SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549



                                    FORM 10-Q

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

                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1998

                                       OR

[ ]         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
      incorporation or organization)                   Identification No.)

                   135 NORTH MERAMEC, CLAYTON, MISSOURI 63105
                   ------------------------------------------
               (Address of principal executive offices) (Zip code)

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

         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  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

                                                        Outstanding at
                 Class                                 October 31, 1998
                 -----                                 ----------------

    Common Stock, $250.00 par value                         23,661


<PAGE>


                                First Banks, Inc.

                                      INDEX






                                                                            Page

PART I       FINANCIAL INFORMATION


   Item 1. Financial Statements:
           Consolidated Balance Sheets as of September 30, 1998
             and December 31, 1997.........................................  -1-
           Consolidated Statements of Income for the three and nine
             months ended September 30, 1998 and 1997......................  -3-
           Consolidated Statements of Changes in Stockholders' Equity for
             the nine months ended September 30, 1998 and 1997
             and the three months ended December 31, 1997..................  -4-
           Consolidated Statements of Cash Flows for the nine
             months ended September 30, 1998 and 1997......................  -5-
           Notes to Consolidated Financial Statements......................  -6-

   Item 2. Management's Discussion and Analysis of Financial
             Condition and Results of Operations...........................  -9-



PART II.     OTHER INFORMATION

   Item 6. Exhibits and Reports on Form 8-K................................ -19-


Signatures................................................................. -20-






<PAGE>



                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

                                FIRST BANKS, INC.
                           Consolidated Balance Sheets
             (dollars expressed in thousands, except per share data)

<TABLE>
<CAPTION>



                                                                              September 30,       December 31,
                                                                                  1998                1997
                                                                                  ----                ----
                                                                               (unaudited)
                                   ASSETS
                                   ------

Cash and cash equivalents:
<S>                                                                          <C>                     <C>    
   Cash and due from banks...............................................    $   130,186             142,125
   Interest-bearing deposits with other financial
     institutions - with maturities of three months or less..............          2,657               2,840
   Federal funds sold....................................................         10,200              23,515
                                                                             -----------          ----------
              Total cash and cash equivalents............................        143,043             168,480
                                                                             -----------          ----------

Investment securities:
   Trading, at fair value................................................          3,882               3,110
   Available for sale, at fair value.....................................        635,693             773,271
   Held to maturity, at amortized cost (fair value
     of $21,383 and $19,835 at September 30, 1998 and
     December 31,1997, respectively).....................................         20,519              19,149
                                                                             -----------          ----------
              Total investment securities................................        660,094             795,530
                                                                             -----------          ----------

Loans:
   Commercial, financial and agricultural................................        831,816             621,618
   Real estate construction and development..............................        626,113             413,107
   Real estate mortgage..................................................      1,557,102           1,629,115
   Consumer and installment..............................................        318,860             287,752
   Loans held for sale...................................................        106,369              59,081
                                                                             -----------          ----------
              Total loans................................................      3,440,260           3,010,673
   Unearned discount.....................................................         (7,776)             (8,473)
   Allowance for possible loan losses....................................        (60,553)            (50,509)
                                                                             -----------          ----------
              Net loans..................................................      3,371,931           2,951,691
                                                                             -----------          ----------

Bank premises and equipment, net of
   accumulated depreciation and amortization.............................         60,438              51,505
Intangibles associated with the purchase
   of subsidiaries.......................................................         37,476              25,835
Mortgage servicing rights, net of amortization...........................          9,737               9,046
Accrued interest receivable..............................................         29,617              28,358
Other real estate........................................................          5,861               7,324
Deferred income taxes....................................................         49,393              43,355
Other assets.............................................................         93,704              83,890
                                                                             -----------          ----------
               Total assets..............................................    $ 4,461,294           4,165,014
                                                                             ===========          ==========
</TABLE>





<PAGE>


                                FIRST BANKS, INC.
                           Consolidated Balance Sheets
             (dollars expressed in thousands, except per share data)
                                   (continued)
<TABLE>
<CAPTION>


                                                                           September 30,            December 31,
                                                                               1998                    1997
                                                                               ----                    ----
                                                                            (unaudited)
                                 LIABILITIES
                                 -----------

Deposits:
    Demand:
<S>                                                                        <C>                     <C>    
      Non-interest-bearing............................................     $   510,063                 485,222
      Interest-bearing................................................         348,662                 348,080
    Savings...........................................................       1,167,749                 947,029
    Time:
      Time deposits of $100 or more...................................         220,069                 219,417
      Other time deposits.............................................       1,620,221               1,684,847
                                                                           -----------             -----------
              Total deposits..........................................       3,866,764               3,684,595
Other borrowings......................................................         105,519                  54,153
Notes payable.........................................................          53,048                  55,144
Accrued interest payable..............................................           9,020                   9,976
Deferred income taxes.................................................          12,948                   9,029
Accrued and other liabilities.........................................          17,287                  20,990
Minority interest in subsidiaries.....................................          14,949                  16,407
                                                                           -----------             -----------
              Total liabilities.......................................       4,079,535               3,850,294
                                                                           -----------             -----------

Guaranteed preferred beneficial interests in:
    First Banks, Inc. subordinated debenture..........................          83,262                  83,183
    First Banks America, Inc. subordinated debenture..................          44,140                      --
                                                                           -----------             -----------
                                                                               127,402                  83,183
                                                                           -----------             -----------

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

Preferred stock:
    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.......................................................           1,432                   3,978
Retained earnings.....................................................         221,448                 199,143
Accumulated other comprehensive income................................          12,499                   9,438
                                                                           -----------             -----------
              Total stockholders' equity..............................         254,357                 231,537
                                                                           -----------             -----------
              Total liabilities and stockholders' equity..............     $ 4,461,294               4,165,014
                                                                           ===========             ===========

</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>
                                FIRST BANKS, INC.
                  Consolidated Statements of Income (unaudited)
             (dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>

                                                                           Three months ended       Nine months ended
                                                                              September 30,           September 30,  
                                                                           -----------------       ------------------
                                                                            1998       1997        1998         1997
                                                                            ----       ----        ----         ----
Interest income:
<S>                                                                      <C>           <C>        <C>         <C>    
     Interest and fees on loans........................................  $  73,260     64,334     209,430     187,431
     Investment securities.............................................      9,966      8,508      31,676      24,988
     Federal funds sold and other......................................        551      1,898       2,541       4,400
                                                                         ---------   --------    --------    --------
           Total interest income.......................................     83,777     74,740     243,647     216,819
                                                                         ---------   --------    --------    --------
Interest expense:
     Deposits:
       Interest-bearing demand.........................................      1,141      1,409       3,944       4,214
       Savings.........................................................     11,226      7,221      31,011      18,260
       Time deposits of $100 or more...................................      2,883      2,668       9,258       7,536
       Other time deposits.............................................     22,590     23,881      70,322      70,910
     Securities sold under agreements to repurchase....................        647        490       1,722       1,232
     Interest rate exchange agreements, net ...........................      1,011      3,227       2,991       5,610
     Notes payable and other borrowings................................        825        114       2,797       1,242
                                                                         ---------   --------    --------    --------
           Total interest expense......................................     40,323     39,010     122,045     109,004
                                                                         ---------   --------    --------    --------
           Net interest income.........................................     43,454     35,730     121,602     107,815
                                                                         ---------   --------    --------    --------
Provision for possible loan losses.....................................      2,275      3,100       6,225       9,125
                                                                         ---------   --------    --------    --------
           Net interest income after provision
              for possible loan losses.................................     41,179     32,630     115,377      98,690
                                                                         ---------   --------    --------    --------
Noninterest income:
     Service charges on deposit accounts and
       customer service fees...........................................      3,781      3,208      10,670       9,176
     Credit card fees..................................................        695        788       2,307       2,248
     Loan servicing fees, net..........................................        177        398         880       1,262
     Gain on mortgage loans sold and held for sale.....................      1,758        162       3,659         370
     Gain on sales of securities, net..................................        559      2,241         815       2,241
     (Loss) gain on trading securities, net............................        (29)        91         615         113
     Other income......................................................      2,059      1,941       6,205       4,335
                                                                         ---------   --------    --------    --------
           Total noninterest income....................................      9,000      8,829      25,151      19,745
                                                                         ---------   --------    --------    --------
Noninterest expense:
     Salaries and employee benefits....................................     14,627     10,756      41,897      31,684
     Occupancy, net of rental income...................................      2,830      2,711       7,970       7,924
     Furniture and equipment...........................................      1,755      1,654       5,381       5,704
     Postage, printing and supplies....................................      1,144        803       4,093       3,044
     Data processing fees..............................................      3,737      2,323       9,691       5,844
     Legal, examination and professional fees..........................      1,716        967       4,046       3,136
     Credit card expenses..............................................        987        863       2,549       2,503
     Communications....................................................        741        594       2,233       1,849
     Advertising and business development expense......................      1,111      1,098       3,767       2,711
     Losses and expenses on other real estate, net of gains............       (146)      (273)        515        (180)
     Guaranteed preferred debentures expense...........................      2,786      2,083       6,828       5,462
     Other expenses....................................................      4,818      4,344      14,232      11,177
                                                                         ---------   --------    --------    --------
           Total noninterest expense...................................     36,106     27,923     103,202      80,858
                                                                         ---------   --------    --------    --------
           Income before provision for income taxes and minority
              interest in income of subsidiaries.......................     14,073     13,536      37,326      37,577
Provision for income taxes.............................................      5,079      4,632      13,469      12,397
                                                                         ---------   --------    --------    --------
           Income before minority interest in income of subsidiaries...      8,994      8,904      23,857      25,180
Minority interest in income of subsidiaries............................        407        363       1,028         940
                                                                         ---------   --------    --------    --------
           Net income..................................................      8,587      8,541      22,829      24,240
Preferred stock dividends..............................................        196      1,256         524       3,744
                                                                         ---------   --------    --------    --------
           Net income available to common stockholders.................  $   8,391      7,285      22,305      20,496
                                                                         =========   ========    ========    ========

Earnings per share:
     Basic.............................................................  $  354.65     307.87      942.70      866.21
     Diluted...........................................................     343.73     295.45      910.91      830.16
                                                                         =========   ========    ========    ========
Weighted average shares of common stock outstanding....................     23,661     23,661      23,661      23,661
                                                                         =========   ========    ========    ========
</TABLE>
See accompanying notes to consolidated financial statements.

<PAGE>
                                FIRST BANKS, INC.
     Consolidated Statements of Changes in Stockholders' Equity (unaudited)
             (dollars expressed in thousands, except per share data)
                  Nine months ended September 30, 1998 and 1997
                    and three months ended December 31, 1997
<TABLE>
<CAPTION>
                                                   Class C                                                        Accu-
                                                  preferred     Adjustable rate                                  mulated
                                                   stock,       preferred stock                                   other   Total
                                                 increasing   Class A                          Compre-           compre- stock-
                                                    rate,     conver-         Common  Capital  hensive Retained  hensive holders'
                                                 redeemable    tible  Class B  stock  surplus  income  earnings  income  equity
                                                 ----------    -----  -------  -----  -------  ------  --------  ------ ------

<S>                                               <C>        <C>        <C>    <C>     <C>     <C>     <C>       <C>     <C>    
Consolidated balances, January 1, 1997........... $ 53,887   12,822     241    5,915   3,289           171,182   4,053   251,389
Nine months ended September 30, 1997:
    Comprehensive income:
       Net income................................       --       --      --       --      --   $24,240   24,240      --   24,240
       Other comprehensive income, net of tax (1) -
         Unrealized gains on securities, net of
           reclassification adjustment (2) ......       --       --      --       --      --     4,910      --    4,910    4,910
                                                                                               -------
       Comprehensive income......................       --       --      --       --      --   $29,150
                                                                                               =======
    Class C preferred stock dividends,
         $.56 per share..........................       --       --      --       --      --            (3,220)      --   (3,220)
    Class A preferred stock dividends,
         $.30 per share..........................       --       --      --       --      --              (513)      --     (513)
    Class B preferred stock dividends,
         $.03 per share..........................       --       --      --       --      --               (11)      --      (11)
    Purchase and retirement of Class C shares....   (6,774)      --      --       --    (161)               --       --   (6,935)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --       --      --       --    (399)               --       --     (399)
                                                  --------    -----     ---     ----  ------            ------   ------  -------
Consolidated balances, September 30, 1997........   47,113    12,822    241     5,915  2,729           191,678   8,963   269,461
Three months ended December 31, 1997: Comprehensive income:
       Net income................................       --       --      --       --      --   $ 8,787   8,787      --     8,787
       Other comprehensive income, net of tax (1) -
         Unrealized gains on securities, net of
           reclassification adjustment (2).......       --       --      --       --      --       475      --     475       475
                                                                                               -------
       Comprehensive income......................       --       --      --       --      --   $ 9,262
                                                                                               =======
    Class C preferred stock dividends, 
        $1.69 per share..........................       --       --      --       --      --            (1,060)     --    (1,060)
    Class A preferred stock dividends, 
        $.90 per share...........................       --       --      --       --      --              (256)     --      (256)
    Class B preferred stock dividends,
        $.08 per share...........................       --       --      --       --      --                (6)     --        (6)
    Redemption of Class C preferred shares.......  (47,113)      --      --       --      --                --      --   (47,113)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --       --      --       --   1,249                --      --     1,249
                                                  --------    -----     ---     ----   -----           -------  ------  --------
Consolidated balances, December 31,1997..........       --   12,822     241     5,915  3,978           199,143   9,438   231,537
Nine months ended September 30, 1998: Comprehensive income:
       Net income................................       --       --      --       --      --   $22,829  22,829      --    22,829
       Other comprehensive income, net of tax (1) -
         Unrealized gains on securities, net of
           reclassification adjustment (2).......       --       --      --       --      --     3,061      --   3,061     3,061
                                                                                               -------
       Comprehensive income......................       --       --      --       --      --   $25,890
                                                                                               =======
    Class A preferred stock dividends,
        $.30 per share...........................       --       --      --       --      --              (513)     --       (513)
    Class B preferred stock dividends, 
        $.03 per share...........................       --       --      --       --      --               (11)     --        (11)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --       --      --       --  (2,546)               --      --     (2,546)
                                                  --------    -----     ---     ----  ------            ------  ------   --------
Consolidated balances, September 30, 1998........ $     --   12,822     241     5,915  1,432            221,448 12,499    254,357
                                                  ========   ======     ===     ===== ======            ======= ======   ========
</TABLE>
---------------
(1)  Components of other comprehensive income are shown net of tax.
(2)  Disclosure of reclassification adjustment:

<PAGE>

<TABLE>
<CAPTION>
                                                                                          Nine months ended   Three months ended
                                                                                              September 30,       December 31,
                                                                                           -----------------  ------------------

                                                                                             1998      1997          1997
                                                                                             ----      ----          ----
<S>                                                                                         <C>        <C>            <C>
Unrealized gains arising during the period..............................................    $2,531     3,453          414
Less: reclassification adjustment for gains included in net income......................       530     1,457           61
                                                                                            ------     -----         ----
Unrealized gain on securities...........................................................    $3,061     4,910          475
                                                                                            ======     =====         ====
</TABLE>
See accompanying notes to consolidated financial statements.


<PAGE>


                                FIRST BANKS, INC.
                Consolidated Statements of Cash Flows (unaudited)
             (dollars expressed in thousands, except per share data)
<TABLE>
<CAPTION>


                                                                                         Nine months ended
                                                                                           September 30,  
                                                                                        -------------------
                                                                                        1998           1997
                                                                                        ----           ----
Cash flows from operating activities:
<S>                                                                                  <C>              <C>   
     Net income...................................................................   $   22,829       24,240
     Adjustments to reconcile net income to net cash (used in) provided
       by operating activities:
         Depreciation and amortization of bank premises and equipment.............        3,835        4,396
         Amortization, net of accretion...........................................        7,851        3,505
         Originations and purchases of loans held for sale........................     (391,414)    (121,137)
         Proceeds from sales of loans held for sale ..............................      344,766       94,716
         Provision for possible loan losses.......................................        6,225        9,125
         Provision for income taxes...............................................       13,469       12,397
         Payments of income taxes.................................................      (13,161)     (11,169)
         Increase in accrued interest receivable .................................         (825)      (5,015)
         Net increase in trading securities.......................................         (772)      (3,681)
         Interest accrued on liabilities..........................................      122,045      114,230
         Payments of interest on liabilities......................................     (123,563)    (115,480)
         Other operating activities, net..........................................      (14,228)      (7,303)
         Minority interest in income of subsidiaries..............................        1,028          940
                                                                                     ----------    ---------
              Net cash (used in) provided by operating activities.................      (21,915)        (236)
                                                                                     ----------    ---------
Cash flows from investing activities:
     Cash and cash equivalents received from acquisitions, net of cash paid.......       29,339       82,234
     Sale of investment securities available for sale.............................      104,273           --
     Maturities of investment securities available for sale.......................      271,571      260,568
     Maturities of investment securities held to maturity.........................        1,699        1,366
     Purchases of investment securities available for sale........................     (160,102)    (393,704)
     Purchases of investment securities held to maturity..........................       (3,124)        (744)
     Net increase in loans........................................................     (327,896)    (111,317)
     Recoveries of loans previously charged-off...................................        6,656        7,544
     Purchases of bank premises and equipment.....................................       (9,984)      (4,062)
     Other investing activities...................................................       (3,612)       4,652
                                                                                     ----------    ---------
              Net cash used in investing activities...............................      (91,180)    (153,463)
                                                                                     ----------    ---------
Cash flows from financing activities:
     Other increases (decreases) in deposits:
       Demand and savings deposits................................................      147,845      166,754
       Time deposits..............................................................     (133,516)      14,929
     Decrease in Federal Home Loan Bank advances..................................       (1,514)     (36,931)
     Increase in other borrowings.................................................       13,979       16,843
     Decrease in notes payable....................................................       17,264      (71,175)
     Purchase and retirement of Class C preferred stock...........................           --       (6,774)
     Proceeds from issuance of guaranteed preferred
       subordinated debenture.....................................................       44,124       83,086
     Payment of preferred stock dividends.........................................         (524)      (3,742)
                                                                                     ----------    ---------
              Net cash provided by financing activities ..........................       87,658      162,990
                                                                                     ----------    ---------
              Net increase (decrease) in cash and cash equivalents ...............      (25,437)       9,291
Cash and cash equivalents, beginning of period ...................................      168,480      227,954
                                                                                     ----------    ---------
Cash and cash equivalents, end of period..........................................   $  143,043      237,245
                                                                                     ==========    =========

Noncash investing and financing activities:
     Loans transferred to other real estate.......................................   $    2,391        3,062
     Loans transferred to investment securities available for sale................       65,361           --
                                                                                     ==========    =========

</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>

                                FIRST BANKS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Basis of Presentation

         The accompanying consolidated financial statements of First Banks, Inc.
and  subsidiaries  (First Banks) are unaudited and should be read in conjunction
with the consolidated  financial  statements contained in the 1997 annual report
on Form 10-K.  In the opinion of  management,  all  adjustments,  consisting  of
normal recurring  accruals  considered  necessary for a fair presentation of the
results of  operations  for the  interim  periods  presented  herein,  have been
included. Operating results for the three and nine month periods ended September
30, 1998 are not necessarily  indicative of the results that may be expected for
any other interim period or for the year ending December 31, 1998.

 First Banks' primary subsidiaries (Subsidiary Banks) are:

   First Bank, headquartered in St. Louis County, Missouri (First Bank).
   First Banks America, Inc., headquartered in St. Louis County, Missouri (FBA),
      and its wholly owned subsidiaries:
        BankTEXAS   N.A., headquartered in Houston, Texas (BankTEXAS).
        First Bank of California,  headquartered  in  Roseville, California (FB
          California).
   CCB Bancorp, Inc., headquartered in Newport Beach, California (CCB), and its
      wholly owned subsidiary:
        First Bank & Trust, headquartered in Newport Beach, California (FB&T).

         First Banks' ownership interest in FBA was 73.7% and 65.1% at September
30, 1998 and December 31, 1997, respectively.

         The  consolidated  financial  statements  include the accounts of First
Banks, Inc. and its  subsidiaries,  net of minority  interests.  All significant
intercompany  accounts and transactions  have been eliminated in  consolidation.
Certain  reclassifications  of 1997  amounts  have been made to conform with the
1998 presentation.

(2)  Mergers and Acquisitions

         On  September  15,  1998,  First Banks  completed  its  acquisition  of
Republic Bank for cash consideration of $19.3 million.  Republic Bank had $124.1
million in total assets,  $97.9 million in loans, net of unearned discount,  and
$117.2 million in deposits at the date of acquisition. Republic Bank, previously
headquartered  in  Torrance,  California,  was merged  into and will  operate as
branch offices of FB&T. The  transaction  was funded from available cash of $3.3
million and  borrowings of $16.0  million under First Banks' $90 million  credit
agreement  with  a  group  of  unaffiliated   financial   institutions   (Credit
Agreement).  The  acquisition  was  accounted  for under the purchase  method of
accounting and, accordingly,  the consolidated  financial statements include the
financial  position and results of operations  for the period  subsequent to the
acquisition date, and the assets acquired and liabilities  assumed were recorded
at fair  value at the  acquisition  date.  The  excess of the cost over the fair
value of the net assets  acquired was $10.2 million and is being  amortized over
15 years.

         As previously announced,  FBA and Redwood Bancorp executed an agreement
on September 3, 1998 providing for the acquisition of Redwood  Bancorp,  and its
wholly-owned subsidiary,  Redwood Bank, for cash consideration of $26.0 million.
Redwood Bank is  headquartered  in San  Francisco,  California and operates four
banking locations in the San Francisco Bay area. Redwood Bank had $168.5 million
in total assets,  $126.4 million in loans, net of unearned discount,  and $148.6
million in deposits at September 30, 1998. FBA anticipates that the transaction,
which is subject to regulatory approval,  will be completed on or about December
31, 1998.
<PAGE>


         On March 19, 1998, First Banks completed its assumption of the deposits
and purchase of selected assets of the Solvang,  California  banking location of
Bank of America.  The transaction  resulted in the acquisition of  approximately
$15.5 million in deposits and one office that operates as a branch of FB&T.  The
excess  of the cost  over the fair  value of the net  assets  acquired  was $1.8
million and is being amortized over 15 years.

         On February 2, 1998,  FBA  completed  its merger with First  Commercial
Bancorp, Inc. (FCB). FCB's wholly owned subsidiary, First Commercial Bank (First
Commercial), was merged into FB California. In the transaction, FCB shareholders
received  .8888  shares of FBA common  stock for each share of FCB common  stock
that they held. In total, FCB shareholders received approximately 752,000 shares
of FBA common stock in the transaction. The transaction provided for First Banks
to receive  804,000  shares of FBA common stock in exchange for $10.0 million of
FBA's note  payable to First  Banks,  and for the  exchange  of FCB  convertible
debentures  of $6.5  million,  which are owned by First  Banks,  for  comparable
debentures of FBA. The merger of FBA and FCB did not have a  significant  impact
on the operations of First Banks.

         The transaction was accounted for as a business combination of entities
under common control.  Accordingly,  FBA assumed First Banks' 61.48% interest in
FCB at its historical cost basis. The remaining  38.52%,  or minority  interest,
owned by unaffiliated parties was recorded at fair value. The excess of the cost
over the fair value of the  minority  interest's  share in the fair value of the
net assets acquired was $1.6 million and is being amortized over 15 years.

         On February 2, 1998, FBA completed its acquisition of Pacific Bay Bank,
San  Pablo,  California  (Pacific  Bay).  Under  the  terms of the  Pacific  Bay
Agreement,  Pacific Bay shareholders received $14.00 per share in cash for their
stock, an aggregate of $4.2 million. The 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 $1.5 million and is being amortized over 15 years.  This
transaction was funded from an advance under the Credit Agreement.

         Pacific Bay operated a banking  office in San Pablo,  California  and a
loan production office in Lafayette,  California.  At February 2, 1998,  Pacific
Bay had total assets of $38.3 million, investment securities of $232,000, loans,
net of  unearned  discount,  of $29.7  million and  deposits  of $35.2  million.
Pacific Bay was merged into FB California.


(3)  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' and the Subsidiary  Banks'
financial  statements.  Under capital  adequacy  guidelines  and the  regulatory
framework for Prompt Corrective  Action, the Subsidiary Banks must meet specific
capital guidelines that involve  quantitative  measures of the Subsidiary Banks'
assets,  liabilities  and certain  off-balance-sheet  items as calculated  under
regulatory  accounting  practices.  The Subsidiary  Banks'  capital  amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.

         Quantitative  measures  established  by  regulations  to ensure capital
adequacy require the Subsidiary  Banks to maintain  certain minimum ratios.  The
Subsidiary  Banks are  required  to  maintain  a minimum  risk-based  capital to
risk-weighted  assets  ratio of 8.0%,  with at least 4.0% being "Tier 1" capital
(as defined in the regulations).  In addition,  a minimum leverage ratio (Tier 1
capital to  average  assets)  of 3.0% plus an  additional  cushion of 100 to 200
basis points is  expected.  In order to be  considered  well  capitalized  under
Prompt  Corrective  Action  provisions,  a bank is  required  to maintain a risk
weighted asset ratio of at least 10%, a Tier 1 to risk weighted  assets ratio of
at least 6%, and a leverage  ratio of at least 5%. As of December 31, 1997,  the
date of the most recent  notification from First Banks' primary regulator,  each
of the Subsidiary Banks was categorized as well capitalized under the regulatory
framework for Prompt Corrective Action.
<PAGE>

         At  September  30, 1998 and  December  31,  1997,  First Banks' and the
Subsidiary Banks' capital ratios were as follows:
<TABLE>
<CAPTION>

                                                      Risk based capital ratios 
                                                      ------------------------- 
                                                   Total                     Tier 1                Leverage Ratio
                                                   -----                     ------                --------------
                                              1998       1997           1998        1997            1998    1997
                                              ----       ----           ----        ----            ----    ----

<S>                                          <C>        <C>             <C>         <C>            <C>      <C>  
         First Banks......................   10.41%     10.26%          9.15%       8.78%          7.83%    6.80%
         First Bank.......................   10.10      10.78           8.84        9.52           7.35     7.19
         FB&T.............................   10.40      12.71           9.14       11.45           8.29     7.70
         BankTEXAS........................   12.33      12.26          11.07       11.00           9.15     8.90
         FB California....................   10.93      13.03           9.67       11.77           8.47    13.80
         First Commercial (1).............      --      11.89             --       10.61             --     8.43
</TABLE>

----------
(1) Merged into FB California effective February 2, 1998.

(4)  Cumulative Trust Preferred Securities of First America Capital Trust

         During July 1998,  First  America  Capital  Trust  (First  Capital),  a
newly-formed  Delaware  business  trust  subsidiary of FBA,  issued 1.84 million
shares of 8.50% Cumulative Trust Preferred Securities (Preferred  Securities) at
$25.00 per share in an underwritten public offering. FBA made certain guarantees
and commitments  relating to the Preferred  Securities.  FBA's proceeds from the
issuance of the  Preferred  Securities,  net of  underwriting  fees and offering
expenses,  were  approximately  $44.0  million.  Distributions  payable  on  the
Preferred  Securities  are  payable  quarterly  in arrears on March 31, June 30,
September 30 and  December 31 of each year  commencing  on  September  30, 1998.
Distributions  payable on the Preferred  Securities  were $765,000 for the three
months ended  September 30, 1998 and are recorded as noninterest  expense in the
accompanying consolidated financial statements.

         Proceeds from the offering were used to repay outstanding  indebtedness
under the Credit Agreement,  support possible  repurchases of FBA's common stock
from time to time and for  general  corporate  purposes  of FBA.  The  remaining
proceeds  have been  temporarily  invested  and will be used to fund the pending
acquisition of Redwood Bancorp.



<PAGE>


                 Item 2: Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

         The discussion  herein  contains  certain  forward  looking  statements
regarding the financial  condition,  results of operations and business of First
Banks.  These forward looking statements are subject to risks and uncertainties,
not all of which can be predicted or anticipated.  Factors that may cause actual
results to differ  materially  from those  contemplated  by such forward looking
statements include general market conditions,  conditions  affecting the banking
industry  generally  and  factors  having a  specific  impact  on  First  Banks,
including but not limited to, fluctuations in interest rates and in the economy;
the  impact  of laws and  regulations  applicable  to First  Banks  and  changes
therein;  competitive  conditions  in the  markets in which  First Banks and the
Subsidiary  Banks  conduct their  operations;  and the ability of the Company to
respond to changes in  technology,  including the Year 2000 problem.  Additional
factors potentially affecting First Banks' results were identified in the Annual
Report on Form 10-K filed with the Securities and Exchange  Commission.  Readers
should not place  undue  reliance on any forward  looking  statements  contained
herein.

                                     General

         First Banks is a  registered  bank  holding  company,  incorporated  in
Missouri in 1978 and headquartered in St. Louis County,  Missouri.  At September
30, 1998, First Banks had $4.46 billion in total assets;  $3.43 billion in total
loans,  net of unearned  discount;  $3.87  billion in total  deposits;  and $254
million in total stockholders' equity.

         Through  the  Subsidiary  Banks,  First  Banks  offers a broad range of
commercial  and  personal  banking  services  including  certificate  of deposit
accounts,  individual  retirement and other time deposit accounts,  checking and
other demand deposit accounts,  interest checking accounts, savings accounts and
money market accounts. Loans include commercial,  financial,  agricultural, real
estate construction and development,  commercial and residential real estate and
consumer and  installment  loans.  Other  financial  services  include  mortgage
banking,  discount  brokerage,   credit-related   insurance,   automatic  teller
machines,  safe  deposit  boxes,  cash  management,  lockbox and trust  services
offered by certain Subsidiary Banks.

         The following table lists the Subsidiary Banks at September 30, 1998:
<TABLE>
<CAPTION>

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

<S>                                             <C>        <C>                  <C>             <C>      
First Bank..............................        98         $ 2,962,042          2,377,806       2,610,405
CCB:
   FB&T.................................        21             795,119            563,701         704,364
FBA:
   FB California........................        11             402,353            297,889         354,272
   BankTEXAS............................         6             286,378            193,507         244,232
</TABLE>


                               Financial Condition

         First Banks' total  assets  increased by $296 million to $4.46  billion
from $4.17  billion at September  30, 1998 and December 31, 1997,  respectively.
This increase is primarily attributable to the acquisitions of Republic Bank and
Pacific Bay, and internal loan growth. As previously  discussed in Note 2 to the
consolidated financial statements, the acquisitions of Republic Bank and Pacific
Bay  provided  assets  of  $162.4  million.  Internal  loan  growth,  consisting
primarily of commercial, financial and agricultural and real estate construction
and  development,  increased  by $302.6  million.  Offsetting  the  increase and

<PAGE>

providing an  additional  source of funds for the loan growth was a reduction in
investment securities of $135.4 million and Federal funds sold of $13.3 million.
Total  deposits,   excluding  deposits  provided  by  acquisitions,   and  other
borrowings  increased  by $29.8  million and $51.4  million,  respectively.  The
increase in other borrowings was comprised primarily of Federal funds purchased.


                              Results of Operations

Net Income

         First  Banks' net income was $8.6  million,  or $343.73  per share on a
diluted  basis,  for the three months ended  September 30, 1998 compared to $8.5
million,  or $295.45 per share on a diluted basis,  for the same period in 1997.
Net income  for the nine  months  ended  September  30,  1998 and 1997 was $22.8
million and $24.2 million,  or $910.91 and $830.16 per share on a diluted basis,
respectively.  The  increase in earnings  per share  reflects  the effect of the
redemption of the Company's  Class C preferred  stock in 1997, and the resulting
reduction of the Company's quarterly dividend  requirement by approximately $1.0
million and $3.2 million for the three and nine month  periods  ended  September
30, 1998,  respectively.  However,  the funds required for the  redemption  were
borrowed,  resulting  in an increase in  interest  expense of $700,000  and $2.6
million  for the  three  and  nine  month  periods  ended  September  30,  1998,
respectively.  Since the Class C dividend  requirement  is not  deducted  in the
determination of net income, whereas interest expense is, the effect of this was
to reduce  1998 net income by $455,000  and $1.7  million for the three and nine
month periods, respectively, when compared to the same periods in 1997.

         The results for the three and nine month  periods  ended  September 30,
1998 include the  additional  costs  associated  with Surety  Bank's and Pacific
Bay's data  processing and  back-office  conversions to First Banks' systems and
procedures.  Surety  Bank,  Vallejo,  California,  and Pacific  Bay,  San Pablo,
California, were acquired in December 1997 and February 1998, respectively.

Net Interest Income

         Net interest income  (expressed on a tax-equivalent  basis) improved to
$43.7 million, or 4.35% of average interest earning assets, for the three months
ended  September  30, 1998,  from $35.9  million,  or 3.97% of average  interest
earning assets, for the same period in 1997. For the nine months ended September
30, 1998 and 1997, net interest income (expressed on a tax-equivalent basis) was
$122.3  million,  or 4.16%,  and $108.5 million,  or 4.15%, of average  interest
earning assets, respectively.

         The  increased  net  interest  income for 1998 is  attributable  to the
increase in average interest-earning assets of $389.7 million and $431.9 million
for the three and nine month  periods ended  September  30, 1998,  respectively,
compared to the same  periods in 1997.  The increase is  attributable  to loans,
which  increased on average by $427.3  million and $345.4  million for the three
and nine month periods ended  September  30, 1998,  respectively,  over the same
periods in 1997.  Contributing  further to the improved net interest  income was
the decrease in the cost of interest-bearing  liabilities to 4.68% and 4.80% for
the three and nine month periods ended September 30, 1998, compared to 5.15% and
4.92% for the same periods in 1997,  respectively.  This  reflects the continual
process of  realigning  the  deposit  portfolios  of acquired  entities  and the
overall  increase in the percentage of demand  deposits and savings  deposits to
total deposits.

         Offsetting the increase in net interest income is the  amortization and
periodic  costs of hedging the interest rate risk (IRR) position of First Banks.
The cost of hedging totaled $1.0 million and $3.2 million for the three and nine
month  periods  ended  September  30,  1998,  compared to $3.2  million and $5.6
million for the same  periods in 1997.  The  decrease in the cost of hedging for
1998 is  attributable  to the reduced  level of IRR risk that  occurred over the
past several years.  This reduction in IRR resulted from the  realignment of the
loan  portfolio,  combined with the gradual  changes in the  composition  of the
investment  securities  portfolios  from  mortgage-backed   securities  to  U.S.

<PAGE>

         Treasury and U.S.  government agencies  securities,  and changes in the
composition  of  interest-bearing  liabilities.  As more fully  discussed in the
Interest Rate Risk Management section, First Banks increased the use of interest
rate swap  agreements  during the third quarter of 1998 to offset the increasing
exposure to continued  reductions in interest  rates on its financial  condition
and results of operations.


         The following  table sets forth,  on a  tax-equivalent  basis,  certain
information  relating to First Banks' 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 three
and nine month periods ended September 30:
<TABLE>
<CAPTION>


                                            Three months ended September 30,                   Nine months ended September 30,     
                                     ----------------------------------------------   ---------------------------------------------
                                              1998                    1997                    1998                    1997       
                                              ----                    ----                    ----                    ----       
                                            Interest                 Interest               Interest                Interest
                                     Average income/ Yield/   Average  income/Yield/  Average  income/Yield/  Average income/ Yield/
                                     balance expense rate     balance  expense rate   balance expense  rate   balance expense rate
                                     ------- ------- ----     -------  ------------    ------- -------  ----  ---------------------
                                                                         (dollars expressed in thousands)
             Assets

Interest-earning assets:
<S>                              <C>         <C>    <C>    <C>        <C>    <C>   <C>        <C>     <C>   <C>        <C>     <C>  
   Loans.......................  $3,297,377  73,332 8.82%  $2,870,094 64,418 8.90% $3,168,141 209,654 8.85% $2,822,754 187,695 8.89%
   Investment securities.......     641,853  10,107 6.25      583,551  8,619 5.86     698,614  32,112 6.15     567,645  25,371 5.98
   Federal funds sold and other      41,603     551 5.25      137,474  1,898 5.48      62,223   2,541 5.46     106,678   4,400 5.51
                                 ---------- -------        ---------- ------       ---------- -------       ---------- -------
       Total interest-earning
         assets................   3,980,833  83,990 8.37    3,591,119 74,935 8.28   3,928,978 244,307 8.31   3,497,077 217,466 8.31
                                            -------                   ------                  -------                  -------
Nonearning assets..............     309,265                   201,766                 302,093                  218,238
                                 ----------                ----------              ----------               ----------
       Total assets............  $4,290,098                $3,792,885              $4,231,071               $3,715,315
                                 ==========                ==========              ==========               ==========

   Liabilities and Stockholders' Equity

Interest-bearing liabilities:
   Interest-bearing demand
     deposits..................  $  355,503   1,141 1.27%  $  327,616  1,409 1.71% $ 353,144   3,944  1.49%  $ 330,529   4,214 1.70%
   Savings deposits............   1,116,879  11,226 3.99      779,690  7,221 3.68  1,038,717  31,011  3.99     715,656  18,260 3.41
   Time deposits of $100
     or more (1)...............     208,753   2,994 5.69      186,424  2,978 6.34    216,439   9,589  5.92     178,194   8,063 6.05
   Other time deposits (1).....   1,627,137  23,455 5.72    1,660,059 26,720 6.40  1,688,111  72,897  5.77   1,677,714  75,858 6.05
                                 ---------- -------        ---------- ------      ----------  ------        ---------- -------
       Total interest-bearing
         deposits..............   3,308,272  38,816 4.65    2,953,789 38,328 5.16  3,296,411 117,441  4.76   2,902,093 106,395 4.90
   Notes payable and other (1).     112,953   1,507 5.29       51,677    682 5.24    106,555   4,604  5.78      63,063   2,609 5.53
                                 ---------- -------        ---------- ------      ----------  ------        ---------- -------
       Total interest-bearing
         liabilities...........   3,421,225  40,323 4.68    3,005,466 39,010 5.15  3,402,966 122,045 4.80    2,965,156 109,004 4.92
                                            -------                   ------                 -------                   -------
Noninterest-bearing liabilities: 
   Demand deposits.............     461,287                   399,745                448,517                   381,784
   Other liabilities...........     159,714                   123,860                138,781                   112,808
                                 ----------                ----------             ----------                ----------
       Total liabilities.......   4,042,226                 3,529,071              3,990,264                 3,459,748
Stockholders' equity...........     247,872                   263,814                240,807                   255,567
                                 ----------                ----------             ----------                ----------
       Total liabilities and
         stockholders' equity..  $4,290,098                $3,792,885             $4,231,071                $3,715,315
                                 ==========                ==========             ==========                ==========

Net interest income............              43,667                   35,925                 122,262                   108,462
                                            =======                   ======                 =======                   =======
Net interest margin............                     4.35%                    3.97%                   4.16%                     4.15%
                                                    ====                     ====                    ====                      ====
</TABLE>

------------
(1) Includes the effects of interest rate exchange agreements.



<PAGE>

Provision for Possible Loan Losses

         The  provision  for  possible  loan  losses was $2.3  million  and $6.2
million for the three and nine month periods ended September 30, 1998,  compared
to $3.1 million and $9.1 million for the same periods in 1997, respectively. The
decrease in the provision for possible loan losses is primarily  attributable to
loan loss  experience.  For the three and nine month periods ended September 30,
1998,  First Banks  experienced  net loan  recoveries  of $372,000 and $619,000,
respectively,  in comparison to net loan charge-offs of $68,000 and $5.2 million
for the same periods in 1997.

         Tables summarizing  nonperforming assets, past due loans and charge-off
experience are presented  under  "--Lending and Credit  Management" of this Form
10-Q.

Noninterest Income

         Noninterest income was $9.0 million and $25.2 million for the three and
nine month periods  ended  September  30, 1998,  respectively,  compared to $8.8
million and $19.7 million for the same period in 1997. The largest components of
noninterest  income are service charges on deposit  accounts and other non-yield
customer service fees and mortgage banking revenues.

         Service charges on deposit accounts and customer service fees were $3.8
million and $10.7 million for the three and nine month  periods ended  September
30, 1998,  respectively,  compared to $3.2 million and $9.2 million for the same
periods in 1997. The increase in service charges  corresponds to the increase in
deposit balances  provided by internal  growth,  the acquisitions of Surety Bank
and Pacific Bay and the  additional  services  available  and  utilized by First
Banks' commercial customers.

         Mortgage banking revenues consist primarily of loan servicing fees, net
and gain on mortgage  loans sold and held for sale.  Loan servicing  fees,  net,
decreased to $177,000 and  $880,000 for the three and nine month  periods  ended
September  30, 1998,  respectively,  from $398,000 and $1.3 million for the same
periods  in 1997.  This  decrease  is  attributable  to the  reduction  in loans
serviced for others resulting from the repayment and prepayment of the portfolio
and the current  strategy of selling the new production of  adjustable-rate  and
non-conforming  residential  mortgage loans on a servicing  released basis.  The
gain on mortgage loans sold and held for sale increased to $1.8 million and $3.7
million for the three and nine month  periods  ended  September  30, 1998,  from
$162,000 and $370,000 for the same periods in 1997, respectively.  This increase
is attributable to an increased volume of loans sold and held for sale including
fixed rate residential  mortgage loans,  which are sold on a servicing  retained
basis, and adjustable-rate and non-conforming  residential mortgage loans, which
are sold on a servicing released basis.

         The gain on sales of securities,  net, of $559,000 and $815,000 for the
three and nine month periods ended  September 30, 1998,  respectively,  resulted
from sales of  available-for-sale  securities to facilitate  the funding of loan
growth. The gain on sale of securities,  net, of $2.24 million for the three and
nine month periods  ended  September  30, 1997 is  attributable  to the sales of
certain  residual  securities  which had been acquired by First Banks through an
acquisition  completed in 1995. These residuals,  which had been written-down to
diminimous  values  at the  date of  acquisition,  entitled  First  Banks to the
remaining  cash  flows  of  certain  collateralized   mortgage-backed   residual
securities  (CMOs)  available  upon  redemption  of  the  CMOs.   However,   the
combination  of the unique  structure of these CMOs and changes in interest rate
and mortgage markets combined to significantly  enhance their value in 1997. The
residual  securities  sold were  classified  as  available  for sale  within the
investment security portfolio.

         Other  income was $2.1  million and $6.2 million for the three and nine
month periods ended September 30, 1998,  respectively,  compared to $1.9 million
and $4.3  million for the same  periods in 1997.  The primary  component  of the
increase  consists  of  $827,000  and  $2.2  million  recognized  as  income  on
bank-owned  life insurance  (BOLI) policies for the three and nine month periods
ended September 30, 1998,  respectively.  The BOLI balance was $76.2 million and
is included in other assets.
<PAGE>


Noninterest Expense

         Noninterest  expense was $36.1 million and $103.2 million for the three
and nine month periods ended September 30, 1998, respectively, compared to $27.9
million  and  $80.9  million  for the same  periods  in 1997.  The  increase  in
noninterest  expense is  attributable  to the  acquisitions  of Surety  Bank and
Pacific Bay and the continued  expansion of First Banks'  commercial  and retail
functions within existing markets.

         Salaries  and employee  benefits  have  increased to $14.6  million and
$41.9  million for the three and nine month  periods  ended  September 30, 1998,
from $10.8 million and $31.7 million for the same periods in 1997.  The increase
is  attributable  to  the  newly  acquired  banks  and  First  Banks'  continued
commitment  to  expanding  its  commercial  and  retail   business   development
capabilities.

         Data  processing  fees for the  three  and  nine  month  periods  ended
September 30, 1998 were $3.7 million and $9.7 million,  compared to $2.3 million
and $5.8 million for the same  periods in 1997,  respectively.  First  Services,
L.P., a limited  partnership  indirectly  owned by First Banks' Chairman and his
immediate family, provides data processing and related services for First Banks.
The increase  for the third  quarter of 1998 is  primarily  attributable  to the
additional  services  provided by First  Services,  L.P. to meet the  increasing
technology  requirements  of the  banking  industry  and  the  additional  costs
associated with the data processing  conversions of newly acquired  entities and
system  upgrades.  Expenses billed by First Services,  L.P.  associated with the
year 2000  efforts  were  $200,000  for the three and nine month  periods  ended
September 30, 1998.

         Contributing  further to the  increase  in  noninterest  expense is the
guaranteed  preferred  debenture  expense.  For the three and nine month periods
ended  September  30,  1998,  the  cost  was  $2.8  million  and  $6.8  million,
respectively,  compared to $2.1 million and $5.5 million for the same periods in
1997.  The increases for 1998 are  attributable  to FBA's  issuance of Preferred
Securities  in July 1998 (as described in Note 4 to the  consolidated  financial
statements) and First Banks' issuance of similar securities in February 1997.

         Other noninterest  expense for the nine months ended September 30, 1998
includes  a $1.1  million  charitable  contribution  to the  Affordable  Housing
Assistance  Program.  In addition,  the  Subsidiary  Banks  settled two lawsuits
resulting in approximately  $500,000 being charged to other noninterest  expense
during the nine month period ended September 30, 1998.

                          Lending and Credit Management

         Interest  earned on the loan  portfolio is the primary source of income
of First Banks.  Total loans, net of unearned  discount,  represented  76.9% and
72.1%  of  total  assets  as of  September  30,  1998  and  December  31,  1997,
respectively.  Total  loans,  excluding  loans held for sale and net of unearned
discount,  increased by $383.0  million to $3.3  billion at September  30, 1998,
from $2.9 billion at December 31, 1997. The increase  reflects  continued growth
within  corporate  lending  of $503.3  million,  offset by the  decrease  of the
residential   mortgage  and  increase  of  the  consumer  and  installment  loan
portfolios of $157.8 million and $31.8 million,  respectively,  at September 30,
1998 in comparison to December 31, 1997. These  fluctuations are attributable to
the reductions of new loan origination volumes that are held for investment, the
securitization and transfer of $64.5 million in residential real estate loans to
investment  securities  available  for  sale,  and the  continued  repayment  of
principal on the existing portfolios.

<PAGE>


         The following is a summary of nonperforming assets by category:
<TABLE>
<CAPTION>

                                                                                September 30,       December 31,
                                                                                    1998                1997
                                                                                    ----                ----
                                                                                 (dollars expressed in thousands)

<S>                                                                             <C>                      <C>  
Commercial, financial and agricultural.......................................   $    6,709               6,025
Real estate construction and development.....................................        6,386               4,097
Real estate mortgage.........................................................       20,610              19,305
Consumer and installment.....................................................          192                  94
                                                                                ----------          ----------
         Total nonperforming loans...........................................       33,897              29,521
Other real estate............................................................        5,861               7,324
                                                                                ----------          ----------
         Total nonperforming assets..........................................   $   39,758              36,845
                                                                                ==========          ==========

Loans, net of unearned discount..............................................   $3,432,484           3,002,200
                                                                                ==========           =========

Loans past due 90 days or more
   and still accruing........................................................   $    3,238               2,725
                                                                                ==========           =========

Asset Quality Ratios:
   Allowance for possible loan losses to loans ..............................         1.76%               1.68%
   Nonperforming loans to loans..............................................         0.99                0.98
   Allowance for possible loan losses
      to nonperforming loans.................................................       178.64              171.10
   Nonperforming assets to loans and other real estate.......................         1.16                1.22
                                                                                ==========         ===========
</TABLE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
restructured  loans,  were $33.9  million at September 30, 1998 in comparison to
$29.5  million at December 31, 1997.  Impaired  loans,  consisting of nonaccrual
loans,  were $32.4  million and $24.1 million at September 30, 1998 and December
31, 1997, respectively.  These increases are primarily attributable to corporate
banking loans,  including commercial,  financial and agricultural,  construction
and  commercial  real  estate  loans,   and  the  loans  obtained   through  the
acquisitions of Pacific Bay and Republic Bank.

     The following is a summary of loan loss  experience  for the three and nine
month periods ended September 30:
<TABLE>
<CAPTION>
                                                                           Three months ended    Nine months ended
                                                                               September 30,        September 30, 
                                                                               -------------        ------------- 
                                                                              1998      1997      1998       1997
                                                                              ----      ----      ----       ----
                                                                                (dollars expressed in thousands)
Allowance for possible loan losses,
<S>                                                                        <C>          <C>       <C>       <C>   
    beginning of period..................................................  $ 55,591     47,708    50,509    46,781
Acquired allowances for possible loan losses.............................     2,315         --     3,200        --
                                                                           --------   --------   -------  --------
                                                                             57,906     47,708    53,709    46,781
                                                                           --------   --------   -------  --------
Loans charged-off........................................................    (1,899)    (2,062)   (6,037)  (12,710)
Recoveries of loans previously charged-off...............................     2,271      1,994     6,656     7,544
                                                                           --------   --------   -------  --------
     Net loan (charge-offs) recoveries...................................       372        (68)      619    (5,166)
                                                                           --------   --------   -------  --------
Provision for possible loan losses.......................................     2,275      3,100     6,225     9,125
                                                                           --------   --------   -------  --------
Allowance for possible loan losses, end of period........................  $ 60,553     50,740    60,553    50,740
                                                                           ========   ========   =======  ========
</TABLE>

         The allowance for possible loan losses is monitored on a monthly basis.
Each month, credit administration provides First Banks' 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,
the overall  increases or decreases in the levels of risk in the  portfolios are
monitored  continually.  Factors  are  applied to the loan  portfolios  for each
category of loan risk to determine  acceptable  levels of allowance for possible
loan losses. These factors are derived primarily from the actual loss experience

<PAGE>

of the  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  judgment in its  analysis  of  determining  the overall  level of the
allowance for possible loan losses.  In its analysis,  management  considers the
change in the  portfolio,  including  growth and  composition,  and the economic
conditions  of the  regions  in  which  First  Banks  operates.  Based  on  this
quantitative and qualitative analysis, the allowance for possible loan losses is
adjusted.  Such  adjustments  are  reflected in the  consolidated  statements of
income.

                          Interest Rate Risk Management

         Derivative  financial  instruments  held by First Banks for purposes of
managing interest rate risk are summarized as follows:
<TABLE>
<CAPTION>

                                                                September 30, 1998         December 31, 1997  
                                                              ----------------------     --- ------------------ 
                                                              Notional      Credit       Notional      Credit
                                                               amount      exposure       amount       exposure
                                                               ------      --------       ------       --------
                                                                      (dollars expressed in thousands)

<S>                                                           <C>              <C>        <C>           <C>          
   Interest rate swap agreements..........................    $  280,000        --            --         --
   Interest rate floor agreements.........................        70,000       120        70,000         26
   Interest rate cap agreement............................        10,000        28        10,000        222
   Forward commitments to sell
     mortgage-backed securities...........................        65,000        --        60,000         --
</TABLE>

         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  derivative   financial
instruments.  The amounts  exchanged are determined by reference to the notional
amounts and the other terms of the derivatives.

         Previously,  First Banks  utilized  interest  rate swap  agreements  to
lengthen the repricing  characteristics of certain interest-bearing  liabilities
to correspond  more closely with its assets,  with the objective of  stabilizing
net  interest  income  over  time.  The  utilization  of these  swaps  decreased
consistent with the change in the composition of the balance sheet, resulting in
no open swap  agreements as of December 31, 1997.  Deferred losses on terminated
swap  agreements  are  being  amortized  over  the  remaining  lives of the swap
agreements.  If all or any portion of the underlying liabilities are repaid, the
related deferred losses are charged to operations.  The net interest expense for
these agreements, consisting solely of amortization of deferred losses, was $2.9
million and $4.4 million for the nine month periods ended September 30, 1998 and
1997, respectively. At September 30, 1998 and December 31, 1997, the unamortized
balance  of  these   deferred   losses  was  $6.5  million  and  $9.4   million,
respectively.

         During 1998, First Banks entered into $280.0 million interest rate swap
agreements   (Swap   Agreements)   to   effectively    shorten   the   repricing
characteristics  of certain  interest-bearing  liabilities  to  correspond  more
closely with its assets,  with the objective of stabilizing  net interest income
over time.  In contrast  to  previous  swap  agreements,  these Swap  Agreements
provide  for  First  Banks  to  receive  a  fixed  rate of  interest  and pay an
adjustable rate equivalent to the 90-day London Interbank Offering Rate (LIBOR).
The terms of the Swap  Agreements  provide for First Banks to pay  quarterly and
receive payment semi-annually.  The net amount due to First Banks under the Swap
Agreements was $214,000 at September 30, 1998.  The unrealized  gain on the Swap
Agreements was $5.3 million at September 30, 1998.

         First Banks has interest rate cap and floor  agreements  outstanding to
limit the interest expense associated with certain interest-bearing liabilities.
At September  30, 1998 and December 31, 1997,  the  unamortized  costs for these
agreements were $192,000 and $290,000,  respectively, and were included in other
assets.
<PAGE>

         Derivative  financial  instruments  issued by First  Banks  consist  of
commitments to originate  fixed-rate loans.  Commitments to originate fixed-rate
loans  consist   primarily  of  residential   real  estate  loans.   These  loan
commitments,  net of estimated underwriting fallout, and loans held for sale are
hedged with forward contracts to sell mortgage-backed securities.

                                    Liquidity

         The liquidity of First Banks and its 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. The primary sources of
funds  for  liquidity  are  derived  from  customer  deposits,   loan  payments,
maturities, sales of investments and earnings.

         In addition,  First Banks and its Subsidiary Banks may avail themselves
of more volatile sources of funds through issuance of certificates of deposit in
denominations of $100,000 or more, federal funds borrowed, securities sold under
agreements to repurchase and other  borrowings,  including the Credit Agreement.
The aggregate funds acquired from those sources were $378.6 million at September
30, 1998 and $328.7 million at December 31, 1997.

         At September  30, 1998,  First  Banks' more  volatile  sources of funds
mature as follows:

                                                          (dollars expressed
                                                             in thousands)


    Three months or less.................................     $   219,739
    Over three months through six months.................          49,830
    Over six months through twelve months................          72,899
    Over twelve months...................................          36,168
                                                              -----------
      Total..............................................     $   378,636
                                                              ===========


         Management believes the future earnings of its Subsidiary Banks will be
sufficient  to  provide  funds for  growth  and to permit  the  distribution  of
dividends  to First Banks  sufficient  to meet First Banks'  operating  and debt
service  requirements  both on a short-term  and long-term  basis and to pay the
dividends on the Preferred Securities.

                                    Year 2000

         First Banks and the  Subsidiary  Banks are subject to risks  associated
with the "Year 2000"  problem,  a term which refers to  uncertainties  about the
ability of various data  processing  hardware and software  systems to interpret
dates correctly after the beginning of the Year 2000.

         As described in Note 2, data processing  services are provided to First
Banks by First Services L.P. under the terms of data processing  agreements.  To
address the Year 2000 problem,  First Banks, working jointly with First Services
L.P.,  has  established  a dedicated  team to  coordinate  the overall Year 2000
Preparedness  Program (Program) under the guidelines of the  Comprehensive  Year
2000 Plan (Plan) as approved by the Board of Directors. The Plan summarizes each
major phase of the Program and the estimated costs to remediate and test systems
in preparation for the Year 2000. The major phases of the Program are awareness,
assessment, remediation, validation and implementation.

         The awareness phase included a company-wide campaign to communicate the
Year  2000  problem  and  the  potential   ramifications  to  the  organization.
Concurrent  with  this  phase,  the Year  2000  Program  Team  (Team)  began the
assessment phase of the Program.  The assessment phase included the inventorying
of systems  that may be impacted by the Year 2000  problem.  The business use of
each  inventoried item was then analyzed and prioritized in varying degrees from
critical  to  non-critical,  based  upon the  perceived  adverse  effect  on the

<PAGE>

financial condition of First Banks in the event of a loss or interruption in the
use of each system.  The  awareness  and  assessment  phases of the Program were
completed as scheduled.

         First  Banks'  critical  systems  are  purchased  from   industry-known
vendors. Such systems are generally used in their standard  configuration,  that
is, with minor modification.  Focusing on these critical systems, First Banks is
closely  reviewing  and  monitoring  the Year 2000  progress as reported by each
vendor  and  testing,  when  possible,  on a system  separate  from the  on-line
production  system.  The review of  non-critical  in-house  systems and external
providers of data  processing  services,  including  critical  and  non-critical
systems, has commenced and should be completed by June 30, 1999.

         For the critical systems that have been modified,  the vendors provided
remediation  for  such  systems  that  were  not  otherwise  reported  as  "Year
2000-ready." As the remediation  phase was completed within the stated deadline,
First Banks did not invoke any remediation contingency efforts.

         With the remediation phase of the program  complete,  the objective for
the fourth  quarter of 1998 is to complete  the  validation  phase for  critical
in-house systems,  including remediated systems provided by third party vendors.
A  system  is  deemed  validated  upon  completion  of an  approved  test  plan,
contingency  plan and system testing of the Year 2000 compliant  version without
significant problems.

         First  Banks has  accelerated  one major  project,  its  teller  system
replacement,  since  the  existing  system  is not Year  2000  compliant.  While
planning for the  replacement of the teller system has been underway for several
years,  the  implementation  was  accelerated  based on the potential  Year 2000
impact.  The reviewing  and testing of the selected  teller system is in process
and should be  completed by December  31,  1998.  In  addition,  First Banks has
identified  a  back-up  teller  system,  which is being  subjected  to a similar
review,  in the event the  selected  teller  system  does not meet First  Banks'
requirements.  The new teller  system  should be installed in selected bank test
locations during the fourth quarter of 1998 with implementation in the remaining
locations to be substantially  completed by June 30, 1999. The estimated cost of
the teller  replacement is $8.0 million and is expected to be charged to expense
over a 60 month period  commencing in the third quarter of 1999.  First Banks is
also  upgrading  its  local  area  network-based  systems,   networks  and  core
processor,   and  is  accelerating  the  purchase  of  certain  item  processing
equipment,  as the current equipment,  which is fully  depreciated,  is not Year
2000  compliant.  The  estimated  cost of these  upgrades  and  item  processing
equipment is $3.9 million and $1.4 million,  respectively, and is expected to be
charged to expense over 60 months commencing in the first quarter of 1999.

         The final phase of the Program is the  implementation of remediated and
other systems into the operating  environment of First Banks. The final phase of
the Program is scheduled to be completed by June 30, 1999.

         Concurrent  with  the  development  and  execution  of the  Plan is the
evolution of First Banks' Year 2000  Contingency  Plan  (Contingency  Plan). The
Contingency Plan is intended to be a living document  changing and developing to
reflect  the  results  of  the  Program.   The  Contingency  Plan  includes  the
contingency  procedures  for  common  systems,  coordinated  by  the  Team,  and
departmental  specific  systems,  coordinated  by the  appropriate  departmental
manager and the assigned Team member.  The Contingency  Plan addresses a variety
of issues including critical systems,  credit risk, liquidity,  loan and deposit
customers, facilities, supplies and computer hot-site location.

         First  Banks  is also  completing  an  assessment  of Year  2000  risks
relating  to its  lines  of  business  separate  from  its  dependence  on  data
processing.  The  assessment  includes  a review of larger  commercial  loan and
deposit  customers to ascertain their overall  preparedness  regarding Year 2000
risks.  The process  requires  lending and other  banking  officers to meet with
their  customers to review and assess their overall  preparedness  for Year 2000
risks.  While the process of evaluating  the potential  adverse  effects of Year
2000 risks on these customers is substantially  complete,  it is not possible to
quantify the overall  potential  adverse  effects to First Banks  resulting from
these customers' failure to adequately prepare for the Year 2000. The failure of
a  commercial  bank  customer to prepare  adequately  for Year 2000 could have a

<PAGE>

significant adverse effect on such customer's  operations and profitability,  in
turn  inhibiting  its ability to repay loans in  accordance  with their terms or
requiring  the use of its  deposited  funds.  First Banks is also  reviewing and
structuring   certain  funding  sources  to  facilitate  the  Subsidiary  Banks'
liquidity requirements under varying cash flow assumptions.

         The Plan also provides for the  identification  and communication  with
significant non-data processing third party vendors regarding their preparedness
for Year 2000 risks.  The results of this process have  revealed no  significant
business risks to First Banks;  however,  additional  investigation is scheduled
for the fourth quarter of 1998 and the first quarter of 1999.

         The total cost of the Program is currently  estimated at $16.2 million,
comprised of capital  improvements  of $13.3 million and direct expenses of $2.9
million. The capital improvements,  as previously discussed,  will be charged to
expense in the form of depreciation  expense or lease expense,  generally over a
period of 60 months. First Banks incurred direct expenses related to the Program
of  approximately  $200,000 during the third quarter of 1998.  Similarly,  First
Banks expects the Program to incur  expenses of  approximately  $500,000 for the
last quarter of 1998. In addition,  First Banks is estimating direct expenses of
$2.2 million for the duration of the Program. The total cost of the Program does
not include certain incremental  expenses of temporary employees and contractors
positioned  outside the Program Team in other operating units. These individuals
are providing assistance to other departments,  allowing the more seasoned staff
to test and facilitate the Program. The total cost could vary significantly from
those currently  estimated for unforeseen  circumstances  which could develop in
carrying out the Program.

         While  First Banks is making a  substantial  effort to become Year 2000
compliant,  there is no assurance the failure to  adequately  address all issues
relating to the Year 2000 problem  would not have a material  adverse  effect on
its financial condition or results of operations.


                       Effects of New Accounting Standards

          First  Banks   adopted  the   provisions  of  Statement  of  Financial
Accounting Standards (SFAS) No. 130 - Reporting  Comprehensive Income (SFAS 130)
retroactively  on January 1, 1998. SFAS 130 established  standards for reporting
and displaying income and its components (revenues, gains, and losses) in a full
set of general purpose  financial  statements.  SFAS 130 requires all items that
are  required to be  recognized  under  accounting  standards as  components  of
comprehensive  income to be reported in a financial  statement that is displayed
with the same prominence as other financial  statements.  Comparative  financial
statements  provided  for  earlier  periods  have been  restated  to reflect the
application  of SFAS 130. The  implementation  of SFAS 130 did not have material
impact on First Banks' consolidated financial statements.

          During 1997, the Financial  Accounting  Standards  Board (FASB) issued
SFAS  No.  131 -  Disclosures  about  Segments  of  an  Enterprise  and  Related
Information  (SFAS  131).  SFAS 131  establishes  standards  for the way  public
business  enterprises  report  information  about  operating  segments in annual
financial   statements  and  requires  those   enterprises  to  report  selected
information  about  operating  segments in interim  financial  reports issued to
shareholders.   Additionally,   SFAS  131  establishes   standards  for  related
disclosures  about products and services,  geographic areas, and major customers
superseding  SFAS No.  14 -  Financial  Reporting  for  Segments  of a  Business
Enterprise. First Banks is currently evaluating the requirements of SFAS 131 and
believes  expanded  disclosure  information  will be  required to be included in
First Banks' consolidated  financial statements for fiscal years beginning after
December 15, 1997.

          In June 1998, the FASB issued SFAS No. 133 - Accounting for Derivative
Instruments and Hedging  Activities  (SFAS 133). SFAS 133 establishes  standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities.  It requires an entity to recognize

<PAGE>

all  derivatives  as either assets or  liabilities in the statement of financial
position and measure those  instruments at fair value. SFAS 133 is effective for
fiscal years beginning after June 15, 1999.  Earlier  application of SFAS 133 is
encouraged but should not be applied  retroactively  to financial  statements of
prior periods.  First Banks is currently  evaluating the requirements and impact
of SFAS 133.


                           Part II- OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

   (a) These Exhibits are numbered in accordance  with the Exhibit Table of Item
601 of Regulation S-K.

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

                 11        Calculations of Earnings Per Share.

                 27        Article 9 - Financial Data Schedule (EDGAR only)

   (b) First Banks  filed no reports on Form 8-K during the three  month  period
ended September 30, 1998.



<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  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.
                                          Registrant


Date:  November 10, 1998                  By: /s/ James F. Dierberg
                                              ---------------------
                                                  James F. Dierberg
                                                  Chairman, President and
                                                   Chief Executive Officer



Date:  November 10, 1998                  By: /s/ Allen H. Blake 
                                              ------------------
                                                  Allen H. Blake
                                                  Executive Vice President
                                                   and Chief Financial Officer
                                                   (Principal Financial Officer)


<PAGE>



                                   Exhibit 11


         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 expressed in thousands, except per share data)
Three months ended September 30, 1998:
<S>                                                                  <C>              <C>          <C>      
     Basic EPS-income available to common stockholders.........      $ 8,391          23,661       $  354.65
                                                                                                   =========
     Effect of dilutive securities:
       Class A convertible preferred stock.....................          193           1,311
                                                                     -------         -------
     Diluted EPS-income available to common stockholders.......      $ 8,584          24,972       $  343.73
                                                                     =======         =======       =========

Three months ended September 30, 1997:
     Basic EPS-income available to common stockholders.........      $ 7,285          23,661       $  307.87
                                                                                                   =========
     Effect of dilutive securities:
       Class A convertible preferred stock.....................          192           1,650
                                                                     -------         -------
     Diluted EPS-income available to common stockholders.......      $ 7,477          25,311       $  295.45
                                                                     =======         =======       =========


Nine months ended September 30, 1998:
     Basic EPS-income available to common stockholders.........      $22,305          23,661       $  942.70
                                                                                                   =========
     Effect of dilutive securities:
       Class A convertible preferred stock.....................          513           1,389
                                                                     -------         -------
     Diluted EPS-income available to common stockholders.......      $22,818          25,050       $  910.91



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

Nine months ended September 30, 1997:
     Basic EPS-income available to common stockholders.........      $20,496          23,661       $  866.21
                                                                                                   =========
     Effect of dilutive securities:
       Class A convertible preferred stock.....................          513           1,650
                                                                     -------         -------
     Diluted EPS-income available to common stockholders.......      $21,009          25,311       $  830.16
                                                                     =======         =======       =========
</TABLE>