ------------     ------------
             Total                                    $ 17,899,616     $  2,200,000
                                                      ============     ============
</TABLE>



                                  32
<PAGE>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(10) ADVANCES FROM FEDERAL HOME LOAN BANK (CONTINUED)
     ------------------------------------------------

     The fixed rate advances shown above, excluding advances with
     an original maturity of one or three months which are not
     prepayable, shall be subject to a prepayment fee equal to
     100 percent of the present value of the monthly lost cash
     flow to the Federal Home Loan Bank based upon
     the difference between the contract rate on the advance and the
     rate on an alternative qualifying investment of the same
     remaining maturity.  Advances may be prepaid without a
     prepayment fee if the rate on an advance being prepaid is equal
     to or below the current rate for an alternative qualifying
     investment of the same remaining maturity.  The adjustable
     rate advance is prepayable without penalty.

     The adjustable rate advance is a Federal Funds credit line
     with the Federal Home Loan Bank of Des Moines.  The credit
     line has a limit of $26,605,000.

     Maturities of Federal Home Loan Bank advances and other borrowed
     funds are as follows:
<TABLE>
<CAPTION>
                                     Aggregate
                                      Annual
          Year Ended June 30         Maturities
          ------------------      -------------
<S>                                    <C>
                2001               $ 15,083,013
                2002                  1,835,577
                2003                    238 340
                2004                     41,317
                2005                     44,527
            Later years                 656,842
                                   ------------
                                  $  17,899,616
                                  =============
</TABLE>

     Interest expense on borrowed funds for the years ended June 30
     is summarized below:
<TABLE>
<CAPTION>
                                           2000          1999        1998
                                        -----------   ---------   ---------
<S>                                         <C>           <C>         <C>
     Advances from Federal Home Loan
       Bank                             $   419,040   $ 270,131   $  992,959
     Other borrowings                         2,648          -         3,954
                                        -----------   ---------   ---------
         Total                          $   421,688   $ 270,131   $  996,913
                                       ============   =========   =========
</TABLE>

(11) INCOME TAXES

     The provision for income tax expense for the years ended June
     30 is as follows:
<TABLE>
<CAPTION>
                              2000         1999          1998
                           ----------   ----------   ----------
<S>                            <C>           <C>          <C>
     Current               $1,097,993   $1,104,919   $  858,842
     Deferred                  23,067      (42,891)      32,474
                           ----------   ----------   ----------
         Total             $1,121,060   $1,062,028   $  891,316
                           ==========   ==========   ==========
</TABLE>


                                  33
<PAGE>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(11) INCOME TAXES - (CONTINUED)

     The provision for income taxes differs from that computed at
     the statutory corporate rate, 34% for the years ended June 30
     were as follows:
<TABLE>
<CAPTION>
                                         2000         1999         1998
                                      ---------    ---------    ---------
<S>                                      <C>            <C>         <C>
     Tax at statutory rate           $1,067,807   $  979,340    $ 930,512
     Increase (decrease) in taxes
       resulting from:
         State taxes, net of
           federal benefit               81,593       81,897       68,966
         Tax-exempt income              (25,714)     (18,211)     (24,665)
         Employee benefit plans          21,958       32,404      (85,975)
         Net effect of other
           book/tax differences         (24,584)     (13,402)       2,478
                                     -----------   ----------    ---------
     Provision for income taxes      $1,121,060   $1,062,028    $ 891,316
                                      =========    =========    =========
</TABLE>

     Deferred income tax expense results from timing differences in
     the recognition of income and expense for tax and financial
     reporting purposes.  The sources of the differences and the
     related tax effects for the years ended June 30 were as follows:

<TABLE>
<CAPTION>
                                                    2000         1999         1998
                                                ----------    ----------   ----------
<S>                                                 <C>           <C>           <C>
     Difference in depreciation methods
       used for tax purposes and
        financial statements                     $  28,426     $  27,755    $  26,281
     Effect of health insurance plan
       reserves not currently deductible             7,136        (5,737)       6,010
     Use of different methods for computing
       loan loss reserves for tax purposes
       and financial statements                    (59,498)      (26,160)     (28,083)
     Use of different methods for computing
       net deferred loan costs/fees for tax
       purposes and financial statements            14,970        12,672       17,741
     Other book/tax differences                     32,033       (51,421)     10,525
                                                 ----------     --------      --------
       Increase in deferred income taxes         $  23,067     $ (42,891)   $  32,474
                                                 =========     =========    =========
</TABLE>

                                  34
<PAGE>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(11) INCOME TAXES (CONTINUED)
     -----------------------

     The components of deferred tax assets and liabilities as of June
     30, 2000 and 1999 consisted of:

<TABLE>
<CAPTION>
                                                                  2000        1999
                                                               ---------   ---------
<S>                                                                <C>         <C>
     Deferred tax assets:
       Reserve for loan losses                                 $ 220,872   $ 199,825
       Valuation reserve on investment real estate                92,190      92,190
       Unrealized losses on securities available-for-sale         38,881      13,439
       Health insurance plan reserves not
         currently deductible                                         -        6,792
       Book amortization in excess of tax amortization            35,681      17,194
       Unearned compensation                                       4,847       9,020
       Other                                                          -       33,878
                                                               ---------   ---------
          Total gross deferred tax benefits                    $ 392,471   $ 372,338
                                                               ---------   ---------
     Deferred tax liabilities:
       Tax depreciation in excess of book depreciation         $ 293,410   $ 264,984
       Federal Home Loan Bank stock dividends                     60,936      60,936
       Bad debt reserves for tax purposes in excess of
         base year bad debt reserve                               76,038     114,489
       Unrealized gains on securities available-for-sale           1,725      10,219
       Installment sale recognition                                4,914       7,136
       Unamortized deferred loan costs, net of fees              124,116     109,146
       Health insurance plan reserves not currently taxable          344          -
       Other                                                      14,691          -
                                                               ---------   ---------
         Total gross deferred tax liabilities                  $ 576,174   $ 566,910
                                                               ---------   ---------
           Net deferred tax liabilities                        $(183,703)  $(194,572)
                                                               ==========  =========
</TABLE>
     In accordance with SFAS No. 109, a deferred tax liability has
     not been recognized for tax basis bad debt reserves of
     approximately $2,190,825 of the Savings Bank that arose in tax
     years that began prior to December 31, 1987.  At June 30, 2000
     the amount of the deferred tax liability that had not been
     recognized was approximately $810,605.  This deferred tax
     liability could be recognized if, in the future, there is a
     change in federal tax law, the Savings Bank fails to meet the
     definition of a 'qualified savings institution,' as defined by
     the Internal Revenue Code, certain distributions are made with
     respect to the stock of the Savings Bank, or the bad debt
     reserves are used for any purpose other than absorbing bad
     debts.  In August 1996, new legislation was enacted which
     provided for the recapture into taxable income of certain
     amounts previously deducted as additions to the bad debt
     reserves for income tax purposes.  The Savings Bank began
     changing its method of determining bad debt reserves for tax
     purposes during 1996.  The amounts to be recaptured for income
     tax reporting purposes are considered by the Savings Bank in
     the determination of the net deferred tax liability.

                                  35
<PAGE>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(12) EMPLOYEE BENEFIT PLANS

     The Savings Bank participates in a multiple-employer defined
     benefit pension plan covering substantially all employees.
     Separate actuarial valuations are not available for each
     participating employer, nor are plan assets segregated.  Pension
     expense for the years ended June 30, 2000, 1999 and 1998 was
     approximately $4,742, $4,220, and $3,800, respectively.  Plan
     assets exceeded the present value of accumulated plan benefits
     at June 30, 2000, the latest actuarial valuation date.

     The Company established an internally-leveraged ESOP in December
     1993 that covers all employees that are age 21 or older and have
     completed one year of service with the Savings Bank.  The Savings
     Bank makes annual contributions to the ESOP equal to the ESOP's
     debt service in addition to dividends received by the ESOP.  All
     dividends received by the ESOP are used to pay debt service.  The
     ESOP shares initially were pledged as collateral for its debt to
     the Company.  As the debt is repaid, shares are released from
     collateral and allocated to active participants, in proportion to
     their compensation relative to total compensation of active
     participants.  The loan will be repaid principally from the
     Savings Bank's discretionary contributions to the ESOP over a
     period of ten years.  As of June 30, 2000 the loan had an
     outstanding balance of $318,321 and an interest rate of 6%.

     The Company accounts for its ESOP in accordance with Statement
     of Position 93-6, "Employer's Accounting for Employee Stock
     Ownership Plans".  Accordingly, the debt of the ESOP is
     eliminated in consolidation and the shares pledged as collateral
     are reported as unearned ESOP shares as a reduction of
     stockholders' equity in the consolidated balance sheets.  As
     shares are committed to be released from collateral, the Company
     reports compensation expense equal to the current market price
     of the shares, and the shares become outstanding for earnings
     per share computations.  Dividends on allocated ESOP shares are
     recorded as a reduction of retained earnings; dividends on
     unallocated ESOP shares are recorded as a reduction of debt and
     accrued interest.  Benefits generally become 20% vested after
     each year of credited service beyond two years.  Vesting is
     accelerated upon retirement, death, or disability of the
     participant.  Forfeitures are returned to the Savings Bank or
     reallocated to other participants to reduce future funding costs.
     Benefits may be payable upon retirement, death, disability or
     separation from service.  Since the Savings Bank's annual
     contributions are discretionary, benefits payable under the ESOP
     cannot be estimated.  The Savings Bank recorded $358,159 of ESOP
     compensation expense in 2000, $445,117 in 1999 and $496,302 in
     1998.

     A summary of ESOP shares at June 30, 2000 is as follows:

        Allocated shares                   178,279
        Shares committed for release        37,161
        Unreleased shares                   57,797
                                        ----------
           Total                           273,237
                                        ==========

        Fair value of unreleased shares $  570,736
                                        ==========

                                  36
<PAGE>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(12) EMPLOYEE BENEFIT PLANS (CONTINUED)
     ----------------------------------

     The Savings Bank adopted a Management Recognition Plan ("MRP")
     for the benefit of the directors, officers and employees of the
     Savings Bank.  The MRP provided directors, officers and employees
     of the Company with a proprietary interest in the Company in a
     manner designed to encourage such persons to remain with the
     Savings Bank.  The MRP was managed by trustees comprised of the
     directors of the Company. The plan authorized the Company to
     grant up to 60,834 shares of the Company stock, all of which
     are awarded as of June 30, 1999.  These shares represented
     unearned compensation and have been accounted for as a reduction
     of stockholders' equity.  During the year ended June 30, 1999
     all of the MRP shares became fully vested.  The Savings Bank
     recorded compensation expense under the MRP of $31,375 and
     $52,250 in 1999 and 1998, respectively.

     The Company has reserved 304,174 shares of common stock under the
     1994 Stock Option and Incentive Plan (Stock Option Plan) for the
     benefit of certain officers, employees and directors.  The Stock
     Option Plan is administered by a committee of the Board of
     Directors.  Management intends that options granted under the
     Stock Option Plan constitute both incentive and non-incentive
     stock options.

     Options granted to non-employee directors will constitute
     non-incentive stock options.  With respect to incentive stock
     options, the option exercise price may be no less than the fair
     market value of the Company's common stock on the date of grant.
     All options expire no later than ten years from the date of grant.
     The option grants vest at a rate of 20% at the end of each 12
     months.


     A summary of the Company's stock option activity, and related
     information for the years ended June 30 follows:
<TABLE>
<CAPTION>
                                         2000                    1999               1998
                                 --------------------    ------------------  ---------------------
                                             Weighted             Weighted                 Weighted
                                              Average              Average                 Average
                                              Exercise             Exercise                Exercise
                                    Options     Price      Options   Price     Options      Price
                                   --------    -------    --------  -------  ----------    ------
    <S>                               <C>        <C>        <C>        <C>        <C>       <C>
Outstanding - beginning of year     168,432      5.06      193,980    5.05     247,320      5.05
Granted                                  -         -            -       -           -         -
Exercised                           (37,920)     5.00      (25,220)   5.00     (52,692)     5.04
Forfeited                              (192)     5.00         (328)   5.00        (648)     5.00
                                    --------               --------            --------
Outstanding - end of year           130,320      5.08      168,432    5.06     193,980      5.06
                                    ========               =========           ========

Exercisable at end of year          130,320      5.08      168,032    5.06     140,512      5.05
                                    ========               =========           ========

</TABLE>

     Exercise prices for options outstanding as of June 30, 2000
     ranged from $5.00 to $7.75.  The weighted-average remaining
     contractual life of those options is 3.5 years.





                                  37
<PAGE>


               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(12) EMPLOYEE BENEFIT PLANS (CONTINUED)
     ----------------------------------

     The Company accounts for stock options in accordance with SFAS
     No. 123, "Accounting for Stock-Based Compensation".  As permitted
     by the standard, the Company has elected to continue following the
     guidance of Accounting Principles Board Opinion No. 25 (APB No.
     25), "Accounting for Stock Issued to Employees".  Under APB No.
     25, no compensation expense is recognized because the exercisable
     price of the Company's stock options equals or exceeds the market
     price of the stock on the date of grant.  The effect of applying
     the fair value method required by SFAS No. 123 to the Company's
     stock option awards results in net income and earnings per share
     that are not materially different from amounts reported in the
     consolidated statements of income.

     All references in this note to the number of shares and per share
     amounts have been restated to reflect the 100% stock dividend
     during 1998.

(13) EARNINGS PER SHARE
     -------------------

     The following information shows the amounts used in computing
     earnings per share and the effect on income and the weighted
     average number of shares of dilutive potential common stock.  The
     amounts in the income columns represent the numerator and the
     amounts in the shares columns represent the denominator.
<TABLE>
<CAPTION>
                                              Years Ended June 30
               ------------------------------------------------------------------------------------------------
                            2000                            1999                          1998
               -------------------------------  ------------------------------  -------------------------------
                                      Per Share                      Per Share                            Per Share
                  Income      Shares    Amount    Income     Shares    Amount      Income         Shares   Amount
                ----------- ---------  -------   ---------  ---------  ------  --------------  ----------  ------
  <S>               <C>        <C>       <C>       <C>         <C>       <C>        <C>             <C>       <C>
Basic EPS:
Income available
 to Common
 Stockholders    $2,019,548  1,911,324  $1.06    $1,818,385  2,018,005   $.90    $1,845,483  2,039,290   $.90
                                        =====                            =====                             ======
Effect of
 dilutive securities     -      66,876                   -     100,125                       -    121,818
                 ----------  ---------          -----------  ----------            -----------  ----------
Diluted EPS:
 Income available to
 stockholders plus
 stock options   $2,019,548  1,978,200  $1.02    $1,818,385  2,118,130   $.86    $1,845,483  2,161,108   $.85
              =============  =========  =====    ===========  =========   =====   ==========  =========  ======
</TABLE>
(14) RELATED PARTY TRANSACTIONS

     Certain employees, officers and directors are engaged in
     transactions with the Savings Bank in the ordinary course of
     business.  It is the Savings Bank's policy that all related party
     transactions are conducted at "arm's length" and all loans and
     commitments included in such transactions are made on
     substantially the same terms, including interest rates and
     collateral, as those prevailing at the time for comparable
     transactions with other customers.  A summary of the changes in
     outstanding loans to employees, officers and directors for the
     years ended June 30 is as follows:



                                  38
<PAGE>



               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(14) RELATED PARTY TRANSACTIONS (CONTINUED)
     --------------------------------------

                                     2000           1999
                                 -----------    ------------
     Beginning balance           $ 1,143,535    $ 1,053,077
     Originations and advances       911,394        568,405
     Principal repayments           (638,887)      (477,947)
                                 ------------   ------------
     Ending balance              $ 1,416,042    $ 1,143,535
                                 ===========    ===========

(15) COMMITMENTS AND CONTINGENCIES

     In the ordinary course of business, the Savings Bank has various
     outstanding commitments that are not reflected in the accompanying
     consolidated financial statements.  Since some of the commitments
     are expected to expire without being drawn upon, the total
     commitment amounts do not necessarily represent future cash
     requirements.  The principal commitments of the Savings Bank are
     as follows:

     Letters of Credit - Outstanding standby letters of credit were
     approximately $253,951 at June 30, 2000.

     Loan Commitments - The Savings Bank had outstanding firm
     commitments to originate real estate loans in the amount of
     $495,256 at June 30, 2000.

     Lines of Credit - The unused portion of lines of credit on
     commercial loans were approximately $3,638,689 at June 30, 2000.

     Loan in Process - The Savings Bank has recorded loans in process
     representing the undisbursed portion of loans in the amount of
     $3,638,689 at June 30, 2000.  These amounts were recorded as
     loans receivable, with a corresponding reduction for such loans
     in process as reflected in Note (6).

     At June 30, 2000, the Savings Bank had an Irrevocable Standby
     Letter of Credit issued on its behalf from the Federal Home
     Loan Bank of Des Moines in the amount of $300,000, expiring
     May 26, 2001.

(16) REGULATORY CAPITAL REQUIREMENTS

     The Savings Bank is subject to various regulatory capital
     requirements administered by its primary federal regulator, the
     Office of Thrift Supervision ("OTS").  Failure to meet the minimum
     regulatory capital requirements can initiate certain mandatory,
     and possible additional discretionary actions by regulators, that
     if undertaken, could have a direct material affect on the Savings
     Bank and the consolidated financial statements.  Under the
     regulatory capital adequacy guidelines and the regulatory
     framework for prompt corrective action, the Savings Bank must meet
     specific capital guidelines involving quantitative measures of the
     Savings Bank's assets, liabilities, and certain off-balance-sheet
     items as calculated under regulatory accounting practices.  The
     Savings Bank's capital amounts and classification under the prompt
     corrective action guidelines are also subject to qualitative
     judgments by the regulators about components, risk weightings, and
     other factors.

                                  39
<PAGE>



               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(16) REGULATORY CAPITAL REQUIREMENTS (CONTINUED)
     -------------------------------------------

     Quantitative measures established by regulation to ensure capital
     adequacy require the Savings Bank to maintain minimum amounts and
     ratios (set forth in the table below) of total risk-based capital
     and Tier 1 capital to risk-weighted assets (as defined in the
     regulations), Tier 1 capital to adjusted total assets (as
     defined), and tangible capital to adjusted total assets (as
     defined).  Management believes, as of June 30, 2000, that the
     Savings Bank meets all capital adequacy requirements to which it
     is subject.

     As of June 30, 2000, the most recent notification from the OTS,
     the Savings Bank was categorized as well-capitalized under the
     framework for prompt corrective action.  To be categorized as
     well-capitalized, the Savings Bank must maintain minimum total
     risk-based, Tier 1 risk-based, and core capital leverage ratios as
     set forth in the table.  There are no conditions or events since
     that notification that management believes have changed the
     institution's category.

     The Savings Bank's actual capital amounts and ratios are also
     presented in the table.


<TABLE>
<CAPTION>

                                                                                         To Be Well-
                                                                                       Capitalized Under
                                                                   For Capital         Prompt Corrective
                                                Actual          Adequacy Purposes      Action Provisions
                                             --------------     -----------------      -----------------
                                             Amount   Ratio      Amount    Ratio       Amount     Ratio
                                             -------  -----    ----------  ------    ---------  --------
                                                              (Dollars in thousands)
<S>                                           <C>       <C>       <C>       <C>        <C>         <C>
     As of June 30, 2000:
        Total Risk-Based Capital
           (to Risk-Weighted Assets)         $ 20,397  14.0%    > $11,627  > 8.0%    > $ 14,534  > 10.0%
        Core Capital
           (to Adjusted Tangible Assets)       20,124  10.3%    >   7,826  > 4.0%    >    9,783  >  5.0%
        Tangible Capital
           (to Tangible Assets)                20,124  10.3%    >   2,935  > 1.5%          N/A
        Tier 1 Capital
           (to Risk-Weighted Assets)           20,124  13.9%          N/A  	          >    8,720  >  6.0%
     As of June 30, 1998:
        Total Risk-Based Capital
           (to Risk-Weighted Assets)         $ 19,909  15.7%    >  10,124  > 8.0%    > $ 12,655  > 10.0%
        Core Capital
           (to Adjusted Tangible Assets)       19,676  11.2%    >   7,041  > 4.0%    >    8,801  >  5.0%
        Tangible Capital
           (to Tangible Assets)                19,676  11.2%    >   2,640  > 1.5%          N/A
        Tier 1 Capital
           (to Risk-Weighted Assets)           19,676  15.6%          N/A  	          >    7,593  >  6.0%
</TABLE>



                                  40
<PAGE>


               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(17) ADVERTISING COSTS

     The Company incurred $138,320, $83,634, and $105,688 in
     non-direct response advertising costs during the years ended
     2000, 1999 and 1998, respectively.  The Company incurred no
     direct response advertising costs during these years.

(18) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

     The following methods and assumptions were used to estimate the
     fair value of each class of financial instruments:

     Cash and cash equivalents and certificates of deposit - For
          these short-term instruments, the carrying amount
          approximates fair value.

     Available-for-sale and held-to-maturity securities - Fair values
          for investment securities equal quoted market prices, if
          available.  If quoted market prices are not available, fair
          values are estimated based on quoted market prices of
          similar securities.

     Loans receivable - The fair value of loans is estimated by
          discounting the future cash flows using the current rates
          at which similar loans would be made to borrowers with
          similar credit ratings and for the same remaining
          maturities.  Loans with similar characteristics are
          aggregated for purposes of the calculations.  The carrying
          value of accrued interest receivable approximates its fair
          value.

     Investment in Federal Home Loan Bank stock - Fair value of the
          Savings Bank's investment in Federal Home Loan Bank stock
          approximates the carrying value as no ready market exists
          for this investment and the stock could only be sold back
          to the Federal Home Loan Bank.

     Deposits - The fair value of demand deposits, savings accounts
          and interest-bearing demand deposits is the amount payable
          on demand at the reporting date (i.e., their carrying
          amount).  The fair value of fixed-maturity time deposits
          is estimated using a discounted cash flow calculation that
          applies the rates currently offered for deposits of similar
          remaining maturities.  The carrying amount of accrued
          interest payable approximates its fair value.

     Federal Home Loan Bank advances - Rates currently available to
          the Savings Bank for advances with similar terms and
          remaining maturities are used to estimate fair value of
          existing advances.  The carrying amount of accrued
          interest payable approximates its fair value.

                                  41
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARY
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(18) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS -
       (CONTINUED)



     Commitments to extend credit, letters of credit and lines of
          credit - The fair value of commitments is estimated using
          the fees currently charged to enter into similar
          agreements, taking into account the remaining terms of the
          agreements and the present credit worthiness of the
          counterparties.  For fixed-rate loan commitments, fair
          value also considers the difference between current levels
          of interest rates and the committed rates.  The fair value
          of letters of credit and lines of credit is based on fees
          currently charged for similar agreements or on the
          estimated cost to terminate or otherwise settle the
          obligations with the counterparties at the reporting date.

     The following table presents estimated fair values of the
     Company's financial instruments.  The fair values of certain
     of these instruments were calculated by discounted expected
     cash flows, which involves significant judgments by management
     and uncertainties.  Fair value is the estimated amount at which
     financial assets or liabilities could be exchanged in a current
     transaction between willing parties, other than in a forced or
     liquidation sale.  Because no market exists for certain of these
     financial instruments and because management does not intend to
     sell these financial instruments, the Company does not know
     whether the fair values shown below represent values at which
     the respective financial instruments could be sold individually
     or in the aggregate.





<TABLE>
<CAPTION>

                                                                        June 30, 2000
                                                                 --------------------------
                                                                    Carrying        Fair
                                                                     Amount         Value
                                                                 ------------   -----------
<S>                                                                    <C>            <C>
     Financial assets:
        Cash and cash equivalents                                $  7,961,552  $  7,961,552
        Certificates of deposit                                     1,009,000     1,009,000
        Federal funds sold                                            320,000       320,000
        Available-for-sale securities                               3,918,241     3,918,241
        Held-to-maturity securities                                 1,657,197     1,633,150
        Investment in Federal Home Loan Bank stock                  1,072,200     1,072,200
        Available-for-sale mortgage-backed securities                 448,559       448,559
        Loans, net of allowance for loan losses                   174,868,666   175,249,000
        Accrued interest receivable                                 1,067,411     1,067,411

     Financial liabilities:
        Deposits                                                  155,661,444   154,943,000
        Federal Home Loan Bank advances                            17,925,253    17,855,000
        Accrued interest payable                                      627,000       627,000
     Unrecognized financial instruments (net of contract amount)
        Commitments to extend credit                                       -             -
        Letters of credit                                                  -             -
        Unused lines of credit                                             -             -

                                  42
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(18) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS - (CONTINUED)


                                                                        June 30, 1999
                                                                ---------------------------
                                                                    Carrying        Fair
                                                                     Amount         Value
                                                                -------------  -------------
     Financial assets:
        Cash and cash equivalents                                $ 10,721,664  $ 10,721,664
        Certificates of deposit                                     1,209,000     1,209,000
        Federal funds sold                                            245,000       245,000
        Available-for-sale securities                               3,216,799     3,216,799
        Held-to-maturity securities                                 1,543,948     1,529,597
        Investment in Federal Home Loan Bank stock                  1,057,600     1,057,600
        Available-for-sale mortgage-backed securities                 550,296       550,296
        Loans, net of allowance for loan losses                   153,615,936   154,498,000
        Accrued interest receivable                                   772,474       772,474

     Financial liabilities:
        Deposits                                                  151,209,747   150,999,000
        Federal Home Loan Bank advances                             2,200,000     2,196,000
        Accrued interest payable                                      517,214       517,214
     Unrecognized financial instruments (net of contract amount)
        Commitments to extend credit                                       -             -
        Letters of credit                                                  -             -
        Unused lines of credit                                             -             -
</TABLE>

(19) PARENT COMPANY ONLY FINANCIAL INFORMATION

     The following condensed statements of financial condition and
     condensed statements of income and cash flows for First
     Bancshares, Inc. should be read in conjunction with the
     consolidated financial statements and notes thereto.


                                  43
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(19) PARENT COMPANY ONLY FINANCIAL INFORMATION (CONTINUED)
     -----------------------------------------------------

<TABLE>
<CAPTION>
                       Condensed Statements of Financial Condition

                 ASSETS                                          2000            1999
                -------                                     --------------   -------------
<S>                                                                 <C>             <C>
     Cash                                                    $     478,309   $  1,206,584
     Certificates of deposit                                        10,000         85,839
     Investment securities available-for-sale, at fair value       487,122        487,694
     Investment in subsidiary                                   22,090,259     21,198,150
     Loan to ESOP                                                  318,321        515,409
     Property and equipment, less accumulated
       depreciation                                              1,084,408        632,438
     Deferred income taxes, net                                      8,280             -
     Other assets                                                   28,735        161,541
                                                              ------------   ------------
         Total assets                                         $ 24,505,434   $ 24,287,655
                                                              ============   ============

     LIABILITIES AND STOCKHOLDERS' EQUITY
     Due to subsidiary                                        $     17,346   $     12,351
     Accrued expenses                                               11,053         20,379
     Deferred income taxes, net                                         -           5,872
     Stockholders' equity                                       24,477,035     24,249,053
                                                              ------------   ------------
        Total liabilities and stockholders' equity            $ 24,505,434   $ 24,287,655
                                                              ============   ============
</TABLE>

<TABLE>
<CAPTION>
                                   Condensed Statements of Income

                                                            2000           1999          1998
                                                       -------------  -------------  -------------
<S>                                                          <C>          <C>              <C>
     Income
       Equity in earnings of subsidiary                  $ 2,015,220   $ 1,778,557   $ 1,789,186
       Interest income                                        52,804        64,588        96,705
       Gain on sale of investments                                -         37,203        41,444
       Gain on sale of property and equipment                 13,130        21,735            -
       Other                                                  52,630        32,041        26,129
                                                         -----------   -----------   -----------
         Total income                                      2,133,784     1,934,124     1,953,464
                                                         -----------   -----------   -----------

     Expenses
       Professional fees                                       7,085        16,212        13,501
       Printing and office supplies                            7,869        12,973         9,936
       Interest                                                4,392           155           978
       Other                                                  78,228        73,134        57,269
       Income tax                                             16,662        13,265        26,297
                                                         -----------   -----------   -----------
         Total expenses                                      114,236       115,739       107,981
                                                         -----------   -----------   -----------
           Net income                                    $ 2,019,548   $ 1,818,385   $ 1,845,483
                                                         ===========   ===========   ===========

</TABLE>
                                  44
</page>

               FIRST BANCSHARES, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             - - - - -  - - - - - - - - - - - - - - - - -
               Years Ended June 30, 2000, 1999 and 1998

(19) PARENT COMPANY ONLY FINANCIAL INFORMATION - (CONTINUED)

<TABLE>
<CAPTION>

                                Condensed Statements of Cash Flows

                                                            2000            1999          1998
                                                       -------------  -------------  -------------
<S>                                                         <C>            <C>             <C>
     Cash flows from operating activities:
       Net income                                        $ 2,019,548   $ 1,818,385   $ 1,845,483
       Adjustments to reconcile net income to net
         cash provided from operating activities:
           Equity in earnings of subsidiary               (2,015,220)   (1,778,557)   (1,789,186)
           Depreciation expense                               17,719        12,496        10,318
           Gain on sale of investments                            -        (37,203)      (41,444)
           Gain on sale of property and equipment            (13,130)      (21,735)           -
           Net change in operating accounts:
             Deferred income taxes, net                       16,393       (13,048)        1,742
             Other assets                                    132,806      (119,987)       24,570
             Liabilities                                      (4,331)      (63,604)       46,003
                                                         ------------   -----------   -----------
               Net cash from (used in) operating activities  153,785      (203,253)       97,486
                                                         ------------   -----------   -----------
     Cash flows from investing activities:
       Dividends from subsidiary                           1,500,000     1,500,000     1,500,000
       Principal payments on ESOP loan                       181,895       174,533       165,939
       Purchase of investment securities                     (53,537)     (233,406)     (248,000)
       Proceeds from maturities of investments                    -        300,000       500,000
       Proceeds from sales of investments                         -        137,203       231,948
       Purchase of property and equipment                   (534,709)     (200,769)       (1,133)
       Proceeds from sales of property and
           equipment                                          78,150       113,500            -
       Purchase of South Central Missouri Title, Inc stock        -             -         (5,000)
       Net change in certificates of deposit                  75,839       124,161      (200,000)
                                                           ---------     ---------     ---------
         Net cash from investing activities                1,247,638     1,915,222     1,943,754
                                                           ---------     ---------     ---------

     Cash flows from financing activities:
       Repayment of borrowed funds                                -             -        (50,000)
       Net proceeds from issuance of common stock            189,600       126,100       252,715
       Cash dividends paid                                  (300,818)     (279,195)     (223,153)
       Purchase of treasury stock                         (2,018,480)   (2,208,937)     (234,507)
                                                          -----------   -----------   -----------
         Net cash used in financing activities            (2,129,698)   (2,362,032)     (254,945)
                                                          -----------   -----------   -----------


     Net increase (decrease) in cash and cash equivalents   (728,275)     (650,063)    1,786,295

     Cash and cash equivalents - beginning of period       1,206,584     1,856,647        70,352
                                                          ----------     ----------    ----------

     Cash and cash equivalents - end of period           $   478,309   $ 1,206,584   $ 1,856,647
                                                         ===========   ===========   ===========
</TABLE>
                                  45
</page>



                     COMMON STOCK INFORMATION

     The common stock of First Bancshares, Inc. is traded on The
Nasdaq Stock Market under the symbol "FBSI".  As of September 1,
2000, there were 729 stockholders and 1,894,292 shares of common
stock outstanding (including unreleased ESOP shares of 57,797).
This does not reflect the number of persons or entities who hold
stock in nominee or "street name."

     On August 31, and November 29, 1999 and February 29, May 31,
and August 28, 3000, the Company declared a $.04 common stock
dividend payable September 30, and December 31, 1999 and March 31,
June 30, and September 30, 2000 to stockholders of record on
September 15, and December 15, 1999, and March 15, June 15 and
September 15, 2000, respectively.  Dividend payments by the Company are
dependent primarily on dividends received by the Company from the
Savings Bank.  Under Federal regulations, the dollar amount of
dividends a savings and loan association may pay is dependent upon the
association's capital position and recent net income.  Generally, if an
association satisfies its regulatory capital requirements, it may make
dividend payments up to the limits prescribed in the OTS regulations.
However, institutions that have converted to stock form of ownership
may not declare or pay a dividend on, or repurchase any of, its common
stock if the effect thereof would cause the regulatory capital of the
institution to be reduced below the amount required for the liquidation
account which was established in accordance with the OTS regulations
and the Savings Bank's Plan of Conversion.  In addition, under Missouri
law, the Company is generally prohibited from declaring and paying
dividends at a time when the Company's net assets are less than its
stated capital or when the payment of dividends would reduce the
Company's net assets below its stated capital.

     The following table sets forth market price and dividend
information for the Company's common stock.
<TABLE>
<CAPTION>

Fiscal 1999            High         Low      Dividend
-----------           ---------    -------    ---------
<S>                      <C>         <C>          <C>
First Quarter          $13.75       $12.50      $.03

Second Quarter         $13.375      $12.50      $ 03

Third Quarter          $13.25       $11.75      $.04

Fourth Quarter         $12.625      $10.75      $.04

Fiscal 2000

First Quarter          $11.50       $10.875     $.04

Second Quarter         $11.531      $ 9.00      $.04

Third Quarter          $10.50       $ 9.25      $.04

Fourth Quarter         $10.00       $ 9.75      $.04

</TABLE>
                                  46
</page>



<TABLE>
<CAPTION>

                         DIRECTORS AND OFFICERS


FIRST BANCSHARES, INC.                           FIRST HOME SAVINGS BANK
<S>                                                <C>
DIRECTORS:                                       DIRECTORS:

Stephen H. Romines                               Stephen H. Romines
Chairman of the Board                            Chairman of the Board

Harold F. Glass                                  Harold F. Glass
Partner                                          Partner
Millington, Glass & Walters, Attorneys at Law    Millington, Glass & Walters, Attorneys at Law

John G. Moody                                    John G. Moody
Judge of the 44th                                Judge of the 44th
Missouri Judicial Circuit                        Missouri Judicial Circuit

Dr. James F. Moore                               Dr. James F. Moore
Director of State Fruit Experiment Station of    Director of State Fruit Experiment Station of
Southwest Missouri State University              Southwest Missouri State University

Almeta Hardebeck                                 Charles R. Cunningham
Loan Officer at the Sparta Branch                Retired Manager of the Marshfield Branch
First Home Savings Bank                          First Home Savings Bank

OFFICERS:                                        OFFICERS:

Stephen H. Romines                               Stephen H. Romines
President and Chief Executive Officer            President and Chief Executive Officer

Peter M. Medlen                                  Charles W. Schumacher
Vice-President                                   Senior Vice-President

Susan J. Uchtman,  CPA                           Peter M. Medlen
Chief Financial Officer                          Executive Vice-President

Gina Gunnels                                     Susan J. Uchtman
Secretary and Treasurer                          Chief Financial Officer

                                                 Colleen B. Stofer
                                                 Secretary

                                                 Diana Blanton
                                                 Treasurer
</TABLE>
                                  47
</page>


                        CORPORATE INFORMATION

CORPORATE HEADQUARTERS                           TRANSFER AGENT

142 East First Street                       Registrar and Transfer Co.
P.O. Box 777                                10 Commerce Drive
Mountain Grove, Missouri                    Cranford, New Jersey
                                                07016
INDEPENDENT AUDITORS                        (800) 866-1340

Kirkpatrick, Phillips & Miller, CPAs, P.C.  COMMON STOCK
Springfield, Missouri
                                            Traded on The Nasdaq
                                               Stock Market
GENERAL COUNSEL                             Nasdaq Symbol:  FBSI

Harold F. Glass
Springfield, Missouri

SPECIAL COUNSEL

Breyer & Associates, P.C.
Washington, D.C.







ANNUAL MEETING

     The Annual Meeting of Stockholders will be held Wednesday,
October 18, 2000, at 2:00 p.m., Central Time, at the Days Inn
Conference Room, 300 East 19th Street, Mountain Grove, Missouri.

____________________________________________________________________
A COPY OF THE FORM 10-KSB AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF
THE RECORD DATE FOR VOTING AT THE ANNUAL MEETING OF STOCKHOLDERS
UPON WRITTEN REQUEST TO THE SECRETARY, FIRST BANCSHARES, INC.,
P.O. BOX 777, MOUNTAIN GROVE, MISSOURI   65711.

THE CORPORATION'S FORMS 10-KSB, 10-QSB AND OTHER DISCLOSURE
DOCUMENTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
CAN BE OBTAINED FROM THE SEC HOME PAGE ON THE WORLD WIDE WEB
AT http://www.sec.gov.

                                  48
</page>











                                  Exhibit 21

                        Subsidiaries of the Registrant

</page>


Exhibit 21

                        Subsidiaries of the Registrant



<TABLE>
<CAPTION>

Parent
-------

First Bancshares, Inc.

                                    Percentage        Jurisdiction or
Subsidiaries (a)                    of Ownership     State of Incorporation
<S>                                     <C>                 <C>
First Home Savings Bank                  100%              Missouri

South Central Missouri Title, Inc.       100%              Missouri

Fybar Service Corporation (b)            100%              Missouri
</TABLE>
----------------------
(a)     The operation of the Company's wholly owned subsidiaries are
included in the Company's Consolidated Financial Statements contained
in the Annual Report attached hereto as Exhibit 13.
(b)     Wholly owned subsidiary of First Home Savings Bank.
</page>















                                          Exhibit 23

                                    Consent of Auditors

(On CPA firm letterhead)

                                CONSENT OF INDEPENDENT AUDITORS

We have issued our report dated August 3, 2000, accompanying the
Consolidated Financial Statement incorporated by reference in the
Annual Report of First Bancshares, Inc. on Form 10-KSB for the year
ending June 30, 2000.  We hereby consent to the incorporation by
reference of said reports in the Registration Statement of First
Bancshares, Inc. on Form S-8 (File No. 33-87234, effective December
9, 1994).


                                /s/Kirkpatrick, Phillips & Miller
                          KIRKPATRICK, PHILLIPS & MILLER, CPAs , P.C.

Springfield, Missouri
September 26, 2000
</page>

??







143143