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






 (Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

                  For the quarterly period ended June 30, 2001

 [] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934

               For the transition period from _______ to ________

                           Commission File No. 0-20632

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

             MISSOURI                                   43-1175538
   (State or other jurisdiction            (I.R.S. Employer Identification No.)
 of incorporation or organization)

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

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

         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 practical date.


                                                        Shares outstanding
                Class                                    at July 31, 2001
                -----                                    ----------------

    Common Stock, $250.00 par value                           23,661

<PAGE>

                                                           First Banks, Inc.

                                                           Table of Contents

<TABLE>
<CAPTION>




                                                                                                      Page
                                                                                                      ----

  PART I.    FINANCIAL INFORMATION

        Item 1. Financial Statements - (Unaudited):

<S>                                                                                                     <C>
                Consolidated Balance Sheets.........................................................    1

                Consolidated Statements of Income...................................................    3

                Consolidated Statements of Changes in Stockholders' Equity
                    and Comprehensive Income........................................................    4

                Consolidated Statements of Cash Flows...............................................    5

                Notes to Consolidated Financial Statements..........................................    6

        Item 2. Management's Discussion and Analysis of Financial Condition
                    and Results of Operations.......................................................   13

        Item 3. Quantitative and Qualitative Disclosures about Market Risk..........................   27

  PART II.   OTHER INFORMATION

        Item 6.  Exhibits and Reports on Form 8-K...................................................   28

  SIGNATURES........................................................................................   29
</TABLE>
<PAGE>


                         PART I - FINANCIAL INFORMATION
                          Item 1 - Financial Statements

                                First Banks, Inc.

                    Consolidated Balance Sheets - (Unaudited)
        (dollars expressed in thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                                        June 30,      December 31,
                                                                                          2001            2000
                                                                                          ----            ----


                                                ASSETS
                                                ------


Cash and cash equivalents:
<S>                                                                                   <C>                  <C>
     Cash and due from banks.......................................................   $    130,964         167,474
     Interest-bearing deposits with other financial institutions
       with maturities of three months or less.....................................          3,196           4,005
     Federal funds sold............................................................        133,100          26,800
                                                                                      ------------       ---------
               Total cash and cash equivalents.....................................        267,260         198,279
                                                                                      ------------       ---------

Investment securities:
     Available for sale, at fair value.............................................        362,515         539,386
     Held to maturity, at amortized cost (fair value of $23,165 and $24,507
       at June 30, 2001 and December 31, 2000, respectively).......................         22,495          24,148
                                                                                      ------------       ---------
               Total investment securities.........................................        385,010         563,534
                                                                                      ------------       ---------

Loans:
     Commercial, financial and agricultural........................................      1,559,990       1,496,284
     Real estate construction and development......................................        813,574         809,682
     Real estate mortgage..........................................................      2,187,572       2,202,857
     Consumer and installment......................................................        119,160         181,602
     Loans held for sale...........................................................        189,788          69,105
                                                                                      ------------       ---------
               Total loans.........................................................      4,870,084       4,759,530
     Unearned discount.............................................................         (8,141)         (7,265)
     Allowance for loan losses.....................................................        (77,141)        (81,592)
                                                                                      ------------       ---------
               Net loans...........................................................      4,784,802       4,670,673
                                                                                      ------------       ---------

Derivative instruments.............................................................         27,417               -
Bank premises and equipment, net of depreciation and amortization..................        125,820         114,771
Intangibles associated with the purchase of subsidiaries, net of amortization......         83,574          85,021
Accrued interest receivable........................................................         42,277          45,226
Deferred income taxes..............................................................         71,878          75,699
Other assets.......................................................................        116,165         123,488
                                                                                      ------------       ---------
               Total assets........................................................   $  5,904,203       5,876,691
                                                                                      ============       =========



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

<PAGE>


                                First Banks, Inc.

              Consolidated Balance Sheets (Continued) - (Unaudited)
        (dollars expressed in thousands, except share and per share data)
<TABLE>
<CAPTION>


                                                                                        June 30,      December 31,
                                                                                          2001            2000
                                                                                          ----            ----


                                             LIABILITIES
                                             -----------
Deposits:
     Demand:
<S>                                                                                   <C>                  <C>
       Non-interest-bearing........................................................   $    734,398         808,251
       Interest-bearing............................................................        490,019         448,146
     Savings.......................................................................      1,491,761       1,447,898
     Time:
       Time deposits of $100 or more...............................................        520,107         499,956
       Other time deposits.........................................................      1,757,834       1,808,164
                                                                                      ------------       ---------
          Total deposits...........................................................      4,994,119       5,012,415
Short-term borrowings..............................................................        201,177         140,569
Note payable.......................................................................         34,500          83,000
Accrued interest payable...........................................................         27,170          23,227
Deferred income taxes..............................................................         26,618          12,774
Accrued expenses and other liabilities.............................................         26,316          54,944
Minority interest in subsidiary....................................................         15,018          14,067
                                                                                      ------------       ---------
          Total liabilities........................................................      5,324,918       5,340,996
                                                                                      ------------       ---------

Guaranteed preferred beneficial interests in:
     First Banks, Inc. subordinated debentures.....................................        138,570         138,569
     First Banks America, Inc. subordinated debentures.............................         44,311          44,280
                                                                                      ------------       ---------
          Total guaranteed preferred beneficial interests in
              subordinated debentures..............................................        182,881         182,849
                                                                                      ------------       ---------

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

Preferred stock:
     $1.00 par value, 5,000,000 shares authorized, no shares issued
       and outstanding at June 30, 2001 and December 31, 2000......................             --              --
     Class A convertible, adjustable rate, $20.00 par value, 750,000
       shares authorized, 641,082 shares issued and outstanding....................         12,822          12,822
     Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
       160,505 shares issued and outstanding.......................................            241             241
Common stock, $250.00 par value, 25,000 shares authorized,
     23,661 shares issued and outstanding..........................................          5,915           5,915
Capital surplus....................................................................          2,610           2,267
Retained earnings..................................................................        345,503         325,580
Accumulated other comprehensive income.............................................         29,313           6,021
                                                                                      ------------       ---------
          Total stockholders' equity...............................................        396,404         352,846
                                                                                      ------------       ---------
          Total liabilities and stockholders' equity...............................   $  5,904,203       5,876,691
                                                                                      ============       =========
</TABLE>
<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
                                                                             ------------------   ----------------
                                                                               2001       2000     2001     2000
                                                                               ----       ----     ----     ----
Interest income:
<S>                                                                         <C>         <C>       <C>      <C>
     Interest and fees on loans............................................ $105,855    96,148    212,917  185,826
     Investment securities.................................................    6,341     7,149     14,821   14,019
     Federal funds sold and other..........................................    1,160       864      1,655    2,033
                                                                            --------   -------    ------- --------
          Total interest income............................................  113,356   104,161    229,393  201,878
                                                                            --------   -------    ------- --------
Interest expense:
     Deposits:
       Interest-bearing demand.............................................    1,807     1,420      3,480    2,885
       Savings.............................................................   13,342    12,434     27,525   24,070
       Time deposits of $100 or more.......................................    7,453     2,840     15,329    5,855
       Other time deposits.................................................   25,954    26,315     53,143   50,222
     Short-term borrowings.................................................    1,673     1,406      3,662    2,515
     Note payable..........................................................      543     1,356      1,773    2,511
                                                                            --------   -------    ------- --------
          Total interest expense...........................................   50,772    45,771    104,912   88,058
                                                                            --------   -------    ------- --------
          Net interest income..............................................   62,584    58,390    124,481  113,820
Provision for loan losses..................................................    3,720     3,620      7,110    7,202
                                                                            --------   -------    ------- --------
          Net interest income after provision for loan losses..............   58,864    54,770    117,371  106,618
                                                                            --------   -------    ------- --------
Noninterest income:
     Service charges on deposit accounts and customer service fees.........    5,312     4,872     10,537    9,464
     Gain on mortgage loans sold and held for sale.........................    3,864     1,876      7,332    3,268
     Gain on sale of credit card portfolio.................................       --        --      2,275       --
     Net gain (loss) on sales of available-for-sale securities.............       61        --       (113)     379
     Gain on derivative instruments, net...................................    4,989        --      5,486       --
     Other.................................................................    5,198     4,723     10,381    7,924
                                                                            --------   -------    ------- --------
          Total noninterest income.........................................   19,424    11,471     35,898   21,035
                                                                            --------   -------    ------- --------
Noninterest expense:
     Salaries and employee benefits........................................   23,345    18,346     45,797   35,237
     Occupancy, net of rental income.......................................    4,100     3,433      8,216    6,655
     Furniture and equipment...............................................    2,406     2,998      5,617    5,673
     Postage, printing and supplies........................................    1,103     1,075      2,258    2,183
     Data processing fees..................................................    6,452     5,474     12,951   10,663
     Legal, examination and professional fees..............................    1,734     1,014      3,424    2,003
     Amortization of intangibles associated with the purchase
          of subsidiaries..................................................    1,862     1,202      3,712    2,373
     Guaranteed preferred debentures.......................................    4,489     2,998      8,978    6,012
     Other.................................................................   18,907     5,377     25,063    8,911
                                                                            --------   -------    ------- --------
          Total noninterest expense........................................   64,398    41,917    116,016   79,710
                                                                            --------   -------    ------- --------
          Income before provision for income taxes, minority interest
               in income of subsidiary and cumulative effect of change
               in accounting principle.....................................   13,890    24,324     37,253   47,943
Provision for income taxes.................................................    5,457     9,197     14,581   17,741
                                                                            --------   -------    ------- --------
          Income before minority interest in income of subsidiary
               and cumulative effect of change in accounting principle ....    8,433    15,127     22,672   30,202
Minority interest in income of subsidiary..................................      534       455      1,045      943
                                                                            --------   -------    ------- --------
          Income before cumulative effect of change in
               accounting principle........................................    7,899    14,672     21,627   29,259
Cumulative effect of change in accounting principle, net of tax............        -         -      1,376        -
                                                                            --------   -------    ------- --------
          Net income.......................................................    7,899    14,672     20,251   29,259
Preferred stock dividends..................................................      132       132        328      328
                                                                            --------   -------    ------- --------
          Net income available to common stockholders...................... $  7,767    14,540     19,923   28,931
                                                                            ========   =======    ======= ========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Earnings per common share:
     Basic:
<S>                                                                         <C>          <C>       <C>    <C>
       Income before cumulative effect of change in accounting principle... $  328.27    614.51    900.21 1,222.71
       Cumulative effect of change in accounting principle, net of tax.....        --        --    (58.16)      --
                                                                            ---------   -------   ------- --------
       Basic............................................................... $  328.27    614.51    842.05 1,222.71
                                                                            =========   =======   ======= ========
     Diluted:
       Income before cumulative effect of change in accounting principle... $  322.78    594.12    882.65 1,182.47
       Cumulative effect of change in accounting principle, net of tax.....       - -        --    (58.16)      --
                                                                            ---------   -------   ------- --------
       Diluted............................................................. $  322.78    594.12    824.49 1,182.47
                                                                            =========   =======   ======= ========
Weighted average common stock outstanding..................................    23,661    23,661    23,661   23,661
                                                                            =========   =======   ======= ========

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

<PAGE>

<TABLE>
<CAPTION>

                                                          First Banks, Inc.

                   Consolidated Statements of Changes in Stockholders' Equity and Comprehensive Income - (Unaudited)
                            Six months ended June 30, 2001 and 2000 and six months ended December 31, 2000
                                        (dollars expressed in thousands, except per share data)



                                                                                                            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, December 31, 1999.........  $12,822      241    5,915     3,318            270,259    2,350  294,905
Six months ended June 30, 2000:
    Comprehensive income:
      Net income.................................       --       --       --        --   29,259    29,259       --   29,259
      Other comprehensive income, net of tax:
        Unrealized losses on securities, net of
          reclassification adjustment (1)........       --       --       --        --   (1,467)       --   (1,467)  (1,467)
                                                                                         ------
      Comprehensive income.......................                                        27,792
                                                                                         ======
    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.................       --       --       --      (329)                --       --     (329)
                                                   -------      ---    -----     -----            -------   ------  -------
Consolidated balances, June 30, 2000.............   12,822      241    5,915     2,989            299,190      883  322,040
Six months ended December 31, 2000:
    Comprehensive income:
      Net income.................................       --       --       --        --   26,848    26,848       --   26,848
      Other comprehensive income, net of tax:
        Unrealized gains on securities, net of
          reclassification adjustment (1)........       --       --       --        --    5,138        --    5,138    5,138
                                                                                         ------              -----    -----
      Comprehensive income.......................                                        31,986
                                                                                         ======
    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.................       --       --       --      (722)                --       --     (722)
                                                   -------      ---    -----     -----            -------   ------  -------
Consolidated balances, December 31, 2000.........   12,822      241    5,915     2,267            325,580    6,021  352,846
Six months ended June 30, 2001:

    Comprehensive income:
      Net income.................................       --       --       --        --   20,251    20,251       --   20,251
      Other comprehensive income, net of tax:
        Unrealized gains on securities, net of
          reclassification adjustment (1)........       --       --       --        --    9,529        --    9,529    9,529
        Derivative instruments:
          Cumulative effect of change in
             accounting principle, net...........       --       --       --        --    9,069        --    9,069    9,069
          Current period transactions............       --       --       --        --    7,621        --    7,621    7,621
          Reclassification to earnings...........       --       --       --        --   (2,927)       --   (2,927)  (2,927)
                                                                                         ------
      Comprehensive income.......................                                        43,543
                                                                                         ======
    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.................       --       --       --       343                 --       --      343
                                                   -------      ---    -----     -----            -------   ------  -------
Consolidated balances, June 30, 2001.............  $12,822      241    5,915     2,610             45,503   29,313  396,404
                                                   =======      ===    =====     =====            =======   ======  =======
</TABLE>

<PAGE>
_________________________
(1)  Disclosure of reclassification adjustment:


<TABLE>
<CAPTION>

                                                                        Three months ended Six months ended  Six months ended
                                                                              June 30,         June 30,        December 31,
                                                                        ------------------ ----------------  ----------------
                                                                          2001      2000     2001     2000        2000
                                                                          ----      ----     ----     ----        ----

<S>                                                                       <C>       <C>      <C>      <C>         <C>
     Unrealized gains (losses) on investment securities
         arising during the period.....................................   $4,098    (613)    9,456   (1,221)      5,001
     Less reclassification adjustment for gains (losses)
         included in net income........................................       40      --       (73)     246        (137)
                                                                          ------    ----     -----   ------       -----
     Unrealized gains (losses) on investment securities................   $4,058    (613)    9,529   (1,467)      5,138
                                                                          ======    ====     =====   ======       =====


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

<TABLE>
<CAPTION>


                                                          First Banks, Inc.

                                          Consolidated Statements of Cash Flows - (Unaudited)
                                                   (dollars expressed in thousands)

                                                                                                 Six months ended
                                                                                                     June 30,
                                                                                               -------------------
                                                                                               2001           2000
                                                                                               ----           ----

Cash flows from operating activities:
<S>                                                                                          <C>             <C>
     Net income...........................................................................  $  20,251        29,259
     Adjustments to reconcile net income to net cash used in operating activities:
     Cumulative effect of change in accounting principle, net of tax......................      1,376            --
       Depreciation and amortization of bank premises and equipment.......................      5,734         4,578
       Amortization, net of accretion.....................................................      4,090         3,801
       Originations and purchases of loans held for sale..................................   (757,526)     (238,508)
       Proceeds from the sale of loans held for sale......................................    587,612       185,316
       Provision for loan losses..........................................................      7,110         7,202
       Provision for income taxes.........................................................     14,581        17,741
       Payments of income taxes...........................................................    (21,288)       (5,382)
       Decrease (increase) in accrued interest receivable.................................      2,949        (3,295)
       Interest accrued on liabilities....................................................    104,912        88,058
       Payments of interest on liabilities................................................   (100,969)      (87,088)
       Gain on sale of branch facility....................................................         --        (1,355)
       Gain on sale of credit card portfolio..............................................     (2,275)           --
       Net loss (gain) on sales of available-for-sale investment securities...............        113          (379)
       Other operating activities, net....................................................    (21,392)      (12,080)
       Minority interest in income of subsidiary..........................................      1,045           943
                                                                                            ---------      --------
          Net cash used in operating activities...........................................   (153,677)      (11,189)
                                                                                            ---------      --------

Cash flows from investing activities:
     Cash paid for acquired entities, net of cash and cash equivalents received...........         --        (2,709)
     Proceeds from sales of investment securities available for sale......................     71,023         8,148
     Maturities of investment securities available for sale...............................    194,642       191,276
     Maturities of investment securities held to maturity.................................      1,887           679
     Purchases of investment securities available for sale................................    (57,421)     (149,971)
     Purchases of investment securities held to maturity..................................       (240)         (489)
     Net decrease (increase) in loans.....................................................     27,258      (254,431)
     Recoveries of loans previously charged-off...........................................      3,775         6,180
     Purchases of bank premises and equipment.............................................    (20,403)      (10,039)
     Other investing activities, net......................................................      6,494         2,183
                                                                                            ---------      --------
          Net cash provided by (used in) investing activities.............................    227,015      (209,173)
                                                                                            ---------      --------

Cash flows from financing activities:
     Increase in demand and savings deposits..............................................     11,883        55,340
     (Decrease) increase in time deposits.................................................    (27,926)       81,595
     Increase in federal funds purchased..................................................         --        36,100
     Increase in Federal Home Loan Bank advances..........................................     50,000            --
     Increase in securities sold under agreements to repurchase...........................     10,608        41,158
     Advances drawn on note payable.......................................................      5,000        10,000
     Repayments of note payable...........................................................    (53,500)      (15,500)
     Payment of preferred stock dividends.................................................       (328)         (328)
     Other financing activities, net......................................................        (94)          892
                                                                                            ---------      --------
          Net cash (used in) provided by financing activities.............................     (4,357)      209,257
                                                                                            ---------      --------
          Net increase (decrease) in cash and cash equivalents............................     68,981       (11,105)
Cash and cash equivalents, beginning of period............................................    198,279       170,894
                                                                                            ---------      --------
Cash and cash equivalents, end of period..................................................  $ 267,260       159,789
                                                                                            =========      ========

Noncash investing and financing activities:
     Loans transferred to other real estate...............................................  $   1,312         1,081
     Reduction of deferred tax asset valuation reserve....................................        565         1,267
     Loans held for sale transferred to available-for-sale investment securities..........     15,139         7,186
     Loans held for sale transferred to loans.............................................     28,351        46,153
                                                                                            =========      ========


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


<PAGE>


                                First Banks, Inc.

                   Notes to Consolidated Financial Statements


(1)      Basis of Presentation

         The  consolidated   financial  statements  of  First  Banks,  Inc.  and
subsidiaries  (First Banks) are unaudited and should be read in conjunction with
the  consolidated  financial  statements  contained in the 2000 Annual Report on
Form  10-K.  The  consolidated   financial  statements  have  been  prepared  in
accordance with accounting principles generally accepted in the United States of
America  and  conform to  predominant  practices  within the  banking  industry.
Management  of First  Banks  has  made a number  of  estimates  and  assumptions
relating  to the  reporting  of assets and  liabilities  and the  disclosure  of
contingent  assets  and  liabilities  to  prepare  the  consolidated   financial
statements in conformity with accounting  principles  generally  accepted in the
United  States of  America.  In the  opinion  of  management,  all  adjustments,
consisting  of  normal  recurring  accruals  considered  necessary  for  a  fair
presentation  of the results of  operations  for the interim  periods  presented
herein, have been included. Operating results for the three and six months ended
June 30, 2001 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2001.

         The  consolidated  financial  statements  include the accounts of First
Banks,  Inc.  and its  subsidiaries,  net of  minority  interest,  as more fully
described below.  All significant  intercompany  accounts and transactions  have
been  eliminated.  Certain  reclassifications  of 2000 amounts have been made to
conform to the 2001 presentation.

         First Banks operates through its subsidiary bank holding  companies and
subsidiary financial  institutions  (collectively  referred to as the Subsidiary
Banks) and through its  non-banking  subsidiary,  First Capital Group,  Inc., as
follows:

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

         The  Subsidiary  Banks  and FCG are  wholly  owned by their  respective
parent companies except FBA, which was 93.16% and 92.86% owned by First Banks at
June 30, 2001 and December 31, 2000, respectively.

(2)      Acquisitions

         On May 23,  2001,  FBA  and  Charter  Pacific  Bank  (Charter  Pacific)
executed a definitive agreement providing for the acquisition of Charter Pacific
by FBA. Under the terms of the agreement,  the  shareholders  of Charter Pacific
will receive $3.80 per share in cash, or a total of approximately $21.4 million,
subject to a $0.20 per share  escrow  relating to certain  potential  litigation
costs. Charter Pacific is headquartered in Agoura Hills, California, and has one
other branch  office in Beverly  Hills,  California.  At June 30, 2001,  Charter
Pacific  had $107.6  million in total  assets,  $71.4  million in loans,  net of
unearned discount,  $10.7 million in investment  securities and $94.0 million in
deposits. FBA expects this transaction, which is subject to regulatory approvals
and the approval of Charter Pacific's shareholders, will be completed during the
third quarter of 2001.

         On June 22,  2001,  FBA and BYL  Bancorp  (BYL)  executed a  definitive
agreement  providing  for the  acquisition  of BYL and its wholly owned  banking
subsidiary,  BYL Bank  Group,  by FBA.  Under  the terms of the  agreement,  the
shareholders  of BYL will  receive  $18.50  per  share  in  cash,  or a total of
approximately  $52.0 million.  BYL Bank is headquartered in Orange,  California,
and has six branches located in Orange and Riverside counties. At June 30, 2001,
BYL had $278.2 million in total assets, $151.2 million in loans, net of unearned
discount, $12.3 million in investment securities and $246.1 million in deposits.
FBA expects this transaction,  which is subject to regulatory  approvals and the
approval of BYL's  shareholders,  will be completed during the fourth quarter of
2001.


<PAGE>



         On July 20, 2001,  First Banks and Union  Financial  Group,  Ltd. (UFG)
executed a definitive  agreement  providing for the  acquisition of UFG by First
Banks for a total purchase price of approximately $26.8 million. Under the terms
of the agreement,  the common  shareholders of UFG will receive $11.00 per share
in cash, or a total of $18.0 million, subject to a $1.60 per common share escrow
to cover certain contingent liabilities.  The shareholders of Series C preferred
stock may convert their shares to common stock at closing and receive the common
equivalent  transaction  value,  or they will receive the stated value of $1,000
per share,  plus, in either case,  cumulative  dividends.  The  shareholders  of
Series D preferred  stock will  receive the stated  value of $100,000 per share.
UFG is  headquartered  in Swansea,  Illinois,  and operates nine banking offices
located in St. Clair,  Madison,  Jersey and Macoupin counties. At June 30, 2001,
UFG had $361.0 million in total assets, $270.0 million in loans, net of unearned
discount, $62.3 million in investment securities and $300.8 million in deposits.
First Banks expects this transaction,  which is subject to regulatory  approvals
and the  approval of UFG's  shareholders,  will be  completed  during the fourth
quarter of 2001.

         On August 2, 2001, First Banks and Plains Financial  Corporation  (PFC)
executed a definitive  agreement  providing for the  acquisition of PFC by First
Banks. PFC is headquartered in Des Plaines,  Illinois,  and has a total of three
banking offices in Des Plaines,  and one banking office in Elk Grove,  Illinois.
At June 30, 2001,  PFC had $255.4  million in total  assets,  $149.7  million in
loans,  net of unearned  discount,  $72.7 million in investment  securities  and
$220.3 million in deposits.  Under the terms of the agreement,  the shareholders
of PFC will  receive  cash in  exchange  for  their  shares.  The  total  merger
consideration  is  approximately   $36.5  million.   First  Banks  expects  this
transaction,  which is subject to regulatory approvals and the approval of PFC's
shareholders, will be completed during the first quarter of 2002.

(3)      Derivative Instruments and Hedging Activities

         In June 1998, the Financial  Accounting  Standards  Board (FASB) issued
Statement  of Financial  Accounting  Standards  (SFAS) No. 133 - Accounting  for
Derivative  Instruments and Hedging Activities (SFAS 133). In June 1999 and June
2000, the FASB issued SFAS No. 137 - Accounting for Derivative  Instruments  and
Hedging  Activities - Deferral of the Effective  Date of FASB Statement No. 133,
an  Amendment  of FASB  Statement  No. 133,  and SFAS No. 138 -  Accounting  for
Derivative  Instruments and Hedging  Activities,  an Amendment of FASB Statement
No.  133,  respectively.  SFAS  133,  as  amended,  establishes  accounting  and
reporting  standards for derivative  instruments,  including certain  derivative
instruments embedded in other contracts,  and for hedging activities.  SFAS 133,
as amended,  requires an entity to recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value.  If certain  conditions are met, a derivative may be specifically
designated as a hedge in one of three categories.  The accounting for changes in
the fair  value of a  derivative  (that is,  gains and  losses)  depends  on the
intended use of the derivative and the resulting designation. Under SFAS 133, as
amended,  an entity  that  elects  to apply  hedge  accounting  is  required  to
establish,  at the inception of the hedge,  the method it will use for assessing
the  effectiveness  of the hedging  derivative and the measurement  approach for
determining  the  ineffective  aspect  of  the  hedge.  Those  methods  must  be
consistent with the entity's approach to managing risk.

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

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

         Interest Rate Swap  Agreements - Fair Value Hedges.  Interest rate swap
agreements  designated  as fair value  hedges are  accounted  for at fair value.
Changes in the fair value of the swap  agreements  are  recognized  currently in
noninterest  income.  The change in the fair value on the underlying hedged item
attributable  to the hedged risk adjusts the carrying  amount of the  underlying
hedged item and is also recognized  currently in noninterest income. All changes
in fair value are measured on a monthly basis. The swap agreements are accounted
for on an accrual basis with the net interest  differential  being recognized as
an  adjustment  to interest  income or interest  expense of the related asset or
liability.

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

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

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

         On January 1, 2001, First Banks  implemented SFAS 133, as amended.  The
implementation  of SFAS 133, as amended,  resulted in an increase in  derivative
instruments  of $12.5 million,  an increase in deferred tax  liabilities of $5.1
million  and an  increase  in other  comprehensive  income of $9.1  million.  In
addition,  First  Banks  recorded a  cumulative  effect of change in  accounting
principle  of $1.4  million,  net of taxes of  $741,000,  as a reduction  of net
income.

 (4)     Earnings Per Common Share

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

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

     Three months ended June 30, 2001:
<S>                                                                          <C>               <C>           <C>
         Basic EPS - income before cumulative effect.....................    $   7,767         23,661        $  328.27
         Cumulative effect of change in accounting principle, net of tax.            -              -                -
                                                                             ---------         ------        ---------
         Basic EPS - income available to common stockholders.............        7,767         23,661           328.27
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          128            800            (5.49)
                                                                             ---------         ------        ---------
         Diluted EPS - income available to common stockholders...........    $   7,895         24,461        $  322.78
                                                                             =========         ======        =========

     Three months ended June 30, 2000:
         Basic EPS - income available to common stockholders.............    $  14,540         23,661        $  614.51
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          128          1,028           (20.39)
                                                                             ---------         ------        ---------
         Diluted EPS - income available to common stockholders...........    $  14,668         24,689        $  594.12
                                                                             =========         ======        =========

     Six months ended June 30, 2001:
         Basic EPS - income before cumulative effect.....................    $  21,299         23,661        $  900.21
         Cumulative effect of change in accounting principle, net of tax.        1,376              -           (58.16)
                                                                             ---------         ------           ------
         Basic EPS - income available to common stockholders.............       19,923         23,661           842.05
                                                                             =========         ======        =========
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          321            893           (17.56)
                                                                             ---------         ------        ---------
         Diluted EPS - income available to common stockholders...........    $  20,244         24,554        $  824.49
                                                                             =========         ======        =========

     Six months ended June 30, 2000:
         Basic EPS - income available to common stockholders.............    $  28,931         23,661        $1,222.71
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          321          1,076           (40.24)
                                                                             ---------         ------        ---------
         Diluted EPS - income available to common stockholders...........    $  29,252         24,737        $1,182.47
                                                                             =========         ======        =========
</TABLE>
<PAGE>

(5)      Transactions with Related Parties

         First Brokerage  America,  L.L.C., a limited liability company which is
indirectly  owned by First Bank' Chairman and members of his immediate  family,
received  approximately  $676,000  and $1.4 million for the three and six months
ended June 30, 2001, and $565,000 and $1.1 million for the comparable periods in
2000,  respectively,  in commissions paid by unaffiliated third-party companies.
The  commissions  received were primarily in connection with sales of annuities,
securities and other insurance products to customers of the Subsidiary Banks.

         First Services,  L.P., a limited partnership  indirectly owned by First
Bank'  Chairman and his adult children,  provides data processing  services and
operational  support for First Banks,  Inc. and the Subsidiary  Banks. Fees paid
under  agreements with First Services,  L.P. were $5.6 million and $10.9 million
for the three and six months  ended June 30,  2001,  and $4.7  million  and $9.2
million  for the  comparable  periods  in 2000,  respectively.  During the three
months  ended June 30,  2001 and 2000,  First  Services,  L.P.  paid First Banks
$498,000 and  $435,000,  respectively,  and during the six months ended June 30,
2001 and 2000,  First  Services,  L.P.  paid First Banks  $984,000 and $889,000,
respectively,  in rental fees for the use of data processing and other equipment
owned by First Banks.

(6)      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 Bank' financial  statements.  Under
capital adequacy  guidelines and the regulatory  framework for prompt corrective
action,  First  Banks  and the  Subsidiary  Banks  must  meet  specific  capital
guidelines that involve quantitative measures of assets, liabilities and certain
off-balance-sheet  items as calculated  under regulatory  accounting  practices.
Capital amounts and classifications are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.

         Quantitative  measures  established  by  regulation  to ensure  capital
adequacy  require  First  Banks and the  Subsidiary  Banks to  maintain  minimum
amounts and ratios of total and Tier I capital  (as defined in the  regulations)
to  risk-weighted  assets,  and of Tier I capital to average assets.  Management
believes,  as of June 30, 2001,  First Banks and the Subsidiary  Banks were each
well capitalized under the applicable regulations.

         As of June 30,  2001,  the most recent  notification  from First Banks'
primary  regulator  categorized  First  Banks and the  Subsidiary  Banks as well
capitalized under the regulatory  framework for prompt corrective  action. To be
categorized  as well  capitalized,  First  Banks and the  Subsidiary  Banks must
maintain minimum total risk-based,  Tier I risk-based and Tier I leverage ratios
as set forth in the table below.

         At June 30, 2001 and December 31, 2000, First Banks' and the Subsidiary
Banks' required and actual capital ratios were as follows:
<TABLE>
<CAPTION>

                                                                                                         To be well
                                                               Actual                                 capitalized under
                                                       ------------------------
                                                       June 30,    December 31,      For capital      prompt corrective
                                                        2001           2000       adequacy purposes   action provisions
                                                        ----           ----       -----------------   -----------------

     Total capital (to risk-weighted assets):
<S>                                                       <C>          <C>               <C>                <C>
              First Banks.............................    10.60%       10.21%            8.0%               10.0%
              First Bank..............................    10.45        10.71             8.0                10.0
              FB&T....................................    10.70        10.58             8.0                10.0
              BSF (1).................................       --        22.38             8.0                10.0


     Tier 1 capital (to risk-weighted assets):
              First Banks.............................     8.01         7.56             4.0                 6.0
              First Bank..............................     9.20         9.46             4.0                 6.0
              FB&T....................................     9.45         9.32             4.0                 6.0
              BSF (1).................................       --        21.42             4.0                 6.0

     Tier 1 capital (to average assets):
              First Banks.............................     7.33         7.45             3.0                 5.0
              First Bank..............................     8.10         8.49             3.0                 5.0
              FB&T....................................     8.73         9.27             3.0                 5.0
              BSF (1).................................       --        22.00             3.0                 5.0
____________________
(1)  BSF was acquired by FBA on December 31, 2000.  FB&T merged with BSF on March 29, 2001, and BSF was renamed First Bank & Trust.
</TABLE>
<PAGE>

(7)  Business Segment Results

         First Banks' business segments are its Subsidiary Banks. The reportable
business  segments are consistent with the management  structure of First Banks,
the  Subsidiary   Banks  and  the  internal   reporting   system  that  monitors
performance.

         Through the respective  branch  networks,  the Subsidiary Banks provide
similar  products and services in their defined  geographic  areas. The products
and services  offered  include a broad range of commercial and personal  deposit
products,  including demand, savings, money market and time deposit accounts. In
addition,  the  Subsidiary  Banks  market  combined  basic  services for various
customer groups,  including packaged accounts for more affluent  customers,  and
sweep accounts,  lock-box  deposits and cash management  products for commercial
customers.  The Subsidiary Banks also offer both consumer and commercial  loans.
Consumer lending includes  residential real estate,  home equity and installment
lending.  Commercial  lending  includes  commercial,  financial and agricultural
loans, real estate  construction and development  loans,  commercial real estate
loans, asset-based loans, commercial leasing and trade financing.

         Other  financial  services  include  mortgage  banking,   debit  cards,
brokerage  services,   credit-related  insurance,   automated  teller  machines,
telephone banking,  bankruptcy,  escrow and stock option services,  safe deposit
boxes and trust,  private banking and institutional  money management  services.
The revenues  generated by each business  segment consist  primarily of interest
income, generated from the loan and investment security portfolios,  and service
charges  and  fees,  generated  from the  deposit  products  and  services.  The
geographic areas include Missouri,  Illinois,  southern and northern  California
and Houston,  Dallas, Irving and McKinney,  Texas. The products and services are
offered to customers  primarily within their respective  geographic  areas, with
the exception of loan participations executed between the Subsidiary Banks.

         The business  segment results are consistent with First Bank'  internal
reporting  system and, in all  material  respects,  with  accounting  principles
generally accepted in the United States of America and practices  predominant in
the banking industry.


<PAGE>
<TABLE>
<CAPTION>
         The business segment results are summarized as follows:

                                                                             First Bank                First Bank & Trust (1)
                                                                     --------------------------       -----------------------
                                                                     June 30,      December 31,       June 30,   December 31,
                                                                       2001            2000             2001         2000
                                                                       ----            ----             ----         ----
                                                                                   (dollars expressed in thousands)
Balance sheet information:

<S>                                                                  <C>                <C>            <C>          <C>
Investment securities...........................................     $154,789           214,005        203,610      330,478
Loans, net of unearned discount.................................    2,809,064         2,694,005      2,053,295    2,058,628
Total assets....................................................    3,244,560         3,152,885      2,628,378    2,733,545
Deposits........................................................    2,784,522         2,729,489      2,224,079    2,306,469
Stockholder'  equity............................................      281,750           273,848        316,646      333,186
                                                                    =========         =========      =========    =========

                                                                             First Bank                First Bank & Trust (1)
                                                                         ------------------            ----------------------
                                                                         Three months ended              Three months ended
                                                                              June 30,                        June 30,
                                                                      -------------------------         -------------------
                                                                      2001                 2000          2001         2000
                                                                      ----                 ----          ----         ----
Income statement information:

Interest income.................................................     $ 61,391            61,869         52,339       42,661
Interest expense................................................       30,121            28,268         20,712       16,943
                                                                     --------            ------         ------       ------
     Net interest income........................................       31,270            33,601         31,627       25,718
Provision for loan losses.......................................        2,900             3,150            820          470
                                                                     --------            ------         ------       ------
     Net interest income after provision for loan losses........       28,370            30,451         30,807       25,248
                                                                     --------            ------         ------       ------
Noninterest income..............................................       13,373             8,971          6,343        2,797
Noninterest expense.............................................       24,561            22,120         22,171       16,436
                                                                     --------            ------         ------       ------
     Income (loss) before provision (benefit) for income
       taxes and minority interest in income of subsidiary......       17,182            17,302         14,979       11,609
Provision (benefit) for income taxes............................        6,000             6,097          5,772        4,631
                                                                     --------            ------         ------       ------
     Income (loss) before minority interest in income of
       subsidiary...............................................       11,182            11,205          9,207        6,978
Minority interest in income of subsidiary.......................           --                --             --           --
                                                                     --------            ------         ------       ------
        Net income..............................................       11,182            11,205          9,207        6,978
                                                                     ========            ======         ======       ======


                                                                             First Bank                First Bank & Trust (1)
                                                                      --------------------------       ----------------------
                                                                          Six months ended                Six months ended
                                                                              June 30,                        June 30,
                                                                      -------------------------         ------------------
                                                                      2001                 2000         2001          2000
                                                                      ----                 ----         ----          ----
Income statement information:

Interest income..................................................    $122,986           120,627        107,078       81,468
Interest expense.................................................      61,297            54,520         43,052       32,041
                                                                     --------           -------        -------       ------
     Net interest income.........................................      61,689            66,107         64,026       49,427
Provision for loan losses........................................       6,200             5,750            910        1,452
                                                                     --------           -------        -------       ------
     Net interest income after provision for loan losses.........      55,489            60,357         63,116       47,975
Noninterest income...............................................      25,805            15,965         10,853        5,843
                                                                     --------           -------        -------       ------
Noninterest expense..............................................      48,867            41,926         42,963       31,118
     Income (loss) before provision (benefit) for income taxes,
       minority interest in income of subsidiary and cumulative
       of change in accounting principle.........................      32,427            34,396         31,006       22,700
Provision (benefit) for income taxes.............................      11,327            11,930         12,056        9,027
                                                                     --------           -------        -------       ------
     Income (loss) before minority interest in income of
       subsidiary and cumulative effect of change in
       accounting principle......................................      21,100            22,466         18,950       13,673
Minority interest in income of subsidiary........................          --                --             --           --
                                                                     --------           -------        -------       ------
     Income before cumulative effect of change in
       accounting principle......................................      21,100            22,466         18,950       13,673
Cumulative effect of change in accounting principle, net of tax..         917                --            459           --
                                                                     --------           -------        -------       ------
     Net income..................................................      20,183            22,466         18,491       13,673
                                                                     ========           =======        =======       ======
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

___________________________
<S>  <C>
(1)  Includes  BSF,  which was acquired by FBA on December 31,  2000.   FB&T merged with BSF on March 29, 2001, and  BSF was renamed
     First Bank & Trust.

(2)  Corporate  and  other  includes $2.9 million and $5.8 million  of  guaranteed  preferred  debenture  expense,  after applicable
     income tax benefit of $1.6 million and $3.2 million for the three and six months ended  June 30, 2001,   and  $2.0 million  and
     $3.9  million  of  guaranteed  preferred  debenture  expense, after  applicable  income  tax  benefit  of $1.0 million and $2.1
     million, for   the comparable periods in 2000, respectively.  In addition, corporate and other includes FCG and holding company
     expenses.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                     Corporate, other and
                              intercompany reclassifications (2)                       Consolidated totals
                              ----------------------------------                       -------------------
                               June 30,           December 31,                    June 30,          December 31,
                                 2001                 2000                          2001                2000
                                 ----                 ----                          ----                ----
                                                          (dollars expressed in thousands)


<S>                             <C>                  <C>                         <C>                    <C>
                                26,611               19,051                      385,010                563,534
                                  (416)                (368)                   4,861,943              4,752,265
                                31,265               (9,739)                   5,904,203              5,876,691
                               (14,482)             (23,543)                   4,994,119              5,012,415
                              (201,992)            (254,188)                     396,404                352,846
                              ========             ========                    =========              =========

                                   Corporate, other and
                             intercompany reclassifications (2)                        Consolidated totals
                             ----------------------------------                 -------------------------------
                                   Three months ended                                 Three months ended
                                        June 30,                                           June 30,
                             ----------------------------------                 -------------------------------
                               2001                   2000                       2001                     2000
                               ----                   ----                       ----                     ----

                                  (374)                (369)                     113,356                104,161
                                   (61)                 560                       50,772                 45,771
                               -------               ------                      -------                -------
                                  (313)                (929)                      62,584                 58,390
                                     -                    -                        3,720                  3,620
                                  (313)                (929)                      58,864                 54,770
                               -------               ------                      -------                -------
                                  (292)                (297)                      19,424                 11,471
                                17,666                3,361                       64,398                 41,917
                               -------               ------                      -------                -------

                               (18,271)              (4,587)                      13,890                 24,324
                                (6,315)              (1,531)                       5,457                  9,197
                               -------               ------                      -------                -------

                               (11,956)              (3,056)                       8,433                 15,127
                                   534                  455                          534                    455
                               -------               ------                      -------                -------
                               (12,490)              (3,511)                       7,899                 14,672
                               =======               ======                      =======                =======

                                   Corporate, other and
                             intercompany reclassifications (2)                        Consolidated totals
                             ----------------------------------                        -------------------
                                    Six months ended                                   Six months ended
                                        June 30,                                           June 30,
                             ----------------------------------                  -----------------------------
                               2001                   2000                       2001                     2000
                               ----                   ----                       ----                     ----



                                  (671)                (217)                     229,393                201,878
                                   563                1,497                      104,912                 88,058
                               -------               ------                      -------                -------
                                (1,234)              (1,714)                     124,481                113,820
                                    --                   --                        7,110                  7,202
                               -------               ------                      -------                -------
                                (1,234)              (1,714)                     117,371                106,618
                                ------               ------                      -------                -------
                                  (760)                (773)                      35,898                 21,035
                                24,186                6,666                      116,016                 79,710
                               -------               ------                      -------                -------


                               (26,180)              (9,153)                      37,253                 47,943
                                (8,802)              (3,216)                      14,581                 17,741
                               -------               ------                      -------                -------


                               (17,378)              (5,937)                      22,672                 30,202
                                 1,045                  943                        1,045                    943
                               -------               ------                      -------                -------

                               (18,423)              (6,880)                      21,627                 29,259
                                    --                   --                        1,376                     --
                               -------               ------                      -------                -------
                               (18,423)              (6,880)                      20,251                 29,259
                               =======               ======                      =======                =======
</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 our financial  condition,  results of operations and
business.  These  forward-looking  statements  are subject to certain  risks and
uncertainties,  not all of which can be predicted or  anticipated.  Factors that
may cause actual results to differ  materially  from those  contemplated  by the
forward-looking   statements   herein  include  market  conditions  as  well  as
conditions  affecting  the  banking  industry  generally  and  factors  having a
specific  impact on us,  including but not limited to  fluctuations  in interest
rates and in the economy;  the impact of laws and  regulations  applicable to us
and changes therein;  the impact of accounting  pronouncements  applicable to us
and changes therein;  competitive  conditions in the markets in which we conduct
our operations,  including  competition  from banking and non-banking  companies
with  substantially  greater  resources  than us,  some of which  may  offer and
develop  products  and  services  not  offered by us; our ability to control the
composition of our loan portfolio without adversely  affecting  interest income;
and our ability to respond to changes in technology.  With regard to our efforts
to grow  through  acquisitions,  factors  that  could  affect  the  accuracy  or
completeness  of  forward-looking   statements   contained  herein  include  the
potential  for  higher  than  anticipated   operating  costs  arising  from  the
geographic  dispersion of our offices,  as compared with  competitors  operating
solely in contiguous  markets;  the competition of larger acquirers with greater
resources than us,  fluctuations in the prices at which acquisition  targets may
be available  for sale and in the market for our  securities;  and the potential
for  difficulty or  unanticipated  costs in realizing the benefits of particular
acquisition  transactions.  Readers of our Form 10-Q should  therefore not place
undue reliance on forward-looking statements.

                                     General

         We are a registered bank holding  company  incorporated in Missouri and
headquartered  in St.  Louis  County,  Missouri.  Through the  operation  of our
subsidiaries,  we offer a broad array of  financial  services  to  consumer  and
commercial customers.  We currently operate banking subsidiaries with 135 branch
offices throughout California,  Illinois,  Missouri and Texas. At June 30, 2001,
we had total assets of $5.90 billion,  loans, net of unearned discount, of $4.86
billion,  total  deposits  of $4.99  billion and total  stockholder'   equity of
$396.4 million.

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

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

         Our  subsidiary  banks  and FCG are  wholly  owned by their  respective
parent  companies.  We owned  93.16%  and  92.86%  of FBA at June  30,  2001 and
December 31, 2000, respectively.

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

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

<PAGE>

                               Financial Condition

         Our total assets were $5.90  billion and $5.88 billion at June 30, 2001
and December 31, 2000,  respectively.  The increase in total assets is primarily
attributable  to internal  loan  growth,  bank  premises and  equipment,  net of
depreciation and amortization, and derivative instruments partially offset by an
anticipated  level of attrition  associated with our  acquisitions of Commercial
Bank of San Francisco,  Millennium  Bank and Bank of San  Francisco,  which were
completed during the fourth quarter of 2000.  Loans,  net of unearned  discount,
increased  by $109.7  million,  which is further  discussed  under  "-Loans  and
Allowance for Loan Losses."  Offsetting the overall increase in total assets was
a decrease in investment  securities of $178.5 million to $385.0 million at June
30, 2001 from $563.5  million at December 31, 2000. We attribute the decrease in
investment  securities  primarily  to  the  liquidation  of  certain  investment
securities  held by FBA and a higher than normal  level of  investment  security
calls experienced during the six months ended June 30, 2001. The funds generated
from the reduction of investment  securities  were utilized to fund loan growth,
with  the  remaining  funds  being   temporarily   invested  in  cash  and  cash
equivalents, resulting in an increase of $106.3 million in federal funds sold to
$133.1  million at June 30, 2001 from $26.8  million at December 31,  2000.  The
increase in assets is also due to  derivative  instruments  of $27.4  million at
June  30,  2001,  resulting  solely  from the  implementation  of  Statement  of
Financial  Accounting  Standards,  or SFAS,  No. 133,  Accounting for Derivative
Instruments and Hedging Activities,  as amended by SFAS No. 137 - Accounting for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB  Statement No. 133, an Amendment of FASB Statement No. 133, and SFAS No.
138 - Accounting for Derivative Instruments and Hedging Activities, an Amendment
of FASB  Statement  No. 133. In addition,  bank premises and  equipment,  net of
depreciation and amortization, increased $11.0 million to $125.8 million at June
30, 2001 from $114.8  million at December 31, 2000. We primarily  attribute this
increase to our recent  acquisitions as well as the purchase and remodeling of a
new  operations  center and corporate  administrative  building.  Total deposits
decreased by $20.0  million to $4.99 billion at June 30, 2001 from $5.01 billion
at  December  31,  2000,  which  reflects  an  anticipated  level  of  attrition
associated  with our  acquisitions  in the fourth  quarter  of 2000.  Short-term
borrowings  increased by $60.6  million to $201.2  million at June 30, 2001 from
$140.6 million at December 31, 2000. This increase reflects a slight increase in
securities sold under  agreements to repurchase and a $50.0 million Federal Home
Loan Bank advance drawn as an  additional  source of funds  principally  for the
substantial  increase  in  loans  held  for sale as the  general  reductions  in
interest rates led to substantial  refinancing of single family  mortgage loans.
Our note payable  decreased by $48.5  million to $34.5  million at June 30, 2001
from $83.0  million at December 31, 2000.  The reduction of our note payable was
funded with dividends  from our  subsidiaries  and a capital  reduction of $23.0
million  that  was  recorded  in  conjunction  with  the  merger  of our  former
subsidiary, First Bank & Trust, with Bank of San Francisco,  effective March 29,
2001. In conjunction  with this merger,  Bank of San Francisco was renamed First
Bank & Trust. In addition,  accrued expenses and other liabilities  decreased by
$28.6  million to $26.3  million at June 30, 2001 from $54.9 million at December
31,  2000.  We  attribute  the majority of this  decrease to our  quarterly  tax
payments and the timing of certain other routine payments.


                              Results of Operations

Net Income

         Net income was $7.9  million,  or $322.78 per common share on a diluted
basis, for the three months ended June 30, 2001, in comparison to $14.7 million,
or $594.12 per common share on a diluted  basis,  for the  comparable  period in
2000. For the six months ended June 30, 2001,  net income was $20.3 million,  or
$824.49 per common share on a diluted basis, in comparison to $29.3 million,  or
$1,182.47 per common share on a diluted basis, for 2000. The  implementation  of
SFAS No. 133, as amended,  on January 1, 2001,  resulted in the recognition of a
cumulative effect of change in accounting principle of $1.4 million, net of tax,
which reduced net income.  Excluding this item, net income was $21.6 million, or
$882.65 per common share on a diluted  basis,  for the six months ended June 30,
2001. The primary  factors that led to the decline in earnings for the three and
six months ended June 30, 2001 were  continued  reductions  in the prime lending
rate and higher operating expenses,  including  nonrecurring  charges associated
with the establishment of a specific reserve relating to a contingent  liability
and the settlement of certain litigation. Net interest income improved primarily
as a result of increased  earning assets generated  through internal loan growth
along with our  acquisitions  of Lippo  Bank,  certain  assets of First  Capital
Group, Inc., Bank of Ventura, Commercial Bank of San Francisco,  Millennium Bank
and Bank of San Francisco,  completed during 2000.  However,  the improvement in
net interest income was partially  offset by six reductions in the prime lending
rate  during the first and  second  quarters  of 2001.  During the three and six
months ended June 30, 2001,  noninterest  income  improved to $19.4  million and
$35.9 million,  from $11.5 million and $21.0 million for the comparable  periods
in 2000, respectively, as further discussed under "-Noninterest Income."
<PAGE>

         The  improvement  in net  interest  income and  noninterest  income was
offset by increased  operating  expenses of $64.4 million and $116.0 million for
the three and six months  ended June 30,  2001,  compared  to $41.9  million and
$79.7 million for the comparable  periods in 2000,  respectively.  The increased
operating expenses are primarily attributable to:

>>       the operating expenses of the aforementioned acquisitions subsequent to
         their respective acquisition dates;

>>       increased salaries and employee benefit expenses;

>>       increased data processing fees;

>>       increased legal, examination and professional fees;

>>       increased  amortization  of intangibles associated with the purchase of
         the aforementioned entities;

>>       a nonrecurring litigation settlement charge; and

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

         Additionally,  guaranteed  preferred debentures expense of $1.5 million
on the trust preferred  securities issued by First Preferred Capital Trust II in
October 2000 further  contributed to the overall increase in operating expenses.
These higher operating expenses,  exclusive of the litigation settlement and the
specific reserve on the unfunded letter of credit, are reflective of significant
investments that we have made in personnel, technology, capital expenditures and
new business lines in conjunction  with our overall  strategic  growth plan. The
payback on these  investments  is expected to occur over a longer period of time
through higher and more diversified revenue streams.

Net Interest Income

         Net interest income  (expressed on a tax equivalent  basis) improved to
$62.8 million, or 4.70% of  interest-earning  assets, for the three months ended
June 30, 2001, from $58.6 million, or 4.94% of interest-earning  assets, for the
comparable  period in 2000. For the six months ended June 30, 2001 and 2000, net
interest income  (expressed on a tax equivalent  basis) was $124.9  million,  or
4.73% of  interest  earning  assets,  and $114.2  million,  or 4.90% of interest
earning assets, respectively. We credit the improved net interest income for the
three and six months ended June 30, 2001  primarily to the net  interest-earning
assets  provided  by our  aforementioned  acquisitions  completed  during  2000,
internal loan growth,  and earnings on our interest rate swap agreements that we
entered  into in  conjunction  with our risk  management  program.  The  overall
increase in net interest income was partially  offset by reductions in the prime
lending rate that occurred during the first and second quarters of 2001.

         Average loans, net of unearned  discount,  were $4.88 billion and $4.84
billion for the three and six months ended June 30, 2001, in comparison to $4.27
billion and $4.18 billion for the comparable periods in 2000, respectively.  The
yield on our loan  portfolio  decreased to 8.70% and 8.88% for the three and six
months ended June 30, 2001,  respectively,  in comparison to 9.05% and 8.95% for
the comparable periods in 2000. The increase in the cost of deposits while there
was a decrease in the yield on loans was the major contributor to the decline in
our net  interest  rate margin for the three and six months ended June 30, 2001,
of 24  basis  points  and 17 basis  points,  respectively,  from the  comparable
periods in 2000.  We attribute  the decline in yields and our net interest  rate
margin  primarily to the continued  decreases in the prime lending rate.  During
the period from December 31, 2000 through June 30, 2001,  the Board of Governors
of the Federal  Reserve  System  decreased  the targeted  Federal funds rate six
times,  resulting in six  decreases in the prime rate of interest  from 9.50% to
6.75%.  This is reflected not only in the rate of interest  earned on loans that
are indexed to the prime rate,  but also in other assets and  liabilities  which
either have variable or adjustable  rates,  or which matured or repriced  during
this period.  As further  discussed under "-Interest Rate Risk  Management," the
reduced  level of interest  income  earned on our loan  portfolio as a result of
declining interest rates was partially mitigated by the earnings associated with
our interest rate swap  agreements.  For the three and six months ended June 30,
2001,  these  agreements  provided  income  of $4.7  million  and $5.7  million,
respectively, in comparison to expense of $1.0 million and $1.7 million incurred
for the comparable periods in 2000.
<PAGE>

         For the  three  and six  months  ended  June 30,  2001,  the  aggregate
weighted  average  rate paid on our  deposit  portfolio  increased  to 4.56% and
4.73%,  respectively,  compared to 4.52% and 4.42% for the comparable periods in
2000. The overall  increases  reflect  increased rates paid by us to attract and
retain  deposits as a result of generally  increasing  interest rates during the
first six months of 2000 compared to generally  decreasing interest rates during
the first six months of 2001,and the high level of competition within our market
areas. The aggregate weighted average rate paid on our note payable decreased to
5.93% and 6.78% for the three and six months  ended June 30,  2001,  compared to
7.95% and 7.55% for the comparable  periods in 2000.  Amounts  outstanding under
our  $120.0  million  line of credit  with a group of  unaffiliated  banks  bear
interest  at the lead  bank's  corporate  base  rate or, at our  option,  at the
Eurodollar  rate plus a margin  determined  by the  outstanding  balance and our
profitability. Thus, our revolving credit line represents a relatively high-cost
funding  source,  although it has been mitigated by the continued  reductions in
the prime lending  rate, so that  increased  advances  under the revolving  note
payable have the effect of increasing  the weighted  average rate of non-deposit
liabilities.  During 2000, we utilized the note payable to fund our acquisitions
of Commercial Bank of San Francisco,  Millennium Bank and Bank of San Francisco,
thus  resulting  in a higher  level of  borrowings  occurring  during the fourth
quarter of 2000.  Furthermore,  the aggregate  weighted average rate paid on our
short-term  borrowings also declined for the three and six months ended June 30,
2001, reflecting continued reductions in the current interest rate environment.


<PAGE>



         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, 2001 and 2000:
<TABLE>
<CAPTION>

                                              Three months ended June 30,                        Six months ended June 30,
                                   -------------------------------------------------  ----------------------------------------------
                                            2001                     2000                     2001                     2000
                                   ------------------------  -----------------------  -----------------------  ---------------------
                                            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>
   Loans (1)(2)(3)(4).......... $4,883,268  105,931 8.70% $4,274,961  96,234 9.05% $4,840,188 213,069 8.88% $4,180,776 185,987 8.95%
   Investment securities (4)...    388,456    6,466 6.68     440,008   7,277 6.65     428,817  15,072 7.09     440,405  14,279 6.52
   Federal funds sold and other     82,631    1,160 5.63      56,891     864 6.11      57,511   1,655 5.80      70,222   2,033 5.82
                                ----------  ------- ----  ----------  ------ ----  ---------- ------- ----  ---------- ------- ----
        Total interest-earning
          assets...............  5,354,355  113,557 8.51   4,771,860 104,375 8.80   5,326,516 229,796 8.70   4,691,403 202,299 8.67
                                            -------                  -------                  -------                  -------
Nonearning assets..............    541,033                   345,751                  524,469                  348,529
                                ----------                ----------               ----------               ----------
        Total assets........... $5,895,388                $5,117,611               $5,850,985               $5,039,932
                                ==========                ==========               ==========               ==========

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

Interest-bearing liabilities:
   Interest-bearing deposits:
     Interest-bearing demand
       deposits................ $  478,771    1,807 1.51% $  421,937   1,420 1.35% $  466,634   3,480 1.50% $  422,512   2,885 1.37%
     Savings deposits..........  1,479,117   13,342 3.62   1,257,448 1 2,434 3.98   1,452,496  27,525 3.82   1,241,385  24,070 3.90
     Time deposits of $100
       or more (3).............    534,970    7,453 5.59     210,945   2,841 5.42     527,164  15,329 5.86     223,941   5,855 5.26
     Other time deposits (3)...  1,778,304   25,954 5.85   1,939,657  26,314 5.46   1,795,382  53,143 5.97   1,893,330  50,222 5.33
                                ----------  ------- ----  ----------  ------ ----   ---------  ------ ----  ---------- ------- ----
        Total interest-bearing
          deposits.............  4,271,162   48,556 4.56   3,829,987  43,009 4.52   4,241,676  99,477 4.73   3,781,168  83,032 4.42
   Short-term borrowings.......    174,667    1,673 3.84     105,033   1,406 5.38     166,720   3,662 4.43      96,109   2,515 5.26
   Note payable................     36,700      543 5.93      68,611   1,356 7.95      52,753   1,773 6.78      66,869   2,511 7.55
                                ----------  ------- ----  ----------  ------ ----  ----------  ------ ----  ---------- ------- ----
        Total interest-bearing
          liabilities..........  4,482,529   50,772 4.54   4,003,631  45,771 4.60   4,461,149 104,912 4.74   3,944,146  88,058 4.49
                                            -------                   ------                  -------                  -------
Noninterest-bearing liabilities:
   Demand deposits.............    718,259                   617,501                  714,891                  602,459
   Other liabilities...........    297,410                   179,961                  296,085                  187,437
                                ----------                ----------               ----------               ----------
        Total liabilities......  5,498,198                 4,801,093                5,472,125                4,734,042
Stockholder' equity............    397,190                   316,518                  378,860                  305,890
                                ----------                ----------               ----------               ----------
        Total liabilities and
          stockholders' equity. $5,895,388                $5,117,611               $5,850,985               $5,039,932
                                ==========                ==========               ==========               ==========

Net interest income............              62,785                   58,604                  124,884                  114,241
                                            =======                   ======                  =======                  =======
Interest rate spread...........                     3.97                     4.20                     3.96                     4.18
Net interest margin............                     4.70%                    4.94%                    4.73%                    4.90%
                                                    ====                     ====                     ====                     ====
____________________
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Includes the effects of interest rate exchange agreements.
(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustments were approximately
    $201,000 and $403,000 for the three and six months  ended June 30, 2001, and $214,000 and $421,000 for the comparable periods in
    2000, respectively.
</TABLE>




<PAGE>


Provision for Loan Losses

         The provision for loan losses was $3.7 million and $7.1 million for the
three and six months  ended June 30,  2001,  compared  to $3.6  million and $7.2
million for the  comparable  periods in 2000,  respectively.  The provisions for
loan losses reflect the level of loan  charge-offs and recoveries,  the adequacy
of the  allowance for loan losses and the effect of economic  conditions  within
our markets.  Loan charge-offs were $6.4 million and $15.3 million for the three
and six months  ended June 30,  2001,  in  comparison  to $1.8  million and $5.0
million for the  comparable  periods in 2000.  The increase in loan  charge-offs
reflects a single loan in the amount of $4.5 million that was charged-off due to
suspected  fraud on the part of the  borrower,  a $1.4 million  charge-off  on a
single credit  relationship,  a $675,000 charge-off with respect to a loan in an
acquired  portfolio  as  well  as the  recent  general  slow  down  in  economic
conditions  prevalent within our markets.  Loan recoveries were $1.9 million and
$3.8 million for the three and six months ended June 30, 2001,  in comparison to
$2.1 million and $6.2 million for the comparable periods in 2000,  respectively.
Nonperforming  assets and past-due  loans have  increased  during the six months
ended June 30, 2001,  and we  anticipate  these trends will continue in the near
future.  However,  we believe  these trends  represent  normal  cyclical  trends
experienced  within the banking  industry  during  times of economic  slow down.
Management  considered these trends in its overall assessment of the adequacy of
the allowance for loan losses.

         Tables summarizing  nonperforming assets, past-due loans and charge-off
and recovery  experience  are  presented  under  "-Loans and  Allowance for Loan
Losses."

Noninterest Income

         Noninterest  income was $19.4  million and $35.9  million for the three
and six months ended June 30, 2001,  in  comparison  to $11.5  million and $21.0
million for the comparable  periods in 2000,  respectively.  Noninterest  income
consists  primarily of service charges on deposit  accounts and customer service
fees,  mortgage-banking  revenues,  a  gain  on the  sale  of  our  credit  card
portfolio, net gains on derivative instruments and other income.

         Service charges on deposit accounts and customer service fees were $5.3
million and $10.5  million for the three and six months ended June 30, 2001,  in
comparison to $4.9 million and $9.5 million for the comparable  periods in 2000,
respectively.  We attribute the increase in service charges and customer service
fees to:

         >>  increased deposit balances provided by internal growth;

         >>  our acquisitions completed during 2000;

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

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

         >>  increased  income associated with automated teller machine services
             and debit cards.

         The gain on mortgage  loans sold and held for sale was $3.9 million and
$7.3 million for the three and six months ended June 30, 2001,  in comparison to
$1.9 million and $3.3 million for the comparable periods in 2000,  respectively.
The  overall  increase  for the  three and six  months  ended  June 30,  2001 is
primarily  attributable  to a  significant  increase  in  the  volume  of  loans
originated and sold commensurate with the continued  reductions in mortgage loan
rates  experienced  in the  first six  months  of 2001 as well as the  continued
expansion of our mortgage banking activities into new and existing markets.

         During the six months ended June 30,  2001,  we recorded a $2.3 million
pre-tax  gain on the sale of our  credit  card  portfolio.  This  gain is solely
attributable  to the  sale of  this  portfolio  consistent  with  our  strategic
decision to exit this product line and enter into an agent  relationship  with a
larger credit card service provider.

         Noninterest  income for the six months  ended June 30, 2001  included a
net loss on the sale of available-for-sale investment securities of $113,000, in
comparison to a net gain on the sale of available-for-sale investment securities
of $379,000 for the  comparable  period in 2000.  The net loss for 2001 resulted
primarily from the liquidation of certain equity  investment  securities held by
FBA that  resulted in a loss of $134,000,  whereas the net gain in 2000 resulted
primarily  from  sales  of  certain  investment   securities  held  by  acquired
institutions that did not meet our overall investment objectives.
<PAGE>

         The net gain on derivative instruments of $5.0 million and $5.5 million
for the  three and six  months  ended  June 30,  2001,  respectively,  primarily
results from the  termination of certain  interest rate swap agreements in April
and June 2001 to adjust the interest  rate hedge  position  consistent  with the
changes in  portfolio  structure  and mix. In  addition,  the net gain  reflects
changes in the fair value of our interest  rate cap  agreements,  interest  rate
floor agreements and fair value hedges,  and results from the  implementation of
SFAS No.  133, as amended,  on January 1, 2001.  See Note 3 to our  consolidated
financial statements.

         Other income was $5.2  million and $10.4  million for the three and six
months ended June 30, 2001,  in  comparison to $4.7 million and $7.9 million for
the  comparable  periods  in  2000,  respectively.   We  attribute  the  primary
components of the increase to:

         >>  our acquisitions completed during 2000;

         >>  increased   portfolio  management  fee   income   of  $1.6  million
             associated with our Institutional Money Management  Division, which
             was formed in August 2000;

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

         >>  increased rental income of $761,000  associated with our commercial
             leasing activities that  were  acquired  in  conjunction  with  our
             acquisition of First Capital Group, Inc. in February 2000; and

         >>  income of approximately $600,000 associated with equipment leasing
             activities that were acquired in conjunction  with our
             acquisition of Bank of San Francisco in December 2000.

Noninterest Expense

         Noninterest  expense was $64.4 million and $116.0 million for the three
and six months ended June 30, 2001,  in  comparison  to $41.9  million and $79.7
million for the comparable periods in 2000, respectively. The increase reflects:

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

         >>  increased salaries and employee benefit expenses;

         >>  increased data processing fees;

         >>  increased legal, examination and professional fees;

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

         >>  increased guaranteed preferred debentures expense; and

         >>  increased other expense.

         Salaries and employee benefits were $23.3 million and $45.8 million for
the three and six months ended June 30, 2001, in comparison to $18.3 million and
$35.2 million for the  comparable  periods in 2000,  respectively.  We primarily
associate the increase with our 2000  acquisitions.  However,  the increase also
reflects the competitive  environment in the employment market that has resulted
in a higher demand for limited  resources,  thus escalating  industry salary and
employee  benefit  costs  associated  with  employing  and  retaining  qualified
personnel.  In  addition,  the  increase  includes  various  additions  to staff
throughout 2000 to enhance  executive and senior management  expertise,  improve
technological support,  strengthen centralized  operational functions and expand
our product lines.

         Occupancy,  net of rental income,  and furniture and equipment  expense
totaled $6.5  million and $13.8  million for the three and six months ended June
30, 2001, in  comparison  to $6.4 million and $12.3  million for the  comparable
periods in 2000,  respectively.  We  primarily  attribute  the  increase  to our
aforementioned acquisitions,  the relocation of certain branches and operational
areas and  increased  depreciation  expense  associated  with  numerous  capital
expenditures,  including  our  new  facility  that  houses  various  centralized
operations and certain corporate administrative functions.
<PAGE>

         Data  processing fees were $6.5 million and $13.0 million for the three
and six months  ended June 30,  2001 in  comparison  to $5.5  million  and $10.7
million  for the  comparable  periods  in  2000,  respectively.  As  more  fully
described in Note 5 to our consolidated  financial  statements,  First Services,
L.P.  provides data processing and various related  services to our subsidiaries
and  us.  We  attribute  the  increased  data  processing  fees  to  growth  and
technological  advancements  consistent with our product and service  offerings,
continued  upgrades  to  technological  equipment,  networks  and  communication
channels,  and certain nonrecurring expenses associated with the data processing
conversions of Redwood Bank,  Commercial Bank of San Francisco,  and Bank of San
Francisco, completed in February 2001, March 2001 and June 2001, respectively.

         Legal,  examination  and  professional  fees were $1.7 million and $3.4
million for the three and six months ended June 30, 2001,  in comparison to $1.0
million and $2.0 million for the comparable  periods in 2000,  respectively.  We
primarily  attribute  the  increase  in these fees to the  ongoing  professional
services utilized by certain of our acquired  entities,  increased  professional
fees associated with our  Institutional  Money  Management  Division,  which was
formed in August 2000, and increased  legal fees associated with commercial loan
documentation, collection efforts and certain defense litigation.

         Amortization   of   intangibles   associated   with  the   purchase  of
subsidiaries  was $1.9  million  and $3.7  million  for the three and six months
ended June 30,  2001,  in  comparison  to $1.2  million and $2.4 million for the
comparable  periods in 2000,  respectively.  The  increase for 2001 is primarily
attributable  to amortization of the cost in excess of the fair value of the net
assets acquired of the six acquisitions that we completed during 2000.

         Guaranteed  preferred  debentures  expense  was $4.5  million  and $9.0
million for the three and six months ended June 30, 2001,  in comparison to $3.0
million and $6.0 million for the comparable periods in 2000,  respectively.  The
increase  for 2001 is solely  attributable  to the  issuance of trust  preferred
securities in October 2000 by our financing subsidiary,  First Preferred Capital
Trust II.

         Other expense was $18.9 million and $25.1 million for the three and six
months ended June 30, 2001,  in  comparison to $5.4 million and $8.9 million for
the comparable periods in 2000, respectively. Other expense encompasses numerous
general and administrative  expenses including but not limited to travel,  meals
and entertainment,  insurance, freight and courier services,  correspondent bank
charges,   advertising  and  business  development,   miscellaneous  losses  and
recoveries, memberships and subscriptions,  transfer agent fees and sales taxes.
We attribute the majority of the increase in other expense to:

         >>  our acquisitions completed during 2000;

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

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

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

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

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

Provision for Income Taxes

         The  provision  for income taxes was $5.5 million and $14.6 million for
the three and six months ended June 30, 2001,  representing an effective  income
tax rate of 39.29% and 39.14%,  respectively,  in comparison to $9.2 million and
$17.7 million,  representing  an effective  income tax rate of 37.81% and 37.00%
for the comparable periods in 2000, respectively.  The increase in the effective
income tax rate for the three and six months  ended June 30,  2001 is  primarily
attributable to:

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

         >>  a reduction of the deferred tax asset valuation reserve of $404,000
             related to the  utilization of net operating losses associated with
             a previously acquired entity, which was recorded in March 2000.
<PAGE>

                          Interest Rate Risk Management

         We utilize  derivative  financial  instruments  and hedging  activities
solely to assist in our management of interest rate sensitivity by modifying the
repricing,   maturity  and  option   characteristics   of  certain   assets  and
liabilities. The derivative instruments we hold are summarized as follows:
<TABLE>
<CAPTION>

                                                                      June 30, 2001             December 31, 2000
                                                                 ----------------------      ----------------------
                                                                 Notional       Credit       Notional       Credit
                                                                  amount       exposure       amount       exposure
                                                                  ------       --------       ------       --------
                                                                            (dollars expressed in thousands)

<S>                                                             <C>              <C>        <C>               <C>
         Cash flow hedges.....................................  $1,050,000       1,971      1,055,000         3,449
         Fair value hedges....................................     250,000       5,553         50,000           758
         Interest rate floor agreements.......................     310,000       5,631         35,000             6
         Interest rate cap agreements.........................     450,000       1,976        450,000         3,753
         Interest rate lock commitments.......................      22,000          --          4,100            --
         Forward commitments to sell mortgage-backed
             securities.......................................     101,000          --         32,000            --
                                                                ==========       =====      =========         =====
</TABLE>

         The  notional  amounts  of  derivative  financial  instruments  do  not
represent amounts exchanged by the parties and, therefore,  are not a measure of
our credit exposure  through our use of these  instruments.  The credit exposure
represents  the accounting  loss we would incur in the event the  counterparties
failed completely to perform according to the terms of the derivative  financial
instruments  and the  collateral  held to support the credit  exposure was of no
value.

         During the three and six months ended June 30,  2001,  the net interest
income  realized on our derivative  financial  instruments  was $4.7 million and
$5.7  million,  respectively,  in  comparison  to net  interest  expense of $1.0
million and $1.7 million  realized on our derivative  financial  instruments for
the comparable periods in 2000, respectively.

Cash Flow Hedges

         During 1998, we entered into $280.0 million notional amount of interest
rate swap agreements to effectively  lengthen the repricing  characteristics  of
certain  interest-earning  assets to correspond  more closely with their funding
source  with the  objective  of  stabilizing  cash flow,  and  accordingly,  net
interest income,  over time. The swap  agreements,  which are designated as cash
flow  hedges,  provide  for us to  receive a fixed rate of  interest  and pay an
adjustable  rate of interest  equivalent  to the daily  weighted  average  prime
lending rate minus 2.705%.  The terms of the swap  agreements  provide for us to
pay  quarterly  and receive  payment  semiannually.  In June 2001, we terminated
$205.0  million  notional  amount of these  swap  agreements,  which  would have
expired in 2002, in order to appropriately  modify our overall hedge position in
accordance with our risk  management  program.  In conjunction  with the partial
termination  of these  swap  agreements,  we  recorded  a  pre-tax  gain of $2.8
million.  The amount  receivable  and  payable by us under the  remaining  $75.0
million  notional amount of the swap agreements was $1.2 million and $115,000 at
June 30, 2001, respectively.

         During  September 1999, we entered into $175.0 million  notional amount
of  interest  rate  swap  agreements  to  effectively   lengthen  the  repricing
characteristics  of certain  interest-earning  assets to correspond more closely
with their  funding  source with the  objective of  stabilizing  cash flow,  and
accordingly, net interest income, over time. The swap agreements, which had been
designated  as cash flow  hedges,  provided  for us to  receive a fixed  rate of
interest  and pay an  adjustable  rate of interest  equivalent  to the  weighted
average  prime  lending  rate  minus  2.70%.  The  terms of the swap  agreements
provided for us to pay and receive interest on a quarterly basis. In April 2001,
we terminated these swap agreements, which would have expired in September 2001,
in order to lengthen the period covered by the swaps.  In  conjunction  with the
termination of these swap agreements, we recorded a pre-tax gain of $985,000.

<PAGE>

         During  September  2000,  March 2001 and April  2001,  we entered  into
$600.0 million, $200.0 million and $175.0 million notional amount, respectively,
of  interest  rate  swap  agreements  to  effectively   lengthen  the  repricing
characteristics  of certain  interest-earning  assets to correspond more closely
with their  funding  source with the  objective of  stabilizing  cash flow,  and
accordingly,  net interest income,  over time. The swap  agreements,  which have
been  designated as cash flow hedges,  provide for us to receive a fixed rate of
interest  and pay an  adjustable  rate of interest  equivalent  to the  weighted
average  prime  lending rate minus either 2.70% or 2.82%.  The terms of the swap
agreements  provide for us to pay and receive interest on a quarterly basis. The
amount  receivable  by us under the swap  agreements  was $3.9  million and $1.2
million at June 30, 2001 and  December 31,  2000,  respectively,  and the amount
payable by us under the swap  agreements  was $3.0  million and $1.2  million at
June 30, 2001 and December 31, 2000, respectively.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of our  interest  rate swap  agreements  designated  as cash flow
hedges as of June 30, 2001 and December 31, 2000 were as follows:
<TABLE>
<CAPTION>

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

         June 30, 2001:
<S>                                                            <C>               <C>           <C>       <C>
             September 16, 2002..............................  $   75,000        4.05%         5.36%     $     890
             September 20, 2004..............................     600,000        4.05          6.78         24,634
             March 21, 2005..................................     200,000        3.93          5.24         (1,855)
             April 2, 2006...................................     175,000        3.93          5.45         (1,871)
                                                               ----------        ----          ----      ---------
                                                               $1,050,000        4.01          6.16      $  21,798
                                                               ==========        ====          ====      =========

         December 31, 2000:
             September 27, 2001..............................  $  175,000        6.80%         6.14%     $      65
             June 11, 2002...................................      15,000        6.80          6.00              7
             September 16, 2002..............................     195,000        6.80          5.36         (1,776)
             September 18, 2002..............................      70,000        6.80          5.33           (690)
             September 20, 2004..............................     600,000        6.80          6.78         16,869
                                                               ----------        ----          ----      ---------
                                                               $1,055,000        6.80          5.92      $  14,475
                                                               ==========        ====          ====      =========
</TABLE>

Fair Value Hedges

         During September 2000, we entered into $25.0 million notional amount of
one-year interest rate swap agreements and $25.0 million notional amount of five
and one-half  year  interest rate swap  agreements  to  effectively  shorten the
repricing  characteristics  of  certain  interest-bearing  liabilities  with the
objective of stabilizing  net interest  income over time.  The swap  agreements,
which have been designated as fair value hedges, provide for us to receive fixed
rates of  interest  ranging  from 6.60% to 7.25% and pay an  adjustable  rate of
interest  equivalent to the  three-month  London  Interbank  Offering Rate minus
rates ranging from 0.02% to 0.11%. The terms of the swap agreements  provide for
us to pay  interest  on a  quarterly  basis  and  receive  interest  either on a
semiannual  or an  annual  basis.  The  amount  receivable  by us under the swap
agreements  was $1.8  million and $1.0 million at June 30, 2001 and December 31,
2000,  respectively,  and the amount payable by us under the swap agreements was
$68,000 and $119,000 at June 30, 2001 and December 31, 2000, respectively.

         During January 2001, we entered into $50.0 million  notional  amount of
three-year  interest rate swap agreements and $150.0 million  notional amount of
five-year  interest rate swap  agreements to  effectively  shorten the repricing
characteristics  of certain  interest-bearing  liabilities with the objective of
stabilizing net interest income over time. The swap agreements,  which have been
designated  as fair  value  hedges,  provide  for us to  receive a fixed rate of
interest and pay an adjustable  rate of interest  equivalent to the  three-month
London Interbank  Offering Rate. The terms of the swap agreements provide for us
to pay and receive interest on a quarterly  basis.  The amount  receivable by us
under the swap  agreements  was $5.2  million at June 30,  2001,  and the amount
payable by us under the swap agreements was $2.2 million at June 30, 2001.


<PAGE>

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of our interest  rate swap  agreements  designated  as fair value
hedges as of June 30, 2001 were as follows:
<TABLE>
<CAPTION>

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

         June 30, 2001:
<S>                                                            <C>               <C>           <C>         <C>
             September 13, 2001..............................  $   12,500        3.89%         6.80%       $   70
             September 21,2001...............................      12,500        3.71          6.60            79
             January 9, 2004.................................      50,000        4.80          5.37           (84)
             January 9, 2006.................................     150,000        4.80          5.51         (2,073)
             March 13, 2006..................................      12,500        3.80          7.25             86
             March 22, 2006..................................      12,500        3.64          7.20            101
                                                               ----------        ----          ----        -------
                                                               $  250,000        4.59          5.77        $(1,821)
                                                               ==========        ====          ====        =======

         December 31, 2000:
             September 13, 2001..............................  $   12,500        6.56%         6.80%       $    42
             September 21, 2001..............................      12,500        6.47          6.60             43
             March 13, 2006..................................      12,500        6.47          7.25              5
             March 22, 2006..................................      12,500        6.39          7.20              6
                                                               ----------        ----          ----        -------
                                                               $   50,000        6.47          6.96        $    96
                                                               ==========        ====          ====        =======
</TABLE>

Interest Rate Floor Agreements

         During  January 2001 and March 2001, we entered into $200.0 million and
$75.0 million notional amount,  respectively,  of four-year  interest rate floor
agreements to further  stabilize  net interest  income in the event of a falling
rate scenario.  The interest rate floor  agreements  provide for us to receive a
quarterly adjustable rate of interest equivalent to the differential between the
three-month  London  Interbank  Offering  Rate and the strike prices of 5.50% or
5.00%, respectively,  should the three-month London Interbank Offering Rate fall
below the respective  strike prices. At June 30, 2001, the carrying value of the
interest rate floor agreements,  which is included in derivative  instruments in
the consolidated balance sheet, was $5.6 million.

Interest Rate Cap Agreements

         In conjunction  with the interest rate swap  agreements that we entered
into in September  2000, we also entered into $450.0 million  notional amount of
four-year  interest  rate cap  agreements  to  limit  the net  interest  expense
associated  with our interest rate swap agreements in the event of a rising rate
scenario. The interest rate cap agreements provide for us to receive a quarterly
adjustable  rate  of  interest  equivalent  to  the  differential   between  the
three-month  London Interbank Offering Rate and the strike price of 7.50% should
the three-month  London Interbank Offering Rate exceed the strike price. At June
30, 2001 and December 31, 2000,  the carrying  value of these  interest rate cap
agreements,  which is included in  derivative  instruments  in the  consolidated
balance sheet, was $2.0 million and $3.8 million, respectively.

Pledged Collateral

         At June 30, 2001, we had pledged  investment  securities  available for
sale with a carrying value of $2.4 million in connection  with our interest rate
swap  agreements.  In  addition,  at June 30, 2001,  we had accepted  investment
securities  with a fair value of $34.7 million as collateral in connection  with
our  interest  rate swap  agreements.  We are  permitted  by contract to sell or
repledge the collateral accepted from our  counterparties,  however, at June 30,
2001, we had not sold or repledged any of this collateral.


<PAGE>

Interest  Rate  Lock  Commitments/Forward  Commitments  to  Sell Mortgage-Backed
Securities

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

                      Loans and Allowance for Loan Losses

         Interest earned on our loan portfolio  represents the principal  source
of income for our subsidiary  banks.  Interest and fees on loans were 93.38% and
92.82% of total  interest  income  for the three and six  months  ended June 30,
2001,  in comparison  to 92.31% and 92.05% for the  comparable  periods in 2000,
respectively. Total loans, net of unearned discount, increased $109.7 million to
$4.86  billion,  or 82.4% of total assets,  at June 30, 2001,  compared to $4.75
billion,  or 80.9% of total assets, at December 31, 2000. The increase in loans,
as summarized on our consolidated  balance sheets, is primarily  attributable to
an increase  of $120.7  million in our loans held for sale  portfolio  to $189.8
million at June 30, 2001 from $69.1  million at December 31, 2000.  We primarily
attribute  this  increase to be the result of a  significantly  higher volume of
residential  mortgage loans  originated,  including both new fundings as well as
refinancings,  as a result of declining  interest rates  experienced  during the
first six months of 2001. This increase was partially offset by a decline in our
consumer and installment portfolio,  net of unearned discount, to $111.0 million
at June 30,  2001 from  $174.3  million at  December  31,  2000.  This  decrease
reflects the sale of our student loan and credit card portfolios,  reductions in
new loan volumes and the repayment of principal on our existing  portfolio,  and
is also consistent  with our objectives of  de-emphasizing  indirect  automobile
lending and expanding  commercial lending. In addition,  the overall increase in
loans, net of unearned discount,  was further offset by an anticipated amount of
attrition  associated with our acquisitions  completed during the fourth quarter
of 2000.

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

                                                                                    June 30,      December 31,
                                                                                      2001            2000
                                                                                      ----            ----
                                                                               (dollars expressed in thousands)

         Commercial, financial and agricultural:
<S>                                                                               <C>                 <C>
              Nonaccrual.....................................................     $   26,887          22,437
              Restructured terms.............................................             --              22
         Real estate construction and development:
              Nonaccrual.....................................................         13,316          11,068
         Real estate mortgage:
              Nonaccrual.....................................................         17,820          16,524
              Restructured terms.............................................          2,930           2,952
         Consumer and installment:
              Nonaccrual.....................................................             58             155
              Restructured terms.............................................              7               8
                                                                                  ----------       ---------
                  Total nonperforming loans..................................         61,018          53,166
         Other real estate...................................................          3,690           2,487
                                                                                  ----------       ---------
                  Total nonperforming assets.................................     $   64,708          55,653
                                                                                  ==========       =========

         Loans, net of unearned discount.....................................     $4,861,943       4,752,265
                                                                                  ==========       =========

         Loans past due 90 days or more and still accruing...................     $    7,550           3,009
                        ==                                                        ==========       =========

         Allowance for loan losses to loans..................................           1.59%           1.72%
         Nonperforming loans to loans........................................           1.26            1.12
         Allowance for loan losses to nonperforming loans....................         126.42          153.47
         Nonperforming assets to loans and other real estate.................           1.33            1.17
                                                                                  ==========       =========
</TABLE>
<PAGE>

         Nonperforming  loans (also considered  impaired  loans),  consisting of
loans on nonaccrual status and certain restructured loans, were $61.0 million at
June 30, 2001, in comparison to $53.2 million at December 31, 2000.  Included in
nonaccrual  real estate mortgage loans at June 30, 2001 and December 31, 2000 is
a  single   borrowing   relationship   of  $12.7  million  and  $10.9   million,
respectively,  relating to a residential and  recreational  development  project
that  has had  significant  financial  difficulties.  This  project  experienced
inadequate  project  financing  at  inception,  project  delays and weak project
management.  Financing for this project has since been recast,  and is presently
meeting  development  expectations.  We attribute the increase in  nonperforming
loans and past-due loans since December 2000 to be reflective of cyclical trends
experienced  within the  banking  industry  as a result of  economic  slow down.
Consistent  with the recent general  economic slow down  experienced  within our
primary markets, we anticipate this trend will continue in the upcoming months.

<TABLE>
<CAPTION>


          The following table is a summary of our loan loss experience for the periods indicated:

                                                                       Three months ended      Six months ended
                                                                            June 30,               June 30,
                                                                        -----------------      ----------------
                                                                        2001        2000       2001       2000
                                                                        ----        ----       ----       ----
                                                                            (dollars expressed in thousands)

<S>                                                                    <C>          <C>        <C>       <C>
         Allowance for loan losses, beginning of period..............  $77,996      73,859     81,592    68,611
         Acquired allowances for loan losses.........................        -           -          -       799
                                                                       -------      ------    -------    ------
                                                                        77,996      73,859     81,592    69,410
                                                                       -------      ------    -------    ------
         Loans charged-off...........................................   (6,433)      1,756)   (15,336)   (4,970)
         Recoveries of loans previously charged-off..................    1,858       2,099      3,775     6,180
                                                                      --------      ------    -------    ------
         Net loan (charge-offs) recoveries...........................   (4,575)        343    (11,561)    1,210
                                                                       -------      ------    -------    ------
         Provision for loan losses...................................    3,720       3,620      7,110     7,202
                                                                       -------      ------    -------    ------
         Allowance for loan losses, end of period....................  $77,141      77,822     77,141    77,822
                                                                       =======      ======    =======    ======
</TABLE>

         The  allowance  for loan losses is monitored on a monthly  basis.  Each
month, the credit  administration  department  provides management with detailed
lists of loans on the watch list and  summaries of the entire loan  portfolio of
each subsidiary bank by risk rating.  These are coupled with analyses of changes
in the risk profiles of the  portfolios,  changes in past-due and  nonperforming
loans and changes in watch list and classified  loans over time. In this manner,
we continually  monitor the overall increases or decreases in the levels of risk
in the portfolios.  Factors are applied to the loan portfolios for each category
of loan risk to determine  acceptable  levels of allowance  for loan losses.  We
derive these factors from the actual loss experience of our subsidiary banks and
from  published  national  surveys  of norms  in the  industry.  The  calculated
allowances required for the portfolios are then compared to the actual allowance
balances to determine  the  provisions  necessary to maintain the  allowances at
appropriate  levels.  In  addition,  management  exercises  a certain  degree of
judgment  in its  analysis of the overall  adequacy  of the  allowance  for loan
losses.  In its  analysis,  management  considers  the change in the  portfolio,
including growth,  composition,  the ratio of net loans to total assets, and the
economic  conditions  of  the  regions  in  which  we  operate.  Based  on  this
quantitative and qualitative analysis,  provisions are made to the allowance for
loan losses.  Such  provisions are reflected in our  consolidated  statements of
income.


                                    Liquidity

         Our liquidity and the liquidity of our subsidiary  banks is the ability
to  maintain a cash flow which is  adequate  to fund  operations,  service  debt
obligations and meet  obligations and other  commitments on a timely basis.  Our
subsidiary  banks  receive  funds for liquidity  from  customer  deposits,  loan
payments,  maturities  of  loans  and  investments,  sales  of  investments  and
earnings.  In  addition,  we may avail  ourselves  of other  sources of funds by
issuing  certificates of deposit in denominations of $100,000 or more, borrowing
federal  funds,  selling  securities  sold under  agreements to  repurchase  and
utilizing  borrowings  from the  Federal  Home Loan Banks and other  borrowings,
including our revolving  credit line.  The aggregate  funds  acquired from these
sources were $755.8 million and $723.5 million at June 30, 2001 and December 31,
2000, respectively.
<PAGE>

         The  following  table  presents the  maturity  structure of these other
sources of funds, which consists of certificates of deposit of $100,000 or more,
short-term borrowings and our revolving note payable, at June 30, 2001:

                                                              (dollars expressed
                                                                 in thousands)

         Three months or less.................................     $ 349,342
         Over three months through six months.................        94,028
         Over six months through twelve months................       126,966
         Over twelve months...................................       185,358
                                                                   ---------
                Total.........................................     $ 755,784
                                                                   =========

         In  addition  to these  sources  of funds,  our  subsidiary  banks have
established  borrowing  relationships  with the Federal  Reserve  Banks in their
respective  districts.  These  borrowing  relationships,  which are  secured  by
commercial loans,  provide an additional liquidity facility that may be utilized
for contingency  purposes. At June 30, 2001 and December 31, 2000, the borrowing
capacity of our subsidiary banks under these agreements was approximately  $1.85
billion and $1.24 billion,  respectively.  In addition,  our  subsidiary  banks'
borrowing capacity through their  relationships with the Federal Home Loan Banks
was  approximately  $213.6  million  and  $262.1  million  at June 30,  2001 and
December 31, 2000, respectively.

         Management  believes the available  liquidity and operating  results of
our  subsidiary  banks will be  sufficient  to  provide  funds for growth and to
permit the  distribution of dividends to us sufficient to meet our operating and
debt service requirements,  both on a short-term and long-term basis, and to pay
the  dividends  on the  trust  preferred  securities  issued  by  our  financing
subsidiaries,  First Preferred Capital Trust I and First Preferred Capital Trust
II, and FBA's financing subsidiary, First America Capital Trust.


                       Effects of New Accounting Standards

         In  September  2000,  the FASB  issued  SFAS No. 140 -  Accounting  for
Transfers and Servicing of Financial Assets and  Extinguishments of Liabilities,
a  replacement  of FASB  Statement  125.  SFAS 140  revises  the  standards  for
accounting  for  securitizations  and other  transfers of  financial  assets and
collateral and requires certain  disclosures.  SFAS 140 provides  accounting and
reporting  standards  for  transfers  and  servicing  of  financial  assets  and
extinguishments of liabilities which are based on the consistent  application of
a  financial-components  approach.  SFAS  140 is  effective  for  transfers  and
servicing of financial assets and extinguishments of liabilities occurring after
March 31,  2001,  and is  effective  for  recognition  and  reclassification  of
collateral  and for  disclosures  relating to  securitization  transactions  and
collateral  for fiscal  years ending  after  December 15, 2001.  On December 31,
2000, we implemented the disclosure requirements of SFAS 140, which did not have
a material effect on our consolidated  financial  statements.  We have evaluated
the additional  requirements of SFAS 140 to determine their potential  impact on
our  consolidated  financial  statements  and do not  believe  they  will have a
material effect on our consolidated financial statements.

         In July 2001, the FASB issued SFAS No. 141 - Business Combinations, and
SFAS No. 142 - Goodwill and Other Intangible Assets.  SFAS 141 requires that the
purchase  method of accounting be used for all business  combinations  initiated
after  June  30,  2001 as  well as all  purchase  method  business  combinations
completed  after June 30,  2001.  SFAS 141 also  specifies  criteria  intangible
assets  acquired  in a  purchase  method  business  combination  must meet to be
recognized  and reported  apart from  goodwill  noting that any  purchase  price
allocable to an assembled  workforce may not be accounted for  separately.  SFAS
142 will require that  goodwill and  intangible  assets with  indefinite  useful
lives no longer  be  amortized,  but  instead  tested  for  impairment  at least
annually  in  accordance  with the  provisions  of SFAS 142.  SFAS 142 will also
require that  intangible  assets with  definite  useful lives be amortized  over
their respective  estimated useful lives to their estimated residual values, and
reviewed for  impairment  in accordance  with SFAS No. 121 - Accounting  for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The
amortization  of goodwill  ceases upon adoption of SFAS 142,  which for calendar
year-end  companies,  will be January 2, 2002. We are currently  evaluating  the
requirements of SFAS 141 and SFAS 142 to determine their potential impact on our
consolidated financial statements.

<PAGE>

       Item 3 - Quantitative and Qualitative Disclosures about Market Risk

         At December 31, 2000, our risk management  program's  simulation  model
indicated a loss of projected  net interest  income in the event of a decline in
interest rates.  While a decline in interest rates of less than 100 basis points
was projected to have a relatively minimal impact on our net interest income, an
instantaneous,  parallel decline in the interest yield curve of 100 basis points
indicated a pre-tax projected loss of approximately 5.2% of net interest income.
An  instantaneous,  parallel  decline in the  interest  yield curve of 200 basis
points and 300 basis points indicated a pre-tax  projected loss of approximately
7.1% and  10.3% of net  interest  income,  respectively,  based  on  assets  and
liabilities   at  December  31,  2000.  At  June  30,  2001,  we  remain  in  an
"asset-sensitive" position and thus, remain subject to a higher level of risk in
a  declining  interest-rate  environment,  as  experienced  during the first six
months of 2001.  Although we do not anticipate that instantaneous  shifts in the
yield  curve  as  projected  in our  simulation  model  are  likely,  these  are
indications  of the effects that changes in interest rates would have over time.
Our asset-sensitive position,  coupled with reductions in the prime lending rate
throughout  the last six months,  is reflected in our reduced net interest  rate
margin for the three and six months  ended  June 30,  2001 as further  discussed
under "-Results of  Operations."  During the three and six months ended June 30,
2001, our  asset-sensitive  position and overall  susceptibility to market risks
have not changed materially.



<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
              --------------                                -----------

                   None                                    Not Applicable

(b) We filed no reports on Form 8-K during the three months ended June 30, 2001.




<PAGE>

                                   SIGNATURES


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



                                     FIRST BANKS, INC.



August 15, 2001                      By: /s/  James F. Dierberg
                                         ---------------------------------------
                                              James F. Dierberg
                                              Chairman of the Board of Directors
                                              and Chief Executive Officer
                                              (Principal Executive Officer)


August 15, 2001                      By: /s/  Allen H. Blake
                                         ---------------------------------------
                                              Allen H. Blake
                                              President,
                                              Chief Operating Officer and
                                              Chief Financial Officer
                                              (Principal Financial
                                              and Accounting Officer)