UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
 (Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                   For the fiscal year ended December 31, 2000

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
               For the transition period from _______ to ________

                        Commission File Number - 0-20632

                                FIRST BANKS, INC.
             (Exact name of registrant as specified in its charter)

           MISSOURI                                  43-1175538
(State or other jurisdiction           (I.R.S. Employer Identification Number)
of incorporation or organization)

                   135 North Meramec, Clayton, Missouri 63105
               (Address of principal executive offices) (Zip code)

                                 (314) 854-4600
              (Registrant's telephone number, including area code)
                      ------------------------------------

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

                                                 Name of each exchange
         Title of each class                      on which registered
         -------------------                     ---------------------

                None                                       N/A

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

                  9.25% Cumulative Trust Preferred Securities
                  (issued by First Preferred Capital Trust and
                  guaranteed by its parent, First Banks, Inc.)
                                (Title of class)

                  10.24% Cumulative Trust Preferred Securities
                   (issued by First Preferred Capital Trust II
                and guaranteed by its parent, First Banks, Inc.)
                                (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 if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendments to this Form 10-K. [ X ]

         None of the voting stock of the Company is held by  nonaffiliates.  All
of the voting stock of the Company is owned by various trusts which were created
by and for the benefit of Mr. James F. Dierberg,  the Company's  Chairman of the
Board of Directors  and Chief  Executive  Officer,  and members of his immediate
family.

         At March 20, 2001, there were 23,661 shares of the registrant's  common
stock outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions  of the  Annual  Report  to  Stockholders  for the year  ended
December 31, 2000, or our 2000 Annual Report, are incorporated by reference into
Parts I, II and IV of this report, as follows:


<PAGE>


         The following  portions of our 2000 Annual Report to  Stockholders,  or
our 2000 Annual Report, are incorporated by reference in this report:
<TABLE>
<CAPTION>

                                                                                        Page(s) in the 2000
                             Section                                                       Annual Report
                             -------                                                       -------------

              Management's Discussion and Analysis of Financial
<S>                                                                                           <C> <C>
                 Condition and Results of Operations ("MD&A")...........................      3 - 30
              Selected Consolidated and Other Financial Data............................         2
              Consolidated Financial Statements.........................................      32 - 60
              Supplementary Financial Data..............................................        31
              Range of Prices of Preferred Securities...................................        63
</TABLE>

         Except for the parts of our 2000 Annual Report  expressly  incorporated
by reference,  such report is not deemed filed with the  Securities and Exchange
Commission.

                                     PART I


         Information  appearing in this report,  in  documents  incorporated  by
reference  herein and in documents  subsequently  filed with the  Securities and
Exchange  Commission  that are not  statements  of  historical  fact may include
forward-looking  statements with respect to our financial condition,  results of
operations and business. These forward-looking statements are subject to certain
risks and  uncertainties,  not all of which  can be  predicted  or  anticipated.
Factors  that may cause our  actual  results  to differ  materially  from  those
contemplated by the forward-looking  statements herein include market conditions
as well as  conditions  affecting  the banking  industry  generally  and factors
having a specific  impact on us,  including but not limited to  fluctuations  in
interest rates and in the economy; the impact of laws and regulations applicable
to us and changes  therein;  competitive  conditions  in the markets in which we
conduct our  operations,  including  competition  from  banking  and  nonbanking
companies  with  substantially  greater  resources,  some of which may offer and
develop  products and services that we do not offer;  our ability to control the
composition of our loan portfolio without adversely  affecting  interest income;
and our ability to respond to changes in technology.  With regard to our efforts
to grow  through  acquisitions,  factors  that  could  affect  the  accuracy  or
completeness  of  forward-looking   statements   contained  herein  include  the
potential for higher than acceptable operating costs arising from the geographic
dispersion of our offices,  as compared  with  competitors  operating  solely in
contiguous markets;  the competition of larger acquirers with greater resources;
fluctuations  in the prices at which  acquisition  targets may be available  for
sale and in the market for our  securities;  and the potential for difficulty or
unanticipated  costs  in  realizing  the  benefits  of  particular   acquisition
transactions. Readers of our Form 10-K should therefore not place undue reliance
on forward-looking statements.

Item 1.  Business

General.  First Banks,  Inc. is a registered bank holding company under the Bank
Holding Company Act of 1956, as amended, or the BHC Act. We were incorporated in
Missouri  in 1978 and our  corporate  headquarters  are  located  in St.  Louis,
Missouri.  Our principal  function is to assist in the management of our banking
subsidiaries.

         At December  31,  2000,  we had $5.88  billion in total  assets,  $4.75
billion  in total  loans,  net of  unearned  discount,  $5.01  billion  in total
deposits and $352.8 million in total  stockholders'  equity.  We operate through
three subsidiary banks, two subsidiary bank holding  companies,  and through our
subsidiary leasing company, as follows:

    First Bank, headquartered in St. Louis County, Missouri;
    First Capital Group, Inc., or FCG, headquartered in Albuquerque, New Mexico;
    First Banks America,  Inc., or  FBA,  headquartered  in  St. Louis  County,
          Missouri,  and its wholly owned subsidiaries:
              First  Bank &  Trust,   or  FB&T,  headquartered in San Francisco,
                California;  and
              The  San  Francisco  Company,  or  SFC,   headquartered   in   San
                Francisco,  California, and its wholly owned subsidiary:
                  Bank of San Francisco, or BSF, headquartered in San Francisco,
                  California.


<PAGE>


         Our  subsidiary  banks  and FCG are  wholly  owned by their  respective
parent companies. We owned 92.86% of FBA at December 31, 2000.

         Through our subsidiary  banks, we offer a broad range of commercial and
personal deposit  products,  including  demand,  savings,  money market and time
deposit  accounts.  In addition,  we market  combined basic services for various
customer groups,  including packaged accounts for more affluent  customers,  and
sweep accounts,  lock-box  deposits and cash management  products for commercial
customers.  We also offer both consumer and commercial  loans.  Consumer lending
includes   residential  real  estate,  home  equity  and  installment   lending.
Commercial lending includes  commercial,  financial and agricultural loans, real
estate  construction  and  development  loans,  commercial  real  estate  loans,
asset-based  loans,  commercial  leasing and trade  financing.  Other  financial
services include mortgage banking,  credit and debit cards,  brokerage services,
credit-related  insurance,  automated teller machines,  telephone banking,  safe
deposit boxes and trust,  private  banking and  institutional  money  management
services.

         Primary  responsibility for managing our subsidiary banking units rests
with the  officers  and  directors  of each unit.  However,  in keeping with our
policy, we centralize overall corporate policies,  procedures and administrative
functions and provide operational  support functions for our subsidiaries.  This
practice allows us to achieve various operating  efficiencies while allowing our
subsidiary banking units to focus on customer service.

         The following table summarizes  selected data about our subsidiaries at
December 31, 2000:
<TABLE>
<CAPTION>

                                                                                        Loans, net of
                                                           Number of      Total           unearned          Total
                             Name                          locations     assets           discount        deposits
                             ----                          ---------     ------           --------        --------
                                                                             (dollars expressed in thousands)

<S>                                                           <C>     <C>                <C>              <C>
     First Bank......................................         86      $ 3,152,885        2,694,004        2,729,489
     FCG (1).........................................          1              153               --               --
     FBA:
         FB&T........................................         52        2,516,993        1,943,013        2,168,742
         SFC:
              BSF....................................          1          216,552          115,615          137,727
</TABLE>
     ------------------------------
     (1) FCG was purchased on February 29, 2000. As of December 31, 2000,  there
         were approximately  $124.1 million of commercial leases. The commercial
         leases are recorded as assets of our subsidiary banks.

         As described under "MD&A - Financial Condition and Average Balances" in
our 2000 Annual Report,  on October 19, 2000, First Preferred  Capital Trust II,
or First  Preferred  II, our newly  formed  Delaware  statutory  business  trust
subsidiary,  issued  2,300,000  shares  of  10.24%  cumulative  trust  preferred
securities  for $57.5  million.  In addition,  First  Preferred II issued 71,135
shares of common  securities  to us for $1.8  million.  Similar to the preferred
securities issued in February 1997 by First Preferred Capital Trust, our initial
Delaware  statutory  business trust  subsidiary,  First Preferred II's preferred
securities  are publicly held and listed on the Nasdaq Stock  Market's  National
Market system. The preferred  securities have no voting rights except in certain
limited circumstances.

         Various trusts,  which were created by and are  administered by and for
the  benefit  of Mr.  James F.  Dierberg,  our  Chairman  of the Board and Chief
Executive  Officer,  and members of his immediate family,  own all of our voting
stock. Mr. Dierberg and his family, therefore, control our management,  policies
and the election of our directors.

         At December 31, 2000, we, Mr. Dierberg and an affiliate of Mr. Dierberg
owned 18.87%, 0.20% and 4.43%, respectively, of the outstanding shares of common
stock of Southside Bancshares Corporation,  or Southside,  located in St. Louis,
Missouri.

         Further  discussion of our business  operations and our policies is set
forth in the MD&A section of our 2000 Annual Report.


<PAGE>


Acquisitions.  Prior to 1994,  our  acquisitions  were  concentrated  within the
market areas of eastern Missouri and central and southern Illinois. The premiums
required to successfully pursue acquisitions escalated sharply in 1993, reducing
the economic viability of many potential  acquisitions in that area. Recognizing
this, we began to expand the geographic area in which we approached  acquisition
candidates.  While we were  successful  in making  acquisitions  in Chicago  and
northern Illinois, it became apparent to us that acquisition pricing, in Chicago
and other areas being considered, was comparable to that of the eastern Missouri
and  central and  southern  Illinois  acquisition  area.  As a result,  while we
continued  to pursue  acquisitions  within  these  areas,  we turned much of our
attention to institutions  that could be acquired at more attractive prices that
were within major  metropolitan areas outside of these market areas. This led to
our  acquisition  of a bank in Texas in 1994  that had  offices  in  Dallas  and
Houston,  Texas, and numerous  acquisitions of financial  institutions  that had
offices in Los Angeles,  Orange County, Santa Barbara,  San Francisco,  San Jose
and  Sacramento,  California  during the five years ended  December 31, 2000. In
addition,  on February 29, 2000, we acquired  certain assets and assumed certain
liabilities of FCG, our commercial  leasing  subsidiary that is headquartered in
Albuquerque, New Mexico.

         For  the  three  years  ended  December  31,  2000,  we  completed  ten
acquisitions and two branch office  purchases.  These  transactions  provided us
with total assets of $1.21 billion and 25 banking  locations.  For a description
of these acquisitions,  see "MD&A - Acquisitions" and Note 2 to the Consolidated
Financial Statements of our 2000 Annual Report.

Market Area. As of December 31, 2000, our subsidiary  banks' 139 banking offices
were located throughout eastern Missouri and in Illinois,  Texas and California.
Our primary market area is the St. Louis, Missouri metropolitan area. Our second
and third  largest  market areas are central and southern  Illinois and southern
and northern  California,  respectively.  We also have locations in the Houston,
Dallas,  Irving and McKinney,  Texas metropolitan  areas, rural eastern Missouri
and the greater  Chicago,  Illinois  metropolitan  area.  In addition,  FCG, our
leasing subsidiary, operates from its headquarters in Albuquerque, New Mexico.

         The  following  table  lists the market  areas in which our  subsidiary
banks operate,  total  deposits,  deposits as a percentage of total deposits and
the number of locations as of December 31, 2000:
<TABLE>
<CAPTION>

                                                                             Total         Deposits       Number
                                                                           deposits     as a percentage     of
                               Geographic area                           (in millions) of total deposits locations
                               ---------------                            ------------ ----------------- ---------

<S>                                        <C>                             <C>                <C>          <C>
     St. Louis, Missouri metropolitan area (1)..........................   $ 1,050.0          21.0%        29
     Regional Missouri (1)..............................................       400.6           8.0         15
     Central and southern Illinois (1)..................................       878.6          17.5         39
     Northern Illinois (1)..............................................       376.8           7.5          3
     Texas (2)..........................................................       271.4           5.4          6
     Southern California (2)............................................       922.2          18.4         26
     Northern California (2) (3)........................................     1,112.8          22.2         21
                                                                           ---------         -----      -----
         Total deposits.................................................   $ 5,012.4         100.0%       139
                                                                           =========         =====      =====
</TABLE>
   ------------------------
   (1) First Bank  operates  in the St.  Louis  metropolitan  area,  in regional
       Missouri,  in central and  southern  Illinois  and in northern  Illinois,
       including Chicago.
   (2) FB&T operates in the Houston,  Dallas,  Irving and McKinney  metropolitan
       areas; in the greater Los Angeles  metropolitan  area,  including Ventura
       County  and  Orange  County,   California;   in  Santa  Barbara   County,
       California;  and  in  northern  California,  including  the  greater  San
       Francisco, San Jose and Sacramento metropolitan areas.
   (3) BSF operates in the greater San Francisco metropolitan area.

Competition  and Branch  Banking.  The activities in which our subsidiary  banks
engage are highly  competitive.  Those  activities  and the  geographic  markets
served  primarily  involve  competition  with  other  banks,  some of which  are
affiliated with large regional or national holding companies.  Competition among
financial institutions is based upon interest rates offered on deposit accounts,
interest  rates  charged on loans and other  credit  and  service  charges,  the
quality of services rendered,  the convenience of banking facilities and, in the
case of loans to large commercial borrowers, relative lending limits.



<PAGE>


         In addition to competing with other banks within their primary  service
areas,  our subsidiary  banks also compete with other financial  intermediaries,
such as thrifts, credit unions, industrial loan associations,  securities firms,
insurance  companies,   small  loan  companies,   finance  companies,   mortgage
companies,  real estate investment trusts, certain governmental agencies, credit
organizations  and other  enterprises.  Additional  competition  for depositors'
funds comes from United States  Government  securities,  private issuers of debt
obligations and suppliers of other investment alternatives for depositors.  Many
of our  non-bank  competitors  are not  subject  to the same  extensive  federal
regulations that govern bank holding companies and  federally-insured  banks and
state regulations  governing  state-chartered  banks. As a result, such non-bank
competitors may have certain advantages over us in providing some services.

         The trend in  Missouri,  Illinois,  Texas and  California  has been for
multi-bank  holding  companies  to  acquire  independent  banks and  thrifts  in
communities  throughout  these  states.  We  believe  we will  continue  to face
competition  in the  acquisition  of such banks and  thrifts  from bank  holding
companies  based in those states and from bank holding  companies based in other
states under interstate  banking laws. Many of the financial  institutions  with
which we compete are larger  than us and have  substantially  greater  resources
available for making acquisitions.

         Subject to regulatory approval,  commercial banks situated in Missouri,
Illinois,  Texas and California are permitted to establish  branches  throughout
their  respective   states,   thereby  creating  the  potential  for  additional
competition in our subsidiary banks' service areas.

Supervision and Regulation

General.  We are  extensively  regulated  under  federal and state laws designed
primarily to protect  depositors and customers of our subsidiary  banks.  To the
extent this discussion refers to statutory or regulatory  provisions,  it is not
intended to summarize all of such provisions and is qualified in its entirety by
reference  to the  relevant  statutory  and  regulatory  provisions.  Changes in
applicable laws,  regulations or regulatory  policies may have a material effect
on our business and prospects.  We are unable to predict the nature or extent of
the effects on our business and earnings that new federal and state  legislation
or regulation may have.  The enactment of the  legislation  described  below has
significantly  affected  the banking  industry  generally  and is likely to have
ongoing effects on our subsidiary banks and us in the future.

         We are a  registered  bank  holding  company  under the BHC Act and, as
such, we are subject to regulation,  supervision and examination by the Board of
Governors  of the Federal  Reserve  System,  or the FRB. We are required to file
annual reports with the FRB and to provide to the FRB additional  information as
it may require.

         First  Bank is  chartered  by the State of  Missouri  and is subject to
supervision,  regulation and  examination  by the State of Missouri  Division of
Finance.  FB&T and BSF are chartered by the State of California  and are subject
to  supervision,  regulation and  examination  by the  California  Department of
Financial Institutions.  Our subsidiary banks are also regulated and examined by
the Federal Deposit Insurance  Corporation,  or the FDIC, which provides deposit
insurance of up to $100,000 for each insured depositor.

Bank Holding Company  Regulation.  Our activities and those of our  subsidiaries
have in the past been limited to the business of banking and activities "closely
related" or "incidental" to banking. Under the Gramm-Leach-Bliley Act, which was
enacted in November 1999 and is discussed below, bank holding companies now have
the  opportunity  to  seek  broadened  authority,   subject  to  limitations  on
investment,  to engage in  activities  that are  "financial  in  nature"  if its
subsidiary depository  institutions are well capitalized,  well managed and have
at least a satisfactory  rating under the Community  Reinvestment Act (discussed
briefly below).

         We are also subject to capital  requirements  applied on a consolidated
basis which are substantially  similar to those required of our subsidiary banks
(briefly  summarized below). The BHC Act also requires a bank holding company to
obtain  approval from the FRB before:  (i)  acquiring,  directly or  indirectly,
ownership  or  control  of any voting  shares of  another  bank or bank  holding
company if, after such acquisition, it would own or control more than 5% of such
shares  (unless it already  owns or  controls a majority of such  shares);  (ii)
acquiring all or substantially all of the assets of another bank or bank holding
company;  or (iii) merging or  consolidating  with another bank holding company.
The FRB will not approve any  acquisition,  merger or  consolidation  that would
have  a  substantially  anti-competitive  result,  unless  the  anti-competitive
effects of the proposed  transaction are clearly  outweighed by a greater public

<PAGE>

interest in meeting the convenience and needs of the community to be served. The
FRB also considers  capital adequacy and other financial and managerial  factors
in reviewing acquisitions and mergers.

Safety  and  Soundness  and  Similar  Regulations.  We are  subject  to  various
regulations and regulatory  policies directed at the financial  soundness of our
subsidiary  banks.  These  include,  but are not limited to, the FRB's source of
strength policy, which obligates a bank holding company to provide financial and
managerial strength to our subsidiary banks; restrictions on the nature and size
of  certain  transactions  between a bank  holding  company  and its  subsidiary
depository  institutions;  and  restrictions  on  extensions  of  credit  by our
subsidiary banks to executive officers,  directors,  principal  stockholders and
the related interests of such persons.

Regulatory Capital Standards.  The federal bank regulatory agencies have adopted
substantially  similar  risk-based and leverage  capital  guidelines for banking
organizations.  Risk-based  capital ratios are determined by classifying  assets
and specified  off-balance-sheet financial instruments into weighted categories,
with higher levels of capital being required for categories  deemed to represent
greater risk. FRB policy also provides that banking organizations generally, and
in particular  those that are  experiencing  internal  growth or actively making
acquisitions,  are expected to maintain capital positions that are substantially
above the minimum supervisory levels, without significant reliance on intangible
assets.

         Under the risk-based capital standard,  the minimum  consolidated ratio
of total capital to risk-adjusted  assets required for bank holding companies is
8%. At least one-half of the total capital, or Tier I capital,  must be composed
of  common  equity,  retained  earnings,   qualifying  non-cumulative  perpetual
preferred stock, a limited amount of qualifying  cumulative  perpetual preferred
stock  and   minority   interests  in  the  equity   accounts  of   consolidated
subsidiaries,  less certain items such as goodwill and certain other  intangible
assets.  The  remainder,  or Tier 2 capital,  may consist of  qualifying  hybrid
capital instruments,  perpetual debt, mandatory  convertible debt securities,  a
limited amount of  subordinated  debt,  preferred stock that does not qualify as
Tier 1 capital and a limited amount of loan and lease loss reserves.

         In  addition  to the  risk-based  standard,  we are  subject to minimum
requirements  with  respect  to the ratio of our Tier 1 capital  to our  average
assets less goodwill and certain  other  intangible  assets,  referred to as the
Leverage Ratio.  Applicable requirements provide for a minimum Leverage Ratio of
3% for bank holding companies that have the highest  supervisory  rating,  while
all other bank holding  companies  must maintain a minimum  Leverage Ratio of at
least 4% to 5%.

         The FDIC has  established  capital  requirements  for  banks  under its
jurisdiction  that are consistent  with those imposed by the FRB on bank holding
companies.  Information  regarding our capital levels and our subsidiary  banks'
capital levels under the federal capital requirements is contained in Note 19 to
the Consolidated Financial Statements incorporated herein by reference.

Prompt  Corrective  Action.  The FDIC  Improvement Act requires the federal bank
regulatory  agencies to take prompt  corrective  action in respect to depository
institutions  that  do not  meet  minimum  capital  requirements.  A  depository
institution's  status under the prompt  corrective action provisions will depend
upon how its capital levels  compare to various  relevant  capital  measures and
other factors as established by regulation.

         The federal regulatory agencies have adopted  regulations  establishing
relevant capital measures and relevant capital levels. Under the regulations,  a
bank will be: (i) "well  capitalized"  if it has a total capital ratio of 10% or
greater,  a Tier 1 capital ratio of 6% or greater and a Leverage  Ratio of 5% or
greater  and is not  subject  to any  order  or  written  directive  by any such
regulatory  authority  to meet and  maintain  a specific  capital  level for any
capital measure;  (ii) "adequately  capitalized" if it has a total capital ratio
of 8% or greater,  a Tier 1 capital ratio of 4% or greater and a Leverage  Ratio
of 4% or greater (3% in certain circumstances);  (iii)  "undercapitalized" if it
has a total  capital  ratio of less than 8%, a Tier 1 capital ratio of less than
4% or a  Leverage  Ratio of less  than 4% (3% in  certain  circumstances);  (iv)
"significantly  undercapitalized"  if it has a total  capital ratio of less than
6%, a Tier 1 capital ratio of less than 3% or a Leverage  Ratio of less than 3%;
and (v) "critically undercapitalized" if its tangible equity is equal to or less
than 2% of average quarterly tangible assets. A depository institution's primary
federal  regulatory  agency is  authorized  to lower the  institution's  capital
category  under  certain  circumstances.  The banking  agencies are permitted to
establish  individualized  minimum  capital  requirements  exceeding the general
requirements  described  above.  Generally,  a bank which does not  maintain the

<PAGE>

status of "well  capitalized"  or  "adequately  capitalized"  will be subject to
restrictions and limitations on its business that are progressively more severe.

         A bank is prohibited  from making any capital  distribution  (including
payment of a dividend) or paying any  management  fee to its holding  company if
the bank would thereafter be "undercapitalized."  "Undercapitalized"  depository
institutions  are subject to limitations  on, among other things,  asset growth,
acquisitions,  branching, new lines of business, acceptance of brokered deposits
and borrowings from the Federal Reserve System,  and they are required to submit
a capital  restoration  plan that  includes a guarantee  from the  institution's
holding company. "Significantly undercapitalized" depository institutions may be
subject to a number of requirements and  restrictions,  including orders to sell
sufficient  voting stock to become  "adequately  capitalized,"  requirements  to
reduce total  assets and  cessation  of receipt of deposits  from  correspondent
banks. "Critically undercapitalized" institutions are subject to the appointment
of a receiver or conservator.

Dividends.  Our primary source of funds in the future is the dividends,  if any,
paid by our  subsidiary  banks.  The  ability  of our  subsidiary  banks  to pay
dividends is limited by federal laws,  by  regulations  promulgated  by the bank
regulatory agencies and by principles of prudent bank management.  The amount of
dividends  our  subsidiary  banks may pay to us is also  limited  by our  credit
agreement  with a  group  of  unaffiliated  financial  institutions.  Additional
information concerning limitations on the ability of our subsidiary banks to pay
dividends  appears  in  Note  20  to  the  Consolidated   Financial   Statements
incorporated herein by reference.

Customer Protection.  Our subsidiary banks are also subject to consumer laws and
regulations  intended  to protect  consumers  in  transactions  with  depository
institutions,  as well as  other  laws or  regulations  affecting  customers  of
financial  institutions  generally.  These laws and regulations  mandate various
disclosure requirements and substantively regulate the manner in which financial
institutions  must deal with their customers.  Our subsidiary banks are required
to comply with numerous  regulations  in this regard and are subject to periodic
examinations with respect to their compliance with the requirements.

Community  Reinvestment  Act. The  Community  Reinvestment  Act of 1977, or CRA,
requires that, in connection with examinations of financial  institutions within
their  jurisdiction,  the federal banking regulators must evaluate the record of
the  financial   institutions  in  meeting  the  credit  needs  of  their  local
communities,  including low and moderate income  neighborhoods,  consistent with
the safe and sound  operation of those banks.  These factors are also considered
in evaluating mergers, acquisitions and other applications to expand.

The  Gramm-Leach-Bliley  Act.  The  activities  of bank holding  companies  have
historically  been  limited to the business of banking and  activities  "closely
related" or "incidental" to banking. The enactment of the Gramm-Leach-Bliley Act
in 1999 has relaxed the  previous  limitations  and  permits  some bank  holding
companies  to engage in a broader  range of financial  activities.  Bank holding
companies may elect to become "financial  holding  companies" that may affiliate
with  securities  firms and insurance  companies and engage in other  activities
that are financial in nature.  In addition to lending,  activities  that will be
deemed  "financial in nature"  include  securities  underwriting,  dealing in or
making a market in securities, sponsoring mutual funds and investment companies,
insurance  underwriting and agency  activities,  merchant banking activities and
other  activities  which the FRB determines to be closely related to banking.  A
bank holding company may become a financial  holding company only if each of its
subsidiary  banks is well  capitalized  and  well  managed  and has a rating  of
satisfactory  or higher under CRA. A bank  holding  company that ceases to be in
compliance with those requirements may be required to stop engaging in specified
activities.

         The  Gramm-Leach-Bliley Act also permits banks to own subsidiaries that
engage in a somewhat  broader range of financial  activities than was previously
permitted,  including some insurance  activities.  In order to take advantage of
any new powers, a bank must satisfy standards  governing capital adequacy and is
also required to have satisfactory examination ratings of its management and CRA
compliance,  among other factors.  The powers available to bank subsidiaries are
not as broad as those available to qualifying financial holding companies.
<PAGE>

         Under the  Gramm-Leach-Bliley  Act, the FRB has  supervisory  authority
over each  parent  financial  holding  company and  limited  authority  over its
subsidiaries.  The  determination  of which federal  regulatory  agency is given
primary  authority over a subsidiary of a financial  holding company will depend
on the  types  of  activities  conducted  by the  subsidiary.  In  that  regard,
broker-dealer  subsidiaries will be regulated primarily by securities regulators
and insurance subsidiaries will primarily be regulated by insurance authorities.

         The  Gramm-Leach-Bliley Act also will impose significant new regulatory
requirements  regarding the privacy of customer  information  when  implementing
regulations  become  effective  in July 2001.  Each bank and other  provider  of
financial services will be required to protect the security and  confidentiality
of  nonpublic  information  about  its  customers,  to  adopt a  privacy  policy
regarding  its  practices  for sharing  information  about  customers,  and, for
consumer accounts,  to disclose its privacy policy when an account  relationship
is established  and at least annually  thereafter.  Unless an exemption from the
requirements in the Act is available for a particular type of disclosure, a bank
or other financial  company must provide an opportunity for the consumer to "opt
out" of disclosure of information to third parties,  and third parties with whom
information  is shared  will be subject to  restrictions  on their use of shared
information.  The Act will also prohibit the  disclosure to  unaffiliated  third
parties  of  account  numbers  and  other  specified   information  for  use  in
telemarketing, direct mail and electronic mail marketing.

Reserve Requirements;  Federal Reserve System and Federal Home Loan Bank System.
The FRB requires all depository  institutions to maintain reserves against their
transaction accounts and non-personal time deposits.  The balances maintained to
meet  the  reserve  requirements  imposed  by the FRB  may be  used  to  satisfy
liquidity  requirements.  Institutions are authorized to borrow from the Federal
Reserve Bank "discount  window," but FRB  regulations  require  institutions  to
exhaust other reasonable  alternative sources of funds,  including advances from
Federal Home Loan Banks,  or FHLBs,  before  borrowing from the Federal  Reserve
Bank.

         Certain of our  subsidiary  banks are  members of the  Federal  Reserve
System  and  the  Federal  Home  Loan  Bank  System  and  are  required  to hold
investments in regional banks within those systems. Our subsidiary banks were in
compliance with these  requirements  at December 31, 2000,  with  investments of
$10.3  million  in stock  of the FHLB of Des  Moines  held by First  Bank,  $2.0
million and $767,000 in stock of the FHLB of San Francisco held by FB&T and BSF,
respectively,  $1.5  million in stock of the FHLB of Dallas  held by FB&T;  $4.9
million in stock of the Federal  Reserve  Bank of St.  Louis held by First Bank,
and $328,000 in stock of the Federal Reserve Bank of San Francisco held by FB&T.

Monetary  Policy and  Economic  Control.  The  commercial  banking  business  is
affected  not only by  legislation,  regulatory  policies  and general  economic
conditions,  but  also by the  monetary  policies  of the  FRB.  Changes  in the
discount  rate on member  bank  borrowings,  the  availability  of credit at the
"discount window," open market operations,  the imposition of changes in reserve
requirements against deposits and assets of foreign branches, and the imposition
of and changes in reserve  requirements  against certain borrowings by banks and
their affiliates are some of the instruments of monetary policy available to the
FRB.  These  monetary  policies  are used in varying  combinations  to influence
overall growth and  distributions of bank loans,  investments and deposits,  and
this use may affect interest rates charged on loans or paid on liabilities.  The
monetary  policies  of the FRB have had a  significant  effect on the  operating
results  of  commercial  banks and are  expected  to do so in the  future.  Such
policies are influenced by various factors,  including inflation,  unemployment,
short-term and long-term changes in the  international  trade balance and in the
fiscal policies of the U.S. Government.  Future monetary policies and the effect
of such policies on our future  business and earnings and on the future business
and earnings of our subsidiary banks cannot be predicted.

Employees

         As of March 20, 2001, we employed  approximately 1,985 employees.  None
of our employees are subject to a collective bargaining  agreement.  We consider
our relationships with our employees to be good.

Executive Officers of the Registrant

         Information  regarding  executive  officers is  contained in Item 10 of
Part III hereof (pursuant to General  Instruction G) and is incorporated  herein
by this reference.



<PAGE>


Item 2.  Properties

         We own  our  office  building  which  houses  our  principal  place  of
business,  which is located at 135 North Meramec,  Clayton,  Missouri 63105. The
property is in good condition and consists of approximately  41,763 square feet,
of which  approximately  1,791 square feet is currently leased to others. Of our
other 138 offices and facilities, 85 are located in buildings that we own and 53
are located in buildings that we lease.

         We  consider  the  properties  at  which we do  business  to be in good
condition,  suitable for our business conducted at each location.  To the extent
our  properties or those  acquired in connection  with our  acquisition of other
entities provide space in excess of that effectively  utilized in the operations
of our subsidiary banks, we seek to lease or sub-lease any excess space to third
parties. Additional information regarding the premises and equipment utilized by
our subsidiary banks appears in Note 6 to our Consolidated  Financial Statements
incorporated herein by reference.

Item 3.  Legal Proceedings

         There are various claims and pending actions  against our  subsidiaries
and us in the ordinary  course of business.  It is our opinion,  in consultation
with legal counsel,  the ultimate liability,  if any, resulting from such claims
and pending  actions will not have a material  adverse  effect on our  financial
position or results of operations.

Item 4.  Submission of Matters to a Vote of Security Holders

         None.




<PAGE>


                                     PART II


Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

Market Information. There is no established public trading market for our common
stock. Various trusts, which were created by and are administered by and for the
benefit of Mr. James F. Dierberg,  our Chairman of the Board and Chief Executive
Officer, and members of his immediate family, own all of our voting stock.

Dividends.  In recent  years,  we have  paid  minimal  dividends  on our Class A
Convertible  Adjustable  Rate  Preferred  Stock and our Class B  Non-Convertible
Adjustable Rate Preferred Stock, and have paid no dividends on our Common Stock.
Our ability to pay  dividends is limited by regulatory  requirements  and by the
receipt of dividend payments from our subsidiary  banks,  which are also subject
to regulatory requirements. See Note 20 to the Consolidated Financial Statements
incorporated herein by reference.

Item 6. Selected Financial Data

         The  information  required  by this  item  is  incorporated  herein  by
reference  from page 2 of our 2000 Annual  Report  under the  caption  "Selected
Consolidated and Other Financial Data."

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of Operations

         The  information  required  by this  item  is  incorporated  herein  by
reference  from pages 3 through 30 of our 2000 Annual  Report  under the caption
"MD&A."

Item 7a. Quantitative and Qualitative Disclosures about Market Risk

         The  information  required  by this  item  is  incorporated  herein  by
reference  from page 13 of our 2000  Annual  Report  under the  caption  "MD&A -
Interest Rate Risk Management."

Item 8.  Financial Statements and Supplementary Data

         Our  consolidated  financial  statements  are  incorporated  herein  by
reference  from pages 32 through 60 of our 2000 Annual Report under the captions
"Consolidated   Balance   Sheets,"   "Consolidated    Statements   of   Income,"
"Consolidated  Statements of Changes in Stockholders'  Equity and  Comprehensive
Income,"  "Consolidated  Statements  of  Cash  Flows,"  "Notes  to  Consolidated
Financial Statements" and "Independent Auditors' Report."

         Our  Supplementary  Financial  Information  is  incorporated  herein by
reference  from page 31 of our 2000 Annual  Report under the caption  "Quarterly
Condensed Financial Data - Unaudited."

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
Financial Disclosure

         None.




<PAGE>


                                    PART III


Item 10.  Directors and Executive Officers of the Registrant

Board of Directors

         Our Board of Directors,  consisting  of four members,  is identified in
the following  table.  Each of our directors was elected or appointed to serve a
one-year term and until his successor has been duly qualified for office.
<TABLE>
<CAPTION>

                                      Director               Principal Occupation(s) During Last Five Years
          Name                 Age      Since                    and Directorships of Public Companies
          ----                 ---      -----                    -------------------------------------


<S>                             <C>     <C>       <C>
James F. Dierberg               63      1979      Chairman of the Board of Directors and Chief  Executive  Officer  of
                                                  First Banks,  Inc. since 1988;  President of First Banks,  Inc. from
                                                  1979 to 1992 and from 1994 to October  1999;  Chairman of the  Board
                                                  of  Directors,  President and Chief  Executive Officer of FBA  since
                                                  1994;  Trustee of First  Preferred Capital  Trust and First  America
                                                  Capital Trust since 1997 and 1998, respectively.

Allen H. Blake                  58      1988      President of First Banks,  Inc. since October 1999;  Executive  Vice
                                                  President  and Chief  Financial  Officer of First Banks,  Inc.  from
                                                  1996 to September  1999;  Chief  Operating  Officer of First  Banks,
                                                  Inc. since 1998;  Senior Vice President and Chief Financial  Officer
                                                  of First Banks,  Inc. from 1992 to 1996;  Secretary of First  Banks,
                                                  Inc.  since  1988;  Director,   Executive  Vice  President,    Chief
                                                  Operating  Officer and Secretary of FBA since 1998; Chief  Financial
                                                  Officer of FBA from 1994 to September 1999;  Director,  Senior  Vice
                                                  President and Secretary of FBA from 1994 to 1998;  Trustee of  First
                                                  Preferred  Capital  Trust,  First  America  Capital Trust and  First
                                                  Preferred  Capital Trust II since  1997,  1998 and  September  2000,
                                                  respectively.


David L. Steward (1)            49      2000      Chairman of the Board of Directors,  President and  Chief  Executive
                                                  Officer  of  World  Wide  Technology,  Inc.; Chairman of  the  Board
                                                  of Directors of Telcobuy.com (an affiliate of World Wide Technology,
                                                  Inc.); Director of the 21st Century Workforce,  Civic Progress,  the
                                                  St. Louis   Regional  Commerce  and  Growth  Association,   Missouri
                                                  Technology  Corporation,  Webster  University,  BJC  Health  System,
                                                  Union Memorial Outreach Center, St.Louis Science Center,  the United
                                                  Way of Greater St. Louis,  Greater  St.  Louis  Area  Council -  Boy
                                                  Scouts of  America,  INROADS and New Cornerstone.

Douglas H. Yaeger (1)           52      2000      Chairman of the Board of Directors,  President and  Chief  Executive
                                                  Officer of Laclede Gas Company  since  1999;  President  of  Laclede
                                                  Gas Company  since 1997;  Director and Chief  Operating  Officer  of
                                                  Laclede Gas Company from 1997 to 1999;  Executive  Vice  President -
                                                  Operations  and Marketing of Laclede Gas  Company from 1995 to 1997;
                                                  Director   of   Southern   Gas   Association,   the   American   Gas
                                                  Association,   the   American  Gas  Cooling   Center,   the  Central
                                                  Institute for  the Deaf, the St. Louis  Regional  Chamber and Growth
                                                  Association,  the  St. Louis Science Center, Civic Progress, Greater
                                                  St. Louis Area  Council - Boy Scouts of America,  the  United Way of
                                                  Greater  St.  Louis,  Junior  Achievement,   The  Municipal  Theatre
                                                  Association of St. Louis and Webster University.

</TABLE>
-----------------------
(1)      Member of the Audit Committee.


<PAGE>


Executive Officers

         Our  executive  officers,  each of whom was  elected  to the  office(s)
indicated by the Board of Directors, as of March 20, 2001 were as follows:
<TABLE>
<CAPTION>

                                            Current First Banks                     Principal Occupation(s)
          Name                Age              Office(s) Held                       During Last Five Years
          ----                ---              --------------                       ----------------------

<S>                            <C>  <C>                                   <C>
James F. Dierberg              63   Chairman  of the Board of  Directors  See  Item  10 -  "Directors and  Executive
                                    and Chief Executive Officer.          Officers  of  the  Registrant  -  Board of
                                                                          Directors."

Allen H. Blake                 58   President,  Chief Operating  Officer  See  Item 10 -  "Directors  and  Executive
                                    and Secretary.                        Officers  of the  Registrant  -  Board  of
                                                                          Directors."

Donald W. Williams             53   Senior  Executive Vice President and  Mr.  Williams has been employed in various
                                    Chief  Credit   Officer;   Director,  executive  capacities  with  First  Banks,
                                    Executive  Vice  President and Chief  Inc. since 1993.
                                    Credit  Officer of FBA;  Chairman of
                                    the  Board of  Directors,  President
                                    and  Chief   Executive   Officer  of
                                    First  Bank;  Chairman  of the Board
                                    of   Directors   of  First   Capital
                                    Group, Inc.

Michael F. Hickey              43   Executive  Vice  President and Chief  Executive   Vice   President   and   Chief
                                    Information  Officer;   Director  of  Information  Officer of First Banks,  Inc.
                                    First  Bank;   President   of  First  since  November  1999;  Director  of First
                                    Services, L.P.                        Bank since  November  1999;  President  of
                                                                          First Services L.P. since  November  1999;
                                                                          Vice  President - Senior Group  Manager of
                                                                          Information  Systems, Mercantile Bank, St.
                                                                          Louis,  Missouri  from  1996  to  November
                                                                          1999;   Group   Manager   of   Information
                                                                          Systems,  Mercantile  Bank,  from  1992 to
                                                                          1996.


Terrance M. McCarthy           46   Executive Vice President;  Executive  Mr.  McCarthy has been employed in various
                                    Vice  President of FBA;  Chairman of  executive  capacities  with  First  Banks,
                                    the  Board of  Directors,  President  Inc. since 1995.
                                    and Chief Executive Officer of FB&T.

Michael F. McWhortor           46   Executive  Vice  President - Banking  Executive   Vice   President   -   Banking
                                    Support.                              Support  since  March  2000;  Senior  Vice
                                                                          President  and  Manager  of  the  Business
                                                                          Intelligence  Group of Firstar Bank,  N.A.
                                                                          in  St.  Louis,  Missouri  from  September
                                                                          1999 to March 2000;  Senior Vice President
                                                                          and   Manager   of  Retail   Banking   and
                                                                          Consumer     Products    of     Mercantile
                                                                          Bancorporation,  Inc.  from  1998 to 1999;
                                                                          Vice  President  and  Manager of  Customer
                                                                          Information   Management   of   Mercantile
                                                                          Bancorporation,  Inc.  from  1997 to 1998;
                                                                          Vice  President  and  Regional  Manager of
                                                                          the Western  Region  Credit Card  Division
                                                                          of Bank  One  Corp.  in  Phoenix,  Arizona
                                                                          from  1996 to 1997;  and  Chief  Financial
                                                                          Officer of the Western  Region Credit Card
                                                                          Division  of Bank One  Corp.  from 1995 to
                                                                          1996.


</TABLE>


<PAGE>
<TABLE>
<CAPTION>



<S>                            <C>                                        <C>
Frank H. Sanfilippo            38   Executive  Vice  President and Chief  Executive   Vice   President   and   Chief
                                    Financial  Officer;  Executive  Vice  Financial  Officer  of First  Banks,  Inc.
                                    President   and   Chief    Financial  and FBA since  September  1999;  Director,
                                    Officer of FBA; Director,  Executive  Executive Vice President,  Chief Financial
                                    Vice   President  and  Secretary  of  Officer,  Secretary and Treasurer of First
                                    First   Bank;   Trustee   of   First  Bank  since  September  1999;  Trustee  of
                                    Preferred Capital Trust II.           First  Preferred  Capital  Trust  II since
                                                                          September 2000;  Senior Vice President and
                                                                          Director  of   Management   Accounting  of
                                                                          Mercantile   Bancorporation,   Inc.,   St.
                                                                          Louis,  Missouri,  from 1998 to  September
                                                                          1999;  Vice President and Chief  Financial
                                                                          Officer  -  Mercantile   Bank   Operations
                                                                          Division,   from   1996  to   1997;   Vice
                                                                          President  and  Assistant  Comptroller  of
                                                                          Mercantile Bank N.A. from 1994 to 1996.

Mark T. Turkcan                45   Executive  Vice President - Mortgage  Mr.  Turkcan has been  employed in various
                                    Banking;   Director  and   Executive  executive   capacities  with  First  Banks
                                    Vice President of First Bank.         since 1994.
</TABLE>

Section 16(a) Beneficial Ownership Reporting Compliance

         To  our  knowledge,  none  of  our  directors,  executive  officers  or
shareholders,  subject, in their capacity as such, to the reporting  obligations
set forth in Section 16 of the Securities  Exchange Act of 1934, as amended,  or
the  Exchange  Act,  has failed to file on a timely  basis  reports  required by
Section 16(a) of the Exchange Act during the year ended December 31, 2000.

Item 11.  Executive Compensation

         The   following   table  sets  forth  certain   information   regarding
compensation earned by the named executive officers for the years ended December
31, 2000, 1999 and 1998:

                                       SUMMARY COMPENSATION TABLE
                                       --------------------------
<TABLE>
<CAPTION>
                                                                                                      All Other
         Name and Principal Position(s)                     Year          Salary        Bonus     Compensation (1)
         ------------------------------                     ----          ------        -----     ----------------

<S>                                                         <C>         <C>              <C>            <C>
James F. Dierberg                                           2000        $  560,000       90,000         5,250
Chairman of the Board of Directors                          1999           543,000       20,000         5,000
and Chief Executive Officer                                 1998           536,000            0         5,000

Allen H. Blake                                              2000           282,900       45,000         6,150
President and                                               1999           204,800       20,000         5,000
Chief Operating Officer                                     1998           157,300       40,000         5,000

Donald W. Williams                                          2000           241,250       40,000         6,450
Senior Executive Vice President                             1999           208,750       36,600         5,000
and Chief Credit Officer                                    1998           181,900       40,000         5,000

Frank H. Sanfilippo                                         2000           139,200       83,500         3,700
Executive Vice President                                    1999            35,800            0             0
and Chief Financial Officer                                 1998                 0            0             0

Terrance M. McCarthy                                        2000           180,000       25,000         6,650
Executive Vice President;                                   1999           147,500       20,000         4,950
Chairman of the Board of Directors,                         1998           121,600       27,000         4,450
President and Chief Executive Officer
of FB&T and BSF
</TABLE>

-----------------------
(1)  All other  compensation  reported  includes  matching  contributions to our
     401(k) Plan for the year indicated and ownership interests granted in units
     of Star Lane Trust,  our unit investment  trust that was created on January
     21, 2000.


<PAGE>


Employment Agreement. Messr. Williams is a party to an employment agreement with
First Bank and us. The term of his contract is one year, and it is automatically
renewable  for  additional  one-year  periods.  As  part of the  annual  renewal
process,  the base salary payable under the employment agreement is reviewed and
may be adjusted at the  discretion  of our Board of  Directors.  The base salary
paid to Messr. Williams pursuant to his employment agreement is set forth in the
salary column of the Summary Compensation Table.

         Messr.  Williams'  employment  contract  provides  for a bonus of up to
twenty percent (20%) of his annual base salary,  with the exact percentage to be
determined  by our Chairman of the Board if Messr.  Williams  meets the criteria
set by First Bank and us at the  beginning  of each  contract  year.  The annual
bonus is payable within ninety (90) days after the close of the year to which it
relates. In addition,  Messr.  Williams is entitled to participate in our 401(k)
Plan, our health  insurance plan and in other  additional  benefit plans that we
may adopt for our employees.

         Under  the  terms  of  his  employment  contract,  if Mr.  Williams  is
terminated  for a reason  other  than  retirement,  death,  "disability"  or for
"cause,"  as  those  terms  are  defined  in  the  employment  agreement,  or is
terminated  due to a change in our  control,  Mr.  Williams  will be entitled to
receive two years' base salary.  Should Mr. Williams  voluntarily  terminate his
employment  with First Bank and us, he would be  entitled to receive the balance
of his base  salary for that year or a minimum of six  months  salary,  provided
that he would  not be  permitted  to  accept a  position  with any bank or trust
company for the duration of that year. Finally, in the event of the death of Mr.
Williams, his employment agreement provides that his estate would be entitled to
receive compensation that would have been payable to him during the month of his
death, and his monthly salary for the twelve-month  period following the date of
his death.

Compensation  of Directors.  Only those  directors who are neither our employees
nor employees of any of our subsidiaries receive remuneration for their services
as directors.  Such non-employee directors (currently Messrs. Douglas Yaeger and
David  Steward)  receive a fee of $3,000 for each  Board  meeting  attended  and
$1,000  for each  Audit  Committee  meeting  attended.  The Audit  Committee  is
currently  the only  committee  of our Board of  Directors.  Messrs.  Yaeger and
Steward each received $4,000 in director's fees during 2000.

         Our  Executive   officers  who  are  also   directors  do  not  receive
remuneration  other  than  salaries  and  bonuses  for  serving  on our Board of
Directors.

Compensation  Committee Interlocks and Insider Participation.  Messrs.  Dierberg
and  Blake,  who are  executive  officers,  are  also  members  of the  Board of
Directors  and  executive  officers  of FBA.  FBA does  not have a  compensation
committee,  but  its  Board  of  Directors  performs  the  functions  of  such a
committee.  Except for the  foregoing,  none of our  executive  officers  served
during 2000 as a member of the  compensation  committee,  or any other committee
performing similar  functions,  or as a director of another entity, any of whose
executive officers or directors served on our Board of Directors.

         During  2000,  1999 and 1998,  Tidal  Insurance  Limited,  or Tidal,  a
corporation  owned  indirectly by our Chairman and his adult children,  received
approximately  $212,000,  $316,000  and  $280,000,  respectively,  in  insurance
premiums for accident,  health and life insurance policies purchased by our loan
customers.  The  insurance  policies are issued by an  unaffiliated  company and
subsequently  ceded to Tidal. We believe the premiums paid by our loan customers
are comparable to those that such loan customers would have paid if the premiums
were subsequently ceded to an unaffiliated third-party insurer.

         During 2000, 1999 and 1998, First Securities  America,  Inc., or FSA, a
trust  established  and  administered by and for the benefit of our Chairman and
members of his immediate family, received approximately  $235,000,  $194,000 and
$265,000,  respectively,  in  commissions  and  insurance  premiums for policies
purchased  by us or by  customers  of our  subsidiary  banks from  unaffiliated,
third-party  insurors to which First Banc  Insurors  placed such  policies.  The
insurance  premiums  on which the  aforementioned  commissions  were earned were
competitively  bid and we deem the  commissions  FSA  earned  from  unaffiliated
third-party  companies to be  comparable to those that would have been earned by
an unaffiliated third-party agent.

         First Brokerage America,  L.L.C., a limited liability corporation which
is  indirectly  owned by our  Chairman  and  members  of his  immediate  family,
received approximately $2.1 million, $2.3 million and $1.8 million for the years
<PAGE>


ended December 31, 2000,  1999 and 1998,  respectively,  in commissions  paid by
unaffiliated  third-party companies.  The commissions received were primarily in
connection  with the sales of  annuities  and  securities  and  other  insurance
products to  customers of our subsidiary banks.

         First Services,  L.P., a limited  partnership  indirectly  owned by our
Chairman  and  his  adult  children,   provides  data  processing  services  and
operational  support for our subsidiary banks and us. Fees paid under agreements
with First  Services,  L.P. were $19.3 million,  $16.4 million and $12.2 million
for the years ended December 31, 2000, 1999 and 1998, respectively. During 2000,
1999 and 1998,  First  Services,  L.P.  paid us $1.8  million,  $1.2 million and
$799,000,  respectively, in rental fees for the use of data processing and other
equipment owned by us. The fees paid by us for data  processing  services are at
least as favorable as could have been obtained from unaffiliated third parties.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets  forth,  as  of  March  20,  2001,  certain
information  with  respect to the  beneficial  ownership  of all  classes of our
voting  capital stock by each person known to us to be the  beneficial  owner of
more than five percent of the  outstanding  shares of the respective  classes of
our stock:
<TABLE>
<CAPTION>

                                                                                                             Percent of
                                                                                 Number of                     Total
                          Title of Class                                          Shares        Percent       Voting
                         and Name of Owner                                        Owned        of Class       Power
                         -----------------                                        -----        --------       -----

Common Stock ($250.00 Par value)

<S>                                                                             <C>              <C>             <C>
     James F. Dierberg II Family Trust (1)....................................  7,714.677(2)     32.605%         *
     Michael J. Dierberg Family Trust (1).....................................  4,255.319(2)     17.985%         *
     Ellen C. Dierberg Family Trust (1).......................................  7,714.676(2)     32.605%         *
     Michael J. Dierberg Irrevocable Trust (1)................................  3,459.358(2)     14.621%         *
     First Trust (Mary W. Dierberg and First Bank, Trustees) (1)..............    516.830(3)      2.184%         *

Class A Convertible Adjustable Rate Preferred Stock ($20.00 par value)
----------------------------------------------------------------------

     James F. Dierberg, Trustee of the James F. Dierberg
         Living Trust (1).....................................................    641,082(4)(5)     100%      77.7%

Class B Non-Convertible Adjustable Rate Preferred Stock ($1.50 par value)
-------------------------------------------------------------------------

     James F. Dierberg, Trustee of the James F. Dierberg
         Living Trust (1).....................................................    160,505(5)        100%      19.4%

All executive officers and directors
    other than Mr. James F. Dierberg
    and members of his immediate family.......................................          0             0%       0.0%
</TABLE>

--------------------
   * Represents less than 1.0%.
(1)  Each of the  above-named  trustees and beneficial  owners are United States
     citizens,  and the business  address for each such  individual is 135 North
     Meramec  Avenue,  Clayton,  Missouri  63105.  Mr.  James F.  Dierberg,  our
     Chairman  of the  Board  and  Chief  Executive  Officer,  and Mrs.  Mary W.
     Dierberg,  are husband and wife, and Messrs.  James F. Dierberg II, Michael
     J. Dierberg and Mrs. Ellen D. Schepman, formerly Ms. Ellen C. Dierberg, are
     their adult children.
(2)  Due to the relationship  between Mr. James F. Dierberg,  his wife and their
     children,  Mr. Dierberg is deemed to share voting and investment power over
     our common stock.
(3)  Due to the relationship  between Mr. James F. Dierberg,  his wife and First
     Bank,  Mr.  Dierberg is deemed to share  voting and  investment  power over
     these shares.
(4)  Convertible  into common stock,  based on the appraised value of the common
     stock at the date of conversion.  Assuming an appraised value of the common
     stock  equal to the book value,  the number of shares of common  stock into
     which the Class A Preferred  Stock is  convertible  at December 31, 2000 is
     892, which shares are not included in the above table.
(5)  Sole voting and investment power.

<PAGE>


Item 13.  Certain Relationships and Related Transactions

         Outside  of normal  customer  relationships,  no  directors,  executive
officers  or  stockholders  holding  over 5% of our  voting  securities,  and no
corporations  or firms with  which such  persons  or  entities  are  associated,
currently  maintain  or have  maintained  since the  beginning  of the last full
fiscal  year,  any  significant  business  or  personal  relationship  with  our
subsidiaries  or us, other than that which arises by virtue of such  position or
ownership  interest in our  subsidiaries or us, except as set forth in Item 11 -
"Executive  Compensation  -  Compensation  of Directors," or as described in the
following paragraphs.

         Our subsidiary  banks have had in the past, and may have in the future,
loan transactions in the ordinary course of business with our directors or their
affiliates.  These loan  transactions  have been and will be on the same  terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable  transactions  with  unaffiliated  persons  and did not and  will not
involve more than the normal risk of collectibility or present other unfavorable
features.  Our  subsidiary  banks do not  extend  credit to our  officers  or to
officers  of our  subsidiary  banks,  except  extensions  of credit  secured  by
mortgages on personal  residences,  loans to purchase  automobiles  and personal
credit card accounts.

         Certain of our directors and officers and their  respective  affiliates
have  deposit  accounts  with our  subsidiary  banks.  It is the  policy  of our
subsidiary  banks not to permit  any of their  officers  or  directors  or their
affiliates to overdraw their respective  deposit accounts unless that person has
been previously approved for overdraft  protection under a plan whereby a credit
limit has been  established in accordance  with the standard  credit criteria of
our subsidiary banks.




<PAGE>


                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

           (a)    1.     Financial  Statements  and  Supplementary  Data  -  The
                         financial  statements and  supplementary  data filed as
                         part of this Report are listed under Item 8.

                  2.     Financial  Statement  Schedules - These  schedules  are
                         omitted for the reason they are not required or are not
                         applicable.

                  3.     Exhibits  - The  exhibits  are  listed  in the index of
                         exhibits required by Item 601 of Regulation S-K at Item
                         (c) below and are incorporated herein by reference.

           (b)    Reports on Form 8-K.

                         We filed no  reports  on Form 8-K  during  the  quarter
                         ended December 31, 2000.

           (c)    The index of required  exhibits is included  beginning on page
                  18 of this Report.



<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 BANKS, INC.



                                 By: /s/  James F. Dierberg
                                     ------------------------------------------
                                          James F. Dierberg
                                          Chairman of the Board of Directors
                                          and Chief Executive Officer
                                          (Principal Executive Officer)



                                 By: /s/  Frank H. Sanfilippo
                                     ------------------------------------------
                                          Frank H. Sanfilippo
                                          Executive Vice President and
                                          Chief Financial Officer
                                          (Principal Financial Officer)



                                 By: /s/  Lisa K. Vansickle
                                     ------------------------------------------
                                          Lisa K. Vansickle
                                          Senior Vice President and Controller
                                          (Principal Accounting Officer)


Date:    March 28, 2001

        Pursuant to the  requirements  of the  Securities  Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.

            Signatures                            Title            Date
-------------------------------------------------------------------------------


       /s/ James F. Dierberg                    Director        March 28, 2001
       ---------------------------
           James F. Dierberg


       /s/ Allen H. Blake                       Director        March 28, 2001
       ---------------------------
           Allen H. Blake


       /s/ David L. Steward                     Director        March 28, 2001
       ---------------------------
           David L. Steward


       /s/ Douglas H. Yaeger                    Director        March 28, 2001
       ---------------------------
           Douglas H. Yaeger



<PAGE>


                                INDEX TO EXHIBITS


  Exhibit
  Number                           Description
  ------                           -----------

    3.1           Restated Articles of Incorporation of the Company,  as amended
                  (incorporated   herein   by   reference  to  Exhibit  3(i)  to
                  the Company's Annual Report on Form 10-K for  the  year  ended
                  December 31, 1993).

    3.2           Bylaws of the  Company (incorporated herein  by  reference  to
                  Exhibit  3.2 to  Amendment No. 2 to the Company's Registration
                  Registration  Statement  on Form S-1, File No. 33-50576, dated
                  September 15, 1992).

    4.1           Reference  is made to Article  III of the  Company's  Restated
                  Articles of Incorporation (incorporated  herein  by  reference
                  to Exhibit 3.1 of the Company's Annual Report on Form 10-K for
                  the year ended December 31, 1997).

    4.2           The Company agrees to furnish to the  Securities  and Exchange
                  Commission upon request  pursuant to  Item 601(b)(4)(iii)   of
                  Regulation  S-K, copies of instruments  defining the rights of
                  holders of long term debt of the Company and its subsidiaries.

    4.3           Agreement  as to Expenses and  Liabilities  (relating to First
                  Preferred  Capital Trust I ("First Preferred I") (incorporated
                  herein by reference to Exhibit 4(a) to the Company's Report on
                  Form 10-Q for the quarter ended March 31, 1997).

    4.4           Agreement  as to Expenses and  Liabilities  dated  October 19,
                  2000  (relating   to   First    Preferred  Capital   Trust  II
                  ("First Preferred  II") (filed as Exhibit 4.8 to the Company's
                  Registration  Statement  on Form  S-2,  File No.    333-46270,
                  dated September 20, 2000).

    4.5           Preferred  Securities Guarantee  Agreement (relating  to First
                  Preferred I) (incorporated herein by reference to Exhibit 4(b)
                  to  the  Company's  Report  on Form 10-Q for the quarter ended
                  March 31, 1997).

    4.6           Preferred  Securities Guarantee Agreement by and between First
                  Banks, Inc. and   State  Street  Bank  and  Trust  Company  of
                  Connecticut,  National  Association,  dated  October  19, 2000
                  (relating to First Preferred II) (filed as Exhibit 4.7 to  the
                  Company's  Registration   Statement  on  Form  S-2,  File  No.
                  333-46270, dated September 20, 2000).

    4.7           Indenture (relating to First Preferred I)(incorporated  herein
                  by reference to Exhibit 4(c) to the Company's Report   on Form
                  10-Q for the quarter ended March 31, 1997).

    4.8           Indenture between First Banks, Inc. and State Street Bank  and
                  Trust  Company   of   Connecticut,  National   Association, as
                  Trustee,  dated October 19, 2000 (relating to  First Preferred
                  II) (filed as Exhibit   4.1  to  the  Company's   Registration
                  Statement on Form S-2, File No. 333-46270, dated September 20,
                  2000).

    4.9           Amended  and  Restated  Trust  Agreement  (relating  to  First
                  Preferred I) (incorporated herein by reference to Exhibit 4(d)
                  to the Company's  Report  on  Form 10-Q for  the quarter ended
                  March 31, 1997).

   4.10           Amended and Restated Trust Agreement among First Banks,  Inc.,
                  as   Depositor,   State  Street  Bank  and  Trust  Company  of
                  Connecticut,   National  Association,   as  Property  Trustee,
                  Wilmington  Trust  Company,  as  Delaware  Trustee,   and  the
                  Administrative  Trustees,  dated October 19, 2000 (relating to
                  First  Preferred  II) (filed as Exhibit  4.5 to the  Company's
                  Registration Statement on Form S-2, File No. 333-46270,  dated
                  September 20, 2000).


<PAGE>



   10.1           Shareholders' Agreement by and among James F. Dierberg, II and
                  Mary W. Dierberg,  Trustees under the Living Trust of James F.
                  Dierberg II, dated July 24, 1989,  Michael James  Dierberg and
                  Mary W.  Dierberg,  Trustees under the Living Trust of Michael
                  James  Dierberg,  dated July 24, 1989;  Ellen C.  Dierberg and
                  Mary W. Dierberg,  Trustees under the Living Trust of Ellen C.
                  Dierberg   dated  July  17,  1992,   and  First  Banks,   Inc.
                  (incorporated  herein  by  reference  to  Exhibit  10.3 to the
                  Company's   Registration   Statement  on  Form  S-1,  File  No
                  33-50576, dated August 6, 1992).

   10.2           Comprehensive  Banking  System  License and Service  Agreement
                  dated as of July 24,  1991,  by and  between  the  Company and
                  FiServ CIR, Inc.  (incorporated herein by reference to Exhibit
                  10.4 to the Company's Registration Statement on Form S-1, File
                  No. 33-50576, dated August 6, 1992).

   10.3*          Employment Agreement by and among the Company,  First Bank and
                  Donald W. Williams dated March 22, 1993 (incorporated   herein
                  by reference to Exhibit  10(iii)(A)  to the Company's   Annual
                  Report on Form 10-K for the year ended  December 31, 1993).

   10.4           $120,000,000   Second  Amended  and  Restated  Secured  Credit
                  Agreement,  dated  as  of  August 24, 2000, among First Banks,
                  Inc. and  Firstar  Bank,  N.A.,  American  National  Bank  and
                  Trust  Company  of  Chicago,  Harris  Trust and  Savings Bank,
                  Wells  Fargo  Bank  Minnesota,  N.A., the Frost National Bank,
                  Union Bank of California,  N.A.,  LaSalle Bank National
                  Association  and Firstar  Bank,  N.A., as Agent  (incorporated
                  herein   by   reference  to  Exhibit  10.6  to  the  Company's
                  Registration cStatement on Form S-2, File No. 333-46270, dated
                  September 20, 2000).

   10.5           Stock   Purchase  and  Operating  Agreement by and between the
                  Company  and  BancTEXAS  Group,  Inc.,   dated  May  19,  1994
                  (incorporated   herein  by  reference  to  Exhibit  2  to  the
                  Company's  Quarterly Report on Form 10-Q for the quarter ended
                  June 30, 1994).

   10.6*          Service  Agreement  by and between  First  Services,  L.P. and
                  First  Bank  dated  April  1,  1997  (incorporated  herein  by
                  reference to Exhibit 10.8 of the  Company's  Annual  Report on
                  Form 10-K for the year ended December 31, 1997).

   10.7*          Service  Agreement  by and between  First  Services,  L.P. and
                  First Bank & Trust dated April 1, 1997  (incorporated   herein
                  by reference  to Exhibit  10.9 of the  Company's Annual Report
                  on Form 10-K for the year ended  December 31, 1997).

   10.8*          Management Services Agreement by and between First Banks, Inc.
                  and Redwood Bank, dated June 1, 1999  (incorporated  herein by
                  reference to Exhibit 10.11 to the Company's  Quarterly  Report
                  on Form 10-Q for the quarter ended September 30, 1999).

   13.1           The  Company's  2000  Annual  Report  to  Shareholders   filed
                  herewith.    Portions    not   specifically   incorporated  by
                  reference in this Report are not deemed  "filed" for  purposes
                  of the  Securities  Exchange  Act of 1934 - filed herewith.

   21.1           Subsidiaries of the Company - filed herewith.

-------------------------
*    Exhibits  designated  by an  asterisk  in the Index to  Exhibits  relate to
     management contracts and/or compensatory plans or arrangements.


<PAGE>









                                                                   EXHIBIT 13.1



                                FIRST BANKS, INC.

                               2000 ANNUAL REPORT









<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                             PAGE

<S>                                                                                                            <C>
LETTER TO SHAREHOLDERS..............................................................................           1

SELECTED CONSOLIDATED AND OTHER FINANCIAL DATA......................................................           2

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
     AND RESULTS OF OPERATIONS......................................................................           3

QUARTERLY CONDENSED FINANCIAL DATA - UNAUDITED......................................................          31

FINANCIAL STATEMENTS:

     CONSOLIDATED BALANCE SHEETS....................................................................          32

     CONSOLIDATED STATEMENTS OF INCOME..............................................................          34

     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
           AND COMPREHENSIVE  INCOME................................................................          35

     CONSOLIDATED STATEMENTS OF CASH FLOWS..........................................................          36

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.....................................................          37

INDEPENDENT AUDITORS' REPORT........................................................................          60

DIRECTORS AND SENIOR MANAGEMENT.....................................................................          61

INVESTOR INFORMATION................................................................................          63


</TABLE>


<PAGE>




                             LETTER TO SHAREHOLDERS

To Our Valued Investors, Customers and Friends:

One of the tenets of our  longevity has been our sound  financial  condition and
operating  results.  Total assets  increased  over $1.01 billion  during 2000, a
20.7%  increase over the prior year.  Net income reached a record $56.1 million,
which was 27.0%  higher  than 1999 net  income of $44.2  million.  First  Banks'
practice continues to be one of not paying dividends on its common stock, so net
income is retained and supports  future growth.  First Banks' equity is now over
$352.8 million. Our asset quality remains  outstanding,  given the nature of our
loan portfolio.  While nonperforming loans were 1.12% of total loans at December
31, 2000, net loan charge-offs  during the year represented only 17 basis points
of  average  loans.  Our  allowance  for  loan  losses  covered  153.47%  of our
nonperforming loans at the end of the year.

Our new tag line, "BANK FIRST. BE FIRST." reflects our dedication to serving our
customers and our  communities.  With the continued rapid  consolidation  in the
banking industry, consistent, high-quality service is becoming more difficult to
find.  But at  family-owned  First Banks,  we have been  providing this level of
service  since  1910 and will  continue  to do so in the  future.  We believe in
knowing  our  customers  well  and  doing  what it  takes  for you to meet  your
financial objectives. We know that if you succeed, we succeed.

At nearly $6 billion in assets, we are the largest family owned bank in America.
This financial  strength allows us to invest in technology and business lines to
serve many customer needs.  Development of our Internet technology  continues to
be one of our main  priorities and enhanced  functionality  will be available to
our customers this year.  During 2000, our  acquisition  activities  resulted in
several new or  complementary  business  lines  including  commercial  equipment
leasing,  international letters of credit and import/export inventory financing,
bankruptcy trustee deposit  processing,  institutional  money management,  stock
option and non real estate escrow services. These additional services supplement
our existing  array of  commercial  lending and deposit  product  offerings.  We
listen to our  customers  and will  pursue  opportunities  to acquire or develop
internally the products you need to BE FIRST.

Our primary  strategic  objective  remains  progressive  and  profitable  growth
through the continued  development of our existing  franchise,  augmented by the
acquisition of other financial  institutions.  In 2000, our growth was primarily
driven by  acquisitions.  Total  loans  grew  $755.9  million  or 18.9% to $4.75
billion.  While internal growth accounted for 7-8% of this growth, the rest came
from  our  acquisitions  of  Lippo  Bank,  Commercial  Bank  of  San  Francisco,
Millennium Bank and Bank of San Francisco,  all  headquartered in San Francisco,
California. We also acquired Bank of Ventura, in Ventura, California and certain
assets and liabilities of First Capital Group, Inc. in Albuquerque, New Mexico.

To  give  our  customers  greater  convenience  as  well  as to  achieve  better
utilization of our marketing and business development resources, we consolidated
our  California  and Texas bank  charters into one on October 31, 2000 and named
the charter, First Bank & Trust.

I am very proud of the progress First Banks has achieved and look forward to the
future with  confidence.  We have over 2,000 employees and over 140 locations in
five states to serve our  customers.  Our staff is trained to give our customers
outstanding  personal service,  diversified  product offerings and the necessary
flexibility to meet your changing financial needs.

In closing,  I would like to express my sincere  appreciation  to our employees,
customers and investors for your hard work and  confidence in the Company.  Your
support enabled First Banks, Inc. to have an outstanding year!

Sincerely,




/s/James F. Dierberg
--------------------
   Chairman of the Board and Chief Executive Officer




<PAGE>


               SELECTED CONSOLIDATED AND OTHER FINANCIAL DATA (1)

         The selected  consolidated  financial data set forth below,  insofar as
they relate to the five years ended  December  31,  2000,  are derived  from our
consolidated  financial  statements,  which have been audited by KPMG LLP.  This
information is qualified by reference to our consolidated  financial  statements
included  herein.  This  information  should  be read in  conjunction  with such
consolidated  financial statements,  the related notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>

                                                               As of or for the year ended December 31, (1)
                                                        -----------------------------------------------------------
                                                            2000         1999        1998        1997        1996
                                                            ----         ----        ----        ----        ----
                                                           (dollars expressed in thousands, except per share data)
Income Statement Data:
<S>                                                     <C>            <C>         <C>          <C>         <C>
    Interest income...................................  $  422,826     353,082     327,860      295,101     266,021
    Interest expense..................................     187,679     158,701     162,179      148,831     141,670
                                                        ----------    --------    --------    ---------   ---------
    Net interest income...............................     235,147     194,381     165,681      146,270     124,351
    Provision for loan losses.........................      14,127      13,073       9,000       11,300      11,494
                                                        ----------    --------    --------    ---------   ---------
    Net interest income after provision
      for loan losses.................................     221,020     181,308     156,681      134,970     112,857
    Noninterest income................................      42,778      41,650      36,497       25,697      20,721
    Noninterest expense...............................     171,163     150,807     138,704      110,287     105,741
                                                        ----------    --------    --------    ---------   ---------
    Income before provision for income taxes and
      minority interest in income of subsidiaries.....      92,635      72,151      54,474       50,380      27,837
    Provision for income taxes........................      34,482      26,313      19,693       16,083       6,960
                                                        ----------    --------    --------    ---------   ---------
    Income before minority interest in income
      of subsidiaries.................................      58,153      45,838      34,781       34,297      20,877
    Minority interest in income of subsidiaries.......      (2,046)     (1,660)     (1,271)      (1,270)       (659)
                                                        ----------    --------    --------    ---------   ---------
    Net income........................................  $   56,107      44,178      33,510       33,027      20,218
                                                        ==========    ========    ========    =========   =========
Dividends:
    Preferred stock...................................  $      786         786         786        5,067       5,728
    Common stock......................................          --          --          --           --          --
    Ratio of total dividends declared to net income...        1.40%       1.78%       2.35%       15.34%      28.33%
Per Share Data:
    Earnings per common share:
      Basic...........................................  $  ,338.04    1,833.91    1,383.04     1,181.69      612.46
      Diluted.........................................    2,267.41    1,775.47    1,337.09     1,134.28      596.83
    Weighted average common stock outstanding.........      23,661      23,661      23,661       23,661      23,661
Balance Sheet Data:
    Investment securities.............................  $  563,534     451,647     534,796      795,530     552,801
    Loans, net of unearned discount...................   4,752,265   3,996,324   3,580,105    3,002,200   2,767,969
    Total assets......................................   5,876,691   4,867,747   4,554,810    4,165,014   3,689,154
    Total deposits....................................   5,012,415   4,251,814   3,939,985    3,684,595   3,238,567
    Notes payable.....................................      83,000      64,000      50,048       55,144      76,330
    Guaranteed preferred beneficial interests in
      First Banks, Inc. and First Banks America, Inc.
      subordinated debentures.........................     182,849     127,611     127,443       83,183          --
    Common stockholders' equity.......................     339,783     281,842     250,300      218,474     184,439
    Total stockholders' equity........................     352,846     294,905     263,363      231,537     251,389
Earnings Ratios:
    Return on average total assets....................        1.09%       0.95%       0.78%        0.87%       0.57%
    Return on average total stockholders' equity......       17.43       15.79       13.64        12.91        8.43
    Efficiency ratio (2)..............................       61.59       63.89       68.60        64.13       72.89
    Net interest margin...............................        4.93        4.52        4.19         4.09        3.79
Asset Quality Ratios:
    Allowance for loan losses to loans................        1.72        1.72        1.70         1.68        1.69
    Nonperforming loans to loans (3)..................        1.12        0.99        1.22         0.80        1.09
    Allowance for loan losses to
     nonperforming loans (3)..........................      153.47      172.66      140.04       209.88      154.55
    Nonperforming assets to loans and
      other real estate (4)...........................        1.17        1.05        1.32         1.04        1.47
    Net loan charge-offs to average loans.............        0.17        0.22        0.05         0.27        0.72
Capital Ratios:
    Average total stockholders' equity
      to average total assets.........................        6.25        6.00        5.73         6.70        6.79
    Total risk-based capital ratio....................       10.21       10.05       10.28        10.26        9.23
    Leverage ratio....................................        7.45        7.14        7.77         6.80        5.99
</TABLE>

<PAGE>

    ------------------------------
(1)  The  comparability  of the  selected  data  presented  is  affected  by the
     acquisitions  of 11 banks and five  branch  offices  during  the  five-year
     period ended December 31, 2000.  These  acquisitions  were accounted for as
     purchases  and,  accordingly,  the selected  data  includes  the  financial
     position and results of  operations  of each  acquired  entity only for the
     periods subsequent to its respective date of acquisition.
(2)  Efficiency  ratio is the  ratio of  noninterest  expense  to the sum of net
     interest  income and  noninterest  income.
(3)  Nonperforming  loans  consist  of  nonaccrual loans  and certain loans with
     restructured  terms.
(4)  Nonperforming assets consist of nonperforming loans and other real estate.


<PAGE>





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

         The discussion set forth in the Letter to Shareholders and Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
contains  certain  forward-looking  statements  with  respect  to our  financial
condition,  results of operations and business. These forward-looking statements
are  subject  to  certain  risks  and  uncertainties,  not all of  which  can be
predicted or  anticipated.  Factors that may cause our actual  results to differ
materially from those  contemplated  by the  forward-looking  statements  herein
include market  conditions as well as conditions  affecting the banking industry
generally and factors having a specific impact on us,  including but not limited
to  fluctuations  in interest  rates and in the economy;  the impact of laws and
regulations applicable to us and changes therein;  competitive conditions in the
markets in which we conduct our operations,  including  competition from banking
and non-banking  companies with substantially  greater resources,  some of which
may offer and develop products and services that we do not offer; our ability to
control  the  composition  of our loan  portfolio  without  adversely  affecting
interest  income;  and our  ability to respond  to changes in  technology.  With
regard to our efforts to grow  through  acquisitions,  factors that could affect
the accuracy or  completeness of  forward-looking  statements  contained  herein
include the potential for higher than  acceptable  operating  costs arising from
the geographic dispersion of our offices, as compared with competitors operating
solely in contiguous  markets;  the competition of larger acquirers with greater
resources,  fluctuations  in the  prices  at which  acquisition  targets  may be
available for sale and in the market for our  securities;  and the potential for
difficulty  or  unanticipated  costs in  realizing  the  benefits of  particular
acquisition  transactions.  Readers of our Annual  Report  should  therefore not
place undue reliance on forward-looking statements.

Company Profile

         We are a registered bank holding  company  incorporated in Missouri and
headquartered  in St.  Louis  County,  Missouri.  Through the  operation  of our
subsidiaries,  we offer a broad array of  financial  services  to  consumer  and
commercial customers.  Over the years, our organization has grown significantly,
primarily as a result of our acquisition  strategy,  as well as through internal
growth.  We currently  operate  banking  subsidiaries  in California,  Illinois,
Missouri and Texas.  At December 31, 2000, we had total assets of $5.88 billion,
loans,  net of unearned  discount,  of $4.75  billion,  total  deposits of $5.01
billion and total stockholders' equity of $352.8 million.
         We operate through three subsidiary  banks, two subsidiary bank holding
companies, and through our subsidiary leasing company, as follows:

    First Bank, headquartered in St. Louis County, Missouri;
    First Capital Group, Inc., or FCG, headquartered in Albuquerque, New Mexico;
    First  Banks  America,  Inc,  or  FBA,  headquartered  in  St. Louis County,
      Missouri,  and its  wholly  owned  subsidiaries:
            First  Bank  &  Trust, or  FB&T,  headquartered  in  San  Francisco,
            California;
               The  San Francisco   Company,  or  SFC,   headquartered   in  San
               Francisco, California, and its wholly owned subsidiary:
                  Bank of San Francisco, or BSF, headquartered in San Francisco,
                  California.

         Our  subsidiary  banks  and FCG are  wholly  owned by their  respective
parent  companies.  We owned 92.86% of FBA at December 31, 2000.  On October 31,
2000, our former wholly owned  subsidiary bank, First Bank & Trust, was acquired
by FBA through an exchange of  6,530,769  shares of FBA common  stock for all of
the issued and outstanding  shares of common stock of First Bank & Trust that we
held. As a result of this transaction,  our ownership percentage of FBA's issued
and outstanding voting stock increased from 84.42% to approximately 92.82%.
         Through our subsidiary  banks, we offer a broad range of commercial and
personal deposit  products,  including  demand,  savings,  money market and time
deposit  accounts.  In addition,  we market  combined basic services for various
customer groups,  including packaged accounts for more affluent  customers,  and
sweep accounts,  lock-box  deposits and cash management  products for commercial
customers.  We also offer both consumer and commercial  loans.  Consumer lending
includes   residential  real  estate,  home  equity  and  installment   lending.
Commercial lending includes  commercial,  financial and agricultural loans, real
estate  construction  and  development  loans,  commercial  real  estate  loans,
asset-based  loans,  commercial  leasing and trade  financing.  Other  financial
services include mortgage banking,  credit and debit cards,  brokerage services,
credit-related  insurance,  automated teller machines,  telephone banking,  safe
deposit boxes and trust,  private  banking and  institutional  money  management
services.


<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Primary  responsibility for managing our subsidiary banking units rests
with the  officers  and  directors  of each unit.  However,  in keeping with our
policy, we centralize overall corporate policies,  procedures and administrative
functions and provide operational  support functions for our subsidiaries.  This
practice allows us to achieve various operating  efficiencies while allowing our
subsidiary banking units to focus on customer service.
         The following table summarizes  selected data about our subsidiaries at
December 31, 2000:
<TABLE>
<CAPTION>

                                                                                        Loans, net of
                                                           Number of      Total           unearned          Total
                             Name                          locations     assets           discount        deposits
                             ----                          ---------     ------           --------        --------
                                                                             (dollars expressed in thousands)

<S>                                                           <C>     <C>                <C>              <C>
     First Bank......................................         86      $ 3,152,885        2,694,004        2,729,489
     FCG (1).........................................          1              153               --               --
     FBA:
         FB&T........................................         52        2,516,993        1,943,013        2,168,742
         SFC:
              BSF....................................          1          216,552          115,615          137,727
</TABLE>
     ------------------------------------
     (1) FCG was purchased on February 29, 2000. As of December 31, 2000,  there
         were approximately  $124.1 million of commercial leases. The commercial
         leases are recorded as assets of our subsidiary banks.

         Various trusts,  which were created by and are  administered by and for
the  benefit  of Mr.  James F.  Dierberg,  our  Chairman  of the Board and Chief
Executive  Officer,  and members of his immediate family,  own all of our voting
stock. Mr. Dierberg and his family, therefore, control our management,  policies
and the election of our directors.
         As more  fully  described  in Note 9 to our  accompanying  consolidated
financial statements, in February 1997, our initial financing subsidiary,  First
Preferred  Capital  Trust,  issued  $86.25  million  of  9.25%  trust  preferred
securities. In addition, in July 1998, FBA's financing subsidiary, First America
Capital  Trust,  issued $46.0 million of 8.50% trust  preferred  securities.  On
October 19, 2000, our second financing subsidiary, First Preferred Capital Trust
II, issued $57.5  million of 10.24% trust  preferred  securities.  Each of these
financing  subsidiaries  operates as a Delaware  statutory  business trust.  The
trust preferred  securities  issued by our financing  subsidiaries  are publicly
held and traded in the Nasdaq National  Market.  The trust preferred  securities
issued by FBA's  financing  subsidiary  are publicly  held and traded on the New
York Stock  Exchange.  These trust  preferred  securities  have no voting rights
except in certain limited  circumstances.  We pay  distributions  on these trust
preferred securities quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year.

General

         In the  development of our banking  franchise,  we emphasize  acquiring
other financial  institutions  as one means of achieving our growth  objectives.
Acquisitions may serve to enhance our presence in a given market,  to expand the
extent of our market area or to enable us to enter new or noncontiguous markets.
However,  by  using  cash  in  our  acquisitions,  the  characteristics  of  the
acquisition arena may, at times, place us at a competitive disadvantage relative
to other  acquirers  offering stock  transactions.  This results from the market
attractiveness  of  other  financial  institutions'  stock,  the  advantages  of
tax-free  exchanges to the selling  shareholders,  and the  financial  reporting
flexibility  inherent  in  structuring  stock  transactions.  Consequently,  our
acquisition  activities appear somewhat sporadic because we consummate  multiple
transactions  in a  particular  period,  followed by  substantially  less active
acquisition periods.  Furthermore, the intangible assets recorded in conjunction
with these  acquisitions  create an immediate  reduction in regulatory  capital.
This reduction,  as required by regulatory  policy,  provides further  financial
disincentives to paying large premiums in cash acquisitions.
         Recognizing   these   facts,   we  follow   certain   patterns  in  our
acquisitions.   First,  we  typically  acquire  several  smaller   institutions,
sometimes over an extended  period of time,  rather than a single larger one. We
attribute this to the constraints  imposed by the amount of funds required for a
larger transaction, as well as the opportunity to minimize the aggregate premium
required   through   smaller   individual   transactions.   Secondly,   in  some
acquisitions,  we may  acquire  institutions  having  significant  asset-quality
problems,  and we seek to address the risks of this approach through pricing and
other means. This diminishes their  attractiveness to other potential acquirers,
and therefore reduces the amount of acquisition  premium required.  Finally,  we
may  pursue  our  acquisition  strategy  in other  geographic  areas,  or pursue
internal growth more aggressively because cash transactions are not economically
viable in extremely competitive acquisition markets.


<PAGE>


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

         During  the five years  ended  December  31,  2000,  we have  primarily
concentrated our acquisitions in California, completing 11 acquisitions of banks
and five  purchases of branch  offices,  which  provided us with an aggregate of
$1.41  billion  in total  assets  and 32  banking  locations  as of the dates of
acquisition.  In addition,  on February 29, 2000,  we completed  our purchase of
certain  assets and  liabilities  of First  Capital  Group,  Inc., a multi-state
commercial  leasing  business  headquartered in Albuquerque,  New Mexico.  These
acquisitions have allowed us to significantly expand our presence throughout the
state of California, improve operational efficiencies,  convey a more consistent
image and quality of service and more cohesively market and deliver our products
and  services.  Management  continues  to meld the  acquired  entities  into our
operations,  systems and culture.  Some of the acquired  institutions  exhibited
elements of financial distress prior to their acquisitions, which contributed to
marginal  earnings  performance.  Generally,  these  elements were the result of
asset quality problems and/or high noninterest expenses.
         Following our acquisitions,  various tasks are necessary to effectively
integrate the acquired entities into our business systems and culture. While the
activities required are specifically dependent upon the individual circumstances
surrounding each acquisition, during the five years ended December 31, 2000, the
majority of our efforts have been  concentrated in various areas including,  but
not limited to:

        >>  improving  asset quality,  which  was  primarily associate with  the
            acquisitions completed in 1996, 1997 and 1998;

        >>  reducing unnecessary and/or excessive expenses;

        >>  maintaining,  repairing  and,  in  some  cases,  refurbishing   bank
            premises  necessitated by the  deferral  of  such  projects  by  the
            acquired entities;

        >>  renegotiating  long-term  leases  which  provide space in excess  of
            that  necessary  for  banking  activities  and/or rates in excess of
            current market rates, or  subleasing excess  space to third parties;

        >>  relocating  branch  offices  which  are  not  adequate, conducive or
            convenient for banking operations; and

        >>  managing lawsuits that existed with respect to acquired entities to
            minimize the overall costs of negotiation, settlement or litigation.

         The  post-acquisition  process also  required the combining of separate
and  distinct  entities  together  to form a cohesive  organization  with common
objectives and focus.  We invested  significant  resources to reorganize  staff,
recruit personnel where needed,  and establish the direction and focus necessary
for the combined entity to take advantage of the opportunities  available to it.
This investment  contributed to the increases in noninterest  expense during the
five years ended  December 31, 2000, and resulted in the creation of new banking
entities, which conveyed a more consistent image and quality of service. The new
banking  entities  provide a broad array of banking  products to their customers
and compete  effectively  in their  marketplaces,  even in the presence of other
financial  institutions  with  much  greater  resources.  While  some  of  these
modifications  did not  contribute to reductions of  noninterest  expense,  they
contributed  to the commercial and retail  business  development  efforts of the
banks, and ultimately to their overall profile to improve future profitability.
         In conjunction with our acquisition strategy, we were also building the
infrastructure  necessary to accomplish our objectives for internal growth. This
process,  which began in 1993, required  significant  increases in the resources
dedicated to  commercial  and retail  business  development,  financial  service
product line and delivery systems, branch development and training,  advertising
and marketing programs and administrative and operational  support. In addition,
during  1999,  we began an  internal  restructuring  process  designed to better
position us for future growth and opportunities  expected to become available as
consolidation  and changes continue in the delivery of financial  services.  The
magnitude of this  project was  extensive  and covered  almost every area of our
organization.  Although  these efforts have  primarily led to increased  capital
expenditures and noninterest expenses in the short-term, we anticipate they will
lead to more effective internal growth,  more efficient  operations and improved
profitability over the long term.
         Our enhanced business development resources assisted in the realignment
of certain  acquired loan  portfolios,  which were skewed toward loan types that
reflected  the  abilities  and  experiences  of the  management  of the acquired
entities.  In  order  to  achieve  a  more  diversified  portfolio,  to  address
asset-quality issues in our portfolios and to achieve a higher interest yield on
our loan  portfolio,  we reduced a  substantial  portion of the loans which were
acquired  during this time through  payments,  refinancing  with other financial
institutions,  charge-offs,  and, in two instances, sales of loans. As a result,
the  portfolio  of  one-to-four  family  residential  real estate  loans,  after
reaching a maximum of $1.20 billion at December 31, 1995, was  reduced  over the

<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

past four years from $1.06  billion at December  31,  1996 to $726.5  million at
December 31, 2000.  Similarly,  our portfolio of consumer and installment loans,
net of unearned  discount,  decreased  47.7% from $333.3 million at December 31,
1996 to $174.3 million at December 31, 2000.
         As these components of our loan portfolio  decreased,  we replaced them
with more  diversified and higher yielding loans that were internally  generated
by our business  development  function.  With our acquisitions,  we expanded our
business  development  function  into the new market areas in which we were then
operating.  Consequently,  in spite of relatively  large  reductions in acquired
portfolios,  our aggregate loan portfolio,  net of unearned discount,  increased
from $2.77 billion at December 31, 1996 to $3.00 billion,  $3.58 billion,  $4.00
billion  and  $4.75  billion  at  December  31,  1997,   1998,  1999  and  2000,
respectively.
         Our expanded level of commercial lending carries with it greater credit
risk which, although managed through loan policies and procedures,  underwriting
and credit  administration,  must be recognized through adequate  allowances for
loan losses. We associate the increased level of commercial  lending  activities
with the  increase of $13.4  million in  nonperforming  loans as of December 31,
2000,  compared to December 31, 1999.  However,  this increase primarily results
from a small  number of credit  relationships  that  were  placed on  nonaccrual
during the year ended December 31, 2000,  reflecting  problems that are specific
to these relationships.
         In addition to restructuring  our loan portfolio,  we also have changed
the  composition  of our  deposit  base.  The  majority  of our  recent  deposit
development programs have been directed toward increased  transaction  accounts,
such as  demand  and  savings  accounts,  rather  than time  deposits,  and have
emphasized  attracting  more than one account  relationship  with  customers  by
cross-selling  to them  through  packaging  various  account  types and offering
incentives to deposit  customers on other deposit or  non-deposit  services.  In
addition,  commercial  borrowers  are  encouraged  to maintain  their  operating
deposit  accounts with us. At December 31, 1996,  total time deposits were $1.81
billion,  or 55.9% of total  deposits.  Although time deposits have continued to
increase to $2.31 billion at December 31, 2000, this  represented  only 46.0% of
total deposits.
         The  simultaneous  growth by acquisition of financial  institutions and
the building of the  infrastructure  necessary to achieve  significant  internal
growth has  adversely  impacted  our  operating  results.  However,  despite the
significant  expenses we incurred in the  amalgamation of the acquired  entities
into  our  corporate   culture  and  systems,   and  in  the  expansion  of  our
organizational  capabilities,  the  earnings of the  acquired  entities  and the
improved net interest income resulting from the transition in the composition of
our loan and deposit  portfolios have contributed to improving net income during
2000 and 1999.  For the years ended  December 31, 2000 and 1999,  net income was
$56.1 million and $44.2  million,  respectively,  compared  with $33.5  million,
$33.0 million and $20.2 million in 1998, 1997 and 1996,  respectively.  While we
anticipate   certain   short-term  adverse  effects  on  our  operating  results
associated  with  acquisitions,   we  believe  the  long-term  benefits  of  our
acquisition  program will exceed the  short-term  issues  encountered  with some
acquisitions.  As such, in addition to  concentrating on internal growth through
continued  efforts to further develop our corporate  infrastructure  and product
and  service   offerings,   we  expect  to  continue  to  identify   and  pursue
opportunities for growth through acquisitions.


<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

Acquisitions

         To  enhance  our  banking  franchise,   we  emphasize  acquiring  other
financial  institutions  as a means  of  accelerating  our  growth,  in order to
significantly  expand our presence in a given market,  to increase the extent of
our  market  area or to  enter  new or  noncontiguous  market  areas.  After  we
consummate  an  acquisition,  we expect to enhance the franchise of the acquired
entity by  supplementing  the  marketing  and  business  development  efforts to
broaden the customer bases, strengthening particular segments of the business or
filling voids in the overall market coverage. We have utilized cash, borrowings,
FBA's voting stock and the issuance of additional  securities to meet our growth
objectives under our acquisition program.
         During the three years ended  December  31,  2000,  we  completed  nine
acquisitions of banks and two branch office  purchases.  As demonstrated  below,
our  acquisitions  during the three years ended December 31, 2000 have primarily
served to increase  our  presence in markets  that we  originally  entered  into
during  1995.  These  transactions,  as more  fully  described  in Note 2 to our
accompanying consolidated financial statements, are summarized as follows:
<TABLE>
<CAPTION>

                                                                                                             Number
                                                                     Loans, net of                             of
                                                            Total      unearned    Investment                banking
             Entity                       Date             assets      discount    securities    Deposits   locations
             ------                       ----             ------      --------    ----------    --------   ---------
                                                                   (dollars expressed in thousands)

2000
----

   The San Francisco Company
<S>                                 <C>                   <C>            <C>           <C>         <C>           <C>
   San Francisco, California        December 31, 2000     $183,800       115,700       38,300      137,700       1

   Millennium Bank
   San Francisco, California (1)    December 29, 2000      117,000        81,700       21,100      104,200       2

   Commercial Bank of San Francisco
   San Francisco, California (1)    October 31, 2000       155,600        97,700       45,500      109,400       1

   Bank of Ventura
   Ventura, California (2)           August 31, 2000        63,800        39,400       15,500       57,300       1

   First Capital Group, Inc.
   Albuquerque, New Mexico          February 29, 2000       64,600        64,600           --           --       1

   Lippo Bank
   San Francisco, California (3)    February 29, 2000       85,300        40,900       37,400       76,400       3
                                                          --------      --------     --------     --------    ----
                                                          $670,100       440,000      157,800      485,000       9
                                                          ========      ========     ========     ========    ====

1999
----

   Brentwood Bank of California
   Malibu, California
      branch office (4)            September 17, 1999     $ 23,600         6,300           --       17,300       1

   Century Bank
   Beverly Hills, California (2)     August 31, 1999       156,000        94,800       26,100      132,000       6

   Redwood Bancorp
   San Francisco, California (5)      March 4, 1999        183,900       134,400       34,400      162,900       4
                                                          --------      --------     --------     --------    ----
                                                          $363,500       235,500       60,500      312,200      11
                                                          ========      ========     ========     ========    ====
</TABLE>


<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>

                                                                                                             Number
                                                                     Loans, net of                             of
                                                            Total      unearned    Investment                banking
             Entity                       Date             assets      discount    securities    Deposits   locations
             ------                       ----             ------      --------    ----------    --------   ---------
                                                                   (dollars expressed in thousands)
1998
----

   Republic Bank
<S>                                <C>                    <C>             <C>           <C>        <C>           <C>
   Torrance, California (2)        September 15, 1998     $124,100        97,900        7,500      117,200       3

   Bank of America
   Solvang, California
   branch office (4)                 March 19, 1998         15,500            --           --       15,500       1

   Pacific Bay Bank
   San Pablo, California (3)        February 2, 1998        38,300        29,700          232       35,200       1
                                                          --------      --------      -------     --------    ----
                                                          $177,900       127,600        7,732      167,900       5
                                                          ========      ========      =======     ========    ====
</TABLE>
-------------------------
(1)  Millennium Bank and Commercial Bank of San Francisco were  merged into  our
     existing subsidiary bank, FB&T.
(2)  Bank of Ventura, Century Bank and Republic Bank were merged into our former
     subsidiary, First Bank & Trust. On October 31, 2000, First Bank & Trust and
     two of our former wholly owned subsidiary  banks,  First Bank of California
     and First Bank Texas  N.A.,  were merged with and into  Redwood  Bank,  our
     other wholly owned subsidiary bank, which was renamed FB&T.
(3)  Lippo  Bank and  Pacific  Bay Bank  were  merged  with and into our  former
     subsidiary bank, First Bank of California.
(4)  The Malibu branch  office of Brentwood Bank of California  and  the Solvang
     branch office of Bank of America were acquired by  the former  First Bank &
     Trust  through a  purchase  of certain  assets and   assumption  of deposit
     liabilities of the branch office.  Total  assets consist  primarily of cash
     received  upon  assumption  of  the deposit liabilities and selected loans.
(5)  Redwood  Bancorp  was merged with and into its wholly owned subsidiary, the
     former Redwood Bank.

         We funded these  acquisitions  from available  cash reserves,  proceeds
from the sales  and  maturities  of  available-for-sale  investment  securities,
borrowings  under  our  $120.0  million  revolving  credit  line with a group of
unaffiliated  banks  and  the  proceeds  of  the  issuance  of  trust  preferred
securities by our financing subsidiaries.

Financial Condition and Average Balances

         Our average total assets were $5.15 billion for the year ended December
31,  2000,  compared  to $4.66  billion  and $4.29  billion  for the years ended
December 31, 1999 and 1998,  respectively.  We attribute  the increase of $491.5
million in total average assets for 2000 primarily to our acquisitions completed
during 2000,  which provided total assets of $670.1  million,  and internal loan
growth  resulting from the continued  expansion and  development of our business
development  staff.  The  acquisitions  of Millennium Bank and The San Francisco
Company were completed on December 29, 2000 and December 31, 2000, respectively,
and therefore did not have a significant  impact on our average total assets for
the year ended  December 31, 2000.  These  acquisitions  alone  provided  $300.8
million,  or 61.2%, of the assets we acquired in 2000.  Similarly,  we attribute
the increase of $377.6 million in total average assets for 1999 primarily to:

     >>   our  acquisitions of Redwood Bancorp and Century Bank,  which provided
          total assets of $183.9  million and $156.0  million, respectively;

     >>   our purchase of the deposit accounts of the Malibu, California banking
          location of Brentwood Bank of California;

     >>   internal loan growth; and

     >>   the  issuance  of  trust  preferred  securities  in July 1998 by FBA's
          financing subsidiary, First America Capital Trust.

         The increase in assets for 2000 was primarily  funded by an increase in
total  average  deposits of $412.0  million to $4.48  billion for the year ended
December 31, 2000, a decrease in average investment  securities of $22.5 million
to $431.9 million for the year ended December 31, 2000, and an increase of $18.7
million in average  short-term  borrowings to $106.1  million for the year ended
December 31, 2000.  We utilized  the  majority of the funds  generated  from our
deposit growth to fund a portion of our loan  growth,  and the  remaining  funds

<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (CONTINUED)

were  temporarily  invested in federal  funds sold,  resulting in an increase in
average  federal funds sold of $15.0 million to $64.5 million for the year ended
December  31, 2000.  Similarly,  we funded the increase in assets for 1999 by an
increase in total  average  deposits of $283.3  million to $4.06 billion for the
year ended  December 31, 1999, an increase in average  short-term  borrowings of
$26.2 million and a decrease in average investment  securities of $221.3 million
during 1999.
         Loans, net of unearned discount,  averaged $4.29 billion, $3.81 billion
and  $3.25  billion  for the  years  ended  December  31,  2000,  1999 and 1998,
respectively.   As  summarized  under   "--Acquisitions,"  the  acquisitions  we
completed  during 1999 and 2000 provided  loans,  net of unearned  discount,  of
$235.5  million  and $440.0  million,  respectively.  In  addition to the growth
provided by these acquisitions,  for 2000, $360.4 million of net loan growth was
provided by corporate banking business  development,  consisting of increases of
$192.9  million  of  commercial,  financial  and  agricultural  loans and $175.9
million of commercial real estate loans, offset by a decrease of $8.4 million of
real estate  construction and land development  loans.  These overall  increases
were  partially  offset by  continuing  reductions  in consumer and  installment
loans, net of unearned discount,  which consist primarily of indirect automobile
loans, of $64.6 million.  While  residential real estate loans have continued to
decline  throughout the past three years, these loans increased slightly in 2000
by $20.1 million, primarily as a result of significant volume experienced during
the fourth quarter  associated with refinancing  activity.  These changes result
from the  focus we have  placed  on our  business  development  efforts  and the
portfolio  repositioning which we began in 1995. This repositioning provided for
substantially all of our conforming  residential  mortgage loan production to be
sold in the secondary mortgage market and the origination of indirect automobile
loans to be substantially reduced.
         Investment  securities  averaged  $431.9  million,  $454.4  million and
$675.7  million  for  the  years  ended  December  31,  2000,   1999  and  1998,
respectively,  reflecting  decreases of $22.5 million and $221.3 million for the
years  ended  December  31,  2000 and 1999,  respectively.  We  attribute  these
decreases primarily to the liquidation of certain acquired investment securities
and to sales of investment securities available for sale necessary to provide an
additional source of funds for our loan growth.  The investment  securities that
we obtained in conjunction with our  acquisitions  during 1999 and 2000 and that
we retained in our portfolio partially offset the decreases.
         We use deposits as our primary  funding  source and acquire them from a
broad base of local markets,  including both individual and corporate customers.
Deposits  averaged $4.48 billion,  $4.06 billion and $3.78 billion for the years
ended December 31, 2000,  1999 and 1998,  respectively.  We credit the increases
primarily to our acquisitions  completed  during the respective  periods and the
expansion of our deposit product and service offerings available to our customer
base. The overall  increase was partially  offset by the  divestiture of certain
branches in 1999 and 2000, which resulted in a reduction in First Bank's deposit
base of approximately $54.8 million and $8.8 million, respectively.
         During July 1998,  First America  Capital Trust issued $46.0 million of
8.50%  trust  preferred  securities.   Proceeds  from  this  offering,   net  of
underwriting fees and offering expenses,  were  approximately  $44.0 million and
were used to reduce  borrowings,  to support possible  repurchases of our common
stock  from time to time and for  general  corporate  purposes.  We  temporarily
invested the remaining  proceeds in  interest-bearing  deposits and subsequently
used them to fund our  acquisition of Redwood  Bancorp  completed in March 1999.
Distributions  payable on the trust preferred securities were $3.9 million, $4.0
million and $1.8 million for the years ended  December 31, 2000,  1999 and 1998,
respectively,  and are  recorded  as  noninterest  expense  in our  accompanying
consolidated financial statements.
         During  October  2000,  First  Preferred  Capital Trust II issued $57.5
million of 10.24% trust preferred securities.  Proceeds from this offering,  net
of underwriting fees and offering expenses, were approximately $55.1 million and
were used to reduce  borrowings.  Distributions  payable on the trust  preferred
securities  were $1.2  million  for the year  ended  December  31,  2000 and are
recorded  as  noninterest  expense in our  accompanying  consolidated  financial
statements.
         Stockholders' equity averaged $321.9 million, $279.8 million and $245.6
million for the years ended December 31, 2000, 1999 and 1998,  respectively.  We
associate  the increase for 2000  primarily to net income of $56.1 million and a
$3.7 million increase in accumulated other comprehensive income,  resulting from
the  change in  unrealized  gains and  losses on  available-for-sale  investment
securities.  The increase was partially offset by FBA's stock repurchases during
2000 and dividends paid on our Class A and Class B preferred stock. We associate
the increase for 1999  primarily to net income of $44.2  million and a reduction
of the  deferred  tax  asset  valuation  reserve  of  $811,000  relating  to the
utilization of tax net operating  losses  incurred by certain  subsidiary  banks
prior to completing quasi-reorganizations.  The increase was partially offset by
a $9.4  million  reduction in other  comprehensive  income,  resulting  from the
change  in  unrealized  gains  and  losses  on   available-for-sale   investment
securities,  FBA's stock repurchases during 1999 and dividends paid on our Class
A and Class B preferred stock.




<PAGE>


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         The following  table sets forth,  on a  tax-equivalent  basis,  certain
information  relating to our average  balance  sheet,  and  reflects the average
yield earned on  interest-earning  assets, the average cost of  interest-bearing
liabilities and the resulting net interest income for the periods indicated.
<TABLE>
<CAPTION>

                                                                   Years Ended December 31,
                                        ------------------------------------------------------------------------------------
                                                     2000                          1999                       1998
                                        -----------------------------    ------------------------    -----------------------
                                                   Interest                        Interest                   Interest
                                         Average    income/  Yield/      Average    income/ Yield/  Average   income/ Yield/
                                         balance    expense   rate       balance    expense  rate   balance   expense  rate
                                                             (dollars expressed in thousands)
                   ASSETS
                   ------

Interest-earning assets:
    Loans: (1) (2) (3)
<S>                                    <C>          <C>        <C>     <C>         <C>       <C>   <C>         <C>      <C>
       Taxable........................ $4,281,290   389,687    9.10%   $3,805,351  322,703   8.48% $3,243,183  283,661  8.75%
       Tax-exempt (4).................      9,668       992   10.26         7,157      775  10.83       7,536      794 10.54
    Investment securities:
       Taxable........................    412,932    27,331    6.62       435,189   26,206   6.02     657,385   39,898  6.07
       Tax-exempt (4).................     18,996     1,478    7.78        19,247    1,442   7.49      18,318    1,515  8.27
    Federal funds sold................     64,465     4,004    6.21        49,464    2,617   5.29      46,509    2,630  5.65
    Other.............................      3,033       198    6.53         1,878      115   6.12       2,853      170  5.96
                                       ----------   -------            ----------  -------         ----------  -------
         Total interest-
          earning assets..............  4,790,384   423,690    8.84     4,318,286  353,858   8.19   3,975,784  328,668  8.27
                                                    -------                        -------                     -------
Nonearning assets.....................    364,333                         344,942                     309,811
                                       ----------                      ----------                  ----------
         Total assets................. $5,154,717                      $4,663,228                  $4,285,595
                                       ==========                      ==========                  ==========

               LIABILITIES AND
            STOCKHOLDERS' EQUITY
            --------------------

Interest-bearing liabilities:
    Interest-bearing deposits:
       Interest-bearing
        demand deposits............... $  421,986     5,909    1.40%   $  391,892    5,098   1.30% $  357,463    5,135  1.44%
       Savings deposits...............  1,279,378    51,656    4.04     1,220,425   44,101   3.61   1,076,524   42,591  3.96
       Time deposits (3)..............  2,139,305   120,257    5.62     1,899,218  101,653   5.35   1,882,329  108,019  5.74
                                        ---------   -------            ----------  -------         ----------  -------
         Total interest-
           bearing deposits...........  3,840,669   177,822    4.63     3,511,535  150,852   4.30   3,316,316  155,745  4.70
    Short-term borrowings (3).........    106,123     5,881    5.54        87,374    4,220   4.83      61,178    2,959  4.84
    Notes payable and other...........     51,897     3,976    7.66        56,376    3,629   6.44      50,718    3,475  6.85
                                       ----------   -------            ----------  -------         ----------  -------
         Total interest-
           bearing liabilities........  3,998,689   187,679    4.69     3,655,285  158,701   4.34   3,428,212  162,179  4.73
                                                    -------                        -------                     -------

Noninterest-bearing liabilities:
    Demand deposits...................    634,886                         552,029                     463,939
    Other liabilities.................    199,215                         176,102                     147,849
                                       ----------                      ----------                  ----------
         Total liabilities............  4,832,790                       4,383,416                   4,040,000
Stockholders' equity..................    321,927                         279,812                     245,595
                                       ----------                      ----------                  ----------
         Total liabilities and
          stockholders' equity........ $5,154,717                      $4,663,228                  $4,285,595
                                       ==========                      ==========                  ==========
Net interest income...................              236,011                        195,157                     166,489
                                                    =======                        =======                     =======
Interest rate spread..................                         4.15                          3.85                       3.54
Net interest margin...................                         4.93%                         4.52%                      4.19%
                                                              =====                         =====                      =====
</TABLE>
--------------------------------
(1)   For purposes  of  these computations, nonaccrual loans are included in the
       average loan amounts.
(2)   Interest income on loans includes loan fees.
(3)   Includes the effects of interest rate exchange agreements.
(4)   Information is presented on a tax-equivalent  basis assuming a tax rate of
      35%. The tax-equivalent adjustments were approximately $864,000,  $776,000
      and  $808,000  for the  years  ended  December  31,  2000,  1999 and 1998,
      respectively.


<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         The following table indicates,  on a tax-equivalent  basis, the changes
in interest  income and interest  expense which are  attributable  to changes in
average  volume and changes in average rates,  in comparison  with the preceding
year. The change in interest due to the combined  rate/volume  variance has been
allocated to rate and volume  changes in proportion to the dollar amounts of the
change in each.
<TABLE>
<CAPTION>

                                                         Increase (decrease) attributable to change in:
                                               ------------------------------------------------------------------
                                                  December 31, 2000 compared         December 31, 1999 compared
                                                     to December 31, 1999               to December 31, 1998
                                               -------------------------------     ------------------------------
                                                                          Net                                Net
                                               Volume        Rate       Change     Volume       Rate       Change
                                               ------        ----       ------     ------       ----       ------
                                                                 (dollars expressed in thousands)

Interest earned on:
    Loans: (1) (2) (3)
<S>                                          <C>           <C>         <C>        <C>         <C>         <C>
       Taxable...........................    $ 42,273      24,711      66,984     48,009      (8,967)     39,042
       Tax-exempt (4)....................         260         (43)        217        (41)         22         (19)
    Investment securities:
       Taxable...........................      (1,389)      2,514       1,125    (13,366)       (326)    (13,692)
       Tax-exempt (4)....................         (19)         55          36         74        (147)        (73)
    Federal funds sold...................         881         506       1,387        161        (174)        (13)
    Other................................          75           8          83        (59)          4         (55)
                                             --------      ------      ------    -------     -------     -------
           Total interest income.........      42,081      27,751      69,832     34,778      (9,588)     25,190
                                             --------      ------      ------    -------     -------     -------
Interest paid on:
    Interest-bearing demand deposits.....         405         406         811        480        (517)        (37)
    Savings deposits.....................       2,180       5,375       7,555      5,445      (3,935)      1,510
    Time deposits (3) ...................      13,296       5,308      18,604        970      (7,336)     (6,366)
    Short-term borrowings (3)............         986         675       1,661      1,267          (6)      1,261
    Notes payable and other..............        (304)        651         347        371        (217)        154
                                             --------      ------      ------    -------     -------     -------
           Total interest expense........      16,563      12,415      28,978      8,533     (12,011)     (3,478)
                                             --------      ------      ------    -------     -------     -------
           Net interest income...........    $ 25,518      15,336      40,854     26,245       2,423      28,668
                                             ========      ======      ======    =======     =======     =======
</TABLE>
-----------------------------
(1)  For  purposes  of  these computations, nonaccrual loans are included in the
     average loan amounts.
(2)  Interest income on loans includes loan fees.
(3)  Includes the effect of interest rate exchange agreements.
(4)  Information  is  presented  on  a  tax-equivalent basis assuming a tax rate
     of 35%.

Net Interest Income

         The primary source of our income is net interest  income,  which is the
difference  between the interest earned on our  interest-earning  assets and the
interest  paid  on  our  interest-bearing   liabilities.   Net  interest  income
(expressed on a  tax-equivalent  basis) improved to $236.0 million,  or 4.93% of
average  interest-earning  assets,  for the year ended  December 31, 2000,  from
$195.2 million,  or 4.52% of  interest-earning  assets,  and $166.5 million,  or
4.19% of  interest-earning  assets,  for the years ended  December  31, 1999 and
1998, respectively.  We credit the improved net interest income primarily to the
net interest-earning  assets provided by our acquisitions,  internal loan growth
and  increases in the prime lending rate which  resulted in increased  yields on
interest-earning  assets. During 2000, the cost of interest-bearing  liabilities
increased with prevailing interest rates. However,  since this increase was less
dramatic  than  the  increase  in  earnings  on   interest-earning   assets,  it
contributed to an improvement in net interest margins.
         Average  total  loans,  net of unearned  discount,  increased by $480.0
million  to $4.29  billion  for the year ended  December  31,  2000,  from $3.81
billion  and $3.25  billion  for the years  ended  December  31,  1999 and 1998,
respectively.  During the period from June 30, 1999  through  December 31, 2000,
the Board of Governors of the Federal Reserve System increased the discount rate
several  times,  resulting in six  increases in the prime rate of interest  from
7.75% to 9.50%, respectively. This is reflected not only in the rate of interest
earned on loans that are indexed to the prime rate, but also in other assets and
liabilities  which either have variable or adjustable rates, or which matured or
repriced during this period.
         The yield on our loan  portfolio  increased to 9.10% for the year ended
December 31, 2000, from 8.48% for the year ended December 31, 1999,  principally
as the result of an increase in prevailing interest rates. However, the improved
yield on our loan portfolio was partially offset by the expense  associated with
our interest rate swap agreements  that we entered into in conjunction  with our
risk  management  program.  Although  our net interest  margin has  continued to
improve over the last three years,  the yield on our loan portfolio  declined to
8.48% for the year ended  December 31, 1999, in comparison to 8.75% for the year


<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

ended  December 31, 1998.  This  reduction  primarily  resulted from the overall
decline in prevailing  interest rates that occurred during the fourth quarter of
1998. In addition,  increased competition within our market areas led to reduced
lending  rates.  The  effect  of the  reduced  yield on our loan  portfolio  was
partially  mitigated  in 1999 by the earnings  impact of our interest  rate swap
agreements as well as:

     >>  the reduction of First Bank's deposit base associated with the divested
         branches, which was primarily concentrated  in certificates of deposit;
         and

     >>  a decrease in the cost of  interest-bearing  liabilities  to 4.34% from
         4.73% for the years ended  December 31, 1999 and 1998, respectively.

         For the years ended  December 31, 2000,  1999 and 1998,  the  aggregate
weighted average rate paid on our interest-bearing  deposit portfolio was 4.63%,
4.30% and 4.70%,  respectively.  The increase for 2000 reflects  increased rates
that we paid to provide a funding source for continued loan growth,  whereas the
decrease  for 1999  primarily  reflects our ongoing  realignment  of the deposit
portfolio and the reduction of First Bank's deposit base. The reduced rates paid
on our deposit  portfolio in 1999 were  partially  offset by  increased  expense
associated with our interest rate swap  agreements.  As further  discussed under
"--Interest Rate Risk," for 1999 and 1998, the increased expense associated with
our derivative financial  instruments resulted from the liquidation of a portion
of   the   underlying   interest-bearing    liabilities.   This   reduction   in
interest-bearing liabilities, primarily associated with our branch divestitures,
resulted in the  recognition of a portion of the related  deferred losses on our
previously terminated interest rate swap agreements.
         The aggregate  weighted average rate on the amounts  outstanding  under
our  revolving  credit line  increased to 7.66% for the year ended  December 31,
2000,  from  6.44% and 6.85% for the years  ended  December  31,  1999 and 1998,
respectively,   reflecting  an  increase  in  market  interest  rates.   Amounts
outstanding  under our $120.0  million  revolving line of credit with a group of
unaffiliated  banks bear interest at the lead bank's  corporate base rate or, at
our option,  at the Eurodollar rate plus a margin  determined by the outstanding
balance and our  profitability.  Thus,  the revolving  credit line  represents a
relatively  high-cost  funding  source,  so that  increased  advances  under the
revolving credit line have the effect of increasing our weighted average rate of
non-deposit liabilities.

Interest Rate Risk Management

         For financial institutions,  the maintenance of a satisfactory level of
net interest income is a primary factor in achieving  acceptable  income levels.
However,  the maturity and repricing  characteristics  of the institution's loan
and investment portfolios,  relative to those within its deposit structure,  may
differ  significantly.  The nature of the loan and deposit  markets within which
such institution  operates,  and its objectives for business  development within
those markets at any point in time influence these characteristics. In addition,
the ability of borrowers to repay loans and  depositors to withdraw  funds prior
to stated  maturity dates  introduces  divergent  option  characteristics  which
operate primarily as interest rates change. These factors cause various elements
of the  institution's  balance  sheet  to  react  in  different  manners  and at
different  times  relative  to changes in  interest  rates,  thereby  leading to
increases  or decreases in net  interest  income over time.  Depending  upon the
direction  and  velocity  of interest  rate  movements  and their  effect on the
specific  components  of the  institution's  balance  sheet,  the effects on net
interest  income  can  be  substantial.   Consequently,   managing  a  financial
institution  requires  establishing  effective  control of the  exposure  of the
institution to changes in interest rates.
         We manage our interest rate risk by:

     >>  maintaining an Asset Liability Committee,  or ALCO, responsible to  our
         Board  of  Directors,  to  review   the  overall  interest   rate  risk
         management activity and approve actions taken to reduce risk;

     >>  maintaining an effective simulation model to determine our exposure  to
         changes in interest rates;

     >>  coordinating the lending, investing and deposit-generating functions to
         control the assumption of interest rate risk; and

     >>  employing various off-balance-sheet financial   instruments,  including
         derivatives,  to  offset inherent interest rate  risk when  it  becomes
         excessive.  The  objective of these  procedures is to limit the adverse
         impact that changes in interest  rates  may have  on  our  net interest
         income.


<PAGE>


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         The ALCO has overall  responsibility  for the  effective  management of
interest rate risk and the approval of policy guidelines.  The ALCO includes our
Chairman, Chief Executive Officer and President as well as the senior executives
of investments, credit, banking support and finance, and certain other officers.
The Asset  Liability  Management  Group,  which  monitors  interest  rate  risk,
supports  the ALCO,  prepares  analyses  for  review by the ALCO and  implements
actions which are either  specifically  directed by the ALCO or  established  by
policy guidelines.
         In interest  sensitivity  management,  we strive to  optimize  earnings
results,  while managing interest rate risk within internal policy  constraints.
Regarding rate sensitivity,  our policy is to manage exposure to potential risks
associated  with changing  interest rates by maintaining a balance sheet posture
in which annual net interest income is not significantly  impacted by reasonably
possible  near-term changes in interest rates. To measure the effect of interest
rate changes,  we calculate  our net income over two one-year  horizons on a pro
forma basis. The analysis assumes various  scenarios for increases and decreases
in interest rates  including both  instantaneous  and gradual,  and parallel and
non-parallel  shifts in the yield  curve,  in varying  amounts.  For purposes of
arriving at reasonably  possible near-term changes in interest rates, we include
scenarios based on actual changes in interest rates,  which have occurred over a
two-year period,  simulating both a declining and rising interest rate scenario.
We are "asset-sensitive," and our simulation model indicates a loss of projected
net income should  interest rates decline.  While a decline in interest rates of
less than 100 basis points has a relatively  minimal  impact on our net interest
income,  a decline in interest  rates of 100 basis points  indicates a projected
pre-tax  loss of  approximately  5.2% of net interest  income,  and a decline in
interest  rates of 200  basis  points  indicates  a  pre-tax  projected  loss of
approximately  7.1% of net interest  income,  based on assets and liabilities at
December 31, 2000.
         We utilize off-balance-sheet derivative financial instruments to assist
in our  management of interest  rate  sensitivity  and to modify the  repricing,
maturity and option characteristics of on-balance-sheet  assets and liabilities.
We limit  the use of such  derivative  financial  instruments  to  reducing  our
interest rate exposure.  As more fully described in Note 12 to our  consolidated
financial statements, the derivative financial instruments we hold, for purposes
of managing interest rate risk, are summarized as follows:
<TABLE>
<CAPTION>

                                                                                   December 31,
                                                             ------------------------------------------------------
                                                                        2000                         1999
                                                             --------------------------  --------------------------
                                                               Notional        Credit       Notional       Credit
                                                                amount        exposure       amount       exposure
                                                                ------        --------       ------       --------
                                                                         (dollars expressed in thousands)

     Interest rate swap agreements - pay
<S>                                                          <C>               <C>          <C>              <C>
       adjustable rate, receive fixed rate.................  $ 1,105,000       4,207        455,000          3,349
     Interest rate swap agreements - pay
       adjustable rate, receive adjustable rate............           --          --        500,000             --
     Interest rate floor agreements........................       35,000           6         35,000             13
     Interest rate cap agreements..........................      450,000       3,753         10,000             26
     Forward commitments to sell
       mortgage-backed securities..........................       32,000          --         33,000             --
                                                             ===========       =====        =======          =====
</TABLE>

         The  notional  amounts  of  derivative  financial  instruments  do  not
represent amounts exchanged by the parties and, therefore,  are not a measure of
our credit exposure  through the use of these  instruments.  The credit exposure
represents  the accounting  loss we would incur in the event the  counterparties
failed completely to perform according to the terms of the derivative  financial
instruments  and the  collateral  held to support the credit  exposure was of no
value.
         Previously,  we utilized  interest  rate swap  agreements to extend the
repricing  characteristics  of  certain  interest-bearing  liabilities  to  more
closely correspond with our assets, with the objective of stabilizing cash flow,
and  accordingly,  net interest  income,  over time.  These swap agreements were
terminated due to a change in the  composition of our balance sheet.  The change
in the composition of our balance sheet was primarily  driven by the significant
decline in interest rates  experienced  during 1995, which caused an increase in
the  principal  prepayments  of  residential  mortgage  loans.  The net interest
expense associated with these agreements,  consisting  primarily of amortization
of  deferred  losses,  was $5.7  million  and $3.7  million  for the years ended
December 31, 1999 and 1998, respectively. The deferred losses on terminated swap
agreements were amortized over the remaining lives of the agreements, unless the
underlying  liabilities  were  repaid,  in which case the  deferred  losses were
immediately charged to operations.  There were no remaining unamortized deferred
losses on the terminated swap agreements at December 31, 1999.


<PAGE>

          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (CONTINUED)

         During 1998, we entered into $280.0 million notional amount of interest
rate swap  agreements.  The swap agreements  effectively  lengthen the repricing
characteristics  of certain  interest-earning  assets to correspond more closely
with their  funding  source with the  objective of  stabilizing  cash flow,  and
accordingly,  net interest  income,  over time.  The swap  agreements  initially
provided for us to receive a fixed rate of interest and pay an  adjustable  rate
equivalent  to the 90-day London  Interbank  Offering  Rate. In March 2000,  the
terms of the  swap  agreements  were  modified  such  that we  currently  pay an
adjustable  rate of interest  equivalent  to the daily  weighted  average  prime
lending rate minus 2.705%.  The terms of the swap  agreements  provide for us to
pay  quarterly and receive  payment  semiannually.  The amount  receivable by us
under the swap  agreements  was $4.1 million at December 31, 2000 and 1999,  and
the amounts  payable by us under the swap  agreements were $744,000 and $770,000
at December 31, 2000 and 1999, respectively.
         During May 1999,  we entered  into $500.0  million  notional  amount of
interest rate swap agreements with the objective of stabilizing the net interest
margin  during the  six-month  period  surrounding  the Year 2000  century  date
change.  The swap  agreements  provided for us to receive an adjustable  rate of
interest  equivalent  to the daily  weighted  average  30-day  London  Interbank
Offering  Rate and pay an  adjustable  rate of interest  equivalent to the daily
weighted  average  prime  lending  rate  minus  2.665%.  The  terms  of the swap
agreements,  which had an effective  date of October 1, 1999 and a maturity date
of March 31,  2000,  provided  for us to pay and  receive  interest on a monthly
basis.  In January  2000,  we determined  these swap  agreements  were no longer
necessary  based upon the  results of the Year 2000  transition  and  terminated
these agreements resulting in a cost of $150,000.
         During  September 1999, we entered into $175.0 million  notional amount
of  interest  rate  swap  agreements  to  effectively   lengthen  the  repricing
characteristics  of certain  interest-earning  assets to correspond more closely
with their  funding  source with the  objective of  stabilizing  cash flow,  and
accordingly,  net interest income, over time. The swap agreements provide for us
to receive a fixed rate of interest and pay an adjustable rate equivalent to the
weighted  average  prime  lending  rate  minus  2.70%.  The  terms  of the  swap
agreements  provide for us to pay and receive interest on a quarterly basis. The
amount  receivable by us under the swap  agreements was $119,000 at December 31,
2000 and 1999 and the  amounts  payable  by us under  the swap  agreements  were
$165,000 and $141,000 at December 31, 2000 and 1999, respectively.
         During  September 2000, we entered into $600.0 million  notional amount
of  interest  rate  swap  agreements  to  effectively   lengthen  the  repricing
characteristics  of certain  interest-earning  assets to correspond more closely
with their  funding  source with the  objective of  stabilizing  cash flow,  and
accordingly,  net interest income, over time. The swap agreements provide for us
to receive a fixed rate of interest and pay an adjustable rate equivalent to the
weighted  average  prime  lending  rate  minus  2.70%.  The  terms  of the  swap
agreements  provide for us to pay and receive interest on a quarterly basis. The
amount  receivable and payable by us under the swap  agreements was $1.2 million
at December 31, 2000. In conjunction  with these interest rate swap  agreements,
we also  entered  into  $450.0  million  notional  amount of  interest  rate cap
agreements to limit the net interest  expense  associated with the interest rate
swap  agreements.  The interest rate cap agreements  provide for us to receive a
quarterly  adjustable  rate of interest  equivalent  to the  three-month  London
Interbank Offering Rate, should such rate exceed the predetermined interest rate
of 7.50%.  At December 31,  2000,  the  unamortized  costs  associated  with the
interest  rate cap  agreements  were $3.8  million,  and were  included in other
assets.
         During September 2000, we entered into $25.0 million notional amount of
one-year  interest rate swap  agreements  and $25.0 million of five and one-half
year  interest  rate  swap  agreements  to  effectively  shorten  the  repricing
characteristics  of certain  interest-bearing  liabilities with the objective of
stabilizing cash flow, and accordingly, net interest income, over time. The swap
agreements  provide for us to receive fixed rates of interest  ranging from 6.6%
to  7.25%  and pay an  adjustable  rate  equivalent  to the  three-month  London
Interbank  Offering Rate minus rates  ranging from 0.02% to 0.11%.  The terms of
the swap  agreements  provide for us to pay  interest  on a quarterly  basis and
receive  interest on either a semi-annual  basis or an annual basis.  The amount
receivable by us under the swap agreements was $1.0 million at December 31, 2000
and the amount payable by us under the swap  agreements was $119,000 at December
31, 2000.
         We also utilize  interest  rate cap and floor  agreements  to limit the
interest expense  associated with certain  interest-bearing  liabilities and the
net interest expense of certain interest rate swap agreements,  respectively. At
December  31, 2000 and 1999,  the  unamortized  costs of these  agreements  were
$6,000 and $32,000, respectively, and were included in other assets.
         During  2000  and  1998,  we  realized  net  interest  expense  on  our
derivative financial instruments of $4.7 million and $4.0 million, respectively,
in  comparison  to net  interest  income of  $430,000  that we  realized  on our
derivative financial instruments in 1999.



<PAGE>


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         As more  fully  described  in Note 1 to our  accompanying  consolidated
financial  statements,  in the event of early  termination  of the interest rate
swap  agreements,  the net proceeds  received or paid are deferred and amortized
over the shorter of the  remaining  contract life or the maturity of the related
asset. If, however,  the amount of the underlying asset is repaid, then the fair
value  gains or  losses on the  interest  rate swap  agreements  are  recognized
immediately in our consolidated statements of income.
         As further discussed under "--Mortgage Banking Activities,"  derivative
financial  instruments  that we issue consist solely of commitments to originate
fixed-rate loans. Commitments to originate fixed-rate loans consist primarily of
residential  real  estate  loans.  These  loan  commitments,  net  of  estimated
underwriting  fallout, and loans held for sale are hedged with forward contracts
to sell mortgage-backed securities.
         In addition to the simulation  model, we also prepare and review a more
traditional  interest rate sensitivity  position in conjunction with the results
of the simulation  model. The following table presents the projected  maturities
and periods to  repricing of our rate  sensitive  assets and  liabilities  as of
December 31, 2000, adjusted to account for anticipated prepayments:
<TABLE>
<CAPTION>

                                                                Over three   Over six
                                                     Three        through     through    Over one
                                                    months          six       twelve      through    Over five
                                                    or less       months      months    five years     years       Total
                                                    -------       ------      ------    ----------     -----       -----
                                                                    (dollars expressed in thousands)

Interest-earning assets:
<S>                                                <C>           <C>          <C>         <C>          <C>       <C>
    Loans (1)..................................   $3,021,904     411,886     585,481      715,661      17,333    4,752,265
    Investment securities......................      201,079      29,041      33,151      242,969      57,294      563,534
    Federal funds sold.........................       26,800          --          --           --          --       26,800
    Interest-bearing deposits with other
      financial institutions...................        4,005          --          --           --          --        4,005
                                                  ----------    --------    --------    ---------    --------    ---------
        Total interest-earning assets..........    3,253,788     440,927     618,632      958,630      74,627    5,346,604
    Effect of interest rate swap agreements....   (1,105,000)         --     200,000      880,000      25,000           --
                                                  ----------    --------    --------    ---------    --------    ---------
        Total interest-earning assets
           after the effect of interest
           rate swap agreements................   $2,148,788     440,927     818,632    1,838,630      99,627    5,346,604
                                                  ==========    ========    ========    =========    ========    =========
Interest-bearing liabilities:
    Interest-bearing demand accounts...........   $  165,814     103,074      67,222       49,296      62,740      448,146
    Savings accounts...........................      258,749      52,586      45,074       63,855     150,246      570,510
    Money market demand accounts...............      877,388          --          --           --          --      877,388
    Time deposits..............................      499,229     449,177     692,428      641,728      25,558    2,308,120
    Other borrowed funds.......................      130,025          --      83,000       10,544          --      223,569
                                                  ----------    --------    --------     --------    --------    ---------
        Total interest-bearing liabilities.....    1,931,205     604,837     887,724      765,423     238,544    4,427,733
    Effect of interest rate swap agreements....       50,000          --     (25,000)          --     (25,000)          --
                                                  ----------    --------    --------    ---------    --------    ---------
        Total interest-bearing liabilities
           after the effect of interest
           rate swap agreements................   $1,981,205     604,837     862,724      765,423     213,544    4,427,733
                                                  ==========    ========    ========    =========    ========    =========
Interest sensitivity gap:
    Periodic...................................   $  167,583    (163,910)    (44,092)   1,073,207    (113,917)     918,871
                                                                                                                 =========

    Cumulative.................................      167,583       3,673     (40,419)   1,032,788     918,871
                                                  ==========    ========    ========    =========    ========
Ratio of interest-sensitive assets to
    interest-sensitive liabilities:
      Periodic.................................         1.08        0.73        0.95         2.40        0.47         1.21
                                                                                                                 =========
      Cumulative...............................         1.08        1.00        0.99         1.25        1.21
                                                  ==========    ========    ========    =========    ========
</TABLE>
-----------------------
(1) Loans are presented net of unearned discount.

         Management made certain assumptions in preparing the table above. These
assumptions included:

    >> loans will repay at projected repayment speeds;

    >> mortgage-backed securities, included in investment securities, will repay
       at projected repayment speeds;

    >> interest-bearing  demand  accounts  and  savings accounts  are  interest-
       sensitive at rates ranging  from 11% to 37% and 12% to 40%, respectively,
       of the remaining balance for each period presented; and

    >> fixed maturity deposits will not be withdrawn prior to maturity.
<PAGE>


          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         A  significant  variance  in actual  results  from one or more of these
assumptions could materially affect the results reflected in the table.
         At December 31, 2000, our liability-sensitive  position on a cumulative
basis through the twelve-month time horizon was $40.4 million, or 0.69% of total
assets,  in comparison  to our  asset-sensitive  position on a cumulative  basis
through the twelve-month time horizon of $76.1 million, or 1.56% of total assets
at December 31, 1999. The liability  sensitive  position is  attributable to the
composition  of our loan and investment  security  portfolios as compared to our
deposit  base.  We  attribute  the  change  for 2000 to the  interest  rate swap
agreements  entered  into in June  1998,  September  1998,  September  1999  and
September 2000.
         The interest-sensitivity position is one of several measurements of the
impact of interest  rate  changes on net  interest  income.  Its  usefulness  in
assessing the effect of potential changes in net interest income varies with the
constant  change in the composition of our assets and liabilities and changes in
interest rates. For this reason, we place greater emphasis on a simulation model
for monitoring our interest rate risk exposure.

Mortgage Banking Activities

         Our mortgage banking  activities  consist of the origination,  purchase
and servicing of residential mortgage loans.  Generally,  we sell our production
of residential  mortgage loans in the secondary loan markets.  Servicing  rights
are retained with respect to conforming  fixed-rate  residential mortgage loans.
We sell other loans,  including  adjustable-rate  and nonconforming  residential
mortgage loans, on a servicing released basis.
         For the  three  years  ended  December  31,  2000,  1999 and  1998,  we
originated  and  purchased  loans for resale  totaling  $532.2  million,  $452.9
million  and $628.5  million  and sold loans  totaling  $413.2  million,  $507.1
million  and $521.0  million,  respectively.  The  origination  and  purchase of
residential  mortgage  loans and the related sale of the loans  provides us with
additional sources of income including the gain realized upon sale, the interest
income  earned  while  the  loan is held  awaiting  sale  and the  ongoing  loan
servicing  fees from the loans sold with  servicing  rights  retained.  Mortgage
loans  serviced for investors  aggregated  $957.2  million,  $957.1  million and
$923.0 million at December 31, 2000, 1999 and 1998, respectively.
         The gain on mortgage loans originated for resale,  including loans sold
and held for sale, was $7.8 million, $6.9 million and $5.6 million for the years
ended December 31, 2000, 1999 and 1998, respectively.  We determine these gains,
net of losses,  on a lower of cost or market basis.  These gains are realized at
the time of sale.  The cost basis  reflects:  (1)  adjustments  of the  carrying
values of loans held for sale to the lower of cost, adjusted to include the cost
of  hedging  the  loans  held  for  sale,  or  current  market  values;  and (2)
adjustments  for any gains or losses on loan  commitments for which the interest
rate has been established,  net of anticipated  underwriting "fallout," adjusted
for the cost of hedging these loan commitments. We credit the increases for 2000
and 1999 to the continued  expansion of our mortgage banking activities into the
California and Texas markets and the related  additional volume of nonconforming
loans prominent in those markets.
         The  interest  income on loans held for sale was $3.5  million  for the
year ended  December 31, 2000 in comparison to $4.9 million and $6.8 million for
the years ended December 31, 1999 and 1998, respectively. The amount of interest
income  realized on loans held for sale is a function of the average  balance of
loans held for sale,  the period for which the loans are held and the prevailing
interest  rates when the loans are made.  The average  balance of loans held for
sale was $47.0  million,  $79.1  million and $102.7  million for the years ended
December 31, 2000,  1999 and 1998,  respectively.  On an annualized  basis,  our
yield on the portfolio of loans held for sale was 7.45%, 6.19% and 6.62% for the
years ended December 31, 2000, 1999 and 1998,  respectively.  This compares with
our cost of funds, as a percentage of average interest-bearing  liabilities,  of
4.69%,  4.34% and 4.73% for the years ended  December 31,  2000,  1999 and 1998,
respectively.
         We report  mortgage loan servicing fees net of amortization of mortgage
servicing rights, interest shortfall and mortgage-backed  security guarantee fee
expense. Interest shortfall equals the difference between the interest collected
from a  loan-servicing  customer upon  prepayment of the loan and a full month's
interest that is required to be remitted to the security  owner.  Loan servicing
fees, net, were $486,000, $657,000 and $1.0 million for the years ended December
31,  2000,  1999 and 1998,  respectively.  We  attribute  the  decrease  in loan
servicing fees for 2000 and 1999 to increased amortization of mortgage servicing
rights,  reduced late charge fees and our strategy of selling the new production
of adjustable-rate and nonconforming  residential  mortgage loans on a servicing
released  basis.  In addition,  mortgage-backed  security  expense  increased by
$333,000 to $1.2 million from $867,000 for the years ended December 31, 1999 and
1998,  respectively,  reflecting the increased level of serviced loans sold into
the secondary market in the form of securities.



<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         As described under "--Interest Rate Risk Management," our interest rate
risk  management  policy  provides  certain  hedging  parameters  to reduce  the
interest rate risk exposure arising from changes in loan prices from the time of
commitment  until the sale of the security or loan. To reduce this exposure,  we
use forward  commitments  to sell  fixed-rate  mortgage-backed  securities  at a
specified date in the future.  At December 31, 2000, 1999 and 1998, we had $37.6
million, $31.5 million and $103.1 million,  respectively, of loans held for sale
and related commitments,  net of committed loan sales and estimated underwriting
fallout, of which $32.0 million, $33.0 million and $95.0 million,  respectively,
were hedged through the use of such forward commitments.

Comparison of Results of Operations for 2000 and 1999

         Net Income.  Net income was $56.1  million for the year ended  December
31, 2000, compared to $44.2 million for 1999. The earnings progress for 2000 was
primarily   driven  by  increased  net  interest   income   generated  from  our
acquisitions  completed  throughout  1999 and 2000;  the  continued  growth  and
diversification  in the composition of our loan portfolio;  and increased yields
on interest-earning  assets. We funded the overall loan growth primarily through
deposits added through  acquisitions and internal  deposit growth.  Net interest
income  (expressed on a  tax-equivalent  basis) improved to $236.0  million,  or
4.93% of average  interest-earning  assets,  from  $195.2  million,  or 4.52% of
average interest-earning assets, for the years ended December 31, 2000 and 1999,
respectively.
        The  increase  in  net  income  was  partially  offset  by an  increased
provision for loan losses and an increase in operating expenses of $20.4 million
for the year ended  December 31, 2000,  in  comparison  to 1999.  The  increased
operating  expenses  reflect  the  operating  expenses  of  our  1999  and  2000
acquisitions   subsequent  to  their  respective  acquisition  dates;  increased
salaries  and  employee  benefit  expenses;   increased  data  processing  fees;
increased   amortization   of  intangibles   associated  with  the  purchase  of
subsidiaries and increased  guaranteed preferred debentures expense. A reduction
in legal,  examination and  professional  fees partially  offset the increase in
operating expenses.

Provision  for Loan Losses.  The provision for loan losses was $14.1 million and
$13.1 million for the years ended December 31, 2000 and 1999,  respectively.  We
attribute the increase in the provision for loan losses primarily to the overall
growth in the loan portfolio, both internal and through acquisitions, as well as
a general increase in risk associated with the continued changing composition of
our loan  portfolio and an increase in  nonperforming  assets,  which is further
discussed under "--Loans and Allowance for Loan Losses." Loan  charge-offs  were
$17.1  million for the year ended  December 31,  2000,  in  comparison  to $17.7
million for the year ended December 31, 1999.  Included in  charge-offs  for the
year ended  December  31, 2000 was $1.6 million  relating to a single loan.  The
overall  decrease  in  loan   charge-offs,   excluding  the  large   single-loan
charge-off,  is indicative of the generally strong economic conditions prevalent
in our markets, as well as management's continued efforts to effectively monitor
and manage our loan  portfolio.  Loan  recoveries were $9.8 million for the year
ended  December 31, 2000,  in  comparison  to $9.3 million for 1999,  reflecting
continued  aggressive  collection efforts. Our acquisitions during 1999 and 2000
provided $3.0 million and $6.1 million,  respectively,  in additional  allowance
for loan losses at their respective acquisition dates.
         The following  table  represents a summary of loan loss  experience and
nonperforming  assets  for First  Bank and FB&T  (including  BSF,  which will be
merged with FB&T) for the years ended December 31, 2000 and 1999:
<TABLE>
<CAPTION>

                                                                               First Bank                 FB&T
                                                                            ----------------       -----------------
                                                                            2000        1999       2000         1999
                                                                            ----        ----       ----         ----
                                                                                (dollars expressed in thousands)


<S>                                                                      <C>         <C>          <C>        <C>
    Total loans.......................................................   $2,694,005  2,527,649    2,058,628  1,469,093
    Total assets......................................................    3,152,885  3,028,046    2,733,545  1,854,827
    Provision for loan losses.........................................       12,250      8,890        1,877      4,183
    Net loan charge-offs..............................................        7,007      6,494          201      1,946
    Net loan charge-offs as a percentage of average loans.............         0.26%      0.26%        0.01%      0.15%
    Nonperforming loans...............................................       38,161     23,493       15,005     16,244
    Nonperforming assets..............................................       39,954     25,233       15,699     16,633

</TABLE>


<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Noninterest   Income  and  Expense.   The  following  table  summarizes
noninterest income and noninterest expense for the years ended December 31, 2000
and 1999:
<TABLE>
<CAPTION>

                                                                                 December 31,        Increase (Decrease)
                                                                              -----------------      -------------------
                                                                              2000         1999        Amount       %
                                                                              ----         ----        ------       -
                                                                                   (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>         <C>        <C>
        Service charges on deposit accounts and customer service fees....   $  19,794     17,676      2,118      11.98%
        Credit card fees.................................................         236        409       (173)    (42.30)
        Loan servicing fees, net.........................................         486        657       (171)    (26.03)
        Gain on mortgage loans sold and held for sale....................       7,806      6,909        897      12.98
        Net gain on sales of available-for-sale securities...............         168        791       (623)    (78.76)
        Net loss on trading securities...................................          --       (303)       303    (100.00)
        Gain on sales of branches, net of expenses.......................       1,355      4,406     (3,051)    (69.25)
        Other............................................................      12,933     11,105      1,828      16.46
                                                                            ---------   --------    -------
              Total noninterest income...................................   $  42,778     41,650      1,128       2.71
                                                                            =========   ========    =======    =======

     Noninterest expense:
        Salaries and employee benefits...................................  $  73,391     61,524     11,867      19.29%
        Occupancy, net of rental income..................................     14,675     12,518      2,157      17.23
        Furniture and equipment..........................................     11,702      8,520      3,182      37.35
        Postage, printing and supplies...................................      4,431      4,244        187       4.41
        Data processing fees.............................................     22,359     18,567      3,792      20.42
        Legal, examination and professional fees.........................      4,523      9,109     (4,586)    (50.35)
        Communications...................................................      2,625      2,488        137       5.51
        Advertising and business development.............................      4,331      3,734        597      15.99
        Guaranteed preferred debentures..................................     13,173     12,050      1,123       9.32
        Other............................................................     19,953     18,053      1,900      10.52
                                                                           ---------   --------    -------
             Total noninterest expense...................................  $ 171,163    150,807     20,356      13.50
                                                                           =========   ========    =======    =======
</TABLE>

         Noninterest  Income.  Noninterest income was $42.8 million for the year
ended December 31, 2000, compared to $41.7 million for 1999.  Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees, mortgage banking revenues and other income.
         Service charges on deposit accounts and customer service fees increased
to $19.8  million  for 2000,  from $17.7  million  for 1999.  We  attribute  the
increase in service charges and customer service fees to:

    >>  increased deposit balances provided by internal growth;

    >>  our acquisitions completed throughout 1999 and 2000;

    >>  additional products and services available and utilized by our expanding
        base of retail and commercial customers;

    >>  increased fee income resulting from revisions of customer service charge
        rates  effective  April 1, 1999 and June 30, 2000,  and enhanced control
        of fee waivers; and

    >>  increased  interchange  income associated with automatic teller machine
        services and debit and credit cards.

         The gain on  mortgage  loans sold and held for sale  increased  to $7.8
million  from $6.9  million  for the years  ended  December  31,  2000 and 1999,
respectively. We attribute the increase to an increased volume of loans sold and
held for sale, primarily during the fourth quarter of 2000, including fixed rate
residential  mortgage loans,  which are sold on a servicing  retained basis, and
adjustable-rate and non-conforming residential mortgage loans, which are sold on
a servicing released basis.



<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         The net gain on sales of available-for-sale securities was $168,000 and
$791,000  for the years ended  December 31, 2000 and 1999,  respectively.  These
gains  resulted  from  sales  of  available-for-sale   securities  necessary  to
facilitate  the funding of loan growth.  The decrease in the net gains  reflects
the sales,  at a loss, of certain  investment  securities  that did not meet our
overall investment objectives.
         The net loss on sales of trading  securities  was $303,000 for the year
ended December 31, 1999 resulted from the  termination of our trading  division,
effective  December  31, 1998,  and the  liquidation  of all trading  securities
during the first quarter of 1999.
         The gain on sales of branches,  net of  expenses,  was $1.4 million and
$4.4 million for the years ended December 31, 2000 and 1999,  respectively.  The
reduction in these gains results from a reduced  number of branch  divestitures.
During  2000,  we  divested  one of our branch  locations  in central  Illinois,
whereas in 1999,  we  divested  seven  branch  offices in central  and  northern
Illinois.
         Other  income was $12.9  million and $11.1  million for the years ended
December  31,  2000 and 1999,  respectively.  The  increase  in other  income is
primarily   attributable  to  increased  income  earned  on  our  investment  in
bank-owned  life  insurance,   rental  income   associated  with  FCG's  leasing
activities and increased rental fees received from First Services,  L.P. for the
use of data  processing and other  equipment owned by us. The increase in rental
fees  corresponds  to the  replacement  of our teller  system and certain  other
technological  upgrades,  including local and wide area  network-based  systems,
core  processors  and item  processing  equipment  that were replaced in 1999 in
preparation for the Year 2000 transition.

         Noninterest  Expense.  Noninterest  expense was $171.2  million for the
year ended  December 31, 2000,  in comparison  to $150.8  million for 1999.  The
increase reflects:

   >>    the noninterest  expense  associated  with  our  acquisitions completed
         throughout 1999 and  2000 subsequent to  their  respective  acquisition
         dates, including certain  nonrecurring  expenses  associated with those
         acquisitions;

   >>    increased salaries and employee benefit expenses;

   >>    increased data processing fees;

   >>    increased amortization of  intangibles associated with the purchase of
         subsidiaries;

   >>    increased guaranteed preferred debentures expense; and

   >>    increased expenses associated with our internal restructuring process.

         The overall  increase in noninterest  expense was partially offset by a
decrease in legal, examination and professional fees.
         During 1999,  we began an internal  restructuring  process  designed to
better  position  us for future  growth  and  opportunities  expected  to become
available  as  consolidation  and changes  continue in the delivery of financial
services.  The magnitude of this project was extensive and covered  almost every
area of our organization.  The primary  objectives of the restructuring  process
were to:

   >>    redesign  the  corporate   organization  to   provide  clearer lines of
         authority  which  are  more conducive  to  the  effective  delivery  of
         services to customers;

   >>    enhance    our    technological   strength   to   enable   us  to  more
         effectively  and   efficiently   provide  the  products,  services  and
         delivery  channels  necessary  to  remain  competitive in the financial
         services industry of the future;

   >>    establish the infrastructure necessary to  better support  our  service
         delivery   and  business  development  efforts,  and  to  provide  more
         efficient, better quality services to customers;

   >>    increase the depth and  abilities of all levels of our  management  and
         provide  supervision  to lead its efforts to  accomplish  our corporate
         objectives; and

   >>    improve  internal  monitoring  systems  in  order to better  assess the
         progress of all of our areas in achieving  our corporate objectives.
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Although  these  efforts  have  primarily  led  to  increased   capital
expenditures  and  noninterest  expenses in the short term as further  discussed
below,  we anticipate  they will lead to more effective  internal  growth,  more
efficient operations and improved profitability over the long term.
         Salaries and  employee  benefits  increased  by $11.9  million to $73.4
million  from $61.5  million  for the years  ended  December  31, 2000 and 1999,
respectively.   We  primarily  associate  the  increase  with  our  acquisitions
completed  throughout 1999 and 2000 as well as the additional  lines of business
that  we  entered  into  in  2000,  including  institutional  money  management,
international  banking and fiduciary deposit management for bankruptcy trustees,
receivers and other estate  administrators.  However, the increase also reflects
the  competitive  environment  in the  employment  market that has resulted in a
higher  demand  for  limited  resources,  thus  escalating  industry  salary and
employee  benefit  costs  associated  with  employing  and  retaining  qualified
personnel.  In addition, the increase includes various additions to our staff to
enhance executive and senior management expertise, improve technological support
and strengthen centralized operational functions.
         Occupancy,  net of rental income,  and furniture and equipment  expense
totaled $26.4  million and $21.0  million for the years ended  December 31, 2000
and  1999,   respectively.   The  increase  is  primarily  attributable  to  our
acquisitions,  the  relocation  of certain  California  and Texas  branches  and
increased  depreciation  expense  associated with numerous capital  expenditures
made throughout 1999, including the implementation of our new teller system. Our
selective  elimination of 16 branch offices by sales, mergers or closures during
1999 and 2000 partially offset this increase.
         Data processing fees were $22.4 million and $18.6 million for the years
ended December 31, 2000 and 1999, respectively.  As more fully discussed in Note
17 to our accompanying consolidated financial statements,  First Services, L.P.,
a limited  partnership  indirectly owned by our Chairman and his adult children,
provides data  processing and various related  services to our subsidiary  banks
and us under the terms of data processing agreements. We attribute the increased
data processing fees to growth and  technological  advancements  consistent with
our product and  service  offerings  and  upgrades to  technological  equipment,
networks and communication channels.
         Legal,  examination  and  professional  fees were $4.5 million and $9.1
million  for the years  ended  December  31,  2000 and 1999,  respectively.  The
decrease in these fees  results  from a decline in our  utilization  of external
consultants  who  provided  assistance   throughout  1999  associated  with  the
development and expansion of selected  business  initiatives.  The decrease also
reflects the settlement of certain litigation completed in 1999.
         Guaranteed  preferred  debentures  expense was $13.2  million and $12.1
million  for the years  ended  December  31,  2000 and 1999,  respectively.  The
increase for 2000 is solely  attributable to First Preferred  Capital Trust II's
issuance of trust preferred  securities on October 19, 2000 as further described
in Note 9 to our accompanying consolidated financial statements.
         Other  expense was $20.0  million and $18.1 million for the years ended
December 31, 2000 and 1999,  respectively.  Other expense  encompasses  numerous
general and administrative  expenses including but not limited to travel,  meals
and entertainment,  insurance, freight and courier services,  correspondent bank
charges,   amortization   of  intangibles   associated   with  the  purchase  of
subsidiaries,  miscellaneous losses and recoveries, and sales taxes. The overall
increase in these expenses primarily reflects:

    >>   continued growth and expansion of our banking franchise;

    >>   increased  amortization of intangibles  associated with the purchase of
         subsidiaries of $900,000,  attributable  solely  to  our   acquisitions
         completed throughout 1999 and 2000;

    >>   a $700,000  provision  for  an  estimated  loss on equipment underlying
         leases associated with a previously acquired entity; and

    >>   a $200,000  provision  for  estimated  losses  associated  with certain
         pending litigation.

         Offsetting  the  overall  increase  in  other  expenses  in  2000  were
recoveries  of $1.8 million from loans of acquired  entities that had been fully
charged off prior to the acquisition dates.



<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

Comparison of Results of Operations for 1999 and 1998

         Net Income.  Net income was $44.2  million for the year ended  December
31,  1999,  compared  to $33.5  million  for 1998.  We  associate  the  improved
operating  results for 1999 with our efforts to realign the  composition  of our
loan portfolio through further  diversification  and growth;  the improvement in
the composition of the interest-earning assets and interest-bearing liabilities;
the results of our  acquisitions  of Century Bank and Redwood  Bancorp;  and the
divestiture of certain branch  facilities.  Net interest income  (expressed on a
tax-equivalent   basis)  improved  to  $195.2  million,   or  4.52%  of  average
interest-earning   assets,   from   $166.5   million,   or  4.19%   of   average
interest-earning assets, for 1999 and 1998, respectively.
        An  increased  provision  for loan losses and an  increase in  operating
expenses  partially  offset the  improvement  in net  income.  The  increase  in
operating expense reflects the additional cost of the trust preferred securities
issued by FBA in July 1998;  the  continuing  expansion of commercial and retail
banking  activities;  the  acquisitions  of Century  Bank and  Redwood  Bancorp;
increased  legal,   examination  and  professional   fees;  and  increased  data
processing fees primarily associated with Year 2000 activities.

         Provision  for Loan  Losses.  The  provision  for loan losses was $13.1
million  and $9.0  million  for the  years  ended  December  31,  1999 and 1998,
respectively.  We primarily  attribute  the increase in the  provision  for loan
losses for 1999 to the  continued  growth and changing  composition  of our loan
portfolio combined with an increase in loans  charged-off.  Net loan charge-offs
were $8.4 million for the year ended December 31, 1999, compared to $1.7 million
for 1998. The increase in net loan  charge-offs  reflects  overall growth in our
loan portfolio and increased risk  associated  with the continued  change in the
composition of our loan portfolio.  In addition,  nonperforming  assets have, in
general,  increased at December  31, 1999 and 1998,  in  comparison  to previous
periods.  The allowances for loan losses of Century Bank and Redwood  Bancorp at
their dates of acquisition added  approximately $3.0 million to our consolidated
allowance for loan losses.
         The following  table  represents a summary of loan loss  experience and
nonperforming  assets for First Bank and FB&T for the years ended  December  31,
1999 and 1998:
<TABLE>
<CAPTION>

                                                                               First Bank                 FB&T
                                                                            ----------------       -----------------
                                                                            1999        1998       1999         1998
                                                                            ----        ----       -----        ----
                                                                                 (dollars expressed in thousands)

<S>                                                                      <C>         <C>          <C>        <C>
    Total loans........................................................  $2,527,649  2,490,556    1,469,093  1,089,966
    Total assets.......................................................   3,028,046  3,024,600    1,854,827  1,504,311
    Provision for loan losses..........................................       8,890      7,250        4,183      1,750
    Net loan charge-offs...............................................       6,494      1,150        1,946        589
    Net loan charge-offs as a percentage of average loans..............        0.26%      0.05%        0.15%      0.06%
    Nonperforming loans................................................      23,493     18,494       16,244     25,044
    Nonperforming assets...............................................      25,233     21,268       16,633     25,979

</TABLE>


<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Noninterest   Income  and  Expense.   The  following  table  summarizes
noninterest income and noninterest expense for the years ended December 31, 1999
and 1998:
<TABLE>
<CAPTION>

                                                                                December 31,         Increase (Decrease)
                                                                               ---------------       -------------------
                                                                               1999       1998        Amount        %
                                                                               ----       ----        ------       ---
                                                                                   (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>         <C>        <C>
        Service charges on deposit accounts and customer service fees....   $  17,676     14,876      2,800      18.82%
        Credit card fees.................................................         409      2,999     (2,590)    (86.36)
        Loan servicing fees, net.........................................         657      1,017       (360)    (35.40)
        Gain on mortgage loans sold and held for sale....................       6,909      5,563      1,346      24.20
        Net gain on sales of available-for-sale securities...............         791      1,466       (675)    (46.04)
        Net (loss) gain on trading securities............................        (303)       607       (910)   (149.92)
        Gain on sales of branches, net of expenses.......................       4,406         --      4,406        --
        Other............................................................      11,105      9,969      1,136      11.40
                                                                            ---------   --------    -------
              Total noninterest income...................................   $  41,650     36,497      5,153      14.12
                                                                            =========   ========    =======    =======

     Noninterest expense:
        Salaries and employee benefits...................................  $  61,524     55,907      5,617      10.05%
        Occupancy, net of rental income..................................     12,518     11,037      1,481      13.42
        Furniture and equipment..........................................      8,520      8,122        398       4.90
        Postage, printing and supplies...................................      4,244      5,230       (986)    (18.85)
        Data processing fees.............................................     18,567     13,917      4,650      33.41
        Legal, examination and professional fees.........................      9,109      5,326      3,783      71.03
        Credit card......................................................        667      3,396     (2,729)    (80.36)
        Communications...................................................      2,488      2,874       (386)    (13.43)
        Advertising and business development.............................      3,734      4,668       (934)    (20.01)
        Guaranteed preferred debentures..................................     12,050      9,842      2,208      22.43
        Other............................................................     17,386     18,385       (999)     (5.43)
                                                                           ---------   --------    -------
             Total noninterest expense...................................  $ 150,807    138,704     12,103       8.73
                                                                           =========   ========    =======    =======

</TABLE>
         Noninterest  Income.  Noninterest income was $41.7 million for the year
ended December 31, 1999, compared to $36.5 million for 1998.  Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees, mortgage banking revenues and other income.
         Service charges on deposit accounts and customer service fees increased
to $17.7 million for 1999,  from $14.9 million for 1998. The increase in service
charges and customer service fees is attributable to:

     >>  increased deposit balances provided by internal growth;

     >>  our acquisitions completed throughout 1998 and 1999;

     >>  additional   products  and  services  available  and  utilized  by  our
         expanding base of retail and commercial customers;

     >>  increased  fee  income  resulting  from  revisions of customer  service
         charge  rates  effective  April 1, 1999,  and  enhanced  control of fee
         waivers; and

     >>  increased interchange  income  associated with automatic teller machine
         services and debit and credit cards.

         As described below,  this increase was partially offset by the foregone
revenue  associated  with the  divestiture  of certain  branches in 1999,  which
resulted in a reduction in First  Bank's  deposit  base of  approximately  $54.8
million.
         Credit card fees  declined to $409,000 for 1999,  from $3.0 million for
1998. The reduction in credit card fees primarily  results from the  liquidation
of our merchant credit card processing operation effective December 31, 1998.


<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Our mortgage banking revenues consist primarily of loan servicing fees,
net, and gain on mortgage  loans sold and held for sale.  Loan  servicing  fees,
net,  decreased to $657,000  from $1.0 million for the years ended  December 31,
1999 and 1998, respectively. We attribute the decrease in loan servicing fees to
aggregate increases of $698,000 in additional amortization of mortgage servicing
rights,  interest shortfall and mortgage-backed  security expense. This decrease
in loan  servicing  fees was partially  offset by an increase in loan  servicing
fees  resulting from the increase in the portfolio of loans serviced for others.
The gain on mortgage loans sold and held for sale increased to $6.9 million from
$5.6 million for 1999 and 1998,  respectively.  This increase regarding mortgage
loans is  attributable  to an increased  volume of loans sold and held for sale,
including fixed rate residential  mortgage loans,  which are sold on a servicing
retained basis, and  adjustable-rate  and  non-conforming  residential  mortgage
loans, which are sold on a servicing released basis.
         The net gain on sales of available-for-sale securities was $791,000 and
$1.5 million for the years ended December 31, 1999 and 1998, respectively. These
gains  resulted  from  sales  of  available-for-sale   securities  necessary  to
facilitate the funding of loan growth.
         Net loss on sales of trading securities was $303,000 for the year ended
December 31, 1999, in  comparison  to a net gain of $607,000 for 1998.  The loss
for 1999  resulted  from the  termination  of our  trading  division,  effective
December 31, 1998, and the liquidation of all trading portfolio securities.
         The  gain on  sales  of  branches,  net of  expenses,  of $4.4  million
resulted  from the  divestiture  of seven  branches in the central and  northern
Illinois market areas.
         Other  income was $11.1  million and $10.0  million for the years ended
December 31, 1999 and 1998, respectively. The primary components of the increase
are attributable to increased income earned on our investment in bank-owned life
insurance and expanded  brokerage and private  banking and trust  services.  The
bank-owned  life  insurance  income  increased  to $3.9  million  for  1999,  in
comparison to $3.1 million for 1998. This increase results from twelve months of
earnings on FBA's investment in bank-owned life insurance in 1999, in comparison
to nine months of earnings in 1998. In addition, trust services income increased
to $1.8  million  for 1999  from  $1.4  million  for  1998 due to the  continued
expansion of these services, primarily in California.

         Noninterest  Expense.  Noninterest  expense increased to $150.8 million
for the year ended  December 31, 1999 from $138.7 million for 1998. The increase
reflects:

     >>  our acquisitions completed throughout 1998 and 1999;

     >>  increased data processing fees  primarily associated with our Year 2000
         Program;

     >>  increased legal, examination and professional fees; and

     >>  FBA's issuance of the trust preferred securities in July 1998.

         The overall  increase in noninterest  expense was partially offset by a
decline in credit card  expenses  and a reduction  in  advertising  and business
development expenses, postage, printing and supplies expenses and communications
expenses.  This is  consistent  with  management's  efforts to more  effectively
manage these expenditures.
         Specifically,  salaries and employee benefits increased by $5.6 million
to $61.5  million from $55.9  million for the years ended  December 31, 1999 and
1998, respectively.  We associate the increase with the newly-acquired banks and
our  continued  commitment  to expanding our  commercial,  mortgage  banking and
retail  business  development  capabilities  associated  with the  expansion and
delivery of our products and  services.  The overall  increase also reflects the
competitive  environment in the employment  market that has resulted in a higher
demand for limited  resources,  thus  escalating  industry  salary and  employee
benefit costs.
         Data  processing fees were $18.6 million and $13.9 million for 1999 and
1998, respectively. First Services, L.P., a limited partnership indirectly owned
by our Chairman and his adult  children,  provides data  processing  and various
related  services  to us and  our  subsidiary  banks  under  the  terms  of data
processing  agreements.  We attribute  the increase in data  processing  fees to
growth and  technological  advancements  consistent with our product and service
offerings,  increased expenses  attributable to communication data lines related
to the expansion of the branch network  infrastructure  and expenses  associated
with our Year 2000 Program.
         Legal,  examination and professional  fees increased by $3.8 million to
$9.1 million in 1999,  from $5.3 million in 1998.  We attribute  the increase in
these fees to our expanded  utilization  of external  consultants in conjunction
with the development and expansion of selected business  initiatives.  Increased
legal expenditures  associated with the settlement of certain litigation further
contributed to the overall increase.


<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Credit card  expenses  declined by $2.7  million to $667,000  from $3.4
million  for the  years  ended  December  31,  1999 and 1998,  respectively.  As
previously discussed, this decline primarily results from the liquidation of our
merchant credit card processing operation, effective December 31, 1998.
         Guaranteed  preferred  debentures  increased  by $2.2  million to $12.1
million  from $9.8  million  for the years  ended  December  31,  1999 and 1998,
respectively.  We  associate  the  increase  for 1999 with the issuance by FBA's
financing subsidiary of its trust preferred securities in July 1998.

Investment Securities

         We classify the securities  within our investment  portfolio as held to
maturity or available for sale. We no longer engage in the trading of investment
securities.  As  more  fully  described  in  Notes  1 and 3 to our  accompanying
consolidated  financial  statements,  our investment security portfolio consists
primarily  of  securities  designated  as  available  for sale.  The  investment
security  portfolio  was $563.5  million at December 31, 2000 compared to $451.6
million and $534.8  million at December  31,  1999 and 1998,  respectively.  See
"--Financial  Condition  and Average  Balances"  for further  discussion  of our
investment security portfolio.

Loans and Allowance for Loan Losses

         Interest earned on our loan portfolio  represents the principal  source
of income for our subsidiary banks. Interest and fees on loans were 92.3%, 91.5%
and 86.7% of total interest  income for the years ended December 31, 2000,  1999
and 1998,  respectively.  Loans, net of unearned discount,  represented 80.9% of
total  assets as of  December  31,  2000,  compared  to 82.1% and 78.6% of total
assets at December 31, 1999 and 1998, respectively. Total loans, net of unearned
discount,  increased $750.0 million to $4.75 billion for the year ended December
31, 2000,  and $420.0  million to $4.00 billion for the year ended  December 31,
1999.  We view  the  quality,  yield  and  growth  of our loan  portfolio  to be
instrumental elements in determining our profitability.
         As summarized in the  composition of loan portfolio  table,  during the
five years ended  December 31,  2000,  total  loans,  net of unearned  discount,
increased  71.5% from $2.77  billion at December  31,  1996 to $4.75  billion at
December 31, 2000.  Throughout this period, we have  substantially  enhanced our
capabilities  for achieving and managing  internal growth. A key element of this
process has been the  expansion of our  corporate  business  development  staff,
which is  responsible  for the  internal  development  of both loan and  deposit
relationships with commercial  customers.  While this process was occurring,  in
order to achieve more  diversification,  a higher level of interest  yield and a
reduction in interest  rate risk within our loan  portfolio,  we also focused on
repositioning  our  portfolio.  As the  corporate  business  development  effort
continued to originate a substantial  volume of new loans,  substantially all of
our  conforming  residential  mortgage  loan  production  has  been  sold in the
secondary mortgage market. We have also substantially reduced our origination of
indirect  automobile  loans.  This  allowed  us to fund  part of the  growth  in
corporate  lending  through  reductions in residential  real estate and indirect
automobile lending.
         In addition,  our  acquisitions  added  substantial  portfolios  of new
loans. Some of these portfolios,  particularly those from acquisitions completed
in 1995, contained  significant loan problems.  As we resolved the asset quality
issues,  the portfolios of the acquired  entities tended to decline because many
of the resources which would  otherwise be directed toward  generating new loans
were concentrated on improving or eliminating existing relationships.
         A summary of the effects of these factors on our loan portfolio for the
years ended December 31 is as follows:
<TABLE>
<CAPTION>
                                                                               Increase (decrease)
                                                                         for the year ended December 31,
                                                                 --------------------------------------------
                                                                   2000        1999         1998        1997
                                                                   ----        ----         ----        ----
                                                                       (dollars expressed in thousands)

        Internal loan volume increase (decrease):
<S>                                                            <C>            <C>         <C>         <C>
             Commercial lending.............................   $ 360,410      363,486     633,660     378,882
             Residential real estate lending................      20,137     (126,418)   (152,849)   (144,707)
             Consumer lending, net of unearned discount.....     (64,606)     (56,349)    (30,506)    (54,305)
        Loans provided by acquisitions......................     440,000      235,500     127,600      54,361
                                                               ---------     --------   ---------   ---------
             Total increase in loans,
               net of unearned discount.....................   $ 755,941      416,219     577,905     234,231
                                                               =========     ========  ==========   =========

        Increase (decrease) in potential problem loans (1)..   $  27,400       11,200      12,800      (9,800)
                                                               =========     ========   =========   =========
</TABLE>
        -------------------------
        (1)  Potential problem loans include nonperforming loans and other loans
             identified by management as having potential credit problems.


<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Our lending  strategy  stresses  quality,  growth and  diversification.
Throughout our organization,  we employ a common credit underwriting policy. Our
commercial  lenders  focus  principally  on  small to  middle-market  companies.
Consumer lenders focus principally on residential  loans,  including home equity
loans,  automobile financing and other consumer financing  opportunities arising
out of our branch banking network.
         Commercial,  financial  and  agricultural  loans include loans that are
made primarily  based on the borrowers'  general credit  strength and ability to
generate cash flows for repayment from income sources even though such loans may
also be secured by real estate or other  assets.  Real estate  construction  and
development loans,  primarily relating to residential  properties and commercial
properties,  represent financing secured by real estate under construction. Real
estate  mortgage  loans  consist  primarily of loans  secured by  single-family,
owner-occupied  properties  and various types of commercial  properties on which
the income from the property is the intended  source of repayment.  Consumer and
installment  loans are  loans to  individuals  and  consist  primarily  of loans
secured by  automobiles.  Loans held for sale are primarily fixed and adjustable
rate residential loans pending sale in the secondary mortgage market in the form
of a mortgage-backed security, or to various private third-party investors.
         The  following  table shows the  composition  of our loan  portfolio by
major category and the percent of each category to the total portfolio as of the
dates presented:
<TABLE>
<CAPTION>

                                                                           December 31,
                                    ---------------------------------------------------------------------------------------
                                          2000               1999                1998            1997              1996
                                    -----------------   ---------------    --------------    -------------   --------------
                                      Amount      %      Amount      %     Amount      %     Amount      %   Amount       %
                                      ------      -      ------      -     ------      -     ------      -   ------       -
                                                                (dollars expressed in thousands)

Commercial, financial
<S>                                 <C>         <C>   <C>          <C>    <C>         <C>    <C>       <C>    <C>         <C>
    and agricultural.............   $1,496,284  32.0% $1,086,919   27.4% $  920,007   26.7%$  621,618  21.1% $  457,186  16.7%
Real estate construction
    and development..............      809,682  17.3     795,081   20.1     720,910   20.9    413,107   14.0    289,378  10.5
Real estate mortgage:
    One-to-four-family
    residential loans............      726,474  15.5     720,630   18.2     739,442   21.5    915,205   31.1  1,059,770  38.7
    Other real estate loans......    1,476,383  31.5   1,130,939   28.6     789,735   22.9    713,910   24.3    600,810  21.9
Consumer and installment, net of
    unearned discount............      174,337   3.7     225,343    5.7     274,392    8.0    279,279    9.5    333,340  12.2
                                    ---------- -----   --------- ------  ----------  -----  --------- ------  --------- -----
      Total loans, excluding
        loans held for sale......    4,683,160 100.0%  3,958,912  100.0%  3,444,486  100.0% 2,943,119  100.0% 2,740,484 100.0%
                                               =====             ======             =====                               =====
Loans held for sale..............       69,105            37,412            135,619            59,081            27,485
                                    ----------        ----------         ----------        ----------        ----------
      Total loans................   $4,752,265        $3,996,324         $3,580,105        $3,002,200        $2,767,969
                                    ==========        ==========         ==========        ==========        ==========
</TABLE>


     Loans at December 31, 2000 mature as follows:
<TABLE>
<CAPTION>

                                                                             Over one year
                                                                             through five
                                                                                 years          Over five years
                                                                           -----------------    ---------------
                                                              One year     Fixed    Floating    Fixed  Floating
                                                              or less      rate       rate      rate     rate      Total
                                                              --------     ----       ----      ----     ----      -----
                                                                          (dollars expressed in thousands)

<S>                                                         <C>           <C>         <C>      <C>      <C>     <C>
Commercial, financial and agricultural....................  $ 1,253,183   159,905     54,266   18,524   10,406  1,496,284
Real estate construction and development..................      775,615    27,314      4,231      206    2,316    809,682
Real estate mortgage......................................    1,130,611   466,735    317,581  174,650  113,280  2,202,857
Consumer and installment, net of unearned discount........       45,751   104,364      1,207   21,308    1,707    174,337
Loans held for sale.......................................       69,105        --         --       --       --     69,105
                                                            -----------  --------   --------  -------  -------  ---------
      Total loans.........................................  $ 3,274,265   758,318    377,285  214,688  127,709  4,752,265
                                                            ===========  ========   ========  =======  =======  =========

</TABLE>

<PAGE>



           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         The following  table is a summary of loan loss  experience for the five
years ended December 31, 2000:
<TABLE>
<CAPTION>

                                                                              December 31,
                                                      -------------------------------------------------------------
                                                           2000        1999        1998         1997         1996
                                                           ----        ----        ----         ----         ----
                                                                       (dollars expressed in thousands)

<S>                                                   <C>             <C>         <C>          <C>           <C>
Allowance for loan losses, beginning of year......... $   68,611      60,970      50,509       46,781        52,665
Acquired allowances for loan losses..................      6,062       3,008       3,200           30         2,338
                                                      ----------  ----------  ----------    ---------    ----------
                                                          74,673      63,978      53,709       46,811        55,003
                                                      ----------  ----------  ----------    ---------    ----------
Loans charged-off:
    Commercial, financial and agricultural...........     (9,768)    (10,855)     (3,908)      (2,308)       (8,918)
    Real estate construction and development.........     (2,229)       (577)       (185)      (2,242)       (1,241)
    Real estate mortgage.............................     (2,213)     (2,561)     (2,389)      (6,250)      (10,308)
    Consumer and installment.........................     (2,840)     (3,728)     (3,701)      (6,032)       (8,549)
                                                      ----------  ----------  ----------    ---------    ----------
          Total .....................................    (17,050)    (17,721)    (10,183)     (16,832)      (29,016)
                                                      ----------  ----------  ----------    ---------    ----------
Recoveries of loans previously charged-off:
    Commercial, financial and agricultural...........      5,621       3,602       3,417        2,146         2,642
    Real estate construction and development.........        319         849         342          269           495
    Real estate mortgage.............................      1,937       2,357       2,029        3,666         3,255
    Consumer and installment.........................      1,965       2,473       2,656        3,149         2,908
                                                      ----------  ----------  ----------    ---------    ----------
          Total .....................................      9,842       9,281       8,444        9,230         9,300
                                                      ----------  ----------  ----------    ---------    ----------
          Net loans charged-off......................     (7,208)     (8,440)     (1,739)      (7,602)      (19,716)
                                                      ----------  ----------  ----------    ---------    ----------
Provision for loan losses............................     14,127      13,073       9,000       11,300        11,494
                                                      ----------  ----------  ----------    ---------    ----------
Allowance for loan losses, end of year............... $   81,592      68,611      60,970       50,509        46,781
                                                      ==========  ==========  ==========    =========    ==========

Loans outstanding, net of unearned discount:
    Average.......................................... $4,290,958   3,812,508   3,250,719    2,846,157     2,726,297
    End of year......................................  4,752,265   3,996,324   3,580,105    3,002,200     2,767,969
    End of year, excluding loans held for sale.......  4,683,160   3,958,912   3,444,486    2,943,119     2,740,484
                                                      ==========  ==========  ==========    =========    ==========

Ratio of allowance for loan losses
  to loans outstanding:
    Average..........................................       1.90%       1.80%       1.88%        1.77%         1.72%
    End of year .....................................       1.72        1.72        1.70         1.68          1.69
    End of year, excluding loans held for sale.......       1.74        1.73        1.77         1.72          1.71
Ratio of net charge-offs to average
    loans outstanding................................       0.17        0.22        0.05         0.27          0.72
Ratio of current year recoveries to
    preceding year's total charge-offs...............      55.54       91.14       50.17        31.81         59.54
                                                      ==========  ==========  ==========    =========    ==========

Allocation of allowance for loan losses
  at end of year:
    Commercial, financial and agricultural........... $   32,352      24,898      19,239       14,879        13,579
    Real estate construction and development.........     14,667      13,264      15,073        7,148         4,584
    Real estate mortgage.............................     24,691      20,750      18,774       18,317        14,081
    Consumer and installment.........................      3,142       4,390       5,180        5,089        10,296
    Unallocated......................................      6,740       5,309       2,704        5,076         4,241
                                                      ----------  ----------  ----------    ---------    ----------
          Total ..................................... $   81,592      68,611      60,970       50,509        46,781
                                                      ==========  ==========  ==========    =========    ==========

Percent of categories to loans, net of
  unearned discount:
    Commercial, financial and agricultural...........      31.49%      27.20%      25.70%       20.71%        16.52%
    Real estate construction and development.........      17.04       19.90       20.14        13.76         10.45
    Real estate mortgage.............................      46.35       46.33       42.71        54.26         60.00
    Consumer and installment.........................       3.67        5.64        7.66         9.30         12.04
    Loans held for sale..............................       1.45        0.93        3.79         1.97          0.99
                                                      ----------  ----------  ----------    ---------     ---------
          Total .....................................     100.00%     100.00%     100.00%      100.00%       100.00%
                                                      ==========  ==========  ==========    =========     =========

</TABLE>

<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Nonperforming  assets include nonaccrual loans,  restructured loans and
other real estate.  The following table presents the categories of nonperforming
assets and certain ratios as of the dates indicated:
<TABLE>
<CAPTION>

                                                                                    December 31,
                                                              ---------------------------------------------------------
                                                               2000        1999         1998         1997         1996
                                                               ----        ----         ----         ----         ----
                                                                          (dollars expressed in thousands)

    Commercial, financial and agricultural:
<S>                                                       <C>              <C>          <C>          <C>          <C>
       Nonaccrual......................................   $    22,437      18,397       15,385       4,017        4,113
       Restructured terms..............................            22          29           --          --          130
    Real estate construction and development:
       Nonaccrual......................................        11,068       1,886        3,858       4,097          817
    Real estate mortgage:
       Nonaccrual......................................        16,524      16,414       18,858      10,402       24,486
       Restructured terms..............................         2,952       2,979        5,221       5,456          278
    Consumer and installment:
       Nonaccrual......................................           155          32          216          94          440
       Restructured terms..............................             8          --           --          --            5
                                                          -----------   ---------    ---------   ---------    ---------
              Total nonperforming loans................        53,166      39,737       43,538      24,066       30,269
    Other real estate..................................         2,487       2,129        3,709       7,324       10,607
                                                          -----------   ---------    ---------   ---------    ---------
              Total nonperforming  assets..............   $    55,653      41,866       47,247      31,390       40,876
                                                          ===========   =========    =========   =========    =========

    Loans, net of unearned discount....................   $ 4,752,265   3,996,324    3,580,105   3,002,200    2,767,969
                                                          ===========   =========    =========   =========    =========

    Loans past due 90 days or more and still accruing..   $     3,009       5,844        4,674       2,725        3,779
                                                          ===========   =========    =========   =========    =========

    Allowance for loan losses to loans.................          1.72%       1.72%        1.70%       1.68%        1.69%
    Nonperforming loans to loans.......................          1.12        0.99         1.22        0.80         1.09
    Allowance for loan losses to
       nonperforming loans.............................        153.47      172.66       140.04      209.88       154.55
    Nonperforming assets to loans
       and other real estate...........................          1.17        1.05         1.32        1.04         1.47
                                                          ===========   =========    =========   ==========   =========
</TABLE>

         Nonperforming  loans (also considered  impaired  loans),  consisting of
loans on nonaccrual status and certain restructured loans, were $53.2 million at
December 31, 2000 in  comparison  to $39.7 million and $43.5 million at December
31, 1999 and 1998,  respectively.  The increase in  nonperforming  loans in 2000
primarily results from a small number of credit  relationships  that were placed
on nonaccrual during the year ended December 31, 2000. These nonperforming loans
are symptomatic of circumstances that are specific to these  relationships,  and
are not indicative of distress  across the broad spectrum of our loan portfolio.
As previously  discussed,  certain acquired loan portfolios,  particularly those
acquired  during 1994 and 1995,  exhibited  varying degrees of distress prior to
their  acquisition.  While these problems had been  identified and considered in
our acquisition  pricing,  the  acquisitions led to an increase in nonperforming
assets and problem  loans (as defined  below) to $95.0  million at December  31,
1995.  Problem  loans were reduced to $59.3  million at December  31,  1997.  At
December 31, 1998,  nonperforming  assets and problem  loans  increased to $68.5
million.  We associate the increase for 1998 to two  commercial  loans  totaling
$6.0 million,  net of charge-off;  our acquisitions of Republic Bank and Pacific
Bay  Bank;  and  the  overall  growth  of our  loan  portfolio,  principally  in
commercial, financial and agricultural, real estate construction and development
and commercial real estate loans.
         As of December 31, 2000,  1999 and 1998,  $50.2 million,  $36.3 million
and $21.3 million,  respectively,  of loans not included in the table above were
identified by management as having  potential  credit problems  (problem loans).
Problem  loans  totaled $27.9 million and $31.5 million at December 31, 1997 and
1996, respectively.  We attribute the increase in problem loans primarily to the
gradual slow down and  uncertainties  that have recently occurred in the economy
surrounding the markets in which First Bank operates.
         Our credit  management  policies and procedures  focus on  identifying,
measuring  and  controlling   credit  exposure.   These   procedures   employ  a
lender-initiated  system  of  rating  credits,  which  is  ratified  in the loan
approval  process and  subsequently  tested in internal loan  reviews,  external
audits and regulatory bank examinations. The system requires rating all loans at
the time they are originated,  except for homogeneous  categories of loans, such
as residential real estate mortgage loans,  indirect automobile loans and credit
card loans.  These homogeneous loans are assigned an initial rating based on our
experience  with each type of loan.  We adjust  these  ratings  based on payment
experience subsequent to their origination.


<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         We include  adversely  rated credits,  including  loans requiring close
monitoring  which  would  not  normally  be  considered  criticized  credits  by
regulators,  on a monthly loan watch list.  Loans may be added to our watch list
for reasons that are temporary and  correctable,  such as the absence of current
financial  statements  of the  borrower or a deficiency  in loan  documentation.
Other loans are added whenever any adverse  circumstance is detected which might
affect the borrower's  ability to meet the terms of the loan. The delinquency of
a scheduled loan payment, a deterioration in the borrower's  financial condition
identified in a review of periodic financial statements, a decrease in the value
of the  collateral  securing the loan,  or a change in the economic  environment
within which the borrower  operates could initiate the addition of a loan to the
list.  Loans on the watch list require  periodic  detailed  loan status  reports
prepared by the responsible officer, which are discussed in formal meetings with
loan review and credit  administration  staff  members.  Downgrades of loan risk
ratings may be initiated by the responsible  loan officer at any time.  However,
upgrades of risk ratings may only be made with the  concurrence of selected loan
review and credit  administration  staff  members  generally  at the time of the
formal watch list review meetings.
         Each month, the credit  administration  department  provides management
with detailed  lists of loans on the watch list and summaries of the entire loan
portfolio  of each  subsidiary  bank by risk  rating.  These  are  coupled  with
analyses of changes in the risk profiles of the portfolios,  changes in past-due
and  nonperforming  loans and  changes in watch list and  classified  loans over
time. In this manner, we continually  monitor the overall increases or decreases
in the  levels  of risk in the  portfolios.  Factors  are  applied  to the  loan
portfolios  for each  category of loan risk to  determine  acceptable  levels of
allowance  for loan  losses.  We  derive  these  factors  from the  actual  loss
experience of our subsidiary banks and from published  national surveys of norms
in the industry.  The calculated allowances required for the portfolios are then
compared to the actual allowance balances to determine the provisions  necessary
to maintain the  allowances  at  appropriate  levels.  In  addition,  management
exercises a certain  degree of judgment in its analysis of the overall  adequacy
of the allowance for losses. In its analysis, management considers the change in
the portfolio, including growth, composition and the ratio of net loans to total
assets, and the economic conditions of the regions in which we operate. Based on
this quantitative and qualitative analysis, provisions are made to the allowance
for loan losses. Such provisions are reflected in our consolidated statements of
income.
         We do not engage in lending to foreign countries or activities based in
foreign  countries.  Additionally,  we do not have any  concentrations  of loans
exceeding  10% of total  loans  that  are not  otherwise  disclosed  in the loan
portfolio  composition  table  and  Note  4  to  our  accompanying  consolidated
financial  statements.  We do not have a  material  amount  of  interest-earning
assets that would have been  included in  nonaccrual,  past due or  restructured
loans if such assets were loans.

Deposits

         Deposits are the primary source of funds for our subsidiary  banks. Our
deposits  consist  principally  of core  deposits  from each bank's local market
areas,  including individual and corporate  customers.  The following table sets
forth the  distribution of our average  deposit  accounts at the dates indicated
and the weighted average interest rates on each category of deposits:
<TABLE>
<CAPTION>

                                                                    Year Ended December 31,
                                    ----------------------------------------------------------------------------------
                                               2000                        1999                         1998
                                    --------------------------  --------------------------   --------------------------
                                                Percent                      Percent                    Percent
                                                  of                           of                         of
                                     Amount    deposits   Rate    Amount    deposits  Rate    Amount   deposits    Rate
                                     ------    --------   ----    ------    --------  ----    ------   --------    ----
                                                                (dollars expressed in thousands)

<S>                                <C>           <C>            <C>           <C>            <C>          <C>      <C>
Noninterest-bearing demand....... $  634,886     14.18%    --% $  552,029     13.59%    --% $  463,939    12.27%    --%
Interest-bearing demand.........     421,986      9.43   1.40     391,892      9.65   1.30     357,463     9.45    1.44
Savings.........................   1,279,378     28.59   4.04   1,220,425     30.03   3.61   1,076,524    28.48    3.96
Time deposits ..................   2,139,305     47.80   5.62   1,899,218     46.73   5.35   1,882,329    49.80    5.74
                                  ----------    ------   ====  ----------   -------   ====  ----------   ------    ====
      Total average deposits....  $4,475,555    100.00%        $4,063,564    100.00%        $3,780,255   100.00%
                                  ==========    ======         ==========   =======         ==========   ======

</TABLE>

<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

Capital and Dividends

         Historically,  we have accumulated  capital to support our acquisitions
by retaining  most of our earnings.  We pay  relatively  small  dividends on our
Class A convertible,  adjustable rate preferred stock and our Class B adjustable
rate preferred stock,  totaling  $786,000 for the years ended December 31, 2000,
1999 and  1998.  We have  never  paid,  and have no  present  intention  to pay,
dividends on our common stock.
         As more fully  discussed  in Note 19 to our  accompanying  consolidated
financial statements,  management believes as of December 31, 2000 and 1999, our
subsidiary  banks and we were  "well  capitalized"  as  defined  by the  Federal
Deposit Insurance Corporation Improvement Act of 1991.
         As  more  fully  discussed  under  "--Company  Profile,"   "--Financial
Condition and Average  Balances,"  and Note 9 to our  accompanying  consolidated
financial  statements,  in  December  1996,  we  formed  our  initial  financing
subsidiary,  First  Preferred  Capital Trust,  for the purpose of issuing $86.25
million of trust  preferred  securities,  and on October 6, 2000,  we formed our
second financing  subsidiary,  First Preferred Capital Trust II, for the purpose
of issuing $57.5 million of trust preferred securities. In June 1998, FBA formed
its  financing  subsidiary,  First  America  Capital  Trust,  for the purpose of
issuing $46.0 million of trust preferred  securities.  For regulatory  reporting
purposes,  these  preferred  securities are eligible for  inclusion,  subject to
certain limitations, in our Tier 1 capital.

Liquidity

         Our liquidity and the liquidity of our subsidiary  banks is the ability
to  maintain a cash flow which is  adequate  to fund  operations,  service  debt
obligations and meet other  commitments on a timely basis.  Our subsidiary banks
receive funds for liquidity from customer deposits, loan payments, maturities of
loans and investments,  sales of investments and earnings.  In addition,  we may
avail  ourselves of more volatile  sources of funds by issuing  certificates  of
deposit in denominations of $100,000 or more,  borrowing federal funds,  selling
securities sold under agreements to repurchase and utilizing borrowings from the
Federal Home Loan Banks and other  borrowings,  including our  revolving  credit
line. The aggregate funds acquired from these more volatile  sources were $723.5
million and $476.8 million at December 31, 2000 and 1999, respectively.
         The following table presents the maturity  structure of volatile funds,
which  consists  of  certificates  of deposit of  $100,000  or more,  short-term
borrowings and the note payable, at December 31, 2000:
<TABLE>
<CAPTION>

                                                                                December 31, 2000
                                                                                -----------------
                                                                        (dollars expressed in thousands)

<S>                                                                                <C>
       Three months or less...................................................     $ 260,410
       Over three months through six months...................................       100,224
       Over six months through twelve months..................................       230,333
       Over twelve months.....................................................       132,558
                                                                                   ---------
                Total.........................................................     $ 723,525
                                                                                   =========
</TABLE>

         In  addition  to these more  volatile  sources of funds,  in 1999,  our
subsidiary banks established  borrowing  relationships  with the Federal Reserve
Bank in their respective  districts.  These borrowing  relationships,  which are
secured by commercial loans,  provide an additional  liquidity facility that may
be  utilized  for  contingency  purposes.  At December  31,  2000 and 1999,  the
borrowing   capacity  of  our  subsidiary   banks  under  these  agreements  was
approximately $1.24 billion and $1.67 billion,  respectively.  In addition,  our
subsidiary  banks'  borrowing  capacity  through  their  relationships  with the
Federal Home Loan Banks was  approximately  $262.1 million and $395.9 million at
December 31, 2000 and 1999, respectively.
         Management  believes the available  liquidity and operating  results of
our  subsidiary  banks will be  sufficient  to  provide  funds for growth and to
permit the  distribution of dividends to us sufficient to meet our operating and
debt service requirements,  both on a short-term and long-term basis, and to pay
the  dividends  on the  trust  preferred  securities  issued  by  our  financing
subsidiaries and FBA's financing subsidiary.



<PAGE>


           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

Effects of New Accounting Standards

         In June 1998, the Financial  Accounting  Standards  Board, or the FASB,
issued  Statement  of  Financial  Accounting  Standards,  or  SFAS,  No.  133 --
Accounting  for  Derivative   Instruments  and  Hedging  Activities.   SFAS  133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including certain derivative  instruments  embedded in other contracts,  and for
hedging  activities.  SFAS 133 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.  If certain  conditions  are met, a
derivative may be specifically designated as a hedge in one of three categories.
The accounting for changes in the fair value of a derivative (that is, gains and
losses)  depends  on the  intended  use  of the  derivative  and  the  resulting
designation.  Under SFAS 133, an entity that elects to apply hedge accounting is
required to establish, at the inception of the hedge, the method it will use for
assessing  the  effectiveness  of the  hedging  derivative  and the  measurement
approach for determining the ineffective aspect of the hedge. Those methods must
be consistent  with the entity's  approach to managing risk. SFAS 133 applies to
all entities.
          In June 1999, the FASB issued SFAS No. 137 - Accounting for Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
Statement  No. 133, an Amendment  of FASB  Statement  No. 133,  which defers the
effective  date of SFAS 133 from fiscal years  beginning  after June 15, 1999 to
fiscal years beginning after June 15, 2000. Initial  application should be as of
the beginning of an entity's fiscal quarter; on that date, hedging relationships
must be designated  and  documented  pursuant to the  provisions of SFAS 133, as
amended.  Earlier  application  of all of the  provisions is  encouraged  but is
permitted  only as of the beginning of any fiscal  quarter that begins after the
issuance  date of SFAS 133,  as  amended.  Additionally,  SFAS 133,  as amended,
should not be applied retroactively to financial statements of prior periods.
         In June 2000,  the FASB issued SFAS No. 138 - Accounting for Derivative
Instruments  and Hedging  Activities,  an Amendment of FASB  Statement  No. 133,
which addresses a limited number of issues causing  implementation  difficulties
for  numerous  entities  that apply SFAS 133,  as  amended.  SFAS 138 amends the
accounting  and  reporting  standards  of SFAS  133,  as  amended,  for  certain
derivative instruments, certain hedging activities and for decisions made by the
FASB relating to the Derivatives  Implementation Group, or the DIG, process. The
DIG  presently  has  additional  issues and  questions  pending and continues to
release guidance and interpretations as such issues are resolved. We continue to
consider the actions and conclusions of the DIG as they are released in order to
determine their potential impact on our consolidated financial statements.
         On  January  1,  2001,  we  implemented  SFAS  133,  as  amended.   The
implementation  of SFAS 133, as amended,  did not have a material  impact on our
consolidated  financial  statements  as it relates to the  derivative  financial
instruments  that existed at December 31,  2000.  However,  the effect of future
derivative  transactions as well as further  guidance from the DIG may result in
modifications of our current assessment of SFAS 133, as amended, and its overall
impact on our consolidated financial statements.
         In  September  2000,  the FASB  issued SFAS No. 140 --  Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
a  replacement  of FASB  Statement  125.  SFAS 140  revises  the  standards  for
accounting  for  securitizations  and other  transfers of  financial  assets and
collateral and requires certain  disclosures.  SFAS 140 provides  accounting and
reporting  standards  for  transfers  and  servicing  of  financial  assets  and
extinguishments of liabilities which are based on the consistent  application of
a  financial-components  approach.  SFAS  140 is  effective  for  transfers  and
servicing of financial assets and extinguishments of liabilities occurring after
March 31,  2001,  and is  effective  for  recognition  and  reclassification  of
collateral  and for  disclosures  relating to  securitization  transactions  and
collateral  for fiscal  years ending  after  December 15, 2001.  On December 31,
2000, we implemented the disclosure requirements of SFAS 140, which did not have
a material effect on our  consolidated  financial  statements.  We are currently
evaluating the additional  requirements of SFAS 140 to determine their potential
impact on our consolidated financial statements.

Effects of Inflation

         Inflation  affects  financial  institutions  less than  other  types of
companies.   Financial   institutions  make  relatively  few  significant  asset
acquisitions that are directly affected by changing prices.  Instead, the assets
and liabilities are primarily monetary in nature.  Consequently,  interest rates
are more  significant  to the  performance  of financial  institutions  than the
effect of general  inflation  levels.  While a  relationship  exists between the
inflation  rate and interest  rates,  we believe  this is  generally  manageable
through our asset-liability management program.


<PAGE>


                 QUARTERLY CONDENSED FINANCIAL DATA - UNAUDITED
<TABLE>
<CAPTION>



                                                                                 2000 Quarter Ended
                                                                 ---------------------------------------------------
                                                                 March 31     June 30    September 30    December 31
                                                                 --------     -------    ------------    -----------
                                                                          (dollars expressed in thousands)

<S>                                                             <C>           <C>            <C>            <C>
Interest income..............................................   $  97,717     104,161        107,582        113,366
Interest expense.............................................      42,287      45,771         48,140         51,481
                                                                ---------   ---------     ----------      ---------
       Net interest income...................................      55,430      58,390         59,442         61,885
Provision for loan losses....................................       3,582       3,620          3,865          3,060
                                                                ---------   ---------     ----------      ---------
       Net interest income after provision for loan losses...      51,848      54,770         55,577         58,825
Noninterest income...........................................       9,564      11,471         10,750         10,993
Noninterest expense..........................................      37,793      41,917         42,776         48,677
                                                                ---------   ---------     ----------      ---------
       Income before provision for income taxes and
         minority interest in income of subsidiary...........      23,619      24,324         23,551         21,141
Provision for income taxes...................................       8,544       9,197          8,947          7,794
                                                                ---------   ---------     ----------      ---------
       Income before minority interest in
         income of subsidiary................................      15,075      15,127         14,604         13,347
Minority interest in income of subsidiary....................         488         455            546            557
                                                                ---------   ---------     ----------      ---------
       Net income............................................   $  14,587      14,672         14,058         12,790
                                                                =========   =========     ==========      =========
Earnings per common share:
    Basic....................................................   $  608.21      614.51         585.87         529.46
    Diluted..................................................      589.52      594.12         570.33         519.78
                                                                =========   =========     ==========       ========



                                                                                 1999 Quarter Ended
                                                                 ---------------------------------------------------
                                                                 March 31     June 30    September 30    December 31
                                                                 --------     -------    ------------    -----------
                                                                          (dollars expressed in thousands)

Interest income..............................................   $  82,560      85,641         89,045         95,836
Interest expense.............................................      38,966      38,150         39,544         42,041
                                                                ---------   ---------     ----------      ---------
       Net interest income...................................      43,594      47,491         49,501         53,795
Provision for loan losses....................................       2,490       3,373          2,880          4,330
                                                                ---------   ---------     ----------      ---------
       Net interest income after provision for loan losses...      41,104      44,118         46,621         49,465
Noninterest income...........................................       9,603      13,515          9,021          9,511
Noninterest expense..........................................      35,487      37,248         37,515         40,557
                                                                ---------   ---------     ----------      ---------
       Income before provision for income taxes and
         minority interest in income of subsidiary...........      15,220      20,385         18,127         18,419
Provision for income taxes...................................       5,638       7,465          6,689          6,521
                                                                ---------   ---------     ----------      ---------
       Income before minority interest in
         income of subsidiary................................       9,582      12,920         11,438         11,898
Minority interest in income of subsidiary....................         311         361            416            572
                                                                ---------   ---------     ----------      ---------
       Net income............................................   $   9,271      12,559         11,022         11,326
                                                                =========   =========     ==========      =========
Earnings per common share:
    Basic....................................................   $  383.52      525.23         457.54         467.62
    Diluted..................................................      372.57      505.15         444.11         456.94
                                                                =========   =========     ==========      =========

</TABLE>




<PAGE>


                           CONSOLIDATED BALANCE SHEETS

             (dollars expressed in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                              December 31,
                                                                                          ---------------------
                                                                                          2000             1999
                                                                                          ----             ----

                                     ASSETS
                                     ------


Cash and cash equivalents:
<S>                                                                                   <C>                  <C>
     Cash and due from banks.......................................................   $    167,474         126,720
     Interest-bearing deposits with other financial institutions
       with maturities of three months or less.....................................          4,005           1,674
     Federal funds sold............................................................         26,800          42,500
                                                                                      ------------     -----------
               Total cash and cash equivalents.....................................        198,279         170,894
                                                                                      ------------     -----------

Investment securities:
     Available for sale, at fair value.............................................        539,386         430,093
     Held to maturity, at amortized cost (fair value of $24,507 and
       $21,476 at December 31, 2000 and 1999, respectively)........................         24,148          21,554
                                                                                      ------------     -----------
               Total investment securities.........................................        563,534         451,647
                                                                                      ------------     -----------

Loans:
     Commercial, financial and agricultural........................................      1,496,284       1,086,919
     Real estate construction and development......................................        809,682         795,081
     Real estate mortgage..........................................................      2,202,857       1,851,569
     Consumer and installment......................................................        181,602         233,374
     Loans held for sale...........................................................         69,105          37,412
                                                                                      ------------     -----------
               Total loans.........................................................      4,759,530       4,004,355
     Unearned discount.............................................................         (7,265)         (8,031)
     Allowance for loan losses.....................................................        (81,592)        (68,611)
                                                                                      ------------     -----------
               Net loans...........................................................      4,670,673       3,927,713
                                                                                      ------------     -----------

Bank premises and equipment, net of accumulated
     depreciation and amortization.................................................        114,771          75,647
Intangibles associated with the purchase of subsidiaries...........................         85,021          46,085
Mortgage servicing rights, net of amortization.....................................          7,048           8,665
Accrued interest receivable........................................................         45,226          33,491
Deferred income taxes..............................................................         75,699          51,972
Other assets.......................................................................        116,440         101,633
                                                                                      ------------     -----------
               Total assets........................................................   $  5,876,691       4,867,747
                                                                                      ============     ===========

</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>


                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

             (dollars expressed in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                               December 31,
                                                                                          ------------------------
                                                                                          2000             1999
                                                                                          ----             ----

                                   LIABILITIES
                                   -----------
Deposits:
     Demand:
<S>                                                                                   <C>                  <C>
       Non-interest-bearing........................................................   $    808,251         606,064
       Interest-bearing............................................................        448,146         415,113
     Savings.......................................................................      1,447,898       1,198,314
     Time:
       Time deposits of $100 or more...............................................        499,956         339,214
       Other time deposits.........................................................      1,808,164       1,693,109
                                                                                      ------------     -----------
          Total deposits...........................................................      5,012,415       4,251,814
Short-term borrowings..............................................................        140,569          73,554
Note payable.......................................................................         83,000          64,000
Accrued interest payable...........................................................         23,227          11,607
Deferred income taxes..............................................................         12,774           6,582
Accrued expenses and other liabilities.............................................         54,944          25,616
Minority interest in subsidiary....................................................         14,067          12,058
                                                                                      ------------     -----------
          Total liabilities........................................................      5,340,996       4,445,231
                                                                                      ------------     -----------

Guaranteed preferred beneficial interests in:
     First Banks, Inc. subordinated debentures.....................................        138,569          83,394
     First Banks America, Inc. subordinated debentures.............................         44,280          44,217
                                                                                      ------------     -----------
          Total guaranteed preferred beneficial interests in
              subordinated debentures..............................................        182,849         127,611
                                                                                      ------------     -----------

                              STOCKHOLDERS' EQUITY
                              --------------------

Preferred stock:
     $1.00 par value, 5,000,000 shares authorized, no shares issued
       and outstanding at December 31, 2000 and 1999...............................             --              --
     Class A convertible, adjustable rate, $20.00 par value, 750,000
       shares authorized, 641,082 shares issued and outstanding....................         12,822          12,822
     Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
       160,505 shares issued and outstanding.......................................            241             241
Common stock, $250.00 par value, 25,000 shares authorized,
     23,661 shares issued and outstanding..........................................          5,915           5,915
Capital surplus....................................................................          2,267           3,318
Retained earnings..................................................................        325,580         270,259
Accumulated other comprehensive income.............................................          6,021           2,350
                                                                                      ------------     -----------
          Total stockholders' equity...............................................        352,846         294,905
                                                                                      ------------     -----------
          Total liabilities and stockholders' equity...............................   $  5,876,691       4,867,747
                                                                                      ============     ===========
</TABLE>


<PAGE>

                        CONSOLIDATED STATEMENTS OF INCOME

             (dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                                      Years ended December 31,
                                                                                   -----------------------------
                                                                                   2000         1999        1998
                                                                                   ----         ----        ----

Interest income:
<S>                                                                             <C>           <C>          <C>
     Interest and fees on loans..............................................  $ 390,332      323,207      284,177
     Investment securities:
       Taxable...............................................................     27,331       26,206       39,898
       Nontaxable............................................................        961          937          985
     Federal funds sold and other............................................      4,202        2,732        2,800
                                                                               ---------     --------    ---------
          Total interest income..............................................    422,826      353,082      327,860
                                                                               ---------     --------    ---------
Interest expense:
     Deposits:
       Interest-bearing demand...............................................      5,909        5,098        5,135
       Savings...............................................................     51,656       44,101       42,591
       Time deposits of $100 or more.........................................     20,654       11,854       12,024
       Other time deposits...................................................     99,603       84,639       92,305
     Interest rate exchange agreements, net..................................         --        5,397        3,810
     Short-term borrowings...................................................      5,881        3,983        2,903
     Note payable............................................................      3,976        3,629        3,411
                                                                               ---------     --------    ---------
          Total interest expense.............................................    187,679      158,701      162,179
                                                                               ---------     --------    ---------
          Net interest income................................................    235,147      194,381      165,681
Provision for loan losses....................................................     14,127       13,073        9,000
                                                                               ---------     --------    ---------
          Net interest income after provision for loan losses................    221,020      181,308      156,681
                                                                               ---------     --------    ---------
Noninterest income:
     Service charges on deposit accounts and customer service fees...........     19,794       17,676       14,876
     Credit card fees........................................................        236          409        2,999
     Loan servicing fees, net................................................        486          657        1,017
     Gain on mortgage loans sold and held for sale...........................      7,806        6,909        5,563
     Net gain on sales of available-for-sale securities......................        168          791        1,466
     Net (loss) gain on trading securities...................................         --         (303)         607
     Gain on sales of branches, net of expenses..............................      1,355        4,406           --
     Other...................................................................     12,933       11,105        9,969
                                                                               ---------     --------    ---------
          Total noninterest income...........................................     42,778       41,650       36,497
                                                                               ---------     --------    ---------
Noninterest expense:
     Salaries and employee benefits..........................................     73,391       61,524       55,907
     Occupancy, net of rental income.........................................     14,675       12,518       11,037
     Furniture and equipment.................................................     11,702        8,520        8,122
     Postage, printing and supplies..........................................      4,431        4,244        5,230
     Data processing fees....................................................     22,359       18,567       13,917
     Legal, examination and professional fees................................      4,523        9,109        5,326
     Communications..........................................................      2,625        2,488        2,874
     Advertising and business development....................................      4,331        3,734        4,668
     Guaranteed preferred debentures.........................................     13,173       12,050        9,842
     Other...................................................................     19,953       18,053       21,781
                                                                               ---------     --------    ---------
          Total noninterest expense..........................................    171,163      150,807      138,704
                                                                               ---------     --------    ---------
          Income before provision for income taxes and
           minority interest in  income of subsidiary........................     92,635       72,151       54,474
Provision for income taxes...................................................     34,482       26,313       19,693
                                                                               ---------     --------    ---------
          Income before minority interest in income of subsidiary............     58,153       45,838       34,781
Minority interest in income of subsidiary....................................      2,046        1,660        1,271
                                                                               ---------     --------    ---------
          Net income.........................................................     56,107       44,178       33,510
Preferred stock dividends....................................................        786          786          786
                                                                               ---------     --------    ---------
          Net income available to common stockholders........................  $  55,321       43,392       32,724
                                                                               =========     ========    =========
Earnings per common share:
     Basic...................................................................  $2,338.04     1,833.91     1,383.04
     Diluted.................................................................   2,267.41     1,775.47     1,337.09
                                                                               =========     ========    =========
Weighted average shares of common stock outstanding..........................     23,661       23,661       23,661
                                                                               =========     ========    =========
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.



<PAGE>

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME

                       Three years ended December 31, 2000
             (dollars expressed in thousands, except per share data)

<TABLE>
<CAPTION>


                                                                                                            Accu-
                                                     Adjustable rate                                       mulated
                                                     preferred stock                                        other     Total
                                                     ---------------
                                                   Class A                               Compre-          compre-   stock-
                                                   conver-             Common    Capital hensive Retained  hensive  holders'
                                                    tible    Class B    stock    surplus income  earnings  income    equity
                                                    -----    -------    -----    -------  ---------------  ------    ------

<S>                                               <C>          <C>     <C>       <C>     <C>    <C>        <C>     <C>
Consolidated balances, January 1, 1998........... $ 12,822     241     5,915     3,978          199,143    9,438   231,537
Year ended December 31, 1998:
    Comprehensive income:
      Net income.................................       --      --        --        --   33,510  33,510       --    33,510
      Other comprehensive income, net of tax
        Unrealized gains on securities, net of
        reclassification adjustment (1)..........       --      --        --        --    2,300      --    2,300     2,300
                                                                                        -------
      Comprehensive income.......................                                        35,810
                                                                                        =======
    Class A preferred stock dividends,
      $1.20 per share............................       --      --        --        --             (769)      --      (769)
    Class B preferred stock dividends,
      $0.11 per share............................       --      --        --        --              (17)      --       (17)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --      --        --    (3,198)              --       --    (3,198)
                                                  --------    ----     -----    ------          -------   ------   -------
Consolidated balances, December 31, 1998.........   12,822     241     5,915       780          231,867   11,738   263,363
Year ended December 31, 1999:
    Comprehensive income:
      Net income.................................       --      --        --       --    44,178  44,178       --    44,178
      Other comprehensive income, net of tax
        Unrealized losses on securities, net of
        reclassification adjustment (1)..........       --      --        --       --    (9,388)     --   (9,388)   (9,388)
                                                                                        -------
      Comprehensive income.......................                                        34,790
                                                                                        =======
    Class A preferred stock dividends,
      $1.20 per share............................       --      --        --       --              (769)      --      (769)
    Class B preferred stock dividends,
      $0.11 per share............................       --      --        --       --               (17)      --       (17)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --      --        --    (3,273)              --       --    (3,273)
    Reclassification of retained earnings........       --      --        --     5,000           (5,000)      --        --
    Reduction of deferred tax asset
       valuation allowance.......................       --      --        --       811               --       --       811
                                                   -------    ----     -----    ------          -------   ------   -------
Consolidated balances, December 31,1999..........   12,822     241     5,915     3,318          270,259    2,350   294,905
Year ended December 31, 2000:
    Comprehensive income:
      Net income.................................       --      --        --        --   56,107  56,107       --    56,107
      Other comprehensive income, net of tax
        Unrealized gains on securities, net of
        reclassification adjustment (1)..........       --      --        --        --    3,671      --    3,671     3,671
                                                                                        -------
      Comprehensive income.......................                                        59,778
                                                                                        =======
    Class A preferred stock dividends,
      $1.20 per share............................       --      --        --        --             (769)      --      (769)
    Class B preferred stock dividends,
      $0.11 per share............................       --      --        --        --              (17)      --       (17)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --      --        --    (1,051)              --       --    (1,051)
                                                  --------    ----     -----    ------          -------   ------   -------
Consolidated balances, December 31, 2000......... $ 12,822     241     5,915     2,267          325,580    6,021   352,846
                                                  ========    ====     =====    ======          =======   ======   =======
</TABLE>

<PAGE>

-------------------------
(1)  Disclosure of reclassification adjustment:

<TABLE>
<CAPTION>
                                                                                             Years ended December 31, 2000
                                                                                             -----------------------------
                                                                                             2000         1999       1998
                                                                                             ----         ----       ----

<S>                                                                                         <C>         <C>         <C>
     Unrealized gains (losses) arising during the year...................................   $3,780      (8,874)     3,253
     Less reclassification adjustment for gains included in net income...................      109         514        953
                                                                                            ------      ------      -----
     Unrealized gains (losses) on securities.............................................   $3,671      (9,388)     2,300
                                                                                            ======      ======      =====
</TABLE>

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                        (dollars expressed in thousands)
<TABLE>
<CAPTION>


                                                                                        Years ended December 31,
                                                                                      ---------------------------
                                                                                      2000       1999        1998
                                                                                      ----       ----        ----

Cash flows from operating activities:
<S>                                                                               <C>          <C>          <C>
     Net income.................................................................  $ 56,107     44,178       33,510
     Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
          Depreciation, amortization and accretion, net.........................    17,906     20,241       15,787
          Originations and purchases of loans held for sale.....................  (532,178)  (452,941)    (628,544)
          Proceeds from sales of loans held for sale............................   413,247    507,077      520,994
          Provision for loan losses.............................................    14,127     13,073        9,000
          Provision for income taxes............................................    34,482     26,313       19,693
          Payments of income taxes..............................................   (10,525)   (23,904)     (16,091)
          (Increase) decrease in accrued interest receivable....................    (7,338)    (3,164)         256
          Net decrease (increase) in trading securities.........................        --      3,425         (315)
          Interest accrued on liabilities.......................................   187,679    158,701      162,368
          Payments of interest on liabilities...................................  (177,764)  (154,056)    (167,090)
          Other operating activities, net.......................................   (13,307)    (7,201)      (5,582)
          Minority interest in income of subsidiary.............................     2,046      1,660        1,271
                                                                                  --------   --------     --------
               Net cash (used in) provided by operating activities..............   (15,518)   133,402      (54,743)
                                                                                  --------   --------     --------

Cash flows from investing activities:
     Cash (paid) received for acquired entities, net of
       cash and cash equivalents received (paid)................................   (86,106)   (15,961)      29,339
     Proceeds from sales of investment securities...............................    46,279     63,938      136,042
     Maturities of investment securities available for sale.....................   347,642    350,940      395,961
     Maturities of investment securities held to maturity.......................     1,169      2,708        2,314
     Purchases of investment securities available for sale......................  (289,875)  (288,023)    (167,082)
     Purchases of investment securities held to maturity........................    (3,806)    (2,627)      (4,910)
     Net increase in loans......................................................  (339,575)  (268,238)    (443,741)
     Recoveries of loans previously charged-off.................................     9,842      9,281        8,444
     Purchases of bank premises and equipment...................................   (30,856)   (17,099)     (14,851)
     Other investing activities.................................................     5,052        (10)     (13,919)
                                                                                  --------   --------     --------
               Net cash used in investing activities............................  (340,234)  (165,091)     (72,403)
                                                                                  --------   --------     --------

Cash flows from financing activities:
     Increase (decrease) in demand and savings deposits.........................   155,058    (72,895)     258,757
     Increase (decrease) in time deposits.......................................   129,008    144,499     (171,207)
     (Decrease) increase in Federal Home Loan Bank advances.....................        --    (50,000)      48,485
     Decrease in federal funds purchased........................................   (27,100)        --           --
     Increase in securities sold under agreements to repurchase.................    52,015      2,223       18,692
     Increase (decrease) in notes payable.......................................    19,000     13,952      (24,637)
     Proceeds from issuance of guaranteed preferred subordinated debentures.....    55,050         --       44,124
     Sale of branch deposits....................................................       892    (49,172)          --
     Payment of preferred stock dividends.......................................      (786)      (786)        (786)
                                                                                  --------   --------     --------
               Net cash provided by (used in) financing activities..............   383,137    (12,179)     173,428
                                                                                  --------   --------     --------
               Net increase (decrease) in cash and cash equivalents.............    27,385    (43,868)      46,282
Cash and cash equivalents, beginning of year....................................   170,894    214,762      168,480
                                                                                  --------   --------     --------
Cash and cash equivalents, end of year..........................................  $198,279    170,894      214,762
                                                                                  ========   ========     ========

Noncash investing and financing activities:
     Loans transferred to other real estate.....................................  $  1,761      4,039        3,067
     Loans exchanged for and transferred to
       available-for-sale investment securities.................................    37,634         --       65,361
     Loans held for sale exchanged for and transferred
       to available-for-sale investment securities..............................    19,805      3,985       23,898
     Loans held for sale transferred to loans...................................    72,847     32,982           --
                                                                                  ========   ========    ========
</TABLE>


The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The following is a summary of the more significant  accounting policies
followed by First Banks, Inc. and subsidiaries (First Banks or the Company):

         Basis  of  Presentation.   The  accompanying   consolidated   financial
statements  of First Banks have been  prepared  in  accordance  with  accounting
principles  generally  accepted  in the United  States of America and conform to
predominant practices within the banking industry. Management of First Banks has
made a number of estimates and  assumptions  relating to the reporting of assets
and  liabilities  and the  disclosure of contingent  assets and  liabilities  to
prepare the  consolidated  financial  statements in conformity  with  accounting
principles  generally  accepted in the United States of America.  Actual results
could differ from those estimates.

         Principles of  Consolidation.  The  consolidated  financial  statements
include the accounts of the parent company and its subsidiaries, net of minority
interest,  as more fully described below. All significant  intercompany accounts
and transactions  have been eliminated.  Certain  reclassifications  of 1999 and
1998 amounts have been made to conform with the 2000 presentation.
         First Banks operates through its subsidiary bank holding  companies and
subsidiary financial  institutions  (collectively  referred to as the Subsidiary
Banks) as follows:

         First Bank, headquartered  in  St. Louis County, Missouri (First Bank);
         First  Capital  Group,  Inc., headquartered  in Albuquerque, New Mexico
           (FCG);
         First Banks America, Inc., headquartered in St. Louis County,  Missouri
           (FBA) and its wholly owned subsidiaries:
              First Bank & Trust, headquartered  in  San  Francisco,  California
                (FB&T); and
              The   San   Francisco   Company,  headquartered  in San Francisco,
                California (SFC), and its wholly owned subsidiary:
                      Bank  of  San Francisco,  headquartered  in San Francisco,
                      California.

         The  Subsidiary  Banks  are  wholly  owned by their  respective  parent
companies  except FBA,  which was 83.37%  owned by First  Banks at December  31,
1999. On October 31, 2000,  FBA issued  6,530,769  shares of its common stock to
First  Banks in  conjunction  with FBA's  acquisition  of First Bank & Trust,  a
wholly owned subsidiary of First Banks. This transaction  increased First Banks'
ownership interest in FBA to approximately  92.82%.  First Banks owned 92.86% of
FBA at December 31, 2000.

         Cash and Cash  Equivalents.  Cash, due from banks,  federal funds sold,
and  interest-bearing  deposits with original maturities of three months or less
are considered to be cash and cash  equivalents for purposes of the consolidated
statements of cash flows.
         The  Subsidiary  Banks are required to maintain  certain  daily reserve
balances on hand in  accordance  with  regulatory  requirements.  These  reserve
balances  maintained in accordance with such requirements were $22.3 million and
$10.8 million at December 31, 2000 and 1999, respectively.

         Investment  Securities.  The  classification  of investment  securities
available  for sale or held to maturity is  determined  at the date of purchase.
First Banks no longer engages in the trading of investment securities.
         Investment  securities  designated as available for sale, which include
any  security  that First Banks has no  immediate  plan to sell but which may be
sold in the future  under  different  circumstances,  are stated at fair  value.
Realized gains and losses are included in noninterest  income upon commitment to
sell,  based on the amortized cost of the individual  security sold.  Unrealized
gains and losses are recorded, net of related income tax effects, in accumulated
other comprehensive  income. All previous fair value adjustments included in the
separate component of accumulated other  comprehensive  income are reversed upon
sale.
         Investment securities designated as held to maturity, which include any
security  that  First  Banks has the  positive  intent  and  ability  to hold to
maturity,  are stated at cost, net of  amortization of premiums and accretion of
discounts computed on the level-yield method taking into consideration the level
of current and anticipated prepayments.



<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Loans Held for Portfolio. Loans held for portfolio are carried at cost,
adjusted  for  amortization  of premiums and  accretion  of discounts  using the
interest  method.  Interest and fees on loans are recognized as income using the
interest  method.  Loan  origination  fees are deferred  and  accreted  over the
estimated life of the loans using the interest method.  Loans held for portfolio
are  stated  at cost as  First  Banks  has the  ability  and it is  management's
intention to hold them to maturity.
         The accrual of interest on loans is  discontinued  when it appears that
interest or principal may not be paid in a timely manner in the normal course of
business.  Generally,  payments  received on nonaccrual  and impaired  loans are
recorded  as  principal  reductions.  Interest  income is  recognized  after all
principal  has been repaid or an  improvement  in the  condition of the loan has
occurred which would warrant resumption of interest accruals.
         A loan is considered impaired when it is probable that First Banks will
be unable to collect all amounts due, both principal and interest,  according to
the contractual  terms of the loan  agreement.  When measuring  impairment,  the
expected  future cash flows of an  impaired  loan are  discounted  at the loan's
effective interest rate.  Alternatively,  impairment is measured by reference to
an observable  market price, if one exists,  or the fair value of the collateral
for a collateral-dependent loan. Regardless of the historical measurement method
used, First Banks measures  impairment based on the fair value of the collateral
when foreclosure is probable. Additionally, impairment of a restructured loan is
measured  by  discounting  the total  expected  future  cash flows at the loan's
effective rate of interest as stated in the original loan agreement. First Banks
uses its existing nonaccrual methods for recognizing interest income on impaired
loans.

         Loans Held for Sale.  Loans  held for sale are  carried at the lower of
cost or market value,  which is determined on an individual loan basis. Gains or
losses  on the  sale of  loans  held  for  sale  are  determined  on a  specific
identification method.

         Loan Servicing Income. Loan servicing income represents fees earned for
servicing real estate  mortgage loans owned by investors,  net of federal agency
guarantee  fees,  interest  shortfall  and  amortization  of mortgage  servicing
rights. Such fees are generally calculated on the outstanding  principal balance
of the loans serviced and are recorded as income when earned.

         Allowance for Loan Losses.  The allowance for loan losses is maintained
at a level considered adequate to provide for probable losses. The provision for
loan losses is based on a periodic  analysis of the loans held for portfolio and
held for sale,  considering,  among other factors,  current economic conditions,
loan portfolio composition,  past loan loss experience,  independent appraisals,
loan  collateral,  payment  experience  and selected key  financial  ratios.  As
adjustments become necessary, they are reflected in the results of operations in
the periods in which they become known.

         Bank Premises and Equipment.  Bank premises and equipment are stated at
cost less accumulated  depreciation and  amortization.  Depreciation is computed
primarily using the straight-line  method over the estimated useful lives of the
related assets.  Amortization of leasehold  improvements is calculated using the
straight-line  method over the shorter of the useful life of the  improvement or
term of the lease.  Bank premises and  improvements are depreciated over five to
40 years and equipment over three to seven years.

         Intangibles  Associated With the Purchase of Subsidiaries.  Intangibles
associated with the purchase of subsidiaries  consist of excess of cost over net
assets  acquired.  The  excess of cost over net  assets  acquired  of  purchased
subsidiaries  is amortized  using the  straight-line  method over the  estimated
periods to be benefited,  which range from  approximately 10 to 15 years.  First
Banks reviews  intangible  assets for impairment  whenever  events or changes in
circumstances  indicate the  carrying  value of an  underlying  asset may not be
recoverable.  First  Banks  measures  recoverability  based upon the future cash
flows expected to result from the use of the  underlying  asset and its eventual
disposition.  If the sum of the  expected  future cash flows  (undiscounted  and
without  interest  charges) is less than the  carrying  value of the  underlying
asset, First Banks recognizes an impairment loss. The impairment loss recognized
represents  the  amount  by which the  carrying  value of the  underlying  asset
exceeds  the fair value of the  underlying  asset.  As such  adjustments  become
necessary,  they are  reflected in the results of  operations  in the periods in
which they become known.




<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Mortgage  Servicing Rights.  Mortgage servicing rights are amortized in
proportion to the related  estimated net  servicing  income on a  disaggregated,
discounted basis over the estimated lives of the related  mortgages  considering
the level of current  and  anticipated  repayments,  which range from five to 12
years.

         Other  Real  Estate.  Other  real  estate,  consisting  of real  estate
acquired  through  foreclosure or deed in lieu of foreclosure,  is stated at the
lower of cost or fair value less  applicable  selling costs.  The excess of cost
over fair value of the  property  at the date of  acquisition  is charged to the
allowance for loan losses.  Subsequent  reductions in carrying value, to reflect
current fair value or costs incurred in maintaining the properties,  are charged
to expense as incurred.

         Income  Taxes.  Deferred tax assets and  liabilities  are  reflected at
currently  enacted  income  tax  rates  applicable  to the  period  in which the
deferred tax assets or  liabilities  are expected to be realized or settled.  As
changes  in the  tax  laws  or  rates  are  enacted,  deferred  tax  assets  and
liabilities are adjusted through the provision for income tax expense.
         First Banks,  Inc. and its eligible  subsidiaries  file a  consolidated
federal income tax return and unitary or  consolidated  state income tax returns
in all applicable states.

         Financial  Instruments.  A  financial  instrument  is  defined as cash,
evidence of an ownership  interest in an entity,  or a contract  that conveys or
imposes on an entity the  contractual  right or obligation to either  receive or
deliver cash or another financial instrument.

         Financial Instruments With Off-Balance-Sheet Risk. First Banks utilizes
financial  instruments  to  reduce  the  interest  rate  risk  arising  from its
financial assets and liabilities. These instruments involve, in varying degrees,
elements  of  interest  rate  risk  and  credit  risk in  excess  of the  amount
recognized in the consolidated  balance sheets.  "Interest rate risk" is defined
as the possibility that interest rates may move unfavorably from the perspective
of First Banks.  The risk that a  counterparty  to an agreement  entered into by
First Banks may default is defined as "credit risk."
         First Banks is party to commitments to extend credit and commercial and
standby letters of credit in the normal course of business to meet the financing
needs of its customers.  These commitments involve, in varying degrees, elements
of interest rate risk and credit risk in excess of the amount  recognized in the
consolidated balance sheets.

         Interest Rate Swap, Floor and Cap Agreements. Interest rate swap, floor
and cap  agreements  are accounted for on an accrual basis with the net interest
differential  being  recognized as an adjustment to interest  income or interest
expense  of the  related  asset or  liability.  Premiums  and fees paid upon the
purchase of interest rate swap,  floor and cap agreements are amortized over the
life of the  agreements  using  the  interest  method.  In the  event  of  early
termination of these derivative financial instruments, the net proceeds received
or paid are deferred and amortized  over the shorter of the  remaining  contract
life of the derivative financial instrument or the maturity of the related asset
or  liability.  If,  however,  the  amount  of the  underlying  hedged  asset or
liability is repaid,  then the gains or losses on the  agreements are recognized
immediately in the consolidated  statements of income. The unamortized premiums,
fees paid and deferred losses on early terminations are included in other assets
in the accompanying consolidated balance sheets.

         Forward Contracts to Sell Mortgage-Backed Securities.  Gains and losses
on  forward  contracts  to sell  mortgage-backed  securities,  which  qualify as
hedges,  are deferred.  The net  unamortized  balance of such deferred gains and
losses is  applied to the  carrying  value of the loans held for sale as part of
the lower of cost or market valuation.

         Earnings Per Common Share. Basic earnings per shares (EPS) are computed
by dividing the income available to common  stockholders  (the numerator) by the
weighted average number of common shares  outstanding (the  denominator)  during
the year. The  computation of dilutive EPS is similar except the  denominator is
increased to include the number of additional common shares that would have been
outstanding if the dilutive  potential shares had been issued.  In addition,  in
computing  the  dilutive  effect of  convertible  securities,  the  numerator is
adjusted  to add  back:  (a) any  convertible  preferred  dividends  and (b) the
after-tax  amount of  interest  recognized  in the  period  associated  with any
convertible debt.




<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(2)      ACQUISITIONS AND DIVESTITURES

         During the three years ended December 31, 2000,  First Banks  completed
10 acquisitions as follows:
<TABLE>
<CAPTION>

                                                                              Total        Purchase        Excess
           Entity                                       Date                 assets          price          cost
           ------                                       ----                 ------          -----          ----
                                                                               (dollars expressed in thousands)
   2000
   ----

     The San Francisco Company
<S>                                               <C>                    <C>                <C>             <C>
     San Francisco, California                    December 31, 2000      $  183,800         62,200          16,300

     Millennium Bank
     San Francisco, California                    December 29, 2000         117,000         20,700           8,700

     Commercial Bank of San Francisco
     San Francisco, California                    October 31, 2000          155,600         26,400           9,300

     Bank of Ventura
     Ventura, California                           August 31, 2000           63,800         14,200           7,200

     First Capital Group, Inc.
     Albuquerque, New Mexico                      February 29, 2000          64,600         66,100           1,500

     Lippo Bank
     San Francisco, California                    February 29, 2000          85,300         17,200           4,800
                                                                         ----------       --------        --------
                                                                         $  670,100        206,800          47,800
                                                                         ==========       ========        ========
   1999
   ----

     Century Bank
     Beverly Hills, California                     August 31, 1999       $  156,000         31,500           4,500

     Redwood Bancorp
     San Francisco, California                      March 4, 1999           183,900         26,000           9,500
                                                                         ----------       --------        --------
                                                                         $  339,900         57,500          14,000
                                                                         ==========       ========        ========
   1998
   ----

     Republic Bank
     Torrance, California                        September 15, 1998      $  124,100         19,300          10,200

     Pacific Bay Bank
     San Pablo, California                        February 2, 1998           38,300          4,200           1,500
                                                                         ----------       --------        --------
                                                                         $  162,400         23,500          11,700
                                                                         ==========       ========        ========
</TABLE>

         In addition to the acquisitions included in the table above, during the
three years ended  December  31,  2000,  First Banks also  completed  two branch
office purchases.
         On September 17, 1999,  FB&T  completed its  assumption of the deposits
and certain  liabilities  and the  purchase  of  selected  assets of the Malibu,
California  branch  office of  Brentwood  Bank of  California.  The  transaction
resulted  in the  acquisition  of  approximately  $6.3  million in loans,  $17.3
million of deposits and one branch office.  The excess of the cost over the fair
value of the net assets  acquired was $325,000  and is being  amortized  over 15
years.
         On March 19, 1998, First Banks completed its assumption of the deposits
and purchase of selected assets of the Solvang,  California  banking location of
Bank of America.  The transaction  resulted in the acquisition of  approximately
$15.5  million in deposits and one office.  The excess of the cost over the fair
value of the net assets acquired was $1.8 million and is being amortized over 15
years.
         In April  2000,  First Bank  completed  its  divestiture  of one branch
office in central  Illinois.  In March and April 1999,  First Bank completed its
divestiture of seven branches in the northern and central Illinois market areas.
For the years  ended  December  31,  2000 and 1999,  these  branch  divestitures
resulted in a reduction  of the deposit base of  approximately  $8.8 million and
$54.8  million,  resulting in pre-tax  gains of $1.4  million and $4.4  million,
respectively.


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The  aforementioned  acquisition  transactions were accounted for using
the purchase method of accounting and, accordingly,  the consolidated  financial
statements  include the  financial  position and results of  operations  for the
periods subsequent to the respective  acquisition dates, and the assets acquired
and liabilities  assumed were recorded at fair value at the  acquisition  dates.
These acquisitions were funded from available cash reserves, proceeds from sales
and maturities of  available-for-sale  investment  securities,  borrowings under
First Banks' $120.0 million revolving credit agreement and the proceeds from the
issuance  of  trust  preferred  securities.  Due to  the  immaterial  effect  on
previously reported financial  information,  pro forma disclosures have not been
prepared for the aforementioned transactions.

(3)      INVESTMENTS IN DEBT AND EQUITY SECURITIES

         Securities   Available  for  Sale.  The  amortized  cost,   contractual
maturity,  gross  unrealized  gains  and  losses  and fair  value of  investment
securities available for sale at December 31, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
                                                        Maturity                    Total
                                        ---------------------------------------
                                                                          After     Amor-        Gross             Weighted
                                        1 Year        1-5       5-10       10       tized     Unrealized     Fair   Average
                                                                                             -------------
                                        or Less      Years      Years     Years     Cost     Gains   Losses  Value   Yield
                                        -------      -----      -----     -----     ----     -----   ------  -----   -----
                                                                     (dollars expressed in thousands)

 December 31, 2000:
    Carrying value:
<S>                                    <C>             <C>         <C>       <C>   <C>         <C>     <C>   <C>     <C>
       U.S. Treasury.................. $ 89,229        801         --         --   90,030      30      (37)  90,023  5.85%
       U.S. Government agencies
          and corporations:
              Mortgage-backed.........    1,078     29,625     12,472    159,143  202,318     826     (160) 202,984  7.02
              Other...................   22,059    151,242     10,131     20,256  203,688   2,028   (1,521) 204,195  6.70
       Corporate debt securities......      912      1,961         --        500    3,373      --      (20)   3,353  7.65
       Equity investments in other
          financial institutions......   11,299         --         --         --   11,299   8,121     (369)  19,051  7.98
       Federal Home Loan Bank and
          Federal Reserve Bank stock
          (no stated maturity)........   19,780         --         --         --   19,780      --       --   19,780  6.69
                                       --------    -------     ------    -------  -------  ------   ------  -------
                   Total.............. $144,357    183,629     22,603    179,899  530,488  11,005   (2,107) 539,386  6.60
                                       ========    =======     ======    =======  =======  ======   ======  =======  ====
    Fair value:
       Debt securities................ $113,277    184,942     22,798    179,538
       Equity securities..............   38,831         --         --         --
                                       --------    -------     ------    -------
                   Total.............. $152,108    184,942     22,798    179,538
                                       ========    =======     ======    =======

    Weighted average yield............     6.19%      6.73%      6.89%      7.09%
                                       ========    =======     ======    =======
 December 31, 1999:
    Carrying value:
       U.S. Treasury.................. $ 21,036     29,240         --         --   50,276      58      (45)  50,289  6.10%
       U.S. Government agencies
          and corporations:
              Mortgage-backed.........   12,489      2,274     20,946     98,935  134,644      20   (1,540) 133,124  6.64
              Other...................  144,185     26,073     13,170     24,256  207,684       4   (3,607) 204,081  6.02
       Foreign debt securities........    2,995         --         --         --    2,995     286       --    3,281  9.42
       Equity investments in other
          financial institutions......    9,605         --         --         --    9,605   8,492     (434)  17,663  8.53
       Federal Home Loan Bank and
          Federal Reserve Bank stock
          (no stated maturity)........   21,655         --         --         --   21,655      --       --   21,655  6.07
                                       --------    -------     ------    -------  -------  ------   ------  -------
                   Total.............. $211,965     57,587     34,116    123,191  426,859   8,860   (5,626) 430,093  6.26
                                       ========    =======     ======    =======  =======  ======   ======  =======  ====
    Fair value:
       Debt securities................ $177,426     57,448     32,998    119,621
       Equity securities..............   42,600         --         --         --
                                       --------    -------     ------    -------
                   Total.............. $220,026     57,448     32,998    119,621
                                       ========    =======     ======    =======

    Weighted average yield............     6.00%      6.44%      6.26%      6.79%
                                       ========    =======     ======    =======
</TABLE>


<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Securities Held to Maturity.  The amortized cost, contractual maturity,
gross unrealized  gains and losses and fair value of investment  securities held
to maturity at December 31, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>

                                                      Maturity
                                         ------------------------------------       Total
                                                                       After       Amor-        Gross            Weighted
                                        1 Year      1-5      5-10       10         tized     Unrealized    Fair   Average
                                                                                          --------------
                                        or Less    Years     Years     Years       Cost    Gains  Losses   Value   Yield
                                        -------    -----     -----     -----       ----    -----  ------   -----   -----
                                                                  (dollars expressed in thousands)

 December 31, 2000:
    Carrying value:
       U.S. Government agencies
          and corporations:
<S>                                     <C>            <C>       <C>    <C>        <C>         <C>   <C>    <C>      <C>
              Mortgage-backed.........  $   --         --        --     5,130      5,130       3     (63)   5,070    6.72%
       State and political
           subdivisions...............     950     11,692     5,896       270     18,808     419      --   19,227    5.03
       Other..........................     210         --        --        --        210      --      --      210    6.90
                                        ------     ------     -----     -----     ------     ---    ----   ------
                   Total..............  $1,160     11,692     5,896     5,400     24,148     422     (63)  24,507    5.33
                                        ======     ======     =====     =====     ======     ===    ====   ======    ====

    Fair value:
       Debt securities................  $1,167     11,854     6,124     5,362
                                        ======     ======     =====     =====

    Weighted average yield............    4.64%      4.98%     5.16%     6.74%
                                        ======     ======     =====     =====
 December 31, 1999:
    Carrying value:
       U.S. Government agencies
          and corporations:
              Mortgage-backed.........  $   --         --        --     2,355      2,355      --    (155)   2,200    6.28%
       State and political
           subdivisions...............     506     11,196     5,322     1,965     18,989     275    (198)  19,066    5.05
       Other..........................      --        210        --        --        210      --      --      210    6.92
                                        ------     ------     -----     -----     ------     ---    ----   ------
                   Total..............  $  506     11,406     5,322     4,320     21,554     275    (353)  21,476    5.22
                                        ======     ======     =====     =====     ======     ===    ====   ======    ====
    Fair value:
       Debt securities................  $  512     11,505     5,125     4,334
                                        ======     ======     =====     =====

    Weighted average yield............    5.09%      4.97%     4.55%     6.62%
                                        ======     ======     =====     =====
</TABLE>
         Proceeds from sales of  available-for-sale  investment  securities were
$46.3 million, $63.9 million and $136.0 million for the years ended December 31,
2000, 1999 and 1998,  respectively.  Gross gains of $565,000,  $791,000 and $1.5
million were  realized on these sales during the years ended  December 31, 2000,
1999 and 1998,  respectively.  Gross losses of $396,000  were  realized on these
sales during the year ended December 31, 2000.  There were no losses realized on
these sales in 1999 and 1998.
         Proceeds from calls of investment  securities were $111,000 and $20,000
for the years ended  December  31, 2000 and 1999,  respectively.  Gross gains of
$300 were realized on these called securities during the year ended December 31,
2000.  There were no gross gains on called  securities in 1999.  Gross losses of
$1,800 and $1,200 were  realized  on these  called  securities  during the years
ended December 31, 2000 and 1999, respectively.
         Proceeds from sales of trading investment  securities were $2.9 million
and $311 million for the years ended  December 31, 1999 and 1998,  respectively.
There were no gross gains  realized  on these sales for the year ended  December
31,  1999.  Gross  gains of $879,000  were  realized on these sales for the year
ended December 31, 1998.  Gross losses of $303,000 and $234,000 were realized on
these sales for the years ended December 31, 1999 and 1998, respectively.
         Certain of the  Subsidiary  Banks  maintain  investments in the Federal
Home Loan Bank (FHLB) and/or the Federal Reserve Bank (FRB).  These  investments
are recorded at cost, which represents  redemption value. The investment in FHLB
stock is  maintained  at a  minimum  amount  equal to the  greater  of 1% of the
aggregate  outstanding balance of the applicable Subsidiary Bank's loans secured
by residential  real estate,  or 5% of advances from the FHLB to each Subsidiary
Bank. First Bank,  FB&T, and BSF are members of the FHLB system.  The investment
in FRB stock is  maintained  at a  minimum  of 6% of the  applicable  Subsidiary
Bank's capital stock and capital surplus. First Bank and FB&T are members of the
FRB system.
         Investment  securities  with a carrying value of  approximately  $180.5
million and $222.3  million at December  31, 2000 and 1999,  respectively,  were
pledged in connection  with deposits of public and trust funds,  securities sold
under agreements to repurchase and for other purposes as required by law.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(4)      LOANS AND ALLOWANCE FOR LOAN LOSSES

         Changes in the allowance  for loan losses for the years ended  December
31 were as follows:
<TABLE>
<CAPTION>

                                                                                    2000        1999        1998
                                                                                    ----        ----        ----
                                                                                  (dollars expressed in thousands)

<S>                                                                              <C>           <C>          <C>
               Balance, beginning of year.....................................   $ 68,611      60,970       50,509
               Acquired allowances for loan losses............................      6,062       3,008        3,200
                                                                                 --------    --------    ---------
                                                                                   74,673      63,978       53,709
                                                                                 --------    --------    ---------
               Loans charged-off..............................................    (17,050)    (17,721)     (10,183)
               Recoveries of loans previously charged-off.....................      9,842       9,281        8,444
                                                                                 --------    --------    ---------
               Net loans charged-off..........................................     (7,208)     (8,440)      (1,739)
                                                                                 --------    --------    ---------
               Provision charged to operations................................     14,127      13,073        9,000
                                                                                 --------    --------    ---------
               Balance, end of year...........................................   $ 81,592      68,611       60,970
                                                                                 ========    ========    =========
</TABLE>

         At December 31, 2000 and 1999,  First Banks had $50.2 million and $36.7
million,  respectively,  of loans on nonaccrual  status.  Interest on nonaccrual
loans, which would have been recorded under the original terms of the loans, was
$5.8  million,  $5.8 million and $4.5  million for the years ended  December 31,
2000, 1999 and 1998, respectively.  Of these amounts, $1.9 million, $2.7 million
and $1.9  million  were  actually  recorded as interest  income on such loans in
2000, 1999 and 1998, respectively.
         At December 31, 2000 and 1999,  First Banks had $53.2 million and $39.7
million of impaired loans, including $50.2 million and $36.7 million of loans on
nonaccrual status,  respectively.  At December 31, 2000 and 1999, impaired loans
also include $3.0 million of restructured  loans.  The allowance for loan losses
includes an allocation for each impaired  loan. The aggregate  allocation of the
allowance  for loan losses  related to impaired  loans was  approximately  $10.3
million  and $8.2  million at  December  31,  2000 and 1999,  respectively.  The
average recorded  investment in impaired loans was $45.1 million,  $46.0 million
and  $35.2  million  for the  years  ended  December  31,  2000,  1999 and 1998,
respectively. The amount of interest income recognized using a cash basis method
of accounting  during the time these loans were impaired was $2.2 million,  $2.8
million and $2.3 million in 2000, 1999 and 1998, respectively.
         First Banks' primary market areas are the states of Missouri, Illinois,
Texas and California.  At December 31, 2000 and 1999,  approximately 91% and 90%
of the total loan portfolio and 83% and 88% of the commercial and financial loan
portfolio, respectively, were to borrowers within these regions.
         Real estate lending  constituted the only significant  concentration of
credit risk. Real estate loans comprised  approximately  65% and 67% of the loan
portfolio  at December  31, 2000 and 1999,  of which 26% and 28%,  respectively,
were consumer  related in the form of residential real estate mortgages and home
equity lines of credit.
         First Banks is, in general,  a secured lender. At December 31, 2000 and
1999, 96% and 97%, respectively,  of the loan portfolio was secured.  Collateral
is required in accordance with the normal credit  evaluation  process based upon
the  creditworthiness  of the customer and the credit risk  associated  with the
particular transaction.

(5)      MORTGAGE BANKING ACTIVITIES

         At December 31, 2000 and 1999,  First Banks  serviced  loans for others
amounting to $957.2 million and $957.1 million, respectively.  Borrowers' escrow
balances  held by First Banks on such loans were  $653,000  and $1.0  million at
December 31, 2000 and 1999, respectively.
         Changes in mortgage  servicing  rights,  net of  amortization,  for the
years ended December 31 were as follows:
<TABLE>
<CAPTION>

                                                                                           2000         1999
                                                                                           ----         ----
                                                                                   (dollars expressed in thousands)

<S>                                                                                     <C>            <C>
              Balance, beginning of year...........................................     $  8,665       9,825
              Originated mortgage servicing rights.................................        1,455       1,670
              Amortization.........................................................       (3,072)     (2,830)
                                                                                        --------    --------
              Balance, end of year.................................................     $  7,048       8,665
                                                                                        ========    ========
</TABLE>


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(6)      BANK PREMISES AND EQUIPMENT

         Bank premises and equipment were comprised of the following at December
31:
<TABLE>
<CAPTION>

                                                                                           2000        1999
                                                                                           ----        ----
                                                                                  (dollars expressed in thousands)

<S>                                                                                  <C>             <C>
              Land................................................................    $  18,266        17,582
              Buildings and improvements...........................................      66,474        52,491
              Furniture, fixtures and equipment....................................      66,460        55,344
              Leasehold improvements...............................................      23,794        11,635
              Construction in progress.............................................      15,655         2,896
                                                                                      ---------     ---------
                  Total............................................................     190,649       139,948
              Less accumulated depreciation and amortization.......................      75,878        64,301
                                                                                      ---------     ---------
                  Bank premises and equipment, net.................................   $ 114,771        75,647
                                                                                      =========     =========
</TABLE>

         Depreciation and amortization  expense for the years ended December 31,
2000,  1999 and 1998  totaled  $9.5  million,  $7.6  million  and $5.3  million,
respectively.
         First Banks leases land,  office properties and some items of equipment
under  operating  leases.  Certain of the leases  contain  renewal  options  and
escalation clauses.  Total rent expense was $10.7 million, $7.4 million and $5.3
million for the years ended  December  31,  2000,  1999 and 1998,  respectively.
Future  minimum lease  payments  under  noncancellable  operating  leases extend
through 2084 as follows:
<TABLE>
<CAPTION>

                                                                                 (dollars expressed in thousands)

              Year ending December 31:
<S>                   <C>                                                                    <C>
                      2001...............................................................    $  7,420
                      2002...............................................................       6,101
                      2003...............................................................       5,321
                      2004...............................................................       3,941
                      2005...............................................................       3,198
                      Thereafter.........................................................      21,578
                                                                                             --------
                           Total future minimum lease payments...........................    $ 47,559
                                                                                             ========
</TABLE>

         First  Banks  leases to  unrelated  parties a  portion  of its  banking
facilities.  Total rental income was $2.6 million, $2.6 million and $2.5 million
for the years ended December 31, 2000, 1999 and 1998, respectively.

(7)      SHORT-TERM BORROWINGS

         Short-term borrowings were comprised of the following at December 31:
<TABLE>
<CAPTION>

                                                                                           2000        1999
                                                                                           ----        ----
                                                                                  (dollars expressed in thousands)

<S>           <C>                                                                      <C>            <C>
              Securities sold under agreements to repurchase.......................    $ 125,025      73,010
              FHLB borrowings......................................................       15,544         544
                                                                                       ---------    --------
                  Short-term borrowings............................................    $ 140,569      73,554
                                                                                       =========    ========
</TABLE>

         The average  balance of short-term  borrowings  was $106.1  million and
$87.4 million,  respectively,  and the maximum  month-end  balance of short-term
borrowings was $158.4 million and $176.4  million,  respectively,  for the years
ended  December  31,  2000  and  1999.  The  average  rates  paid on  short-term
borrowings  during the years ended December 31, 2000,  1999 and 1998 were 5.54%,
4.83% and 4.84%,  respectively.  The assets underlying the short-term borrowings
are under First Banks' control.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(8)      NOTE PAYABLE

         First Banks has a $120.0 million  revolving line of credit with a group
of unaffiliated banks (Credit Agreement). The Credit Agreement, dated August 24,
2000,  replaced a similar  revolving  credit  agreement  dated  August 25, 1999.
Interest  under the Credit  Agreement is payable on a monthly  basis at the lead
bank's  corporate base rate or, at the option of First Banks,  is payable at the
Eurodollar Rate plus a margin based upon the outstanding  loans and First Banks'
profitability.  The interest rate for borrowings  under the Credit Agreement was
7.65% at December 31, 2000, and was based on the applicable Eurodollar Rate plus
a margin of 1.00%.  Amounts may be  borrowed  under the Credit  Agreement  until
August 23, 2001,  at which time the  principal  and accrued  interest is due and
payable.
         Loans under the Credit Agreement are secured by all of the stock of the
Subsidiary  Banks,  which is owned by First Banks.  Under the Credit  Agreement,
there were  outstanding  borrowings of $83.0 million at December 31, 2000. There
were outstanding borrowings of $64.0 million under the previous credit agreement
at December 31, 1999.
         The Credit  Agreement  requires  maintenance of certain minimum capital
ratios for each of the Subsidiary  Banks. In addition,  it prohibits the payment
of dividends on First Banks' common stock. At December 31, 2000 and 1999,  First
Banks and the  Subsidiary  Banks were in compliance  with all  restrictions  and
requirements of the respective credit agreements.
         The average  balance  and  maximum  month-end  balance  outstanding  of
advances under the Credit  Agreement  during the years ended December 31 were as
follows:
<TABLE>
<CAPTION>

                                                                                        2000          1999
                                                                                        ----          ----
                                                                                 (dollars expressed in thousands)

<S>                                                                                  <C>            <C>
         Average balance...........................................................  $ 51,897       56,376
         Maximum month-end balance.................................................    83,000       75,000
                                                                                     ========       ======
</TABLE>

         The average  rates paid on the  outstanding  advances  during the years
ended  December  31,  2000,   1999  and  1998  were  7.66%,   6.44%  and  6.85%,
respectively.

(9)      GUARANTEED PREFERRED BENEFICIAL INTERESTS IN SUBORDINATED DEBENTURES

         In February 1997, First Preferred  Capital Trust (First Preferred I), a
newly formed  Delaware  business  trust  subsidiary of First Banks,  issued 3.45
million shares of 9.25% cumulative  trust preferred  securities at $25 per share
in an  underwritten  public  offering,  and  issued  106,702  shares  of  common
securities  to  First  Banks at $25 per  share.  First  Banks  owns all of First
Preferred I's common securities. The gross proceeds of the offering were used by
First  Preferred I to purchase  $88.9 million of 9.25%  subordinated  debentures
from First Banks, maturing on March 31, 2027. The maturity date may be shortened
to a date not  earlier  than March 31, 2002 or extended to a date not later than
March 31, 2046 if certain  conditions are met. The  subordinated  debentures are
the sole asset of First  Preferred  I. In  connection  with the  issuance of the
preferred securities,  First Banks made certain guarantees and commitments that,
in the aggregate,  constitute a full and unconditional  guarantee by First Banks
of the  obligations of First  Preferred I under the First  Preferred I preferred
securities.  First  Banks'  proceeds  from  the  issuance  of  the  subordinated
debentures to First Preferred I, net of underwriting fees and offering expenses,
were $83.1 million.  Distributions on First Preferred I's preferred  securities,
which are payable  quarterly  in arrears,  were $8.0 million for the years ended
December 31, 2000, 1999 and 1998, and are included in noninterest expense in the
consolidated financial statements.
         In July 1998,  First  America  Capital  Trust  (FACT),  a newly  formed
Delaware  business trust  subsidiary of FBA, issued 1.84 million shares of 8.50%
cumulative trust preferred securities at $25 per share in an underwritten public
offering, and issued 56,908 shares of common securities to FBA at $25 per share.
FBA owns all of FACT's  common  securities.  The gross  proceeds of the offering
were used by FACT to purchase  $47.4  million of 8.50%  subordinated  debentures
from FBA,  maturing on June 30, 2028.  The  maturity  date may be shortened to a
date not  earlier  than June 30,  2003 or extended to a date not later than June
30, 2037 if certain conditions are met. The subordinated debentures are the sole
asset of FACT. In connection with the issuance of the FACT preferred securities,
FBA made certain guarantees and commitments that, in the aggregate, constitute a
full and  unconditional  guarantee by FBA of the  obligations  of FACT under the
FACT preferred securities.  FBA's proceeds from the issuance of the subordinated
debentures to FACT, net of underwriting fees and offering  expenses,  were $44.0
million.  Distributions  payable  on the FACT  preferred  securities,  which are
payable quarterly in arrears,  were $3.9 million,  $4.0 million and $1.8 million
for the years ended  December 31,  2000,  1999 and 1998,  respectively,  and are
included in noninterest expense in the consolidated financial statements.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         On October 19, 2000, First Preferred  Capital Trust II (First Preferred
II), a newly formed Delaware  business trust  subsidiary of First Banks,  issued
2.3 million shares of 10.24%  cumulative  trust preferred  securities at $25 per
share in an  underwritten  public  offering,  and issued 71,135 shares of common
securities  to  First  Banks at $25 per  share.  First  Banks  owns all of First
Preferred II's common  securities.  The gross proceeds of the offering were used
by  First  Preferred  II  to  purchase  $59.3  million  of  10.24%  subordinated
debentures  from First Banks,  maturing on September 30, 2030. The maturity date
may be  shortened  to a date not earlier than  September  30,  2005,  if certain
conditions  are met.  The  subordinated  debentures  are the sole asset of First
Preferred II. In connection with the issuance of the preferred securities, First
Banks made certain guarantees and commitments that, in the aggregate, constitute
a full and  unconditional  guarantee by First Banks of the  obligations of First
Preferred II under the First  Preferred II  preferred  securities.  First Banks'
proceeds from the issuance of the subordinated debentures to First Preferred II,
net  of   underwriting   fees  and  offering   expenses,   were  $55.1  million.
Distributions  on First Preferred II's preferred  securities,  which are payable
quarterly in arrears,  were $1.2  million for the year ended  December 31, 2000,
and  are  included  in  noninterest   expense  in  the  consolidated   financial
statements.

(10)     INCOME TAXES

         Income tax expense  attributable to income from  continuing  operations
for the years ended December 31 consists of:
<TABLE>
<CAPTION>

                                                                                    Years ended December 31,
                                                                                    ------------------------
                                                                                   2000        1999      1998
                                                                                   ----        ----      ----
                                                                                (dollars expressed in thousands)

              Current income tax expense:
<S>                                                                               <C>         <C>       <C>
                  Federal....................................................     $28,215     19,731    16,801
                  State......................................................       2,731      2,247     1,292
                                                                                  -------     ------    ------
                                                                                   30,946     21,978    18,093
                                                                                  -------     ------    ------
              Deferred income tax expense:
                  Federal....................................................       4,001      5,056     1,895
                  State......................................................         (60)        14       273
                                                                                  -------     ------    ------
                                                                                    3,941      5,070     2,168
                                                                                  -------     ------    ------
              Reduction in deferred valuation allowance......................        (405)      (735)     (568)
                                                                                  -------     ------    ------
                      Total..................................................     $34,482     26,313    19,693
                                                                                  =======     ======    ======
</TABLE>

         The  effective  rates of  federal  income  taxes  for the  years  ended
December 31 differ from statutory rates of taxation as follows:
<TABLE>
<CAPTION>

                                                                             Years ended December 31,
                                                            ----------------------------------------------------------
                                                                   2000                1999                1998
                                                            -----------------     --------------     -----------------
                                                            Amount     Percent    Amount   Percent    Amount   Percent
                                                            ------     -------    ------   -------    ------   -------
                                                                         (dollars expressed in thousands)

         Income before provision for income taxes and
<S>                                                        <C>          <C>      <C>        <C>     <C>         <C>
           minority interest in income of subsidiary....   $ 92,635              $72,151            $ 54,474
                                                           ========              =======            ========
         Provision for income taxes calculated
           at federal statutory income tax rates........   $ 32,422     35.0%    $25,253    35.0%   $ 19,066     35.0%
         Effects of differences in tax reporting:
           Tax-exempt interest income, net of
               tax preference adjustment................       (587)    (0.6)       (439)   (0.6)       (461)    (0.9)
           State income taxes...........................      1,736      1.8       1,470     2.0       1,018      1.9
           Amortization of intangibles associated
               with the purchase of subsidiaries........      1,567      1.7       1,261     1.8         864      1.6
           Reduction in deferred valuation allowance....       (405)    (0.4)       (735)   (1.0)       (568)    (1.0)
           Other, net...................................       (251)    (0.3)       (497)   (0.7)       (226)    (0.4)
                                                           --------    -----     -------    ----    --------     ----


                 Provision for income taxes.............   $ 34,482     37.2%    $26,313    36.5%   $ 19,693     36.2%
                                                           ========    =====     =======    ====    ========     ====
</TABLE>


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The tax effects of temporary  differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities are as follows:
<TABLE>
<CAPTION>

                                                                                           December 31,
                                                                                           ------------
                                                                                        2000         1999
                                                                                        ----         ----
                                                                                 (dollars expressed in thousands)

              Deferred tax assets:
<S>                                                                                   <C>           <C>
                  Net operating loss carryforwards................................    $ 47,043      30,792
                  Allowance for loan losses.......................................      29,965      27,071
                  Alternative minimum tax credits.................................       3,319       2,841
                  Disallowed losses on investment securities......................       3,197       2,443
                  Other real estate...............................................          65          15
                  Other...........................................................       5,185       3,556
                                                                                      --------    --------
                      Gross deferred tax assets...................................      88,774      66,718
                  Valuation allowance.............................................     (13,075)    (14,746)
                                                                                      --------    --------
                      Deferred tax assets, net of valuation allowance.............      75,699      51,972
                                                                                      --------    --------
              Deferred tax liabilities:
                  Depreciation on bank premises and equipment.....................       6,151       3,332
                  Net fair value adjustment for securities available for sale.....       3,258       1,132
                  Operating leases................................................       1,313          --
                  FHLB stock dividends............................................         890       1,094
                  State taxes.....................................................         568         591
                  Other...........................................................         594         433
                                                                                      --------    --------
                      Deferred tax liabilities....................................      12,774       6,582
                                                                                      --------    --------
                      Net deferred tax assets.....................................    $ 62,925      45,390
                                                                                      ========    ========
</TABLE>

         The realization of First Banks' net deferred tax assets is based on the
availability of carrybacks to prior taxable  periods,  the expectation of future
taxable income and the  utilization of tax planning  strategies.  Based on these
factors,  management  believes  it is more likely than not that First Banks will
realize the recognized  net deferred tax asset of $62.9 million.  The net change
in the valuation  allowance,  related to deferred tax assets,  was a decrease of
$1.7 million for the year ended December 31, 2000.  The decrease  related to the
recognition of deferred tax assets for certain loans and other real estate,  and
the  reversal  of  valuation  reserves  resulting  from the  utilization  of net
operating loss carryforwards.
         Changes to the deferred  tax asset  valuation  allowance  for the years
ended December 31 were as follows:
<TABLE>
<CAPTION>

                                                                                       2000       1999       1998
                                                                                       ----       ----       ----
                                                                                    (dollars expressed in thousands)

<S>                                                                                  <C>          <C>        <C>
              Balance, beginning of year.........................................    $ 14,746     17,179     17,747
              Current year deferred provision, change in
                  deferred tax valuation allowance...............................        (405)      (735)      (568)
              Reduction attributable to utilization of deferred tax assets:
                 Adjustment to capital surplus...................................          --       (811)        --
                 Adjustment to intangibles associated with the
                    purchase of subsidiaries.....................................      (1,266)      (887)        --
                                                                                     --------    -------    -------
              Balance, end of year...............................................    $ 13,075     14,746     17,179
                                                                                     ========    =======    =======
</TABLE>

         The  valuation  allowance  for deferred tax assets at December 31, 1999
included $1.3 million that was  recognized  in 2000 and credited to  intangibles
associated  with the  purchase  of  subsidiaries.  In  addition,  the  valuation
allowance  for deferred tax assets at December 31, 2000 and 1999  includes  $5.0
million  which when  recognized,  will be credited to capital  surplus under the
terms of the  quasi-reorganizations  implemented  for FBA and  First  Commercial
Bancorp, Inc. as of December 31, 1994 and 1996, respectively.
         At  December  31,  2000 and  1999,  the  accumulation  of prior  years'
earnings  representing tax bad debt deductions were approximately $30.8 million.
If these tax bad debt  reserves  were  charged  for  losses  other than bad debt
losses, First Bank and FB&T would be required to recognize taxable income in the
amount of the charge. It is not contemplated that such  tax-restricted  retained
earnings  will be  used  in a  manner  that  would  create  federal  income  tax
liabilities.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         At December 31, 2000 and 1999, for federal income taxes purposes, First
Banks had net operating loss  carryforwards of approximately  $134.4 million and
$88.0 million, respectively.
         The net operating loss carryforwards for First Banks expire as follows:
<TABLE>
<CAPTION>

                                                                        (dollars expressed in thousands)

                       Year ending December 31:
<S>                        <C>                                                     <C>
                           2001.................................................   $     561
                           2002.................................................       4,562
                           2003.................................................       4,611
                           2004.................................................       4,148
                           2005.................................................      21,052
                           2006 - 2020..........................................      99,475
                                                                                   ---------
                               Total............................................   $ 134,409
                                                                                   =========
</TABLE>

(11)     EARNINGS PER COMMON SHARE

         The following is a reconciliation of the numerators and denominators of
the basic and diluted EPS computations for the periods indicated:
<TABLE>
<CAPTION>
                                                                               Income         Shares        Per share
                                                                             (numerator)   (denominator)     amount
                                                                             -----------   -------------     ------
                                                                         (dollars in thousands, except for per share data)

     Year ended December 31, 2000:
<S>                                                                          <C>               <C>          <C>
         Basic EPS - income available to common stockholders.............    $  55,321         23,661       $ 2,338.04
                                                                                                            ==========
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          769          1,076
                                                                             ---------        -------
         Diluted EPS - income available to common stockholders...........    $  56,090         24,737       $ 2,267.41
                                                                             =========        =======       ==========

     Year ended December 31, 1999:
         Basic EPS - income available to common stockholders.............    $  43,392         23,661       $ 1,833.91
                                                                                                            ==========
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          769          1,212
                                                                             ---------        -------
         Diluted EPS - income available to common stockholders...........    $  44,161         24,873       $ 1,775.47
                                                                             =========        =======       ==========

     Year ended December 31, 1998:
         Basic EPS - income available to common stockholders.............    $  32,724         23,661       $ 1,383.04
                                                                                                            ==========
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          769          1,389
                                                                             ---------        -------
         Diluted EPS - income available to common stockholders...........    $  33,493         25,050       $ 1,337.09
                                                                             =========        =======       ==========
</TABLE>
<PAGE>

(12)     INTEREST RATE RISK MANAGEMENT / DERIVATIVE FINANCIAL INSTRUMENTS

         First Banks utilizes off-balance-sheet derivative financial instruments
to assist in the  management  of  interest  rate  sensitivity  and to modify the
repricing,  maturity and option  characteristics of on-balance-sheet  assets and
liabilities.  The use of  such  derivative  financial  instruments  is  strictly
limited to reducing First Banks' interest rate risk exposure.
         Derivative  financial  instruments  held by First Banks for purposes of
managing interest rate risk are summarized as follows:
<TABLE>
<CAPTION>
                                                                                  December 31,
                                                               -------------------------------------------------
                                                                         2000                        1999
                                                                ---------------------       --------------------
                                                               Notional        Credit       Notional       Credit
                                                                amount        exposure       amount       exposure
                                                                ------        --------       ------       --------
                                                                         (dollars expressed in thousands)

     Interest rate swap agreements - pay
<S>                                                           <C>              <C>          <C>            <C>
       adjustable rate, receive fixed rate.................   $1,105,000       4,207        455,000        3,349
     Interest rate swap agreements - pay
       adjustable rate, receive adjustable rate............           --          --        500,000           --
     Interest rate floor agreements........................       35,000           6         35,000           13
     Interest rate cap agreements..........................      450,000       3,753         10,000           26
     Forward commitments to sell
       mortgage-backed securities..........................       32,000          --         33,000           --
                                                              ==========     =======      =========       ======
</TABLE>


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The  notional  amounts  of  derivative  financial  instruments  do  not
represent amounts exchanged by the parties and, therefore,  are not a measure of
our credit exposure  through the use of these  instruments.  The credit exposure
represents  the accounting  loss we would incur in the event the  counterparties
failed completely to perform according to the terms of the derivative  financial
instruments  and the  collateral  held to support the credit  exposure was of no
value.
         Previously,  First Banks  utilized  interest  rate swap  agreements  to
extend the repricing characteristics of certain interest-bearing  liabilities to
more closely correspond with its assets,  with the objective of stabilizing cash
flow, and  accordingly,  net interest  income,  over time. These swap agreements
were  terminated due to a change in the  composition  of the balance sheet.  The
change in the  composition  of the  balance  sheet was  primarily  driven by the
significant  decline in interest rates experienced  during 1995, which caused an
increase in the principal  prepayments of residential  mortgage  loans.  The net
interest  expense  associated  with these  agreements,  consisting  primarily of
amortization of deferred losses, was $5.7 million and $3.7 million for the years
ended  December  31,  1999  and  1998,  respectively.  The  deferred  losses  on
terminated  swap  agreements  were  amortized  over the  remaining  lives of the
agreements,  unless the underlying  liabilities  were repaid,  in which case the
deferred losses were immediately charged to operations.  There were no remaining
unamortized  deferred  losses on the terminated  swap agreements at December 31,
1999.
         During 1998, First Banks entered into $280.0 million notional amount of
interest rate swap  agreements.  The swap  agreements  effectively  lengthen the
repricing  characteristics of certain interest-earning assets to correspond more
closely with their funding source with the objective of  stabilizing  cash flow,
and accordingly,  net interest income, over time. The swap agreements  initially
provided  for  First  Banks  to  receive  a fixed  rate of  interest  and pay an
adjustable  rate  equivalent to the 90-day London  Interbank  Offering  Rate. In
March 2000, the terms of the swap agreements were modified such that First Banks
currently pay an adjustable  rate of interest  equivalent to the daily  weighted
average  prime  lending  rate  minus  2.705%.  The terms of the swap  agreements
provide for First Banks to pay quarterly and receive payment  semiannually.  The
amount  receivable by First Banks under the swap  agreements was $4.1 million at
December 31, 2000 and 1999, respectively,  and the amount payable by First Banks
under the swap  agreements  was  $744,000  and $770,000 at December 31, 2000 and
1999, respectively.
         During May 1999,  First  Banks  entered  into $500.0  million  notional
amount of interest rate swap  agreements  with the objective of stabilizing  the
net  interest  margin  during the  six-month  period  surrounding  the Year 2000
century date change. The swap agreements  provided for First Banks to receive an
adjustable  rate of interest  equivalent to the daily  weighted  average  30-day
London Interbank Offering Rate and pay an adjustable rate of interest equivalent
to the daily weighted average prime lending rate minus 2.665%.  The terms of the
swap  agreements,  which had an effective date of October 1, 1999 and a maturity
date of March 31, 2000,  provided for First Banks to pay and receive interest on
a monthly basis. In January 2000,  First Banks  determined these swap agreements
were no longer  necessary based upon the results of the Year 2000 transition and
terminated these agreements resulting in a cost of $150,000.
         During September 1999, First Banks entered into $175.0 million notional
amount of interest rate swap  agreements to  effectively  lengthen the repricing
characteristics  of certain  interest-earning  assets to correspond more closely
with their  funding  source with the  objective of  stabilizing  cash flow,  and
accordingly,  net interest  income,  over time. The swap agreements  provide for
First  Banks to  receive a fixed rate of  interest  and pay an  adjustable  rate
equivalent to the weighted  average prime lending rate minus 2.70%. The terms of
the swap  agreements  provide for First  Banks to pay and receive  interest on a
quarterly basis. The amount  receivable by First Banks under the swap agreements
was $119,000 at December 31, 2000 and 1999 and the amount payable by First Banks
under the swap  agreements  was  $165,000  and $141,000 at December 31, 2000 and
1999, respectively.
         During September 2000, First Banks entered into $600.0 million notional
amount of interest rate swap  agreements to  effectively  lengthen the repricing
characteristics  of certain  interest-earning  assets to correspond more closely
with their  funding  source with the  objective of  stabilizing  cash flow,  and
accordingly,  net interest  income,  over time. The swap agreements  provide for
First  Banks to  receive a fixed rate of  interest  and pay an  adjustable  rate
equivalent to the weighted  average prime lending rate minus 2.70%. The terms of
the swap  agreements  provide for First  Banks to pay and receive  interest on a
quarterly basis. The amount receivable and payable by First Banks under the swap
agreements  was $1.2  million at December 31, 2000.  In  conjunction  with these
interest  rate swap  agreements,  First Banks also entered  into $450.0  million
notional  amount of  interest  rate cap  agreements  to limit  the net  interest
expense associated with the interest rate swap agreements. The interest rate cap
agreements  provide for First Banks to receive a  quarterly  adjustable  rate of
interest  equivalent to the three-month  London Interbank  Offering Rate, should
such rate exceed the predetermined interest rate of 7.50%. At December 31, 2000,
the unamortized costs associated with the interest rate cap agreements were $3.8
million,  and were included in other assets,  and the fair value of the interest
rate cap agreements was $1.6 million.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         During  September 2000, First Banks entered into $25.0 million notional
amount of one-year  interest rate swap  agreements and $25.0 million of five and
one-half year interest rate swap agreements to effectively shorten the repricing
characteristics  of certain  interest-bearing  liabilities with the objective of
stabilizing cash flow, and accordingly, net interest income, over time. The swap
agreements  provide for First Banks to receive  fixed rates of interest  ranging
from 6.6% to 7.25% and pay an  adjustable  rate  equivalent  to the  three-month
London  Interbank  Offering  Rate minus rates  ranging from 0.02% to 0.11%.  The
terms of the swap  agreements  provide  for  First  Banks to pay  interest  on a
quarterly basis and receive  interest on either a semiannual  basis or an annual
basis.  The amount  receivable by First Banks under the swap agreements was $1.0
million at  December  31,  2000 and the amount  payable by First Banks under the
swap agreements was $119,000 at December 31, 2000.
         At December 31,  2000,  First Banks had pledged  investment  securities
available for sale with a carrying value of $8.6 million in connection  with the
interest rate swap  agreements.  In addition,  at December 31, 2000, First Banks
had  accepted  investment  securities  with a fair  value  of $19.0  million  as
collateral in connection with the interest rate swap agreements.  First Banks is
permitted  by contract  to sell or repledge  the  collateral  accepted  from its
counterparties,  however,  at  December  31,  2000,  First Banks had not sold or
repledged any of this collateral.
         The maturity dates, notional amounts, interest rates paid and received,
and fair values of interest rate swap agreements  outstanding as of December 31,
2000 and 1999 were as follows:
<TABLE>
<CAPTION>

                                                               Notional   Interest rate  Interest rate     Fair
                           Maturity date                        amount        paid         received        Value
                           -------------                        ------        ----         --------        -----
                                                                        (dollars expressed in thousands)

         December 31, 2000:
<S>                    <C> <C>                               <C>               <C>           <C>       <C>
             September 27, 2001...........................   $  175,000        6.80%         6.14%     $     65
             June 11, 2002................................       15,000        6.80          6.00             7
             September 13, 2001...........................       12,500        6.56          6.80            42
             September 21, 2001...........................       12,500        6.47          6.60            43
             September 16, 2002...........................      195,000        6.80          5.36        (1,776)
             September 18, 2002...........................       70,000        6.80          5.33          (690)
             September 20, 2004...........................      600,000        6.80          6.78        16,869
             March 13, 2006...............................       12,500        6.47          7.25             5
             March 22, 2006...............................       12,500        6.39          7.20             6
                                                             ----------                                --------
                                                             $1,105,000        6.70          6.43      $ 14,571
                                                             ==========      ======         =====      ========

         December 31, 1999:
             March 31, 2000...............................   $  500,000        5.84%         6.45%     $    124
             September 27, 2001...........................      175,000        5.80          6.14        (1,598)
             June 11, 2002................................       15,000        6.12          6.00          (291)
             September 16, 2002...........................      195,000        6.12          5.36        (7,325)
             September 18, 2002...........................       70,000        6.14          5.33        (2,700)
                                                             ----------                                --------
                                                             $  955,000        5.91          6.08      $(11,790)
                                                             ==========      ======         =====      ========
</TABLE>

         First Banks also  utilizes  interest  rate cap and floor  agreements to
limit the interest expense associated with certain interest-bearing  liabilities
and  the  net  interest  expense  of  certain  interest  rate  swap  agreements,
respectively.  At December  31, 2000 and 1999,  the  unamortized  costs of these
agreements  were $6,000 and $32,000,  respectively,  and were  included in other
assets.
         During  2000  and  1998,  the  net  interest  expense  realized  on the
derivative   financial   instruments   was  $4.7   million  and  $4.0   million,
respectively,  in comparison to net interest income of $430,000  realized on the
derivative financial instruments in 1999.
         Derivative  financial  instruments  issued by First  Banks  consist  of
commitments to originate  fixed-rate loans.  Commitments to originate fixed-rate
loans  consist   primarily  of  residential   real  estate  loans.   These  loan
commitments, net of estimated underwriting fallout, and loans held for sale were
$37.6  million and $31.5  million at December  31, 2000 and 1999,  respectively.
These net loan  commitments  and loans  held for sale are  hedged  with  forward
contracts to sell mortgage-backed  securities of $32.0 million and $33.0 million
at December  31,  2000 and 1999,  respectively.  Gains and losses  from  forward
contracts are deferred and included in the cost basis of loans held for sale. At
December 31, 2000, the net  unamortized  losses were $165,000,  in comparison to
net  unamortized  gains of $838,000 at December 31, 1999.  Such gains and losses
were  applied  to the  carrying  value of the loans held for sale as part of the
lower of cost or market valuation.


<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(13)     CREDIT COMMITMENTS

         First Banks is a party to  commitments  to extend credit and commercial
and  standby  letters of credit in the  normal  course of  business  to meet the
financing needs of its customers. These instruments involve, to varying degrees,
elements  of  credit  risk  and  interest  rate  risk in  excess  of the  amount
recognized in the consolidated balance sheets. The interest rate risk associated
with these credit commitments  relates primarily to the commitments to originate
fixed-rate  loans.  As more  fully  discussed  in  Note  12 to the  accompanying
consolidated financial statements,  the interest rate risk of the commitments to
originate  fixed-rate  loans has been  hedged  with  forward  contracts  to sell
mortgage-backed securities. The credit risk amounts are equal to the contractual
amounts,  assuming the amounts are fully  advanced and the  collateral  or other
security is of no value.  First Banks uses the same credit  policies in granting
commitments and conditional obligations as it does for on-balance-sheet items.
         Commitments to extend credit at December 31 were as follows:
<TABLE>
<CAPTION>

                                                                                              December 31,
                                                                                              ------------
                                                                                            2000         1999
                                                                                            ----         ----
                                                                                   (dollars expressed in thousands)

<S>                                                                                    <C>           <C>
              Commitments to extend credit..........................................   $ 1,484,278   1,310,249
              Commercial and standby letters of credit..............................        94,802      64,455
                                                                                       -----------   ---------
                                                                                       $ 1,579,080   1,374,704
                                                                                       ===========   =========
</TABLE>

         Commitments  to extend  credit are  agreements to lend to a customer as
long as there is no  violation of any  condition  established  in the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent  future  cash  requirements.   Each  customer's   creditworthiness  is
evaluated on a case-by-case basis. The amount of collateral obtained,  if deemed
necessary upon extension of credit,  is based on management's  credit evaluation
of the counterparty. Collateral held varies but may include accounts receivable,
inventory, property, plant, equipment, income-producing commercial properties or
single family  residential  properties.  Collateral is generally required except
for consumer credit card commitments.
         Commercial and standby  letters of credit are  conditional  commitments
issued to guarantee the performance of a customer to a third party.  The letters
of  credit  are  primarily  issued  to  support  public  and  private  borrowing
arrangements,   including   commercial   paper,   bond   financing  and  similar
transactions.  Most letters of credit extend for less than one year.  The credit
risk  involved  in  issuing  letters of credit is  essentially  the same as that
involved  in  extending  loan  facilities  to  customers.  Upon  issuance of the
commitments,  First Banks holds marketable securities,  certificates of deposit,
inventory,  real  property  or  other  assets  as  collateral  supporting  those
commitments for which collateral is deemed necessary.

(14)     FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair value of financial instruments is management's estimate of the
values at which the  instruments  could be  exchanged in a  transaction  between
willing parties.  These estimates are subjective and may vary significantly from
amounts  that would be  realized  in actual  transactions.  In  addition,  other
significant  assets are not considered  financial  assets including the mortgage
banking  operation,  deferred  tax  assets,  bank  premises  and  equipment  and
intangibles  associated  with the  purchase of  subsidiaries.  Further,  the tax
ramifications  related to the realization of the unrealized gains and losses can
have a  significant  effect  on the  fair  value  estimates  and  have  not been
considered in any of the estimates.



<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The  estimated  fair value of First  Banks'  financial  instruments  at
December 31 were as follows:
<TABLE>
<CAPTION>

                                                                         2000                          1999
                                                               -----------------------       -----------------------
                                                              Carrying        Estimated     Carrying       Estimated
                                                                value        fair value       value       fair value
                                                                -----        ----------       -----       ----------

         Financial assets:
<S>                                                          <C>               <C>           <C>             <C>
             Cash and cash equivalents....................   $  198,279        198,279       170,894         170,894
             Investment securities:
               Available for sale.........................      539,386        539,386       430,093         430,093
               Held to maturity...........................       24,148         24,509        21,554          21,476
             Net loans....................................    4,670,673      4,694,594     3,927,713       3,908,065
             Accrued interest receivable..................       45,226         45,226        33,491          33,491
                                                             ==========     ==========    ==========      ==========

         Financial liabilities:
             Deposits:
               Demand:
                  Non-interest-bearing....................   $  808,251        808,251       606,064         606,064
                  Interest-bearing........................      448,146        448,146       415,113         415,113
               Savings and money market...................    1,447,898      1,447,898     1,198,314       1,198,314
               Time deposits..............................    2,308,120      2,351,418     2,032,323       2,032,323
             Short-term borrowings........................      140,569        140,569        73,554          73,554
             Note payable.................................       83,000         83,000        64,000          64,000
             Accrued interest payable.....................       23,227         23,227        11,607          11,607
             Guaranteed preferred beneficial interests
               in subordinated debentures.................      182,849        185,608       127,611         127,391
                                                             ==========     ==========    ==========      ==========

         Off-balance-sheet:
             Interest rate swap, cap and floor agreements.   $    7,966         16,208         3,388         (11,742)
             Forward contracts to sell mortgage-backed
               securities.................................           --         32,393            --          32,207
             Credit commitments...........................           --          4,183            --           4,517
                                                             ==========     ==========    ==========      ==========
</TABLE>

         The following  methods and assumptions were used in estimating the fair
value of financial instruments:

Financial Assets:

         Cash and cash equivalents and accrued interest receivable: The carrying
values reported in the consolidated balance sheets approximate fair value.

         Investment   securities:   The  fair  value  of  investment  securities
available for sale is the amount  reported in the  consolidated  balance sheets.
The fair value of  investment  securities  held to  maturity  is based on quoted
market prices where available.  If quoted market prices were not available,  the
fair value was based upon quoted market prices of comparable instruments.

         Net  loans:  The  fair  value of most  loans  held  for  portfolio  was
estimated  utilizing  discounted cash flow  calculations  that applied  interest
rates  currently  being offered for similar loans to borrowers with similar risk
profiles. The fair value of loans held for sale, which is the amount reported in
the  consolidated  balance  sheets,  is  based on  quoted  market  prices  where
available.  If quoted market prices are not  available,  the fair value is based
upon quoted market prices of comparable instruments. The carrying value of loans
is net of the allowance for loan losses and unearned discount.

Financial Liabilities:

         Deposits:  The fair value disclosed for deposits  generally  payable on
demand (i.e.,  non-interest-bearing  and  interest-bearing  demand,  savings and
money market accounts) is considered equal to their respective  carrying amounts
as reported in the  consolidated  balance  sheets.  The fair value disclosed for
demand  deposits  does not include the benefit  that  results  from the low-cost
funding provided by deposit liabilities  compared to the cost of borrowing funds
in the market.

<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The fair value disclosed for  certificates of deposit was estimated  utilizing a
discounted  cash flow  calculation  that applied  interest rates currently being
offered on similar  certificates to a schedule of aggregated  monthly maturities
of time deposits.

         Guaranteed preferred  beneficial interests in subordinated  debentures:
The fair value is based on quoted market prices.

         Short-term  borrowings,  note payable and accrued interest payable: The
carrying value reported in the  consolidated  balance sheets  approximates  fair
value.

Off-Balance-Sheet:

         Interest  rate swap,  cap and floor  agreements:  The fair value of the
interest  rate swap,  cap and floor  agreements  is estimated by  comparison  to
market rates quoted on new agreements with similar terms and creditworthiness.

         Forward contracts to sell mortgage-backed securities: The fair value of
forward contracts to sell mortgage-backed securities is based upon quoted market
prices. The fair value of these contracts has been reflected in the consolidated
balance  sheets in the  carrying  value of the loans held for sale  portfolio as
part of the lower of cost or market valuation.

         Credit commitments:  The fair value of the commitments to extend credit
associated  with loans held for sale in which First Banks has interest rate risk
exposure  are  based on  quoted  market  prices  of  comparable  mortgage-backed
securities  less  estimated  fallout.  The majority of the other  commitments to
extend credit and  commercial  and standby  letters of credit  contain  variable
interest rates and credit  deterioration  clauses and,  therefore,  the carrying
value of these credit  commitments  reported in the consolidated  balance sheets
approximates fair value.

(15)     EMPLOYEE BENEFITS

         First Banks' 401(k) plan is a  self-administered  savings and incentive
plan covering  substantially  all employees.  Under the plan,  employer-matching
contributions  are  determined  annually  by First  Banks'  Board of  Directors.
Employee contributions are limited to 15% of the employee's annual compensation,
not to exceed $10,500 for 2000. Total employer contributions under the plan were
$1.1 million,  $863,000 and $648,000 for the years ended December 31, 2000, 1999
and 1998,  respectively.  The plan  assets  are held and  managed  under a trust
agreement with First Bank's trust department.

(16)     PREFERRED STOCK

         First Banks has two classes of preferred stock outstanding. The Class A
preferred  stock is  convertible  into shares of common stock at a rate based on
the ratio of the par value of the preferred stock to the current market value of
the common stock at the date of  conversion,  to be  determined  by  independent
appraisal at the time of  conversion.  Shares of Class A preferred  stock may be
redeemed  by  First  Banks at any  time at  105.0%  of par  value.  The  Class B
preferred stock may not be redeemed or converted. The redemption of any issue of
preferred stock requires the prior approval of the Federal Reserve Board.
         The holders of the Class A and Class B preferred stock have full voting
rights.  Dividends  on the Class A and Class B  preferred  stock are  adjustable
quarterly  based  on the  highest  of the  Treasury  Bill  Rate or the Ten  Year
Constant  Maturity  Rate  for the  two-week  period  immediately  preceding  the
beginning  of the  quarter.  This rate shall not be less than 6.0% nor more than
12.0% on the Class A preferred  stock,  or less than 7.0% nor more than 15.0% on
the Class B preferred stock. The annual dividend rates for the Class A and Class
B preferred stock were 6.0% and 7.0%, respectively, for the years ended December
31, 2000, 1999 and 1998.
         In addition to the Class A and Class B preferred stock, First Banks has
two issues of trust  preferred  securities  outstanding and FBA has one issue of
trust  preferred  securities  outstanding.  The structure of the trust preferred
securities,   as  further   described  in  Note  9,   satisfies  the  regulatory
requirements  for  inclusion,  subject to certain  limitation,  in First  Banks'
capital base.



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(17)     TRANSACTIONS WITH RELATED PARTIES

         Outside of normal customer  relationships,  no directors or officers of
First Banks, no stockholders  holding over 5% of First Banks' voting  securities
and no  corporations or firms with which such persons or entities are associated
currently  maintain or have  maintained,  since the  beginning  of the last full
fiscal year, any significant business or personal relationships with First Banks
or its  subsidiaries,  other than such as arises by virtue of such  position  or
ownership  interest in First Banks or its  subsidiaries,  except as described in
the following paragraphs.
         During  2000,  1999  and  1998,  Tidal  Insurance  Limited  (Tidal),  a
corporation  owned  indirectly by First Banks'  Chairman and his adult children,
received  approximately  $212,000,  $316,000  and  $280,000,   respectively,  in
insurance premiums for accident, health and life insurance policies purchased by
loan  customers  of  First  Banks.  The  insurance  policies  are  issued  by an
unaffiliated  company and subsequently  ceded to Tidal. First Banks believes the
premiums paid by the loan  customers of First Banks are comparable to those that
such loan customers would have paid if the premiums were  subsequently  ceded to
an unaffiliated third-party insurer.
         During 2000, 1999 and 1998,  First  Securities  America,  Inc. (FSA), a
corporation  established and administered by and for the benefit of First Banks'
Chairman and members of his immediate family,  received approximately  $235,000,
$194,000 and $265,000,  respectively,  in commissions and insurance premiums for
policies  purchased  by First Banks or customers  of the  Subsidiary  Banks from
unaffiliated,   third-party  insurors.  The  insurance  premiums  on  which  the
aforementioned  commissions were earned were  competitively bid, and First Banks
deems the commissions FSA earned from unaffiliated  third-party  companies to be
comparable to those that would have been earned by an  unaffiliated  third-party
agent.
         First Brokerage America,  L.L.C., a limited liability corporation which
is  indirectly  owned by First  Banks'  Chairman  and  members of his  immediate
family,  received  approximately $2.1 million, $2.3 million and $1.8 million for
the years ended December 31, 2000, 1999 and 1998,  respectively,  in commissions
paid by  unaffiliated  third-party  companies.  The  commissions  received  were
primarily  in  connection  with the  sales of  annuities,  securities  and other
insurance products to customers of the Subsidiary Banks.
         First Services,  L.P., a limited partnership  indirectly owned by First
Banks'  Chairman and his adult children,  provides data processing  services and
operational  support for First Banks,  Inc. and its Subsidiary  Banks. Fees paid
under agreements with First Services L.P. were $19.3 million,  $16.4 million and
$12.2  million  for  the  years  ended   December  31,  2000,   1999  and  1998,
respectively.  During 2000, 1999 and 1998, First Services, L.P. paid First Banks
$1.8 million,  $1.2 million and $799,000,  respectively,  in rental fees for the
use of data processing and other  equipment owned by First Banks.  The fees paid
by First Banks for data  processing  services are at least as favorable as could
have been obtained from unaffiliated third parties.

(18)     CAPITAL STOCK OF FIRST BANKS AMERICA, INC.

         First Banks owned  2,500,000  shares of FBA's Class B common  stock and
8,741,350 shares of FBA's common stock at December 31, 2000, representing 92.86%
of FBA's  outstanding  voting stock. In comparison,  First Banks owned 2,500,000
shares of FBA's Class B common stock and 2,210,581  shares of FBA's common stock
at December 31, 1999, representing 83.37% of FBA's outstanding voting stock. The
increase for 2000 is attributable  to FBA's issuance of 6,530,769  shares of its
common  stock to First Banks in  conjunction  with its  purchase of First Bank &
Trust,  a wholly  owned  subsidiary  of First  Banks.  This  transaction,  which
occurred on October 31, 2000,  increased First Banks' ownership  interest in FBA
from 84.42% to  approximately  92.82%.  FBA's common stock is publicly traded on
the New York Stock Exchange.



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(19)     REGULATORY CAPITAL

         First Banks and the Subsidiary Banks are subject to various  regulatory
capital  requirements  administered  by the federal and state banking  agencies.
Failure to meet minimum capital  requirements can initiate certain mandatory and
possibly  additional  discretionary  actions by regulators  that, if undertaken,
could have a direct material effect on First Banks' financial statements.  Under
capital adequacy  guidelines and the regulatory  framework for prompt corrective
action,  First  Banks  and the  Subsidiary  Banks  must  meet  specific  capital
guidelines that involve quantitative measures of assets, liabilities and certain
off-balance-sheet  items as calculated  under regulatory  accounting  practices.
Capital amounts and classifications are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.
         Quantitative  measures  established  by  regulation  to ensure  capital
adequacy  require  First  Banks and the  Subsidiary  Banks to  maintain  minimum
amounts and ratios of total and Tier 1 capital  (as defined in the  regulations)
to  risk-weighted  assets,  and of Tier 1 capital to average assets.  Management
believes,  as of December 31, 2000,  First Banks and the  Subsidiary  Banks were
each well capitalized.
         As of December 31, 2000, the most recent notification from First Banks'
primary  regulator  categorized  First  Banks and the  Subsidiary  Banks as well
capitalized under the regulatory  framework for prompt corrective  action. To be
categorized  as well  capitalized,  First  Banks and the  Subsidiary  Banks must
maintain minimum total risk-based,  Tier 1 risk-based and Tier 2 leverage ratios
as set forth in the table below.
         At December 31, 2000 and 1999,  First Banks' and the Subsidiary  Banks'
required and actual capital ratios were as follows:
<TABLE>
<CAPTION>

                                                                                                         To be well
                                                                                                      capitalized under
                                                               Actual              For capital        prompt corrective
                                                               ------
                                                          2000         1999     adequacy purposes     action provisions
                                                          ----         ----     -----------------     -----------------

     Total capital (to risk-weighted assets):
<S>                                                       <C>          <C>             <C>                  <C>
              First Banks.............................    10.21%       10.05%          8.0%                 10.0%
              First Bank..............................    10.71        10.60           8.0                  10.0
              FB&T....................................    10.58        11.17           8.0                  10.0
              BSF (1).................................    22.38          --            8.0                  10.0

     Tier 1 capital (to risk-weighted assets):
              First Banks.............................     7.56         8.00           4.0                   6.0%
              First Bank..............................     9.46         9.35           4.0                   6.0
              FB&T....................................     9.32         9.94           4.0                   6.0
              BSF (1).................................    21.42          --            4.0                   6.0

     Tier 1 capital (to average assets):
              First Banks.............................     7.45         7.14           3.0                   5.0%
              First Bank..............................     8.49         8.10           3.0                   5.0
              FB&T....................................     9.27         9.15           3.0                   5.0
              BSF (1).................................    22.00          --            3.0                   5.0
</TABLE>
     -----------------------------
     (1)  BSF was acquired by FBA on December 31, 2000.


(20)     DISTRIBUTION OF EARNINGS OF THE SUBSIDIARY BANKS

         The  Subsidiary  Banks are  restricted  by  various  state and  federal
regulations,  as well as by the terms of the Credit Agreement  described in Note
8, as to the amount of dividends which are available for payment to First Banks,
Inc.  Under the most  restrictive of these  requirements,  the future payment of
dividends from the Subsidiary Banks is limited to approximately $45.2 million at
December 31, 2000, unless prior permission of the regulatory  authorities and/or
the lending banks is obtained.



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(21)     BUSINESS SEGMENT RESULTS

         First Banks' business segments are its Subsidiary Banks. The reportable
business  segments are consistent with the management  structure of First Banks,
the  Subsidiary   Banks  and  the  internal   reporting   system  that  monitors
performance.
         Through the respective  branch  networks,  the Subsidiary Banks provide
similar  products and services in their defined  geographic  areas. The products
and services  offered  include a broad range of commercial and personal  deposit
products,  including demand, savings, money market and time deposit accounts. In
addition,  the  Subsidiary  Banks  market  combined  basic  services for various
customer groups,  including packaged accounts for more affluent  customers,  and
sweep accounts,  lock-box  deposits and cash management  products for commercial
customers.  The Subsidiary Banks also offer both consumer and commercial  loans.
Consumer lending includes  residential real estate,  home equity and installment
lending.  Commercial  lending  includes  commercial,  financial and agricultural
loans, real estate  construction and development  loans,  commercial real estate
loans, asset-based loans, commercial leasing and trade financing.
<TABLE>
<CAPTION>


                                                        First Bank                               FB&T (1)
                                            ---------------------------------       ----------------------------------
                                             2000           1999         1998       2000           1999           1998
                                             ----           ----         ----       ----           ----           ----
                                                                        (dollars expressed in thousands)

Balance sheet information:

<S>                                       <C>              <C>         <C>            <C>         <C>          <C>
Investment securities...................  $  214,005       241,624     264,364        330,478     192,357      247,566
Loans, net of unearned discount.........   2,694,005     2,527,649   2,490,556      2,058,628   1,469,093    1,089,965
Total assets............................   3,152,885     3,028,046   3,024,600      2,733,545   1,854,827    1,504,311
Deposits................................   2,729,489     2,689,671   2,659,030      2,306,469   1,590,490    1,329,253
Stockholders' equity....................     273,848       263,466     243,673        333,186     204,617      148,239
                                          ==========    ==========   =========      =========   =========    =========


Income statement information:

Interest income.........................  $  247,290       221,195     219,609        176,902     132,407      108,662
Interest expense........................     115,421       105,231     111,656         71,167      51,544       48,320
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Net interest income................     131,869       115,964     107,953        105,735      80,863       60,342
Provision for possible loan losses......      12,250         8,890       7,250          1,877       4,183        1,750
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Net interest income after provision
       for possible loan losses.........     119,619       107,074     100,703        103,858      76,680       58,592
Noninterest income......................      32,152        32,260      29,582         12,343      10,774        8,322
Noninterest expense.....................      90,746        77,786      79,748         65,567      54,992       47,105
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Income (loss) before provision
       (benefit) for income taxes and
       minority interest in income of
       subsidiary.......................      61,025        61,548      50,537         50,634      32,462       19,809
Provision (benefit) for income taxes....      20,889        20,811      17,238         20,064      12,353        8,163
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Income (loss) before minority
       interest in income of subsidiary.      40,136        40,737      33,299         30,570      20,109       11,646
Minority interest in income
       of subsidiary....................          --            --          --             --          --           --
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Net income.........................  $   40,136        40,737      33,299         30,570      20,109       11,646
                                          ==========    ==========   =========      =========   =========    =========
</TABLE>
------------------------
(1)  Includes BSF, which  was acquired by FBA on December 31, 2000.
(2)  Corporate and other includes $8.6 million, $7.9 million and $6.4 million of
     guaranteed  preferred  debentures  expense,  after  applicable  income  tax
     benefit of $4.6 million,  $4.2 million and $3.4 million for the years ended
     December 31, 2000, 1999 and 1998, respectively.


<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



         Other financial  services  include mortgage  banking,  credit and debit
cards, brokerage services,  credit-related insurance, automated teller machines,
telephone   banking,   safe  deposit  boxes  and  trust,   private  banking  and
institutional money management services. The revenues generated by each business
segment  consist  primarily  of  interest  income,  generated  from the loan and
investment security portfolios, and service charges and fees, generated from the
deposit products and services. The geographic areas include Missouri,  Illinois,
southern and northern California and Houston, Dallas, Irving and McKinney Texas.
The  products  and  services  are offered to  customers  primarily  within their
respective geographic areas, with the exception of loan participations  executed
between the Subsidiary Banks.
         The business  segment results are consistent with First Banks' internal
reporting  system  and,  in  all  material  respects,  with  generally  accepted
accounting  principles and practices  predominant in the banking industry.  Such
principles and practices are summarized in Note 1 to the consolidated  financial
statements.
<TABLE>
<CAPTION>


                     Corporate, Other and
              Intercompany Reclassifications (2)                               Consolidated Totals
              ----------------------------------------             -------------------------------------------
               2000            1999              1998                2000             1999              1998
               ----            ----              ----                ----             ----              ----
                                               (dollars expressed in thousands)



<S>          <C>               <C>             <C>                  <C>               <C>              <C>
             19,051            17,666          22,866               563,534           451,647          534,796
               (368)             (418)           (416)            4,752,265         3,996,324        3,580,105
             (9,739)          (15,126)         25,899             5,876,691         4,867,747        4,554,810
            (23,543)          (28,347)        (48,298)            5,012,415         4,251,814        3,939,985
           (254,188)         (173,178)       (128,549)              352,846           294,905          263,363
          =========         =========       =========            ==========         =========        =========




             (1,366)             (520)           (411)              422,826           353,082          327,860
              1,091             1,926           2,203               187,679           158,701          162,179
          ---------         ---------       ---------            ----------         ---------        ---------
             (2,457)           (2,446)         (2,614)              235,147           194,381          165,681
                 --                --              --                14,127            13,073            9,000
          ---------         ---------       ---------            ----------         ---------        ---------

             (2,457)           (2,446)         (2,614)              221,020           181,308          156,681
             (1,717)           (1,384)         (1,407)               42,778            41,650           36,497
             14,850            18,029          11,851               171,163           150,807          138,704
          ---------         ---------       ---------            ----------         ---------        ---------



            (19,024)          (21,859)        (15,872)               92,635            72,151           54,474
             (6,471)           (6,851)         (5,708)               34,482            26,313           19,693
          ---------         ---------       ---------             ---------         ---------        ---------

            (12,553)          (15,008)        (10,164)               58,153            45,838           34,781
              2,046             1,660           1,271                 2,046             1,660            1,271
          ---------         ---------       ---------            ----------         ---------        ---------
            (14,599)          (16,668)        (11,435)               56,107            44,178           33,510
          =========         =========       =========            ==========         =========        =========
</TABLE>




<PAGE>


             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(22)     PARENT COMPANY ONLY FINANCIAL INFORMATION

         Following  are  condensed  balance  sheets of First  Banks,  Inc. as of
December 31, 2000 and 1999,  and  condensed  statements of income and cash flows
for the years ended December 31, 2000, 1999 and 1998:


                            CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                                           December 31,
                                                                                        -----------------
                                                                                        2000         1999
                                                                                        ----         ----
                                                                                 (dollars expressed in thousands)
                                   Assets
                                   ------

<S>                                                                                  <C>              <C>
     Cash deposited in subsidiary banks...........................................   $    8,079       4,347
     Investment securities........................................................       14,309      13,848
     Investment in subsidiaries...................................................      461,753     429,255
     Advances to FBA .............................................................       98,000          --
     Other assets.................................................................       15,333      12,278
                                                                                     ----------   ---------
           Total assets...........................................................   $  597,474     459,728
                                                                                     ==========   =========

                    Liabilities and Stockholders' Equity
                    ------------------------------------

     Note payable................................................................    $   83,000      64,000
     Subordinated debentures.....................................................       148,196      88,918
     Accrued expenses and other liabilities......................................        13,432      11,905
                                                                                     ----------   ---------
           Total liabilities.....................................................       244,628     164,823
     Stockholders' equity........................................................       352,846     294,905
                                                                                     ----------   ---------
           Total liabilities and stockholders' equity............................    $  597,474     459,728
                                                                                     ==========   =========
</TABLE>



                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                    Years ended December 31,
                                                                                  ----------------------------
                                                                                  2000        1999        1998
                                                                                  ----        ----        ----
                                                                                (dollars expressed in thousands)

     Income:
<S>                                                                           <C>            <C>         <C>
       Dividends from subsidiaries........................................    $  43,000      25,250      23,000
       Management fees from subsidiaries..................................       17,325      12,977      10,154
       Other..............................................................        1,956       1,313       2,796
                                                                              ---------      ------     -------
           Total income...................................................       62,281      39,540      35,950
                                                                              ---------      ------     -------
     Expense:
       Interest...........................................................        3,964       3,628       3,411
       Salaries and employee benefits.....................................       12,180       8,999       7,307
       Legal, examination and professional fees...........................        2,031       7,006       1,988
       Other..............................................................       13,969      12,947      12,639
                                                                              ---------      ------     -------
           Total expense..................................................       32,144      32,580      25,345
                                                                              ---------      ------     -------
           Income before benefit for income taxes and
              equity in undistributed earnings of subsidiaries............       30,137       6,960      10,605
     Benefit for income taxes.............................................       (3,922)     (5,649)     (3,999)
                                                                              ---------      ------     -------
           Income before equity in undistributed earnings of subsidiaries.       34,059      12,609      14,604
     Equity in undistributed earnings of subsidiaries.....................       22,048      31,569      18,906
                                                                              ---------      ------     -------
           Net income.....................................................    $  56,107      44,178      33,510
                                                                              =========      ======     =======
</TABLE>



<PAGE>

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                   Years ended December 31,
                                                                              ---------------------------------
                                                                              2000          1999           1998
                                                                              ----          ----           ----
                                                                               (dollars expressed in thousands)

     Cash flows from operating activities:
<S>                                                                       <C>              <C>            <C>
       Net income......................................................   $  56,107        44,178         33,510
       Adjustments to reconcile net income to net cash provided by
         operating activities:
           Net income of subsidiaries..................................     (64,937)      (56,676)       (42,107)
           Dividends from subsidiaries.................................      43,000        25,250         23,000
           Other, net..................................................         272         1,900          4,963
                                                                          ---------      --------        -------
              Net cash provided by operating activities................      34,442        14,652         19,366
                                                                          ---------      --------        -------

     Cash flows from investing activities:
       (Increase) decrease in investment securities....................        (860)         (100)         3,000
       Investment in common securities of First Preferred II...........      (1,778)           --             --
       Acquisitions of subsidiaries....................................          --       (31,500)       (31,586)
       Capital contributions to subsidiaries...........................      (6,100)       (3,000)            --
       Return of subsidiary capital....................................          --        10,000             --
       (Increase) decrease in advances to subsidiaries.................     (98,000)           --         14,900
       Other, net......................................................      (1,464)       (3,646)        (3,350)
                                                                          ---------      --------        -------
              Net cash used in investing activities....................    (108,202)      (28,246)       (17,036)
                                                                          ---------      --------        -------

     Cash flows from financing activities:
       Increase (decrease) in note payable.............................      19,000        13,952         (5,096)
       Proceeds from issuance of First Preferred II
           subordinated debentures.....................................      59,278            --             --
       Payment of preferred stock dividends............................        (786)         (786)          (786)
                                                                          ---------      --------        -------
              Net cash provided by (used in) financing activities......      77,492        13,166         (5,882)
                                                                          ---------      --------        -------
              Net increase (decrease) in cash and cash equivalents.....       3,732          (428)        (3,552)
     Cash deposited in subsidiary banks, beginning of year.............       4,347         4,775          8,327
                                                                          ---------      --------        -------
     Cash deposited in subsidiary banks, end of year...................   $   8,079         4,347          4,775
                                                                          =========      ========        =======

     Noncash investing activities:
       Cash paid for interest..........................................   $   4,117         3,420          3,747
       Reduction of deferred tax valuation reserve.....................          --           811             --
                                                                          =========      ========        =======
</TABLE>

(23)     CONTINGENT LIABILITIES

         In the ordinary course of business, there are various legal proceedings
pending against First Banks and/or its subsidiaries. Management, in consultation
with  legal  counsel,  is of  the  opinion  the  ultimate  resolution  of  these
proceedings  will have no material effect on the financial  condition or results
of operations of First Banks or its subsidiaries.


<PAGE>

                          INDEPENDENT AUDITORS' REPORT







The Board of Directors and Stockholders
First Banks, Inc.:

We have audited the  accompanying  consolidated  balance  sheets of First Banks,
Inc. and  subsidiaries  (the Company) as of December 31, 2000 and 1999,  and the
related consolidated  statements of income,  changes in stockholders' equity and
comprehensive  income  and cash  flows for each of the  years in the  three-year
period ended December 31, 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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above, present
fairly, in all material  respects,  the financial  position of First Banks, Inc.
and  subsidiaries  as of December  31,  2000 and 1999,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 2000, in conformity  with  accounting  principles  generally
accepted in the United States of America.



                                             /s/KPMG LLP
                                             -----------


St. Louis, Missouri
March 16, 2001




<PAGE>

<TABLE>
<CAPTION>

                         DIRECTORS AND SENIOR MANAGEMENT

First Banks, Inc.

<S>                                     <C>
     James F. Dierberg                  Chairman of the Board and Chief Executive Officer
     Allen H. Blake                     Director, President, Chief Operating Officer and Secretary
     Michael F. Hickey                  Executive Vice President and Chief Information Officer
     Terrance M. McCarthy               Executive Vice President
     Michael F. McWhortor               Executive Vice President - Banking Support
     Frank H. Sanfilippo                Executive Vice President and Chief Financial Officer
     David L. Steward                   Director,  Chairman  of the  Board,  President  and Chief  Executive  Officer  of World Wide
                                          Technology, Inc., St. Louis, Missouri
     Mark T. Turkcan                    Executive Vice President - Mortgage Banking
     Lisa K. Vansickle                  Senior Vice President and Controller
     Donald W. Williams                 Senior Executive Vice President and Chief Credit Officer
     Douglas H. Yaeger                  Director,  Chairman  of the Board,  President  and Chief  Executive  Officer of Laclede  Gas
                                          Company, St. Louis, Missouri


First Banks America, Inc.

     James F. Dierberg                  Chairman of the Board, President and Chief Executive Officer
     Allen H. Blake                     Director, Executive Vice President, Chief Operating Officer and Secretary
     Charles A. Crocco, Jr.             Director, Counsel to the law firm of Crocco & De Maio, P.C., Mount Kisco, New York
     Albert M. Lavezzo                  Director,  President and Chief Operating Officer of the law firm of Favaro,  Lavezzo,  Gill,
                                          Caretti & Heppell, Vallejo, California
     Terrance M. McCarthy               Executive Vice President
     Frank H. Sanfilippo                Executive Vice President and Chief Financial Officer
     Ellen D. Schepman                  Director, Retail Marketing Officer, First Banks, Inc., St. Louis, Missouri
     Edward T. Story, Jr.               Director, President and Chief Executive Officer of SOCO International, plc, Comfort, Texas
     David F. Weaver                    Executive Vice President
     Donald W. Williams                 Director,  Senior Executive Vice President and Chief Credit Officer,  First Banks, Inc., St.
                                          Louis, Missouri


First Bank

     Donald W. Williams                 Chairman of the Board, President and Chief Executive Officer
     Douglas R. Distler                 Director, Senior Vice President and Regional President
     Michael F. Hickey                  Director, Executive Vice President and Chief Information Officer
     Michael F. McWhortor               Director, Executive Vice President - Banking Support
     Frank H. Sanfilippo                Director, Executive Vice President, Chief Financial Officer and Secretary
     Mark T. Turkcan                    Director and Executive Vice President - Mortgage Banking


First Bank & Trust

     Terrance M. McCarthy               Chairman of the Board, President and Chief Executive Officer
     Norman O. Broyer                   Director, Senior Vice President and Senior Credit Officer - Southern California
     Patrick S. Day                     Director, Senior Vice President and Senior Credit Officer - Northern California
     Fred D. Jensen                     Vice Chairman of the Board
     Albert M. Lavezzo                  Director
     Kathryn L. Perrine                 Director, Senior Vice President and Chief Financial Officer
     David F. Weaver                    Director and President - Texas Region

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                   DIRECTORS AND SENIOR MANAGEMENT (CONTINUED)


Bank of San Francisco

<S>                                     <C>
     Terrance M. McCarthy               Chairman of the Board, President and Chief Executive Officer
     Keary L. Colwell                   Executive Vice President and Chief Financial Officer
     Patrick S. Day                     Director, Senior Vice President and Senior Credit Officer
     Peter A. Goetze                    Director
     Joanne J. Haakinson                Executive Vice President and Chief Administrative Officer
     William G. Nelle, Jr.              Director, Senior Vice President - Commercial / Private Banking
     Kathryn L. Perrine                 Director


</TABLE>


<PAGE>


                              INVESTOR INFORMATION

         First Banks' Annual  Report on Form 10-K, as filed with the  Securities
and Exchange  Commission,  is available  without charge to any stockholder  upon
request. Requests should be directed, in writing, to Frank H. Sanfilippo,  First
Banks, Inc., 11901 Olive Boulevard, Creve Coeur, Missouri 63141.

PREFERRED SECURITIES

         The  preferred  securities  of First  Banks are  traded  on the  Nasdaq
National  Market System with the ticker symbols "FBNKO" and "FBNKN." As of March
20, 2001, there were approximately 484 record holders of First Preferred Capital
Trust.  This number  does not  include  any persons or entities  that hold their
preferred  securities  in nominee or "street"  name  through  various  brokerage
firms.  The  preferred  securities  of  First  Preferred  Capital  Trust  II are
represented by a global  security that has been deposited with and registered in
the  name of The  Depository  Trust  Company,  New  York,  New York  (DTC).  The
beneficial  ownership  interests  of these  preferred  securities  are  recorded
through the DTC book-entry system. The high and low preferred  securities prices
and the dividends declared for 2000 and 1999 are summarized as follows:


                      FIRST PREFERRED CAPITAL TRUST - FBNKO
<TABLE>
<CAPTION>

                                                                       2000                1999           Dividend
                                                                  --------------      -------------
                                                                   High     Low       High      Low       Declared
                                                                   ----     ---       ----      ---     -------------

<S>                                                             <C>        <C>        <C>      <C>        <C>
     First quarter............................................  $  25.25   23.13      27.25    25.13      $ 0.578125
     Second quarter...........................................     26.00   23.50      27.00    25.25        0.578125
     Third quarter............................................     25.13   23.50      26.63    24.94        0.578125
     Fourth quarter...........................................     25.00   23.38      26.00    23.88        0.578125



                    FIRST PREFERRED CAPITAL TRUST II - FBNKN

                                                                       2000                1999           Dividend
                                                                  --------------      -------------
                                                                   High     Low       High      Low       Declared
                                                                   ----     ---       ----      ---     -------------

     First quarter............................................  $   --      --         --       --   $            --
     Second quarter...........................................      --      --         --       --                --
     Third quarter............................................      --      --         --       --                --
     Fourth quarter...........................................     27.00   25.13       --       --          0.504888

</TABLE>

For information concerning First Banks, please contact:

    Allen H. Blake                             Frank H. Sanfilippo
    President and Chief Operating Officer      Executive Vice President and
    11901 Olive Boulevard                        Chief Financial Officer
    Creve Coeur, Missouri 63141                11901 Olive Boulevard
    Telephone - (314) 995-8700                 Creve Coeur, Missouri 63141
                                               Telephone - (314) 995-8700


Transfer Agent:

    State Street Bank and Trust Company
    Corporate Trust Department
    P. O. Box 778
    Boston, Massachusetts 02102-0778
    Telephone - (800) 531-0368
    www.statestreet.com


<PAGE>


                                                                    EXHIBIT 21.1



                               FIRST BANKS, INC.

                                  Subsidiaries

The  following  is  a  list  of  our   subsidiaries   and  the  jurisdiction  of
incorporation or organization.


                                                  Jurisdiction of Incorporation
     Name of Subsidiary                                 of Organization
     ------------------                                 ---------------

First Bank                                                 Missouri

  First Land Trustee Corp.                                 Missouri

  FB Commercial Finance, Inc.                              Missouri

  First Banc Mortgage, Inc.                                Missouri

  Missouri Valley Partners, Inc.                           Missouri

  Star Lane Holdings Trust Statutory Trust                 Connecticut

       Star Lane Trust                                     New York

  First Capital Group, Inc.                                New Mexico

  First Banks America, Inc.                                Delaware

       First Bank & Trust                                  California

            Eucalyptus Financial Corp.                     California

       The San Francisco Company                           Delaware

            Bank of San Francisco                          California

                 Bank of San Francisco Investors, Inc.     California