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 June 30, 1999

                                       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)


--------------------------------------------------------------------------------
(Former  name,  former  address,  and former  fiscal year, if changed since last
report)

         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                                   July 31, 1999
               -----                                   -------------

   Common Stock, $250.00 par value                         23,661




<PAGE>




                                FIRST BANKS, INC.

                                      INDEX
<TABLE>
<CAPTION>


                                                                                                        Page

PART I            FINANCIAL INFORMATION


     Item 1.      Financial Statements:
                  Consolidated Balance Sheets as of June 30, 1999
<S>                                                                                                     <C>
                      and December 31, 1998......................................................       -1-
                  Consolidated Statements of Income for the three and six
                      months ended June 30, 1999 and 1998........................................       -3-
                  Consolidated Statements of Changes in Stockholders' Equity and
                      Comprehensive  Income  for the six  months  ended June 30,
                      1999 and 1998 and the six months ended
                      December 31, 1998..........................................................       -4-
                  Consolidated Statements of Cash Flows for the six months
                      ended June 30, 1999 and 1998...............................................       -5-
                  Notes to Consolidated Financial Statements.....................................       -6-

     Item 2.      Management's Discussion and Analysis of Financial
                    Condition and Results of Operations..........................................      -12-


PART II.          OTHER INFORMATION

     Item 6.      Exhibits and Reports on Form 8-K...............................................      -24-


SIGNATURES.......................................................................................      -25-



</TABLE>





<PAGE>




                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

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

<TABLE>
<CAPTION>



                                                                                June 30,          December 31,
                                                                                  1999                1998
                                                                                  ----                ----


                                   ASSETS
                                   ------

Cash and cash equivalents:
<S>                                                                          <C>                     <C>
   Cash and due from banks...............................................    $   138,686             174,329
   Interest-bearing deposits with other financial
     institutions with maturities of three months or less................          2,232               3,733
   Federal funds sold....................................................         28,100              36,700
                                                                             -----------          ----------
         Total cash and cash equivalents.................................        169,018             214,762
                                                                             -----------          ----------

Investment securities:
   Trading, at fair value................................................             --               3,425
   Available for sale, at fair value.....................................        374,978             509,695
   Held to maturity, at amortized cost (fair value of
     $22,373 and $22,568 at June 30, 1999 and
     December 31,1998, respectively).....................................         22,136              21,676
                                                                             -----------          ----------
         Total investment securities.....................................        397,114             534,796
                                                                             -----------          ----------

Loans:
   Commercial, financial and agricultural................................      1,018,343             920,007
   Real estate construction and development..............................        789,582             720,910
   Real estate mortgage..................................................      1,637,026           1,529,177
   Consumer and installment .............................................        266,904             282,549
   Loans held for sale...................................................         62,900             135,619
                                                                             -----------          ----------
         Total loans ....................................................      3,774,755           3,588,262
   Unearned discount.....................................................         (6,661)             (8,157)
   Allowance for possible loan losses....................................        (64,977)            (60,970)
                                                                             -----------          ----------
         Net loans.......................................................      3,703,117           3,519,135
                                                                             -----------          ----------

Bank premises and equipment, net of accumulated
   depreciation and amortization.........................................         70,271              63,848
Intangibles associated with the purchase of subsidiaries.................         43,844              36,534
Mortgage servicing rights, net of amortization...........................          9,567               9,825
Accrued interest receivable..............................................         31,722              28,465
Other real estate........................................................          2,545               3,709
Deferred income taxes....................................................         50,437              46,848
Other assets.............................................................         95,234              96,888
                                                                             -----------          ----------
         Total assets....................................................    $ 4,572,869           4,554,810
                                                                             ===========          ==========

</TABLE>




<PAGE>


                                FIRST BANKS, INC.
                     Consolidated Balance Sheets (unaudited)
             (dollars expressed in thousands, except per share data)
                                   (continued)
<TABLE>
<CAPTION>
                                                                             June 30,               December 31,
                                                                               1999                    1998
                                                                               ----                    ----


                               LIABILITIES
                               -----------

Deposits:
    Demand:
<S>                                                                        <C>                         <C>
      Non-interest-bearing............................................     $   549,408                 561,383
      Interest-bearing................................................         354,440                 377,435
    Savings...........................................................       1,232,519               1,198,567
    Time:
      Time deposits of $100 or more...................................         255,292                 219,996
      Other time deposits.............................................       1,598,831               1,582,604
                                                                           -----------             -----------
         Total deposits...............................................       3,990,490               3,939,985
Other borrowings......................................................          77,855                 121,331
Notes payable.........................................................          48,000                  50,048
Accrued interest payable..............................................           9,872                   5,817
Deferred income taxes.................................................          10,866                  10,920
Accrued and other liabilities.........................................          19,235                  20,652
Minority interest in subsidiary.......................................          11,845                  15,251
                                                                           -----------             -----------
         Total liabilities............................................       4,168,163               4,164,004
                                                                           -----------             -----------

Guaranteed preferred beneficial interests in:
    First Banks, Inc. subordinated debenture...........................         83,341                  83,288
    First Banks America, Inc. subordinated debenture...................         44,186                  44,155
                                                                           -----------             -----------
         Total guaranteed preferred beneficial interests in
           subordinated debentures....................................         127,527                 127,443
                                                                           -----------             -----------

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

Preferred stock:
    $1.00 par value, 5,000,000 shares authorized; no shares issued
       and outstanding at June 30, 1999 and December 31, 1998.........              --                      --
    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.......................................................           3,010                     780
Retained earnings.....................................................         248,369                 231,867
Accumulated other comprehensive income................................           6,822                  11,738
                                                                           -----------             -----------
         Total stockholders' equity...................................         277,179                 263,363
                                                                           -----------             -----------
         Total liabilities and stockholders' equity...................     $ 4,572,869               4,554,810
                                                                           ===========             ===========
</TABLE>


The  accompanying  notes  are an  integral  part of the  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       Six months ended
                                                                                           June 30,                June 30,
                                                                                           --------                --------
                                                                                      1999         1998          1999      1998
                                                                                      ----         ----          ----      ----

Interest income:
<S>                                                                                  <C>           <C>        <C>        <C>
     Interest and fees on loans....................................................  $ 78,964      69,432     153,639    136,170
     Investment securities.........................................................     6,445      10,654      14,107     21,710
     Federal funds sold and other..................................................       232         854         455      1,990
                                                                                     --------     -------    --------   --------
           Total interest income...................................................    85,641      80,940     168,201    159,870
                                                                                     --------     -------    --------   --------
Interest expense:
     Deposits:
       Interest-bearing demand.....................................................     1,182       1,329       2,296      2,803
       Savings.....................................................................    11,085      10,232      22,014     19,785
       Time deposits of $100 or more...............................................     2,691       3,331       5,466      6,375
       Other time deposits.........................................................    19,831      23,715      40,961     47,732
     Interest rate exchange agreements, net........................................     1,305         991       2,588      1,980
     Notes payable and other borrowings............................................     2,056       1,523       3,791      3,047
                                                                                     --------     -------    --------   --------
           Total interest expense..................................................    38,150      41,121      77,116     81,722
                                                                                     --------     -------    --------   --------
           Net interest income.....................................................    47,491      39,819      91,085     78,148
                                                                                     --------     -------    --------   --------
Provision for possible loan losses.................................................     3,373       1,850       5,863      3,950
                                                                                     --------     -------    --------   --------
           Net interest income after provision for possible loan losses............    44,118      37,969      85,222     74,198
                                                                                     --------     -------    --------   --------
Noninterest income:
     Service charges on deposit accounts and customer service fees.................     4,475       3,514       8,357      6,889
     Credit card fees..............................................................       301         750         327      1,612
     Loan servicing fees, net......................................................        62         404         283        703
     Gain on mortgage loans sold and held for sale.................................     1,502         863       3,834      1,901
     Net gain on sales of available-for-sale securities............................       115         164         792        256
     Net gain (loss) on sales of trading securities................................        --         586        (303)       644
     Other.........................................................................     7,060       2,076       9,828      4,146
                                                                                     --------     -------    --------   --------
           Total noninterest income................................................    13,515       8,357      23,118     16,151
                                                                                     --------     -------    --------   --------
Noninterest expense:
     Salaries and employee benefits................................................    15,569      14,391      30,071     27,270
     Occupancy, net of rental income...............................................     2,959       2,717       5,842      5,140
     Furniture and equipment.......................................................     2,098       2,039       3,999      3,626
     Federal Deposit Insurance Corporation premiums................................       325         242         657        617
     Postage, printing and supplies................................................     1,011       1,543       2,153      2,949
     Data processing fees..........................................................     4,687       2,988       9,223      5,954
     Legal, examination and professional fees......................................     1,922       1,274       3,242      2,330
     Credit card...................................................................       199         770         367      1,562
     Communications................................................................       582         766       1,263      1,492
     Advertising and business development..........................................       888       1,791       1,547      2,656
     Losses and expenses on other real estate, net of gains........................        39         281         (14)       661
     Guaranteed preferred debentures...............................................     3,014       2,021       6,028      4,042
     Other.........................................................................     3,955       4,214       8,357      8,797
                                                                                     --------     -------    --------   --------
           Total noninterest expense...............................................    37,248      35,037      72,735     67,096
                                                                                     --------     -------    --------   --------
           Income before provision for income taxes and minority interest
              in income of subsidiary..............................................    20,385      11,289      35,605     23,253
Provision for income taxes.........................................................     7,465       4,134      13,103      8,390
                                                                                     --------     -------    --------   --------
           Income before minority interest in income of subsidiary.................    12,920       7,155      22,502     14,863
Minority interest in income of subsidiary..........................................       361         279         672        621
                                                                                     --------     -------    --------   --------
           Net income..............................................................    12,559       6,876      21,830     14,242
Preferred stock dividends..........................................................       132         131         328        328
                                                                                     --------     -------    --------   --------
           Net income available to common stockholders.............................  $ 12,427       6,745      21,502     13,914
                                                                                     ========     =======    ========   ========
Earnings per share:
     Basic.........................................................................  $ 525.23      285.02      908.75     588.03
     Diluted.......................................................................    505.15      274.34      877.36     568.22
                                                                                     ========     =======    ========   ========
Weighted average shares of common stock outstanding................................    23,661      23,661      23,661     23,661
                                                                                     ========     =======    ========   ========
</TABLE>

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

<PAGE>
                                FIRST BANKS, INC.
           Consolidated Statements of Changes in Stockholders' Equity
                      and Comprehensive Income (unaudited)
                     Six months ended June 30, 1999 and 1998
                     and six months ended December 31, 1998
             (dollars expressed in thousands, except per share data)

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

<S>                                                         <C>         <C>      <C>     <C>     <C>     <C>      <C>    <C>
Consolidated balances, January 1, 1998....................  $ 12,822    241      5,915   3,978          199,143   9,438  231,537
Six months ended June 30, 1998:
    Comprehensive income:
       Net income.........................................       --      --        --       --   14,242  14,242    --     14,242
       Other comprehensive income, net of tax  -
         Unrealized gains on securities, net of
           reclassification adjustment (1)................       --      --        --       --    1,023      --   1,023    1,023
                                                                                                -------
       Comprehensive income...............................                                       15,265
                                                                                                =======
    Class A preferred stock dividends, $0.50 per share....       --      --        --       --             (321)     --     (321)
    Class B preferred stock dividends, $0.04 per share....       --      --        --       --               (7)     --       (7)
    Effect of capital stock transactions of
       majority-owned subsidiary..........................       --      --        --   (1,999)              --      --   (1,999)
                                                            --------    ---      -----  ------          -------  ------  -------
Consolidated balances, June 30, 1998......................    12,822    241      5,915   1,979          213,057  10,461  244,475
Six months ended December 31, 1998:
    Comprehensive income:
       Net income.........................................       --      --        --       --   19,268  19,268      --   19,268
       Other comprehensive income, net of tax  -
         Unrealized gains on securities, net of
           reclassification adjustment (1)................       --      --        --       --    1,277      --   1,277    1,277
                                                                                                -------
       Comprehensive income...............................                                       20,545
                                                                                                =======
    Class A preferred stock dividends, $0.70 per share....       --      --        --       --             (448)     --     (448)
    Class B preferred stock dividends, $0.07 per share....       --      --        --       --              (10)     --      (10)
    Effect of capital stock transactions of
       majority-owned subsidiary..........................       --      --        --   (1,199)              --      --   (1,199)
                                                            --------    ---      -----  ------          -------  ------  -------
Consolidated balances, December 31, 1998..................    12,822    241      5,915     780          231,867  11,738  263,363
Six months ended June 30, 1999:
     Comprehensive income:
       Net income.........................................       --      --        --       --   21,830  21,830      --   21,830
       Other comprehensive income, net of tax  -
         Unrealized losses on securities, net of
           reclassification adjustment (1) ...............       --      --        --       --   (4,916)     --  (4,916)  (4,916)
                                                                                                -------
       Comprehensive income...............................                                       16,914
                                                                                                =======
    Class A preferred stock dividends, $0.50 per share....       --      --        --       --             (321)     --     (321)
    Class B preferred stock dividends, $0.04 per share....       --      --        --       --               (7)     --       (7)
    Effect of capital stock transactions of
       majority-owned subsidiary..........................       --      --        --   (3,040)              --      --   (3,040)
    Reclassification of retained earnings.................       --      --        --    5,000           (5,000)     --       --
    Reduction of valuation reserve........................       --      --        --      270               --      --      270
                                                            -------     ---     -----   ------          -------   -----  -------
Consolidated balances, June 30, 1999......................  $12,822     241     5,915    3,010          248,369   6,822  277,179
                                                            =======     ===     =====   ======          =======   =====  =======
</TABLE>

 (1)  Disclosure of reclassification adjustment:
<TABLE>
<CAPTION>
                                                                                         Six months ended    Six months ended
                                                                                             June 30,          December 31,
                                                                                        -----------------    ----------------
                                                                                           1999    1998            1998
                                                                                           ----    ----            ----

<S>                                                                                   <C>          <C>            <C>
     Unrealized gains (losses) arising during the period............................  $  (4,401)   1,189          2,064
     Less: reclassification adjustment for gains included in net income.............        515      166            787
                                                                                         ------   ------          -----
     Unrealized gains (losses) on securities........................................  $  (4,916)   1,023          1,277
                                                                                         ======   ======          =====
</TABLE>

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


<PAGE>

                                FIRST BANKS, INC.
                Consolidated Statements of Cash Flows (unaudited)
                        (dollars expressed in thousands)

<TABLE>
<CAPTION>
                                                                                        Six months ended
                                                                                            June 30,
                                                                                     ----------------------
                                                                                     1999              1998
                                                                                     ----              ----

Cash flows from operating activities:
<S>                                                                              <C>                  <C>
     Net income.............................................................     $  21,830            14,242
     Adjustments to reconcile net income to net cash provided
       by (used in) operating activities:
         Depreciation and amortization of bank premises
           and equipment....................................................         3,293             2,519
         Amortization, net of accretion.....................................         6,379             5,210
         Originations and purchases of loans held for sale..................      (297,565)         (239,632)
         Proceeds from the sale of loans held for sale......................       352,434           195,617
         Provision for possible loan losses.................................         5,863             3,950
         Provision for income taxes.........................................        13,103             8,390
         Payments of income taxes...........................................       (11,547)           (9,862)
         (Increase) decrease in accrued interest receivable ................        (2,462)              801
         Net decrease (increase) in trading securities......................         3,425            (1,392)
         Interest accrued on liabilities....................................        77,116            81,722
         Payments of interest on liabilities................................       (73,901)          (82,068)
         Gain on sales of branch deposits...................................        (4,473)               --
         Net gain on sales of available-for-sale securities.................          (792)             (256)
         Other operating activities, net....................................           874           (10,420)
         Minority interest in income of subsidiary..........................           672               621
                                                                                 ---------          --------
              Net cash provided by (used in) operating activities...........        94,249           (30,558)
                                                                                 ---------          --------
Cash flows from investing activities:
     Cash (paid) received for acquired entities, net of cash and cash
       equivalents received (paid)..........................................       (17,245)           16,895
     Proceeds from sales of investment securities available for sale........        88,714            46,558
     Maturities of investment securities available for sale.................        85,650           226,922
     Maturities of investment securities held to maturity...................         1,503             1,074
     Purchases of investment securities available for sale..................       (15,029)         (139,067)
     Purchases of investment securities held to maturity....................        (1,982)           (1,091)
     Net increase in loans..................................................      (120,721)         (161,963)
     Recoveries of loans previously charged-off ............................         4,206             4,385
     Purchases of bank premises and equipment...............................        (8,904)           (9,811)
     Other investing activities.............................................        (3,668)           (2,931)
                                                                                 ---------          --------
              Net cash provided by (used in) investing activities...........        12,524           (19,029)
                                                                                 ---------          --------
Cash flows from financing activities:
     (Decrease) increase in demand and savings deposits.....................       (83,907)           73,905
     Increase (decrease) in time deposits...................................        26,221           (25,389)
     Decrease in Federal Home Loan Bank advances............................       (50,000)           (1,514)
     Increase in securities sold under agreements to repurchase.............         6,524            10,447
     Decrease in notes payable..............................................        (2,048)           (7,637)
     Payment of preferred stock dividends...................................          (328)             (328)
     Proceeds from sales of branch deposits.................................       (48,979)               --
                                                                                 ---------          --------
              Net cash (used in) provided by financing activities ..........      (152,517)           49,484
                                                                                 ---------          --------
              Net decrease in cash and cash equivalents ....................       (45,744)             (103)
Cash and cash equivalents, beginning of period .............................       214,762           168,480
                                                                                 ---------         ---------
Cash and cash equivalents, end of period....................................     $ 169,018           168,377
                                                                                 =========         =========

Noncash investing and financing activities:
     Loans held for sale transferred to loans...............................     $   9,206                --
     Loans transferred to other real estate.................................         1,189             1,808
                                                                                 =========         =========
</TABLE>

The  accompanying  notes  are an  integral  part of the  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 or the Company) are unaudited and should be read
in conjunction with the consolidated  financial statements contained in the 1998
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 six month period ended
June 30, 1999 are not necessarily indicative of the results that may be expected
for any other interim period or for the year ending December 31, 1999.

         The  consolidated  financial  statements  include the accounts of First
Banks,  Inc. and its  subsidiaries,  net of minority  interest.  All significant
intercompany   accounts  and   transactions   have  been   eliminated.   Certain
reclassifications  of 1998  amounts  have  been  made to  conform  with the 1999
presentation.

     First Banks  operates  through its  subsidiary  bank holding  companies and
financial  institutions (collectively referred  to as  the  Subsidiary Banks) as
follows:

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

         The  Subsidiary  Banks  are  wholly  owned by their  respective  parent
companies  except FBA,  which was 76.84%  owned by First  Banks at December  31,
1998. On February 17, 1999, First Banks completed its purchase of 314,848 shares
of FBA common stock, pursuant to a tender offer to purchase up to 400,000 shares
of FBA common stock. This tender offer increased First Banks' ownership interest
in FBA to 82.34% of the outstanding voting stock of FBA. At June 30, 1999, First
Banks' ownership interest in FBA was 82.56%.

 (2)     Acquisitions and Divestitures

         On March 4, 1999,  FBA  completed  its  acquisition  of Redwood and its
wholly owned subsidiary,  Redwood Bank, for cash consideration of $26.0 million.
The acquisition  was accounted for using the purchase method of accounting.  The
excess  of the cost  over the fair  value of the net  assets  acquired  was $9.5
million and is being  amortized over 15 years.  The  acquisition was funded from
available  proceeds from the sale of the 8.50% Guaranteed  Preferred  Beneficial
Interest in First Banks America, Inc.  Subordinated  Debenture completed in July
1998.  Redwood is headquartered  in San Francisco,  California and operates four
banking  locations in the San Francisco Bay area.  Redwood had $183.9 million in
total assets,  $134.4 million in loans, net of unearned discount,  $32.4 million
in investment securities and $162.9 million in deposits at the acquisition date.



<PAGE>


         First  Banks,  Century  Holding  Corporation  (CHC)  and  Century  Bank
executed a stock purchase  agreement  (Agreement) on May 7, 1999,  providing for
the acquisition of Century Bank, Beverly Hills, California. Under the Agreement,
First Banks will  purchase  from CHC all of the issued and  outstanding  capital
stock of Century Bank for an estimated purchase price of $31.5 million.  Century
Bank operates six commercial  banking  locations in Beverly Hills,  Los Angeles,
Santa Monica, Marina del Rey, Encino and San Francisco,  California. At June 30,
1999,  Century Bank had $161.3 million in total assets,  $93.8 million in loans,
net of unearned  discount,  $27.6  million in investment  securities  and $127.2
million in deposits.  First Banks expects the  transaction,  which is subject to
regulatory approvals, to be completed by the end of the third quarter of 1999.

         In May 1999, FB&T and Brentwood Bank of California  (Brentwood) entered
into a branch  purchase and assumption  agreement  providing for the purchase of
certain assets and the assumption of deposits of approximately $16.3 million and
certain liabilities of Brentwood's Malibu, California branch office. First Banks
expects  the  transaction,  which is  subject  to  regulatory  approvals,  to be
completed  by the end of the third  quarter  of 1999.  In March and April  1999,
First Bank completed its divestiture of seven branch  facilities in the northern
and central Illinois market areas,  resulting in a reduction of the deposit base
of approximately $54.8 million.

 (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.  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  First  Banks and the  Subsidiary  Banks to  maintain  certain
minimum ratios.  First Banks and the Subsidiary Banks are required to maintain a
minimum risk-based capital to risk-weighted assets ratio of 8.00%, with at least
4.00% being "Tier 1" capital (as defined in the  regulations).  In  addition,  a
minimum  leverage  ratio  (Tier 1 capital  to  average  assets) of 3.00% 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 10.00%,  a Tier 1
risk-weighted  asset ratio of at least 6.00%,  and a leverage  ratio of at least
5.00%. As of March 31, 1999, the date of the most recent notification from First
Banks'  primary  regulator,  the  Subsidiary  Banks  were  categorized  as  well
capitalized  under  the  regulatory  framework  for  Prompt  Corrective  Action.
Management  believes,  as of June 30, 1999, First Banks and the Subsidiary Banks
were well capitalized.

         At June 30, 1999 and December 31, 1998, First Banks' and the Subsidiary
Banks' capital ratios were as follows:
<TABLE>
<CAPTION>

                                                     Risk based capital ratios
                                              ----------------------------------------
                                                   Total                     Tier 1                Leverage Ratio
                                                   -----                     ------                --------------
                                              1999       1998           1999      1998              1999    1998
                                              ----       ----           ----      ----              ----    ----

<S>                                          <C>        <C>             <C>       <C>              <C>      <C>
         First Banks......................   10.29%     10.28%          7.93%     9.03%            6.99%    7.77%
         First Bank.......................   10.54      10.01           9.28      8.75             7.95     7.46
         FB&T.............................   10.26      10.39           9.00      9.13             7.96     7.60
         FB Texas.........................   11.81      11.37          10.56     10.11             9.72     9.15
         FB California....................   11.11      10.63           9.84      9.37             9.28     8.34
         Redwood Bank (1).................   11.66         --          10.72        --             9.50       --

         ----------------
         (1) Redwood Bank was acquired by FBA on March 4, 1999.
</TABLE>


<PAGE>


(4)      Earnings Per Common Share

         The following is a reconciliation of the numerators and denominators of
the basic and diluted EPS computations for the periods indicated:
<TABLE>
<CAPTION>

                                                                        Income         Shares         Per share
                                                                      (numerator)   (denominator)      amount
                                                                      -----------   -------------      ------
                                                              (dollars expressed  in thousands, except per share data)

         Three months ended June 30, 1999:
<S>                                                                    <C>               <C>         <C>
           Basic EPS - income available to common stockholders....     $  12,427         23,661      $  525.23
                                                                                                     =========
           Effect of dilutive securities:
              Class A convertible preferred stock.................           128          1,194
                                                                       ---------       --------
           Diluted EPS - income available to common stockholders..     $  12,555         24,855      $  505.15
                                                                       =========       ========      =========

         Three months ended June 30, 1998:
           Basic EPS - income available to common stockholders....     $   6,745         23,661      $  285.02
                                                                                                     =========
           Effect of dilutive securities:
              Class A convertible preferred stock.................           128          1,389
                                                                       ---------       --------
           Diluted EPS - income available to common stockholders..     $   6,873         25,050      $  274.34
                                                                       =========       ========      =========

         Six months ended June 30, 1999:
           Basic EPS - income available to common stockholders....     $  21,502         23,661      $  908.75
                                                                                                     =========
           Effect of dilutive securities:
              Class A convertible preferred stock.................           321          1,212
                                                                       ---------       --------
           Diluted EPS - income available to common stockholders..     $  21,823         24,873      $  877.36
                                                                       =========       ========      =========

         Six months ended June 30, 1998:
           Basic EPS - income available to common stockholders....     $  13,914         23,661      $  588.03
                                                                                                     =========
           Effect of dilutive securities:
              Class A convertible preferred stock.................           321          1,389
                                                                       ---------       --------
           Diluted EPS - income available to common stockholders..     $  14,235         25,050      $  568.22
                                                                       =========       ========      =========
</TABLE>

(5)      Business Segment Results

         First Banks' business  segments are First Bank, FB California,  Redwood
Bank, FB Texas,  FB&T and First Bank Mortgage  (FBM).  The  reportable  business
segments are  consistent  with the  management  structure of First Banks and the
internal reporting system that monitors performance.

         Through the  respective  branch  networks,  First Bank, FB  California,
Redwood  Bank, FB Texas and FB&T provide  similar  products and services in four
defined  geographic  areas.  The products and services  offered  include a broad
range of commercial and personal  banking  services,  including  certificates of
deposit,  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 and  agricultural,
real estate  construction  and  development,  commercial  and  residential  real
estate,  consumer and  installment,  student and Small  Business  Administration
loans.  Other financial  services  include  mortgage  banking,  credit and debit
cards, discount brokerage,  credit-related insurance, automatic teller machines,
telephone account access, safe deposit boxes, trust and private banking services
and cash management  services.  The revenues  generated by each business segment
consist  primarily of interest  income,  generated  from the loan and investment
security  portfolios,  and service charges and fees,  generated from the deposit
products and services. The geographic areas include Missouri and Illinois (First
Bank),  southern  California  (FB&T),  northern  California  (FB  California and
Redwood Bank) and Houston,  Dallas,  Irving and McKinney,  Texas (FB Texas). The
products and services are offered to customers primarily within their respective
geographic  areas,  with the exception of loan  participations  executed between
these operating segments of First Banks. There are no foreign operations.


<PAGE>


         FBM conducts  the  mortgage  banking  activities  of First  Banks.  The
mortgage banking activities consist primarily of the origination and purchase of
conforming and nonconforming  residential real estate loans, which are generally
sold into the  secondary  market.  The  related  mortgage  servicing  rights are
generally maintained for conforming loans while the nonconforming loans are sold
on a servicing  released basis. FBM's revenues include the interest earned while
loans are held pending sale,  net gains on the sale of loans,  and mortgage loan
servicing  fees earned  from its loan  servicing  portfolio.  The  products  and
services are offered to customers  primarily within First Banks' four geographic
areas.  FBM  also  services  certain  residential  real  estate  loans  for  the
Subsidiary Banks for which it receives loan servicing fees.

         The  business  segment  results  are  summarized  as  follows  and  are
consistent with First Banks' internal  reporting system which is consistent,  in
all  material  respects,  with  generally  accepted  accounting  principles  and
practices  predominant  in the  banking and  mortgage  banking  industries.  The
balance  sheet  information  is  presented  as of June 30, 1999 and December 31,
1998, and the statement of income information is presented for the three and six
months ended June 30, 1999 and 1998, respectively.  The business segment results
include Redwood Bank, which was acquired by FBA on March 4, 1999, for the period
subsequent to the acquisition date.


<PAGE>
<TABLE>
<CAPTION>
                                              First Bank            FB California          Redwood Bank (1)          FB Texas
                                       ----------------------   ----------------------   --------------------  ---------------------
                                       June 30,   December 31,  June 30,   December 31,  June 30, December 31, June 30, December 31,
                                         1999         1998       1999         1998        1999        1998      1999        1998
                                         ----         ----       ----         ----        ----        ----      ----        ----
                                                                        (dollars expressed in thousands)

Balance sheet information:
<S>                                    <C>            <C>         <C>         <C>          <C>      <C>           <C>        <C>
Investment securities................. $  188,651     252,165     29,566      53,449       19,865       --      33,777     59,914
Loans, net of unearned discount.......  2,422,082   2,354,937    331,707     314,977      142,409       --     217,908    201,426
Total assets..........................  2,858,607   2,869,648    396,656     410,110      190,879       --     277,114    300,984
Deposits..............................  2,584,279   2,623,157    349,254     363,422      163,688       --     238,118    264,425
Stockholders' equity.................. $  252,321     236,010     43,709      42,825       25,870       --      30,091     30,249
                                       ==========   =========   ========    ========    =========   ======    ========   ========

                                              First Bank              FB California        Redwood Bank (1)         FB Texas
                                          ---------------------    ------------------     ------------------   ------------------
                                          Three months ended       Three months ended     Three months ended   Three months ended
                                               June 30,                 June 30,               June 30,             June 30,
                                         ----------------------     ------------------    --------------------  ------------------
                                          1999          1998        1999        1998        1999        1998     1999       1998
                                          ----          ----        ----        ----        ----        ----     ----       ----
                                                                        (dollars expressed in thousands)
Income statement information:

Interest income....................... $   52,683      52,678       8,132      8,117        3,750         --     5,481      5,286
Interest expense......................     24,351      27,025       2,996      3,436        1,393         --     2,163      2,132
                                       ----------   ---------     -------     ------        -----      -----    ------     ------
   Net interest income................     28,332      25,653       5,136      4,681        2,357         --     3,318      3,154
Provision for possible loan losses....      2,600       1,500          20        150           73         --        30         50
                                       ----------   ---------     -------     ------        -----      -----    ------     ------
   Net interest income after provision
     for possible loan losses.........     25,732      24,153       5,116      4,531        2,284         --     3,288      3,104
                                       ----------   ---------     -------     ------        -----      -----    ------     ------
Noninterest income (2)................      9,722       5,975         815        616          177         --       513        373
Noninterest expense (3)...............     17,130      18,330       3,926      4,077        1,469         --     2,231      2,185
                                       ----------   ---------     -------     ------        -----      -----    ------     ------
   Income before provision for income
     taxes and minority interest in
     income of subsidiary.............     18,324      11,798       2,005      1,070          992         --     1,570      1,292
Provision for income taxes............      6,035       3,977         866        432          480         --       541        444
                                       ----------   ---------     -------     ------        -----      -----    ------     ------
   Income before minority interest
     in income of subsidiary..........     12,289       7,821       1,139        638          512         --     1,029        848
Minority interest in income of
   subsidiary......................            --          --         --          --           --         --        --         --
                                       ----------   ---------     -------     ------        -----     ------     ------    ------

   Net income......................... $   12,289       7,821       1,139        638          512         --     1,029        848
                                       ==========   =========     =======     ======        =====     ======    ======     ======

                                              First Bank              FB California        Redwood Bank (1)         FB Texas
                                        ----------------------     -----------------       ----------------     ----------------
                                           Six months ended         Six months ended       Six months ended     Six months ended
                                               June 30,                 June 30,               June 30,             June 30,
                                        ----------------------     ------------------    --------------------  ------------------
                                          1999          1998        1999        1998        1999        1998     1999       1998
                                          ----          ----        ----        ----        ----        ----     ----       ----
                                                                        (dollars expressed in thousands)
Income statement information:

Interest income....................... $  104,154     104,985      16,132     15,874        4,930         --    11,023     10,523
Interest expense......................     49,678      53,878       6,075      6,752        1,835         --     4,325      4,232
                                       ----------    --------     -------     ------        -----      -----    ------     ------
   Net interest income................     54,476      51,107      10,057      9,122        3,095         --     6,698      6,291
Provision for possible loan losses....      4,700       3,100          80        300           73         --        60        200
                                       ----------    --------     -------     ------        -----      -----    ------     ------
   Net interest income after provision
     for possible loan losses.........     49,776      48,007       9,977      8,822        3,022         --     6,638      6,091
                                       ----------    --------     -------     ------        -----      -----    ------     ------
Noninterest income (2)................     14,416      10,024       1,424      1,329          203         --     1,056        752
Noninterest expense (3)...............     33,835      35,727       7,625      7,807        1,907         --     4,510      4,388
                                       ----------   ---------     -------     ------        -----      -----    ------     ------
   Income before provision for income
     taxes and minority interest in
     income of subsidiary.............     30,357      22,304       3,776      2,344        1,318         --     3,184      2,455
Provision for income taxes............     10,156       7,537       1,653        967          644         --     1,096        854
                                       ----------   ---------     -------     ------        -----      -----    ------     ------
   Income before minority interest
     in income of subsidiary..........     20,201      14,767       2,123      1,377          674         --     2,088      1,601
Minority interest in income of
   subsidiary.......................           --          --          --         --           --         --        --         --
                                        ---------     -------      ------       ----        -----     ------     ------    ------

   Net income......................... $   20,201      14,767       2,123      1,377          674         --     2,088      1,601
                                       ==========   =========     =======     ======        =====      =====    ======     ======
</TABLE>
<PAGE>

     ---------------
(1)  Redwood Bank was acquired by FBA on March 4, 1999.
(2)  FBM  includes  intercompany  loan  servicing fees of $158,000  and $327,000
     and $272,000 and $596,000 for the three and six months  ended June 30, 1999
     and 1998, respectively.
(3)  Corporate and other includes $2.0 million and $3.9 million and $1.3 million
     and  $2.6  million  of  guaranteed   preferred  debenture  expense,   after
     applicable income tax benefit of $1.0 million and $2.1 million and $700,000
     and $1.4 million for the three and six months ended June 30, 1999 and 1998,
     respectively.


<PAGE>
<TABLE>
<CAPTION>
                                                                    Corporate, other and
                FB&T                        FBM (2)            intercompany reclassifications (3)      Consolidated totals
     ------------------------       ----------------------     ----------------------------------  ---------------------------

     June 30,      December 31,     June 30,  December 31,        June 30,     December 31,        June 30,      December 31,
      1999             1998           1999         1998             1999           1998              1999            1998
      ----             ----           ----         ----             ----           ----              ----            ----
                                              (dollars expressed in thousands)

<S>     <C>           <C>            <C>            <C>            <C>             <C>             <C>              <C>
        91,870        134,203        11,865         12,199         21,520          22,866          397,114          534,796
       587,181        573,562        67,209        135,619           (402)           (416)       3,768,094        3,580,105
       751,028        793,217        89,933        154,952          8,652          25,899        4,572,869        4,554,810
       646,464        701,406        25,358         35,873        (16,671)        (48,298)       3,990,490        3,939,985
        73,860         75,165         3,529          7,663       (152,201)       (128,549)         277,179          263,363
      ========       ========      ========       ========       ========        ========       ==========         ========

                                                                      Corporate, other and
               FB&T                            FBM               intercompany reclassifications      Consolidated totals
     ------------------------        --------------------        ------------------------------   -------------------------
        Three months ended             Three months ended            Three months ended               Three months ended
              June 30,                      June 30,                      June 30,                         June 30,
     ------------------------        ---------------------       ------------------------------   -------------------------
     1999               1998         1999            1998           1999            1998           1999             1998
     ----               ----         ----            ----           ----            ----           ----             ----
                                              (dollars expressed in thousands)

    14,014             12,979         1,757           2,045          (176)           (165)          85,641           80,940
     5,790              6,473         1,158           1,352           299             703           38,150           41,121
   -------           --------      --------       ---------      --------         -------         --------          -------
     8,224              6,506           599             693          (475)           (868)          47,491           39,819
       650                150            --              --            --              --            3,373            1,850
   -------           --------      --------       ---------      --------         -------         --------          -------

     7,574              6,356           599             693          (475)           (868)          44,118           37,969
   -------           --------      --------       ---------      --------         -------         --------          -------
     1,121              1,077         1,327           1,548          (160)         (1,232)          13,515            8,357
     6,673              5,674         1,972           2,037         3,847           2,734           37,248           35,037
   -------           --------      --------       ---------      --------         -------         --------          -------


     2,022              1,759          (46)             204        (4,482)         (4,834)          20,385           11,289
       937                721          (16)              72        (1,378)         (1,512)           7,465            4,134
   -------           --------      -------        ---------      --------         -------         --------          -------

     1,085              1,038          (30)             132        (3,104)         (3,322)          12,920            7,155
        --                 --            --              --           361             279              361              279
   -------           --------      --------       ---------      --------         -------         --------          -------
     1,085              1,038          (30)             132        (3,465)         (3,601)          12,559            6,876
   =======           ========      ========       =========      ========         =======         ========          =======

                                                                      Corporate, other and
               FB&T                            FBM               intercompany reclassifications      Consolidated totals
     ------------------------        ---------------------       ------------------------------    ------------------------
         Six months ended               Six months ended              Six months ended                 Six months ended
              June 30,                      June 30,                      June 30,                         June 30,
     ------------------------        ---------------------       ------------------------------    ----------------------
     1999               1998         1999            1998           1999            1998           1999             1998
     ----               ----         ----            ----           ----            ----           ----             ----
                                              (dollars expressed in thousands)

    28,355             25,377         3,764           3,360          (157)           (249)         168,201          159,870
    11,989             12,967         2,498           2,293           716           1,600           77,116           81,722
   -------           --------      --------       ---------      --------         -------         --------          -------
    16,366             12,410         1,266           1,067          (873)         (1,849)          91,085           78,148
       950                350            --              --            --              --            5,863            3,950
   -------           --------      --------       ---------      --------         -------         --------          -------

    15,416             12,060         1,266           1,067          (873)         (1,849)          85,222           74,198
   -------           --------      --------       ---------      --------         -------         --------          -------
     2,364              1,834         4,052           3,266          (397)         (1,054)          23,118           16,151
    13,225             10,442         4,287           3,262         7,346           5,470           72,735           67,096
   -------           --------      --------       ---------      --------         -------         --------          -------


     4,555              3,452         1,031           1,071        (8,616)         (8,373)          35,605           23,253
     2,060              1,231           361             375        (2,867)         (2,574)          13,103            8,390
   -------           --------      --------       ---------      --------         -------         --------          -------

     2,495              2,221           670             696        (5,749)         (5,799)          22,502           14,863
        --                 --            --              --           672             621              672              621
   -------           --------      --------       ---------      --------         -------         --------          -------
     2,495              2,221           670             696        (6,421)         (6,420)          21,830           14,242
   =======           ========      ========       =========      ========         =======         ========          =======

</TABLE>



<PAGE>


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

         The  discussion  set forth in  Management's  Discussion and Analysis of
Financial  Condition and Results of Operations  contains certain forward looking
statements  with respect to the financial  condition,  results of operations and
business of First Banks. These forward looking statements are subject to certain
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 the forward looking  statements herein include market conditions
as well as conditions  specifically 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  conducts  its  operations,
including  competition from banking and non-banking companies with substantially
greater resources than First Banks, some of which may offer and develop products
and  services  not  offered by First  Banks;  and the  ability of First Banks to
respond to changes in  technology,  including  effects of the Year 2000 problem.
With regard to First Banks' efforts to grow through  acquisitions,  factors that
could  affect  the  accuracy  or  completeness  of  forward  looking  statements
contained  herein  include the  potential for higher than  acceptable  operating
costs arising from the geographic  dispersion of the offices of First Banks,  as
compared  with  competitors   operating  solely  in  contiguous   markets;   the
competition  of larger  acquirers  with  greater  resources  than  First  Banks,
fluctuations  in the prices at which  acquisition  targets may be available  for
sale and in the  market  for First  Banks'  securities;  and the  potential  for
difficulty  or  unanticipated  costs in  realizing  the  benefits of  particular
acquisition transactions.  Additional factors potentially affecting First Banks'
results were  identified  in the 1998 Annual  Report on Form 10-K filed with the
Securities and Exchange Commission.

                                     General

         First Banks is a  registered  bank  holding  company,  incorporated  in
Missouri in 1978 and  headquartered in St. Louis County,  Missouri.  At June 30,
1999, First Banks had $4.6 billion in total assets; $3.8 billion in total loans,
net of unearned discount;  $4.0 billion in total deposits; and $277.2 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 and  agricultural,
real estate  construction  and  development,  commercial  and  residential  real
estate,  consumer and  installment,  student and Small  Business  Administration
loans.  Other financial  services  include  mortgage  banking,  credit and debit
cards, discount brokerage,  credit-related insurance, automatic teller machines,
telephone account access, safe deposit boxes, trust and private banking services
and cash management services.

         The following table lists the Subsidiary Banks at June 30, 1999:
<TABLE>
<CAPTION>

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

<S>                                             <C>             <C>                   <C>              <C>
First Bank..............................        90              $ 2,948,540           2,489,291        2,609,637
FB&T ...................................        21                  751,028             587,181          646,464
FBA:
     FB California......................        10                  396,656             331,707          349,254
     FB Texas...........................         6                  277,114             217,908          238,118
     Redwood:
         Redwood Bank...................         4                  190,879             142,409          163,688

</TABLE>

<PAGE>


                               Financial Condition

         First Banks' total assets  increased by $18.1  million to $4.57 billion
from $4.55  billion at June 30, 1999 and  December 31,  1998,  respectively.  As
discussed in Note 2 to the accompanying  consolidated financial statements,  the
acquisition  of Redwood  provided  assets of $183.9  million.  In addition,  net
loans,  excluding the $134.4 million of loans  acquired from Redwood,  increased
$53.6 million,  which is discussed  under  "--Lending and Credit  Management" of
this Form 10-Q.  Offsetting  this  increase was a reduction in cash and due from
banks  precipitated  by the  purchase  of Redwood  and First  Banks'  efforts to
effectively monitor non-earning assets, and a reduction in investment securities
and federal funds sold of $137.7 million and $8.6 million,  respectively,  which
provided additional sources of funds for the loan growth. Although average total
deposits  for the three and six months  ended June 30, 1999  increased by $188.1
million and $212.5 million,  respectively,  in comparison to the same periods in
1998,  total  deposits,  excluding the deposits  provided by the  acquisition of
Redwood,  decreased  by $112.4  million to $3.99  billion at June 30,  1999 from
$3.94 billion at December 31, 1998.  This decrease is primarily  attributable to
the divestiture of certain branch  facilities with a total deposit base of $54.8
million,  and to First Banks' strategy of reducing its overall  interest cost by
allowing a controlled attrition of a portion of deposits.

                              Results of Operations

Net Income

         Net income was $12.6 million,  or $505.15 per share on a diluted basis,
for the three months ended June 30, 1999,  in  comparison  to $6.9  million,  or
$274.34 per share on a diluted  basis,  for the same period in 1998.  Net income
for the six months  ended  June 30,  1999 and 1998 was $21.8  million  and $14.2
million, or $877.36 and $568.22 per share on a diluted basis, respectively.  The
earnings  improvement  is  primarily  attributable  to First  Banks'  efforts to
realign the composition of the loan portfolio  through  further  diversification
and growth; the results of FBA's acquisition of Redwood;  and the divestiture of
certain  branch  facilities.  As  previously  mentioned,  the  loan  growth  was
primarily funded through  reductions in investment  securities and federal funds
sold.

         The increased net income was partially offset by an increased provision
for possible  loan losses,  as discussed  under  "--Provision  for Possible Loan
Losses," and an increase in operating  expenses of $2.2 million and $5.6 million
for the three and six  months  ended  June 30,  1999 in  comparison  to the same
periods in 1998,  respectively.  The increased operating expenses are reflective
of: the additional cost of the preferred  securities issued by FBA in July 1998;
the  continuing  expansion of  commercial  and retail  banking  activities;  the
acquisitions of Redwood, completed on March 4, 1999, Pacific Bay Bank, completed
on February 2, 1998,  and  Republic  Bank,  completed  on  September  15,  1998;
increased  legal,   examination  and  professional   fees;  and  increased  data
processing fees primarily associated with Year 2000 activities.

Net Interest Income

         Net interest income  (expressed on a tax-equivalent  basis) improved to
$47.7 million, or 4.51% of average interest-earning assets, for the three months
ended June 30, 1999,  from $40.0 million,  or 4.07% of average  interest-earning
assets,  for the same period in 1998. For the six months ended June 30, 1999 and
1998,  net  interest  income  (expressed  on a  tax-equivalent  basis) was $91.5
million,  or 4.40%,  and $78.6 million,  or 4.06%,  or average  interest-earning
assets, respectively. The improved net interest income is primarily attributable
to the net  interest-earning  assets  provided by the  acquisitions  of Redwood,
Pacific Bay Bank and Republic Bank,  internal loan growth and a reduction in the
overall cost of  deposits.  For the three and six months ended June 30, 1999 and
1998,  loans,  on  average,  increased  by $621.5  million  and $606.1  million,
respectively.  Contributing  further to the improved net interest  income is the
effect of (a) the earnings impact of the interest rate swap  agreements  entered
into in 1998; (b) the reduction of First Bank's deposit base associated with the
divested branch facilities,  which was primarily concentrated in certificates of
deposit; and (c) a decrease in the cost of interest-bearing liabilities to 4.26%
and 4.35% from 4.81% and 4.86% for the three and six months  ended June 30, 1999
and 1998, respectively.

         Although net interest margin improved,  the yield on the loan portfolio
declined  to 8.35% and 8.36%  from  8.79% and 8.86% for the three and six months
ended June 30, 1999 and 1998,  respectively.  This reduction  primarily  results
from the overall decline in the prime lending rate experienced during the latter
part of 1998.

<PAGE>
         The improved net interest margin is further offset by the  amortization
of deferred  hedging losses.  These costs were $1.2 million and $2.5 million for
the three and six months ended June 30, 1999,  in comparison to $1.0 million and
$2.0  million  for the same  periods  in 1998,  respectively.  The  increase  is
reflective of the  liquidation of a portion of the  underlying  interest-bearing
liabilities,  primarily associated with the branch divestitures,  which resulted
in the additional recognition of a portion of the related deferred losses on the
previously terminated interest rate exchange agreements.

         The following  table sets forth,  on a  tax-equivalent  basis,  certain
information  relating to First Banks' average balance  sheets,  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 six months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
                                               Three months ended June 30,                      Six months ended June 30,
                                     ----------------------------------------------   ---------------------------------------------
                                              1999                    1998                      1999                    1998
                                      --------------------   ----------------------   ---------------------- ----------------------
                                            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(1)(2)(3)(4)...........  $3,792,234  78,991 8.35% $3,170,735 69,507 8.79%  3,708,908 153,752  8.36% $3,102,837 136,322 8.86%
   Investment securities(4)....     434,288   6,578 6.08     712,523 10,809 6.08     472,566  14,385  6.14     727,515  22,005 6.10
   Federal funds sold..........      13,137     217 6.63      58,752    806 5.50      13,995     410  5.91      68,733   1,877 5.51
   Other.......................       1,743      15 3.45       3,145     48 6.12       1,408      45  6.45       3,878     113 5.88
                                 ---------- -------       ---------- ------       ----------  ------        ---------- -------
        Total interest-earning
          assets...............   4,241,402  85,801 8.11   3,945,155 81,170 8.25   4,196,877 168,592  8.10   3,902,963 160,317 8.28
                                            -------                  ------                  -------                   -------
Nonearning assets..............     337,342                  303,401                 340,373                   298,518
                                 ----------               ----------              ----------                ----------
        Total assets...........  $4,578,744               $4,248,556              $4,537,250                $4,201,481
                                 ==========               ==========              ==========                ==========

   Liabilities and Stockholders' Equity
   ------------------------------------
Interest-bearing liabilities:
   Interest-bearing deposits:
     Interest-bearing demand
       deposits................  $  388,317   1,182 1.22% $  353,276  1,329 1.51%  $ 379,746   2,296  1.22% $  351,974   2,803 1.61%
     Savings deposits..........   1,233,559  11,085 3.60   1,031,642 10,232 3.98   1,222,916  22,014  3.63     999,149  19,785 3.99
     Time deposits of $100
       or more (3).............     211,042   2,834 5.39     230,423  3,446 6.00     212,252   5,752  5.46     220,327   6,594 6.04
     Other time deposits(3)....   1,598,543  20,916 5.25   1,707,704 24,567 5.77   1,608,657  43,130  5.41   1,719,013  49,444 5.80
                                 ---------- -------       ---------- ------       ----------  ------         ---------  ------
        Total interest-bearing
          deposits.............   3,431,461  36,017 4.21   3,323,045 39,574 4.78   3,423,571  73,192  4.31   3,290,463  78,626 4.82
   Federal funds purchased,
     repurchase agreements
     and Federal Home Loan
     Bank advances(3)..........     113,120   1,393 4.94      50,208    596 4.76      98,188   2,391  4.91      49,558   1,175 4.78
   Notes payable and other.....      49,054     740 6.05      53,185    951 7.17      49,527   1,533  6.24      53,900   1,921 7.19
                                 ---------- -------       ---------- ------       ----------  ------        ---------- -------
        Total interest-bearing
          liabilities..........   3,593,635  38,150 4.26   3,426,438 41,121 4.81   3,571,286  77,116  4.35   3,393,921  81,722 4.86
                                            -------                  ------                   ------                   -------
Noninterest-bearing liabilities:
   Demand deposits.............     534,472                  454,792                 521,461                   442,112
   Other liabilities...........     174,456                  127,397                 173,033                   128,217
                                 ----------               ----------              ----------                ----------
        Total liabilities......   4,302,563                4,008,627               4,265,780                 3,964,250
Stockholders' equity...........     276,181                  239,929                 271,470                   237,231
                                 ----------               ----------              ----------                ----------
        Total liabilities and
          stockholders' equity.  $4,578,744               $4,248,556              $4,537,250                $4,201,481
                                 ==========               ==========              ==========                ==========

Net interest income............              47,651                  40,049                   91,476                    78,595
                                            =======                  ======                   ======                   =======
Net interest margin............                     4.51%                   4.07%                     4.40%                    4.06%
                                                    ====                    ====                    ======                     ====
</TABLE>
------------
(1)  Nonaccrual  loans are  included in the average loan  amounts.
(2)  Interest income on loans  includes  loan fees.
(3)  Includes the effects of interest rate exchange agreements.
(4)  Information is presented on a  tax-equivalent  basis assuming a tax rate of
     35%.  The  tax-equivalent   adjustments  were  approximately  $160,000  and
     $391,000  and $230,000 and $447,000 for the three and six months ended June
     30, 1999 and 1998, respectively.


<PAGE>


Provision for Possible Loan Losses

         The  provision  for  possible  loan  losses was $3.4  million  and $5.9
million  for the three and six months  ended  June 30,  1999,  compared  to $1.9
million  and $4.0  million  for the same  periods  in  1998,  respectively.  The
increase in the provision for possible loan losses reflects the continued growth
and  changing  composition  of the  loan  portfolio  and an  increase  in  loans
charged-off and loans past due 90 days or more.

         First  Banks' loan loss  experience  for the three and six months ended
June 30, 1999 further  contributed to the increased  provision for possible loan
losses.  Net loan  charge-offs  were $3.6 million and $3.3 million for the three
and six months ended June 30, 1999,  in comparison  to net loan  charge-offs  of
$302,000 and net loan  recoveries of $247,000 for the same periods in 1998.  The
increase in net loan  charge-offs  is reflective  of overall  growth in the loan
portfolio,  increased risk  associated with the change in the composition of the
loan  portfolio  and  the  charge-off  of  certain  credit  relationships.   The
acquisitions  of  Redwood,  Pacific Bay Bank and  Republic  Bank  provided  $1.5
million,  $885,000 and $2.3 million in  additional  allowance  for possible loan
losses, respectively.

         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 $13.5  million and $23.1  million for the three
and six months  ended June 30,  1999,  in  comparison  to $8.4 million and $16.2
million for the same periods in 1998.  Noninterest  income consists primarily of
service charges on deposit accounts and customer service fees,  mortgage banking
revenues and other income.

         Service charges on deposit accounts and customer service fees were $4.5
million and $8.4 million for the three and six months  ended June 30,  1999,  in
comparison  to $3.5  million  and $6.9  million  for the same  periods  in 1998,
respectively.  The  increase in service  charges and  customer  service  fees is
principally  attributable to (a) increased deposit balances provided by internal
growth; (b) the acquisitions of Redwood, Pacific Bay Bank and Republic Bank; (c)
additional  products and services  available and utilized by First Banks' retail
and commercial  customer base; (d) increased fee income resulting from revisions
of customer  service charge rates effective April 1, 1999, and enhanced  control
of fee waivers;  and (e) increased  interchange income associated with automatic
teller machine  services and debit and credit cards.  As described  below,  this
increase  was  partially  offset by the  foregone  revenue  associated  with the
divestiture of certain branch  facilities in 1999, which resulted in a reduction
in First Bank's deposit base of approximately $54.8 million.

         Mortgage  banking  revenues  consist  primarily of loan servicing fees,
net, and gains on mortgage loans sold and held for sale.  Loan  servicing  fees,
net,  decreased  to $62,000 and $283,000 for the three and six months ended June
30, 1999, from $404,000 and $703,000 for the same periods in 1998, respectively.
This  decrease is  attributable  to a  reduction  in loans  serviced  for others
resulting  from the repayment  and  prepayment of the portfolio and First Banks'
strategy of selling the new  production  of  adjustable-rate  and  nonconforming
residential  mortgage loans on a servicing  released basis. The gain on mortgage
loans sold and held for sale  increased to $1.5 million and $3.8 million for the
three and six months ended June 30, 1999, from $863,000 and $1.9 million for the
same periods in 1998,  respectively.  This increase is primarily 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 nonconforming  residential mortgage loans, which are sold on
a servicing  released  basis.  In  addition,  the  increase  also  reflects  the
continued expansion of First Banks' mortgage banking activities in the Texas and
California market areas.

         Net loss on sales of trading securities was $303,000 for the six months
ended June 30, 1999, in comparison to a net gain of $644,000 for the same period
in 1998. The loss for 1999 resulted from the termination of First Banks' trading
division,  effective  December  31,  1998,  and the  liquidation  of all trading
portfolio securities.



<PAGE>


         Other  income  increased to $7.1 million and $9.8 million for the three
and six months  ended June 30,  1999,  in  comparison  to $2.1  million and $4.1
million for the same periods in 1998,  respectively.  The primary  components of
the  increase  are  attributable  to  increased  income  earned on First  Banks'
investment in bank owned life insurance (BOLI),  expanded discount brokerage and
private banking and trust services,  and a gain recognized on the divestiture of
certain  branch  facilities in the central and northern  Illinois  market areas.
BOLI income was  $966,000  and $1.8  million for the three and six months  ended
June 30, 1999,  in  comparison to $761,000 and $1.4 million for the same periods
in 1998. This increase is primarily  attributable to FBA's initial investment in
BOLI  completed  in April 1998 and  increased  income  earned on the  underlying
investments.  In addition,  First Banks  recorded a pre-tax gain of $4.2 million
and $4.5  million for the three and six months  ended June 30,  1999  associated
with the divestiture of seven branch facilities in late March and early April of
1999.

Noninterest Expense

         Noninterest  expense was $37.2  million and $72.7 million for the three
and six months ended June 30, 1999,  in  comparison  to $35.0  million and $67.1
million for the same periods in 1998,  respectively.  The increase is reflective
of: (a) the  acquisitions  of Redwood,  Pacific Bay Bank and Republic  Bank; (b)
increased data processing fees primarily  associated with First Banks' Year 2000
Program;  (c) increased  legal,  examination and  professional  fees and (d) the
formation  of  First  America  Capital  Trust  (FACT)  and  FACT's  issuance  of
Cumulative  Trust  Preferred  Securities in July 1998.  The overall  increase in
noninterest  expense is  partially  offset by a  reduction  in  advertising  and
business  development  expenses and communications  expenses,  and is consistent
with management's efforts to more effectively and efficiently monitor and manage
these expenditures. In addition, credit card fees declined for the three and six
months ended June 30, 1999, in  comparison  to the same periods in 1998,  and is
primarily  attributable to First Banks'  liquidation of its merchant credit card
processing operation, effective December 31, 1998.

         Salaries and  employee  benefits  increased to $15.6  million and $30.1
million for the three and six months ended June 30, 1999, in comparison to $14.4
million  and $27.3  million  for the same  periods  in 1998,  respectively.  The
increase is attributable to the newly acquired banks and First Banks'  continued
commitment  to  expanding  its  commercial  and  retail   business   development
capabilities  associated  with  expansion  and  delivery  of  its  products  and
services.  The overall increase also reflects the competitive  employment market
environment  that has resulted in a higher  demand for limited  resources,  thus
escalating industry salary and employee benefit costs.

         Data processing fees increased to $4.7 million and $9.2 million for the
three and six months ended June 30, 1999, in comparison to $3.0 million and $6.0
million for the same  periods in 1998,  respectively.  First  Services,  L.P., a
limited  partnership  indirectly owned by First Banks' Chairman and his children
through its general partners and limited partners,  provides data processing and
various related services to First Banks and the Subsidiary Banks under the terms
of  data  processing  agreements.  The  increase  in  data  processing  fees  is
attributable  to growth and  technological  advancements  consistent  with First
Banks'  product  and  service  offerings,  increased  expenses  attributable  to
communication  data  lines  related  to  the  expansion  of the  branch  network
infrastructure and expenses associated with the Year 2000 Program.

         Legal,  examination and professional fees increased to $1.9 million and
$3.2 million for the three and six months ended June 30, 1999,  in comparison to
$1.3 million and $2.3 million for the same  periods in 1998,  respectively.  The
increased fees primarily relate to First Banks' enhanced utilization of external
consulting services and legal expenditures associated with litigation defense.

         Guaranteed  preferred  debentures expense increased to $3.0 million and
$6.0 million for the three and six months ended June 30, 1999,  in comparison to
$2.0  million and $4.0  million for the same  periods in 1998.  Similar to First
Banks'  formation of First  Preferred  Capital  Trust (First  Capital) and First
Capital's issuance of 9.25% Cumulative Trust Preferred Securities (First Capital
Preferred  Securities) in February  1997,  FBA formed FACT, a Delaware  business
trust  subsidiary,  on July 21, 1998.  FACT issued 1.84 million  shares of 8.50%
Cumulative Trust Preferred Securities (FACT Preferred  Securities) at $25.00 per
share in an  underwritten  public  offering,  issued  56,908  shares  of  common
securities to FBA at $25.00 per share. FBA owns all of FACT's common securities.
The gross  proceeds of the offering were used by FACT to purchase  $47.4 million
of 8.50% Subordinated Debentures (Subordinated Debentures) from FBA, maturing on
June 30,  2028.  The  Subordinated  Debentures  are the sole  asset of FACT.  In

<PAGE>

connection with the issuance of the FACT Preferred Securities,  FBA made certain
guarantees  and  commitments  that,  in the  aggregate,  constitute  a full  and
unconditional  guarantee  by FBA of the  obligations  of  FACT  under  the  FACT
Preferred  Securities.  FBA's  proceeds  from the  issuance of the  Subordinated
Debentures,  net of underwriting fees and offering expenses,  were approximately
$44.1  million.  Guaranteed  preferred  debentures  expense on the First Capital
Preferred   Securities  and  the  FACT  Preferred   Securities  is  recorded  as
noninterest expense in the accompanying consolidated financial statements.

                          Lending and Credit Management

         Interest earned on the loan portfolio  represents the principal  source
of income for First Banks and its Subsidiary  Banks.  Interest and fees on loans
were 91.3% and 85.2% of total interest  income for the six months ended June 30,
1999 and 1998, respectively.  Total loans, net of unearned discount, represented
82.4%  and 78.6% of total  assets as of June 30,  1999 and  December  31,  1998,
respectively.  Total  loans,  excluding  loans held for sale and net of unearned
discount,  increased  by $260.7  million to $3.71  billion at June 30, 1999 from
$3.44 billion at December 31, 1998. The increase in loans,  as summarized on the
consolidated  balance  sheets,  is  attributable  to the acquisition of Redwood,
which provided loans, net of unearned discount, of $134.4 million, and continued
internal  growth  of $185.4  million.  This  increase  was  partially  offset by
declines in the residential real estate  mortgage,  consumer and installment and
loans  held for sale  portfolios  of $32.7  million,  $26.4  million  and  $72.7
million, respectively. These fluctuations are attributable to the continued sale
of conforming  residential  mortgage loan production into the secondary mortgage
market,  reductions  of new  loan  origination  volumes  and  the  repayment  of
principal on the existing portfolios.

         First Banks'  nonperforming loans consist of loans on nonaccrual status
and loans on which the original terms have been restructured. The following is a
summary  of  nonperforming  assets and past due loans by  category  at the dates
indicated:
<TABLE>
<CAPTION>

                                                                               June 30,          December 31,
                                                                                 1999                 1998
                                                                                 ----                 ----
                                                                              (dollars expressed in thousands)

         Commercial, financial and agricultural:
<S>                                                                         <C>                        <C>
              Nonaccrual...............................................     $    17,548                15,385
         Real estate construction and development:
              Nonaccrual...............................................           4,904                 3,858
         Real estate mortgage:
              Nonaccrual...............................................          18,318                18,858
              Restructured terms.......................................           4,553                 5,221
         Consumer and installment:
              Nonaccrual...............................................              91                   216
              Restructured items.......................................              29                    --
                                                                            -----------           -----------
              Total nonperforming loans................................          45,443                43,538
         Other real estate.............................................           2,545                 3,709
                                                                            -----------           -----------
              Total nonperforming assets...............................     $    47,988                47,247
                                                                            ===========           ===========

         Loans, net of unearned discount...............................     $ 3,768,094             3,580,105
                                                                            ===========           ===========
         Loans past due 90 days or more and still accruing.............     $     6,957                 4,674
                                                                            ===========           ===========

         Allowance for possible loan losses to loans ..................            1.72%                 1.70%
         Nonperforming loans to loans..................................            1.21                  1.22
         Allowance for possible loan losses to nonperforming loans.....          142.99                140.04
         Nonperforming assets to loans and other real estate...........            1.27                  1.32
                                                                            ===========           ===========
</TABLE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
restructured  loans, were $45.4 million at June 30, 1999, in comparison to $43.5
million at December 31, 1998.  This  increase is  primarily  attributable  to an
increase in  nonaccrual  loans at First Bank and FB&T and the overall  growth of
the loan portfolio,  principally within commercial,  financial and agricultural,
real estate  construction  and  development,  and commercial  real estate loans,
which  generally  possess a higher level of inherent risk.  First Banks does not
believe the  increase in  nonperforming  loans to be  indicative  of distress or
negative trends within the loan portfolio.
<PAGE>

         Impaired loans,  consisting of nonaccrual loans and restructured loans,
were $45.4 million and $43.5 million  at  June 30, 1999  and  December 31, 1998,
respectively.

         The  following is a summary of loan loss  experience  for the three and
six months ended June 30:
<TABLE>
<CAPTION>

                                                                           Three months ended     Six months ended
                                                                                 June 30,             June 30,
                                                                              --------------      ---------------
                                                                              1999      1998      1999       1998
                                                                              ----      ----      ----       ----
                                                                                (dollars expressed in thousands)

<S>                                                                        <C>          <C>       <C>       <C>
Allowance for possible loan losses, beginning of period..................  $ 65,239     54,043    60,970    50,509
Acquired allowances for possible loan losses.............................        --         --     1,466       885
                                                                           --------   --------   -------  --------
                                                                             65,239     54,043    62,436    51,394
                                                                           --------   --------   -------  --------
Loans charged-off........................................................    (5,617)    (2,082)   (7,528)   (4,138)
Recoveries of loans previously charged-off...............................     1,982      1,780     4,206     4,385
                                                                           --------   --------   -------  --------
     Net loan (charge-offs) recoveries...................................    (3,635)      (302)   (3,322)      247
                                                                           --------   --------   -------  --------
Provision for possible loan losses.......................................     3,373      1,850     5,863     3,950
                                                                           --------   --------   -------  --------
Allowance for possible loan losses, end of period........................  $ 64,977     55,591    64,977    55,591
                                                                           ========   ========   =======  ========
</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
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 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

         First  Banks   periodically   utilizes   off-balance-sheet   derivative
financial  instruments to assist in the management of interest rate  sensitivity
and  to  modify  the   repricing,   maturity  and  option   characteristics   of
on-balance-sheet  assets and liabilities.  Derivative financial instruments held
by First Banks for purposes of managing  interest  rate risk are  summarized  as
follows:
<TABLE>
<CAPTION>

                                                                     June 30, 1999             December 31, 1998
                                                               ----------------------       -----------------------
                                                               Notional       Credit        Notional     Credit
                                                                amount       exposure        amount     exposure
                                                                ------       --------        ------     --------
                                                                       (dollars expressed in thousands)

     Interest rate swap agreements - pay
<S>                                                           <C>               <C>          <C>          <C>
       adjustable rate, receive adjustable rate............   $  500,000         --               --         --
     Interest rate swap agreements - pay
       adjustable rate, receive fixed rate.................      280,000      3,574          280,000      3,526
     Interest rate floor agreements........................       70,000         --           70,000         --
     Interest rate cap agreements..........................       10,000         94           10,000        164
     Forward commitments to sell
       mortgage-backed securities..........................       45,000         --           95,000        237
                                                              ==========    =======          =======      =====
</TABLE>



<PAGE>


         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.  The credit exposure  represents
the  accounting  loss First  Banks  would  incur in the event the  couterparties
failed completely to perform according to the terms of the derivative  financial
instruments and the collateral was of no value.

         Previously,  First Banks  utilized  interest  rate swap  agreements  to
extend the repricing characteristics of certain interest-bearing  liabilities to
correspond more closely with its assets,  with the objective of stabilizing cash
flow, and  accordingly,  net interest  income,  over time. These swap agreements
were terminated in July 1995, November 1996 and July 1997 due to a change in the
composition of First Banks' balance sheet.  The change in the composition of the
balance sheet was primarily driven by the significant  decline in interest rates
experienced  during 1995, which caused an increase in the principal  prepayments
of residential  mortgage loans. The net interest  expense  associated with these
agreements,  consisting  primarily of amortization of deferred losses,  was $1.2
million and $2.5 million and $1.0 million and $2.0 million for the three and six
months  ended  June 30,  1999 and 1998,  respectively.  The  deferred  losses on
terminated  swap  agreements are being amortized over the remaining lives of the
agreements,  unless the  underlying  liabilities  are repaid,  in which case the
deferred  losses are charged to  operations.  The  unamortized  balance of these
losses was $2.8 million and $5.7 million at June 30, 1999 and December 31, 1998,
respectively, and is included in other assets.

         During 1998, First Banks entered into $280.0 million notional amount of
interest rate swap  agreements.  The swap  agreements  effectively  extended the
repricing term of a selected group of loans to more closely  correspond with its
funding source with the objective of stabilizing cash flow, and accordingly, net
interest  income,  over time.  The swap  agreements  provide  for First Banks to
receive a fixed rate of interest and pay an  adjustable  rate  equivalent to the
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
amount  receivable by First Banks under the swap  agreements was $4.2 million at
June 30, 1999 and December 31, 1998 and the amount  payable by First Banks under
the swap  agreements was $592,000 and $640,000 at June 30, 1999 and December 31,
1998, respectively.

         During May 1999,  First  Banks  entered  into $500.0  million  notional
amount of interest rate swap  agreements  with the objective of stabilizing  the
net  interest  margin  during the  six-month  period  surrounding  the Year 2000
century date change.  The swap agreements  provide for First Banks to receive an
adjustable  rate of interest  equivalent to the daily  weighted  average  30-day
LIBOR and pay an adjustable  rate of interest  equivalent to the daily  weighted
average prime lending rate minus 2.665%. The terms of the swap agreements, which
have an effective date of October 1, 1999 and a maturity date of March 31, 2000,
provide for First Banks to pay and receive interest on a monthly basis.




<PAGE>


         The maturity dates, notional amounts, interest rates paid and received,
and fair values of the swap  agreements  outstanding as of June 30, 1999 were as
follows:
<TABLE>
<CAPTION>

                                                        Notional     Interest rate    Interest rate
                       Maturity date                     amount          paid           received       Fair value

<S>                                                    <C>               <C>             <C>            <C>
         March 31, 2000 (1).........................  $  350,000           --%             --%         $    261
         March 31, 2000 (1).........................      75,000           --              --                56
         March 31, 2000 (1).........................      50,000           --              --                37
         March 31, 2000 (1).........................      25,000           --              --                19
         June 11, 2002..............................      15,000         5.10            6.00               (72)
         September 16, 2002.........................      20,000         5.16            5.36              (496)
         September 16, 2002.........................     175,000         5.16            5.36            (4,299)
         September 18, 2002.........................      30,000         5.18            5.33              (771)
         September 18, 2002.........................      40,000         5.18            5.33            (1,037)
                                                      ----------                                        -------
                                                      $  780,000         5.16            5.39           $(6,302)
                                                      ==========        =====            ====           =======

</TABLE>
      --------------------
      (1) These  interest  rate swap  agreements  will  become  effective  on
          October 1, 1999.

         First Banks has interest rate cap and floor  agreements  outstanding to
limit the interest expense associated with certain interest-bearing  liabilities
and  the  net  interest  expense  of  certain  interest  rate  swap  agreements,
respectively.  At June 30, 1999 and December 31, 1998, the unamortized  costs of
these agreements were $94,000 and $159,000,  respectively,  and were included in
other assets.

         Derivative  financial  instruments  issued by First  Banks  consist  of
commitments to originate  fixed-rate loans.  Commitments to originate fixed-rate
loans  consist   primarily  of  residential   real  estate  loans.   These  loan
commitments, net of estimated underwriting fallout, and loans held for sale were
$55.6 million and $103.1  million at June 30, 1999  and   December   31,   1998,
respectively. These net loan commitments and loans held for sale are hedged with
forward contracts to sell mortgage-backed  securities of $45.0 million and $95.0
million at June 30, 1999 and December 31, 1998,  respectively.  Gains and losses
from forward contracts are deferred and included in the cost basis of loans held
for sale. At June 30, 1999 and December 31, 1998, the net unamortized  gains and
losses were  $764,000 and  $649,000,  respectively,  which  were  applied to the
carrying value of the loans held for sale as part of the lower of cost or market
valuation.

                             Year 2000 Compatibility

         First Banks and the  Subsidiary  Banks are subject to risks  associated
with the "Year  2000"  issue,  a term which  refers to  uncertainties  about the
ability of various data  processing  hardware and software  systems to interpret
dates  correctly   surrounding  the  beginning  of  the  Year  2000.   Financial
institutions  are  particularly  vulnerable to Year 2000 issues because of heavy
reliance in the  industry  on  electronic  data  processing  and funds  transfer
systems.

         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
issue, 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 Plan addresses both  Information  Technology  (IT) projects,
such as data processing and data network applications, and non-IT projects, such
as building facilities and security systems. The major phases of the Program are
awareness, assessment, remediation, validation and implementation.


<PAGE>


         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  analyzed  and   prioritized   from  critical  to
non-critical, based upon the perceived adverse effect on the 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,  with
minor modification. Focusing on these critical systems, First Banks continues to
closely  review and monitor the Year 2000  progress as reported by each  vendor,
and has tested, in most cases, on a system separate from the on-line  production
system. The review and testing of critical data processing service providers was
substantially complete as of March 31, 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.

         Concurrent with the completion of the remediation phase of the Program,
First Banks  commenced the final analysis of the  validation  phase for critical
systems,  including  remediated  systems  provided by third party vendors.  This
portion of the Program was substantially complete as of December 31, 1998.

         First Banks has  accelerated  the  replacement  of its existing  teller
system  (ISC),  since  certain  functions  of ISC were not Year 2000  compliant.
Planning for the replacement of ISC has been underway for several years with the
primary objectives of adding functionality to meet expanding product and service
offerings and improving  efficiency in serving customers.  As the newly selected
teller  system  (CFI)  also  provided a solution  for the Year 2000  issue,  the
overall  implementation  schedule was  accelerated.  Recognizing  the heightened
risks of  deploying  CFI within the narrowed  timeline  created by the Year 2000
issue,  emphasis  was  first  given  to the Year  2000  solution  for ISC,  with
simultaneous  deployment of CFI  throughout  1999.  The testing of the Year 2000
solution  for ISC was  completed  and ISC was upgraded  throughout  First Banks'
branch network by June 30, 1999, thereby maintaining compliance with appropriate
regulatory guidelines associated with Year 2000.

         The testing of CFI was  completed by December 31, 1998.  The CFI system
was installed in selected bank test locations during the fourth quarter of 1998.
The estimated cost of the teller replacement is $8.0 million and will be charged
to expense over a 60-month  period upon  installation  at each branch  location.
First Banks is also upgrading its local area network-based systems, networks and
core  processor,  and has purchased  certain item processing  equipment,  as the
previous equipment, which is fully depreciated, was not Year 2000 compliant. The
estimated  cost of these  upgrades  and the item  processing  equipment  is $3.9
million and $1.4 million,  respectively,  and is expected to be  depreciated  to
expense over 60 months commencing in the first quarter of 1999.

         The final phase of the Program was the implementation of remediated and
other  systems into the  operating  environment  of First Banks.  With the final
phase of the  Program  substantially  completed  by June 30,  1999,  First Banks
continues to focus its efforts on overall contingency planning and specific Year
2000 event preparation.

         First Banks has also assessed the Year 2000 risks relating to its lines
of business  separate from its  dependence on data  processing.  The  assessment
includes a review of large  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 certain of 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 revealed no probable adverse effect to First Banks, it is not possible
to quantify the overall  potential adverse effects to First Banks resulting from
the  failure of these  customers,  or other  customers  not  meeting  the review
criteria,  to adequately  prepare for the Year 2000. The failure of a commercial
bank  customer  to  adequately  prepare  for Year 2000 could have a  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.

<PAGE>


         First Banks  continues to review and structure  certain funding sources
to facilitate the Subsidiary  Banks' liquidity  requirements  under varying cash
flow assumptions.  In addition,  Year 2000 risks associated with adversely rated
credits are monitored  more  frequently in  conjunction  with the internal watch
list  review  committee  meetings,   while  new  credit  relationships   include
parameters  to assess and  evaluate  Year 2000 risks at the time of the  initial
credit decision.

         The Plan also provides for the  identification  and communication  with
significant non-data processing third party vendors regarding their preparedness
for Year 2000 risks.  While the results of this  process  have not  revealed any
quantifiable  loss to First Banks, the absence of certain basic services such as
telecommunications,  electric  power and  service  provided  by other  financial
institutions  and  governmental  agencies  would  have a  serious  impact on the
operations  of First  Banks.  First  Banks has  developed  processes  to monitor
significant non-data processing third party vendors regarding their preparedness
for Year 2000 risks.

         The total cost of the Program is currently  estimated at $16.2 million,
comprised  of  capital   improvements  of  $13.3  million  and  direct  expenses
reimbursable to First Services L.P. 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  $450,000 and
$900,000 for the three and six months ended June 30, 1999,  and $600,000 for the
year ended  December 31, 1998.  In addition,  First Banks is  estimating  direct
expenses of $1.9 million for the  duration of the Program.  The total cost could
vary significantly from those currently  estimated for unforeseen  circumstances
that could develop in carrying out the Program.

         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 an evolving  document changing and developing
to  reflect  the  results,  progress  and  current  status of the  Program.  The
Contingency  Plan  addresses a variety of issues  including  critical and common
systems,  credit  risk,  liquidity,  loan  and  deposit  customers,  facilities,
supplies and computer back-up locations. Additionally, First Banks has developed
business  resumption plans and process resumption test plans for each functional
area deemed critical to the operations of First Banks. These business resumption
plans,  collectively with the Contingency Plan, also serve as evolving documents
and will  continue  to be  modified  to  appropriately  address  Year 2000 risks
associated  with the  individual  needs  and  responsibilities  of each of these
critical  functional  areas  based upon the  results of the  process  resumption
testing efforts.

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

                                    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 Subsidiary Banks'
primary sources for liquidity are customer deposits,  loan payments,  maturities
and sales of investment securities 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,  borrowings  from the Federal Home Loan Bank and other
borrowings,  including First Banks' $90 million credit agreement with a group of
unaffiliated  financial  institutions.  The aggregate  funds acquired from those
sources were $381.1 million and $391.4 million at June 30, 1999 and December 31,
1998, respectively.




<PAGE>


         At June 30, 1999, First Banks' more volatile sources of funds mature as
follows:
<TABLE>
<CAPTION>

                                                                                  (dollars expressed in thousands)

<S>                                                                                         <C>
         Three months or less...................................................            $  205,410
         Over three months through six months...................................                52,087
         Over six months through twelve months..................................                70,454
         Over twelve months.....................................................                53,196
                                                                                            ----------
           Total................................................................               381,147
                                                                                            ==========
</TABLE>

         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 First  Capital  Preferred  Securities  and the FACT  Preferred
Securities.

                       Effects of New Accounting Standards

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial  Accounting  Standards  (SFAS) No. 133 -- Accounting  for
Derivative  Instruments and Hedging  Activities (SFAS 133). SFAS 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts,  and for hedging activities.
SFAS 133 requires that an entity  recognize all  derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value.  If certain  conditions are met, a derivative may be specifically
designated as a hedge in one of three categories.  The accounting for changes in
the fair  value of a  derivative  (that is,  gains and  losses)  depends  on the
intended use of the derivative and the resulting designation. Under SFAS 133, an
entity that elects to apply hedge  accounting is required to  establish,  at the
inception of the hedge,  the method it will use for assessing the  effectiveness
of the hedging  derivative  and the  measurement  approach for  determining  the
ineffective  aspect of the hedge.  Those  methods  must be  consistent  with the
entity's  approach to managing risk.  SFAS 133 applies to all entities.  In June
1999, the FASB issued SFAS No. 137 - Accounting for Derivative  Instruments  and
Hedging  Activities - Deferral of the Effective  Date of FASB Statement No. 133,
an Amendment of FASB  Statement No. 133, which defers the effective date of SFAS
133 from fiscal years  beginning  after June 15, 1999 to fiscal years  beginning
after June 15, 2000.  Initial  application  should be as of the  beginning of an
entity's fiscal quarter; on that date, hedging  relationships must be designated
and  documented  pursuant to the  provisions  of SFAS 133,  as amended.  Earlier
application  of all of the  provisions is encouraged but is permitted only as of
the beginning of any fiscal  quarter that begins after the issuance date of SFAS
133, as  amended.  Additionally,  SFAS 133,  as  amended,  should not be applied
retroactively to financial statements of prior periods. First Banks is currently
evaluating the requirements of SFAS 133, as amended,  to determine its potential
impact on the consolidated financial statements.

         On January 1, 1999,  First Banks adopted the provisions of SFAS No. 134
- Accounting for Mortgage-Backed Securities Retained after the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking  Enterprise,  an amendment of
FASB SFAS No. 65 (SFAS 134).  SFAS 134 amended SFAS 65 to require that after the
securitization  of mortgage  loans held for sale, an entity  engaged in mortgage
banking activities  classify the resulting  mortgage-backed  securities or other
retained  interests  based  on its  ability  and  intent  to sell or hold  those
investments. However, a mortgage banking enterprise must classify as trading any
retained mortgage-backed securities that it commits to sell before or during the
securitization  process.  The implementation of SFAS 134 did not have a material
impact on First Banks' consolidated financial statements.




<PAGE>


                           Part II- OTHER INFORMATION

                    Item 6. Exhibits and Reports on Form 8-K

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

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

                27         Article 9 - Financial Data Schedule (EDGAR only)

   (b)   First  Banks filed no reports on Form 8-K during the three months ended
         June 30, 1999.


<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:  August 10, 1999               By: /s/ James F. Dierberg
                                        ---------------------
                                            James F. Dierberg
                                            Chairman, President and
                                              Chief Executive Officer



Date:  August 10, 1999               By: /s/ Allen H. Blake
                                        -----------------------
                                            Allen H. Blake
                                            Executive Vice President,
                                               Chief Financial Officer,
                                               Chief Operating Officer
                                               and Secretary
                                               (Principal Financial Officer)