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, 2001

[ ] 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 of        (I.R.S. Employer Identification Number)
 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)

                   9.00% Cumulative Trust Preferred Securities
           (issued by First Preferred Capital Trust III 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 22, 2002, 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, 2001, or our 2001 Annual Report, are incorporated by reference into
Parts I, II and IV of this report, as follows:


<PAGE>


         The following  portions of our 2001 Annual Report to  Stockholders,  or
our 2001 Annual Report, are incorporated by reference in this report:

                                                             Page(s) in the 2001
                      Section                                   Annual Report
                      -------                                -------------------

         Management's Discussion and Analysis of Financial
           Condition and Results of Operations ("MD&A").........     3-32
         Selected Consolidated and Other Financial Data.........      2
         Consolidated Financial Statements......................    34-63
         Supplementary Financial Data...........................      33
         Range of Prices of Preferred Securities................      65

         Except for the parts of our 2001 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,  including the negative impact on the economy
resulting from the events of September 11, 2001 in New York City and Washington,
D.C.  and the  national  response  to  those  events;  the  impact  of laws  and
regulations  applicable  to us and  changes  therein;  the impact of  accounting
pronouncements  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 anticipated 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.  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,  2001,  we had $6.78  billion in total  assets,  $5.41
billion  in total  loans,  net of  unearned  discount,  $5.68  billion  in total
deposits and $448.7 million in total stockholders' equity.

         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

<PAGE>

services   include   mortgage   banking,   debit  cards,   brokerage   services,
credit-related insurance, internet banking, automated teller machines, telephone
banking,  safe deposit boxes,  escrow and  bankruptcy  deposit  services,  stock
option services,  and trust,  private banking and institutional money management
services.

         We operate through two subsidiary banks,  three subsidiary bank holding
companies, and through our subsidiary leasing company, as follows:

         Union   Financial  Group,  Ltd.,  or  UFG,  headquartered  in  Swansea,
           Illinois, and its wholly owned subsidiary:
              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 San Francisco,
              California, and its wholly owned subsidiaries:
           The  San  Francisco  Company, or SFC, headquartered in San Francisco,
              California, and its wholly owned subsidiary:
                 First  Bank  &  Trust, or FB&T, headquartered in San Francisco,
                    California.

         Our  subsidiary  banks  and FCG are  wholly  owned by their  respective
parent companies. We owned 93.69% of FBA at December 31, 2001.

         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, 2001:
<TABLE>
<CAPTION>

                                                                                        Loans, Net of
                                                           Number of     Total            Unearned          Total
                             Name                          Locations     Assets           Discount        Deposits
                             ----                          ---------     ------           --------        --------
                                                                             (dollars expressed in thousands)

         UFG:
<S>                                                           <C>     <C>                <C>              <C>
                 First Bank..........................         93      $ 3,707,081        3,086,023        3,142,676
         FCG (1).....................................          1              482               --               --
         FBA:
                SFC:
                       FB&T..........................         56        3,057,920        2,323,263        2,555,396
</TABLE>
         ---------------------------------
         (1)   FCG was  purchased on February 29, 2000. As of December 31, 2001,
               there were  approximately  $149.0  million of  commercial  leases
               originated by FCG. The  commercial  leases are recorded as assets
               of our subsidiary banks.

         As described under "MD&A - Financial Condition and Average Balances" in
our 2001 Annual Report, on November 15, 2001, First Preferred Capital Trust III,
or First  Preferred  III, our newly formed  Delaware  statutory  business  trust
subsidiary,   issued  2,208,000  shares  of  9.00%  cumulative  trust  preferred
securities for $55.2  million.  In addition,  First  Preferred III issued 68,290
shares of common  securities  to us for $1.7  million.  In October  2000,  First
Preferred  Capital  Trust II, or First  Preferred  II,  our  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,
the  preferred  securities  of First  Preferred II and First  Preferred  III 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 his adult  children,  own all of our voting stock.  Mr.
Dierberg and his family, therefore, control our management and policies, and the
election of our directors.
<PAGE>

         At December 31, 2001, we, Mr. Dierberg and an affiliate of Mr. Dierberg
owned 7.93%, 0.08% and 1.86%, respectively,  of the outstanding shares of common
stock of Allegiant Bancorp, Inc., or Allegiant, located in St. Louis, Missouri.

         Further  discussion of our business  operations and our policies is set
forth in the MD&A section of our 2001 Annual Report.

Acquisitions.  Historically,  we concentrated our acquisitions within the market
areas of eastern  Missouri  and  central and  southern  Illinois.  However,  the
premiums required to successfully pursue these acquisitions escalated sharply in
1993,  reducing the economic  viability of many potential  acquisitions in these
areas.  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, we noted that acquisition pricing
in other areas being  considered was similar to that in our eastern Missouri and
central and southern Illinois acquisition areas. 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 the
acquisition  of  BancTEXAS  Group Inc. in 1994,  which had offices in Dallas and
Houston,  Texas, and numerous  acquisitions of financial  institutions  that had
offices in Los Angeles, Marin, Napa, Orange, Placer,  Riverside,  Santa Barbara,
San Francisco,  San Jose, San Mateo, Sonoma,  Ventura and Sacramento counties in
California  during the seven years ended  December  31, 2001.  During  2001,  we
completed two acquisitions located primarily within our existing market areas in
California, and one acquisition in Swansea, Illinois, located within our primary
market area,  which is the St.  Louis,  Missouri  metropolitan  area (as further
discussed below).

         For  the  three  years  ended  December  31,  2001,  we  completed  ten
acquisitions  of banks,  one branch  office  purchase  and a purchase of certain
assets  and  assumption  of  certain  liabilities  of a leasing  company.  These
transactions  provided  us with  total  assets of $1.78  billion  and 38 banking
facilities.  For a description of these acquisitions,  see "MD&A - Acquisitions"
and Note 2 to the Consolidated Financial Statements in our 2001 Annual Report.

Market  Area.  As of  December  31,  2001,  our  subsidiary  banks' 149  banking
facilities were located throughout  California,  eastern Missouri,  Illinois and
Texas. Our primary market area is the St. Louis, Missouri metropolitan area. Our
second and third largest  market areas are southern and northern  California and
central and  southern  Illinois,  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, 2001:
<TABLE>
<CAPTION>

                                                                              Total         Deposits       Number
                                                                            Deposits     as a Percentage     of
                               Geographic Area                            (in millions) of Total Deposits Locations
                               ---------------                            ------------- ----------------- ---------

<S>                                                                        <C>                <C>             <C>
St. Louis, Missouri metropolitan area (1)...............................   $ 1,183.7          20.8%           29
Regional Missouri (1)...................................................       397.4           7.0            15
Central and southern Illinois (1).......................................     1,104.3          19.4            34
Northern Illinois (1)...................................................       443.2           7.8            15
Texas (2)...............................................................       266.9           4.7             6
Southern California (2).................................................     1,072.8          18.9            32
Northern California (2).................................................     1,215.6          21.4            18
                                                                           ---------         -----          ----
    Total deposits......................................................   $ 5,683.9         100.0%          149
                                                                           =========         =====          ====
</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 greater Los Angeles  metropolitan area, including
     Ventura  County,  Riverside and Orange  County,  California;  in Santa
     Barbara  County,  California;  in northern  California,  including the
     greater San Francisco,  San Jose and Sacramento metropolitan areas; in
     the Houston, Dallas, Irving and McKinney metropolitan areas.


<PAGE>


Competition  and  Branch  Banking.   Our  subsidiary   banks  engage  in  highly
competitive  activities.  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.  Financial  institutions
compete 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.

         Our principal  competitors  include  other  commercial  banks,  savings
banks,  savings and loan associations,  mutual funds,  finance companies,  trust
companies,  insurance  companies,  leasing  companies,  credit unions,  mortgage
companies, private issuers of debt obligations and suppliers of other investment
alternatives,  such as securities firms and financial holding companies. Many of
our non-bank  competitors  are not subject to the same degree of  regulation  as
that imposed on bank holding companies,  federally insured banks and national or
state chartered  banks. As a result,  such non-bank  competitors have advantages
over us in providing  certain  services.  We also compete with major  multi-bank
holding  companies,  which are  significantly  larger  than us and have  greater
access to capital and other resources.

         We believe we will continue to face  competition in the  acquisition of
independent banks and savings banks from bank and financial  holding  companies.
We often  compete with larger  financial  institutions  that have  substantially
greater resources available for making acquisitions.

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

Supervision and Regulation

General. Federal and state laws extensively regulate our subsidiary banks and us
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 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 us and our subsidiary banks in the future.

         We are a registered bank holding company under the Bank Holding Company
Act of 1956. Consequently,  the Board of Governors of the Federal Reserve System
(Federal Reserve) regulates,  supervises and examines us. We file annual reports
with  the  Federal  Reserve  and  provide  to  the  Federal  Reserve  additional
information as it may require.

         Since First Bank is an  institution  chartered by the State of Missouri
and a member of the  Federal  Reserve,  both the State of  Missouri  Division of
Finance and the Federal Reserve supervise, regulate and examine First Bank. FB&T
is  chartered  by the  State  of  California  and  is  subject  to  supervision,
regulation  and   examination   by  the   California   Department  of  Financial
Institutions.  Our subsidiary  banks are also  regulated by the Federal  Deposit
Insurance Corporation (FDIC), which provides deposit insurance of up to $100,000
for each insured depositor.

Bank Holding  Company  Regulation.  Our  activities  and those of our subsidiary
banks 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 all of their 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 Bank Holding Company Act also requires a bank
holding company to obtain approval from the Federal Reserve before:
<PAGE>

         o     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);

         o     acquiring all or substantially  all of the assets of another bank
               or bank holding company; or

         o     merging or consolidating with another bank holding company.

         The  Federal  Reserve  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  interest  in  meeting  the  convenience  and needs of the
community to be served.  The Federal Reserve 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 Federal Reserve's
source of strength policy,  which obligates a bank holding company such as us to
provide financial and managerial strength to its subsidiary banks;  restrictions
on the nature and size of certain affiliate  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  obligations  and financial  instruments  into
weighted categories, with higher levels of capital being required for categories
deemed to represent  greater  risk.  Federal  Reserve  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 must be composed of common  equity,
retained earnings, qualifying noncumulative 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,  which amount is referred to as
"Tier I  capital."  The  remainder  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 I
capital  and a limited  amount of loan and lease loss  reserves,  which  amount,
together with Tier I capital, is referred to as "Total Risk-Based Capital."

         In  addition  to the  risk-based  standard,  we are  subject to minimum
requirements  with  respect  to the ratio of our Tier I capital  to our  average
assets less goodwill and certain other intangible assets, or 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  Office  of  the  Comptroller  of the  Currency  (OCC)  and  the  FDIC  have
established capital requirements for banks under their respective  jurisdictions
that are  consistent  with those imposed by the Federal  Reserve 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
our 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 depends upon
how its capital levels compare to various  relevant  capital  measures and other
factors as established by regulation.
<PAGE>

         The federal regulatory agencies have adopted  regulations  establishing
relevant capital measures and relevant capital levels. Under the regulations,  a
bank will be:

         o     "well  capitalized" if it has a total risk-based capital ratio of
               10% or  greater,  a Tier I 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;

         o     "adequately  capitalized"  if it has a total  risk-based  capital
               ratio of 8% or greater,  a Tier I capital  ratio of 4% or greater
               and  a  Leverage   Ratio  of  4%  or   greater   (3%  in  certain
               circumstances);

         o     "undercapitalized"  if it has a total risk-based capital ratio of
               less  than  8%,  a Tier I  capital  ratio  of  less  than 4% or a
               Leverage Ratio of less than 4% (3% in certain circumstances);

         o     "significantly  undercapitalized"  if it has a  total  risk-based
               capital  ratio of less  than 6%, a Tier I  capital  ratio of less
               than 3% or a Leverage Ratio of less than 3%; and

         o     "critically  undercapitalized" if its tangible equity is equal to
               or less than 2% of average quarterly tangible assets.

         Under certain circumstances, a depository institution's primary federal
regulatory  agency  may use its  authority  to lower the  institution's  capital
category.  The banking  agencies are permitted to establish  individual  minimum
capital  requirements   exceeding  the  general  requirements  described  above.
Generally,  failing to maintain the status of "well  capitalized" or "adequately
capitalized"  subjects a bank to  restrictions  and  limitations on its business
that become progressively more severe as the capital levels decrease.

         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."   Limitations  exist  for
"undercapitalized"  depository institutions regarding, among other things, asset
growth, acquisitions,  branching, new lines of business,  acceptance of brokered
deposits and borrowings from the Federal Reserve System.  These institutions are
also  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. The appointment of a receiver or
conservator may be required for "critically undercapitalized" institutions.

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 terms of
the  subordinated  debentures  associated  with $47.4 million of trust preferred
securities  issued  by FBA's  financing  subsidiary  prevent  FBA's  payment  of
dividends to us under  certain  circumstances,  including the deferral by FBA of
interest payments on those subordinated debentures.

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 must 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 requires
that, in connection  with  examinations of financial  institutions  within their
jurisdiction,  the  federal  banking  regulators  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.
<PAGE>

The Gramm-Leach-Bliley  Act. The Gramm-Leach-Bliley  Act, or GLB Act, enacted in
1999,  amended and repealed portions of the Glass-Steagall Act and other federal
laws  restricting the ability of bank holding  companies,  securities  firms and
insurance  companies  to  affiliate  with  each  other and to enter new lines of
business. The GLB Act established a comprehensive  framework to permit financial
companies to expand their activities,  including through such affiliations,  and
to modify the federal  regulatory  structure  governing some financial  services
activities.  This authority of financial firms to broaden the types of financial
services  offered to customers and to  affiliates  with other types of financial
services  companies may lead to further  consolidation in the financial services
industry. However, it may lead to additional competition in the markets in which
we operate by allowing new entrants into various  segments of those markets that
are  not  the  traditional  competitors  in  those  segments.  Furthermore,  the
authority granted by the GLB Act may encourage the growth of larger competitors.

         The  GLB  Act  also  adopted  consumer  privacy  safeguards   requiring
financial services providers to disclose their policies regarding the privacy of
customer  information  to  their  customers  and,  subject  to some  exceptions,
allowing  customers  to "opt  out" of  policies  permitting  such  companies  to
disclose  confidential  financial  information to non-affiliated  third parties.
Final  regulations  implementing  the new privacy  standards became effective in
2001.

Reserve Requirements;  Federal Reserve System and Federal Home Loan Bank System.
The Federal Reserve  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 Federal Reserve may
be used to satisfy liquidity requirements. Institutions are authorized to borrow
from the Federal Reserve Bank "discount window," but Federal Reserve regulations
require  institutions to exhaust other reasonable  alternative sources of funds,
including  advances  from Federal  Home Loan Banks,  before  borrowing  from the
Federal Reserve Bank.

         First Bank is a member of the Federal Reserve  System.  Both First Bank
and FB&T are members of the Federal Home Loan Bank System. As members,  they are
required to hold  investments  in  regional  banks  within  those  systems.  Our
subsidiary  banks were in  compliance  with these  requirements  at December 31,
2001, with investments of $8.1 million in stock of the Federal Home Loan Bank of
Des Moines held by First Bank,  $1.1  million in stock of the Federal  Home Loan
Bank of  Chicago  held by First Bank  (associated  with the  acquisition  of UFG
completed on December 31, 2001),  $1.3 million in stock of the Federal Home Loan
Bank of San  Francisco  held by FB&T,  and $5.5  million in stock of the Federal
Reserve Bank of St. Louis held by First Bank.

Monetary  Policy and  Economic  Control.  The  commercial  banking  business  is
affected by legislation,  regulatory policies and general economic conditions as
well as the  monetary  policies  of the  Federal  Reserve.  The  instruments  of
monetary policy available to the Federal Reserve include the following:

         o     changes in the discount  rate on member bank  borrowings  and the
               targeted federal funds rate;

         o     the availability of credit at the "discount window;"

         o     open market operations;

         o     the  imposition  of  changes  in  reserve   requirements  against
               deposits of domestic banks;

         o     the  imposition  of  changes  in  reserve   requirements  against
               deposits and assets of foreign branches; and

         o     the  imposition  of and changes in reserve  requirements  against
               certain borrowings by banks and their affiliates.

         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 Federal  Reserve 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,  and short-term and long-term changes in the  international  trade
balance and in the fiscal policies of the U.S. Government. We cannot predict the
effect that changes in monetary  policy or in the  discount  rate on member bank
borrowings  will  have on our  future  business  and  earnings  or  those of our
subsidiary banks.
<PAGE>

Employees

         As of March 22, 2002, we employed  approximately 2,350 employees.  None
of the 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.

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 149 offices and three  operations and  administrative  facilities,  90 are
located in buildings that we own and 62 are located in buildings that we lease.

         We  consider  the  properties  at  which we do  business  to be in good
condition  and  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 7 to our Consolidated
Financial Statements incorporated herein by reference.

Item 3.  Legal Proceedings

         In the ordinary  course of  business,  we and our  subsidiaries  become
involved  in legal  proceedings.  Our  management,  in  consultation  with legal
counsel,  believes the ultimate  resolution of these proceedings will not have a
material  adverse  effect on our  business,  financial  condition  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 his adult children, 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 2001 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 32 of our 2001 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 14 of our 2001  Annual  Report  under the  caption  "MD&A -
Interest Rate Risk Management."



<PAGE>


         In addition to the information included in our 2001 Annual Report under
the caption "MD&A - Interest Rate Risk Management," we also prepare and review a
more  traditional  interest rate  sensitivity  position in conjunction  with the
results of our  simulation  model.  The following  table  presents the projected
maturities and periods to repricing of our rate sensitive assets and liabilities
as of December 31, 2001, adjusted to account for anticipated prepayments:
<TABLE>
<CAPTION>

                                                                   Over       Over
                                                                   three       six       Over
                                                       Three      through    through      one       Over
                                                       months       six      twelve     through     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).......................................    $3,896,251    506,967    526,655    473,356      5,640  5,408,869
Investment securities...........................       232,294     42,966     46,280    238,819     70,709    631,068
Federal funds sold and other....................        60,352         --         --         --         --     60,352
                                                    ----------  ---------  ---------  ---------  ---------  ---------
  Total interest-earning assets.................     4,188,897    549,933    572,935    712,175     76,349  6,100,289
Effect of interest rate swap agreements.........      (900,000)        --         --    900,000         --         --
                                                    ----------  ---------  ---------  ---------  ---------  ---------
  Total interest-earning assets after
      the effect of interest
      rate swap agreements......................    $3,288,897    549,933    572,935  1,612,175     76,349  6,100,289
                                                    ==========  =========  =========  =========  =========  =========
Interest-bearing liabilities:
Interest-bearing demand accounts................    $  232,736    144,673     94,352     69,192     88,062    629,015
Money market demand accounts....................     1,333,199         --         --         --         --  1,333,199
Savings accounts................................        84,956     69,964     59,969     84,956    199,895    499,740
Time deposits...................................       551,183    505,684    634,250    608,653        725  2,300,495
Note payable....................................            --         --     27,500         --         --     27,500
Other borrowed funds............................       176,120        544    (17,159)    81,340      2,289    243,134
                                                    ----------  ---------  ---------  ---------  ---------  ---------
  Total interest-bearing liabilities............     2,378,194    720,865    798,912    844,141    290,971  5,033,083
Effect of interest rate swap agreements.........       200,000         --         --   (200,000)        --         --
                                                    ----------  ---------  ---------  ---------  ---------  ---------
  Total interest-bearing liabilities
      after the effect of interest
      rate swap agreements......................    $2,578,194    720,865    798,912    644,141    290,971  5,033,083
                                                    ==========  =========  =========  =========  =========  =========
Interest-sensitivity gap:
Periodic........................................    $  710,703   (170,932)  (225,977)   968,034   (214,622) 1,067,206
                                                                                                            =========
Cumulative......................................       710,703    539,771    313,794  1,281,828  1,067,206
                                                    ==========  =========  =========  =========  =========
Ratio of interest-sensitive assets
  to interest-sensitive liabilities:
     Periodic...................................          1.28       0.76       0.72       2.50       0.26       1.21
                                                                                                            =========
     Cumulative.................................          1.28       1.16       1.08       1.27       1.21
                                                    ==========  =========  =========  =========  =========
 </TABLE>

----------------------
(1) Loans are presented net of unearned discount.

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

         o     loans will repay at projected repayment speeds;

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

         o     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

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

         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,  2001,  our  asset-sensitive  position on a cumulative
basis  through the  twelve-month  time horizon was $313.8  million,  or 4.63% of
total assets, in comparison to our liability-sensitive  position on a cumulative
basis through the twelve-month time horizon of $40.4 million,  or 0.69% of total
assets at  December  31,  2000.  The  liability-sensitive  position  for 2000 is
attributable to the composition of our loan and investment  security  portfolios
as  compared  to our  deposit  base.  We  attribute  the  change for 2001 to our
interest rate swap agreements entered into in conjunction with our interest rate
risk management program in September 2000 and during 2001.

         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 our simulation
model for monitoring our interest rate risk exposure.

Item 8.  Financial Statements and Supplementary Data

         Our  consolidated  financial  statements  are  incorporated  herein  by
reference  from pages 34 through 63 of our 2001 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 33 of our 2001 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 eight 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 (1)           64      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, First  America
                                                  Capital Trust, First Preferred Capital Trust II and First Preferred
                                                  Capital  Trust III since  1997,  1998, May 2001 and  October  2001,
                                                  respectively.

Allen H. Blake                  59      1988      President of First Banks,  Inc. since October 1999; Chief Operating
                                                  Officer of First Banks, Inc. since 1998;  Director and Secretary of
                                                  First Banks,  Inc.  since 1988;  Chief  Financial  Officer of First
                                                  Banks,  Inc.  from  1984 to  September  1999 and since  June  2001;
                                                  Director,  Executive Vice President,  Chief  Operating  Officer and
                                                  Secretary of FBA since 1998;  Chief  Financial  Officer of FBA from
                                                  1994 to  September  1999 and since June 2001;  Vice  President  and
                                                  Secretary  of FBA from  1994 to 1998;  Trustee  of First  Preferred
                                                  Capital  Trust,   First  America  Capital  Trust,  First  Preferred
                                                  Capital Trust II and First Preferred  Capital Trust III since 1997,
                                                  1998, 2000 and October 2001, respectively.

Donald W. Williams              54      2001      Senior  Executive  Vice President and Chief Credit Officer of First
                                                  Banks,  Inc. since 2000;  Executive Vice President and Chief Credit
                                                  Officer of First Banks,  Inc. since 1996;  Executive Vice President
                                                  and  Chief  Credit  Officer  of  FBA;  Chairman  of  the  Board  of
                                                  Directors,  President  and Chief  Executive  Officer  of First Bank
                                                  since 2000;  Chairman of the Board of  Directors  of First  Capital
                                                  Group, Inc. since 2000.

Michael J. Dierberg (1)         31      2001      Senior Vice President (Northern  California Region) of First Bank &
                                                  Trust since July 2001.  Prior to joining  First  Banks,  Inc.,  Mr.
                                                  Dierberg  served as an attorney  for the Office of the  Comptroller
                                                  of the Currency in Washington, D.C.

Gordon A. Gundaker (2)          68      2001      President and Chief  Executive  Officer of Coldwell Banker Gundaker
                                                  in St. Louis, Missouri.

David L. Steward (2)            50      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.


<PAGE>



Hal J. Upbin (2)                63      2001      Director of Kellwood  Company in St.  Louis,  Missouri  since 1995;
                                                  Chairman of the Board of Directors,  President and Chief  Executive
                                                  Officer  of  Kellwood  Company  since  1997;  President  and  Chief
                                                  Operating   Officer  of  Kellwood   Company   from  1994  to  1997;
                                                  Executive Vice President  Corporate  Development from 1992 to 1994;
                                                  Vice President Corporate Development from 1990 to 1992.

Douglas H. Yaeger (2)           52      2000      Chairman of the Board of Directors,  President and Chief  Executive
                                                  Officer of The Laclede  Group,  Inc. in St. Louis,  Missouri  since
                                                  October  2001;  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  Central  Institute  for  the  Deaf,  the  St.  Louis  Regional
                                                  Commerce  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,  The  Municipal
                                                  Theatre Association of St. Louis and Webster University.

----------------------------------
(1)   Mr. Michael J. Dierberg is the son of Mr. James F. Dierberg.  See Item 12. Security Ownership of Certain Beneficial Owners and
      Management.
(2)   Member of the Audit Committee.
</TABLE>

Executive Officers

         Our  executive  officers,  each of whom was  elected  to the  office(s)
indicated by the Board of Directors, as of March 22, 2002, were as follows:
<TABLE>
<CAPTION>

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

<S>                            <C>                                          <C>
James F. Dierberg              64   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                 59   President,  Chief Operating Officer,    See Item 10 - "Directors  and  Executive
                                    Chief Financial  Officer,  Secretary    Officers  of the  Registrant  - Board of
                                    and Director.                           Directors."

Donald W. Williams             54   Senior   Executive  Vice  President,    See Item 10 - "Directors  and  Executive
                                    Chief Credit Officer and Director.      Officers  of the  Registrant  - Board of
                                                                            Directors."

Michael F. Hickey              44   Executive  Vice  President and Chief    Executive   Vice   President  and  Chief
                                    Information  Officer;   Director  of    Information   Officer  of  First  Banks,
                                    First  Bank;   President   of  First    Inc. since  November  1999;  Director of
                                    Services, L.P.                          First   Bank   since    November   1999;
                                                                            President of First Services,  L.P. since
                                                                            November  1999;  Vice President - Senior
                                                                            Group  Manager of  Information  Systems,
                                                                            Mercantile  Bank in St. Louis,  Missouri
                                                                            from  1996  to  November   1999;   Group
                                                                            Manager    of    Information    Systems,
                                                                            Mercantile  Bancorporation,   Inc.  from
                                                                            1992 to 1996.




<PAGE>


Terrance M. McCarthy           47   Executive Vice President;  Executive    Mr.   McCarthy  has  been   employed  in
                                    Vice  President of FBA;  Chairman of    various executive  capacities with First
                                    the  Board of  Directors,  President    Banks, Inc. since 1995.
                                    and Chief Executive Officer of FB&T.

Michael F. McWhortor           50   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. in St.
                                                                            Louis,  Missouri from 1998 to 1999; Vice
                                                                            President   and   Manager  of   Customer
                                                                            Information   Management  of  Mercantile
                                                                            Bancorporation,  Inc. from 1997 to 1998.

Mark T. Turkcan                46   Executive  Vice President - Mortgage    Mr.   Turkcan   has  been   employed  in
                                    Banking;   Director  and   Executive    various executive  capacities with First
                                    Vice   President   of  First   Bank;    Banks, Inc. since 1990.
                                    Chairman of the Board of  Directors,
                                    President   and   Chief    Executive
                                    Officer of First Banc Mortgage, Inc.
</TABLE>

Section 16(a) Beneficial Ownership Reporting Compliance

         To our knowledge,  our directors,  executive  officers or shareholders,
who are 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,  filed on a timely basis reports  required by Section 16(a) of the
Exchange Act during the year ended December 31, 2001.



<PAGE>


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, 2001, 2000 and 1999:
<TABLE>
<CAPTION>

                                       SUMMARY COMPENSATION TABLE
                                       --------------------------

                                                                                                      All Other
         Name and Principal Position(s)                     Year          Salary        Bonus     Compensation (1)
         ------------------------------                     ----          ------        -----     ----------------

<S>                                                         <C>         <C>             <C>             <C>
James F. Dierberg                                           2001        $  585,000      100,000         2,850
Chairman of the Board of Directors                          2000           560,000       90,000         5,250
and Chief Executive Officer                                 1999           543,000       20,000         5,000

Allen H. Blake                                              2001           343,700       58,000         2,590
President, Chief Operating Officer                          2000           282,900       45,000         6,150
and Chief Financial Officer                                 1999           204,800       20,000         5,000

Donald W. Williams                                          2001           297,000       48,000         5,250
Senior Executive Vice President                             2000           241,250       40,000         6,450
and Chief Credit Officer                                    1999           208,750       36,600         5,000

Terrance M. McCarthy                                        2001           220,000       38,000         5,200
Executive Vice President;                                   2000           180,000       25,000         6,650
Chairman of the Board of Directors, President               1999           147,500       20,000         4,950
and Chief Executive Officer of FB&T

Mark T. Turkcan                                             2001           177,500       22,500         5,250
Executive Vice President - Mortgage Banking;                2000           167,500       15,000         6,570
Director and Executive Vice President of First Bank;        1999           156,250       15,000         4,950
and Chairman of the Board of Directors, President
and Chief Executive Officer of First Banc Mortgage, Inc.
</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.

Employment  Agreement.  Mr. 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 Mr.  Williams  pursuant to his employment  agreement is set forth in the
salary column of the Summary Compensation Table.

         Mr. 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 Mr.  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,  Mr.  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.
<PAGE>

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.  Gordon Gundaker,
David Steward,  Hal Upbin and Douglas  Yaeger)  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.  Steward,  Upbin  and  Yaeger  received  $17,000,  $8,000  and  $17,000,
respectively,  in director's  fees during 2001. Mr. Gundaker did not receive any
director's fees during 2001.

         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,
Blake, Williams and McCarthy who are executive officers, are also members of the
Board  of  Directors  and/or  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  2001 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  2001,  2000 and 1999,  Tidal  Insurance  Limited,  or Tidal,  a
corporation  owned  indirectly by our Chairman and his adult children,  received
approximately  $132,000,  $212,000  and  $316,000,  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 2001, 2000 and 1999, 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  $316,000,  $235,000 and
$194,000,  respectively,  in  commissions  and  insurance  premiums for policies
purchased  by us or by  customers  of our  subsidiary  banks from  unaffiliated,
third-party  insurors.  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 $3.0 million, $2.1 million and $2.3 million for the years
ended December 31, 2001,  2000 and 1999,  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 our subsidiary banks.

         First Services,  L.P., a limited  partnership  indirectly  owned by our
Chairman and his adult children,  provides  information  technology services and
operational  support for our subsidiary banks and us. Fees paid under agreements
with First  Services,  L.P. were $23.1 million,  $19.3 million and $16.4 million
for the years ended December 31, 2001, 2000 and 1999, respectively. During 2001,
2000 and 1999, First Services,  L.P. paid us $2.0 million, $1.8 million and $1.2
million,  respectively,  in rental fees for the use of data processing and other
equipment owned by us.



<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets  forth,  as  of  March  22,  2002,  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%         *
     Ellen C. Dierberg Family Trust (1)...........................     7,714.676(2)     32.605%         *
     Michael J. Dierberg Family Trust (1).........................     4,255.319(2)     17.985%         *
     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, 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 these shares.
  (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, 2001 is 745,  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, 2001.

           (c)    The  index  of required exhibits is included beginning on page
                  21 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)

Date:    March 25, 2002


                                      By: /s/ Allen H. Blake
                                          --------------------------------------
                                              Allen H. Blake
                                              President,
                                              Chief Operating Officer and
                                              Chief Financial Officer
                                              (Principal Financial and
                                              Accounting Officer)
Date:    March 25, 2002

         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 25, 2002
       -----------------------
           James F. Dierberg

       /s/ Allen H. Blake                    Director          March 25, 2002
       -----------------------
           Allen H. Blake

       /s/ Donald W. Williams                Director          March 25, 2002
       -----------------------
           Donald W. Williams

       /s/ Michael J. Dierberg               Director          March 25, 2002
       -----------------------
           Michael J. Dierberg

       /s/ Gordon A. Gundaker                Director          March 25, 2002
       -----------------------
           Gordon A. Gundaker

       /s/ David L. Steward                  Director          March 25, 2002
       -----------------------
           David L. Steward

       /s/ Hal J. Upbin                      Director          March 25, 2002
       -----------------------
           Hal J. Upbin

       /s/ Douglas H. Yaeger                 Director          March 25, 2002
       -----------------------
           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  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 ("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    Agreement as to Expenses and Liabilities between First Banks, Inc. and
          First  Preferred  Capital Trust III, dated November 15, 2001 (relating
          to First Preferred Capital Trust III ("First Preferred III") (filed as
          Exhibit 4.8 to the Company's  Registration Statement on Form S-2, File
          No. 333-71652, dated October 15, 2001).

   4.6    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).

   4.7    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).

   4.8    Preferred  Securities  Guarantee Agreement by and between First Banks,
          Inc. and State Street Bank and Trust Company of Connecticut,  National
          Association, dated November 15, 2001 (relating to First Preferred III)
          (filed as Exhibit 4.7 to the Company's  Registration Statement on Form
          S-2, File No. 333-71652, dated October 15, 2001).

   4.9    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).

   4.10   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).
<PAGE>

   4.11   Indenture  between  First Banks,  Inc. and State Street Bank and Trust
          Company  of  Connecticut,  National  Association,  as  Trustee,  dated
          November 15, 2001 (relating to First  Preferred III) (filed as Exhibit
          4.1 to the  Company's  Registration  Statement  on Form S-2,  File No.
          333-71652, dated October 15, 2001).

   4.12   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).

   4.13   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).


   4.14   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 November
          15, 2001  (relating to First  Preferred  III) (filed as Exhibit 4.5 to
          the Company's  Registration Statement on Form S-2, File No. 333-71652,
          dated October 15, 2001).

   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  Secured Credit  Agreement,  dated as of August 23, 2001,
          among First  Banks,  Inc.,  and Wells Fargo Bank  Minnesota,  National
          Association,  American  National  Bank and Trust  Company of  Chicago,
          Harris Trust and Savings Bank, The Northern Trust Company,  Union Bank
          of California,  N.A., SunTrust Bank, Nashville,  LaSalle Bank National
          Association and Wells Fargo Bank Minnesota,  National Association,  as
          Agent  (incorporated  herein  by  reference  to  Exhibit  10.6  to the
          Company's  Registration  Statement  on Form S-2,  File No.  333-71652,
          dated October 15, 2001).

   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
          Banks, Inc., dated October 15, 2001 - filed herewith.

   10.7*  Service Agreement by and between First Services,  L.P. and First Bank,
          dated October 15, 2001 - filed herewith.
<PAGE>

   10.8*  Service  Agreement by and between First Services,  L.P. and First Banc
          Mortgage, Inc., dated October 15, 2001 - filed herewith.

   10.9*  Service  Agreement  by and  between  First  Services,  L.P.  and First
          Bank & Trust,  dated  October 15, 2001 - filed herewith.

   13.1   The  Company's  2001 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 10.6

                                SERVICE AGREEMENT

          THIS SERVICE  AGREEMENT  is made and entered into as of the  Fifteenth
day of October,  2001, by and between FIRST SERVICES,  L.P., a Missouri  Limited
Partnership  and FIRST BANKS,  INC., a bank holding  company duly  organized and
existing by virtue of the laws of the State of Missouri.

          For  and  in  consideration  of  the  mutual  promises  and  covenants
contained herein,  and the sum of Ten Dollars ($10.00) in hand paid, each to the
other, the receipt and sufficiency of which is hereby acknowledged,  the parties
agree as follows:


I.        SERVICES

          A.   First  Services,  L.P.  shall  furnish  First  Banks,  Inc.  data
               processing  services  selected  by  First  Banks,  Inc.  from the
               Product and Price Schedule as per  Attachment 1, attached  hereto
               and incorporated herein by reference thereto. Additional services
               may be selected upon prior written notice to First Services, L.P.
               at First Services, L.P.'s then current list price by executing an
               amended Summary Page.
          B.   First  Services,   L.P.  will  provide  conversion  and  training
               services  for the fees  specified  from  the  Product  and  Price
               Schedule  (Attachment  1).  Classroom  training  in the  use  and
               operation  of the  system  for the  number of First  Banks,  Inc.
               personnel mutually agreed upon in the conversion planning process
               will be provided at a training  facility  mutually  agreed  upon.
               Conversion services are those activities designed to transfer the
               processing   of  First  Banks,   Inc.'s  data  from  its  present
               processing company to First Services, L.P.
          C.   First  Services,  L.P. will also provide  Network Support Service
               consisting  of  communication   line  monitoring  and  diagnostic
               equipment and support personnel to discover,  diagnose, repair or
               report line problems to the appropriate  telephone  company.  The
               fee for this  service is also  listed  from the Product and Price
               Schedule (Attachment 1).
          D.   First  Services,  L.P.  shall upon  request  act as First  Banks,
               Inc.'s designated representative to arrange for the purchase, and
               installation   of  data  lines  necessary  to  access  the  First
               Services, L.P. system. Where requested,  additional dial-up lines
               and  equipment  to be utilized  as a backup to the  regular  data
               lines may also be ordered. First Services,  L.P. shall bill First
               Banks,  Inc. for the actual  charges  incurred for the data lines
               and  for  the  maintenance  of the  modems  and  other  interface
               devices.
          E.   First Services, L.P. will provide e-mail,  Internet, and Intranet
               capabilities at a fee listed on the Product and Pricing  Schedule
               (Attachment 1).
          F.   Processing  priorities will be determined by mutual  agreement of
               the parties hereto.

II.       TERM

       The term of this  Agreement  shall be twelve (12) months  commencing on
       October 15, 2001.  Upon  expiration,  the Agreement will  automatically
       renew for  successive  terms of twelve (12)  months each unless  either
       party  shall  have  provided  written  notice  to the  other  at  least
       one-hundred  eighty  (180)  days  prior to the  expiration  of the then
       current term, of its intent not to renew.  In the event of termination,
       First Services,  L.P. shall provide  reasonable time allowance to allow
       First Banks, Inc. to convert to another system.

III.      SOFTWARE / FIRMWARE

       Unmodified  third  party  software  or  firmware  ("Software")  may  be
       supplied as part of the Agreement.  All such Software shall be provided
       subject to Software License Agreements.


<PAGE>



IV.       PRICE AND PAYMENT

          A.   Fees for First  Services,  L.P.'s services are set forth from the
               Product  and  Price  Schedule   (Attachment  1)  including  where
               applicable  minimum  monthly  charges and payment  schedules  for
               onetime fees.
          B.   Standard  Fees  shall be  invoiced  no later  than the  fifteenth
               (15th) of each month for the then current month. Terms of payment
               shall be net cash.
          C.   The Base  Service  Charge  listed  from  the  Product  and  Price
               Schedule  (Attachment 1) shall not change more than twice a year.
               The fee schedule shall be reviewed annually to ensure fair market
               value in pricing.  Comparisons  will be made with peers and other
               providers of similar  services.  New products and services can be
               added as they become available and will be priced accordingly.
          D.   This above  limitation shall not apply to pass-thru  expenses.  A
               pass-thru  expense  is a charge  for goods or  services  by First
               Services,  L.P.  on First  Banks,  Inc.'s  behalf  that are to be
               billed to First Banks, Inc. without mark-up.
          E.   The fees listed from the Product and Price  Schedule  (Attachment
               1) do not  include  and First  Banks,  Inc.  is  responsible  for
               furnishing  transportation or transmission of information between
               First Services, L.P.'s data center and First Banks, Inc.'s sites.
               Where First Banks, Inc. has elected to have First Services,  L.P.
               provide  Telecommunication  Services,  the price for the Services
               will be provided and billed as a pass-thru expense.
          F.   Network  Support  Service  Fees and Local  Network Feed are based
               upon services  rendered  from First  Services,  L.P.'s  premises.
               Off-premise  support will be provided  upon First  Banks,  Inc.'s
               request on an as available  basis at First  Services,  L.P.  then
               current charges for time and materials,  plus  reasonable  travel
               and living expenses.

V.        CLIENT OBLIGATIONS

          A.   First  Banks,  Inc.  shall be solely  responsible  for the input,
               transmission  or delivery of all information and data required by
               First  Services,  L.P. to perform the services except where First
               Banks,  Inc. has  retained  First  Services,  L.P. to handle such
               responsibilities  on its behalf.  The data shall be provided in a
               format and manner approved by First  Services,  L.P. First Banks,
               Inc.  will  provide  at its own  expense  or  procure  from First
               Services,  L.P. all equipment,  computer  software  communication
               lines  and  interface   devices  required  to  access  the  First
               services,  L.P.  System.  If First  Banks,  Inc.  has  elected to
               provide such items itself,  First  Services,  L.P.  shall provide
               First  Banks,  Inc.  with  a list  of  compatible  equipment  and
               software.
          B.   First Banks,  Inc. shall designate  appropriate First Banks, Inc.
               personnel  for  training in the use of the First  services,  L.P.
               System,  shall allow First Services,  L.P. access to First Banks,
               Inc.'s site during normal business hours for conversion and shall
               cooperate with First services,  L.P.  personnel in the conversion
               and implementation of the services.
          C.   First Banks, Inc. shall comply with any operating instructions on
               the use of the First Services,  L.P.  reports  furnished by First
               Services,  L.P. for accuracy and shall work with First  Services,
               L.P. to  reconcile  any out of balance  conditions.  First Banks,
               Inc. shall determine and be responsible for the  authenticity and
               accuracy of all information and data submitted to First Services,
               L.P.
          D.   First Banks,  Inc.  shall  furnish,  or if First  Services,  L.P.
               agrees to so furnish,  reimburse First Services, L.P. for courier
               services applicable to the services requested.

VI.       GENERAL ADMINISTRATION

     First  Services,  L.P. is  continually  reviewing  and  modifying the First
     Services,  L.P.  system  to  improve  service  and to comply  with  federal
     government  regulations  applicable  to  the  data  utilized  in  providing
     services to First Banks,  Inc. First Services,  L.P.  reserves the right to
     make  changes in the  service,  including,  but not  limited  to  operating
     procedures,  security procedures, the type of equipment resident at and the
     location of First Services, L.P.'s data center.
<PAGE>

VII.      CLIENT CONFIDENTIAL INFORMATION

          A.   First  Services,  L.P.  shall  treat  all  information  and  data
               relating  to  First  Banks,   Inc.  business  provided  to  First
               Services,  L.P. by First Banks, Inc., or information  relating to
               First  Banks,   Inc.'s  customers,   as  confidential  and  shall
               safe-guard First Banks,  Inc.'s  information with the same degree
               of care  used to  protect  First  Services,  L.P.'s  confidential
               information.  First  Services,  L.P. and First Banks,  Inc. agree
               that  master  and  transaction   data  files  are  owned  by  and
               constitute  property of First Banks,  Inc. data and records shall
               be subject to  regulation  and  examination  by State and Federal
               supervisory  agencies to the same  extent as if such  information
               were on First Banks,  Inc.'s  premises.  First  Services,  L.P.'s
               obligations under this Section VIII shall survive the termination
               or expiration of this Agreement.
          B.   First  Services,  L.P.  agrees now and at all times in the future
               that all such  Confidential  Information  shall be held in strict
               confidence  and disclosed  only to those  employees  whose duties
               reasonably  require access to such  information.  First Services,
               L.P. may use such  Confidential  Information  only in  connection
               with  its   performance   under  this   Agreement.   Confidential
               Information  shall be returned to First Banks,  Inc. or destroyed
               upon First Banks,  Inc.'s request once the services  contemplated
               by this Agreement have been completed or upon termination of this
               Agreement.
          C.   First Services,  L.P. shall maintain  adequate backup  procedures
               including  storage of  duplicate  record  files as  necessary  to
               reproduce First Banks, Inc.'s records and data. In the event of a
               service  disruption due to reasons beyond First Services,  L.P.'s
               control,  First  Services  L.P.  shall use  diligent  efforts  to
               mitigate the effects of such an occurrence.
          D.   First Services,  L.P. shall  establish and maintain  policies and
               procedures  to  insure   compliance  with  this  section.   First
               Services,  L.P. agrees to permit First Banks, Inc. to audit First
               Services'  compliance  with this section during regular  business
               hours  upon  reasonable  notice  to  First  Services,   L.P.  The
               provisions of this section shall survive any  termination of this
               Agreement.

VIII.     FIRST SERVICES, L.P. CONFIDENTIAL INFORMATION

          A.   First Banks,  Inc. shall not use or disclose to any third persons
               any  confidential  information  concerning  First Services,  L.P.
               confidential information is that which relates to First Services,
               L.P.'s software, research, development, trade secrets or business
               affairs  including,  but not limited to, the terms  conditions of
               this  Agreement  but does not include  information  in the public
               domain through no fault of First Banks,  Inc.  First Banks,  Inc.
               obligations  under this Section IX shall survive the  termination
               or expiration of this agreement.
          B.   First Services,  L.P.'s system contains  information and computer
               software that is  proprietary  and  confidential  information  of
               First Services,  L.P., its suppliers and licensees.  First Banks,
               Inc. agrees not to attempt to circumvent the devices  employed by
               First Services,  L.P. to prevent unauthorized access to the First
               Services, L.P.'s system.
<PAGE>

IX.       WARRANTIES

     First  Services,  L.P. will  accurately  process  First Banks,  Inc.'s work
     provided  that First Banks,  Inc.  supplies  accurate  data and follows the
     procedures  described in First Services,  L.P.'s User Manuals,  notices and
     advises.  First  Services,  L.P.  personnel  will  exercise due care in the
     processing of First Banks,  Inc.'s work. In the event of an error caused by
     First Services,  L.P.'s personnel,  programs or equipment,  First Services,
     L.P.  shall  correct the data and/or  reprocess  the affected  report at no
     additional cost to First Banks, Inc.


X.        LIMITATION OF LIABILITY

     IN NO EVENT SHALL FIRST SERVICES,  L.P. BE LIABLE FOR LOSS OF GOODWILL,  OR
     FOR SPECIAL,  INDIRECT,  INCIDENTAL OR  CONSEQUENTIAL  DAMAGES ARISING FROM
     FIRST  BANKS,  INC.'S  USE OF FIRST  SERVICES,  L.P.'S  SERVICES,  OR FIRST
     SERVICES,  L.P.'S  SUPPLY OF EQUIPMENT OR  SOFTWARE,  UNDER THIS  AGREEMENT
     REGARDLESS  OF WHETHER  SUCH  CLAIM  ARISES IN TORT OR IN  CONTRACT.  FIRST
     SERVICES,  L.P.'S  AGGREGATE  LIABILITY  FOR ANY AND ALL  CAUSES  OF ACTION
     RELATING TO SERVICES PERFORMED  HEREUNDER OR ANY DAMAGE OR LOSS INCURRED OR
     SUSTAINED BY FIRST BANKS,  INC. RELATING TO THIS AGREEMENT AND THE SERVICES
     PERFORMED  HEREUNDER  SHALL BE  LIMITED TO THE AMOUNT OF TOTAL FEES PAID BY
     FIRST  BANKS,  INC. TO FIRST  SERVICES,  L.P. IN THE THREE (3) MONTH PERIOD
     PRECEDING THE DATE THE CLAIM  ACCRUED.  FIRST  SERVICES,  L.P.'S  AGGREGATE
     LIABILITY FOR A DEFAULT  RELATING TO EQUIPMENT OR SOFTWARE SHALL BE LIMITED
     TO THE AMOUNT PAID FOR THE EQUIPMENT OR SOFTWARE.

XI.       PERFORMANCE STANDARDS

          A.   On-Line  Availability  -  First  Services,   L.P.'s  standard  of
               performance  shall be on-line  availability  of the system 98% of
               the time that it is scheduled to be so available over a three (3)
               month  period  (the   "Measurement   Period").   Actual   on-line
               performance will be calculated monthly by comparing the number of
               hours  which the system was  scheduled  to be  operational  on an
               on-line basis with the number of hours, or a portion thereof,  it
               was actually  operational  on an on-line  basis.  Downtime may be
               caused by operator  error,  hardware  malfunction or failure,  or
               environmental failures such as loss of power or air conditioning.
               Downtime caused by reasons beyond First Services,  L.P.'s control
               should not be considered in the statistics.
          B.   Report   Availability  -  First  Services,   L.P.'s  standard  of
               performance for report  availability  shall be that, over a three
               (3) month period, ninety-five percent (95%) of all Critical Daily
               Reports  shall be available  for remote  printing on time without
               significant  errors.  A Critical Daily Report shall mean priority
               group reports,  which First Services,  L.P. and First Banks, Inc.
               have  mutually  agreed in  writing,  are  necessary  to  properly
               account for the previous day's activity and properly notify First
               Banks,  Inc. of  overdraft,  NSF or return  items.  A significant
               error is one that impairs First Banks, Inc.'s ability to properly
               account for the previous days activity  and/or  properly  account
               for overdraft,  NSF or return items.  Actual  performance will be
               calculated  monthly by comparing the total number of First Banks,
               Inc. reports scheduled to be available from First Services,  L.P.
               to the number of reports which were available on time and without
               error.

<PAGE>

          C.   Exclusive  Remedy - In the  event  that  First  Services,  L.P.'s
               performance  fails to meet the  standards  listed  above and such
               failure  is not the  result  of  First  Banks,  Inc.'s  error  or
               omission,  First Banks,  Inc. sole and exclusive  remedy for such
               default  shall  be the  right  to  terminate  this  Agreement  in
               accordance  with the provisions of this  paragraph.  In the event
               that  First  Services,  L.P.  fails to  achieve  any  Performance
               Standards,   alone  or  in   combination,   for  the   prescribed
               measurement   period,   First  Banks,  Inc.  shall  notify  First
               Services, L.P. of its intent to terminate this agreement if First
               Services,  L.P.  fails to restore  performance  to the  committed
               levels.  First  Services,  L.P.  shall advise  First Banks,  Inc.
               promptly upon correction of the system  deficiencies (in no event
               shall  corrective  action  exceed sixty (60) days from the notice
               date) and shall begin an additional  measurement  period.  Should
               First  Services,  L.P.  fail to achieve the required  Performance
               Standards during the remeasurement  period, First Banks, Inc. may
               terminate this Agreement and First Services, L.P. shall cooperate
               with First Banks, Inc. to achieve an orderly  transition to First
               Banks,  Inc.'s replacement  processing system.  First Banks, Inc.
               may also  terminate  this  Agreement  if First  Services,  L.P.'s
               performance   for  the  same   standard  is  below  the  relevant
               performance standard for more than two (2) measurement periods in
               any  consecutive  twelve  (12)  months  or for more than five (5)
               measurement periods during the term of this agreement. During the
               period  of  transition,  First  Banks,  Inc.  shall pay only such
               charges  as are  incurred  for  monthly  fees  until  the date of
               deconversion.  First Services, L.P. shall not charge First Banks,
               Inc. for services relating to First Banks, Inc.'s deconversion.
          D.   Audit - First  Banks,  Inc.  shall  have  the  right  to  perform
               reasonable  audits,  at its cost,  upon giving  written notice to
               First Services, L.P. of its intent to do so. First Services, L.P.
               shall  provide,  upon  request,  financial  information  to First
               Banks, Inc.

XII.      BUSINESS CONTINUITY / DISASTER RECOVERY

          A.   A  Disaster  shall  mean  any  unplanned   interruption   of  the
               operations of or inaccessibility to the First Services, L.P. data
               center  which  appears  in  First  Services,   L.P.'s  reasonable
               judgment to require  relocation of  processing to an  alternative
               site. First Services, L.P. shall notify First Banks, Inc. as soon
               as  possible  after it deems a service  outage to be a  Disaster.
               First  Services,  L.P.  shall move the processing of First Banks,
               Inc.'s critical  services to an alternative  processing center as
               expeditiously as possible.  First Services,  L.P. shall work with
               First Banks,  Inc. to define those services deemed as critical to
               the operation,  revenue, and capital preservation of First Banks,
               Inc. First Banks,  Inc. shall  maintain  adequate  records of all
               transactions during the period of service  interruption and shall
               have personnel available to assist First Services,  L.P., Inc. in
               implementing  the switch over to be alternative  processing site.
               During a disaster, non-critical,  optional or on-request services
               shall be provided by First Services, L.P. only to the extent that
               there is adequate capacity at the alternate center and only after
               stabilizing the provision of critical services.

<PAGE>

          B.   First  Services,  L.P.  shall  work with  First  Banks,  Inc.  to
               establish a plan for alternative data communications in the event
               of a  disaster.  First  Banks,  Inc.  shall  be  responsible  for
               furnishing any additional communications equipment and data lines
               required under the adopted plan.
          C.   First Services,  L.P. shall test the Business  Continuity Plan by
               conducting,  at least, one annual test. First Banks,  Inc. agrees
               to  participate  in and assist  First  Services,  L.P.  with such
               testing.  Test  results  will be made  available  to First Banks,
               Inc.'s  regulators,  internal  and external  auditors,  and (upon
               request) to First Banks,  Inc.'s  insurance  underwriters.
         First   Banks,  Inc.  understands   and   agrees   that  the   Business
         Continuity  Plan  is  designed  to  minimize  but  not eliminate  risks
         associated  with  a disaster  affecting  First  Services,  L.P.'s  data
         center.  First Services, L.P. does not warrant that  service   will  be
         uninterrupted  or error free in the event of a  disaster. First  Banks,
         Inc.  maintains  responsibility for adopting a business continuity plan
         relating to disasters affecting First  Banks, Inc.'s facilities and for
         securing resources necessary  to properly  protect First Banks,  Inc.'s
         revenues in the event of a disaster.

XIII.     DEFAULT

          A.   In the event  that  First  Banks,  Inc.  is  thirty  (30) days in
               arrears in making any  payment  required,  or in the event of any
               other material  default by either First  Services,  L.P. or First
               Banks, Inc. in the performance of their obligations, the affected
               party shall have the right to give written notice to the other of
               the default and its intent to terminate  this  Agreement  stating
               with reasonable  particularity the nature of the claimed default.
               This Agreement  shall terminate if the default has not been cured
               within a  reasonable  time with a minimum  being thirty (30) days
               from the effective date of the notice.
          B.   Upon the expiration of this Agreement, or its termination,  First
               Services,  L.P. shall furnish to First Banks, Inc. such copies of
               First Banks,  Inc.'s data files as First Banks,  Inc. may request
               in machine readable format form along with such other information
               and  assistance as or is reasonable and customary to enable First
               Banks,  Inc. to deconvert from the First Services,  L.P.  system.
               First Banks,  Inc. shall reimburse  First Services,  L.P. for the
               production of data records and other services at First  Services,
               L.P.'s current fees for such services.

XIV.      INSURANCE

     First Services, L.P. carries Comprehensive General Liability insurance with
     primary limits of two million dollars,  Commercial Crime Insurance covering
     Employee  Dishonesty  in the  amount of thirty  million  dollars,  all-risk
     replacement  cost coverage on all equipment used at First Services,  L.P.'s
     data  center and  Worker  Compensation  coverage  on First  Services,  L.P.
     employees  wherever  located  in the  United  States.  In  addition,  First
     Services, L.P. carries coverage for computer/computer  related theft in the
     amount of twenty million  dollars.  First Banks,  Inc. shall carry adequate
     insurance to cover  liability for source  documents while in transit and in
     case of data loss through errors and omissions.
<PAGE>

XV.       GENERAL

          A.   This  Agreement is binding upon the parties and their  respective
               successors and permitted  assigns.  Neither party may assign this
               Agreement in whole or in part without the consent of First Banks,
               Inc. and/or First Services,  L.P., provided,  however, that First
               Services,  L.P. may  subcontract any or all of the services to be
               performed  under this  Agreement  without the written  consent of
               First Banks,  Inc. Any such  subcontractors  shall be required to
               comply with all of the  applicable  terms and  conditions of this
               Agreement.
          B.   The parties  agree that, in connection  with the  performance  of
               their  obligations  hereunder,  they will comply with  applicable
               Federal, State, and local laws including the laws and regulations
               regarding Equal Employment Opportunities.
          C.   First  Services,  L.P.  agrees that the Federal Reserve Bank, and
               FDIC will have the authority and  responsibility  pursuant to the
               Bank  Service  Corporation  Act,  12  U.S.C.  1867(C)relating  to
               service performed by contract or otherwise. First Services, L.P.,
               also agrees that its  services  shall be subject to  oversight by
               the Federal  Reserve Bank,  FDIC or state banking  departments as
               may be applicable under laws and regulations  pertaining to First
               Banks,  Inc.'s  charter  and shall,  if  applicable,  provide the
               Federal  Reserve  Bank  and FDIC  with a copy of First  Services,
               L.P.'s  current audit and financial  statements and a copy of any
               current  third  party  review  report  when  a  review  has  been
               performed.
          D.   Neither  party  shall  be  liable  for  any  errors,   delays  or
               non-performance  due to  events  beyond  its  reasonable  control
               including,  but not limited to, acts of God,  failure or delay of
               power or  communications,  changes in law or  regulation or other
               acts of governmental  authority,  strike,  weather  conditions or
               transportation.
          E.   All written  notices  required  to be given under this  Agreement
               shall be sent by Registered  or Certified  Mail,  Return  Receipt
               Requested,  postage  prepaid,  or by  confirmed  facsimile to the
               persons  and at the  addresses  listed  below  or to  such  other
               address or person as a party  shall have  designated  in writing.
                 First  Services,  L.P.                 First Banks,  Inc.
                 600 James S. McDonnell Blvd.           135 North Meramec
                 Hazelwood, MO 63042                    Clayton, MO 63105
          F.   The failure of either  party to exercise in any respect any right
               provided for herein shall not be deemed a waiver of any rights.
          G.   Each  party   acknowledges  that  is  has  read  this  Agreement,
               understands  it, and agrees that it is the complete and exclusive
               statement of the Agreement between the parties and supersedes and
               merges any prior or simultaneous  proposals,  understandings  and
               all other  agreements  with respect to the subject  matter.  This
               Agreement  may not be  modified  or  altered  except by a written
               instrument duly executed by both parties.
          H.   No  waiver  of  any of the  terms  of  this  Agreement  shall  be
               effective  unless in writing  and  signed by the duly  authorized
               representative of the party charged  therewith.  No waiver of any
               provision  hereof  shall extend to or affect any  obligation  not
               expressly waived, impair any rights consequent on such obligation
               or imply a subsequent waiver of that or any other provision.
          I.   This Agreement shall be governed by, construed and interpreted in
               accordance with the laws of the State of Missouri.


IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement the date first
above written.

First Banks, Inc.                           First Services, L.P.
135 North Meramec                           600 James S. McDonnell Boulevard
Clayton, Missouri 63105                     Hazelwood, Missouri 63042

BY:/s/ Allen H. Blake                       BY:/s/ Michael F. Hickey
------------------------                    ---------------------------------
       Allen H. Blake                              Michael F. Hickey
       President                                   President

<PAGE>

                                                                  Attachment 1
                              First Services, L.P.
                           Product and Price Schedule
                            Effective January 1, 2001

ACCOUNT/ITEM/TRANSACTION BASED SERVICES

ACCOUNTS PROCESSED - BASE SERVICES
DDA Accounts                                $ .75
Savings Accounts                            $ .70
Time Accounts                               $ .70
Loan Accounts                               $ .75
CIF Records                                 $ .20
ATM/Debit Cards                             $ .225

         Accounts Processed - Base Services Include:
<TABLE>
<CAPTION>

<S>                                                  <C>
         Collection System (Cyber Resources)         ACH Origination
         Recovery System (Cyber Resources)           ATM/Debit Card Processing
         Organizational Profitability (IPS)          General Ledger
         Asset/Liability (Bankware)                  Loan Tracking (Baker Hill)
         Fixed Asset Interface                       Optical System (RVI)
         Loan Spread Sheet (Baker Hill)              Interactive Voice
         MCIF (Okra)                                 Credit Scoring (Fair Issac)
         Card Management System                      Loan Documentation (FTI/CFI)
         Cash Management System (Firstlink)          Wire Transfer (Fundtech)
         Bank Audit                                  Commercial Analysis
         NOW Reclassification                        Accounts Payable Interface
         Charge Back System                          Long Distance Management
         Remote Laser Printing                       Teller (Encore)
         Retrofit/New Releases                       Query Report Writer
         Mortgage (Unify)                            Forms and Supplies
         Currency Transaction Reporting              Year-end Processing

STATEMENTS PRODUCED
DDA                                         $ .30
Savings                                     $ .10
Time                                        $ .02
Loan                                        $ .15
Year End                                    $1.00
5498                                        $1.00

TRANSACTIONS PROCESSED - BASE SERVICES - ITEM PROCESSING
Proof Items                                 $ .040
POD and EFT Items                           $ .014
Inclearing and Transmission Items           $ .014

         Transactions Processed - Base Services - Item Processing Includes:

         MICR Rejects                       Serial Sort                         Teller Adjustments
         Transit Float Analysis             Microfilming                        Deposit Corrections
         Endorsement Services               Forms and Supplies                  Check Truncation
         Exception Item Sort                Statement Sort                      Interest Check Mailings
         Statement Enclosures               Notice Mailings
</TABLE>

<PAGE>

TRANSACTIONS PROCESSED - OTHER SERVICES

Wire Activity                               $        5.00
First Link Activity                         $       30.00
ACH Activity                                $         .042
Research Requests                           $       15.00
Adjustments Processed                       $       15.00
Lock Box Transactions                       $         .45
Lock Box Postage                                   as incurred
Lock Box Copies                             $         .08
Mail Services:
         FB Midwest                         $      900.00 per month
         FB&T                               $      900.00 per month

BRANCH BASED SERVICES

CONNECTION CHARGES
Support Unit Data Connections               $      varies
Branch Data Connections                     $      900.00 per location
ATM Connections                             $      100.00 per location
Dierbergs ATM Connections                   $      700.00 per location

Contingency Pln/Disaster Rec                $      200.00 per location
Mail Courier Routes (MO/IL)                 $       40.00 per day


USER BASED SERVICES

Network/Telecom Support/Infrastructure      $      60.00 per user
Help Desk Support                           $      25.00 per user
Microsoft Application Licenses              $      25.00 per user
Email                                       $      10.00 per user
Web (Internet) Access                       $      15.00 per user
Dial-In (Remote) Access                     $      20.00 per user
Information Security                        $      25.00 per user

         User Based Services include:

         Network Technical support          Network Infrastructure
         Help Desk                          MS Word
         MS Excel                           MS Access
         MS Powerpoint                      Anti-Virus
         Email usage                        Web usage
         Dial-In Access capability          User/Password Administration
         Security Monitoring                Access Control





<PAGE>



APPLICATION/PROJECT BASED SERVICES

Application Support/Software Maintenance                      $        60.00/hr
Project Management and Support                                $        60.00/hr
Project Office                                                $        60.00/hr
Acquisition/New Business Support                              $        60.00/hr
Asset Management/Technical Purchasing                         $        28.85/hr

         The Above Services Include:
         Production problem support                  Application Q/A
         Application software upgrades/releases      Project Management
         Project Office tracking and reporting       Acquisition Conversions
         Branch Deconversions                        Mergers
         Equipment quotes, orders, and delivery      Asset tracking
         Invoice payment

Operations Support                                   $        28.85/hr
IRA Support                                          $        17.50/hr
Reconciliation/Appl Balancing                        $        14.50/hr
Records Management                                   $        32.00/hr

Bookkeeping Support                                  $        20.50/hr
<TABLE>
<CAPTION>

         Bookkeeping Support includes:

<S>                <C>                      <C>                                 <C>
                  Returns                   Large Item Notification             Signature Verification
                  Chargebacks               Kiting                              Savings Bonds
                  Unposted Items            OFAC                                American Express
                  NSF Notices               Year-End Notifications

</TABLE>



<PAGE>



                                                                    EXHIBIT 10.7

                                SERVICE AGREEMENT

          THIS SERVICE  AGREEMENT  is made and entered into as of the  Fifteenth
day of October,  2001, by and between FIRST SERVICES,  L.P., a Missouri  Limited
Partnership and FIRST BANK, a banking institution duly organized and existing by
virtue of the laws of the State of Missouri.

          WHEREAS,  FIRST BANK and FIRST SERVICES,  L.P.  entered into a Service
Agreement dated April 1, 1997; and

          WHEREAS,  said Service Agreement was assigned to First Services,  L.P.
on or about April 1, 1997; and

          WHEREAS,  FIRST  SERVICES,  L.P.  and FIRST  BANK  desire to amend and
restate said Service Agreement in its entirety.

          NOW,  THEREFORE,  for and in  consideration of the mutual promises and
covenants  contained  herein,  and the sum of Ten Dollars ($10.00) in hand paid,
each to the other, the receipt and sufficiency of which is hereby  acknowledged,
the parties agree as follows:

I.        TERMINATION AND REVOCATION

          The  Parties  hereto  hereby  revoke,  cancel  and hold for naught the
          Service  Agreement  dated April 1, 1997, and hereby  substitute in its
          place the Service Agreement herein contained.

II.       SERVICES

          A.   First Services, L.P. shall furnish First Bank data processing and
               item processing  services selected by First Bank from the Product
               and Price  Schedule  as per  Attachment  1,  attached  hereto and
               incorporated herein by reference thereto. Additional services may
               be selected upon prior written notice to First Services,  L.P. at
               First  Services,  L.P.'s then  current list price by executing an
               amended Summary Page.
          B.   First  Services,   L.P.  will  provide  conversion  and  training
               services  for the fees  specified  from  the  Product  and  Price
               Schedule  (Attachment  1).  Classroom  training  in the  use  and
               operation  of the system  for the number of First Bank  personnel
               mutually agreed upon in the conversion  planning  process will be
               provided at a training facility mutually agreed upon.  Conversion
               services are those activities designed to transfer the processing
               of First Bank's data from its present processing company to First
               Services, L.P.
          C.   First  Services,  L.P. will also provide  Network Support Service
               consisting  of  communication   line  monitoring  and  diagnostic
               equipment and support personnel to discover,  diagnose, repair or
               report line problems to the appropriate  telephone  company.  The
               fee for this  service is also  listed  from the Product and Price
               Schedule (Attachment 1).
          D.   First  Services,  L.P.  shall upon  request  act as First  Bank's
               designated  representative  to  arrange  for  the  purchase,  and
               installation   of  data  lines  necessary  to  access  the  First
               Services, L.P. system. Where requested,  additional dial-up lines
               and  equipment  to be utilized  as a backup to the  regular  data
               lines may also be ordered. First Services,  L.P. shall bill First
               Bank for the actual  charges  incurred for the data lines and for
               the maintenance of the modems and other interface devices.
          E.   First Services, L.P. will provide and support an Internet Banking
               application  capability,  at a fee  listed  on  the  Product  and
               Pricing Schedule (Attachment 1). First Services, L.P. will ensure
               access to this system by employees  and those  customers who meet
               the  requirements  established by the First Bank Internet Banking
               Group.  Any request for access that is denied will be resolved by
               mutual agreement of the parties hereto.
          F.   First Services, L.P. will provide e-mail,  Internet, and Intranet
               capabilities at a fee listed on the Product and Pricing  Schedule
               (Attachment 1).
          G.   Processing  priorities will be determined by mutual  agreement of
               the parties hereto.
          H.   In addition,  First Services,  L.P.  acknowledges that First Bank
               acts as a correspondent  bank to certain Affiliate Banks and that
               as part of its duties  hereunder  First  Services,  L.P.  will be
               performing  certain  services for First Bank which are  necessary
               because of its status as a correspondent bank.
<PAGE>

III.      TERM

     The term of this  Agreement  shall be  twelve  (12)  months  commencing  on
     October 15, 2001. Upon expiration,  the Agreement will automatically  renew
     for  successive  terms of twelve (12) months each unless either party shall
     have provided written notice to the other at least one-hundred eighty (180)
     days prior to the expiration of the then current term, of its intent not to
     renew.  In the event of  termination,  First  Services,  L.P. shall provide
     reasonable time allowance to allow First Bank to convert to another system.

IV.       SOFTWARE / FIRMWARE

     Unmodified third party software or firmware ("Software") may be supplied as
     part of the  Agreement.  All such  Software  shall be  provided  subject to
     Software License Agreements.

V.        PRICE AND PAYMENT

          A.   Fees for First  Services,  L.P.'s services are set forth from the
               Product  and  Price  Schedule   (Attachment  1)  including  where
               applicable  minimum  monthly  charges and payment  schedules  for
               onetime fees.
          B.   Standard  Fees  shall be  invoiced  no later  than the  fifteenth
               (15th) of each month for the then current month. Terms of payment
               shall be net cash.
          C.   The Base  Service  Charge  listed  from  the  Product  and  Price
               Schedule  (Attachment 1) shall not change more than twice a year.
               The fee schedule shall be reviewed annually to ensure fair market
               value in pricing.  Comparisons  will be made with peers and other
               providers of similar  services.  New products and services can be
               added as they become available and will be priced accordingly.
          D.   This above  limitation shall not apply to pass-thru  expenses.  A
               pass-thru  expense  is a charge  for goods or  services  by First
               Services,  L.P. on First  Bank's  behalf that are to be billed to
               First Bank without mark-up.
          E.   The fees listed from the Product and Price  Schedule  (Attachment
               1) do not include and First Bank is  responsible  for  furnishing
               transportation  or  transmission  of  information  between  First
               Services,   L.P.'s  data  center,   First  Bank's  site  and  any
               applicable  clearing house,  regulatory agency or Federal Reserve
               Bank.  Where First Bank has elected to have First Services,  L.P.
               provide  Telecommunication  Services,  the price for the Services
               will be provided and billed as a pass-thru expense.
          F.   Network  Support  Service  Fees and Local  Network Fees are based
               upon services  rendered  from First  Services,  L.P.'s  premises.
               Off-premise support will be provided upon First Bank's request on
               an as  available  basis  at First  Services,  L.P.  then  current
               charges for time and materials, plus reasonable travel and living
               expenses.
          G.   First Services,  L.P.'s Price Schedule for First Bank shall allow
               for a discount from the Schedule of Fees (Attachment 1) in return
               for the use by First  Services,  L.P. of certain of First  Bank's
               computer hardware,  software and equipment.  The monthly discount
               is  determined by adding the monthly  depreciation  of the assets
               used and a reasonable  cost of funds  factor,  said cost of funds
               factor may be changed from time to time with the written  consent
               of the parties hereto.


<PAGE>



VI.       CLIENT OBLIGATIONS

          A.   First   Bank   shall  be  solely   responsible   for  the  input,
               transmission  or delivery of all information and data required by
               First  Services,  L.P. to perform the services except where First
               Bank  has   retained   First   Services,   L.P.  to  handle  such
               responsibilities  on its behalf.  The data shall be provided in a
               format and manner  approved by First  Services,  L.P.  First Bank
               will provide at its own expense or procure  from First  Services,
               L.P. all equipment,  computer  software  communication  lines and
               interface  devices  required to access the First  services,  L.P.
               System.  If First Bank has elected to provide such items  itself,
               First  Services,  L.P.  shall  provide  First Bank with a list of
               compatible equipment and software.
          B.   First Bank shall designate  appropriate  First Bank personnel for
               training in the use of the First  services,  L.P.  System,  shall
               allow First  Services,  L.P.  access to First  Bank's site during
               normal  business hours for  conversion  and shall  cooperate with
               First   services,   L.P.   Personnel   in  the   conversion   and
               implementation of the services.
          C.   First Bank shall comply with any  operating  instructions  on the
               use of the  First  Services,  L.P.  reports  furnished  by  First
               Services,  L.P. for accuracy and shall work with First  Services,
               L.P. to reconcile any out of balance conditions. First Bank shall
               determine and be responsible for the authenticity and accuracy of
               all information and data submitted to First Services, L.P.
          D.   First Bank shall furnish, or if First Services, L.P. agrees to so
               furnish,  reimburse  First  Services,  L.P. for courier  services
               applicable to the services requested.

VII.      GENERAL ADMINISTRATION

     First  Services,  L.P. is  continually  reviewing  and  modifying the First
     Services,  L.P.  system  to  improve  service  and to comply  with  federal
     government  regulations  applicable  to  the  data  utilized  in  providing
     services to First Bank.  First  Services,  L.P.  reserves the right to make
     changes in the service, including, but not limited to operating procedures,
     security procedures,  the type of equipment resident at and the location of
     First Services, L.P.'s data center.

VIII.    CLIENT CONFIDENTIAL INFORMATION

          A.   First  Services,  L.P.  shall  treat  all  information  and  data
               relating to First Bank business provided to First Services,  L.P.
               by First Bank, or information relating to First Bank's customers,
               as confidential  and shall  safe-guard  First Bank's  information
               with the same  degree of care  used to  protect  First  Services,
               L.P.'s confidential  information.  First Services, L.P. and First
               Bank agree that  master and  transaction  data files are owned by
               and  constitute  property of First Bank data and records shall be
               subject  to  regulation  and  examination  by State  and  Federal
               supervisory  agencies to the same  extent as if such  information
               were on First Bank's premises. First Services, L.P.'s obligations
               under  this  Section  VIII  shall  survive  the   termination  or
               expiration of this Agreement.
          B.   First  Services,  L.P.  agrees now and at all times in the future
               that all such  Confidential  Information  shall be held in strict
               confidence  and disclosed  only to those  employees  whose duties
               reasonably  require access to such  information.  First Services,
               L.P. may use such  Confidential  Information  only in  connection
               with  its   performance   under  this   Agreement.   Confidential
               Information  shall be  returned to First Bank or  destroyed  upon
               First  Bank's  request  once the  services  contemplated  by this
               Agreement  have  been  completed  or  upon  termination  of  this
               Agreement.
          C.   First Services,  L.P. shall maintain  adequate backup  procedures
               including  storage of  duplicate  record  files as  necessary  to
               reproduce  First  Bank's  records  and  data.  In the  event of a
               service  disruption due to reasons beyond First Services,  L.P.'s
               control,  First  Services  L.P.  shall use  diligent  efforts  to
               mitigate the effects of such an occurrence.

<PAGE>

          D.   First Services,  L.P. shall  establish and maintain  policies and
               procedures  to  insure   compliance  with  this  section.   First
               Services,  L.P.  agrees  to  permit  First  Bank to  audit  First
               Services'  compliance  with this section during regular  business
               hours  upon  reasonable  notice  to  First  Services,   L.P.  The
               provisions of this section shall survive any  termination of this
               Agreement.

IX.       FIRST SERVICES, L.P. CONFIDENTIAL INFORMATION

          A.   First Bank shall not use or  disclose  to any third  persons  any
               confidential   information   concerning   First  Services,   L.P.
               confidential information is that which relates to First Services,
               L.P.'s software, research, development, trade secrets or business
               affairs  including,  but not limited to, the terms  conditions of
               this  Agreement  but does not include  information  in the public
               domain  through no fault of First  Bank.  First Bank  obligations
               under this Section IX shall survive the termination or expiration
               of this agreement.
          B.   First Services,  L.P.'s system contains  information and computer
               software that is  proprietary  and  confidential  information  of
               First  Services,  L.P., its suppliers and  licensees.  First Bank
               agrees not to attempt to circumvent the devices employed by First
               Services,  L.P.  to  prevent  unauthorized  access  to the  First
               Services, L.P.'s system.

X.        WARRANTIES

     First  Services,  L.P. will  accurately  process First Bank's work provided
     that First Bank supplies accurate data and follows the procedures described
     in  First  Services,  L.P.'s  User  Manuals,  notices  and  advises.  First
     Services,  L.P. personnel will exercise due care in the processing of First
     Bank's  work.  In the event of an error  caused by First  Services,  L.P.'s
     personnel,  programs or equipment,  First Services,  L.P. shall correct the
     data and/or  reprocess the affected  report at no additional  cost to First
     Bank.

XI.       LIMITATION OF LIABILITY

     IN NO EVENT SHALL FIRST SERVICES,  L.P. BE LIABLE FOR LOSS OF GOODWILL,  OR
     FOR SPECIAL,  INDIRECT,  INCIDENTAL OR  CONSEQUENTIAL  DAMAGES ARISING FROM
     FIRST BANK'S USE OF FIRST  SERVICES,  L.P.'S  SERVICES,  OR FIRST SERVICES,
     L.P.'S SUPPLY OF EQUIPMENT OR SOFTWARE,  UNDER THIS AGREEMENT REGARDLESS OF
     WHETHER SUCH CLAIM ARISES IN TORT OR IN CONTRACT.  FIRST  SERVICES,  L.P.'S
     AGGREGATE  LIABILITY FOR ANY AND ALL CAUSES OF ACTION  RELATING TO SERVICES
     PERFORMED  HEREUNDER  OR ANY DAMAGE OR LOSS  INCURRED OR SUSTAINED BY FIRST
     BANK RELATING TO THIS AGREEMENT AND THE SERVICES PERFORMED  HEREUNDER SHALL
     BE  LIMITED  TO THE  AMOUNT  OF  TOTAL  FEES  PAID BY  FIRST  BANK TO FIRST
     SERVICES,  L.P. IN THE THREE (3) MONTH PERIOD  PRECEDING THE DATE THE CLAIM
     ACCRUED. FIRST SERVICES,  L.P.'S AGGREGATE LIABILITY FOR A DEFAULT RELATING
     TO  EQUIPMENT  OR  SOFTWARE  SHALL BE LIMITED  TO THE  AMOUNT  PAID FOR THE
     EQUIPMENT OR SOFTWARE.

XII.      PERFORMANCE STANDARDS

          A.   On-Line  Availability  -  First  Services,   L.P.'s  standard  of
               performance  shall be on-line  availability  of the system 98% of
               the time that it is scheduled to be so available over a three (3)
               month  period  (the   "Measurement   Period").   Actual   on-line
               performance will be calculated monthly by comparing the number of
               hours  which the system was  scheduled  to be  operational  on an
               on-line basis with the number of hours, or a portion thereof,  it
               was actually  operational  on an on-line  basis.  Downtime may be
               caused by operator  error,  hardware  malfunction or failure,  or
               environmental failures such as loss of power or air conditioning.
               Downtime caused by reasons beyond First Services,  L.P.'s control
               should not be considered in the statistics.
          B.   Report   Availability  -  First  Services,   L.P.'s  standard  of
               performance for report  availability  shall be that, over a three
               (3) month period, ninety-five percent (95%) of all Critical Daily
               Reports  shall be available  for remote  printing on time without
               significant  errors.  A Critical Daily Report shall mean priority
               group  reports,  which First  Services,  L.P. and First Bank have
               mutually agreed in writing, are necessary to properly account for
               the previous  day's  activity  and properly  notify First Bank of
               overdraft,  NSF or return items. A significant  error is one that
               impairs First Bank's ability to properly account for the previous
               days  activity  and/or  properly  account for  overdraft,  NSF or
               return items.  Actual  performance will be calculated  monthly by
               comparing the total number of First Bank reports  scheduled to be
               available  from  First  Services,  L.P.  to the number of reports
               which were available on time and without error.

<PAGE>
          C.   Exclusive  Remedy - In the  event  that  First  Services,  L.P.'s
               performance  fails to meet the  standards  listed  above and such
               failure  is not the  result of First  Bank's  error or  omission,
               First Bank sole and  exclusive  remedy for such default  shall be
               the right to  terminate  this  Agreement in  accordance  with the
               provisions of this  paragraph.  In the event that First Services,
               L.P.  fails to achieve  any  Performance  Standards,  alone or in
               combination,  for the prescribed  measurement period,  First Bank
               shall notify First Services, L.P. of its intent to terminate this
               agreement if First Services, L.P. fails to restore performance to
               the committed  levels.  First  Services,  L.P. shall advise First
               Bank promptly upon correction of the system  deficiencies  (in no
               event shall  corrective  action  exceed  sixty (60) days from the
               notice date) and shall begin an  additional  measurement  period.
               Should  First  Services,   L.P.  fail  to  achieve  the  required
               Performance Standards during the remeasurement period, First Bank
               may terminate  this  Agreement  and First  Services,  L.P.  shall
               cooperate  with First Bank to  achieve an orderly  transition  to
               First Bank's replacement  processing system.  First Bank may also
               terminate this Agreement if First  Services,  L.P.'s  performance
               for the same standard is below the relevant  performance standard
               for more  than two (2)  measurement  periods  in any  consecutive
               twelve (12) months or for more than five (5) measurement  periods
               during  the  term  of  this  agreement.   During  the  period  of
               transition,  First  Bank  shall  pay  only  such  charges  as are
               incurred for monthly fees until the date of  deconversion.  First
               Services,  L.P. shall not charge First Bank for services relating
               to First Bank's deconversion.
          D.   Audit - First Bank  shall  have the right to  perform  reasonable
               audits,  at  its  cost,  upon  giving  written  notice  to  First
               Services, L.P. of its intent to do so. First Services, L.P. shall
               provide, upon request, financial information to First Bank.

XIII.     BUSINESS CONTINUITY / DISASTER RECOVERY

          A.   A  Disaster  shall  mean  any  unplanned   interruption   of  the
               operations of or inaccessibility to the First Services, L.P. data
               center  which  appears  in  First  Services,   L.P.'s  reasonable
               judgment to require  relocation of  processing to an  alternative
               site.  First  Services,  L.P.  shall notify First Bank as soon as
               possible after it deems a service outage to be a Disaster.  First
               Services, L.P. shall move the processing of First Bank's critical
               services to an alternative  processing center as expeditiously as
               possible.  First  Services,  L.P.  shall  work with First Bank to
               define  those  services  deemed  as  critical  to the  operation,
               revenue,  and capital  preservation of the Bank. First Bank shall
               maintain  adequate records of all transactions  during the period
               of service  interruption  and shall have  personnel  available to
               assist First Services, L.P., Inc. in implementing the switch over
               to  be   alternative   processing   site.   During  a   disaster,
               non-critical,  optional or on-request  services shall be provided
               by First Services, L.P. only to the extent that there is adequate
               capacity at the alternate  center and only after  stabilizing the
               provision of critical services.
          B.   First  Services,  L.P.  shall work with First Bank to establish a
               plan  for  alternative  data  communications  in the  event  of a
               disaster.  First Bank shall be  responsible  for  furnishing  any
               additional communications equipment and data lines required under
               the adopted plan.
          C.   First Services,  L.P. shall test the Business  Continuity Plan by
               conducting,  at least,  one annual  test.  First  Bank  agrees to
               participate in and assist First Services, L.P. with such testing.
               Test results will be made  available to First Bank's  regulators,
               internal  and  external  auditors,  and (upon  request)  to First
               Bank's insurance underwriters.
          D.   First Bank  understands  and agrees that the Business  Continuity
               Plan is designed to minimize but not eliminate  risks  associated
               with a disaster  affecting  First  Services,  L.P.'s data center.
               First  Services,  L.P.  does not  warrant  that  service  will be
               uninterrupted  or error  free in the event of a  disaster.  First
               Bank maintains  responsibility for adopting a business continuity
               plan relating to disasters  affecting First Bank's facilities and
               for securing resources necessary to properly protect First Bank's
               revenues in the event of a disaster.

<PAGE>


XIV.      DEFAULT

          A.   In the event that  First  Bank is thirty  (30) days in arrears in
               making  any  payment  required,  or in the  event  of  any  other
               material default by either First Services,  L.P. or First Bank in
               the  performance of their  obligations,  the affected party shall
               have the right to give written notice to the other of the default
               and  its  intent  to  terminate  this   Agreement   stating  with
               reasonable  particularity the nature of the claimed default. This
               Agreement  shall  terminate  if the  default  has not been  cured
               within a  reasonable  time with a minimum  being thirty (30) days
               from the effective date of the notice.
          B.   Upon the expiration of this Agreement, or its termination,  First
               Services,  L.P.  shall furnish to First Bank such copies of First
               Bank's data files as First Bank may  request in machine  readable
               format form along with such other  information  and assistance as
               or is reasonable  and customary to enable First Bank to deconvert
               from the First Services,  L.P. system. First Bank shall reimburse
               First Services, L.P. for the production of data records and other
               services  at  First  Services,   L.P.'s  current  fees  for  such
               services.

XV.       INSURANCE

     First Services, L.P. carries Comprehensive General Liability insurance with
     primary limits of two million dollars,  Commercial Crime Insurance covering
     Employee  Dishonesty  in the  amount of thirty  million  dollars,  all-risk
     replacement  cost coverage on all equipment used at First Services,  L.P.'s
     data  center and  Worker  Compensation  coverage  on First  Services,  L.P.
     employees  wherever  located  in the  United  States.  In  addition,  First
     Services, L.P. carries coverage for computer/computer  related theft in the
     amount of twenty million dollars. First Bank shall carry adequate insurance
     to cover  liability  for source  documents  while in transit and in case of
     data loss through errors and omissions.

XVI.      GENERAL

          A.   This  Agreement is binding upon the parties and their  respective
               successors and permitted  assigns.  Neither party may assign this
               Agreement  in whole or in part  without the consent of First Bank
               and/or  First  Services,  L.P.,  provided,  however,  that  First
               Services,  L.P. may  subcontract any or all of the services to be
               performed  under this  Agreement  without the written  consent of
               First Bank. Any such  subcontractors  shall be required to comply
               with  all  of  the  applicable   terms  and  conditions  of  this
               Agreement.
          B.   The parties  agree that, in connection  with the  performance  of
               their  obligations  hereunder,  they will comply with  applicable
               Federal, State, and local laws including the laws and regulations
               regarding Equal Employment Opportunities.
          C.   First  Services,  L.P.  agrees that the Federal Reserve Bank, and
               FDIC will have the authority and  responsibility  pursuant to the
               Bank  Service  Corporation  Act,  12  U.S.C.  1867(C)relating  to
               service performed by contract or otherwise. First Services, L.P.,
               also agrees that its  services  shall be subject to  oversight by
               the Federal  Reserve Bank,  FDIC or state banking  departments as
               may be applicable under laws and regulations  pertaining to First
               Bank's  charter  and shall,  if  applicable,  provide the Federal
               Reserve  Bank and  FDIC  with a copy of  First  Services,  L.P.'s
               current audit and financial  statements and a copy of any current
               third party review report when a review has been performed.

<PAGE>

          D.   Neither  party  shall  be  liable  for  any  errors,   delays  or
               non-performance  due to  events  beyond  its  reasonable  control
               including,  but not limited to, acts of God,  failure or delay of
               power or  communications,  changes in law or  regulation or other
               acts of governmental  authority,  strike,  weather  conditions or
               transportation.
          E.   All written  notices  required  to be given under this  Agreement
               shall be sent by Registered  or Certified  Mail,  Return  Receipt
               Requested,  postage  prepaid,  or by  confirmed  facsimile to the
               persons  and at the  addresses  listed  below  or to  such  other
               address or person as a party shall have designated in writing.
                  First Services, L.P.                    First Bank
                  600 James S. McDonnell Blvd.            11901 Olive Blvd.
                  Hazelwood, MO  63042                    Creve Coeur, MO 63141
          F.   The failure of either  party to exercise in any respect any right
               provided for herein shall not be deemed a waiver of any rights.
          G.   Each  party   acknowledges  that  is  has  read  this  Agreement,
               understands  it, and agrees that it is the complete and exclusive
               statement of the Agreement between the parties and supersedes and
               merges any prior or simultaneous  proposals,  understandings  and
               all other  agreements  with respect to the subject  matter.  This
               Agreement  may not be  modified  or  altered  except by a written
               instrument duly executed by both parties.
          H.   No  waiver  of  any of the  terms  of  this  Agreement  shall  be
               effective  unless in writing  and  signed by the duly  authorized
               representative of the party charged  therewith.  No waiver of any
               provision  hereof  shall extend to or affect any  obligation  not
               expressly waived, impair any rights consequent on such obligation
               or imply a subsequent waiver of that or any other provision.
          I.   This Agreement shall be governed by, construed and interpreted in
               accordance with the laws of the State of Missouri.

IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement the date first
above written.

First Bank                                  First Services, L.P.
11901 Olive Boulevard                       600 James S. McDonnell Boulevard
Creve Coeur, Missouri 63141                 Hazelwood, Missouri 63042

BY:/s/Donald W. Williams                    BY:/s/ Michael F. Hickey
------------------------                    ------------------------
      Donald W. Williams                           Michael F. Hickey
      President                                    President


<PAGE>

                                                                  Attachment 1
                              First Services, L.P.
                           Product and Price Schedule
                            Effective January 1, 2001

ACCOUNT/ITEM/TRANSACTION BASED SERVICES

ACCOUNTS PROCESSED - BASE SERVICES
DDA Accounts                                $ .75
Savings Accounts                            $ .70
Time Accounts                               $ .70
Loan Accounts                               $ .75
CIF Records                                 $ .20
ATM/Debit Cards                             $ .225

         Accounts Processed - Base Services Include:
<TABLE>
<CAPTION>

<S>                                                  <C>
         Collection System (Cyber Resources)         ACH Origination
         Recovery System (Cyber Resources)           ATM/Debit Card Processing
         Organizational Profitability (IPS)          General Ledger
         Asset/Liability (Bankware)                  Loan Tracking (Baker Hill)
         Fixed Asset Interface                       Optical System (RVI)
         Loan Spread Sheet (Baker Hill)              Interactive Voice
         MCIF (Okra)                                 Credit Scoring (Fair Issac)
         Card Management System                      Loan Documentation (FTI/CFI)
         Cash Management System (Firstlink)          Wire Transfer (Fundtech)
         Bank Audit                                  Commercial Analysis
         NOW Reclassification                        Accounts Payable Interface
         Charge Back System                          Long Distance Management
         Remote Laser Printing                       Teller (Encore)
         Retrofit/New Releases                       Query Report Writer
         Mortgage (Unify)                            Forms and Supplies
         Currency Transaction Reporting              Year-end Processing

STATEMENTS PRODUCED
DDA                                         $ .30
Savings                                     $ .10
Time                                        $ .02
Loan                                        $ .15
Year End                                    $1.00
5498                                        $1.00

TRANSACTIONS PROCESSED - BASE SERVICES - ITEM PROCESSING
Proof Items                                 $ .040
POD and EFT Items                           $ .014
Inclearing and Transmission Items           $ .014

         Transactions Processed - Base Services - Item Processing Includes:

         MICR Rejects                       Serial Sort                         Teller Adjustments
         Transit Float Analysis             Microfilming                        Deposit Corrections
         Endorsement Services               Forms and Supplies                  Check Truncation
         Exception Item Sort                Statement Sort                      Interest Check Mailings
         Statement Enclosures               Notice Mailings
</TABLE>

<PAGE>

TRANSACTIONS PROCESSED - OTHER SERVICES

Wire Activity                               $        5.00
First Link Activity                         $       30.00
ACH Activity                                $         .042
Research Requests                           $       15.00
Adjustments Processed                       $       15.00
Lock Box Transactions                       $         .45
Lock Box Postage                                   as incurred
Lock Box Copies                             $         .08
Mail Services:
         FB Midwest                         $      900.00 per month
         FB&T                               $      900.00 per month

BRANCH BASED SERVICES

CONNECTION CHARGES
Support Unit Data Connections               $      varies
Branch Data Connections                     $      900.00 per location
ATM Connections                             $      100.00 per location
Dierbergs ATM Connections                   $      700.00 per location

Contingency Pln/Disaster Rec                $      200.00 per location
Mail Courier Routes (MO/IL)                 $       40.00 per day


USER BASED SERVICES

Network/Telecom Support/Infrastructure      $      60.00 per user
Help Desk Support                           $      25.00 per user
Microsoft Application Licenses              $      25.00 per user
Email                                       $      10.00 per user
Web (Internet) Access                       $      15.00 per user
Dial-In (Remote) Access                     $      20.00 per user
Information Security                        $      25.00 per user

         User Based Services include:

         Network Technical support          Network Infrastructure
         Help Desk                          MS Word
         MS Excel                           MS Access
         MS Powerpoint                      Anti-Virus
         Email usage                        Web usage
         Dial-In Access capability          User/Password Administration
         Security Monitoring                Access Control





<PAGE>



APPLICATION/PROJECT BASED SERVICES

Application Support/Software Maintenance                      $        60.00/hr
Project Management and Support                                $        60.00/hr
Project Office                                                $        60.00/hr
Acquisition/New Business Support                              $        60.00/hr
Asset Management/Technical Purchasing                         $        28.85/hr

         The Above Services Include:
         Production problem support                  Application Q/A
         Application software upgrades/releases      Project Management
         Project Office tracking and reporting       Acquisition Conversions
         Branch Deconversions                        Mergers
         Equipment quotes, orders, and delivery      Asset tracking
         Invoice payment

Operations Support                                   $        28.85/hr
IRA Support                                          $        17.50/hr
Reconciliation/Appl Balancing                        $        14.50/hr
Records Management                                   $        32.00/hr

Bookkeeping Support                                  $        20.50/hr
<TABLE>
<CAPTION>

         Bookkeeping Support includes:

<S>                <C>                      <C>                                 <C>
                  Returns                   Large Item Notification             Signature Verification
                  Chargebacks               Kiting                              Savings Bonds
                  Unposted Items            OFAC                                American Express
                  NSF Notices               Year-End Notifications

</TABLE>


<PAGE>




                                                                    EXHIBIT 10.8

                                SERVICE AGREEMENT

          THIS SERVICE  AGREEMENT  is made and entered into as of the  Fifteenth
day of October,  2001, by and between FIRST SERVICES,  L.P., a Missouri  Limited
Partnership and FIRST BANC MORTGAGE,  INC., a mortgage banking  institution duly
organized and existing by virtue of the laws of the State of Missouri.

          For  and  in  consideration  of  the  mutual  promises  and  covenants
contained herein,  and the sum of Ten Dollars ($10.00) in hand paid, each to the
other, the receipt and sufficiency of which is hereby acknowledged,  the parties
agree as follows:


I.       SERVICES

          A.   First Services, L.P. shall furnish First Banc Mortgage, Inc. data
               processing  services  selected by First Banc Mortgage,  Inc. from
               the Product  and Price  Schedule as per  Attachment  1,  attached
               hereto and incorporated  herein by reference thereto.  Additional
               services  may be  selected  upon  prior  written  notice to First
               Services, L.P. at First Services,  L.P.'s then current list price
               by executing an amended Summary Page.
          B.   First  Services,   L.P.  will  provide  conversion  and  training
               services  for the fees  specified  from  the  Product  and  Price
               Schedule  (Attachment  1).  Classroom  training  in the  use  and
               operation  of the system  for the number of First Banc  Mortgage,
               Inc.  personnel  mutually agreed upon in the conversion  planning
               process will be provided at a training  facility  mutually agreed
               upon.  Conversion  services  are  those  activities  designed  to
               transfer the processing of First Banc Mortgage,  Inc.'s data from
               its present processing company to First Services, L.P.
          C.   First  Services,  L.P. will also provide  Network Support Service
               consisting  of  communication   line  monitoring  and  diagnostic
               equipment and support personnel to discover,  diagnose, repair or
               report line problems to the appropriate  telephone  company.  The
               fee for this  service is also  listed  from the Product and Price
               Schedule (Attachment 1).
          D.   First  Services,  L.P.  shall  upon  request  act as  First  Banc
               Mortgage,  Inc.'s  designated  representative  to arrange for the
               purchase,  and installation of data lines necessary to access the
               First Services, L.P. system. Where requested,  additional dial-up
               lines and  equipment  to be  utilized  as a backup to the regular
               data lines may also be ordered.  First Services,  L.P. shall bill
               First Banc Mortgage, Inc. for the actual charges incurred for the
               data  lines  and for the  maintenance  of the  modems  and  other
               interface devices.
          E.   First Services, L.P. will provide e-mail,  Internet, and Intranet
               capabilities at a fee listed on the Product and Pricing  Schedule
               (Attachment 1).
          F.   Processing  priorities will be determined by mutual  agreement of
               the parties hereto.

II.       TERM

     The term of this  Agreement  shall be  twelve  (12)  months  commencing  on
     October 15, 2001. Upon expiration,  the Agreement will automatically  renew
     for  successive  terms of twelve (12) months each unless either party shall
     have provided written notice to the other at least one-hundred eighty (180)
     days prior to the expiration of the then current term, of its intent not to
     renew.  In the event of  termination,  First  Services,  L.P. shall provide
     reasonable time allowance to allow First Banc Mortgage,  Inc. to convert to
     another system.


<PAGE>



III.      SOFTWARE / FIRMWARE

     Unmodified third party software or firmware ("Software") may be supplied as
     part of the  Agreement.  All such  Software  shall be  provided  subject to
     Software License Agreements.

IV.       PRICE AND PAYMENT

          A.   Fees for First  Services,  L.P.'s services are set forth from the
               Product  and  Price  Schedule   (Attachment  1)  including  where
               applicable  minimum  monthly  charges and payment  schedules  for
               onetime fees.
          B.   Standard  Fees  shall be  invoiced  no later  than the  fifteenth
               (15th) of each month for the then current month. Terms of payment
               shall be net cash.
          C.   The Base  Service  Charge  listed  from  the  Product  and  Price
               Schedule  (Attachment 1) shall not change more than twice a year.
               The fee schedule shall be reviewed annually to ensure fair market
               value in pricing.  Comparisons  will be made with peers and other
               providers of similar  services.  New products and services can be
               added as they become available and will be priced accordingly.
          D.   This above  limitation shall not apply to pass-thru  expenses.  A
               pass-thru  expense  is a charge  for goods or  services  by First
               Services, L.P. on First Banc Mortgage,  Inc.'s behalf that are to
               be billed to First Banc Mortgage, Inc. without mark-up.
          E.   The fees listed from the Product and Price  Schedule  (Attachment
               1) do not include and First Banc  Mortgage,  Inc. is  responsible
               for  furnishing  transportation  or  transmission  of information
               between  First  Services,  L.P.'s  data  center  and  First  Banc
               Mortgage,  Inc.'s  sites.  Where First Banc  Mortgage,  Inc.  has
               elected to have First Services,  L.P.  provide  Telecommunication
               Services,  the price for the Services will be provided and billed
               as a pass-thru expense.
          F.   Network  Support  Service  Fees and Local  Network Fees are based
               upon services  rendered  from First  Services,  L.P.'s  premises.
               Off-premise  support will be provided  upon First Banc  Mortgage,
               Inc.'s request on an as available basis at First  Services,  L.P.
               then  current  charges for time and  materials,  plus  reasonable
               travel and living expenses.

V.        CLIENT OBLIGATIONS

          A.   First Banc  Mortgage,  Inc. shall be solely  responsible  for the
               input,  transmission  or  delivery  of all  information  and data
               required by First  Services,  L.P. to perform the services except
               where First Banc Mortgage, Inc. has retained First Services, L.P.
               to handle such  responsibilities on its behalf. The data shall be
               provided in a format and manner approved by First Services,  L.P.
               First Banc  Mortgage,  Inc.  will  provide at its own  expense or
               procure  from  First  Services,  L.P.  all  equipment,   computer
               software  communication  lines and interface  devices required to
               access the First services,  L.P. System.  If First Banc Mortgage,
               Inc. has elected to provide such items  itself,  First  Services,
               L.P.  shall  provide  First Banc  Mortgage,  Inc.  with a list of
               compatible equipment and software.
          B.   First Banc Mortgage,  Inc. shall designate appropriate First Banc
               Mortgage,  Inc.  personnel  for  training in the use of the First
               services, L.P. System, shall allow First Services, L.P. access to
               First Banc Mortgage, Inc.'s site during normal business hours for
               conversion  and  shall  cooperate  with  First   services,   L.P.
               personnel in the conversion and implementation of the services.
          C.   First  Banc  Mortgage,  Inc.  shall  comply  with  any  operating
               instructions  on the  use of the  First  Services,  L.P.  reports
               furnished  by First  Services,  L.P.  for accuracy and shall work
               with  First  Services,  L.P.  to  reconcile  any  out of  balance
               conditions.  First Banc  Mortgage,  Inc.  shall  determine and be
               responsible for the  authenticity and accuracy of all information
               and data submitted to First Services, L.P.
          D.   First Banc Mortgage,  Inc. shall furnish,  or if First  Services,
               L.P. agrees to so furnish,  reimburse  First  Services,  L.P. for
               courier services applicable to the services requested.

VI.       GENERAL ADMINISTRATION

     First  Services,  L.P. is  continually  reviewing  and  modifying the First
     Services,  L.P.  system  to  improve  service  and to comply  with  federal
     government  regulations  applicable  to  the  data  utilized  in  providing
     services to First Banc Mortgage,  Inc. First  Services,  L.P.  reserves the
     right  to make  changes  in the  service,  including,  but not  limited  to
     operating procedures,  security procedures,  the type of equipment resident
     at and the location of First Services, L.P.'s data center.
<PAGE>

VII.      CLIENT CONFIDENTIAL INFORMATION

          A.   First  Services,  L.P.  shall  treat  all  information  and  data
               relating to First Banc Mortgage,  Inc. business provided to First
               Services,  L.P.  by First Banc  Mortgage,  Inc.,  or  information
               relating   to  First  Banc   Mortgage,   Inc.'s   customers,   as
               confidential  and shall  safe-guard  First Banc Mortgage,  Inc.'s
               information  with the same  degree of care used to protect  First
               Services, L.P.'s confidential  information.  First Services, L.P.
               and First Banc Mortgage,  Inc. agree that master and  transaction
               data  files are owned by and  constitute  property  of First Banc
               Mortgage,  Inc.  data and records  shall be subject to regulation
               and examination by State and Federal supervisory  agencies to the
               same extent as if such  information  were on First Banc Mortgage,
               Inc.'s premises.  First Services,  L.P.'s  obligations under this
               Section VIII shall survive the  termination or expiration of this
               Agreement.
          B.   First  Services,  L.P.  agrees now and at all times in the future
               that all such  Confidential  Information  shall be held in strict
               confidence  and disclosed  only to those  employees  whose duties
               reasonably  require access to such  information.  First Services,
               L.P. may use such  Confidential  Information  only in  connection
               with  its   performance   under  this   Agreement.   Confidential
               Information  shall be  returned to First Banc  Mortgage,  Inc. or
               destroyed  upon  First Banc  Mortgage,  Inc.'s  request  once the
               services  contemplated  by this  Agreement have been completed or
               upon termination of this Agreement.
          C.   First Services,  L.P. shall maintain  adequate backup  procedures
               including  storage of  duplicate  record  files as  necessary  to
               reproduce  First Banc  Mortgage,  Inc.'s records and data. In the
               event  of a  service  disruption  due  to  reasons  beyond  First
               Services,  L.P.'s control, First Services L.P. shall use diligent
               efforts to mitigate the effects of such an occurrence.
          D.   First Services,  L.P. shall  establish and maintain  policies and
               procedures  to  insure   compliance  with  this  section.   First
               Services,  L.P.  agrees to permit  First Banc  Mortgage,  Inc. to
               audit First Services' compliance with this section during regular
               business hours upon reasonable notice to First Services, L.P. The
               provisions of this section shall survive any  termination of this
               Agreement.

VIII.     FIRST SERVICES, L.P. CONFIDENTIAL INFORMATION

          A.   First Banc Mortgage,  Inc. shall not use or disclose to any third
               persons any confidential  information  concerning First Services,
               L.P.  confidential  information  is that  which  relates to First
               Services, L.P.'s software, research,  development,  trade secrets
               or  business  affairs  including,  but not  limited to, the terms
               conditions of this Agreement but does not include  information in
               the public domain through no fault of First Banc  Mortgage,  Inc.
               First Banc Mortgage, Inc. obligations under this Section IX shall
               survive the termination or expiration of this agreement.
          B.   First Services,  L.P.'s system contains  information and computer
               software that is  proprietary  and  confidential  information  of
               First  Services,  L.P., its suppliers and  licensees.  First Banc
               Mortgage,  Inc.  agrees not to attempt to circumvent  the devices
               employed by First Services,  L.P. to prevent  unauthorized access
               to the First Services, L.P.'s system.


<PAGE>



IX.       WARRANTIES

     First Services,  L.P. will accurately  process First Banc Mortgage,  Inc.'s
     work provided that First Banc  Mortgage,  Inc.  supplies  accurate data and
     follows the procedures  described in First  Services,  L.P.'s User Manuals,
     notices and advises. First Services,  L.P. personnel will exercise due care
     in the processing of First Banc  Mortgage,  Inc.'s work. In the event of an
     error caused by First Services,  L.P.'s  personnel,  programs or equipment,
     First Services,  L.P. shall correct the data and/or  reprocess the affected
     report at no additional cost to First Banc Mortgage, Inc.

X.        LIMITATION OF LIABILITY

     IN NO EVENT SHALL FIRST SERVICES,  L.P. BE LIABLE FOR LOSS OF GOODWILL,  OR
     FOR SPECIAL,  INDIRECT,  INCIDENTAL OR  CONSEQUENTIAL  DAMAGES ARISING FROM
     FIRST BANC MORTGAGE,  INC.'S USE OF FIRST  SERVICES,  L.P.'S  SERVICES,  OR
     FIRST  SERVICES,  L.P.'S  SUPPLY  OF  EQUIPMENT  OR  SOFTWARE,  UNDER  THIS
     AGREEMENT  REGARDLESS  OF WHETHER SUCH CLAIM ARISES IN TORT OR IN CONTRACT.
     FIRST SERVICES, L.P.'S AGGREGATE LIABILITY FOR ANY AND ALL CAUSES OF ACTION
     RELATING TO SERVICES PERFORMED  HEREUNDER OR ANY DAMAGE OR LOSS INCURRED OR
     SUSTAINED BY FIRST BANC MORTGAGE,  INC.  RELATING TO THIS AGREEMENT AND THE
     SERVICES  PERFORMED  HEREUNDER SHALL BE LIMITED TO THE AMOUNT OF TOTAL FEES
     PAID BY FIRST BANC MORTGAGE,  INC. TO FIRST SERVICES, L.P. IN THE THREE (3)
     MONTH PERIOD PRECEDING THE DATE THE CLAIM ACCRUED.  FIRST SERVICES,  L.P.'S
     AGGREGATE  LIABILITY FOR A DEFAULT  RELATING TO EQUIPMENT OR SOFTWARE SHALL
     BE LIMITED TO THE AMOUNT PAID FOR THE EQUIPMENT OR SOFTWARE.

XI.       PERFORMANCE STANDARDS

          A.   On-Line  Availability  -  First  Services,   L.P.'s  standard  of
               performance  shall be on-line  availability  of the system 98% of
               the time that it is scheduled to be so available over a three (3)
               month  period  (the   "Measurement   Period").   Actual   on-line
               performance will be calculated monthly by comparing the number of
               hours  which the system was  scheduled  to be  operational  on an
               on-line basis with the number of hours, or a portion thereof,  it
               was actually  operational  on an on-line  basis.  Downtime may be
               caused by operator  error,  hardware  malfunction or failure,  or
               environmental failures such as loss of power or air conditioning.
               Downtime caused by reasons beyond First Services,  L.P.'s control
               should not be considered in the statistics.
          B.   Report   Availability  -  First  Services,   L.P.'s  standard  of
               performance for report  availability  shall be that, over a three
               (3) month period, ninety-five percent (95%) of all Critical Daily
               Reports  shall be available  for remote  printing on time without
               significant  errors.  A Critical Daily Report shall mean priority
               group  reports,  which  First  Services,   L.P.  and  First  Banc
               Mortgage,  Inc. have mutually agreed in writing, are necessary to
               properly  account for the  previous  day's  activity and properly
               notify  First Banc  Mortgage,  Inc. of  overdraft,  NSF or return
               items.  A  significant  error  is one  that  impairs  First  Banc
               Mortgage,  Inc.'s  ability to properly  account for the  previous
               days  activity  and/or  properly  account for  overdraft,  NSF or
               return items.  Actual  performance will be calculated  monthly by
               comparing the total number of First Banc Mortgage,  Inc.  reports
               scheduled to be available from First Services, L.P. to the number
               of reports which were available on time and without error.
<PAGE>

          C.   Exclusive  Remedy - In the  event  that  First  Services,  L.P.'s
               performance  fails to meet the  standards  listed  above and such
               failure is not the result of First Banc Mortgage, Inc.'s error or
               omission, First Banc Mortgage, Inc. sole and exclusive remedy for
               such default  shall be the right to terminate  this  Agreement in
               accordance  with the provisions of this  paragraph.  In the event
               that  First  Services,  L.P.  fails to  achieve  any  Performance
               Standards,   alone  or  in   combination,   for  the   prescribed
               measurement period, First Banc Mortgage,  Inc. shall notify First
               Services, L.P. of its intent to terminate this agreement if First
               Services,  L.P.  fails to restore  performance  to the  committed
               levels.  First  Services,  L.P. shall advise First Banc Mortgage,
               Inc.  promptly upon correction of the system  deficiencies (in no
               event shall  corrective  action  exceed  sixty (60) days from the
               notice date) and shall begin an  additional  measurement  period.
               Should  First  Services,   L.P.  fail  to  achieve  the  required
               Performance Standards during the remeasurement period, First Banc
               Mortgage,  Inc. may terminate this Agreement and First  Services,
               L.P. shall cooperate with First Banc Mortgage, Inc. to achieve an
               orderly  transition to First Banc  Mortgage,  Inc.'s  replacement
               processing system.  First Banc Mortgage,  Inc. may also terminate
               this Agreement if First Services, L.P.'s performance for the same
               standard is below the relevant performance standard for more than
               two (2) measurement periods in any consecutive twelve (12) months
               or for more than five (5) measurement  periods during the term of
               this  agreement.  During  the  period of  transition,  First Banc
               Mortgage,  Inc.  shall pay only such  charges as are incurred for
               monthly fees until the date of deconversion. First Services, L.P.
               shall not charge First Banc Mortgage,  Inc. for services relating
               to First Banc Mortgage, Inc.'s deconversion.
          D.   Audit - First Banc Mortgage, Inc. shall have the right to perform
               reasonable  audits,  at its cost,  upon giving  written notice to
               First Services, L.P. of its intent to do so. First Services, L.P.
               shall provide, upon request,  financial information to First Banc
               Mortgage, Inc.

XII.      BUSINESS CONTINUITY / DISASTER RECOVERY

          A.   A  Disaster  shall  mean  any  unplanned   interruption   of  the
               operations of or inaccessibility to the First Services, L.P. data
               center  which  appears  in  First  Services,   L.P.'s  reasonable
               judgment to require  relocation of  processing to an  alternative
               site. First Services, L.P. shall notify First Banc Mortgage, Inc.
               as soon as  possible  after it  deems a  service  outage  to be a
               Disaster. First Services, L.P. shall move the processing of First
               Banc  Mortgage,   Inc.'s  critical  services  to  an  alternative
               processing  center as expeditiously as possible.  First Services,
               L.P.  shall work with First Banc  Mortgage,  Inc. to define those
               services  deemed  as  critical  to the  operation,  revenue,  and
               capital  preservation  of First Banc  Mortgage,  Inc.  First Banc
               Mortgage,   Inc.   shall   maintain   adequate   records  of  all
               transactions during the period of service  interruption and shall
               have personnel available to assist First Services,  L.P., Inc. in
               implementing  the switch over to be alternative  processing site.
               During a disaster, non-critical,  optional or on-request services
               shall be provided by First Services, L.P. only to the extent that
               there is adequate capacity at the alternate center and only after
               stabilizing the provision of critical services.

<PAGE>

          B.   First Services, L.P. shall work with First Banc Mortgage, Inc. to
               establish a plan for alternative data communications in the event
               of a disaster. First Banc Mortgage, Inc. shall be responsible for
               furnishing any additional communications equipment and data lines
               required under the adopted plan.
          C.   First Services,  L.P. shall test the Business  Continuity Plan by
               conducting,  at least, one annual test. First Banc Mortgage, Inc.
               agrees to  participate  in and assist First  Services,  L.P. with
               such testing.  Test results will be made  available to First Banc
               Mortgage, Inc.'s regulators,  internal and external auditors, and
               (upon   request)  to  First  Banc  Mortgage,   Inc.'s   insurance
               underwriters.
          D.   First  Banc  Mortgage,  Inc.  understands  and  agrees  that  the
               Business   Continuity  Plan  is  designed  to  minimize  but  not
               eliminate  risks  associated  with  a  disaster  affecting  First
               Services,  L.P.'s data  center.  First  Services,  L.P.  does not
               warrant that service will be  uninterrupted  or error free in the
               event  of  a  disaster.   First  Banc  Mortgage,  Inc.  maintains
               responsibility  for adopting a business  continuity plan relating
               to disasters affecting First Banc Mortgage, Inc.'s facilities and
               for securing  resources  necessary to properly protect First Banc
               Mortgage, Inc.'s revenues in the event of a disaster.

XIII.    DEFAULT

          A.   In the event that First Banc  Mortgage,  Inc. is thirty (30) days
               in arrears in making any payment required, or in the event of any
               other material  default by either First  Services,  L.P. or First
               Banc Mortgage, Inc. in the performance of their obligations,  the
               affected party shall have the right to give written notice to the
               other of the default and its intent to terminate  this  Agreement
               stating with reasonable  particularity  the nature of the claimed
               default.  This Agreement  shall  terminate if the default has not
               been cured within a reasonable  time with a minimum  being thirty
               (30) days from the effective date of the notice.
          B.   Upon the expiration of this Agreement, or its termination,  First
               Services,  L.P. shall furnish to First Banc  Mortgage,  Inc. such
               copies of First Banc  Mortgage,  Inc.'s  data files as First Banc
               Mortgage,  Inc. may request in machine readable format form along
               with such other  information  and  assistance as or is reasonable
               and  customary to enable First Banc  Mortgage,  Inc. to deconvert
               from the First Services,  L.P. system. First Banc Mortgage,  Inc.
               shall reimburse  First Services,  L.P. for the production of data
               records and other services at First Services, L.P.'s current fees
               for such services.

XIV.     INSURANCE

     First Services, L.P. carries Comprehensive General Liability insurance with
     primary limits of two million dollars,  Commercial Crime Insurance covering
     Employee  Dishonesty  in the  amount of thirty  million  dollars,  all-risk
     replacement  cost coverage on all equipment used at First Services,  L.P.'s
     data  center and  Worker  Compensation  coverage  on First  Services,  L.P.
     employees  wherever  located  in the  United  States.  In  addition,  First
     Services, L.P. carries coverage for computer/computer  related theft in the
     amount of twenty million  dollars.  First Banc  Mortgage,  Inc. shall carry
     adequate insurance to cover liability for source documents while in transit
     and in case of data loss through errors and omissions.
<PAGE>

XV.       GENERAL

          A.   This  Agreement is binding upon the parties and their  respective
               successors and permitted  assigns.  Neither party may assign this
               Agreement  in whole or in part  without the consent of First Banc
               Mortgage,  Inc. and/or First Services,  L.P., provided,  however,
               that  First  Services,  L.P.  may  subcontract  any or all of the
               services to be performed under this Agreement without the written
               consent  of First Banc  Mortgage,  Inc.  Any such  subcontractors
               shall be required to comply with all of the applicable  terms and
               conditions of this Agreement.
          B.   The parties  agree that, in connection  with the  performance  of
               their  obligations  hereunder,  they will comply with  applicable
               Federal, State, and local laws including the laws and regulations
               regarding Equal Employment Opportunities.
          C.   First  Services,  L.P.  agrees that the Federal Reserve Bank, and
               FDIC will have the authority and  responsibility  pursuant to the
               Bank  Service  Corporation  Act,  12  U.S.C.  1867(C)relating  to
               service performed by contract or otherwise. First Services, L.P.,
               also agrees that its  services  shall be subject to  oversight by
               the Federal  Reserve Bank,  FDIC or state banking  departments as
               may be applicable under laws and regulations  pertaining to First
               Banc Mortgage,  Inc.'s charter and shall, if applicable,  provide
               the Federal  Reserve Bank and FDIC with a copy of First Services,
               L.P.'s  current audit and financial  statements and a copy of any
               current  third  party  review  report  when  a  review  has  been
               performed.
          D.   Neither  party  shall  be  liable  for  any  errors,   delays  or
               non-performance  due to  events  beyond  its  reasonable  control
               including,  but not limited to, acts of God,  failure or delay of
               power or  communications,  changes in law or  regulation or other
               acts of governmental  authority,  strike,  weather  conditions or
               transportation.
          E.   All written  notices  required  to be given under this  Agreement
               shall be sent by Registered  or Certified  Mail,  Return  Receipt
               Requested,  postage  prepaid,  or by  confirmed  facsimile to the
               persons  and at the  addresses  listed  below  or to  such  other
               address or person as a party shall have designated in writing.
                  First  Services,  L.P.              First Banc Mortgage, Inc.
                  600 James S. McDonnell Blvd.        135 North Meramec
                  Hazelwood, MO 63042                 Clayton, MO 63105
          F.   The failure of either  party to exercise in any respect any right
               provided for herein shall not be deemed a waiver of any rights.
          G.   Each  party   acknowledges  that  is  has  read  this  Agreement,
               understands  it, and agrees that it is the complete and exclusive
               statement of the Agreement between the parties and supersedes and
               merges any prior or simultaneous  proposals,  understandings  and
               all other  agreements  with respect to the subject  matter.  This
               Agreement  may not be  modified  or  altered  except by a written
               instrument duly executed by both parties.
          H.   No  waiver  of  any of the  terms  of  this  Agreement  shall  be
               effective  unless in writing  and  signed by the duly  authorized
               representative of the party charged  therewith.  No waiver of any
               provision  hereof  shall extend to or affect any  obligation  not
               expressly waived, impair any rights consequent on such obligation
               or imply a subsequent waiver of that or any other provision.
          I.   This Agreement shall be governed by, construed and interpreted in
               accordance with the laws of the State of Missouri.


IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement the date first
above written.

First Banc Mortgage, Inc.                   First Services, L.P.
135 North Meramec                           600 James S. McDonnell Boulevard
Clayton, Missouri 63105                     Hazelwood, Missouri 63042

BY:/s/Mark T. Turkcan                       BY: /s/ Michael F. Hickey
---------------------                       -------------------------
      Mark T. Turkcan                               Michael F. Hickey
      President                                     President


<PAGE>

                                                                  Attachment 1
                              First Services, L.P.
                           Product and Price Schedule
                            Effective January 1, 2001

ACCOUNT/ITEM/TRANSACTION BASED SERVICES

ACCOUNTS PROCESSED - BASE SERVICES
DDA Accounts                                $ .75
Savings Accounts                            $ .70
Time Accounts                               $ .70
Loan Accounts                               $ .75
CIF Records                                 $ .20
ATM/Debit Cards                             $ .225

         Accounts Processed - Base Services Include:
<TABLE>
<CAPTION>

<S>                                                  <C>
         Collection System (Cyber Resources)         ACH Origination
         Recovery System (Cyber Resources)           ATM/Debit Card Processing
         Organizational Profitability (IPS)          General Ledger
         Asset/Liability (Bankware)                  Loan Tracking (Baker Hill)
         Fixed Asset Interface                       Optical System (RVI)
         Loan Spread Sheet (Baker Hill)              Interactive Voice
         MCIF (Okra)                                 Credit Scoring (Fair Issac)
         Card Management System                      Loan Documentation (FTI/CFI)
         Cash Management System (Firstlink)          Wire Transfer (Fundtech)
         Bank Audit                                  Commercial Analysis
         NOW Reclassification                        Accounts Payable Interface
         Charge Back System                          Long Distance Management
         Remote Laser Printing                       Teller (Encore)
         Retrofit/New Releases                       Query Report Writer
         Mortgage (Unify)                            Forms and Supplies
         Currency Transaction Reporting              Year-end Processing

STATEMENTS PRODUCED
DDA                                         $ .30
Savings                                     $ .10
Time                                        $ .02
Loan                                        $ .15
Year End                                    $1.00
5498                                        $1.00

TRANSACTIONS PROCESSED - BASE SERVICES - ITEM PROCESSING
Proof Items                                 $ .040
POD and EFT Items                           $ .014
Inclearing and Transmission Items           $ .014

         Transactions Processed - Base Services - Item Processing Includes:

         MICR Rejects                       Serial Sort                         Teller Adjustments
         Transit Float Analysis             Microfilming                        Deposit Corrections
         Endorsement Services               Forms and Supplies                  Check Truncation
         Exception Item Sort                Statement Sort                      Interest Check Mailings
         Statement Enclosures               Notice Mailings
</TABLE>

<PAGE>

TRANSACTIONS PROCESSED - OTHER SERVICES

Wire Activity                               $        5.00
First Link Activity                         $       30.00
ACH Activity                                $         .042
Research Requests                           $       15.00
Adjustments Processed                       $       15.00
Lock Box Transactions                       $         .45
Lock Box Postage                                   as incurred
Lock Box Copies                             $         .08
Mail Services:
         FB Midwest                         $      900.00 per month
         FB&T                               $      900.00 per month

BRANCH BASED SERVICES

CONNECTION CHARGES
Support Unit Data Connections               $      varies
Branch Data Connections                     $      900.00 per location
ATM Connections                             $      100.00 per location
Dierbergs ATM Connections                   $      700.00 per location

Contingency Pln/Disaster Rec                $      200.00 per location
Mail Courier Routes (MO/IL)                 $       40.00 per day


USER BASED SERVICES

Network/Telecom Support/Infrastructure      $      60.00 per user
Help Desk Support                           $      25.00 per user
Microsoft Application Licenses              $      25.00 per user
Email                                       $      10.00 per user
Web (Internet) Access                       $      15.00 per user
Dial-In (Remote) Access                     $      20.00 per user
Information Security                        $      25.00 per user

         User Based Services include:

         Network Technical support          Network Infrastructure
         Help Desk                          MS Word
         MS Excel                           MS Access
         MS Powerpoint                      Anti-Virus
         Email usage                        Web usage
         Dial-In Access capability          User/Password Administration
         Security Monitoring                Access Control





<PAGE>



APPLICATION/PROJECT BASED SERVICES

Application Support/Software Maintenance                      $        60.00/hr
Project Management and Support                                $        60.00/hr
Project Office                                                $        60.00/hr
Acquisition/New Business Support                              $        60.00/hr
Asset Management/Technical Purchasing                         $        28.85/hr

         The Above Services Include:
         Production problem support                  Application Q/A
         Application software upgrades/releases      Project Management
         Project Office tracking and reporting       Acquisition Conversions
         Branch Deconversions                        Mergers
         Equipment quotes, orders, and delivery      Asset tracking
         Invoice payment

Operations Support                                   $        28.85/hr
IRA Support                                          $        17.50/hr
Reconciliation/Appl Balancing                        $        14.50/hr
Records Management                                   $        32.00/hr

Bookkeeping Support                                  $        20.50/hr
<TABLE>
<CAPTION>

         Bookkeeping Support includes:

<S>                <C>                      <C>                                 <C>
                  Returns                   Large Item Notification             Signature Verification
                  Chargebacks               Kiting                              Savings Bonds
                  Unposted Items            OFAC                                American Express
                  NSF Notices               Year-End Notifications

</TABLE>


<PAGE>



                                                                    EXHIBIT 10.9

                                SERVICE AGREEMENT

          THIS SERVICE  AGREEMENT  is made and entered into as of the  Fifteenth
day of October,  2001, by and between FIRST SERVICES,  L.P., a Missouri  Limited
Partnership  and FIRST BANK & TRUST,  a banking  institution  duly organized and
existing by virtue of the laws of the State of California.

          WHEREAS,  FIRST BANK & TRUST and FIRST SERVICES,  L.P.  entered into a
Service Agreement dated April 1, 1997; and

          WHEREAS,  said Service Agreement was assigned to First Services,  L.P.
on or about April 1, 1997; and

          WHEREAS,  FIRST SERVICES,  L.P. and FIRST BANK & TRUST desire to amend
and restate said Service Agreement in its entirety.

          NOW,  THEREFORE,  for and in  consideration of the mutual promises and
covenants  contained  herein,  and the sum of Ten Dollars ($10.00) in hand paid,
each to the other, the receipt and sufficiency of which is hereby  acknowledged,
the parties agree as follows:

I.        TERMINATION AND REVOCATION

          The  Parties  hereto  hereby  revoke,  cancel  and hold for naught the
          Service  Agreement  dated April 1, 1997, and hereby  substitute in its
          place the Service Agreement herein contained.

II.       SERVICES

          A.   First  Services,  L.P.  shall  furnish  First  Bank & Trust  data
               processing and item processing  services selected by First Bank &
               Trust from the Product and Price  Schedule as per  Attachment  1,
               attached  hereto and  incorporated  herein by reference  thereto.
               Additional  services may be selected upon prior written notice to
               First Services, L.P. at First Services,  L.P.'s then current list
               price by executing an amended Summary Page.
          B.   First  Services,   L.P.  will  provide  conversion  and  training
               services  for the fees  specified  from  the  Product  and  Price
               Schedule  (Attachment  1).  Classroom  training  in the  use  and
               operation  of the  system  for the  number of First  Bank & Trust
               personnel mutually agreed upon in the conversion planning process
               will be provided at a training  facility  mutually  agreed  upon.
               Conversion services are those activities designed to transfer the
               processing  of  First  Bank  &  Trust's  data  from  its  present
               processing company to First Services, L.P.
          C.   First  Services,  L.P. will also provide  Network Support Service
               consisting  of  communication   line  monitoring  and  diagnostic
               equipment and support personnel to discover,  diagnose, repair or
               report line problems to the appropriate  telephone  company.  The
               fee for this  service is also  listed  from the Product and Price
               Schedule (Attachment 1).
          D.   First  Services,  L.P.  shall  upon  request  act as First Bank &
               Trust's  designated  representative  to arrange for the purchase,
               and  installation  of data  lines  necessary  to access the First
               Services, L.P. system. Where requested,  additional dial-up lines
               and  equipment  to be utilized  as a backup to the  regular  data
               lines may also be ordered. First Services,  L.P. shall bill First
               Bank & Trust for the actual  charges  incurred for the data lines
               and  for  the  maintenance  of the  modems  and  other  interface
               devices.

<PAGE>

          E.   First Services, L.P. will provide and support an Internet Banking
               application  capability,  at a fee  listed  on  the  Product  and
               Pricing Schedule (Attachment 1). First Services, L.P. will ensure
               access to this system by employees  and those  customers who meet
               the  requirements  established by the First Bank Internet Banking
               Group.  Any request for access that is denied will be resolved by
               mutual agreement of the parties hereto.
          F.   First Services, L.P. will provide e-mail,  Internet, and Intranet
               capabilities at a fee listed on the Product and Pricing  Schedule
               (Attachment 1).
          G.   Processing  priorities will be determined by mutual  agreement of
               the parties hereto.
          H.   In addition,  First Services, L.P. acknowledges that First Bank &
               Trust acts as a correspondent bank to certain Affiliate Banks and
               that as part of its duties hereunder First Services, L.P. will be
               performing  certain  services  for First  Bank & Trust  which are
               necessary because of its status as a correspondent bank.

III.      TERM

     The term of this  Agreement  shall be  twelve  (12)  months  commencing  on
     October 15, 2001. Upon expiration,  the Agreement will automatically  renew
     for  successive  terms of twelve (12) months each unless either party shall
     have provided written notice to the other at least one-hundred eighty (180)
     days prior to the expiration of the then current term, of its intent not to
     renew.  In the event of  termination,  First  Services,  L.P. shall provide
     reasonable time allowance to allow First Bank & Trust to convert to another
     system.

IV.       SOFTWARE / FIRMWARE

     Unmodified third party software or firmware ("Software") may be supplied as
     part of the  Agreement.  All such  Software  shall be  provided  subject to
     Software License Agreements.

V.        PRICE AND PAYMENT

          A.   Fees for First  Services,  L.P.'s services are set forth from the
               Product  and  Price  Schedule   (Attachment  1)  including  where
               applicable  minimum  monthly  charges and payment  schedules  for
               onetime fees.
          B.   Standard  Fees  shall be  invoiced  no later  than the  fifteenth
               (15th) of each month for the then current month. Terms of payment
               shall be net cash.
          C.   The Base  Service  Charge  listed  from  the  Product  and  Price
               Schedule  (Attachment 1) shall not change more than twice a year.
               The fee schedule shall be reviewed annually to ensure fair market
               value in pricing.  Comparisons  will be made with peers and other
               providers of similar  services.  New products and services can be
               added as they become available and will be priced accordingly.
          D.   This above  limitation shall not apply to pass-thru  expenses.  A
               pass-thru  expense  is a charge  for goods or  services  by First
               Services,  L.P.  on First  Bank & Trust's  behalf  that are to be
               billed to First Bank & Trust without mark-up.

<PAGE>

          E.   The fees listed from the Product and Price  Schedule  (Attachment
               1) do not  include  and  First  Bank & Trust is  responsible  for
               furnishing  transportation or transmission of information between
               First Services, L.P.'s data center, First Bank & Trust's site and
               any  applicable  clearing  house,  regulatory  agency or  Federal
               Reserve Bank.  Where First Bank & Trust has elected to have First
               Services, L.P. provide Telecommunication  Services, the price for
               the Services will be provided and billed as a pass-thru expense.
          F.   Network  Support  Service  Fees and Local  Network Fees are based
               upon services  rendered  from First  Services,  L.P.'s  premises.
               Off-premise  support  will be provided  upon First Bank & Trust's
               request on an as available  basis at First  Services,  L.P.  then
               current charges for time and materials,  plus  reasonable  travel
               and living expenses.

VI.       CLIENT OBLIGATIONS

          A.   First  Bank & Trust  shall be solely  responsible  for the input,
               transmission  or delivery of all information and data required by
               First  Services,  L.P. to perform the services except where First
               Bank & Trust has  retained  First  Services,  L.P. to handle such
               responsibilities  on its behalf.  The data shall be provided in a
               format and manner approved by First  Services,  L.P. First Bank &
               Trust  will  provide at its own  expense  or  procure  from First
               Services,  L.P. all equipment,  computer  software  communication
               lines  and  interface   devices  required  to  access  the  First
               services,  L.P.  System.  If First  Bank & Trust has  elected  to
               provide such items itself,  First  Services,  L.P.  shall provide
               First  Bank &  Trust  with a list  of  compatible  equipment  and
               software.
          B.   First Bank & Trust shall designate appropriate First Bank & Trust
               personnel  for  training in the use of the First  services,  L.P.
               System,  shall allow First Services,  L.P. access to First Bank &
               Trust's site during  normal  business  hours for  conversion  and
               shall  cooperate  with  First  services,  L.P.  Personnel  in the
               conversion and implementation of the services.
          C.   First Bank & Trust shall comply with any  operating  instructions
               on the use of the First Services, L.P. reports furnished by First
               Services,  L.P. for accuracy and shall work with First  Services,
               L.P. to  reconcile  any out of balance  conditions.  First Bank &
               Trust shall determine and be responsible for the authenticity and
               accuracy of all information and data submitted to First Services,
               L.P.
          D.   First Bank & Trust  shall  furnish,  or if First  Services,  L.P.
               agrees to so furnish,  reimburse First Services, L.P. for courier
               services applicable to the services requested.

VII.      GENERAL ADMINISTRATION

     First  Services,  L.P. is  continually  reviewing  and  modifying the First
     Services,  L.P.  system  to  improve  service  and to comply  with  federal
     government  regulations  applicable  to  the  data  utilized  in  providing
     services to First Bank & Trust. First Services,  L.P. reserves the right to
     make  changes in the  service,  including,  but not  limited  to  operating
     procedures,  security procedures, the type of equipment resident at and the
     location of First Services, L.P.'s data center.

VIII.     CLIENT CONFIDENTIAL INFORMATION

          A.   First  Services,  L.P.  shall  treat  all  information  and  data
               relating  to  First  Bank &  Trust  business  provided  to  First
               Services,  L.P. by First Bank & Trust, or information relating to
               First  Bank  &  Trust's  customers,  as  confidential  and  shall
               safe-guard First Bank & Trust's  information with the same degree
               of care  used to  protect  First  Services,  L.P.'s  confidential
               information.  First  Services,  L.P. and First Bank & Trust agree
               that  master  and  transaction   data  files  are  owned  by  and
               constitute  property of First Bank & Trust data and records shall
               be subject to  regulation  and  examination  by State and Federal
               supervisory  agencies to the same  extent as if such  information
               were on First Bank & Trust's  premises.  First  Services,  L.P.'s
               obligations under this Section VIII shall survive the termination
               or expiration of this Agreement.

<PAGE>

          B.   First  Services,  L.P.  agrees now and at all times in the future
               that all such  Confidential  Information  shall be held in strict
               confidence  and disclosed  only to those  employees  whose duties
               reasonably  require access to such  information.  First Services,
               L.P. may use such  Confidential  Information  only in  connection
               with  its   performance   under  this   Agreement.   Confidential
               Information  shall be returned to First Bank & Trust or destroyed
               upon First Bank & Trust's request once the services  contemplated
               by this Agreement have been completed or upon termination of this
               Agreement.
          C.   First Services,  L.P. shall maintain  adequate backup  procedures
               including  storage of  duplicate  record  files as  necessary  to
               reproduce  First Bank & Trust's records and data. In the event of
               a service disruption due to reasons beyond First Services, L.P.'s
               control,  First  Services  L.P.  shall use  diligent  efforts  to
               mitigate the effects of such an occurrence.
          D.   First Services,  L.P. shall  establish and maintain  policies and
               procedures  to  insure   compliance  with  this  section.   First
               Services, L.P. agrees to permit First Bank & Trust to audit First
               Services'  compliance  with this section during regular  business
               hours  upon  reasonable  notice  to  First  Services,   L.P.  The
               provisions of this section shall survive any  termination of this
               Agreement.

IX.       FIRST SERVICES, L.P. CONFIDENTIAL INFORMATION

          A.   First Bank & Trust shall not use or disclose to any third persons
               any  confidential  information  concerning  First Services,  L.P.
               confidential information is that which relates to First Services,
               L.P.'s software, research, development, trade secrets or business
               affairs  including,  but not limited to, the terms  conditions of
               this  Agreement  but does not include  information  in the public
               domain through no fault of First Bank & Trust. First Bank & Trust
               obligations  under this Section IX shall survive the  termination
               or expiration of this agreement.
          B.   First Services,  L.P.'s system contains  information and computer
               software that is  proprietary  and  confidential  information  of
               First Services,  L.P., its suppliers and licensees.  First Bank &
               Trust agrees not to attempt to circumvent the devices employed by
               First Services,  L.P. to prevent unauthorized access to the First
               Services, L.P.'s system.

X.        WARRANTIES

     First  Services,  L.P.  will  accurately  process First Bank & Trust's work
     provided  that First Bank & Trust  supplies  accurate  data and follows the
     procedures  described in First Services,  L.P.'s User Manuals,  notices and
     advises.  First  Services,  L.P.  personnel  will  exercise due care in the
     processing of First Bank & Trust's work. In the event of an error caused by
     First Services,  L.P.'s personnel,  programs or equipment,  First Services,
     L.P.  shall  correct the data and/or  reprocess  the affected  report at no
     additional cost to First Bank & Trust.
<PAGE>

XI.       LIMITATION OF LIABILITY

     IN NO EVENT SHALL FIRST SERVICES,  L.P. BE LIABLE FOR LOSS OF GOODWILL,  OR
     FOR SPECIAL,  INDIRECT,  INCIDENTAL OR  CONSEQUENTIAL  DAMAGES ARISING FROM
     FIRST  BANK & TRUST'S  USE OF FIRST  SERVICES,  L.P.'S  SERVICES,  OR FIRST
     SERVICES,  L.P.'S  SUPPLY OF EQUIPMENT OR  SOFTWARE,  UNDER THIS  AGREEMENT
     REGARDLESS  OF WHETHER  SUCH  CLAIM  ARISES IN TORT OR IN  CONTRACT.  FIRST
     SERVICES,  L.P.'S  AGGREGATE  LIABILITY  FOR ANY AND ALL  CAUSES  OF ACTION
     RELATING TO SERVICES PERFORMED  HEREUNDER OR ANY DAMAGE OR LOSS INCURRED OR
     SUSTAINED BY FIRST BANK & TRUST RELATING TO THIS AGREEMENT AND THE SERVICES
     PERFORMED  HEREUNDER  SHALL BE  LIMITED TO THE AMOUNT OF TOTAL FEES PAID BY
     FIRST BANK & TRUST TO FIRST  SERVICES,  L.P. IN THE THREE (3) MONTH  PERIOD
     PRECEDING THE DATE THE CLAIM  ACCRUED.  FIRST  SERVICES,  L.P.'S  AGGREGATE
     LIABILITY FOR A DEFAULT  RELATING TO EQUIPMENT OR SOFTWARE SHALL BE LIMITED
     TO THE AMOUNT PAID FOR THE EQUIPMENT OR SOFTWARE.

XII.      PERFORMANCE STANDARDS

          A.   On-Line  Availability  -  First  Services,   L.P.'s  standard  of
               performance  shall be on-line  availability  of the system 98% of
               the time that it is scheduled to be so available over a three (3)
               month  period  (the   "Measurement   Period").   Actual   on-line
               performance will be calculated monthly by comparing the number of
               hours  which the system was  scheduled  to be  operational  on an
               on-line basis with the number of hours, or a portion thereof,  it
               was actually  operational  on an on-line  basis.  Downtime may be
               caused by operator  error,  hardware  malfunction or failure,  or
               environmental failures such as loss of power or air conditioning.
               Downtime caused by reasons beyond First Services,  L.P.'s control
               should not be considered in the statistics.
          B.   Report   Availability  -  First  Services,   L.P.'s  standard  of
               performance for report  availability  shall be that, over a three
               (3) month period, ninety-five percent (95%) of all Critical Daily
               Reports  shall be available  for remote  printing on time without
               significant  errors.  A Critical Daily Report shall mean priority
               group reports, which First Services,  L.P. and First Bank & Trust
               have  mutually  agreed in  writing,  are  necessary  to  properly
               account for the previous day's activity and properly notify First
               Bank & Trust of  overdraft,  NSF or return  items.  A significant
               error  is one  that  impairs  First  Bank &  Trust's  ability  to
               properly  account for the previous days activity  and/or properly
               account for overdraft,  NSF or return items.  Actual  performance
               will be calculated monthly by comparing the total number of First
               Bank  &  Trust  reports  scheduled  to be  available  from  First
               Services,  L.P. to the number of reports which were  available on
               time and without error.
          C.   Exclusive  Remedy - In the  event  that  First  Services,  L.P.'s
               performance  fails to meet the  standards  listed  above and such
               failure  is not the  result  of  First  Bank &  Trust's  error or
               omission,  First Bank & Trust sole and exclusive  remedy for such
               default  shall  be the  right  to  terminate  this  Agreement  in
               accordance  with the provisions of this  paragraph.  In the event
               that  First  Services,  L.P.  fails to  achieve  any  Performance
               Standards,   alone  or  in   combination,   for  the   prescribed
               measurement  period,  First  Bank  &  Trust  shall  notify  First
               Services, L.P. of its intent to terminate this agreement if First
               Services,  L.P.  fails to restore  performance  to the  committed
               levels.  First  Services,  L.P.  shall  advise First Bank & Trust
               promptly upon correction of the system  deficiencies (in no event
               shall  corrective  action  exceed sixty (60) days from the notice
               date) and shall begin an additional  measurement  period.  Should
               First  Services,  L.P.  fail to achieve the required  Performance
               Standards during the remeasurement period, First Bank & Trust may
               terminate this Agreement and First Services, L.P. shall cooperate
               with First Bank & Trust to achieve an orderly transition to First
               Bank & Trust's replacement  processing system. First Bank & Trust
               may also  terminate  this  Agreement  if First  Services,  L.P.'s
               performance   for  the  same   standard  is  below  the  relevant
               performance standard for more than two (2) measurement periods in
               any  consecutive  twelve  (12)  months  or for more than five (5)
               measurement periods during the term of this agreement. During the
               period  of  transition,  First  Bank & Trust  shall pay only such
               charges  as are  incurred  for  monthly  fees  until  the date of
               deconversion.  First Services, L.P. shall not charge First Bank &
               Trust for services relating to First Bank & Trust's deconversion.

<PAGE>

          D.   Audit - First  Bank & Trust  shall  have  the  right  to  perform
               reasonable  audits,  at its cost,  upon giving  written notice to
               First Services, L.P. of its intent to do so. First Services, L.P.
               shall provide, upon request,  financial information to First Bank
               & Trust.

XII.      BUSINESS CONTINUITY / DISASTER RECOVERY

          A.   A  Disaster  shall  mean  any  unplanned   interruption   of  the
               operations of or inaccessibility to the First Services, L.P. data
               center  which  appears  in  First  Services,   L.P.'s  reasonable
               judgment to require  relocation of  processing to an  alternative
               site.  First  Services,  L.P.  shall notify First Bank & Trust as
               soon  as  possible  after  it  deems  a  service  outage  to be a
               Disaster. First Services, L.P. shall move the processing of First
               Bank & Trust's  critical  services to an  alternative  processing
               center as expeditiously as possible.  First Services,  L.P. shall
               work with First Bank & Trust to define those  services  deemed as
               critical to the operation,  revenue,  and capital preservation of
               the Bank.  First Bank & Trust shall maintain  adequate records of
               all  transactions  during the period of service  interruption and
               shall have personnel  available to assist First  Services,  L.P.,
               Inc. in implementing the switch over to be alternative processing
               site.  During a disaster,  non-critical,  optional or  on-request
               services  shall be provided by First  Services,  L.P. only to the
               extent that there is adequate  capacity at the  alternate  center
               and only after stabilizing the provision of critical services.
          B.   First  Services,  L.P.  shall  work  with  First  Bank & Trust to
               establish a plan for alternative data communications in the event
               of a  disaster.  First  Bank & Trust  shall  be  responsible  for
               furnishing any additional communications equipment and data lines
               required under the adopted plan.
          C.   First Services,  L.P. shall test the Business  Continuity Plan by
               conducting,  at least, one annual test. First Bank & Trust agrees
               to  participate  in and assist  First  Services,  L.P.  with such
               testing.  Test  results  will be made  available  to First Bank &
               Trust's  regulators,  internal and external  auditors,  and (upon
               request) to First Bank & Trust's insurance underwriters.
          D.   First  Bank & Trust  understands  and  agrees  that the  Business
               Continuity  Plan is designed to minimize but not eliminate  risks
               associated with a disaster affecting First Services,  L.P.'s data
               center.  First Services,  L.P. does not warrant that service will
               be uninterrupted or error free in the event of a disaster.  First
               Bank & Trust  maintains  responsibility  for  adopting a business
               continuity  plan  relating to  disasters  affecting  First Bank &
               Trust's  facilities  and  for  securing  resources  necessary  to
               properly  protect First Bank & Trust's revenues in the event of a
               disaster.
<PAGE>

XIV.      DEFAULT

          A.   In the  event  that  First  Bank & Trust is  thirty  (30) days in
               arrears in making any  payment  required,  or in the event of any
               other material  default by either First  Services,  L.P. or First
               Bank &  Trust  in  the  performance  of  their  obligations,  the
               affected party shall have the right to give written notice to the
               other of the default and its intent to terminate  this  Agreement
               stating with reasonable  particularity  the nature of the claimed
               default.  This Agreement  shall  terminate if the default has not
               been cured within a reasonable  time with a minimum  being thirty
               (30) days from the effective date of the notice.
          B.   Upon the expiration of this Agreement, or its termination,  First
               Services, L.P. shall furnish to First Bank & Trust such copies of
               First Bank & Trust's data files as First Bank & Trust may request
               in machine readable format form along with such other information
               and  assistance as or is reasonable and customary to enable First
               Bank & Trust to deconvert from the First Services,  L.P.  system.
               First Bank & Trust shall reimburse  First Services,  L.P. for the
               production of data records and other services at First  Services,
               L.P.'s current fees for such services.

XV.       INSURANCE

     First Services, L.P. carries Comprehensive General Liability insurance with
     primary limits of two million dollars,  Commercial Crime Insurance covering
     Employee  Dishonesty  in the  amount of thirty  million  dollars,  all-risk
     replacement  cost coverage on all equipment used at First Services,  L.P.'s
     data  center and  Worker  Compensation  coverage  on First  Services,  L.P.
     employees  wherever  located  in the  United  States.  In  addition,  First
     Services, L.P. carries coverage for computer/computer  related theft in the
     amount of twenty million  dollars.  First Bank & Trust shall carry adequate
     insurance to cover  liability for source  documents while in transit and in
     case of data loss through errors and omissions.

LVI.      GENERAL

          A.   This  Agreement is binding upon the parties and their  respective
               successors and permitted  assigns.  Neither party may assign this
               Agreement in whole or in part without the consent of First Bank &
               Trust and/or First Services, L.P., provided,  however, that First
               Services,  L.P. may  subcontract any or all of the services to be
               performed  under this  Agreement  without the written  consent of
               First Bank & Trust. Any such subcontractors  shall be required to
               comply with all of the  applicable  terms and  conditions of this
               Agreement.
          B.   The parties  agree that, in connection  with the  performance  of
               their  obligations  hereunder,  they will comply with  applicable
               Federal, State, and local laws including the laws and regulations
               regarding Equal Employment Opportunities.
          C.   First  Services,  L.P.  agrees that the Federal Reserve Bank, and
               FDIC will have the authority and  responsibility  pursuant to the
               Bank  Service  Corporation  Act,  12  U.S.C.  1867(C)relating  to
               service performed by contract or otherwise. First Services, L.P.,
               also agrees that its  services  shall be subject to  oversight by
               the Federal  Reserve Bank,  FDIC or state banking  departments as
               may be applicable under laws and regulations  pertaining to First
               Bank & Trust's  charter  and shall,  if  applicable,  provide the
               Federal  Reserve  Bank  and FDIC  with a copy of First  Services,
               L.P.'s  current audit and financial  statements and a copy of any
               current  third  party  review  report  when  a  review  has  been
               performed.

<PAGE>

          D.   Neither  party  shall  be  liable  for  any  errors,   delays  or
               non-performance  due to  events  beyond  its  reasonable  control
               including,  but not limited to, acts of God,  failure or delay of
               power or  communications,  changes in law or  regulation or other
               acts of governmental  authority,  strike,  weather  conditions or
               transportation.
          E.   All written  notices  required  to be given under this  Agreement
               shall be sent by Registered  or Certified  Mail,  Return  Receipt
               Requested,  postage  prepaid,  or by  confirmed  facsimile to the
               persons  and at the  addresses  listed  below  or to  such  other
               address or person as a party shall have designated in writing.
                First Services, L.P.                    First Bank & Trust
                600 James S. McDonnell Blvd.            550 Montgomery Street
                Hazelwood, MO  63042                    San Francisco, CA 94111
          F.   The failure of either  party to exercise in any respect any right
               provided for herein shall not be deemed a waiver of any rights.
          G.   Each  party   acknowledges  that  is  has  read  this  Agreement,
               understands  it, and agrees that it is the complete and exclusive
               statement of the Agreement between the parties and supersedes and
               merges any prior or simultaneous  proposals,  understandings  and
               all other  agreements  with respect to the subject  matter.  This
               Agreement  may not be  modified  or  altered  except by a written
               instrument duly executed by both parties.
          H.   No  waiver  of  any of the  terms  of  this  Agreement  shall  be
               effective  unless in writing  and  signed by the duly  authorized
               representative of the party charged  therewith.  No waiver of any
               provision  hereof  shall extend to or affect any  obligation  not
               expressly waived, impair any rights consequent on such obligation
               or imply a subsequent waiver of that or any other provision.
          I.   This Agreement shall be governed by, construed and interpreted in
               accordance with the laws of the State of Missouri.

IN WITNESS  WHEREOF,  the parties have  executed  this  Agreement the date first
above written.

First Bank & Trust                          First Services, L.P.
550 Montgomery Street                       600 James S. McDonnell Boulevard
San Francisco, California 94111             Hazelwood, Missouri 63042

BY:/s/ Terrance M. McCarthy                 BY:/s/ Michael F. Hickey
---------------------------                 ------------------------
       Terrance M. McCarthy                        Michael F. Hickey
       President                                   President

<PAGE>

                                                                  Attachment 1
                              First Services, L.P.
                           Product and Price Schedule
                            Effective January 1, 2001

ACCOUNT/ITEM/TRANSACTION BASED SERVICES

ACCOUNTS PROCESSED - BASE SERVICES
DDA Accounts                                $ .75
Savings Accounts                            $ .70
Time Accounts                               $ .70
Loan Accounts                               $ .75
CIF Records                                 $ .20
ATM/Debit Cards                             $ .225

         Accounts Processed - Base Services Include:
<TABLE>
<CAPTION>

<S>                                                  <C>
         Collection System (Cyber Resources)         ACH Origination
         Recovery System (Cyber Resources)           ATM/Debit Card Processing
         Organizational Profitability (IPS)          General Ledger
         Asset/Liability (Bankware)                  Loan Tracking (Baker Hill)
         Fixed Asset Interface                       Optical System (RVI)
         Loan Spread Sheet (Baker Hill)              Interactive Voice
         MCIF (Okra)                                 Credit Scoring (Fair Issac)
         Card Management System                      Loan Documentation (FTI/CFI)
         Cash Management System (Firstlink)          Wire Transfer (Fundtech)
         Bank Audit                                  Commercial Analysis
         NOW Reclassification                        Accounts Payable Interface
         Charge Back System                          Long Distance Management
         Remote Laser Printing                       Teller (Encore)
         Retrofit/New Releases                       Query Report Writer
         Mortgage (Unify)                            Forms and Supplies
         Currency Transaction Reporting              Year-end Processing

STATEMENTS PRODUCED
DDA                                         $ .30
Savings                                     $ .10
Time                                        $ .02
Loan                                        $ .15
Year End                                    $1.00
5498                                        $1.00

TRANSACTIONS PROCESSED - BASE SERVICES - ITEM PROCESSING
Proof Items                                 $ .040
POD and EFT Items                           $ .014
Inclearing and Transmission Items           $ .014

         Transactions Processed - Base Services - Item Processing Includes:

         MICR Rejects                       Serial Sort                         Teller Adjustments
         Transit Float Analysis             Microfilming                        Deposit Corrections
         Endorsement Services               Forms and Supplies                  Check Truncation
         Exception Item Sort                Statement Sort                      Interest Check Mailings
         Statement Enclosures               Notice Mailings
</TABLE>

<PAGE>

TRANSACTIONS PROCESSED - OTHER SERVICES

Wire Activity                               $        5.00
First Link Activity                         $       30.00
ACH Activity                                $         .042
Research Requests                           $       15.00
Adjustments Processed                       $       15.00
Lock Box Transactions                       $         .45
Lock Box Postage                                   as incurred
Lock Box Copies                             $         .08
Mail Services:
         FB Midwest                         $      900.00 per month
         FB&T                               $      900.00 per month

BRANCH BASED SERVICES

CONNECTION CHARGES
Support Unit Data Connections               $      varies
Branch Data Connections                     $      900.00 per location
ATM Connections                             $      100.00 per location
Dierbergs ATM Connections                   $      700.00 per location

Contingency Pln/Disaster Rec                $      200.00 per location
Mail Courier Routes (MO/IL)                 $       40.00 per day


USER BASED SERVICES

Network/Telecom Support/Infrastructure      $      60.00 per user
Help Desk Support                           $      25.00 per user
Microsoft Application Licenses              $      25.00 per user
Email                                       $      10.00 per user
Web (Internet) Access                       $      15.00 per user
Dial-In (Remote) Access                     $      20.00 per user
Information Security                        $      25.00 per user

         User Based Services include:

         Network Technical support          Network Infrastructure
         Help Desk                          MS Word
         MS Excel                           MS Access
         MS Powerpoint                      Anti-Virus
         Email usage                        Web usage
         Dial-In Access capability          User/Password Administration
         Security Monitoring                Access Control





<PAGE>



APPLICATION/PROJECT BASED SERVICES

Application Support/Software Maintenance                      $        60.00/hr
Project Management and Support                                $        60.00/hr
Project Office                                                $        60.00/hr
Acquisition/New Business Support                              $        60.00/hr
Asset Management/Technical Purchasing                         $        28.85/hr

         The Above Services Include:
         Production problem support                  Application Q/A
         Application software upgrades/releases      Project Management
         Project Office tracking and reporting       Acquisition Conversions
         Branch Deconversions                        Mergers
         Equipment quotes, orders, and delivery      Asset tracking
         Invoice payment

Operations Support                                   $        28.85/hr
IRA Support                                          $        17.50/hr
Reconciliation/Appl Balancing                        $        14.50/hr
Records Management                                   $        32.00/hr

Bookkeeping Support                                  $        20.50/hr
<TABLE>
<CAPTION>

         Bookkeeping Support includes:

<S>                <C>                      <C>                                 <C>
                  Returns                   Large Item Notification             Signature Verification
                  Chargebacks               Kiting                              Savings Bonds
                  Unposted Items            OFAC                                American Express
                  NSF Notices               Year-End Notifications

</TABLE>




<PAGE>

                                                                    EXHIBIT 13.1




















                                FIRST BANKS, INC.

                               2001 ANNUAL REPORT









<PAGE>


<TABLE>
<CAPTION>


                                TABLE OF CONTENTS


                                                                                       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..................................        33

FINANCIAL STATEMENTS:

     CONSOLIDATED BALANCE SHEETS................................................        34

     CONSOLIDATED STATEMENTS OF INCOME..........................................        36

     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
         AND COMPREHENSIVE  INCOME..............................................        37

     CONSOLIDATED STATEMENTS OF CASH FLOWS......................................        38

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.................................        39

INDEPENDENT AUDITORS' REPORT....................................................        63

DIRECTORS AND SENIOR MANAGEMENT.................................................        64

INVESTOR INFORMATION............................................................        65

</TABLE>



<PAGE>
                             LETTER TO SHAREHOLDERS


To Our Valued Investors, Customers and Friends:

First Banks,  Inc. prides itself on its foundation of sound financial  condition
and operating  results.  We pay  relatively  small  dividends on our Class A and
Class B preferred  stock and we have never paid,  and have no  intention to pay,
dividends on our common  stock.  This practice of retaining net income allows us
to reinvest our earnings to support future growth.  Total assets  increased over
$901.8 million during 2001 to $6.78 billion,  representing a 15.3% increase over
December 31, 2000.  Despite  significantly  declining interest rates and slowing
economic  conditions in our market areas, the Company reported earnings of $64.5
million for 2001, compared to $56.1 million in 2000. These earnings equated to a
return on average assets of 1.08% and a return on average  stockholders'  equity
of 15.96%.  The improved  earnings  reflect  increased  net interest  income and
noninterest income,  including a nonrecurring  pre-tax gain of $19.0 million, as
well as a reduced  provision for income taxes.  The overall  improvement  in our
earnings  was  partially  offset by an increased  provision  for loan losses and
higher operating expenses.

Our primary  strategic  objective  remains  progressive  and  profitable  growth
through  the  continued   development   of  our  existing   banking   franchise,
supplemented by the acquisition of other  financial  institutions.  In 2001, our
growth was primarily driven by  acquisitions.  During October 2001, we increased
our presence in our southern California market areas through the acquisitions of
Charter  Pacific Bank in Agoura  Hills,  California,  and BYL Bancorp in Orange,
California,  and in December  2001, we further  augmented our Midwest  franchise
with the acquisition of Union Financial Group, Ltd. in Swansea,  Illinois. These
acquisitions added assets of approximately $743.0 million.

One of the key components of our earnings and growth is net interest income.  We
continue  to  emphasize  our  commercial  and  commercial  real  estate  lending
activities, which resulted in an increase in average loans of $593.3 million, or
13.8%, in 2001. This increase contributed to the improvement in our net interest
income to $253.7 million in 2001,  compared to $235.1 million in 2000.  However,
the  improvement  in our net  interest  income was  significantly  mitigated  by
continued  reductions in prevailing  interest  rates  throughout  2001.  Our net
interest  rate  margin  decreased  24  basis  points  from  2000 to 4.69% of our
interest-earning  assets in 2001.  To assist us in limiting  the adverse  impact
that changes in interest rates,  similar to those  experienced in 2001, may have
on our net interest income, we employ an interest rate risk management  program.
We utilize various  derivative  financial  instruments,  including interest rate
swap, floor and cap agreements,  in the overall  management of our interest rate
exposure.  This program  contributed  $23.4  million to net interest  income and
$18.6 million to noninterest income in 2001.

Our credit quality weakened  somewhat in 2001,  primarily as a result of slowing
economic  conditions.  Nonperforming  loans  increased  $14.1  million  to $67.3
million,  representing 1.24% of our loan portfolio at the end of 2001,  compared
to 1.12% at the end of 2000. In addition, we experienced an increase in past due
loans to $74.5 million at the end of 2001, also  reflective of current  economic
conditions  prevalent  within our market  areas.  Our  allowance for loan losses
covered 144.36% of our nonperforming loans at the end of the year. We anticipate
these trends will continue in the upcoming months.

In November  2001, we completed our fourth  public  offering of trust  preferred
securities, raising an additional $55.2 million to support our future growth and
expansion efforts. This financial strength allows us to invest in technology and
diversified  business  lines to better  serve you. In  addition to our  existing
array of commercial  lending and deposit product  offerings,  we are continually
striving to provide high quality products and services, as well as the necessary
flexibility,  to meet your  changing  financial  needs.  Our goal is to help you
reach your goal!

The year 2001  certainly  represents  a  memorable  year in light of the  tragic
events of September  11, 2001 in New York City and  Washington,  D.C. as well as
the future challenges facing our nation. Now more than ever, I wish to extend my
deepest  appreciation  for the dedication of our  employees,  the loyalty of our
customers and the continued support of our shareholders.

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 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)
                                                        -----------------------------------------------------------
                                                            2001         2000        1999        1998        1997
                                                            ----         ----        ----        ----        ----
                                                           (dollars expressed in thousands, except per share data)
Income Statement Data:
<S>                                                        <C>         <C>         <C>          <C>         <C>
    Interest income...................................     $  444,743    422,826     353,082      327,860     295,101
    Interest expense..................................        191,014    187,679     158,701      162,179     148,831
                                                           ----------  ---------   ---------    ---------   ---------
    Net interest income...............................        253,729    235,147     194,381      165,681     146,270
    Provision for loan losses.........................         23,510     14,127      13,073        9,000      11,300
                                                           ----------  ---------   ---------    ---------   ---------
    Net interest income after provision
        for loan losses...............................        230,219    221,020     181,308      156,681     134,970
    Noninterest income................................         98,609     42,778      41,650       36,497      25,697
    Noninterest expense...............................        230,261    171,163     150,807      138,704     110,287
                                                           ----------  ---------   ---------    ---------   ---------
    Income before provision for income taxes,
        minority interest in income of subsidiary
        and cumulative effect of change in
        accounting principle..........................         98,567     92,635      72,151       54,474      50,380
    Provision for income taxes........................         30,048     34,482      26,313       19,693      16,083
                                                           ----------  ---------   ---------    ---------   ---------
    Income before minority interest in income
        of subsidiary and cumulative effect of
        change in accounting principle................         68,519     58,153      45,838       34,781      34,297
    Minority interest in income of subsidiary.........          2,629      2,046       1,660        1,271       1,270
                                                           ----------  ---------   ---------    ---------   ---------
    Income before cumulative effect of change in
        accounting principle..........................         65,890     56,107      44,178       33,510      33,027
    Cumulative effect of change in accounting
        principle, net of tax.........................         (1,376)        --          --           --          --
                                                           ----------  ---------   ---------    ---------   ---------
    Net income........................................     $   64,514     56,107      44,178       33,510      33,027
                                                           ==========  =========   =========    =========   =========
Dividends:
    Preferred stock...................................     $      786        786         786          786       5,067
    Common stock......................................             --         --          --           --          --
    Ratio of total dividends declared to net income...           1.22%      1.40%       1.78%        2.35%      15.34%
Per Share Data:
    Earnings per common share:
      Basic:
        Income before cumulative effect of change
          in accounting principle.....................     $ 2,751.54   2,338.04    1,833.91     1,383.04    1,181.69
        Cumulative effect of change in accounting
          principle, net of tax.......................         (58.16)        --          --           --          --
                                                           ----------  ---------   ---------    ---------   ---------

        Basic.........................................     $ 2,693.38   2,338.04    1,833.91     1,383.04    1,181.69
                                                           ==========  =========   =========    =========   =========

      Diluted:
        Income before cumulative effect of change
          in accounting principle.....................     $ 2,684.93   2,267.41    1,775.47     1,337.09    1,134.28
        Cumulative effect of change in
          accounting principle, net of tax............         (58.16)        --          --           --          --
                                                           ----------  ---------   ---------    ---------   ---------

        Diluted.......................................     $ 2,626.77   2,267.41    1,775.47     1,337.09    1,134.28
                                                           ==========  =========   =========    =========   =========


      Weighted average common stock outstanding.......         23,661     23,661      23,661       23,661      23,661
Balance Sheet Data:
    Investment securities.............................     $  631,068    563,534     451,647      534,796     795,530
    Loans, net of unearned discount...................      5,408,869  4,752,265   3,996,324    3,580,105   3,002,200
    Total assets......................................      6,778,451  5,876,691   4,867,747    4,554,810   4,165,014
    Total deposits....................................      5,683,904  5,012,415   4,251,814    3,939,985   3,684,595
    Notes payable.....................................         27,500     83,000      64,000       50,048      55,144
    Guaranteed preferred beneficial interests
        in First Banks, Inc. and First Banks
        America, Inc. subordinated debentures.........        235,881    182,849     127,611      127,443      83,183
    Common stockholders' equity.......................        435,594    339,783     281,842      250,300     218,474
    Total stockholders' equity........................        448,657    352,846     294,905      263,363     231,537

<PAGE>

Earnings Ratios:
    Return on average total assets....................           1.08%      1.09%       0.95%        0.78%       0.87%
    Return on average total stockholders' equity......          15.96      17.43       15.79        13.64       12.91
    Efficiency ratio (2)..............................          65.35      61.59       63.89        68.60       64.13
    Net interest margin (3)...........................           4.69       4.93        4.52         4.19        4.09
Asset Quality Ratios:
    Allowance for loan losses to loans................           1.80       1.72        1.72         1.70        1.68
    Nonperforming loans to loans (4)..................           1.24       1.12        0.99         1.22        0.80
    Allowance for loan losses to
        nonperforming loans (4).......................         144.36     153.47      172.66       140.04      209.88
    Nonperforming assets to loans and
        other real estate (5).........................           1.32       1.17        1.05         1.32        1.04
    Net loan charge-offs to average loans.............           0.45       0.17        0.22         0.05        0.27
Capital Ratios:
    Average total stockholders' equity
         to average total assets......................           6.74       6.25        6.00         5.73        6.70
    Total risk-based capital ratio....................          10.53      10.21       10.05        10.28       10.26
    Leverage ratio....................................           7.24       7.45        7.14         7.77        6.80
</TABLE>

-----------------------------
(1)  The  comparability  of the  selected  data  presented  is  affected  by the
     acquisitions  of 13 banks and five  branch  offices  during  the  five-year
     period ended December 31, 2001.  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)  Net interest rate margin is the ratio of net interest income  (expressed on
     a tax-equivalent basis) to average interest-earning
     assets.
(4)  Nonperforming  loans  consist of  nonaccrual  loans and certain  loans with
     restructured terms.
(5)  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,  including the negative
impact on the economy  resulting  from the events of  September  11, 2001 in New
York City and Washington,  D.C. and the national  response to those events;  the
impact of laws and regulations  applicable to us and changes therein; the impact
of accounting pronouncements  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  anticipated  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 have banking operations in California,  Illinois,  Missouri
and Texas.  At December 31, 2001, we had total assets of $6.78  billion,  loans,
net of unearned discount, of $5.41 billion,  total deposits of $5.68 billion and
total stockholders' equity of $448.7 million.
         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,   debit  cards,   brokerage   services,
credit-related insurance, internet banking, automated teller machines, telephone
banking,  safe deposit boxes,  escrow and  bankruptcy  deposit  services,  stock
option services,  and trust,  private banking and institutional money management
services.
         We operate through two subsidiary banks,  three subsidiary bank holding
companies, and through our subsidiary leasing company, as follows:

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

         Our  subsidiary  banks  and FCG are  wholly  owned by their  respective
parent companies.  We owned 93.69% of FBA at December 31, 2001.
         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 his adult  children,  own all of our voting stock.  Mr.
Dierberg and his family,  therefore,  control our  management,  policies and the
election of our directors.



<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, 2001:
<TABLE>
<CAPTION>

                                                                                        Loans, Net of
                                                           Number of      Total           Unearned          Total
                             Name                          Locations     Assets           Discount        Deposits
                             ----                          ---------     ------           --------        --------
                                                                             (dollars expressed in thousands)

     UFG:
<S>                                                           <C>      <C>               <C>              <C>
         First Bank..................................         93       $3,707,081        3,086,023        3,142,676
     FCG (1).........................................          1              482               --               --
     FBA:
         SFC:
              FB&T...................................         56        3,057,920        2,323,263        2,555,396
</TABLE>
     ------------------------------------
     (1)  FCG was purchased on February 29, 2000. As of December 31, 2001, there
          were  approximately  $149.0 million of commercial leases originated by
          FCG. The  commercial  leases are recorded as assets of our  subsidiary
          banks.

         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 and the related advantages
of tax-free exchanges to the selling  shareholders.  Our acquisition  activities
are generally 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  approach  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,
ownership,  regulatory or other problems  unique to the  respective  acquisition
target,  which we seek to address the risks of these issues through  pricing and
other  means.   In  these   institutions,   these  issues  may  diminish   their
attractiveness to other potential acquirers,  and therefore reduce 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 may not be economically viable in extremely competitive acquisition
markets.
         During  the five years  ended  December  31,  2001,  we have  primarily
concentrated our acquisitions in California, completing 13 acquisitions of banks
and five  purchases of branch  offices,  which  provided us with an aggregate of
$2.05  billion  in total  assets  and 47  banking  locations  as of the dates of
acquisition.  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.  In  addition,  in February  2000,  we
completed our purchase of certain assets and  assumption of certain  liabilities
of FCG, a multi-state  commercial leasing business headquartered in Albuquerque,
New Mexico.  We have also recently  expanded our Midwest banking  franchise with
our Swansea, Illinois acquisition,  completed in December 2001, and our Chicago,
Illinois  acquisition,  completed in January 2002.  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, 2001, the
majority of our efforts have been  concentrated in various areas including,  but
not limited to:


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

         >>    improving asset quality,  which was primarily associated with our
               acquisitions completed in 1997 and 1998;

         >>    reducing   unnecessary   and/or  excessive   expenses   including
               personnel,  information  technology and certain other operational
               and administrative expenses;

         >>    maintaining,  repairing  and,  in some cases,  refurbishing  bank
               premises necessitated by the deferral of such projects by some of
               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  actual or pending  litigation 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 our combined entity to take advantage of the opportunities  available to us.
This investment  contributed to increases in noninterest expense during the five
years ended  December  31,  2001,  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 have also focused on
building  and  reorganizing  the  infrastructure  necessary  to  accomplish  our
objectives for internal growth. This process has 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.  We continue to focus on  modifying  and
effectively  repositioning  our internal and external  resources to better serve
the markets in which we operate.  Although  these efforts have  primarily led to
increased capital expenditures and noninterest expenses, we anticipate they will
lead to additional  internal  growth,  more  efficient  operations  and improved
profitability over the long term.
         In February 1997, our initial  financing  subsidiary,  First  Preferred
Capital Trust, issued $86.25 million of 9.25% trust preferred  securities,  and,
in October 2000, our second financing subsidiary,  First Preferred Capital Trust
II, issued $57.5 million of 10.24% trust preferred  securities.  On November 15,
2001, our third financing subsidiary,  First Preferred Capital Trust III, issued
$55.2 million of 9.00% 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.  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.

Lending Activities

         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 certain  instances,  sales of loans.  As a
result, our portfolio of one-to-four family residential real estate loans, after
reaching a high of $1.20 billion at December 31, 1995, decreased  over the  past

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

five years  from  $915.2  million  at  December  31,  1997 to $798.1  million at
December 31, 2001.  Similarly,  our portfolio of consumer and installment loans,
net of  unearned  discount,  decreased  significantly  from  $279.3  million  at
December 31, 1997 to $122.1  million at December  31,  2001.  For the year ended
December  31,  2001,  the  overall  decline  in  our  consumer  and  installment
portfolio,  exclusive  of loans  held for sale,  also  reflects  the sale of our
student  loan and credit card  portfolios,  the  reduction  in new  consumer and
installment loan volumes and the repayment of principal on our existing consumer
and installment loan portfolio,  all of which are consistent with our objectives
of diversifying our loan portfolio,  expanding  commercial  lending and reducing
the amount of under-performing loan types.
         As various  components of our loan  portfolio have  decreased,  we have
replaced  them  with  more  diversified  and  higher  yielding  loans  that were
internally  generated by our business  development staff. 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 $3.00  billion at December 31, 1997 to $5.41 billion at December
31, 2001.
         Our expanded level of commercial lending carries with it greater credit
risk which, although managed through loan policies, procedures, underwriting and
credit  administration,  must be  accompanied  by adequate  allowances  for loan
losses.  We associate the increased level of commercial  lending  activities and
our  acquisitions  with the  increases  of $13.4  million  and $14.1  million in
nonperforming   loans  for  the  years  ended   December   31,  2000  and  2001,
respectively.  The increase in 2000 as compared to 1999 primarily results from a
small number of credit  relationships  that were placed on nonaccrual during the
year ended  December 31, 2000,  reflecting  problems that were specific to these
relationships.  The  increase  for 2001,  while  partially  attributable  to the
overall risk in our loan portfolio,  is primarily  reflective of cyclical trends
experienced  within the banking  industry as a result of economic  slowdown.  In
addition,  the loan portfolios of our  acquisitions  completed during the fourth
quarter,   particularly  UFG,  exhibited  significant  distress,  which  further
contributed to the overall increase in nonperforming loans for 2001.
         In addition to restructuring  our loan portfolio,  we also have changed
the  composition  of our deposit base.  The majority of our 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.   This  is
accomplished by cross-selling  various products and services,  packaging 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, 1997, total
time deposits were $1.90  billion,  or 51.68% of total  deposits.  Although time
deposits have increased to $2.30 billion at December 31, 2001, they  represented
only 40.5% of total  deposits at December 31,  2001,  reflecting  our  continued
focus on transactional  accounts and full service deposit relationships with our
customers.
         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.  For the years ended  December  31, 2001 and 2000,  net income was $64.5
million and $56.1  million,  respectively,  compared with $44.2  million,  $33.5
million and $33.0 million in 1999, 1998 and 1997,  respectively.  Net income for
2001 reflects a decline in our net interest rate margin,  primarily attributable
to the prevailing  interest rate  environment,  and higher  operating  expenses,
including  nonrecurring  charges associated with the establishment of a specific
reserve relating to a contingent liability, the settlement of certain litigation
and the implementation of a change in accounting principle.  These trends, which
reduced  net income for 2001,  were offset by a reduction  in the  deferred  tax
asset  valuation  allowance of FBA.  Although 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.

Acquisitions

         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.
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  primarily  utilized
cash,  borrowings,  FBA's  voting  stock  and the  issuance  of trust  preferred
securities to meet our growth objectives under our acquisition program.


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

         During the three  years ended  December  31,  2001,  we  completed  ten
acquisitions of banks, one branch office purchase and the acquisition of certain
assets  and  assumption  of  certain   liabilities  of  a  leasing  company.  As
demonstrated  below, our acquisitions  during the three years ended December 31,
2001 have primarily served to increase our presence in the California markets we
originally  entered into during 1995 and to further augment our existing markets
and our Midwest banking franchise. These transactions 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)
2001
----

   Union Financial Group, Ltd.
<S>                                                       <C>            <C>            <C>        <C>           <C>
   Swansea, Illinois                December 31, 2001     $360,000       263,500        1,150      283,300       9

   BYL Bancorp
   Orange, California               October 31, 2001       281,500       175,000       12,600      251,800       7

   Charter Pacific Bank
   Agoura Hills, California         October 16, 2001       101,500        70,200        7,500       89,000       2
                                                          --------      --------     --------     --------    ----
                                                          $743,000       508,700       21,250      624,100      18
                                                          ========      ========     ========     ========    ====
2000
----

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

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

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

   Bank of Ventura
   Ventura, California               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        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              September 17, 1999     $ 23,600         6,300           --       17,300       1

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

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

         In addition to the acquisitions included in the table above, on January
15, 2002, we completed our acquisition of Plains Financial Corporation,  or PFC,
and its wholly  owned  banking  subsidiary,  PlainsBank  of  Illinois,  National
Association,  Des Plaines,  Illinois, in exchange for $36.5 million in cash. PFC
operated a total of three banking facilities in Des Plaines,  Illinois,  and one
banking facility in Elk Grove Village, Illinois. At the time of the transaction,
PFC had $256.3 million in total assets, $150.4 million in loans, net of unearned
discount, $81.0 million in investment securities and $213.4 million in deposits.
         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  proceeds  from the of the  issuance of trust  preferred
securities.



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

Critical Accounting Policies

         Our  financial  condition  and results of  operations  presented in the
consolidated  financial  statements,  accompanying  notes  to  the  consolidated
financial  statements,  selected consolidated and other financial data appearing
elsewhere  within this  report,  and  management's  discussion  and  analysis of
financial  condition and results of operations  are, to large degree,  dependent
upon our accounting  policies.  The selection and  application of our accounting
policies involve judgments,  estimates and uncertainties that are susceptible to
change.
         We have  identified the following  accounting  policies that we believe
are the most  critical  to the  understanding  of our  financial  condition  and
results of operations.  These critical accounting policies require  management's
most  difficult,  subjective  and  complex  judgments  about  matters  that  are
inherently uncertain. In the event that different assumptions or conditions were
to prevail,  and depending upon the severity of such changes, the possibility of
a materially different financial condition and/or results of operations could be
a reasonable  likelihood.  The impact and any  associated  risks  related to our
critical accounting policies on our business operations is discussed  throughout
"--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations,"  where such  policies  affect our reported  and expected  financial
results.  For a  detailed  discussion  on the  application  of these  and  other
accounting policies, see Note 1 to our consolidated financial statements.

         Loans and Allowance for Loan Losses.  We maintain an allowance for loan
losses at a level considered adequate to provide for probable losses in our loan
portfolio.   The  determination  of  our  allowance  for  loan  losses  requires
management to make  significant  judgments  and estimates  based upon a periodic
analysis of our loans held for  portfolio and held for sale  considering,  among
other factors,  current economic conditions,  loan portfolio  composition,  past
loan loss experience,  independent appraisals, the fair value of underlying loan
collateral,  our customers' ability to pay and selected key financial ratios. If
actual events prove the estimates and  assumptions  we used in  determining  our
allowance  for  loan  losses  were  incorrect,  we may  need to make  additional
provisions for loan losses.  See further discussion under "--Loans and Allowance
for Loan Losses" and Note 4 to our consolidated financial statements.

         Derivative  Financial  Instruments.  We  utilize  derivative  financial
instruments  to  assist  in our  management  of  interest  rate  sensitivity  by
modifying the repricing,  maturity and option  characteristics of certain assets
and  liabilities.  The judgments and  assumptions  that are most critical to the
application  of  this  critical   accounting  policy  are  those  affecting  the
estimation of fair value and hedge effectiveness.  Fair value is based on quoted
market prices where  available.  If quoted market prices are  unavailable,  fair
value is based upon quoted market prices of comparable  derivative  instruments.
Factors that affect  hedge  effectiveness  include the initial  selection of the
derivative that will be used as a hedge and how well changes in its cash flow or
fair value has  correlated and is expected to correlate with changes in the cash
flow or fair value of the underlying hedged asset or liability. Past correlation
is easy to demonstrate,  but expected  correlation  depends upon projections and
trends  that may not  always  hold true  within  acceptable  limits.  Changes in
assumptions and conditions could result in greater than expected  inefficiencies
that,  if  large  enough,  could  reduce  or  eliminate  the  economic  benefits
anticipated when the hedges were established  and/or invalidate  continuation of
hedge accounting. The consequence of greater inefficiency and discontinuation of
hedge accounting results in increased volatility to reported earnings.  For cash
flow hedges, this would result as more or all of the change in the fair value of
the affected  derivative would be reported in noninterest income. For fair value
hedges, this would result as less or none of the change in the fair value of the
derivative would be offset by changes in the fair value of the underlying hedged
asset  or  liability.   See  further  discussion  under  "--Interest  Rate  Risk
Management" and Note 5 to our consolidated financial statements.

         Deferred Tax Assets.  We recognize  deferred tax assets and liabilities
for the  estimated  future tax effects of temporary  differences,  net operating
loss carryforwards and tax credits.  We recognize deferred tax assets subject to
management's  judgment  based upon available  evidence that  realization is more
likely  than not.  Our  deferred  tax assets are  reduced,  if  necessary,  by a
deferred tax asset valuation allowance.  In the event that we determine we would
not be able to realize all or part of our net deferred tax assets in the future,
we would need to adjust the recorded  value of our  deferred  tax assets,  which
would result in a direct  charge to our provision for income taxes in the period
in such  determination is made. See further  discussion  under  "--Comparison of
Results of Operations for the Years Ended December 31, 2001 and 2000 - Provision
for Income Taxes" and Note 11 to our consolidated financial statements.

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

         Business   Combinations.   We  emphasize   acquiring   other  financial
institutions as one means of achieving our growth objectives.  The determination
of the fair value of the assets and liabilities  acquired in these  transactions
as well as the returns on investment that may be achieved requires management to
make  significant  judgments and estimates  based upon detailed  analyses of the
existing and future  economic  value of such assets and  liabilities  and/or the
related  income steams,  including the resulting  intangible  assets.  If actual
events prove the  estimates  and  assumptions  we used in  determining  the fair
values of the  acquired  assets and  liabilities  or the  projected  income were
incorrect,  we may need to make additional adjustments to the recorded values of
such assets and  liabilities,  which could  result in  increased  volatility  to
reported earnings.  In addition,  we may need to make additional  adjustments to
the  recorded  value  of  our  intangible  assets,  which  directly  impact  our
regulatory  capital  levels.  See  further  discussion  under  "--Acquisitions,"
"--Effects  of  New  Accounting  Standards,"  and  Note  2 and  Note  19 to  our
consolidated financial statements.

Financial Condition and Average Balances

         Our average total assets were $6.00 billion for the year ended December
31,  2001,  compared  to $5.15  billion  and $4.66  billion  for the years ended
December 31, 2000 and 1999,  respectively.  We attribute  the increase of $844.7
million in total average assets for 2001 primarily to our acquisitions completed
during the fourth  quarter of 2000 and in 2001;  internal loan growth  generated
through the efforts of our business  development staff;  increased bank premises
and equipment  associated with the expansion and renovation of various corporate
and branch  offices;  and,  increased  derivative  instruments  resulting from a
change in accounting  principle.  The  acquisition  of UFG, which provided total
assets of $360.0 million,  was completed on December 31, 2001, and therefore did
not have a  significant  impact on our average  total  assets for the year ended
December 31, 2001.
         Similarly,  we  attribute  the  increase  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, however, 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 44.9%, of the total assets we
acquired in 2000.
         The increase in assets for 2001 was primarily  funded by an increase in
average  deposits of $612.9 million to $5.09 billion for the year ended December
31, 2001, and an increase of $51.9 million in average  short-term  borrowings to
$158.0 million for the year ended December 31, 2001. We utilized the majority of
the funds  generated  from our  deposit  growth  to fund a  portion  of our loan
growth,  and the  remaining  funds were either  temporarily  invested in federal
funds sold or invested in available-for-sale investment securities, resulting in
increases in average  federal  funds sold and average  investment  securities of
$26.1  million  and $19.4  million,  respectively,  to $93.6  million and $451.4
million for the year ended December 31, 2001, respectively. Similarly, we funded
the  increase  in assets for 2000 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.
         Loans, net of unearned discount,  averaged $4.88 billion, $4.29 billion
and  $3.81  billion  for the  years  ended  December  31,  2001,  2000 and 1999,
respectively. The acquisitions we completed during 2000 and 2001 provided loans,
net of unearned discount, of $440.0 million and $508.7 million, respectively. In
addition to the growth provided by these acquisitions,  for 2001, $174.6 million
of net loan  growth was  provided by  corporate  banking  business  development,
consisting  of  increases  of  $20.4  million  of   commercial,   financial  and
agricultural  loans,  $145.8  million of  commercial  real estate loans and $8.4
million of real estate  construction  and development  loans.  Furthermore,  the
increase in loans is also attributable to an increase in residential real estate
lending,  including  loans held for sale,  of $48.6  million  for the year ended
December 31, 2001.  We primarily  attribute  this increase to be the result of a
significantly higher volume of residential mortgage loans originated,  including
both new fundings and  refinancings,  as a result of  declining  interest  rates
experienced  throughout  2001 as well as an expansion  of our  mortgage  banking
activities.   These  overall  increases  were  partially  offset  by  continuing
reductions in consumer and installment  loans, net of unearned  discount,  which
decreased  $75.3 million to $122.1  million at December 31, 2001.  This decrease
reflects  the  sale  of our  student  loan  and  credit  card  loan  portfolios,
reductions  in new loan  volumes and the  repayment of principal on our existing
portfolio, and is also consistent with our objectives of de-emphasizing consumer
lending and expanding commercial lending. These changes result from the focus we
have placed on our business development efforts and the portfolio  repositioning
which we originally  began in the  mid-1990s.  This  repositioning  provided for
substantially all of our residential  mortgage loan production to be sold in the
secondary mortgage market and the origination of indirect automobile loans to be
substantially reduced.
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

         Investment  securities  averaged  $451.4  million,  $431.9  million and
$454.4  million  for  the  years  ended  December  31,  2001,   2000  and  1999,
respectively,  reflecting  an  increase  of $19.4  million  for the  year  ended
December  31, 2001 and a decrease of $22.5  million for the year ended  December
31, 2000.  The increase for 2001 is  primarily  associated  with the  investment
securities that we acquired in conjunction  with our 2000 and 2001  acquisitions
and the  investment of excess funds  available due to reduced loan demand.  This
increase was partially offset by the liquidation of certain acquired  investment
securities,  a higher than normal level of calls of investment  securities prior
to their normal  maturity dates  experienced  throughout 2001 resulting from the
general  decline in  interest  rates,  and sales of  certain  available-for-sale
investment securities.
         Our average  nonearning  assets were $570.2  million for the year ended
December 31, 2001,  compared to $364.3  million and $344.9 million for the years
ended  December  31,  2000 and  1999,  respectively.  The  increase  in  average
nonearning  assets for the year ended  December  31,  2001 is  primarily  due to
derivative  instruments of $54.9 million at December 31, 2001,  resulting solely
from the implementation of Statement of Financial Accounting Standards, or SFAS,
No. 133,  Accounting  for  Derivative  Instruments  and Hedging  Activities,  as
amended by 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,  and  SFAS  No.  138 -  Accounting  for
Derivative  Instruments and Hedging  Activities,  an Amendment of FASB Statement
No. 133. Bank premises and  equipment,  net of  depreciation  and  amortization,
increased  $34.8  million to $149.6  million at  December  31,  2001 from $114.8
million at December  31,  2000.  We  primarily  attribute  the  increase in bank
premises and equipment to our acquisitions, the purchase and remodeling of a new
operations center and corporate  administrative  building,  and the construction
and/or  renovation  of various  branch  offices.  In  addition,  the increase in
intangibles  associated  with the purchase of subsidiaries is due to the cost in
excess of the fair value of the net assets acquired of the 2001 acquisitions.
         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 $5.09 billion,  $4.48 billion and $4.06 billion for the years
ended December 31, 2001, 2000 and 1999,  respectively.  Total deposits increased
by $671.5  million to $5.68  billion at December 31, 2001 from $5.01  billion at
December  31,  2000.  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 for
2001  was  partially  offset  by  an  anticipated  level  of  account  attrition
associated  with our  acquisitions  during the fourth  quarter of 2000 and $50.0
million of time deposits of $100,000 or more that either  matured or were called
in September  2001.  The overall  increase for 2000 was partially  offset by the
divestiture  of  one of our  central  Illinois  branches,  which  resulted  in a
reduction in First Bank's deposit base of approximately $8.8 million.
         Short-term borrowings averaged $158.0 million, $106.1 million and $87.4
million for the years ended  December  31,  2001,  2000 and 1999,  respectively.
Short-term  borrowings increased by $102.5 million to $243.1 million at December
31, 2001 from $140.6  million at December 31,  2000.  This  increase  reflects a
$17.5 million  increase in securities  sold under  agreements to  repurchase,  a
$15.1  million  increase  in  Federal  Home  Loan  Bank  advances   acquired  in
conjunction  with our UFG  acquisition,  and a $70.0 million increase in federal
funds purchased.
         Note payable  averaged $41.6  million,  $51.9 million and $56.4 million
for the years ended  December 31, 2001,  2000 and 1999,  respectively.  Our note
payable  decreased by $55.5  million to $27.5  million at December 31, 2001 from
$83.0 million at December 31, 2000. The reduction for 2001 was primarily  funded
with  dividends  from our  subsidiaries  and the  issuance of  additional  trust
preferred securities.  In addition,  the merger of our former subsidiary,  First
Bank & Trust,  with and into Bank of San  Francisco,  effective  March 29, 2001,
allowed us to further  reduce our note  payable  through a capital  reduction of
$23.0  million.  In  conjunction  with this merger,  Bank of San  Francisco  was
renamed FB&T.  The balance of our note payable at December 31, 2001 results from
a $27.5 million advance drawn on December 31, 2001 to fund our purchase of UFG.
         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  and  subsequently  to  partially  fund  our
acquisitions  of Commercial Bank of San Francisco in October 2000 and Millennium
Bank in December 2000. Distributions payable on these trust preferred securities
were $6.0  million and $1.2  million for the years ended  December  31, 2001 and
2000,  respectively.  On November 15, 2001,  First  Preferred  Capital Trust III
issued $55.2  million of 9.00% trust  preferred  securities.  Proceeds from this
offering,  net of underwriting fees and offering  expenses,  were  approximately
$52.9 million and were used to reduce borrowings. Distributions payable on these
trust  preferred  securities were $634,000 for the year ended December 31, 2001.
The  distributions on all issues of our trust preferred  securities are recorded
as noninterest expense in our accompanying consolidated financial statements.
         Stockholders' equity averaged $404.1 million, $321.9 million and $279.8
million for the years ended December 31, 2001, 2000 and 1999,  respectively.  We
primarily  attribute the increase for 2001 to net income of $64.5 million and an
increase  in  accumulated  other  comprehensive  income  of $28.3  million.  The
increase in accumulated other comprehensive income reflects an increase of $30.1

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

million  associated with our derivative  financial  instruments as accounted for
under  SFAS  133,  as  amended,  offset  by a $1.9  million  reduction  in other
comprehensive income resulting from the change in unrealized gains and losses on
available-for-sale  investment securities. The overall increase in stockholders'
equity for 2001 also  reflects  an  increase  of $3.8  million  associated  with
capital stock and certain other equity  transactions of FBA, partially offset by
dividends  paid on our Class A and Class B preferred  stock.  We  associate  the
increase  in  stockholders'  equity  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.
         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,
                                        -------------------------------------------------------------------------------------
                                                    2001                           2000                       1999
                                        -----------------------------   --------------------------  -------------------------
                                                    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........................ $4,876,615   411,663    8.44%   $4,281,290  389,687   9.10% $3,805,351  322,703  8.48%
       Tax-exempt (4).................      7,684       754    9.81         9,668      992  10.26       7,157      775 10.83
    Investment securities:
       Taxable........................    433,454    26,244    6.05       412,932   27,331   6.62     435,189   26,206  6.02
       Tax-exempt (4).................     17,910     1,366    7.63        18,996    1,478   7.78      19,247    1,442  7.49
    Federal funds sold and other......     93,561     5,458    5.83        67,498    4,202   6.23      51,342    2,732  5.32
                                       ----------  --------            ----------  -------         ----------  -------
        Total interest-earning assets.  5,429,224   445,485    8.21     4,790,384  423,690   8.84   4,318,286  353,858  8.19
                                                   --------                        -------         ----------  -------
Nonearning assets.....................    570,162                         364,333                     344,942
                                       ----------                      ----------                  ----------
        Total assets.................. $5,999,386                      $5,154,717                  $4,663,228
                                       ==========                      ==========                  ==========
               LIABILITIES AND
            STOCKHOLDERS' EQUITY
            --------------------
Interest-bearing liabilities:
    Interest-bearing deposits:
       Interest-bearing
        demand deposits............... $  507,011     7,019    1.38%   $  421,986    5,909   1.40% $  391,892    5,098  1.30%
       Savings deposits...............  1,548,441    50,388    3.25     1,279,378   51,656   4.04   1,220,425   44,101  3.61
       Time deposits (3)..............  2,278,263   125,131    5.49     2,139,305  120,257   5.62   1,899,218  101,653  5.35
                                       ----------  --------            ----------  -------         ----------  -------
        Total interest-
           bearing deposits...........  4,333,715   182,538    4.21     3,840,669  177,822   4.63   3,511,535  150,852  4.30
    Short-term borrowings.............    158,047     5,847    3.70       106,123    5,881   5.54      87,374    4,220  4.83
    Note payable......................     41,590     2,629    6.32        51,897    3,976   7.66      56,376    3,629  6.44
                                       ----------  --------            ----------  -------         ----------  -------
        Total interest-bearing
           liabilities................  4,533,352   191,014    4.21     3,998,689  187,679   4.69   3,655,285  158,701  4.34
                                                   --------                        -------                     -------
Noninterest-bearing liabilities:
    Demand deposits...................    754,763                         634,886                     552,029
    Other liabilities.................    307,164                         199,215                     176,102
                                       ----------                      ----------                  ----------
        Total liabilities.............  5,595,279                       4,832,790                   4,383,416
Stockholders' equity..................    404,107                         321,927                     279,812
                                       ----------                      ----------                  ----------
        Total liabilities and
           stockholders' equity....... $5,999,386                      $5,154,717                  $4,663,228
                                       ==========                      ==========                  ==========
Net interest income...................              254,471                        236,011                     195,157
                                                   ========                        =======                     =======
Interest rate spread..................                         4.00                          4.15                       3.85
Net interest margin (5)...............                         4.69%                         4.93%                      4.52%
                                                               ====                         =====                      =====
</TABLE>
<PAGE>

------------------------
(1)  For purposes of these  computations,  nonaccrual  loans are included in the
     average loan amounts.
(2)  Interest income on loans includes loan fees.
(3)  Interest income and interest  expense includes the effects of interest rate
     swap agreements.
(4)  Information is presented on a  tax-equivalent  basis assuming a tax rate of
     35%. The tax-equivalent  adjustments were approximately $742,000,  $864,000
     and  $776,000  for the  years  ended  December  31,  2001,  2000 and  1999,
     respectively.
(5)  Net interest  margin is the ratio of net interest  income  (expressed  on a
     tax-equivalent basis) to average interest-earning assets.



<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, 2001 Compared         December 31, 2000 Compared
                                                     to December 31, 2000               to December 31, 1999
                                               -----------------------------       ------------------------------
                                                                          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.............................  $ 51,584     (29,608)     21,976     42,273      24,711      66,984
       Tax-exempt (4)......................      (196)        (42)       (238)       260         (43)        217
    Investment securities:
       Taxable.............................     1,325      (2,412)     (1,087)    (1,389)      2,514       1,125
       Tax-exempt (4)......................       (84)        (28)       (112)       (19)         55          36
    Federal funds sold and other...........     1,540        (284)      1,256        956         514       1,470
                                             --------     -------      ------     ------      ------      ------
           Total interest income...........    54,169     (32,374)     21,795     42,081      27,751      69,832
                                             --------     -------      ------     ------      ------      ------
Interest paid on:
    Interest-bearing demand deposits.......     1,194         (84)      1,110        405         406         811
    Savings deposits.......................     9,818     (11,086)     (1,268)     2,180       5,375       7,555
    Time deposits (3) .....................     7,696      (2,822)      4,874     13,296       5,308      18,604
    Short-term borrowings..................     2,306      (2,340)        (34)       986         675       1,661
    Note payable...........................      (716)       (631)     (1,347)      (304)        651         347
                                             --------     -------      ------     ------      ------      ------
           Total interest expense..........    20,298     (16,963)      3,335     16,563      12,415      28,978
                                             --------     -------      ------     ------      ------      ------
           Net interest income.............  $ 33,871     (15,411)     18,460     25,518      15,336      40,854
                                             ========     =======      ======     ======      ======      ======
------------------------
(1)  For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2)  Interest income on loans includes loan fees.
(3)  Interest income and interest expense includes the effect of interest rate swap agreements.
(4)  Information is presented on a tax-equivalent basis assuming a tax rate of 35%.
</TABLE>

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) increased to $254.5 million,  or 4.69% of
average  interest-earning  assets,  for the year ended  December 31, 2001,  from
$236.0 million,  or 4.93% of  interest-earning  assets,  and $195.2 million,  or
4.52% of  interest-earning  assets,  for the years ended  December  31, 2000 and
1999,  respectively.  We credit  the  increased  net  interest  income  for 2001
primarily  to the  net  interest-earning  assets  provided  by our  acquisitions
completed  during  2000 and 2001,  internal  loan  growth,  and  earnings on our
interest  rate swap  agreements  that we entered  into in  conjunction  with our
interest  rate risk  management  program.  The overall  increase in net interest
income was  significantly  offset by  reductions in  prevailing  interest  rates
throughout  2001,  resulting  in the overall  decline in our net  interest  rate
margin.  We credit the increased net interest  income for 2000  primarily to the
net interest-earning  assets provided by our acquisitions  completed during 1999
and 2000,  internal loan growth and increases in prevailing interest rates which
resulted in increased yields on interest-earning  assets.  However,  the overall
increase in net  interest  income for 2000 was  partially  offset by the expense
associated with our interest rate swap agreements.
         Average  total  loans,  net of unearned  discount,  increased by $593.3
million  to $4.88  billion  for the year ended  December  31,  2001,  from $4.29
billion  and $3.81  billion  for the years  ended  December  31,  2000 and 1999,
respectively.  The yield on our loan portfolio,  however,  declined to 8.44% for
the year ended  December 31, 2001, in  comparison to 9.10% for 2000.  This was a
major  contributor to the 24 basis point decline in our net interest rate margin
for 2001.  We attribute  the decline in yields and our net interest  rate margin
primarily to decreases in prevailing  interest rates.  During 2001, the Board of
Governors of the Federal  Reserve  System  decreased the targeted  federal funds
rate 11 times,  resulting  in 11  decreases  in the prime rate of interest  from
9.50% to 4.75%.  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

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

repriced during this period.  As further  discussed under  "--Interest Rate Risk
Management,"  the reduced level of interest  income earned on our loan portfolio
as a result of declining interest rates was partially  mitigated by the earnings
associated with our interest rate swap  agreements.  For the year ended December
31, 2001,  these  agreements  provided net interest income of $23.4 million.  In
addition,  increased  competition within our market areas led to reduced lending
rates.  Conversely,  the yield on our loan portfolio for the year ended December
31, 2000  increased  to 9.10% from 8.48% for the year ended  December  31, 1999,
principally as a result of increases in prevailing  interest  rates.  During the
period from June 30, 1999 to December  31,  2000,  the Board of Governors of the
Federal  Reserve  System  increased  the targeted  federal funds rate six times,
resulting in six  increases  in the prime rate of interest  from 7.75% to 9.50%,
respectively.  However the improved  yield on our loan  portfolio  was partially
offset by the expense  associated with our interest rate swap agreements,  which
was $4.7  million  for the year ended  December  31,  2000.
         For the years ended  December 31, 2001,  2000 and 1999,  the  aggregate
weighted average rate paid on our interest-bearing  deposit portfolio was 4.21%,
4.63% and 4.30%,  respectively.  We attribute  the decline in 2001  primarily to
rates  paid on  savings  deposits,  which have  continued  to  decline  with the
interest rate reductions  previously  discussed.  The overall  decrease in rates
paid is a result of generally  decreasing  interest rates in 2001 as compared to
generally  increasing  rates in 2000.  However,  the  competitive  pressures  on
deposits within our market areas precluded us from fully  reflecting the general
interest rate decreases in our deposit  pricing and still  providing an adequate
funding source for continued loan growth.
         The aggregate  weighted  average rate on our note payable  decreased to
6.32% for the year ended  December 31, 2001,  from 7.66% and 6.44% for the years
ended  December  31, 2000 and 1999,  respectively,  reflecting  changing  market
interest  rates  during  these  periods.  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 of the note
payable and our  profitability.  Thus,  the revolving  credit line  represents a
relatively high-cost funding source which, although it has been mitigated by the
continued  reductions in the prime  lending rate during 2001,  has the effect of
increasing our weighted average rate of non-deposit liabilities. During 2000, we
utilized the note payable to fund our  acquisitions  of  Commercial  Bank of San
Francisco,  Millenium Bank and Bank of San Francisco, thus resulting in a higher
level of borrowings  occurring  during the fourth quarter of 2000.  During 2001,
our note  payable  was fully  repaid from the  proceeds  of the trust  preferred
securities issued by First Preferred Capital Trust III. However, on December 31,
2001, we obtained a $27.5 million advance to fund our acquisition of UFG.

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 may differ significantly from those within its deposit
structure.  The nature of the loan and deposit  markets within which a financial
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 over 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 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 and Chief  Executive  Officer,  President and 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  managing  sensitivity,  we strive to reduce the  adverse  impact on
earnings by managing interest rate risk within internal policy constraints.  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
project 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
interest 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, an instantaneous,  parallel decline in the interest yield curve
of 100 basis points indicates a pre-tax projected loss of approximately  6.1% of
net  interest  income,  based on assets and  liabilities  at December  31, 2001.
Although we do not anticipate  that  instantaneous  shifts in the yield curve as
projected  in our  simulation  model are likely,  these are  indications  of the
effects that changes in interest rates would have over time.
         As previously discussed, we utilize derivative financial instruments to
assist  in  our  management  of  interest  rate  sensitivity  by  modifying  the
repricing,   maturity  and  option   characteristics   of  certain   assets  and
liabilities.  The  derivative  financial  instruments  we hold are summarized as
follows:
<TABLE>
<CAPTION>
                                                           December 31, 2001           December 31, 2000
                                                          -------------------       ----------------------
                                                          Notional    Credit        Notional      Credit
                                                           Amount    Exposure        Amount      Exposure
                                                           ------    --------        ------      --------
                                                                 (dollars expressed in thousands)

<S>                                                       <C>           <C>        <C>             <C>
         Cash flow hedges..............................   $900,000      1,764      1,055,000       3,449
         Fair value hedges.............................    200,000      6,962         50,000         758
         Interest rate floor agreements................         --         --         35,000           6
         Interest rate cap agreements..................    450,000      2,063        450,000       3,753
         Interest rate lock commitments................     88,000         --          4,100          --
         Forward commitments to sell
              mortgage-backed securities...............    209,000         --         32,000          --
                                                          ========     ======      =========      ======
</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 our 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.
         During 2001 and 1999,  we realized  net interest  income on  derivative
financial instruments of $23.4 million and $430,000, respectively, in comparison
to net interest expense of $4.7 million in 2000. In addition,  we realized a net
gain on derivative  instruments,  which is included in noninterest income in the
consolidated  statements of income, of $18.6 million for the year ended December
31, 2001.

         Cash Flow Hedges. 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  prior to 1998. The net interest  expense  associated
with these agreements,  consisting primarily of amortization of deferred losses,
was $5.7 million for the year ended  December 31, 1999.  There were no remaining
unamortized  deferred  losses on the terminated  swap agreements at December 31,
1999.
         We entered into the following interest rate swap agreements, designated
as cash flow hedges, 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:

<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  that provided for us to receive a
               fixed rate of  interest  and pay an  adjustable  rate of interest
               equivalent to the daily weighted average prime lending rate minus
               2.705%.  The terms of the swap agreements  provided for us to pay
               quarterly and receive payment semiannually.

         >>    In June 2001 and November 2001, we terminated  $205.0 million and
               $75.0  million  notional  amount,  respectively,  of  these  swap
               agreements,  which  would  have  expired  in  2002,  in  order to
               appropriately  modify our overall  hedge  position in  accordance
               with our interest rate risk  management  program.  In conjunction
               with  these  terminations,  we  recorded  pre-tax  gains  of $2.8
               million and $1.7 million, respectively.

         >>    During  September  1999, we entered into $175.0 million  notional
               amount of interest rate swap  agreements  that provided 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  provided for us to pay
               and  receive  interest on a quarterly  basis.  In April 2001,  we
               terminated  these swap  agreements,  which would have  expired in
               September  2001,  and replaced them with similar swap  agreements
               with extended  maturities in order to lengthen the period covered
               by the swaps.  In conjunction  with the termination of these swap
               agreements, we recorded a pre-tax gain of $985,000.

         >>    During September 2000, March 2001 and April 2001, we entered into
               $600.0  million,  $200.0  million,  and $175.0  million  notional
               amount,  respectively,  of  interest  rate swap  agreements  that
               provide  for us to  receive a fixed rate of  interest  and pay an
               adjustable rate equivalent to the weighted  average prime lending
               rate  minus  either  2.70%  or  2.82%.  The  terms  of  the  swap
               agreements  provide  for  us to pay  and  receive  interest  on a
               quarterly  basis.  In November 2001, we terminated  $75.0 million
               notional  amount  of these  swap  agreements,  which  would  have
               expired  in April  2006,  in order to  appropriately  modify  our
               overall hedge position in accordance  with our interest rate risk
               management program. We recorded a pre-tax gain of $2.6 million in
               conjunction  with the termination of these swap  agreements.  The
               amount  receivable by us under the remaining swap  agreements was
               $2.9 million at December 31, 2001,  and the amount  payable by us
               was $1.1 million at December 31, 2001. The amount  receivable and
               payable  by us under  the swap  agreements  was $1.2  million  at
               December 31, 2000.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of our  interest  rate swap  agreements  designated  as cash flow
hedges as of December 31, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>
                                                          Notional     Interest Rate     Interest Rate      Fair
                         Maturity Date                     Amount          Paid            Received         Value
                         -------------                    --------      -----------     -------------    ----------
                                                                      (dollars expressed in thousands)

         December 31, 2001:
<S>                                                    <C>                  <C>               <C>          <C>
             September 20, 2004....................... $  600,000           2.05%             6.78%        $ 40,980
             March 21, 2005...........................    200,000           1.93              5.24            4,951
             April 2, 2006............................    100,000           1.93              5.45            2,305
                                                       ----------                                          --------
                                                       $  900,000           2.01              6.29         $ 48,236
                                                       ==========          =====             =====         ========

         December 31, 2000:
             September 27, 2001....................... $  175,000           6.80%             6.14%        $     65
             June 11, 2002............................     15,000           6.80              6.00                7
             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
                                                       ----------                                          --------
                                                       $1,055,000           6.80              5.92         $ 14,475
                                                       ==========          =====             =====         ========
</TABLE>

         Fair Value  Hedges.  We entered into the  following  interest rate swap
agreements,  designated  as  fair  value  hedges,  to  effectively  shorten  the
repricing characteristics of certain interest-bearing  liabilities to correspond
more closely with their  funding  source with the objective of  stabilizing  net
interest income over time:

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

         >>    During  September  2000, we entered into $25.0  million  notional
               amount  of  one-year  interest  rate  swap  agreements  and $25.0
               million  notional  amount of five and one-half year interest rate
               swap  agreements  that  provided for us to receive fixed rates of
               interest  ranging from 6.60% 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  provided for us to pay interest on a quarterly  basis
               and receive  interest on either a  semiannual  basis or an annual
               basis.  In  September  2001,  the  one-year  interest  rate  swap
               agreements matured,  and we terminated the five and one-half year
               interest   rate   swap   agreements    because   the   underlying
               interest-bearing liabilities had either matured or been called by
               their  respective  counterparties.  There  was no  gain  or  loss
               recorded as a result of the terminations.

         >>    During  January  2001,  we entered  into $50.0  million  notional
               amount of  three-year  interest rate swap  agreements  and $150.0
               million   notional   amount  of  five-year   interest  rate  swap
               agreements  that  provide  for us to  receive  a  fixed  rate  of
               interest and pay an adjustable rate of interest equivalent to the
               three-month London Interbank Offering Rate. 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 $5.2 million and $1.2 million at December
               31, 2001, respectively.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of our interest  rate swap  agreements  designated  as fair value
hedges as of December 31, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>

                                                          Notional     Interest Rate     Interest Rate      Fair
                         Maturity Date                     Amount          Paid            Received         Value
                         -------------                    --------      -----------     -------------    ----------
                                                                      (dollars expressed in thousands)

         December 31, 2001:
<S>                                                     <C>                 <C>               <C>          <C>
             January 9, 2004..........................  $  50,000           2.48%             5.37%        $ 1,761
             January 9, 2006..........................    150,000           2.48              5.50           3,876
                                                        ---------                                          -------
                                                        $ 200,000           2.48              5.47         $ 5,637
                                                        =========          =====             =====         =======
         December 31, 2000:
             September 13, 2001.......................  $  12,500           6.56%             6.80%        $    42
             September 21, 2001.......................     12,500           6.47              6.60              43
             March 13, 2006...........................     12,500           6.47              7.25               5
             March 22, 2006...........................     12,500           6.39              7.20               6
                                                        ---------                                          -------
                                                        $  50,000           6.47              6.96         $    96
                                                        =========          =====             =====         =======
</TABLE>
         Interest Rate Floor Agreements.  During January 2001 and March 2001, we
entered into $200.0 million and $75.0 million notional amount, respectively,  of
four-year  interest  rate floor  agreements  to further  stabilize  net interest
income  in the  event of a  falling  rate  scenario.  The  interest  rate  floor
agreements  provided for us to receive a quarterly  adjustable  rate of interest
equivalent to the differential between the three-month London Interbank Offering
Rate  and the  strike  prices  of  5.50%  or  5.00%,  respectively,  should  the
three-month  London  Interbank  Offering Rate fall below the  respective  strike
prices.  In November 2001, we terminated these interest rate floor agreements in
order to appropriately  modify our overall hedge position in accordance with our
interest rate risk management program.  In conjunction with the termination,  we
recorded a pre-tax  adjustment of $4.0 million  representing the decline in fair
value from our previous  month-end  measurement date. These agreements  provided
net interest income of $2.1 million for the year ended December 31, 2001.

         Interest Rate Cap  Agreements.  In  conjunction  with the interest rate
swap  agreements  that we entered into in September  2000,  we also entered into
$450.0  million  notional  amount of four-year  interest rate cap  agreements to
limit the net interest expense associated with our interest rate swap agreements
in the event of a rising rate scenario. The interest rate cap agreements provide
for us to receive a  quarterly  adjustable  rate of interest  equivalent  to the
differential  between the  three-month  London  Interbank  Offering Rate and the
strike price of 7.50% should the  three-month  London  Interbank  Offering  Rate
exceed the strike price.  At December 31, 2001 and 2000,  the carrying  value of
these interest rate cap agreements,  which is included in derivative instruments
in  the  consolidated  balance  sheets,  was  $2.1  million  and  $3.8  million,
respectively.

         Pledged  Collateral.  At  December  31,  2001 and 2000,  we had pledged
investment  securities available for sale with a carrying value of $1.1 and $8.6
million,  respectively, in connection with the interest rate swap agreements. In
addition,  at December 31, 2001 and 2000,  we had  accepted,  as  collateral  in
connection with the interest rate swap agreements, cash of $4.9 million and $4.9
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS (CONTINUED)

million and $400,000,  respectively, and investment securities with a fair value
of 53.9 million and $18.6 million, respectively. We are permitted by contract to
sell or repledge  the  collateral  accepted  from  counterparties;  however;  at
December 31, 2001 and 2000, we had not done so.

         Interest   Rate   Lock   Commitments/Forward    Commitments   to   Sell
Mortgage-Backed  Securities.  Derivative  financial  instruments  issued  by  us
consist  of  interest  rate lock  commitments  to  originate  fixed-rate  loans.
Commitments to originate  fixed-rate loans consist primarily of residential real
estate loans. These net loan commitments and loans held for sale are hedged with
forward contracts to sell mortgage-backed securities.

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,  2001,  2000 and  1999,  we
originated and purchased loans for resale totaling $1.52 billion, $532.2 million
and $452.9 million and sold loans totaling  $992.0  million,  $413.2 million and
$507.1  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 or loss  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 $1.07 billion, $957.2 million and $957.1
million at December 31, 2001, 2000 and 1999, respectively.
         The gain on mortgage loans originated for resale,  including loans sold
and held for sale,  was $15.0  million,  $7.8  million and $6.9  million for the
years ended December 31, 2001, 2000 and 1999,  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. The overall increase for 2001 is
primarily  attributable  to a  significant  increase  in  the  volume  of  loans
originated and sold commensurate  with the prevailing  interest rate environment
experienced  throughout 2001,  including  continued  reductions in mortgage loan
rates and our growth in mortgage banking activities.  The increases for 2000 and
1999  reflect  the  expansion  of  our  mortgage  banking  activities  into  our
California and Texas markets.
         The  interest  income on loans held for sale was $11.1  million for the
year ended December 31, 2001, in comparison to $3.5 million and $4.9 million for
the years ended December 31, 2000 and 1999, 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 $149.0  million,  $47.0  million and $79.1  million for the years ended
December 31, 2001,  2000 and 1999,  respectively.  On an annualized  basis,  our
yield on the portfolio of loans held for sale was 7.45%, 7.45% and 6.19% for the
years ended December 31, 2001, 2000 and 1999,  respectively.  This compares with
our cost of funds, as a percentage of average interest-bearing  liabilities,  of
4.21%,  4.69% and 4.34% for the years ended  December 31,  2001,  2000 and 1999,
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 $222,000, $486,000 and $657,000 for the years ended December 31,
2001, 2000 and 1999,  respectively.  We attribute the decrease in loan servicing
fees for 2001,  2000 and 1999  primarily 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.  Amortization of mortgage  servicing  rights was $3.7
million,  $3.1 million and $2.8  million for the years ended  December 31, 2001,
2000 and 1999, respectively.
         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,
2001,  2000 and 1999, we had $197.5  million,  $37.6 million and $31.5  million,
respectively,  of loans held for sale and related commitments,  net of committed
loan sales and estimated  underwriting  fallout, of which $209.9 million,  $32.0
million and $33.0  million,  respectively,  were hedged  through the use of such
forward commitments.

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

Comparison of Results of Operations for 2001 and 2000

         Net Income.  Net income was $64.5  million for the year ended  December
31, 2001, compared to $56.1 million for 2000. The implementation of SFAS 133, as
amended,  on January 1, 2001, resulted in the recognition of a cumulative effect
of change in accounting principle of $1.4 million, net of tax, which reduced net
income.  Excluding  this item,  net income was $65.9  million for the year ended
December 31, 2001.  The improved  earnings  primarily  result from increased net
interest income and noninterest  income,  including a gain on the exchange of an
equity investment in an unaffiliated  financial  institution in October 2001, as
well as a reduced  provision for income taxes. The reduced  provision for income
taxes  includes  the effect of an $8.1 million  reduction in FBA's  deferred tax
asset valuation  allowance that was no longer deemed  necessary as FBA's overall
net deferred tax assets are expected to be recoverable  through future earnings.
The  overall  improvement  in  earnings  was  partially  offset by an  increased
provision for loan losses and higher operating expenses,  including nonrecurring
charges  associated with the  establishment  of a specific  reserve related to a
contingent liability and the settlement of certain litigation.
         Net interest income  (expressed on a tax-equivalent  basis) improved to
$254.5 million for the year ended December 31, 2001,  compared to $236.0 million
for 2000.  However,  our net interest rate margin declined to 4.69% for the year
ended  December  31, 2001 from 4.93% for 2000.  Net  interest  income  increased
primarily as a result of increased  earning assets  generated  through  internal
loan growth  along with our  acquisitions  completed  throughout  2000 and 2001.
However,  the improvement in net interest income was significantly  mitigated by
continued reductions in prevailing interest rates throughout 2001. We funded the
overall loan growth primarily  through  deposits added through  acquisitions and
internal  deposit growth.  During the year ended December 31, 2001,  noninterest
income improved  significantly to $98.6 million from $42.8 million for the years
ended  December  31,  2001 and 2000,  respectively  as further  discussed  under
"--Noninterest Income."
         The  improvement  in net  interest  income and  noninterest  income was
partially  offset by a $59.1  million  increase in operating  expenses to $230.3
million for the year ended  December  31, 2001,  compared to $171.2  million for
2000. The increased operating expenses are primarily attributable to:

         >>    the  operating   expenses  of  our  2000  and  2001  acquisitions
               subsequent to their respective acquisition dates;

         >>    increased salaries and employee benefit expenses;

         >>    increased information technology fees;

         >>    increased legal, examination and professional fees;

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

         >>    a nonrecurring litigation settlement charge; and

         >>    a charge to other expense  associated with the establishment of a
               specific reserve on an unfunded letter of credit.

         Additionally,  guaranteed  preferred debentures expense of $6.0 million
on the trust preferred  securities issued by First Preferred Capital Trust II in
October 2000,  and $634,000 on the trust  preferred  securities  issued by First
Preferred  Capital Trust III on November 15, 2001,  further  contributed  to the
overall  increase in operating  expenses  for the year ended  December 31, 2001.
These higher operating expenses,  exclusive of the litigation settlement and the
specific reserve on the unfunded letter of credit, are reflective of significant
investments that we have made in personnel, technology, capital expenditures and
new business lines in conjunction  with our overall  strategic  growth plan. The
payback on these  investments  is expected to occur over a longer period of time
through higher and more diversified revenue streams.

         Provision  for Loan  Losses.  The  provision  for loan losses was $23.5
million  and $14.1  million  for the years  ended  December  31,  2001 and 2000,
respectively.  The  provision  for  loan  losses  reflects  the  level  of  loan
charge-offs  and  recoveries,  the adequacy of the allowance for loan losses and
the effect of economic  conditions within our markets. We attribute the increase
in the  provision  for loan losses  primarily to the overall  growth in our loan
portfolio,  both internal and through  acquisitions,  a general increase in risk
associated with the continued  changing  composition of our loan portfolio and a
significant  increase  in  nonperforming  assets  and past due  loans,  which is
further   discussed   under  "--Loans  and  Allowance  for  Loan  Losses."  Loan
charge-offs  were  $31.5  million  for the year  ended  December  31,  2001,  in
comparison to $17.1 million for the year ended  December 31, 2000.  The increase
in loan  charge-offs  is due to  $5.9  million  in  charge-offs  related  to our
commercial  leasing  business,  a single loan in the amount of $4.5 million that
was charged-off due to suspected fraud on the part of the borrower, $3.7 million

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

in charge-offs on shared national credit relationships as well as the effects of
the general slowdown in economic conditions  prevalent within our markets.  Loan
recoveries were $9.5 million for the year ended December 31, 2001, in comparison
to $9.8 million for 2000. Nonperforming assets and past-due loans have increased
significantly  during 2001, and we anticipate  these trends will continue in the
near future.  However,  we believe these trends represent normal cyclical trends
experienced  within the banking  industry  during  times of  economic  slowdown.
Management  considered these trends in its overall assessment of the adequacy of
the allowance for loan losses.  Our  acquisitions  during 2000 and 2001 provided
$6.1 million and $14.0 million,  respectively,  in additional allowance for loan
losses at their respective acquisition dates.
         Noninterest   Income  and  Expense.   The  following  table  summarizes
noninterest income and noninterest expense for the years ended December 31, 2001
and 2000:
<TABLE>
<CAPTION>
                                                                                December 31,        Increase (Decrease)
                                                                              -----------------     -------------------
                                                                              2001         2000       Amount       %
                                                                              ----         ----       ------      ---
                                                                                   (dollars expressed in thousands)

     Noninterest income:
<S>                                                                         <C>           <C>         <C>        <C>
        Service charges on deposit accounts and customer service fees....   $  22,865     19,794      3,071      15.51%
        Gain on mortgage loans sold and held for sale....................      14,983      7,806      7,177      91.94
        Gain on sale of credit card portfolio, net of expenses...........       1,853         --      1,853     100.00
        Net gain on sales of available-for-sale securities...............      18,722        168     18,554        --
        Gain on sales of branches, net of expenses.......................          --      1,355     (1,355)   (100.00)
        Bank-owned life insurance investment income......................       4,415      4,314        101       2.34
        Gain on derivative instruments, net..............................      18,583         --     18,583     100.00
        Other............................................................      17,188      9,341      7,847      84.01
                                                                            ---------   --------    -------
              Total noninterest income...................................   $  98,609     42,778     55,831     130.51
                                                                            =========   ========    =======  =========

     Noninterest expense:
        Salaries and employee benefits...................................   $  93,452     73,391     20,061      27.33%
        Occupancy, net of rental income..................................      17,432     14,675      2,757      18.79
        Furniture and equipment..........................................      12,612     11,702        910       7.78
        Postage, printing and supplies...................................       4,869      4,431        438       9.88
        Information technology fees......................................      26,981     22,359      4,622      20.67
        Legal, examination and professional fees.........................       6,988      4,523      2,465      54.50
        Amortization of intangibles associated with
            the purchase of subsidiaries.................................       8,248      5,297      2,951      55.71
        Communications...................................................       3,247      2,625        622      23.70
        Advertising and business development.............................       5,237      4,331        906      20.92
        Guaranteed preferred debentures..................................      18,590     13,173      5,417      41.12
        Other............................................................      32,605     14,656     17,949     122.47
                                                                            ---------   --------    -------
              Total noninterest expense..................................   $ 230,261    171,163     59,098      34.53
                                                                            =========   ========    =======   ========
</TABLE>

         Noninterest  Income.  Noninterest income was $98.6 million for the year
ended December 31, 2001, compared to $42.8 million for 2000.  Noninterest income
consists  primarily of service charges on deposit  accounts and customer service
fees,  mortgage  banking  revenues,  net  gains on  sales of  available-for-sale
securities, net gains on derivative instruments and other income.
         Service charges on deposit accounts and customer service fees increased
to $22.9  million  for 2001,  from $19.8  million  for 2000.  We  attribute  the
increase in service charges and customer service fees to:

         >>    increased deposit balances provided by internal growth;

         >>    our  acquisitions  completed during 2000 and, to a lesser degree,
               2001;

         >>    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  June 30,  2000,  and July 1, 2001,  and
               enhanced control of fee waivers; and

         >>    increased   income   associated  with  automated  teller  machine
               services and debit cards.
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                     AND RESULTS OF OPERATIONS (CONTINUED)

         The gain on mortgage  loans sold and held for sale  increased  to $15.0
million  from $7.8  million  for the years  ended  December  31,  2001 and 2000,
respectively.  We attribute the increase to a significant increase in the volume
of loans  originated  and sold  commensurate  with the  continued  reductions in
mortgage loan rates experienced  during 2001 as well as the continued  expansion
of our mortgage banking activities into new and existing markets.
         During 2001, we recorded a $1.9 million pre-tax gain on the sale of our
credit card  portfolio,  which results from our strategic  decision to exit this
product  line and enter into an agent  relationship  with a larger  credit  card
service provider.
         Noninterest  income  for the years  ended  December  31,  2001 and 2000
included net gains on the sale of  available-for-sale  investment  securities of
$18.7  million and  $168,000,  respectively.  The  significant  increase in 2001
results from a $19.1 million  pre-tax gain  recognized in  conjunction  with the
exchange  of an  equity  investment  in  the  common  stock  of an  unaffiliated
publicly-traded  financial  institution  for $10.0  million  in cash and a $14.4
million equity investment in the acquiring  unaffiliated  financial institution.
We owned 7.93% of the  outstanding  shares of common  stock of the  unaffiliated
financial  institution at December 31, 2001. This gain was partially offset by a
net loss  that  resulted  from the  liquidation  of  certain  equity  investment
securities held by FBA. The net gain for 2000 resulted  primarily from the sales
of certain investment securities held by acquired institutions that did not meet
our overall investment objectives.
         The gain on sales of branches,  net of  expenses,  was $1.4 million for
the year ended December 31, 2000, and results from the divestiture of one of our
branch  locations  in central  Illinois.  In 2001,  we did not sell any existing
branches.
         The net gain on  derivative  instruments  of $18.6 million for the year
ended  December  31, 2001  includes  $4.1  million of gains  resulting  from the
terminations  of certain  interest rate floor and swap  agreements to adjust our
interest rate hedge position  consistent with changes in the portfolio structure
and mix. In  addition,  the net gain  reflects  changes in the fair value of our
interest  rate cap  agreements,  interest rate floor  agreements  and fair value
hedges,  in accordance with the requirements of SFAS 133, as amended,  which was
implemented on January 1, 2001.
         Other  income was $17.2  million  and $9.3  million for the years ended
December 31, 2001 and 2000, respectively. We attribute the primary components of
this increase to:

         >>    our  acquisitions  completed during 2000 and, to a lesser extent,
               2001;

         >>    increased  portfolio   management  fee  income  of  $3.4  million
               associated  with our  Institutional  Money  Management  Division,
               which was formed in August 2000;

         >>    increased  brokerage revenue of $1.1 million,  which is primarily
               associated with the stock option services acquired in conjunction
               with our acquisition of Bank of San Francisco in December 2000;

         >>    increased  rental  income  of $2.1  million  associated  with our
               commercial  leasing  activities that were acquired in conjunction
               with our acquisition of FCG in February 2000; and

         >>    income of  approximately  $1.2 million  associated with equipment
               leasing  activities  that were acquired in  conjunction  with our
               acquisition of Bank of San Francisco.

         Noninterest  Expense.  Noninterest  expense was $230.3  million for the
year ended  December 31, 2001,  in comparison  to $171.2  million for 2000.  The
increase reflects:

         >>    the  noninterest   expense   associated  with  our   acquisitions
               completed during 2000 and 2001,  including  certain  nonrecurring
               expenses associated with those acquisitions;

         >>    increased salaries and employee benefit expenses;

         >>    increased information technology fees;

         >>    increased legal, examination and professional fees;

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

         >>    increased guaranteed preferred debentures expense; and

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

         Salaries and  employee  benefits  increased  by $20.1  million to $93.5
million  from $73.4  million  for the years  ended  December  31, 2001 and 2000,
respectively.  We  primarily  associate  the  increase  with  our  2000 and 2001
acquisitions and our Institutional Money Management  Division,  which was formed
in August 2000. 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 staff  throughout 2000 to enhance  executive and
senior  management   expertise,   improve  technological   support,   strengthen
centralized operational functions and expand our product lines.
         Occupancy,  net of rental income,  and furniture and equipment  expense
totaled $30.0  million and $26.4  million for the years ended  December 31, 2001
and 2000,  respectively.  The increase is attributable to our acquisitions,  the
relocation of certain branches and operational areas and increased  depreciation
expense  associated  with  numerous  capital  expenditures,  including  our  new
facility that houses various  centralized  operations and certain  corporate and
administrative functions.
         Information  technology  fees were $27.0  million and $22.4 million for
the years ended December 31, 2001 and 2000, respectively.  First Services, L.P.,
a limited  partnership  indirectly owned by our Chairman and his adult children,
provides  information  technology and various related services to our subsidiary
banks and us under the terms of information technology agreements.  We attribute
the  increased   information   technology  fees  to  growth  and   technological
advancements  consistent  with our  product  and  service  offerings,  continued
expansion and upgrades to technological  equipment,  networks and  communication
channels,  and certain nonrecurring expenses associated with the data processing
conversions  of Redwood  Bank,  Commercial  Bank of San  Francisco,  Bank of San
Francisco, Millennium Bank, Charter Pacific Bank and BYL completed in 2001.
         Legal,  examination  and  professional  fees were $7.0 million and $4.5
million  for the  years  ended  December  31,  2001 and 2000,  respectively.  We
primarily  attribute  the  increase  in these fees to the  ongoing  professional
services utilized by certain of our acquired  entities,  increased  professional
fees associated with our  Institutional  Money  Management  Division,  which was
formed in August 2000, and increased  legal fees associated with commercial loan
documentation,  collection  efforts,  expanded corporate  activities and certain
defense litigation.
         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was $8.2 million and $5.3 million for the years ended December 31,
2001 and 2000, respectively.  The increase for 2001 is primarily attributable to
amortization  of the cost in excess of the fair value of the net assets acquired
for the six acquisitions that we completed during 2000.
         Guaranteed  preferred  debentures  expense was $18.6  million and $13.2
million  for the years  ended  December  31,  2001 and 2000,  respectively.  The
increase for 2001 is solely  attributable  to the  issuance of $57.5  million of
trust preferred  securities by First Preferred  Capital Trust II in October 2000
and the issuance of $55.2 million of trust preferred  securities on November 15,
2001 by First Preferred Capital Trust III.
         Other  expense was $32.6  million and $14.7 million for the years ended
December 31, 2001 and 2000,  respectively.  Other expense  encompasses  numerous
general and administrative  expenses including travel,  meals and entertainment,
insurance, freight and courier services, correspondent bank charges, advertising
and business development,  miscellaneous losses and recoveries,  memberships and
subscriptions, transfer agent fees and sales taxes. We attribute the majority of
the increase in other expense to:

         >>    our acquisitions completed during 2000 and 2001;

         >>    increased   advertising   and   business   development   expenses
               associated  with  various  product  and service  initiatives  and
               enhancements;

         >>    increased  travel  expenses  primarily  associated  with business
               development  efforts and the ongoing  integration of the recently
               acquired entities into our corporate culture and systems;

         >>    a  nonrecurring  litigation  settlement  charge in the  amount of
               $11.5   million   associated   with  a  lawsuit   brought  by  an
               unaffiliated  bank  against one of our  subsidiaries  and certain
               individuals related to allegations arising from the employment by
               our  subsidiary  of  individuals   previously   employed  by  the
               plaintiff bank, as well as the conduct of those individuals while
               employed by the plaintiff bank;

         >>    the  establishment  of a  $1.8  million  specific  reserve  on an
               unfunded letter of credit; and

         >>    overall continued growth and expansion of our banking franchise.


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

         Provision  for Income  Taxes.  The provision for income taxes was $30.0
million for the year ended December 31, 2001,  representing an effective  income
tax rate of 30.5%,  in comparison to $34.5  million,  representing  an effective
income tax rate of 37.2%,  for the year ended December 31, 2000. The decrease in
the effective income tax rate is primarily attributable to:

         >>    a reduction of FBA's  deferred tax asset  valuation  allowance of
               $13.1 million recorded in December 2001. This reduction, of which
               $8.1 million  represented a reduction in our provision for income
               taxes  and  $5.0  million  represented  an  increase  in  capital
               surplus,  reflects the recognition of deferred tax assets for net
               operating  loss  carryforwards  and  the  expectation  of  future
               taxable income sufficient to realize the net deferred tax assets;
               partially offset by

         >>    the increase in amortization  of intangibles  associated with the
               purchase  of  subsidiaries,  which  is  not  deductible  for  tax
               purposes.

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 information  technology 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.


<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%
        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)
        Gain on sales of branches, net of expenses.......................       1,355      4,406     (3,051)    (69.25)
        Bank-owned life insurance investment income......................       4,314      3,919        395      10.08
        Other............................................................       9,341      7,949      1,392      17.51
                                                                            ---------   --------    -------
              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
        Information technology fees......................................      22,359     18,567      3,792      20.42
        Legal, examination and professional fees.........................       4,523      9,109     (4,586)    (50.35)
        Amortization of intangibles associated with
            the purchase of subsidiaries.................................       5,297      4,401        896      20.36
        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............................................................      14,656     13,652      1,004       7.35
                                                                            ---------   --------    -------
              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.
         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 automated  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.
         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  investment 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 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.

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

         Bank-owned life insurance  investment  income was $4.3 million and $3.9
million  for the years  ended  December  31,  2000 and 1999,  respectively.  The
increase for 2000 reflects an increased rate of return on this product primarily
associated  with  the  current   interest  rate   environment  as  well  as  the
reinvestment of product earnings.
         Other  income was $9.3  million  and $7.9  million  for the years ended
December  31,  2000 and 1999,  respectively.  The  increase  in other  income is
primarily attributable to rental income associated with FCG's leasing activities
and  increased  rental fees received  from First  Services,  L.P. for the use of
information  technology 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 information technology 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.

         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

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

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.
         Information  technology  fees were $22.4  million and $18.6 million for
the years ended December 31, 2000 and 1999, respectively.  First Services, L.P.,
a limited  partnership  indirectly owned by our Chairman and his adult children,
provides  information  technology and various related services to our subsidiary
banks and us under the terms of information technology agreements.  We attribute
the  increased   information   technology  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.
         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was $5.3 million and $4.4 million for the years ended December 31,
2000 and 1999, respectively.  The increase for 2000 is primarily attributable to
amortization  of the cost in excess of the fair value of the net assets acquired
for the acquisitions that we completed throughout 1999 and 2000.
         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 in October 2000.
         Other  expense was $14.7  million and $13.7 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,  miscellaneous  losses and  recoveries,  and sales  taxes.  The overall
increase in these expenses primarily reflects:

         >>    continued growth and expansion of our banking franchise;

         >>    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.

         Provision  for Income  Taxes.  The provision for income taxes was $34.5
million for the year ended December 31, 2000,  representing an effective  income
tax rate of 37.2%,  in comparison to $26.3  million,  representing  an effective
income tax rate of 36.5%,  for the year ended December 31, 1999. The increase in
the effective income tax rate is primarily attributable to:

         >>    the increase in amortization  of intangibles  associated with the
               purchase  of  subsidiaries,  which  is  not  deductible  for  tax
               purposes; and

         >>    a  reduction  of the  deferred  tax asset  valuation  reserve  of
               approximately   $405,000   related  to  the  utilization  of  net
               operating  losses  associated with a previously  acquired entity,
               which was recorded in March 2000.

Investment Securities

         We classify the securities  within our investment  portfolio as held to
maturity or available  for sale.  We do not engage in the trading of  investment
securities.  Our investment  security portfolio consists primarily of securities
designated as available for sale. The investment  security  portfolio was $631.1
million and $563.5 million at December 31, 2001 and 2000, respectively, compared
to $451.6  million at December 31, 1999. We attribute the increase in investment
securities during 2000 and 2001 to securities acquired through  acquisitions and
the overall  level of loan demand  within our market  areas,  which  affects the

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

amount of funds available for investment.  In addition, the increase for 2001 is
partially offset by the liquidation of certain investment securities held by FBA
and a  significant  increase in calls of  investment  securities  prior to their
normal  maturity  dates  resulting  from the general  decline in interest  rates
during 2001.

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 92.7%, 92.3%
and 91.5% of total interest  income for the years ended December 31, 2001,  2000
and 1999,  respectively.  Loans, net of unearned discount,  represented 79.8% of
total  assets as of December  31,  2001,  compared  to 80.9% of total  assets at
December  31, 2000.  Total loans,  net of unearned  discount,  increased  $656.6
million  to $5.41  billion  for the year ended  December  31,  2001,  and $750.0
million to $4.75  billion  for the year ended  December  31,  2000.  We view the
quality,  yield and growth of our loan portfolio to be instrumental  elements in
determining our profitability.
         During the five years ended  December  31, 2001,  total  loans,  net of
unearned  discount,  increased  significantly from $3.00 billion at December 31,
1997 to $5.41  billion at December 31,  2001.  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
and management of both loan and deposit relationships with commercial customers.
While this process was occurring, in an attempt 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  residential  mortgage  loan
production  has  been  sold in the  secondary  mortgage  market.  We  have  also
substantially  reduced  our  consumer  lending  through  reductions  in new loan
volumes, the repayment of principal on our existing loan portfolio, and the sale
of our student  loan and credit card loan  portfolios.  This  allowed us to fund
part of the growth in corporate  lending through  reductions in residential real
estate, indirect automobile and other consumer-related loans.
         In addition,  our  acquisitions  added  substantial  portfolios  of new
loans. Some of these portfolios,  particularly those from acquisitions completed
in the mid-1990s,  contained significant loan problems, which we anticipated and
considered in our acquisition  pricing. 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.
         The following table summarizes the effects of these factors on our loan
portfolio for the five years ended December 31, 2001:
<TABLE>
<CAPTION>

                                                                   Increase (Decrease) For the Year Ended December 31,
                                                               ---------------------------------------------------------
                                                                   2001         2000        1999        1998      1997
                                                                   ----         ----        ----        ----      ----
                                                                            (dollars expressed in thousands)

      Internal loan volume increase (decrease):
<S>                                                            <C>            <C>         <C>         <C>       <C>
          Commercial lending................................   $ 174,568      360,410     363,486     633,660   378,882
          Residential real estate lending (1) ..............      48,616       20,137    (126,418)   (152,849) (144,707)
          Consumer lending, net of unearned discount........     (75,280)     (64,606)    (56,349)    (30,506)  (54,305)
      Loans provided by acquisitions........................     508,700      440,000     235,500     127,600    54,361
                                                               ---------     --------    --------    --------  --------
          Total increase in loans, net of unearned discount.   $ 656,604      755,941     416,219     577,905   234,231
                                                               =========     ========    ========    ========  ========
</TABLE>

      -------------------------
      (1) Includes loans held for sale, which increased $135.1  million for  the
          year ended December 31, 2001.

         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,  and other  consumer  financing  opportunities  arising out of our branch
banking network.


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

         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 and
bonds  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 during the period projects are
being  developed  secured by the 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 summarizes 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,
                                    ----------------------------------------------------------------------------------------
                                          2001               2000                1999            1998              1997
                                    -----------------   ---------------    --------------    -------------   ---------------
                                     Amount       %      Amount      %     Amount      %     Amount      %   Amount        %
                                     ------       -      ------      -     ------      -     ------      -   ------        -
                                                                (dollars expressed in thousands)

Commercial, financial
<S>                               <C>           <C>   <C>          <C>   <C>         <C>   <C>         <C>    <C>        <C>
    and agricultural............. $1,681,846    32.3% $1,496,284   32.0% $1,086,919  27.4%$  920,007   26.7% $  621,618  21.1%
Real estate construction
    and development..............    954,913    18.4     809,682   17.3     795,081  20.1    720,910   20.9     413,107  14.0
Real estate mortgage:
    One-to-four-family
      residential loans..........    798,089    15.3     726,474   15.5     720,630  18.2    739,442   21.5     915,205  31.1
    Other real estate loans......  1,647,758    31.7   1,476,383   31.5   1,130,939  28.6    789,735   22.9     713,910  24.3
Consumer and installment, net of
    unearned discount............    122,057     2.3     174,337    3.7     225,343   5.7    274,392    8.0     279,279   9.5
                                  ----------   -----  ---------  ------  ---------- -----  --------- ------  ---------- -----
      Total loans, excluding
        loans held for sale......  5,204,663   100.0%  4,683,160  100.0%  3,958,912 100.0% 3,444,486  100.0%  2,943,119 100.0%
                                               =====             ======             =====            ======             =====
Loans held for sale..............    204,206              69,105             37,412          135,619             59,081
                                  ----------          ----------         ----------       ----------         ----------
      Total loans................ $5,408,869          $4,752,265         $3,996,324       $3,580,105         $3,002,200
                                  ==========          ==========         ==========       ==========         ==========
</TABLE>
<TABLE>
<CAPTION>

         Loans at December 31, 2001 mature as follows:

                                                                             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....................  $ 1,432,117   207,884     22,956   17,382    1,507  1,681,846
Real estate construction and development..................      907,907    43,162      2,345    1,499       --    954,913
Real estate mortgage......................................    1,410,772   623,413    243,841  162,081    5,740  2,445,847
Consumer and installment, net of unearned discount........       32,198    66,099        771   22,989       --    122,057
Loans held for sale.......................................      204,206        --         --       --       --    204,206
                                                            -----------  --------   --------  -------  -------  ---------
      Total loans.........................................  $ 3,987,200   940,558    269,913  203,951    7,247  5,408,869
                                                            ===========  ========   ========  =======  =======  =========
</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, 2001:
<TABLE>
<CAPTION>

                                                                As of or For the Years Ended December 31,
                                                      -------------------------------------------------------------
                                                           2001        2000        1999         1998         1997
                                                           ----        ----        ----         ----         ----
                                                                       (dollars expressed in thousands)

<S>                                                   <C>             <C>         <C>          <C>           <C>
Allowance for loan losses, beginning of year......... $   81,592      68,611      60,970       50,509        46,781
Acquired allowances for loan losses..................     14,046       6,062       3,008        3,200            30
                                                      ----------  ----------  ----------    ---------    ----------
                                                          95,638      74,673      63,978       53,709        46,811
                                                      ----------  ----------  ----------    ---------    ----------
Loans charged-off:
    Commercial, financial and agricultural...........    (27,834)     (9,768)    (10,855)      (3,908)       (2,308)
    Real estate construction and development.........       (108)     (2,229)       (577)        (185)       (2,242)
    Real estate mortgage.............................     (1,818)     (2,213)     (2,561)      (2,389)       (6,250)
    Consumer and installment.........................     (1,693)     (2,840)     (3,728)      (3,701)       (6,032)
                                                      ----------  ----------  ----------    ---------    ----------
          Total......................................    (31,453)    (17,050)    (17,721)     (10,183)      (16,832)
                                                      ----------  ----------  ----------    ---------    ----------
Recoveries of loans previously charged-off:
    Commercial, financial and agricultural...........      4,450       5,621       3,602        3,417         2,146
    Real estate construction and development.........      1,171         319         849          342           269
    Real estate mortgage.............................      2,102       1,937       2,357        2,029         3,666
    Consumer and installment.........................      1,746       1,965       2,473        2,656         3,149
                                                      ----------  ----------  ----------    ---------    ----------
          Total......................................      9,469       9,842       9,281        8,444         9,230
                                                      ----------  ----------  ----------    ---------    ----------
          Net loans charged-off......................    (21,984)     (7,208)     (8,440)      (1,739)       (7,602)
                                                      ----------  ----------  ----------    ---------    ----------
Provision for loan losses............................     23,510      14,127      13,073        9,000        11,300
                                                      ----------  ----------  ----------    ---------    ----------
Allowance for loan losses, end of year............... $   97,164      81,592      68,611       60,970        50,509
                                                      ==========  ==========  ==========    =========    ==========

Loans outstanding, net of unearned discount:
    Average.......................................... $4,884,299   4,290,958   3,812,508    3,250,719     2,846,157
    End of year......................................  5,408,869   4,752,265   3,996,324    3,580,105     3,002,200
    End of year, excluding loans held for sale.......  5,204,663   4,683,160   3,958,912    3,444,486     2,943,119
                                                      ==========  ==========  ==========    =========    ==========

Ratio of allowance for loan losses
  to loans outstanding:
    Average..........................................       1.99%       1.90%       1.80%        1.88%         1.77%
    End of year......................................       1.80        1.72        1.72         1.70          1.68
    End of year, excluding loans held for sale.......       1.87        1.74        1.73         1.77          1.72
Ratio of net charge-offs to average loans
    outstanding......................................       0.45        0.17        0.22         0.05          0.27
Ratio of current year recoveries to
    preceding year's total charge-offs...............      55.54       55.54       91.14        50.17         31.81
                                                      ==========  ==========  ==========    =========    ==========

Allocation of allowance for
  loan losses at end of year:
    Commercial, financial and agricultural........... $   40,161      32,352      24,898       19,239        14,879
    Real estate construction and development.........     21,598      14,667      13,264       15,073         7,148
    Real estate mortgage.............................     31,406      24,691      20,750       18,774        18,317
    Consumer and installment.........................      3,999       3,142       4,390        5,180         5,089
    Unallocated (1)..................................         --       6,740       5,309        2,704         5,076
                                                      ----------  ----------  ----------    ---------    ----------
          Total...................................... $   97,164      81,592      68,611       60,970        50,509
                                                      ==========  ==========  ==========    =========    ==========
</TABLE>

--------------------
(1)  During 2001,  we  reviewed our practice of maintaining unallocated reserves
     in  light  of  continuing  refinement  in our loss estimation processes. We
     concluded  the  use  of  unallocated  reserves   would   be   discontinued.
     Consequently, reserves were aligned with their respective portfolios.

<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,
                                                              ---------------------------------------------------------
                                                               2001        2000         1999         1998         1997
                                                               ----        ----         ----         ----         ----
                                                                           (dollars expressed in thousands)
    Commercial, financial and agricultural:
<S>                                                       <C>              <C>          <C>         <C>           <C>
       Nonaccrual......................................   $    19,326      22,437       18,397      15,385        4,017
       Restructured terms..............................            --          22           29          --           --
    Real estate construction and development:
       Nonaccrual......................................         3,270      11,068        1,886       3,858        4,097
    Real estate mortgage:
       Nonaccrual......................................        41,898      16,524       16,414      18,858       10,402
       Restructured terms..............................         2,013       2,952        2,979       5,221        5,456
    Consumer and installment:
       Nonaccrual......................................           794         155           32         216           94
       Restructured terms..............................             7           8           --          --           --
                                                          -----------   ---------    ---------   ---------    ---------
              Total nonperforming loans................        67,308      53,166       39,737      43,538       24,066
    Other real estate..................................         4,316       2,487        2,129       3,709        7,324
                                                          -----------   ---------    ---------   ---------    ---------
              Total nonperforming  assets..............   $    71,624      55,653       41,866      47,247       31,390
                                                          ===========   =========    =========   =========    =========

    Loans, net of unearned discount....................   $ 5,408,869   4,752,265    3,996,324   3,580,105    3,002,200
                                                          ===========   =========    =========   =========    =========

    Loans past due 90 days or more and still accruing..   $    15,156       3,009        5,844       4,674        2,725
                                                          ===========   =========    =========   =========    =========
    Ratio of:
       Allowance for loan losses to loans..............          1.80%       1.72%        1.72%       1.70%        1.68%
       Nonperforming loans to loans....................          1.24        1.12         0.99        1.22         0.80
       Allowance for loan losses to
         nonperforming loans...........................        144.36      153.47       172.66      140.04       209.88
       Nonperforming assets to loans
         and other real estate.........................          1.32        1.17         1.05        1.32         1.04
                                                          ===========   =========    =========   =========    =========
</TABLE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
certain  restructured  loans,  were  $67.3  million at  December  31,  2001,  in
comparison  to $53.2  million and $39.7  million at December  31, 2000 and 1999,
respectively. The increase in nonperforming and past due loans for 2001 reflects
cyclical trends  experienced within the banking industry as a result of economic
slowdown, as well as the asset quality of acquired institutions. Consistent with
the economic slowdown experienced within our primary markets, we anticipate this
trend will continue in the upcoming  months.  In addition,  our UFG acquisition,
completed on December 31, 2001,  resulted in the addition of approximately  $8.9
million  of  nonperforming  loans and $3.6  million of loans past due 90 days or
more.  Furthermore,  nonperforming  loans at December 31, 2000 included a single
borrowing  relationship of $10.9 million that was removed from nonaccrual status
during the third quarter of 2001. The relationship  relates to a residential and
recreational development project that had significant financial difficulties and
experienced  inadequate project financing at inception,  project delays and weak
project  management.  Financing for this project was recast with a new borrower,
and  is  presently   meeting   developmental   expectations.   The  increase  in
nonperforming and past-due loans in 2000 primarily  resulted 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.  At December 31, 1998,  nonperforming
assets and  problem  loans  increased  to $68.5  million  from $59.3  million at
December 31, 1997.  We associate the increase for 1998 to two  commercial  loans
totaling $6.0 million, net of charge-offs; our acquisitions of Republic Bank and
Pacific Bay Bank;  and the  overall  growth of our loan  portfolio,  principally
commercial, financial and agricultural, real estate construction and development
and commercial real estate loans.
         As of December 31, 2001, 2000 and 1999,  $123.2 million,  $50.2 million
and $36.3 million,  respectively,  of loans not included in the table above were
identified by management as having potential credit problems (problem loans). We
attribute the increases  primarily to our acquisitions and to portfolio  growth,
as well as the  slowdown  and  uncertainties  that have  occurred in the economy
surrounding  the markets in which we operate.  As of December 31, 1998 and 1997,
problem loans totaled $21.3 million and $27.9 million, respectively.
         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 and other  various  types of  consumer

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

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
performance subsequent to their origination.
         We include  adversely  rated credits,  including  loans requiring close
monitoring  which  would  not  normally  be  considered  criticized  credits  by
regulators, on our 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 loan losses.  In its  analysis,  management  considers the
change in the  portfolio,  including  growth,  composition  and the ratio of net
loans to total  assets,  as well as 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.

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 for the years indicated and the weighted average interest rates on each
category of deposits:
<TABLE>
<CAPTION>

                                                                    Year Ended December 31,
                                    -----------------------------------------------------------------------------------
                                               2001                        2000                         1999
                                    --------------------------  --------------------------   --------------------------
                                                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>          <C>      <C>
Noninterest-bearing demand......  $  754,763     14.83%    --% $  634,886     14.18%    --% $  552,029     13.59%     --%
Interest-bearing demand.........     507,011      9.97   1.38     421,986      9.43   1.40     391,892      9.65    1.30
Savings.........................   1,548,441     30.43   3.25   1,279,378     28.59   4.04   1,220,425     30.03    3.61
Time deposits ..................   2,278,263     44.77   5.49   2,139,305     47.80   5.62   1,899,218     46.73    5.35
                                  ----------    ------   ====  ----------   -------   ====  ----------    ------    ====
      Total average deposits....  $5,088,478    100.00%        $4,475,555    100.00%        $4,063,564    100.00%
                                  ==========    ======         ==========   =======         ==========    ======
</TABLE>

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, 2001,
2000 and  1999.  We have  never  paid,  and have no  present  intention  to pay,
dividends on our common stock.
         Management  believes as of December 31, 2001 and 2000,  our  subsidiary
banks and we were "well capitalized" as defined by the Federal Deposit Insurance
Corporation Improvement Act of 1991.

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

         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 in October  2000,  we formed  our  second  financing
subsidiary,  First Preferred  Capital Trust II, for the purpose of issuing $57.5
million of trust preferred  securities.  On October 5, 2001, we formed our third
financing  subsidiary,  First  Preferred  Capital  Trust III, for the purpose of
issuing $55.2 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. Because of these limitations, as of
December  31,  2001,  $100.8  million  of these  preferred  securities  were not
includable  in Tier I  capital,  although  this  amount  was  included  in total
risk-based 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 other sources of funds by issuing  certificates of deposit in
denominations of $100,000 or more,  borrowing federal funds,  selling securities
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  sources  were $754.8  million and $723.5
million  at  December  31,  2001 and 2000,  respectively.
         The  following  table  presents the  maturity  structure of these other
sources of funds, which consists of certificates of deposit of $100,000 or more,
short-term borrowings and our note payable, at December 31, 2001:

                                                       (dollars expressed
                                                         in thousands)

       Three months or less..............................  $393,255
       Over three months through six months..............   120,073
       Over six months through twelve months.............   136,205
       Over twelve months................................   105,302
                                                           --------
                Total....................................  $754,835
                                                           ========

         In  addition  to these  sources  of funds,  our  subsidiary  banks have
established  borrowing  relationships  with the Federal  Reserve  Banks 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, 2001 and 2000, the borrowing capacity
of our subsidiary banks under these agreements was  approximately  $1.21 billion
and $1.24 billion,  respectively.  In addition,  our subsidiary banks' borrowing
capacity  through  their  relationships  with the  Federal  Home Loan  Banks was
approximately  $234.6  million and $262.1 million at December 31, 2001 and 2000,
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.

Effects of New Accounting Standards

         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, 2000.  On December 31,
2000, we implemented the disclosure requirements of SFAS 140, which did not have
a material effect on our  consolidated  financial  statements.  In addition,  on
April 1, 2001, we implemented the additional requirements of SFAS 140, which did
not have a material effect on our consolidated financial statements.


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

         In July 2001,  the FASB issued  SFAS No. 141 -- Business  Combinations,
and SFAS No. 142 -- Goodwill and Other Intangible Assets.  SFAS No. 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  after  June  30,  2001  as  well  as  all  purchase  method  business
combinations completed after June 30, 2001. SFAS No. 141 also specifies criteria
intangible  assets acquired in a purchase method business  combination must meet
to be recognized and reported  apart from  goodwill.  SFAS No. 142 requires that
goodwill  and  intangible  assets  with  indefinite  useful  lives no  longer be
amortized,  but instead  tested for  impairment at least  annually in accordance
with the provisions of SFAS No. 142. SFAS No. 142 also requires that  intangible
assets with definite useful lives be amortized over their  respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance  with SFAS No. 121 --  Accounting  for the  Impairment  of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. The amortization of goodwill
ceases upon  adoption of SFAS No. 142,  which for calendar  year-end  companies,
will be January 1, 2002.
         On July 1, 2001,  we  implemented  SFAS No.  141,  which did not have a
material  impact  on  our  consolidated  financial  statements  as  all  of  our
acquisitions have been accounted for under the purchase method of accounting. As
of  January  1,  2002,  the date we adopted  SFAS No.  142,  we had  unamortized
goodwill of $115.9 million and core deposit intangibles of $9.6 million,  all of
which was subject to the transition provisions of SFAS No. 141 and SFAS No. 142.
Amortization of intangibles  associated  with the purchase of  subsidiaries  was
$8.2  million,  $5.3 million and $4.4  million for the years ended  December 31,
2001,  2000 and 1999,  respectively.  Under SFAS No.  142,  we will  continue to
amortize our core deposit  intangibles and goodwill associated with purchases of
branch offices.  We are currently  evaluating the ongoing future requirements of
SFAS No. 142, particularly the impairment testing provisions, to determine their
potential impact on our consolidated  financial  statements.  However, we do not
believe  these  requirements  will have a  material  effect on our  consolidated
financial statements.
         In August  2001,  the FASB  issued SFAS No. 144 --  Accounting  for the
Impairment or Disposal of Long-Lived  Assets.  SFAS No. 144 supersedes  SFAS No.
121,  Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
Assets to be  Disposed  Of.  SFAS No. 144  addresses  financial  accounting  and
reporting  requirements for the impairment or disposal of long-lived  assets and
requires that one accounting model be used for long-lived  assets to be disposed
of by sale,  whether  previously held and used or newly  acquired.  SFAS No. 144
broadens the  presentation of  discontinued  operations to include more disposal
transactions.  Therefore,  the accounting  for similar events and  circumstances
will be the same.  The  provisions  of SFAS No. 144 are  effective for financial
statements  issued for fiscal years  beginning  after  December  15,  2001,  and
interim periods within those fiscal years,  with early  application  encouraged.
The provisions of SFAS No. 144 generally are to be applied prospectively. We are
currently  evaluating  the  requirements  of SFAS  No.  144 to  determine  their
potential impact on our consolidated  financial  statements.  However, we do not
believe  these  requirements  will have a  material  effect 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>



                                                                                 2001 Quarter Ended
                                                                 ---------------------------------------------------
                                                                 March 31     June 30    September 30    December 31
                                                                 --------     -------    ------------    -----------
                                                                          (dollars expressed in thousands)

<S>                                                             <C>           <C>           <C>             <C>
Interest income..............................................   $ 116,037     113,356       110,724         104,626
Interest expense.............................................      54,140      50,772        46,461          39,641
                                                                ---------    --------       -------        --------
    Net interest income......................................      61,897      62,584        64,263          64,985
Provision for loan losses....................................       3,390       3,720         6,800           9,600
                                                                ---------    --------       -------        --------
    Net interest income after provision for loan losses......      58,507      58,864        57,463          55,385
Noninterest income...........................................      16,474      19,424        21,846          40,865
Noninterest expense..........................................      51,618      64,398        54,812          59,433
                                                                ---------    --------       -------        --------
    Income before provision for income taxes, minority
      interest in income of subsidiary and cumulative
      effect of change in accounting principle...............      23,363      13,890        24,497          36,817
Provision for income taxes...................................       9,124       5,457         9,539           5,928
                                                                ---------    --------       -------        --------
    Income before minority interest in income
      of subsidiary and cumulative effect of
      change in accounting principle.........................      14,239       8,433        14,958          30,889
Minority interest in income of subsidiary....................         511         534           577           1,007
                                                                ---------    --------       -------        --------
    Income before cumulative effect of change in
      accounting principle...................................      13,728       7,899        14,381          29,882
Cumulative effect of change in accounting principle,
    net of tax...............................................      (1,376)         --            --              --
                                                                ---------    --------       -------        --------
    Net income...............................................   $  12,352       7,899        14,381          29,882
                                                                =========    ========       =======        ========
Earnings per common share:
    Basic:
      Income before cumulative effect of change in
        accounting principle.................................   $  571.94      328.27        599.47        1,251.86
      Cumulative effect of change in accounting principle....      (58.16)         --            --              --
                                                                ---------    --------       -------        --------
      Basic..................................................   $  571.94      328.27        599.47        1,251.86
                                                                =========    ========       =======        ========
    Diluted:
      Income before cumulative effect of change in
        accounting principle.................................   $  561.09      322.78        587.93        1,225.79
      Cumulative effect of change in accounting principle....      (58.16)         --            --              --
                                                                ---------    --------       -------        --------
      Diluted................................................   $  502.93      322.78        587.93        1,225.79
                                                                =========    ========       =======        ========



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

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
                                                                =========    ========       =======        ========

</TABLE>

<PAGE>
                           CONSOLIDATED BALANCE SHEETS

        (dollars expressed in thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                                              December 31,
                                                                                           --------------------
                                                                                           2001            2000
                                                                                           ----            ----

                                     ASSETS
                                     ------


Cash and cash equivalents:
<S>                                                                                    <C>                 <C>
     Cash and due from banks.......................................................    $   181,522         167,474
     Interest-bearing deposits with other financial institutions
       with maturities of three months or less.....................................          4,664           4,005
     Federal funds sold............................................................         55,688          26,800
                                                                                       -----------      ----------
               Total cash and cash equivalents.....................................        241,874         198,279
                                                                                       -----------      ----------

Investment securities:
     Available for sale, at fair value.............................................        610,466         539,386
     Held to maturity, at amortized cost (fair value of $20,812 and
       $24,507 at December 31, 2001 and 2000, respectively)........................         20,602          24,148
                                                                                       -----------      ----------
               Total investment securities.........................................        631,068         563,534
                                                                                       -----------      ----------

Loans:
     Commercial, financial and agricultural........................................      1,681,846       1,496,284
     Real estate construction and development......................................        954,913         809,682
     Real estate mortgage..........................................................      2,445,847       2,202,857
     Consumer and installment......................................................        124,542         181,602
     Loans held for sale...........................................................        204,206          69,105
                                                                                       -----------      ----------
               Total loans.........................................................      5,411,354       4,759,530
     Unearned discount.............................................................         (2,485)         (7,265)
     Allowance for loan losses.....................................................        (97,164)        (81,592)
                                                                                       -----------      ----------
               Net loans...........................................................      5,311,705       4,670,673
                                                                                       -----------      ----------

Derivative instruments.............................................................         54,889           3,759
Bank premises and equipment, net of accumulated depreciation and amortization......        149,604         114,771
Intangibles associated with the purchase of subsidiaries, net of amortization......        125,440          85,021
Bank-owned life insurance..........................................................         87,200          83,292
Accrued interest receivable........................................................         37,349          45,226
Deferred income taxes..............................................................         94,546          77,956
Other assets.......................................................................         44,776          34,180
                                                                                       -----------      ----------
               Total assets........................................................    $ 6,778,451       5,876,691
                                                                                       ===========      ==========


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

</TABLE>

<PAGE>
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

        (dollars expressed in thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                                              December 31,
                                                                                           --------------------
                                                                                           2001            2000
                                                                                           ----            ----

                                   LIABILITIES
                                   -----------
Deposits:
     Demand:
<S>                                                                                    <C>                 <C>
       Non-interest-bearing........................................................    $   921,455         808,251
       Interest-bearing............................................................        629,015         448,146
     Savings.......................................................................      1,832,939       1,447,898
     Time:
       Time deposits of $100 or more...............................................        484,201         499,956
       Other time deposits.........................................................      1,816,294       1,808,164
                                                                                       -----------      ----------
          Total deposits...........................................................      5,683,904       5,012,415
Short-term borrowings..............................................................        243,134         140,569
Note payable.......................................................................         27,500          83,000
Accrued interest payable...........................................................         16,006          23,227
Deferred income taxes..............................................................         43,856          15,031
Accrued expenses and other liabilities.............................................         61,515          52,687
Minority interest in subsidiary....................................................         17,998          14,067
                                                                                       -----------      ----------
          Total liabilities........................................................      6,093,913       5,340,996
                                                                                       -----------      ----------

Guaranteed preferred beneficial interests in:
     First Banks, Inc. subordinated debentures.....................................        191,539         138,569
     First Banks America, Inc. subordinated debentures.............................         44,342          44,280
                                                                                       -----------      ----------
          Total guaranteed preferred beneficial interests in
              subordinated debentures..............................................        235,881         182,849
                                                                                       -----------      ----------

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

Preferred stock:
     $1.00 par value, 5,000,000 shares authorized, no shares issued
       and outstanding at December 31, 2001 and 2000...............................             --              --
     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....................................................................          6,074           2,267
Retained earnings..................................................................        389,308         325,580
Accumulated other comprehensive income.............................................         34,297           6,021
                                                                                       -----------      ----------
          Total stockholders' equity...............................................        448,657         352,846
                                                                                       -----------      ----------
          Total liabilities and stockholders' equity...............................    $ 6,778,451       5,876,691
                                                                                       ===========      ==========
</TABLE>


<PAGE>
                        CONSOLIDATED STATEMENTS OF INCOME

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

                                                                                     Years Ended December 31,
                                                                                   -----------------------------
                                                                                   2001         2000        1999
                                                                                   ----         ----        ----
Interest income:
<S>                                                                             <C>          <C>          <C>
     Interest and fees on loans..............................................   $ 412,153     390,332      323,207
     Investment securities:
       Taxable...............................................................      26,244      27,331       26,206
       Nontaxable............................................................         888         961          937
     Federal funds sold and other............................................       5,458       4,202        2,732
                                                                                ---------    --------     --------
          Total interest income..............................................     444,743     422,826      353,082
                                                                                ---------    --------     --------
Interest expense:
     Deposits:
       Interest-bearing demand...............................................       7,019       5,909        5,098
       Savings...............................................................      50,388      51,656       44,101
       Time deposits of $100 or more.........................................      28,026      20,654       11,854
       Other time deposits...................................................      97,105      99,603       84,639
     Interest rate exchange agreements, net..................................          --          --        5,397
     Short-term borrowings...................................................       5,847       5,881        3,983
     Note payable............................................................       2,629       3,976        3,629
                                                                                ---------    --------     --------
          Total interest expense.............................................     191,014     187,679      158,701
                                                                                ---------    --------     --------
          Net interest income................................................     253,729     235,147      194,381
Provision for loan losses....................................................      23,510      14,127       13,073
                                                                                ---------    --------     --------
          Net interest income after provision for loan losses................     230,219     221,020      181,308
                                                                                ---------    --------     --------
Noninterest income:
     Service charges on deposit accounts and customer service fees...........      22,865      19,794       17,676
     Gain on mortgage loans sold and held for sale...........................      14,983       7,806        6,909
     Gain on sale of credit card portfolio, net of expenses..................       1,853          --           --
     Net gain on sales of available-for-sale securities......................      18,722         168          791
     Gain on sales of branches, net of expenses..............................          --       1,355        4,406
     Bank-owned life insurance investment income.............................       4,415       4,314        3,919
     Gain on derivative instruments, net.....................................      18,583          --           --
     Other...................................................................      17,188       9,341        7,949
                                                                                ---------    --------     --------
          Total noninterest income...........................................      98,609      42,778       41,650
                                                                                ---------    --------     --------
Noninterest expense:
     Salaries and employee benefits..........................................      93,452      73,391       61,524
     Occupancy, net of rental income.........................................      17,432      14,675       12,518
     Furniture and equipment.................................................      12,612      11,702        8,520
     Postage, printing and supplies..........................................       4,869       4,431        4,244
     Information technology fees.............................................      26,981      22,359       18,567
     Legal, examination and professional fees................................       6,988       4,523        9,109
     Amortization of intangibles associated with the purchase
          of subsidiaries....................................................       8,248       5,297        4,401
     Communications..........................................................       3,247       2,625        2,488
     Advertising and business development....................................       5,237       4,331        3,734
     Guaranteed preferred debentures.........................................      18,590      13,173       12,050
     Other...................................................................      32,605      14,656       13,652
                                                                                ---------    --------     --------
          Total noninterest expense..........................................     230,261     171,163      150,807
                                                                                ---------    --------     --------
          Income before provision for income taxes, minority
             interest in income of subsidiary and cumulative
             effect of change in accounting principle........................      98,567      92,635       72,151
Provision for income taxes...................................................      30,048      34,482       26,313
                                                                                ---------    --------     --------
          Income before minority interest in income of
             subsidiary and cumulative effect of
             change in accounting principle..................................      68,519      58,153       45,838
Minority interest in income of subsidiary....................................       2,629       2,046        1,660
                                                                                ---------    --------     --------
          Income before cumulative effect of change in accounting principle..      65,890      56,107       44,178
Cumulative effect of change in accounting principle, net of tax..............     ( 1,376)         --           --
                                                                                ---------    --------     --------
          Net income.........................................................      64,514      56,107       44,178
Preferred stock dividends....................................................         786         786          786
                                                                                ---------    --------     --------
          Net income available to common stockholders........................   $  63,728      55,321       43,392
                                                                                =========    ========     ========

<PAGE>


Basic earnings per common share:
     Income before cumulative effect of change in accounting principle.......   $2,751.54    2,338.04     1,833.91
     Cumulative effect of change in accounting principle, net of tax.........      (58.16)         --           --
                                                                                ---------    --------     --------
     Basic...................................................................   $2,693.38    2,338.04     1,833.91
                                                                                =========    ========     ========
Diluted earnings per common share:
     Income before cumulative effect of change in accounting principle.......   $2,684.93    2,267.41     1,775.47
     Cumulative effect of change in accounting principle, net of tax.........      (58.16)         --           --
                                                                                ---------    --------     --------
     Diluted.................................................................   $2,626.77    2,267.41     1,775.47
                                                                                =========    ========     ========

Weighted average shares of common stock outstanding..........................      23,661      23,661       23,661
                                                                                =========    ========     ========

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME

                       Three Years Ended December 31, 2001
             (dollars expressed in thousands, except per share data)

<TABLE>
<CAPTION>



                                                     Adjustable Rate                                         Accu-
                                                     Preferred Stock                                        mulated
                                                     ---------------                                         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, 1999...........  $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
Year ended December 31, 2001:
    Comprehensive income:
      Net income.................................       --      --        --        --   64,514    64,514     --      64,514
      Other comprehensive income, net of tax:
        Unrealized gains on securities, net of
          reclassification adjustment (1)........       --      --        --        --   (1,871)       --  (1,871)   ( 1,871)
        Derivative instruments:
          Cumulative effect of change in
           accounting principle, net.............       --      --        --        --    9,069             9,069      9,069
          Current period transactions............       --      --        --        --   27,021             7,021     27,021
          Reclassification to earnings...........       --      --        --        --   (5,943)           (5,943)    (5,943)
                                                                                        -------
      Comprehensive income.......................                                        92,790
                                                                                        =======
    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.................       --      --        --     3,807                 --      --      3,807
                                                   -------    ----     -----    ------            -------  ------    -------
Consolidated balances, December 31, 2001.........  $12,822     241     5,915     6,074            389,308  34,297    448,657
                                                   =======    ====     =====    ======            =======  ======    =======
</TABLE>
<PAGE>

--------------------------------------
(1)  Disclosure of reclassification adjustment:
<TABLE>
<CAPTION>
                                                                                                Years Ended December 31,
                                                                                               --------------------------
                                                                                               2001       2000       1999
                                                                                               ----       ----       ----

<S>                                                                                          <C>         <C>       <C>
     Unrealized gains (losses) arising during the year...................................    $10,298     3,780     (8,874)
     Less reclassification adjustment for gains included in net income...................     12,169       109        514
                                                                                             -------     -----     ------
     Unrealized (losses) gains on investment securities..................................    $(1,871)    3,671     (9,388)
                                                                                             =======     =====     ======

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


<PAGE>
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

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

                                                                                       Years ended December 31,
                                                                                  --------------------------------
                                                                                     2001       2000        1999
                                                                                     ----       ----        ----

Cash flows from operating activities:
<S>                                                                               <C>          <C>          <C>
     Net income...............................................................   $   64,514     56,107       44,178
     Adjustments to reconcile net income to net cash
       (used in) provided by operating activities:
          Cumulative effect of change in accounting principle, net of tax.....        1,376         --           --
          Depreciation and amortization of bank premises and equipment........       12,713      9,536        7,609
          Amortization, net of accretion......................................       11,203      8,370       12,632
          Originations and purchases of loans held for sale...................   (1,524,156)  (532,178)    (452,941)
          Proceeds from sales of loans held for sale..........................    1,348,772    413,247      507,077
          Provision for loan losses...........................................       23,510     14,127       13,073
          Provision for income taxes..........................................       30,048     34,482       26,313
          Payments of income taxes............................................      (19,297)   (10,525)     (23,904)
          Decrease (increase) in accrued interest receivable..................       11,513     (7,338)      (3,164)
          Interest accrued on liabilities.....................................      191,014    187,679      158,701
          Payments of interest on liabilities.................................     (199,739)  (177,764)    (154,056)
          Gain on mortgage loans sold and held for sale.......................      (14,983)    (7,806)      (6,909)
          Gain on sale of credit card portfolio, net of expenses..............       (1,853)        --           --
          Net gain on sales of available-for-sale securities..................      (18,722)      (168)        (791)
          Gain on sales of branches, net of expenses..........................           --     (1,355)      (4,406)
          Gain on derivative instruments, net.................................      (18,583)        --           --
          Other operating activities, net.....................................        4,690     (3,978)       8,330
          Minority interest in income of subsidiary...........................        2,629      2,046        1,660
                                                                                 ----------   --------    ---------
               Net cash (used in) provided by operating activities............      (95,351)   (15,518)     133,402
                                                                                 ----------   --------    ---------

Cash flows from investing activities:
     Cash received (paid) for acquired entities, net of
       cash and cash equivalents received (paid)..............................        6,351    (86,106)     (15,961)
     Proceeds from sales of investment securities.............................       85,824     46,279       63,938
     Maturities of investment securities available for sale...................      762,548    347,642      350,940
     Maturities of investment securities held to maturity.....................        4,292      1,169        2,708
     Purchases of investment securities available for sale....................     (822,593)  (289,875)    (288,023)
     Purchases of investment securities held to maturity......................         (750)    (3,806)      (2,627)
     Proceeds from terminations of derivative instruments.....................       22,203         --           --
     Net increase in loans....................................................       (6,252)  (339,575)    (268,238)
     Recoveries of loans previously charged-off...............................        9,469      9,842        9,281
     Purchases of bank premises and equipment.................................      (36,452)   (30,856)     (17,099)
     Other investing activities...............................................         (331)     5,052          (10)
                                                                                 ----------   --------    ---------
               Net cash provided by (used in) investing activities............       24,309   (340,234)    (165,091)
                                                                                 ----------   --------    ---------

Cash flows from financing activities:
     Increase (decrease) in demand and savings deposits.......................      299,466    155,058      (72,895)
     (Decrease) increase in time deposits.....................................     (254,748)   129,008      144,499
     Repayments of Federal Home Loan Bank advances............................       (5,000)        --      (50,000)
     Increase (decrease) in federal funds purchased...........................       70,000    (27,100)          --
     Increase in securities sold under agreements to repurchase...............        8,438     52,015        2,223
     Advances drawn on note payable...........................................       69,500    137,000       32,000
     Repayments of note payable...............................................     (125,000)  (118,000)     (18,048)
     Proceeds from issuance of guaranteed preferred subordinated debentures...       55,200     55,050           --
     Sale of branch deposits..................................................           --        892      (49,172)
     Payment of preferred stock dividends.....................................         (786)      (786)        (786)
     Other financing activities, net..........................................       (2,433)        --           --
                                                                                 ----------   --------    ---------
               Net cash provided by (used in) financing activities............      114,637    383,137      (12,179)
                                                                                 ----------   --------    ---------
               Net increase (decrease) in cash and cash equivalents...........       43,595     27,385      (43,868)
Cash and cash equivalents, beginning of year..................................      198,279    170,894      214,762
                                                                                 ----------   --------    ---------
Cash and cash equivalents, end of year........................................   $  241,874    198,279      170,894
                                                                                 ==========   ========    =========

Noncash investing and financing activities:
     Reduction of deferred tax asset valuation reserve........................   $    4,971      1,267           --
     Loans transferred to other real estate...................................        3,493      1,761        4,039
     Loans exchanged for and transferred to available-for-sale
       investment securities..................................................           --     37,634           --
     Loans held for sale exchanged for and transferred
       to available-for-sale investment securities............................           --     19,805        3,985
     Loans held for sale transferred to loans.................................       38,343     72,847       32,982
                                                                                 ==========   ========    =========

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The  following  is a summary  of the  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 2000 and
1999 amounts have been made to conform with the 2001 presentation.
         First Banks operates through its subsidiary bank holding  companies and
subsidiary financial  institutions  (collectively  referred to as the Subsidiary
Banks) as follows:

         Union Financial Group, Ltd., headquartered  in  Swansea, Illinois (UFG)
            and its wholly owned subsidiary:
              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  San Francisco, California
            (FBA) and its wholly owned subsidiaries:
              The San Francisco Company, headquartered in San Francisco,
                California (SFC), and its wholly owned subsidiary:
                   First Bank & Trust, headquartered in San Francisco,
                      California (FB&T).

         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%.  On October 31, 2001,  FBA
issued  803,757  shares of its common stock to First Banks in  conjunction  with
FBA's  acquisition  of BYL Bancorp.  First Banks owned 93.69% of FBA at December
31, 2001.

         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 $24.2 million and
$22.3 million at December 31, 2001 and 2000, respectively.

         Investment  Securities.  The  classification  of investment  securities
available  for sale or held to maturity is  determined  at the date of purchase.
First Banks does not engage 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 to interest
income 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.

         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.  In  addition,  various  regulatory
agencies, as an integral part of their examination process,  periodically review
the allowance for loan losses. Such agencies may require First Banks to increase
its  allowance  for  loan  losses  based  on their  judgment  about  information
available to them at the time of their examination.

         Derivative  Instruments  and  Hedging  Activities.  In June  1998,  the
Financial  Accounting  Standards  Board  (FASB)  issued  Statement  of Financial
Accounting Standards (SFAS) No. 133 -- Accounting for Derivative Instruments and
Hedging  Activities (SFAS 133). In June 1999 and June 2000, 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, and SFAS No. 138 - Accounting for Derivative  Instruments and
Hedging Activities,  an Amendment of FASB Statement No. 133, respectively.  SFAS
133, as amended,  establishes  accounting and reporting standards for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and for hedging activities.  SFAS 133, as amended, requires an entity
to 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, as amended, 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.
         On January 1, 2001, First Banks  implemented SFAS 133, as amended.  The
implementation  of SFAS 133, as amended,  resulted in an increase in  derivative
instruments  of $12.5 million,  an increase in deferred tax  liabilities of $5.1
million  and an  increase  in other  comprehensive  income of $9.1  million.  In
addition,  First  Banks  recorded a  cumulative  effect of change in  accounting
principle  of $1.4  million,  net of taxes of  $741,000,  as a reduction  of net
income.


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         First Banks utilizes  derivative  instruments and hedging activities to
assist  in the  management  of  interest  rate  sensitivity  and to  modify  the
repricing,   maturity  and  option   characteristics   of  certain   assets  and
liabilities.  First Banks uses such derivative  instruments solely to reduce its
interest rate risk  exposure.  First Banks'  accounting  policies for derivative
instruments and hedging activities under SFAS 133, as amended, are as follows:

         >>    Interest Rate Swap  Agreements - Cash Flow Hedges.  Interest rate
               swap agreements  designated as cash flow hedges are accounted for
               at fair value.  The  effective  portion of the change in the cash
               flow hedge's gain or loss is initially reported as a component of
               other  comprehensive  income and subsequently  reclassified  into
               noninterest  income  when  the  underlying   transaction  affects
               earnings.  The ineffective portion of the change in the cash flow
               hedge's  gain or loss is recorded in  noninterest  income on each
               monthly  measurement  date.  The  net  interest  differential  is
               recognized  as an  adjustment  to  interest  income  or  interest
               expense of the related asset or liability  being  hedged.  In the
               event of early termination,  the net proceeds received or paid on
               the interest rate swap  agreements are recognized  immediately in
               noninterest income.

         >>    Interest Rate Swap Agreements - Fair Value Hedges.  Interest rate
               swap agreements designated as fair value hedges are accounted for
               at fair value.  Changes in the fair value of the swap  agreements
               are recognized currently in noninterest income. The change in the
               fair value of the  underlying  hedged  item  attributable  to the
               hedged risk adjusts the carrying amount of the underlying  hedged
               item and is also recognized  currently in noninterest income. All
               changes in fair value are  measured on a monthly  basis.  The net
               interest  differential is recognized as an adjustment to interest
               income or interest expense of the related asset or liability.  In
               the event of early termination, the net proceeds received or paid
               are recognized  immediately in noninterest income. The cumulative
               change  in the  fair  value  of the  underlying  hedged  item  is
               deferred and amortized or accreted to noninterest income over the
               weighted  average  life of the related  asset or  liability.  If,
               however,  the  underlying  hedged item is repaid,  the cumulative
               change  in the  fair  value  of the  underlying  hedged  item  is
               recognized immediately in noninterest income.

         >>    Interest  Rate Cap and Floor  Agreements.  Interest  rate cap and
               floor agreements are accounted for at fair value.  Changes in the
               fair  value  of  interest  rate  cap  and  floor  agreements  are
               recognized  in  noninterest  income on each  monthly  measurement
               date.

         >>    Interest Rate Lock  Commitments.  Commitments to originate  loans
               (interest  rate lock  commitments),  which  primarily  consist of
               commitments to originate fixed rate  residential  mortgage loans,
               are  recorded  at fair  value.  Changes  in the  fair  value  are
               recognized in noninterest income on a monthly basis.

         >>    Forward  Contracts to Sell  Mortgage-Backed  Securities.  Forward
               commitments  to sell  mortgage-backed  securities are recorded at
               fair  value.  Changes in the fair value of forward  contracts  to
               sell  mortgage-backed  securities  are  recognized in noninterest
               income on a monthly basis.

         Prior to the  implementation of SFAS 133, interest rate swap, floor and
cap  agreements  were  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 were amortized over the
life of the agreements  using the  straight-line  method.  In the event of early
termination of the derivative financial  instruments,  the net proceeds received
or paid were 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 asset or liability was
repaid,  then the gains or losses on the agreements were recognized  immediately
in the consolidated statements of income. The unamortized premiums and fees paid
are included in derivative instruments in the accompanying  consolidated balance
sheets.
         In   addition,    interest    rate   lock    commitments    represented
off-balance-sheet  items and, therefore,  were not reflected in the consolidated
balance sheets.  Gains and losses on forward  contracts to sell  mortgage-backed
securities,  which  qualified  as hedged,  were  deferred.  The net  unamortized
balance of such deferred  gains and losses was 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)

         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  include  excess of cost over net
assets acquired and core deposit intangibles. 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 10 to 15 years. The
core deposit  intangibles are amortized using the straight-line  method over the
estimated  periods to be  benefited,  which has been  estimated  at seven 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.

         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 taxes.
         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.

         Earnings Per Common Share.  Basic earnings per share (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, 2001, First Banks completed
the following acquisitions:
<TABLE>
<CAPTION>
                                                                              Total        Purchase        Excess
           Entity                                       Date                 Assets          Price          Cost
           ------                                       ----                 ------          -----          ----
                                                                               (dollars expressed in thousands)
   2001
   ----
     Union Financial Group, Ltd.
<S>                                               <C>                     <C>               <C>             <C>
     Swansea, Illinois                            December 31, 2001       $ 360,000         26,700          11,500

     BYL Bancorp
     Orange, California                           October 31, 2001          281,500         49,000          19,000

     Charter Pacific Bank
     Agoura Hills, California                     October 16, 2001          101,500         18,900           6,300
                                                                          ---------       --------        --------
                                                                          $ 743,000         94,600          36,800
                                                                          =========       ========        ========
   2000
   ----
     The San Francisco Company
     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
                                                                          =========       ========        ========
</TABLE>
         In  addition  to the  acquisitions  included  in the  table  above,  in
September 1999, First Banks also completed one branch office purchase in Malibu,
California.  Furthermore,  on  January  15,  2002,  First  Banks  completed  its
acquisition  of Plains  Financial  Corporation,  or PFC,  and its  wholly  owned
banking subsidiary,  PlainsBank of Illinois, National Association,  Des Plaines,
Illinois,  in exchange for $36.5 million in cash.  PFC operated a total of three
banking  facilities in Des Plaines,  Illinois,  and one banking  facility in Elk
Grove Village, Illinois. At the time of the transaction,  PFC had $256.3 million
in total  assets,  $150.4  million in loans,  net of  unearned  discount,  $81.0
million in investment securities and $213.4 million in deposits.
         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.
         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)

(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, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>

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

 December 31, 2001:
    Carrying value:
<S>                                    <C>              <C>        <C>        <C> <C>           <C>    <C>  <C>      <C>
       U.S. Treasury.................. $136,326         --         --         --  136,326       3      (39) 136,290  1.76%
       U.S. Government agencies
          and corporations:
              Mortgage-backed.........       88     21,650     18,224    262,846  302,808   2,422       --  305,230  6.00
              Other...................   22,284     99,353      6,612        974  129,223   2,235      (16) 131,442  4.58
       State and political
           subdivisions...............      317      1,191         46         --    1,554      --       --    1,554  3.92
       Corporate debt securities......       --      1,985         --         --    1,985     107       --    2,092  6.76
       Equity investments in other
          financial institutions
          (no stated maturity)........   15,916         --         --         --   15,916   2,171     (272)  17,815  8.55
       Federal Home Loan Bank and
          Federal Reserve Bank stock
          (no stated maturity)........   16,043         --         --         --   16,043      --       --   16,043  6.49
                                       --------    -------     ------    -------  -------  ------   ------  -------
              Total................... $190,974    124,179     24,882    263,820  603,855   6,938     (327) 610,466  4.75
                                       ========    =======     ======    =======  =======  ======   ======  =======  ====

    Fair value:
       Debt securities................ $159,303    126,673     25,378    265,254
       Equity securities..............   33,858         --         --         --
                                       --------    -------     ------    -------
              Total................... $193,161    126,673     25,378    265,254
                                       ========    =======     ======    =======

    Weighted average yield............     3.25%      4.67%      5.76%      5.92%
                                       ========    =======     ======    =======

 December 31, 2000:
    Carrying value:
       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
          (no stated maturity)........   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%
                                       ========    =======     ======    =======

</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, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>


                                                    Matuity
                                        ----------------------------------------    Total        Gross
                                                                          After     Amor-      Unrealized           Weighted
                                        1 Year        1-5       5-10       10       tized    --------------  Fair   Average
                                        or Less      Years      Years     Years     Cost     Gains   Losses  Value   Yield
                                        -------      -----      -----     -----     ----     -----   ------  -----   -----
                                                                     (dollars expressed in thousands)
 December 31, 2001:
    Carrying value:
<S>                                    <C>          <C>         <C>        <C>      <C>        <C>     <C>    <C>     <C>
       Mortgage-backed securities..... $     --         --         --      4,051    4,051      67      (10)   4,108   6.83%
       State and political
         subdivisions.................    1,943      8,802      5,806         --   16,551     300     (147)  16,704   4.93
                                       --------    -------     ------    -------   ------   -----   ------   ------
                Total................. $  1,943      8,802      5,806      4,051   20,602     367     (157)  20,812   5.25
                                       ========    =======     ======    =======   ======   =====   ======   ======   ====

    Fair value:
       Debt securities................ $  1,930      9,071      5,703      4,108
                                       ========    =======     ======    =======

    Weighted average yield............     4.58%      4.98%      4.98%      6.83%
                                       ========    =======     ======    =======


 December 31, 2000:
    Carrying value:
       Mortgage-backed securities..... $     --         --         --      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%
                                       ========    =======     ======    =======
</TABLE>

         Proceeds from sales of  available-for-sale  investment  securities were
$85.8 million,  $46.3 million and $63.9 million for the years ended December 31,
2001, 2000 and 1999,  respectively.  Gross gains of $19.1 million,  $565,000 and
$791,000 were realized on these sales during the years ended  December 31, 2001,
2000 and 1999, respectively. Gross losses of $384,000 and $396,000 were realized
on these sales during the years ended December 31, 2001 and 2000,  respectively.
There were no losses realized on these sales in 1999.
         Proceeds  from calls of  investment  securities  were  $121.8  million,
$111,000  and $20,000  for the years ended  December  31,  2001,  2000 and 1999,
respectively.  Gross  gains of $6,800  and $300 were  realized  on these  called
securities  during the years ended  December  31,  2001 and 2000,  respectively.
There were no gross gains on called  securities in 1999. Gross losses of $1,400,
$1,800 and $1,200 were  realized  on these  called  securities  during the years
ended December 31, 2001, 2000 and 1999, respectively.
         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 and FB&T 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 is a member of the FRB system.
         Investment  securities  with a carrying value of  approximately  $300.0
million and $180.5  million at December  31, 2001 and 2000,  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>
                                                                                    2001        2000        1999
                                                                                    ----        ----        ----
                                                                                  (dollars expressed in thousands)

<S>                                                                              <C>           <C>          <C>
               Balance, beginning of year.....................................   $ 81,592      68,611       60,970
               Acquired allowances for loan losses............................     14,046       6,062        3,008
                                                                                 --------    --------    ---------
                                                                                   95,638      74,673       63,978
                                                                                 --------    --------    ---------
               Loans charged-off..............................................    (31,453)    (17,050)     (17,721)
               Recoveries of loans previously charged-off.....................      9,469       9,842        9,281
                                                                                 --------    --------    ---------
                  Net loans charged-off.......................................    (21,984)     (7,208)      (8,440)
                                                                                 --------    --------    ---------
               Provision charged to operations................................     23,510      14,127       13,073
                                                                                 --------    --------    ---------
               Balance, end of year...........................................   $ 97,164      81,592       68,611
                                                                                 ========    ========    =========
</TABLE>
         At December 31, 2001 and 2000,  First Banks had $67.3 million and $53.2
million  of  impaired   loans,   including  $65.3  million  and  $50.2  million,
respectively,  of loans on  nonaccrual  status.  At December  31, 2001 and 2000,
impaired  loans also  include $2.0 million and $3.0  million,  respectively,  of
restructured loans. Interest on nonaccrual loans, which would have been recorded
under the original terms of the loans,  was $8.2 million,  $5.8 million and $5.8
million for the years ended December 31, 2001, 2000 and 1999,  respectively.  Of
these amounts, $2.9 million, $1.9 million and $2.7 million was actually recorded
as  interest  income on such  loans in 2001,  2000 and 1999,  respectively.  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 $16.5 million and $10.3 million at December 31, 2001 and 2000,
respectively.  The  average  recorded  investment  in  impaired  loans was $62.4
million,  $45.1 million and $46.0 million for the years ended December 31, 2001,
2000 and 1999,  respectively.  The amount of interest income  recognized using a
cash basis method of  accounting  during the time these loans were  impaired was
$5.8  million,   $2.2  million  and  $2.8  million  in  2001,   2000  and  1999,
respectively.
         First Banks' primary market areas are the states of Missouri, Illinois,
Texas and California.  At December 31, 2001 and 2000,  approximately 92% and 91%
of the total loan  portfolio,  respectively,  and 80% and 83% of the commercial,
financial and agricultural loan portfolio,  respectively, were made to borrowers
within these states.
         Real estate lending  constituted the only significant  concentration of
credit risk. Real estate loans comprised  approximately  67% and 65% of the loan
portfolio  at December  31, 2001 and 2000,  of which 28% and 26%,  respectively,
were made to consumers 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, 2001 and
2000,  96%  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)      DERIVATIVE INSTRUMENTS

         First Banks utilizes derivative financial  instruments to assist in the
management of interest rate sensitivity by modifying the repricing, maturity and
option  characteristics  of  certain  assets  and  liabilities.  The use of such
derivative  financial  instruments is limited to reducing First Banks'  interest
rate exposure. Derivative financial instruments held by First Banks for purposes
of managing interest rate risk are summarized as follows:
<TABLE>
<CAPTION>
                                                                            December 31,
                                                          ------------------------------------------------
                                                                 2001                        2000
                                                          ----------------------    ----------------------
                                                          Notional      Credit      Notional      Credit
                                                           Amount      Exposure      Amount      Exposure
                                                                  (dollars expressed in thousands)
<S>                                                       <C>           <C>        <C>             <C>
         Cash flow hedges..............................   $900,000      1,764      1,055,000       3,449
         Fair value hedges.............................    200,000      6,962         50,000         758
         Interest rate floor agreements................         --         --         35,000           6
         Interest rate cap agreements..................    450,000      2,063        450,000       3,753
         Interest rate lock commitments................     88,000         --          4,100          --
         Forward commitments to sell
              mortgage-backed securities...............    209,000         --         32,000          --
                                                          ========      =====      =========      ======
</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
First Banks' credit exposure  through its use of these  instruments.  The credit
exposure represents the accounting loss First Banks 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.
         During  2001 and 1999,  First Banks  realized  net  interest  income on
derivative financial instruments of $23.4 million and $430,000, respectively, in
comparison to net interest  expense of $4.7 million in 2000. In addition,  First
Banks  realized  a net gain on  derivative  instruments,  which is  included  in
noninterest  income in the consolidated  statements of income,  of $18.6 million
for the year ended December 31, 2001.

         Cash Flow Hedges
         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  prior to 1998. The net interest  expense  associated with these
agreements,  consisting  primarily of amortization of deferred losses,  was $5.7
million  for  the  year  ended  December  31,  1999.  There  were  no  remaining
unamortized  deferred  losses on the terminated  swap agreements at December 31,
1999.
         First Banks entered into the following  interest rate swap  agreements,
designated  as  cash  flow  hedges,   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:

         >>    During 1998,  First Banks  entered into $280.0  million  notional
               amount of interest rate swap  agreements  that provided for First
               Banks to receive a fixed rate of interest  and pay an  adjustable
               rate of interest  equivalent to the daily weighted  average prime
               lending  rate  minus  2.705%.  The  terms of the swap  agreements
               provided  for First Banks to pay  quarterly  and receive  payment
               semiannually.  In  June  2001  and  November  2001,  First  Banks
               terminated  $205.0  million and $75.0  million  notional  amount,
               respectively,  of these swap agreements, which would have expired
               in 2002,  in order to  appropriately  modify  its  overall  hedge
               position in  accordance  with its interest  rate risk  management
               program.  In  conjunction  with these  terminations,  First Banks
               recorded   pre-tax  gains  of  $2.8  million  and  $1.7  million,
               respectively.

         >>    During  September  1999,  First Banks entered into $175.0 million
               notional  amount of interest rate swap  agreements  that provided
               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  provided for
               First Banks to pay and receive  interest on a quarterly basis. In
               April 2001, First Banks  terminated these swap agreements,  which
               would have expired in  September  2001,  and  replaced  them with
               similar swap  agreements  with  extended  maturities  in order to
               lengthen the period covered by the swaps. In conjunction with the
               termination  of these swap  agreements,  First  Banks  recorded a
               pre-tax gain of $985,000.

         >>    During  September  2000,  March 2001 and April 2001,  First Banks
               entered into $600.0 million,  $200.0 million,  and $175.0 million
               notional amount,  respectively,  of interest rate swap agreements
               that  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 either 2.70% or 2.82%.  The terms of the
               swap  agreements  provide  for  First  Banks  to pay and  receive
               interest on a quarterly  basis.  In  November  2001,  First Banks
               terminated   $75.0   million   notional   amount  of  these  swap
               agreements,  which would have expired in April 2006,  in order to
               appropriately  modify its overall  hedge  position in  accordance
               with its  interest  rate risk  management  program.  First  Banks
               recorded a pre-tax gain of $2.6 million in  conjunction  with the
               termination of these swap  agreements.  The amount  receivable by
               First Banks under the remaining swap  agreements was $2.9 million
               at December 31, 2001, and the amount payable by First Banks under
               the swap  agreements  was $1.1 million at December 31, 2001.  The
               amount  receivable  and  payable  by First  Banks  under the swap
               agreements was $1.2 million at December 31, 2000.

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of First Banks' interest rate swap agreements  designated as cash
flow hedges as of December 31, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>
                                                          Notional     Interest Rate     Interest Rate      Fair
                         Maturity Date                     Amount          Paid            Received         Value
                         -------------                 --------------   -----------     -------------    ----------
                                                                      (dollars expressed in thousands)
         December 31, 2001:
<S>                                                     <C>                 <C>               <C>          <C>
             September 20, 2004.......................  $  600,000          2.05%             6.78%        $ 40,980
             March 21, 2005...........................     200,000          1.93              5.24            4,951
             April 2, 2006............................     100,000          1.93              5.45            2,305
                                                        ----------                                         --------
                                                        $  900,000          2.01              6.29         $ 48,236
                                                        ==========          ====              ====         ========
         December 31, 2000:
             September 27, 2001.......................  $  175,000          6.80%             6.14%        $     65
             June 11, 2002............................      15,000          6.80              6.00                7
             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
                                                        ----------                                         --------
                                                        $1,055,000          6.80              5.92         $ 14,475
                                                        ==========          ====              ====         ========
</TABLE>

         Fair Value Hedges
         First Banks entered into the following  interest rate swap  agreements,
designated  as  fair  value  hedges,   to  effectively   shorten  the  repricing
characteristics  of certain  interest-bearing  liabilities  to  correspond  more
closely with their funding source with the objective of stabilizing net interest
income over time:

         >>    During  September  2000,  First Banks  entered into $25.0 million
               notional  amount of one-year  interest rate swap  agreements  and
               $25.0 million  notional amount of five and one-half year interest
               rate swap  agreements  that  provided  for First Banks to receive
               fixed  rates of interest  ranging  from 6.60% 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  provided for First Banks to pay interest
               on a quarterly basis and receive  interest on either a semiannual
               basis  or an  annual  basis.  In  September  2001,  the  one-year
               interest rate swap agreements matured, and First Banks terminated
               the five and one-half year interest rate swap agreements  because
               the underlying interest-bearing liabilities had either matured or
               been called by their respective counterparties. There was no gain
               or loss recorded as a result of the terminations.

         >>    During  January  2001,  First Banks  entered  into $50.0  million
               notional  amount of three-year  interest rate swap agreements and
               $150.0 million  notional  amount of five-year  interest rate swap
               agreements  that  provide for First Banks to receive a fixed rate
               of interest and pay an adjustable rate of interest  equivalent to
               the three-month  London Interbank Offering Rate. 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 $5.2  million and
               $1.2 million at December 31, 2001, respectively.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of First Banks' interest rate swap agreements  designated as fair
value hedges as of December 31, 2001 and 2000 were as follows:
<TABLE>
<CAPTION>
                                                          Notional     Interest Rate     Interest Rate      Fair
                         Maturity Date                     Amount          Paid            Received         Value
                         -------------                  -----------     -----------     -------------    ----------
                                                                      (dollars expressed in thousands)

         December 31, 2001:
<S>                  <C>                                  <C>               <C>               <C>          <C>
             January 9, 2004..........................    $ 50,000          2.48%             5.37%        $ 1,761
             January 9, 2006..........................     150,000          2.48              5.50           3,876
                                                          --------                                         -------
                                                          $200,000          2.48              5.47         $ 5,637
                                                          ========          ====              ====         =======
         December 31, 2000:
             September 13, 2001.......................    $ 12,500          6.56%             6.80%        $    42
             September 21, 2001.......................      12,500          6.47              6.60              43
             March 13, 2006...........................      12,500          6.47              7.25               5
             March 22, 2006...........................      12,500          6.39              7.20               6
                                                          --------                                         -------
                                                          $ 50,000          6.47              6.96         $    96
                                                          ========          ====              ====         =======
</TABLE>
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Interest Rate Floor Agreements
         During  January  2001 and March 2001,  First Banks  entered into $200.0
million and $75.0 million notional amount,  respectively,  of four-year interest
rate floor agreements to further stabilize net interest income in the event of a
falling rate  scenario.  The interest rate floor  agreements  provided for First
Banks to receive a  quarterly  adjustable  rate of  interest  equivalent  to the
differential  between the  three-month  London  Interbank  Offering Rate and the
strike prices of 5.50% or 5.00%,  respectively,  should the  three-month  London
Interbank  Offering Rate fall below the respective  strike  prices.  In November
2001,  First Banks  terminated  these interest rate floor agreements in order to
appropriately  modify its overall hedge position in accordance with its interest
rate risk management program.  In conjunction with the termination,  First Banks
recorded a pre-tax adjustment of $4.0 million representing a decline in the fair
value from the previous  month-end  measurement date. These agreements  provided
net interest income of $2.1 million for the year ended December 31, 2001.

         Interest Rate Cap Agreements
         In conjunction  with the interest rate swap agreements  entered into in
September 2000,  First Banks also entered into $450.0 million notional amount of
four-year  interest  rate cap  agreements  to  limit  the net  interest  expense
associated  with the interest rate swap agreements in the event of a rising rate
scenario.  The interest rate cap agreements provide for First Banks to receive a
quarterly adjustable rate of interest equivalent to the differential between the
three-month  London Interbank Offering Rate and the strike price of 7.50% should
the  three-month  London  Interbank  Offering Rate exceed the strike  price.  At
December  31,  2001 and 2000,  the  carrying  value of these  interest  rate cap
agreements,  which is included in  derivative  instruments  in the  consolidated
balance sheets, was $2.1 million and $3.8 million, respectively.

         Pledged Collateral
         At  December  31, 2001 and 2000,  First  Banks had  pledged  investment
securities  available  for sale with a carrying  value of $1.1 and $8.6 million,
respectively, in connection with the interest rate swap agreements. In addition,
at  December  31, 2001 and 2000,  First Banks had  accepted,  as  collateral  in
connection  with the  interest  rate swap  agreements,  cash of $4.9 million and
$400,000,  respectively,  and investment  securities  with a fair value of $53.9
million and $18.6 million, respectively. First Banks is permitted by contract to
sell or repledge  the  collateral  accepted  from  counterparties;  however,  at
December 31, 2001 and 2000, First Banks had not done so.

         Interest  Rate Lock Commitments / Forward Commitments to Sell Mortgage-
         Backed Securities
         Derivative  financial  instruments  issued by First  Banks  consist  of
interest rate lock  commitments to originate  fixed-rate  loans.  Commitments to
originate  fixed-rate loans consist  primarily of residential real estate loans.
These net loan  commitments  and loans  held for sale are  hedged  with  forward
contracts to sell mortgage-backed securities.

 (6)     MORTGAGE BANKING ACTIVITIES

         At December 31, 2001 and 2000,  First Banks  serviced  loans for others
amounting to $1.07 billion and $957.2 million,  respectively.  Borrowers' escrow
balances  held by First  Banks on such  loans  were  $485,000  and  $653,000  at
December 31, 2001 and 2000, respectively.
         Changes in mortgage  servicing  rights,  net of  amortization,  for the
years ended December 31 were as follows:
<TABLE>
<CAPTION>

                                                                                           2001         2000
                                                                                           ----         ----
                                                                                   (dollars expressed in thousands)

<S>                                                                                    <C>             <C>
              Balance, beginning of year...........................................    $   7,048       8,665
              Originated mortgage servicing rights.................................        6,802       1,455
              Amortization.........................................................       (3,725)     (3,072)
                                                                                       ---------    --------
              Balance, end of year.................................................    $  10,125       7,048
                                                                                       =========    ========
</TABLE>

         The fair value of mortgage servicing rights was $15.8 million and $13.0
million at December 31, 2001 and 2000, respectively.



<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(7)      BANK PREMISES AND EQUIPMENT

         Bank premises and equipment were comprised of the following at December
31:
<TABLE>
<CAPTION>
                                                                                           2001        2000
                                                                                           ----        ----
                                                                                  (dollars expressed in thousands)

<S>                                                                                   <C>              <C>
              Land.................................................................   $  22,063        18,266
              Buildings and improvements...........................................      87,372        66,474
              Furniture, fixtures and equipment....................................      95,626        66,460
              Leasehold improvements...............................................      28,400        23,794
              Construction in progress.............................................      13,865        15,655
                                                                                      ---------     ---------
                  Total............................................................     247,326       190,649
              Less accumulated depreciation and amortization.......................      97,722        75,878
                                                                                      ---------     ---------
                  Bank premises and equipment, net.................................   $ 149,604       114,771
                                                                                      =========     =========
</TABLE>

         Depreciation and amortization  expense for the years ended December 31,
2001,  2000 and 1999  totaled  $12.7  million,  $9.5  million and $7.6  million,
respectively.
         First  Banks  leases  land,   office  properties  and  equipment  under
operating  leases.  Certain of the leases contain renewal options and escalation
clauses.  Total rent expense was $12.9  million,  $10.7 million and $7.4 million
for the years ended  December  31,  2001,  2000 and 1999,  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>
                  2002...................................................................    $  8,681
                  2003...................................................................       7,760
                  2004...................................................................       5,880
                  2005...................................................................       5,058
                  2006...................................................................       4,137
                  Thereafter.............................................................      22,385
                                                                                             --------
                      Total future minimum lease payments................................    $ 53,901
                                                                                             ========
</TABLE>
         First  Banks  leases to  unrelated  parties a  portion  of its  banking
facilities.  Total rental income was $4.8 million, $2.6 million and $2.6 million
for the years ended December 31, 2001, 2000 and 1999, respectively.

(8)      SHORT-TERM BORROWINGS

         Short-term borrowings were comprised of the following at December 31:
<TABLE>
<CAPTION>
                                                                                           2001        2000
                                                                                           ----        ----
                                                                                  (dollars expressed in thousands)

<S>                                                                                    <C>           <C>
              Securities sold under agreements to repurchase.......................    $ 142,534     125,025
              Federal funds purchased..............................................       70,000          --
              FHLB borrowings......................................................       30,600      15,544
                                                                                       ---------    --------
                  Total short-term borrowings......................................    $ 243,134     140,569
                                                                                       =========    ========
</TABLE>
         The average  balance of short-term  borrowings  was $158.0  million and
$106.1 million,  respectively,  and the maximum  month-end balance of short-term
borrowings was $243.1 million and $158.4  million,  respectively,  for the years
ended  December  31,  2001  and  2000.  The  average  rates  paid on  short-term
borrowings  during the years ended December 31, 2001,  2000 and 1999 were 3.70%,
5.54% and 4.83%,  respectively.  The assets underlying the securities sold under
agreements to repurchase  and FHLB  borrowings  are under First Banks'  physical
control.

(9)      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 23,
2001,  replaced a similar  revolving  credit  agreement  dated  August 24, 2000.
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
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Eurodollar Rate plus a margin based upon the outstanding  loans and First Banks'
profitability.  The interest rate for borrowings  under the Credit Agreement was
2.94% at December 31, 2001, 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, 2002,  at which time the  principal  and accrued  interest is due and
payable.
         Loans under the Credit  Agreement are secured by First Banks' ownership
interest  in the  capital  stock of FBA and  First  Bank,  and a $100.0  million
intercompany   promissory  note  receivable  due  from  FBA.  Under  the  Credit
Agreement,  there were  outstanding  borrowings of $27.5 million at December 31,
2001. At December 31, 2000, there were  outstanding  borrowings of $83.0 million
under the previous credit agreement.
         The Credit  Agreement  requires  maintenance of certain minimum capital
ratios  for  First  Banks  and each of the  Subsidiary  Banks,  certain  maximum
nonperforming assets ratios for First Banks and each of the Subsidiary Banks and
a minimum  return on assets ratio for First Banks and the Subsidiary  Banks.  In
addition, it prohibits the payment of dividends on First Banks' common stock. At
December  31,  2001 and 2000,  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  of  advances
outstanding  under the Credit  Agreement during the years ended December 31 were
as follows:
<TABLE>
<CAPTION>
                                                                                       2001          2000
                                                                                       ----          ----
                                                                                 (dollars expressed in thousands)

<S>                                                                                  <C>            <C>
         Average balance...........................................................  $ 41,590       51,897
         Maximum month-end balance.................................................    66,500       83,000
                                                                                     ========       ======
</TABLE>
         The average  rates paid on the  outstanding  advances  during the years
ended  December  31,  2001,   2000  and  1999  were  6.32%,   7.66%  and  6.44%,
respectively.

(10)     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, 2001, 2000 and 1999.
         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 $4.0  million for years ended  December 31,
2001, 2000 and 1999, respectively.
         In October 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


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 $6.0  million and $1.2  million for the years ended
December 31, 2001 and 2000, respectively.
         On  November  15,  2001,  First  Preferred  Capital  Trust  III  (First
Preferred  III), a newly formed  Delaware  business  trust  subsidiary  of First
Banks, issued 2.2 million shares of 9.00% cumulative trust preferred  securities
at $25 per share in an underwritten public offering, and issued 68,290 shares of
common securities to First Banks at $25 per share. First Banks owns all of First
Preferred III's common securities.  The gross proceeds of the offering were used
by  First  Preferred  III  to  purchase  $56.9  million  of  9.00%  subordinated
debentures  from First Banks,  maturing on September 30, 2031. The maturity date
may be  shortened  to a date not earlier than  September  30,  2006,  if certain
conditions  are met.  The  subordinated  debentures  are the sole asset of First
Preferred  III. 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 III under the First Preferred III preferred securities. First
Banks'  proceeds  from the  issuance  of the  subordinated  debentures  to First
Preferred  III,  net of  underwriting  fees and  offering  expenses,  were $52.9
million.  Distributions on First Preferred III's preferred securities, which are
payable  quarterly in arrears,  were  $634,000  for the year ended  December 31,
2001.
         The distributions payable on all issues of First Banks' and FBA's trust
preferred  securities  are included in noninterest  expense in the  consolidated
statements of income.

(11)     INCOME TAXES

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

                                                                                   2001        2000      1999
                                                                                   ----        ----      ----
                                                                                (dollars expressed in thousands)
              Current income tax expense:
<S>                                                                               <C>         <C>       <C>
                  Federal....................................................     $22,252     28,215    19,731
                  State......................................................       1,583      2,731     2,247
                                                                                  -------     ------    ------
                                                                                   23,835     30,946    21,978
                                                                                  -------     ------    ------
              Deferred income tax expense:
                  Federal....................................................      13,691      4,001     5,056
                  State......................................................         626        (60)       14
                                                                                  -------     ------    ------
                                                                                   14,317      3,941     5,070
                                                                                  -------     ------    ------
              Reduction in deferred valuation allowance......................      (8,104)      (405)     (735)
                                                                                  -------     ------    ------
                      Total..................................................     $30,048     34,482    26,313
                                                                                  =======     ======    ======
</TABLE>




<PAGE>
<TABLE>
<CAPTION>

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

                                                                             Years Ended December 31,
                                                             --------------------------------------------------------
                                                                   2001                 2000                1999
                                                             ----------------     ----------------   -----------------
                                                             Amount   Percent     Amount   Percent   Amount    Percent
                                                             ------   -------     ------   -------   ------    -------
                                                                         (dollars expressed in thousands)

         Income before provision for income taxes,
           minority interest in income
           of subsidiary and cumulative effect of
<S>                                                         <C>                  <C>                <C>
           change in accounting principle...............    $98,567              $92,635            $ 72,151
                                                            =======              =======            ========
         Provision for income taxes calculated
           at federal statutory income tax rates........    $34,498     35.0%    $32,422    35.0%   $ 25,253     35.0%
         Effects of differences in tax reporting:
           Tax-exempt interest income, net of
               tax preference adjustment................       (539)    (0.5)       (587)   (0.6)       (439)    (0.6)
           State income taxes...........................      1,436      1.5       1,736     1.8       1,470      2.0
           Amortization of intangibles associated
               with the purchase of subsidiaries........      2,827      2.9       1,567     1.7       1,261      1.8
           Reduction in deferred valuation allowance....     (8,104)    (8.2)       (405)   (0.4)       (735)    (1.0)
           Other, net...................................        (70)    (0.2)       (251)   (0.3)       (497)    (0.7)
                                                            -------    -----     -------  ------    --------   ------
                 Provision for income taxes.............    $30,048     30.5%    $34,482    37.2%   $ 26,313     36.5%
                                                            =======    =====     =======  ======    ========   ======
</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,
                                                                                           ------------
                                                                                        2001         2000
                                                                                        ----         ----
                                                                                 (dollars expressed in thousands)

              Deferred tax assets:
<S>                                                                                   <C>           <C>
                  Net operating loss carryforwards................................    $ 44,100      47,043
                  Allowance for loan losses.......................................      36,000      29,965
                  Alternative minimum tax credits.................................       2,841       3,319
                  Disallowed losses on investment securities......................       1,287       3,197
                  Quasi-reorganization adjustment of bank premises................       1,176       1,226
                  Interest on non-accrual loans...................................       2,084       1,673
                  Mortgage servicing rights.......................................       4,161       1,547
                  Other real estate...............................................         184          65
                  Other...........................................................       2,713       2,996
                                                                                      --------    --------
                      Gross deferred tax assets...................................      94,546      91,031
                  Valuation allowance.............................................          --     (13,075)
                                                                                      --------    --------
                      Deferred tax assets, net of valuation allowance.............      94,546      77,956
                                                                                      --------    --------
              Deferred tax liabilities:
                  Depreciation on bank premises and equipment.....................       6,936       6,151
                  Net fair value adjustment for securities available for sale.....       2,314       3,258
                  Net fair value adjustment for derivative instruments............      16,883          --
                  Operating leases................................................       6,424       1,313
                  Deposit base premiums...........................................       2,777          --
                  Discount on loans...............................................       2,900       2,257
                  Equity investments in other financial institutions..............       3,656          --
                  FHLB stock dividends............................................         462         890
                  State taxes.....................................................         766         568
                  Other...........................................................         738         594
                                                                                      --------    --------
                      Deferred tax liabilities....................................      43,856      15,031
                                                                                      --------    --------
                      Net deferred tax assets.....................................    $ 50,690      62,925
                                                                                      ========    ========
</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 $50.7 million.  The net change
in the valuation  allowance,  related to deferred tax assets,  was a decrease of
$13.1 million for the year ended  December 31, 2001.  The decrease was comprised
of the reversal of valuation  allowances  resulting from the  utilization of net
operating   losses  and  the  reversal  of  the  valuation   allowances  due  to
management's  expectation of future taxable income sufficient to realize the net
deferred assets of $50.7 million.
         Changes to the deferred  tax asset  valuation  allowance  for the years
ended December 31 were as follows:
<TABLE>
<CAPTION>

                                                                                       2001       2000       1999
                                                                                       ----       ----       ----
                                                                                    (dollars expressed in thousands)

<S>                                                                                  <C>          <C>        <C>
              Balance, beginning of year.........................................    $ 13,075     14,746     17,179
              Current year deferred provision, change in
                  deferred tax valuation allowance...............................      (8,104)      (405)      (735)
              Reduction attributable to utilization of deferred tax assets:
                 Adjustment to capital surplus...................................      (4,971)        --       (811)
                 Adjustment to intangibles associated with the
                    purchase of subsidiaries.....................................          --     (1,266)      (887)
                                                                                     --------    -------    -------
              Balance, end of year...............................................    $     --     13,075     14,746
                                                                                     ========    =======    =======
</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  included  $5.0 million
which  was  credited  to  capital  surplus  in  2001  under  the  terms  of  the
quasi-reorganizations  implemented for FBA and First Commercial Bancorp, Inc. as
of December 31, 1994 and 1996, respectively.

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         At  December  31,  2001 and  2000,  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.
         At December 31, 2001 and 2000, for federal income taxes purposes, First
Banks had net operating loss  carryforwards of approximately  $126.0 million and
$134.4 million,  respectively.  The net operating loss  carryforwards  for First
Banks expire as follows:

                                               (dollars expressed in thousands)

          Year ending December 31:
              2002.....................................   $   1,362
              2003.....................................       1,854
              2004.....................................       2,407
              2005.....................................      16,523
              2006.....................................       3,461
              2007 - 2020..............................     100,392
                                                          ---------
                  Total................................   $ 125,999
                                                          =========

(12)     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 per share data)
     Year ended December 31, 2001:
<S>                                                                          <C>               <C>          <C>
         Basic EPS - income before cumulative effect.....................    $  65,104         23,661       $2,751.54
         Cumulative effect of change in accounting principle,
           net of tax....................................................       (1,376)            --          (58.16)
                                                                             ---------        -------       ---------
         Basic EPS - income available to common stockholders.............       63,728         23,661       $2,693.38
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          769            893          (66.61)
                                                                             ---------        -------       ---------
         Diluted EPS - income available to common stockholders...........    $  64,497         24,554       $2,626.77
                                                                             =========        =======       =========


     Year ended December 31, 2000:
         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          (70.63)
                                                                             ---------        -------       ---------
         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          (58.44)
                                                                             ---------        -------       ---------
         Diluted EPS - income available to common stockholders...........    $  44,161         24,873       $1,775.47
                                                                             =========        =======       =========
</TABLE>

(13)     CREDIT COMMITMENTS

         First Banks is a party to  commitments  to extend credit and commercial
and  standby  letters in credit in the  normal  course of  business  to meet the
financing needs of its customers. These instruments involve, in 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 5 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.


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
         Commitments to extend credit at December 31 were as follows:
                                                                                              December 31,
                                                                                              ------------
                                                                                            2001         2000
                                                                                            ----         ----
                                                                                   (dollars expressed in thousands)

<S>                                                                                    <C>            <C>
              Commitments to extend credit..........................................   $ 1,723,568    1,484,278
              Commercial and standby letters of credit..............................       137,345       94,802
                                                                                       -----------     --------
                                                                                       $ 1,860,913    1,579,080
                                                                                       ===========    =========
</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 typically 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>

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

                                                                        2001                          2000
                                                              -------------------------     ------------------------
                                                              Carrying        Estimated     Carrying       Estimated
                                                                Value        Fair Value       Value       Fair Value
                                                                -----        ----------       -----       ----------
                                                                            (dollars expressed in thousands)
     Financial Assets:
<S>                                                          <C>               <C>           <C>             <C>
       Cash and cash equivalents..........................   $  241,874        241,874       198,279         198,279
       Investment securities:
         Available for sale...............................      610,466        610,466       539,386         539,386
         Held to maturity.................................       20,602         20,812        24,148          24,507
       Net loans..........................................    5,311,705      5,346,853     4,670,673       4,694,594
       Derivative instruments.............................       54,889         54,889         3,759          16,208
       Accrued interest receivable........................       37,349         37,349        45,226          45,226
       Forward contracts to sell
         mortgage-backed securities.......................          545            545            --            (202)
                                                             ==========      =========     =========       =========

     Financial Liabilities:
       Deposits:
         Demand:
           Non-interest-bearing...........................   $  921,455        921,455       808,251         808,251
           Interest-bearing...............................      629,015        629,015       448,146         448,146
         Savings and money market.........................    1,832,939      1,832,939     1,447,898       1,447,898
         Time deposits....................................    2,300,495      2,342,892     2,308,120       2,351,418
         Short-term borrowings............................      243,134        243,134       140,569         140,569
         Note payable.....................................       27,500         27,500        83,000          83,000
         Accrued interest payable.........................       16,006         16,006        23,227          23,227
         Interest rate lock commitments...................        1,048          1,048            --           4,183
         Guaranteed preferred beneficial interests
           in subordinated debentures.....................      235,881        256,278       182,849         185,608
                                                             ==========      =========     =========       =========
     Off-Balance Sheet - Credit commitments...............   $       --             --            --              --
                                                             ==========      =========     =========       =========
</TABLE>
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         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 were not available,  the fair value was based
upon quoted market prices of comparable instruments. The carrying value of loans
is net of the allowance for loan losses and unearned discount.

         Derivative  instruments:  The fair value of derivative  instruments  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.

         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.

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.  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.

         Short-term  borrowings,  note  payable,  accrued  interest  payable and
interest rate lock commitments: The carrying values reported in the consolidated
balance sheets approximate fair value.

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

Off-Balance-Sheet:

         Credit  commitments:  The majority of the  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 2001. Total employer contributions under the plan were
$1.3 million,  $1.1 million and $863,000 for the years ended  December 31, 2001,
2000 and 1999, respectively.  The plan assets are held and managed under a trust
agreement with First Bank's trust department.
<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(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, 2001, 2000 and 1999.
         In addition to the Class A and Class B preferred stock, First Banks has
three 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  10,  satisfies  the  regulatory
requirements  for  inclusion,  subject to certain  limitation,  in First  Banks'
capital base.

(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 that which arises by virtue of such position or
ownership  interest in First Banks or its  subsidiaries,  except as described in
the following paragraphs.
         During  2001,  2000  and  1999,  Tidal  Insurance  Limited  (Tidal),  a
corporation  owned  indirectly by First Banks'  Chairman and his adult children,
received  approximately  $132,000,  $212,000  and  $316,000,   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 2001, 2000 and 1999,  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  $316,000,
$235,000 and $194,000,  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 $3.0 million, $2.1 million and $2.3 million for
the years ended December 31, 2001, 2000 and 1999,  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  information  technology and
various related  services to First Banks,  Inc. and its Subsidiary  Banks.  Fees
paid under  agreements  with First  Services,  L.P.,  were $23.1 million,  $19.3
million and $16.4 million for the years ended December 31, 2001,  2000 and 1999,
respectively.  During 2001, 2000 and 1999, First Services, L.P. paid First Banks
$2.0 million,  $1.8 million and $1.2 million,  respectively,  in rental fees for
the use of data processing and other equipment owned by First Banks.

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

         First Banks owned  2,500,000  shares of FBA's Class B common  stock and
9,545,107 shares of FBA's common stock at December 31, 2001, representing 93.69%
of FBA's  outstanding  voting stock. In comparison,  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, 2001, representing 92.86% of FBA's outstanding voting stock. The
increase for 2001 is  attributable  to FBA's  issuance of 803,757  shares of its
common stock to First Banks in conjunction with FBA's purchase of BYL Bancorp on
October 31, 2001.  FBA's  common stock is publicly  traded on the New York Stock
Exchange.


<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(19)     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)
                                            ---------------------------------       ----------------------------------
                                             2001           2000         1999       2001           2000           1999
                                             ----           ----         ----       ----           ----           ----
                                                                        (dollars expressed in thousands)

Balance sheet information:

<S>                                       <C>              <C>         <C>            <C>         <C>          <C>
Investment securities...................  $  245,365       214,005     241,624        368,207     330,478      192,357
Loans, net of unearned discount.........   3,086,023     2,694,005   2,527,649      2,323,263   2,058,628    1,469,093
Total assets............................   3,707,081     3,152,885   3,028,046      3,057,920   2,733,545    1,854,827
Deposits................................   3,142,676     2,729,489   2,689,671      2,555,396   2,306,469    1,590,490
Stockholders' equity....................     321,336       273,848     263,466        398,713     333,186      204,617
                                          ==========    ==========   =========      =========   =========    =========

Income statement information:

Interest income.........................  $  236,889       247,290     221,195        208,291     176,902      132,407
Interest expense........................     111,410       115,421     105,231         78,547      71,167       51,544
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Net interest income................     125,479       131,869     115,964        129,744     105,735       80,863
Provision for loan losses...............      18,500        12,250       8,890          5,010       1,877        4,183
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Net interest income after
       provision for loan losses........     106,979       119,619     107,074        124,734     103,858       76,680
Noninterest income......................      53,623        32,152      32,260         27,469      12,343       10,774
Noninterest expense.....................     105,550        90,746      77,786         89,112      65,567       54,992
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Income before provision for
       income taxes, minority interest
       in income of subsidiary and
       cumulative effect of change in
       accounting principle                   55,052        61,025      61,548         63,091      50,634       32,462
Provision for income taxes..............      19,246        20,889      20,811         16,972      20,064       12,353
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Income before minority interest
       in income of subsidiary and
       cumulative effect of change
       in accounting principle..........      35,806        40,136      40,737         46,119      30,570       20,109
Minority interest in income
       of subsidiary....................          --            --          --             --          --           --
                                          ----------    ----------   ----------      --------   ---------    ---------
     Income before cumulative
       effect of change in
       accounting principle.............      35,806        40,136      40,737         46,119      30,570       20,109
Cumulative effect of change
     in accounting principle,
     net of tax.........................        (917)           --          --          (459)          --           --
                                          ----------    ----------   ---------      ---------   ---------    ---------
     Net income.........................  $   34,889        40,136      40,737         45,660      30,570       20,109
                                          ==========    ==========   =========      =========   =========    =========
</TABLE>
------------------------
(1)  Includes BSF, which was acquired by FBA on December 31, 2000.
(2)  Corporate and other includes $12.1  million, $8.6 million and  $7.9 million
     of  guaranteed  preferred  debentures  expense, after applicable income tax
     benefit of $6.5 million, $4.6 million and $4.2 million, for the years ended
     December 31, 2001, 2000 and 1999, respectively.

<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

         Other  financial  services  include  mortgage  banking,   debit  cards,
brokerage  services,   credit-related  insurance,   automated  teller  machines,
telephone banking,  safe deposit boxes,  escrow and bankruptcy deposit services,
stock  option  services,  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
              ----------------------------------------             -------------------------------------------
               2001            2000              1999                2001             2000              1999
               ----            ----              ----                ----             ----              ----
                                               (dollars expressed in thousands)


<S>          <C>               <C>             <C>                  <C>               <C>              <C>
             17,496            19,051          17,666               631,068           563,534          451,647
               (417)             (368)           (418)            5,408,869         4,752,265        3,996,324
             13,450            (9,739)        (15,126)            6,778,451         5,876,691        4,867,747
            (14,168)          (23,543)        (28,347)            5,683,904         5,012,415        4,251,814
           (271,392)         (254,188)       (173,178)              448,657           352,846          294,905
          =========         =========       =========            ==========         =========        =========


               (437)           (1,366)           (520)              444,743           422,826          353,082
              1,057             1,091           1,926               191,014           187,679          158,701
          ---------         ---------       ---------            ----------         ---------        ---------
             (1,494)           (2,457)         (2,446)              253,729           235,147          194,381
                 --                --              --                23,510            14,127           13,073
          ---------         ---------       ---------            ----------         ---------        ---------

             (1,494)           (2,457)         (2,446)              230,219           221,020          181,308
             17,517            (1,717)         (1,384)               98,609            42,778           41,650
             35,599            14,850          18,029               230,261           171,163          150,807
          ---------         ---------       ---------            ----------         ---------        ---------



            (19,576)          (19,024)        (21,859)               98,567            92,635           72,151
             (6,170)           (6,471)         (6,851)               30,048            34,482           26,313
          ---------         ---------       ---------            ----------         ---------        ---------



            (13,406)          (12,553)        (15,008)               68,519            58,153           45,838
              2,629             2,046           1,660                 2,629             2,046            1,660
          ---------         ---------       ---------            ----------         ---------        ---------

            (16,035)          (14,599)        (16,668)               65,890            56,107           44,178

                 --                --              --                (1,376)               --               --
          ---------         ---------       ---------            ----------         ---------        ---------
            (16,035)          (14,599)        (16,668)               64,514            56,107           44,178
          =========         =========       =========            ==========         =========        =========

</TABLE>



<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(20)     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, 2001,  First Banks and the  Subsidiary  Banks were
each well capitalized.
         As of December 31, 2001, 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 1 leverage ratios
as set forth in the table below.
         At December 31, 2001 and 2000,  First Banks' and the Subsidiary  Banks'
required and actual capital ratios were as follows:
<TABLE>
<CAPTION>


                                                                                                         To be Well
                                                               Actual                                 Capitalized Under
                                                          -----------------       For Capital         Prompt Corrective
                                                          2001         2000     Adequacy Purposes     Action Provisions
                                                          ----         ----     -----------------     -----------------

     Total capital (to risk-weighted assets):
<S>                                                       <C>          <C>             <C>                  <C>
              First Banks.............................    10.53        10.21%          8.0%                 10.0%
              First Bank..............................    10.14        10.71           8.0                  10.0
              FB&T....................................    11.27        10.58           8.0                  10.0

     Tier 1 capital (to risk-weighted assets):
              First Banks.............................     7.57         7.56           4.0                   6.0
              First Bank..............................     8.89         9.46           4.0                   6.0
              FB&T....................................    10.02         9.32           4.0                   6.0

     Tier 1 capital (to average assets):
              First Banks.............................     7.24         7.45           3.0                   5.0
              First Bank..............................     8.67         8.49           3.0                   5.0
              FB&T....................................     9.47         9.27           3.0                   5.0
</TABLE>

(21)     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
9, 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 $12.3 million at
December 31, 2001, unless prior permission of the regulatory  authorities and/or
the lending banks is obtained.



<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, 2001 and 2000,  and  condensed  statements of income and cash flows
for the years ended December 31, 2001, 2000 and 1999:
<TABLE>
<CAPTION>


                            CONDENSED BALANCE SHEETS

                                                                                           December 31,
                                                                                        -----------------
                                                                                        2001         2000
                                                                                        ----         ----
                                                                                 (dollars expressed in thousands)
                                   Assets
                                   ------

<S>                                                                                  <C>              <C>
     Cash deposited in subsidiary banks...........................................   $    4,894       8,079
     Investment securities........................................................       17,497      14,309
     Investment in subsidiaries...................................................      594,152     461,753
     Advances to FBA..............................................................       71,000      98,000
     Other assets.................................................................       10,232      15,333
                                                                                     ----------    --------
           Total assets...........................................................   $  697,775     597,474
                                                                                     ==========    ========

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

     Note payable................................................................    $   27,500      83,000
     Subordinated debentures.....................................................       205,103     148,196
     Accrued expenses and other liabilities......................................        16,515      13,432
                                                                                     ----------    --------
           Total liabilities.....................................................       249,118     244,628
     Stockholders' equity........................................................       448,657     352,846
                                                                                     ----------    --------
           Total liabilities and stockholders' equity............................    $  697,775     597,474
                                                                                     ==========    ========
</TABLE>



                         CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                    Years Ended December 31,
                                                                                 -----------------------------
                                                                                  2001        2000        1999
                                                                                  ----        ----        ----
                                                                                (dollars expressed in thousands)

     Income:
<S>                                                                           <C>            <C>         <C>
       Dividends from subsidiaries........................................    $  53,500      43,000      25,250
       Management fees from subsidiaries..................................       20,443      17,325      12,977
       Gain on sale of securities.........................................       19,134          --          --
       Other..............................................................        6,008       1,956       1,313
                                                                              ---------      ------      ------
           Total income...................................................       99,085      62,281      39,540
                                                                              ---------      ------      ------
     Expense:
       Interest...........................................................        2,621       3,964       3,628
       Salaries and employee benefits.....................................       13,309      12,180       8,999
       Legal, examination and professional fees...........................        2,895       2,031       7,006
       Guaranteed preferred debentures....................................       15,138       9,547       8,330
       Other..............................................................       20,339       4,422       4,617
                                                                              ---------      ------      ------
           Total expense..................................................       54,302      32,144      32,580
                                                                              ---------      ------      ------
           Income before income tax benefit and equity
              in undistributed earnings of subsidiary.....................       44,783      30,137       6,960
     Income tax benefit...................................................       (2,418)     (3,922)     (5,649)
                                                                              ---------      ------      ------
           Income before equity in undistributed earnings of subsidiary...       47,201      34,059      12,609
     Equity in undistributed earnings of subsidiary.......................       17,313      22,048      31,569
                                                                              ---------      ------      ------
           Net income.....................................................    $  64,514      56,107      44,178
                                                                              =========      ======      ======
</TABLE>



<PAGE>
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

                       CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                                   Years Ended December 31,
                                                                           ------------------------------------
                                                                              2001          2000           1999
                                                                              ----          ----           ----
                                                                               (dollars expressed in thousands)

     Cash flows from operating activities:
<S>                                                                       <C>              <C>            <C>
       Net income......................................................   $  64,514        56,107         44,178
       Adjustments to reconcile net income to net cash provided by
         operating activities:
           Net income of subsidiaries..................................     (70,730)      (64,937)       (56,676)
           Dividends from subsidiaries.................................      53,500        43,000         25,250
           Other, net..................................................      (3,875)          272          1,900
                                                                          ---------      --------        -------
              Net cash provided by operating activities................      43,409        34,442         14,652
                                                                          ---------      --------        -------

     Cash flows from investing activities:
       Increase in investment securities...............................      (9,382)         (860)          (100)
       Investment in common securities of First Preferred III and II...      (1,707)       (1,778)            --
       Acquisitions of subsidiaries....................................     (63,767)           --        (31,500)
       Capital contributions to subsidiaries...........................      (5,900)       (6,100)        (3,000)
       Return of subsidiary capital....................................          --            --         10,000
       Decrease (increase) in advances to subsidiary...................      27,000       (98,000)            --
       Other, net......................................................       6,540        (1,464)        (3,646)
                                                                          ---------      --------        -------
              Net cash used in investing activities....................     (47,216)     (108,202)       (28,246)
                                                                          ---------      --------        -------

     Cash flows from financing activities:
       (Decrease) increase in note payable.............................     (55,500)       19,000         13,952
       Proceeds from issuance of First Preferred III and II
         subordinated debentures.......................................      56,908        59,278             --
       Payment of preferred stock dividends............................        (786)         (786)          (786)
                                                                          ---------      --------        -------
              Net cash provided by financing activities................         622        77,492         13,166
                                                                          ---------      --------        -------
              Net (decrease) increase in cash and cash equivalents.....      (3,185)        3,732           (428)
     Cash deposited in subsidiary banks, beginning of year.............       8,079         4,347          4,775
                                                                          ---------      --------        -------
     Cash deposited in subsidiary banks, end of year...................   $   4,894         8,079          4,347
                                                                          =========      ========        =======

     Noncash investing activities:
       Cash paid for interest..........................................   $   2,676         4,117          3,420
       Reduction of deferred tax valuation reserve.....................         636            --            811
                                                                          =========      ========        =======
</TABLE>

(23)     CONTINGENT LIABILITIES

         In the ordinary  course of business,  First Banks and its  subsidiaries
become involved in legal  proceedings.  Management,  in consultation  with legal
counsel,  believes the ultimate  resolution of these proceedings will not have a
material  adverse effect on the financial  condition or results of operations of
First Banks and/or its subsidiaries.

(24)     SUBSEQUENT EVENTS

         On January 15, 2002,  First Banks  completed its  acquisition of Plains
Financial Corporation (PFC) and its wholly owned banking subsidiary,  PlainsBank
of  Illinois,  National  Association  (PlainsBank),  Des Plaines,  Illinois,  in
exchange  for $36.5  million  in cash.  PFC  operated  a total of three  banking
facilities  in Des  Plaines,  Illinois,  and one  banking  facility in Elk Grove
Village, Illinois. The acquisition was funded from borrowings under First Banks'
credit  agreement with a group of unaffiliated  financial  institutions.  At the
time of the transaction,  PFC had $256.3 million in total assets, $150.4 million
in loans, net of unearned discount,  $81.0 million in investment  securities and
$213.4  million  in  deposits.  This  transaction  was  accounted  for using the
purchase method of accounting. The excess of the cost over the fair value of the
net assets  acquired was  approximately  $11.1 million and is not expected to be
tax  deductible.  The  excess of the cost over the fair  value of the net assets
acquired  will not be  amortized,  but instead will be  periodically  tested for
impairment in  accordance  with the  requirements  of SFAS 142. The core deposit
intangibles  were   approximately  $2.9  million  and  will  be  amortized  over
approximately  seven years utilizing the  straight-line  method.  PFC was merged
with and into UFG, and PlainsBank was merged with and into First Bank.


<PAGE>
                          INDEPENDENT AUDITORS' REPORT

[KPMG Logo]




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, 2001 and 2000,  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, 2001. 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,  2001 and 2000,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended  December 31, 2001, in conformity  with  accounting  principles  generally
accepted in the United States of America.

As discussed in note 1 to the  consolidated  financial  statements,  the Company
changed  its  method  of  accounting  for  derivative  instruments  and  hedging
activities in 2001.

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


St. Louis, Missouri
March 15, 2002



<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, Chief Financial Officer and Secretary
     Donald W. Williams                 Director, Senior Executive Vice President and Chief Credit Officer
     Michael J. Dierberg                Director
     Gordon A. Gundaker                 Director,  President and Chief  Executive  Officer of Coldwell Banker  Gundaker,  St. Louis,
                                        Missouri
     Michael F. Hickey                  Executive Vice President and Chief Information Officer
     Terrance M. McCarthy               Executive Vice President
     Michael F. McWhortor               Executive Vice President - Banking Support
     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
     Hal J. Upbin                       Director, Chairman of the Board, President and Chief Executive Officer of
                                        Kellwood Company, St. Louis, Missouri
     Lisa K. Vansickle                  Senior Vice President and Controller
     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, Chief Financial 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 Executive Officer of the law firm of Favaro,  Lavezzo,  Gill,
                                          Caretti & Heppell, Vallejo, California
     Terrance M. McCarthy               Director and Executive Vice President
     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
     Donald W. Williams                 Executive Vice President and Chief Credit Officer

First Bank

     Donald W. Williams                 Chairman of the Board, President and Chief Executive Officer
     Douglas R. Distler                 Director, Senior Vice President and Regional President - Southern Illinois
     Michael F. Hickey                  Director, Executive Vice President and Chief Information Officer
     Michael F. McWhortor               Director, Executive Vice President - Banking Support
     Steven F. Schepman                 Director and Senior Vice President - Trust and Financial Services
     Mark T. Turkcan                    Director and Executive Vice President - Mortgage Banking
     Lisa K. Vansickle                  Director, Senior Vice President and Controller

First Bank & Trust

     Terrance M. McCarthy               Chairman of the Board, President and Chief Executive Officer
     Gilbert J. Dalmau                  Director and Regional President - Southern California
     Patrick S. Day                     Director, Senior Vice President and Senior Credit Officer - Northern California
     Michael J. Dierberg                Director and Regional President - Northern California
     Albert M. Lavezzo                  Director
     Kathryn L. Perrine                 Director, Senior Vice President and Chief Financial Officer
     David F. Weaver                    Director and Regional President - Texas Region
</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 Lisa K. Vansickle,  First
Banks,  Inc., 600 James S.  McDonnell  Boulevard,  Mail Code - #014,  Hazelwood,
Missouri 63042.

FIRST BANKS, INC. PREFERRED SECURITIES

         The  preferred  securities  of First  Banks are  traded  on the  Nasdaq
National  Market System with the ticker symbols  "FBNKO" "FBNKN" and "FBNKM." As
of March  22,  2002,  there  were  approximately  420  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
and First Preferred  Capital Trust III 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 2001 and 2000
are summarized as follows:
<TABLE>
<CAPTION>
                             FIRST PREFERRED CAPITAL TRUST (ISSUE DATE - FEBRUARY 1997) - FBNKO

                                                                       2001                2000           Dividend
                                                                  --------------      -------------
                                                                   High     Low       High      Low       Declared
                                                                   ----     ---       ----      ---     -------------
<S>                                                               <C>      <C>       <C>       <C>        <C>
     First quarter............................................    $26.25   24.38     25.25     23.13      $ 0.578125
     Second quarter...........................................     27.35   25.00     26.00     23.50        0.578125
     Third quarter............................................     27.25   25.00     25.13     23.50        0.578125
     Fourth quarter...........................................     26.90   25.02     25.00     23.38        0.578125
</TABLE>
<TABLE>
<CAPTION>

                            FIRST PREFERRED CAPITAL TRUST II (ISSUE DATE - OCTOBER 2000) - FBNKN

                                                                 2001                              2000
                                                   ---------------------------------  -------------------------------
                                                                         Dividend                         Dividend
                                                     High       Low      Declared      High       Low     Declared
                                                     ----       ---    -------------   ----       ---   -------------
<S>                                                 <C>        <C>       <C>          <C>         <C>              <C>
     First quarter................................  $27.75     26.38     $0.640000    $   --       --              --
     Second quarter...............................   27.40     26.25      0.640000        --       --              --
     Third quarter................................   28.50     26.95      0.640000        --       --              --
     Fourth quarter...............................   28.30     27.00      0.640000     27.00    25.13        0.504888
</TABLE>
<TABLE>
<CAPTION>

                           FIRST PREFERRED CAPITAL TRUST III (ISSUE DATE - NOVEMBER 2001) - FBNKM


                                                                        2001
                                                                   --------------        Dividend
                                                                   High       Low        Declared
                                                                   ----       ---        --------

<S>                                                               <C>                    <C>
     First quarter............................................    $   --       --        $       --
     Second quarter...........................................        --       --                --
     Third quarter............................................        --       --                --
     Fourth quarter...........................................     26.10    25.25          0.281250

For information concerning First Banks, please contact:

              Allen H. Blake                                     Lisa K. Vansickle
              President, Chief Operating Officer                 Senior Vice President and Controller
                and Chief Financial Officer                      600 James S. McDonnell Boulevard
              600 James S. McDonnell Boulevard                   Mail Code - #014
              Mail Code -  #014                                  Hazelwood, Missouri 63042
              Hazelwood, Missouri 63042                          Telephone - (314) 592-5000
              Telephone - (314) 592-5000
</TABLE>

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.

<TABLE>
<CAPTION>

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

<S>            <C>                                                              <C>
              Union Financial Group, Ltd.                                       Delaware

                  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

                  The San Francisco Company                                     Delaware

                      First Bank & Trust                                        California

                           Bank of San Francisco Realty Investors, Inc.         California
</TABLE>