SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549



                                    FORM 10-Q

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

                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1998

                                       OR

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

For the transition period from              to

Commission file number 0-20632


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

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

                   135 NORTH MERAMEC, CLAYTON, MISSOURI 63105
                   ------------------------------------------
               (address of principal executive offices) (Zip Code)

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

         Indicate  by check  mark  whether  the  registrant:  (1) has  filed all
reports required to be filed by Section 13 or 15 (d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                                 Yes X  No
                                                    ---   --- 



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

                                                     Outstanding  at
                 Class                                July 31, 1998
                 -----                                -------------

    Common Stock, $250.00 par value                      23,661
 

<PAGE>


                                First Banks, Inc.

                                      INDEX






                                                                           Page

PART I            FINANCIAL INFORMATION


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

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



PART II.     OTHER INFORMATION

     Item 6. Exhibits and Reports on Form 8-K.............................-17-


Signatures   ............................................................ -18-






<PAGE>







                         PART I - FINANCIAL INFORMATION
                          Item 1. Financial Statements

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




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

Cash and cash equivalents:
<S>                                                                          <C>                     <C>    
   Cash and due from banks...............................................    $   134,230             142,125
   Interest-bearing deposits with other financial
     institutions - with maturities of three months or less..............          2,147               2,840
   Federal funds sold....................................................         32,000              23,515
                                                                             -----------          ----------
              Total cash and cash equivalents............................        168,377             168,480
                                                                             -----------          ----------

Investment securities:
   Trading, at fair value................................................          4,502               3,110
   Available for sale, at fair value.....................................        639,457             773,271
   Held to maturity, at amortized cost (fair value
     of $19,844 and $19,835 at June 30, 1998 and
     December 31,1997, respectively).....................................         19,129              19,149
                                                                             -----------          ----------
              Total investment securities................................        663,088             795,530
                                                                             -----------          ----------

Loans:
   Commercial, financial and agricultural................................        729,412             621,618
   Real estate construction and development..............................        531,881             413,107
   Real estate mortgage..................................................      1,589,218           1,629,115
   Consumer and installment..............................................        286,495             287,752
   Loans held for sale...................................................        103,417              59,081
                                                                             -----------          ----------
              Total loans................................................      3,240,423           3,010,673
   Unearned discount.....................................................         (8,183)             (8,473)
   Allowance for possible loan losses....................................        (55,591)            (50,509)
                                                                             -----------          ----------
              Net loans..................................................      3,176,649           2,951,691
                                                                             -----------          ----------

Bank premises and equipment, net of
   accumulated depreciation and amortization.............................         58,980              51,505
Intangibles associated with the purchase
   of subsidiaries.......................................................         28,036              25,835
Mortgage servicing rights, net of amortization...........................         10,044               9,046
Accrued interest receivable..............................................         28,155              28,358
Other real estate........................................................          5,815               7,324
Deferred income taxes....................................................         45,879              43,355
Other assets.............................................................         90,440              83,890
                                                                             -----------          ----------
               Total assets..............................................    $ 4,275,463           4,165,014
                                                                             ===========          ==========


</TABLE>



<PAGE>


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

<TABLE>
<CAPTION>

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

Deposits:
    Demand:
<S>                                                                        <C>                         <C>    
      Non-interest-bearing............................................     $   478,771                 485,222
      Interest-bearing................................................         336,726                 348,080
    Savings...........................................................       1,066,572                 947,029
    Time:
      Time deposits of $100 or more...................................         237,849                 219,417
      Other time deposits.............................................       1,663,854               1,684,847
                                                                           -----------             -----------
              Total deposits..........................................       3,783,772               3,684,595
Other borrowings......................................................          63,086                  54,153
Notes payable.........................................................          51,048                  55,144
Accrued interest payable..............................................           9,694                   9,976
Deferred income taxes.................................................          12,058                   9,029
Accrued and other liabilities.........................................          12,637                  20,990
Minority interest in subsidiaries.....................................          15,457                  16,407
                                                                           -----------             -----------
              Total liabilities.......................................       3,947,752               3,850,294
                                                                           -----------             -----------

Guaranteed preferred beneficial interests in
  First Banks, Inc. subordinated debenture............................          83,236                  83,183
                                                                           -----------             -----------

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

Preferred stock:
    Class A, convertible, adjustable rate, $20.00 par value; 750,000
       shares authorized; 641,082 shares issued and outstanding.......          12,822                  12,822
    Class B, adjustable rate, $1.50 par value; 200,000 shares
       authorized; 160,505 shares issued and outstanding..............             241                     241
Common stock, $250.00 par value; 25,000 shares
   authorized; 23,661 shares issued and outstanding...................           5,915                   5,915
Capital surplus.......................................................           1,979                   3,978
Retained earnings.....................................................         213,057                 199,143
Accumulated other comprehensive income................................          10,461                   9,438
                                                                           -----------             -----------
              Total stockholders' equity..............................         244,475                 231,537
                                                                           -----------             -----------
              Total liabilities and stockholders' equity..............     $ 4,275,463               4,165,014
                                                                           ===========             ===========

</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>




                       FIRST BANKS, INC. AND SUBSIDIARIES
                  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,
                                                                           ------------------      -----------------
                                                                            1998       1997        1998         1997
Interest income:
<S>                                                                      <C>           <C>        <C>         <C>    
     Interest and fees on loans........................................  $  69,432     62,873     136,170     123,097
     Investment securities.............................................     10,654      8,499      21,710      16,480
     Federal funds sold and other......................................        854      1,407       1,990       2,502
                                                                         ---------   --------    --------    --------
           Total interest income.......................................     80,940     72,779     159,870     142,079
                                                                         ---------   --------    --------    --------
Interest expense:
     Deposits:
       Interest-bearing demand.........................................      1,329      1,400       2,803       2,805
       Savings.........................................................     10,232      5,641      19,785      11,039
       Time deposits of $100 or more...................................      3,331      2,596       6,375       4,868
       Other time deposits.............................................     23,715     23,844      47,732      47,029
     Securities sold under agreements to repurchase....................        550        423       1,075         742
     Interest rate exchange agreements, net ...........................        991      1,176       1,980       2,383
     Notes payable and other borrowings................................        973        158       1,972       1,128
                                                                         ---------   --------    --------    --------
           Total interest expense......................................     41,121     35,238      81,722      69,994
                                                                         ---------   --------    --------    --------
           Net interest income.........................................     39,819     37,541      78,148      72,085
                                                                         ---------   --------    --------    --------
Provision for possible loan losses.....................................      1,850      3,175       3,950       6,025
                                                                         ---------   --------    --------    --------
           Net interest income after provision
             for possible loan losses..................................     37,969     34,366      74,198      66,060
                                                                         ---------   --------    --------    --------
Noninterest income:
     Service charges on deposit accounts and
        customer service fees..........................................      3,514      3,010       6,889       5,968
     Credit card fees..................................................        750        686       1,612       1,460
     Loan servicing fees, net..........................................        404        441         703         864
     Gain on mortgage loans sold and held for sale.....................        863         87       1,901         208
     Gain on sales of securities, net..................................        164         --         256          --
     Gain on trading securities, net...................................        586         22         644          22
     Other income......................................................      2,076      1,460       4,146       2,394
                                                                         ---------   --------    --------    --------
           Total noninterest income....................................      8,357      5,706      16,151      10,916
                                                                         ---------   --------    --------    --------
Noninterest expense:
     Salaries and employee benefits....................................     14,391     10,571      27,270      20,928
     Occupancy, net of rental income...................................      2,717      2,610       5,140       5,213
     Furniture and equipment...........................................      2,039      1,885       3,626       4,050
     Postage, printing and supplies....................................      1,543      1,021       2,949       2,241
     Data processing fees..............................................      2,988      2,392       5,954       3,521
     Legal, examination and professional fees..........................      1,274      1,066       2,330       2,169
     Credit card expenses..............................................        770        821       1,562       1,640
     Communications....................................................        766        566       1,492       1,255
     Advertising and business development expense......................      1,791        965       2,656       1,613
     Losses and expenses on other real estate, net of gains............        281        (20)        661          93
     Guaranteed preferred debenture expense............................      2,021      2,121       4,042       3,379
     Other expenses....................................................      4,456      3,784       9,414       6,833
                                                                         ---------   --------    --------    --------
           Total noninterest expense...................................     35,037     27,782      67,096      52,935
                                                                         ---------   --------    --------    --------
           Income before provision for income taxes and minority
              interest in income of subsidiaries.......................     11,289     12,290      23,253      24,041
Provision for income taxes.............................................      4,134      4,051       8,390       7,765
                                                                         ---------   --------    --------    --------
           Income before minority interest in income of subsidiaries...      7,155      8,239      14,863      16,276
Minority interest in income of subsidiaries............................        279        376         621         577
                                                                         ---------   --------    --------    --------
           Net income..................................................      6,876      7,863      14,242      15,699
Preferred stock dividends..............................................        131      1,209         328       2,488
                                                                         ---------   --------    --------    --------
           Net income available to common shareholders.................  $   6,745      6,654      13,914      13,211
                                                                         =========   ========    ========    ========

Earnings per share:
     Basic.............................................................  $  285.02     281.23      588.03      558.33
     Diluted...........................................................     274.34     267.97      568.22      534.73
                                                                         =========   ========    ========    ========
Weighted average shares of common stock outstanding....................     23,661     23,661      23,661      23,661
                                                                         =========   ========    ========    ========
</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>



                       FIRST BANKS, INC. AND SUBSIDIARIES
     Consolidated Statements of Changes in Stockholders' Equity (unaudited)
             (dollars expressed in thousands, except per share data)

          Six month periods ended June 30, 1998 and 1997 and six month
                         period ended December 31, 1997

<TABLE>
<CAPTION>

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

<S>                                               <C>        <C>        <C>   <C>      <C>     <C>     <C>       <C>    <C>    
Consolidated balances, January 1, 1997........... $ 53,887   12,822     241   5,915    3,289           171,182   4,053  251,389
Six months ended June 30, 1997:
    Comprehensive income:
       Net income................................       --       --      --      --       --  $15,699   15,699      --   15,699
       Other comprehensive income, net of tax (1) -
         Unrealized gains on securities, net of
           reclassification adjustment (2) ......       --       --      --      --       --    3,607       --   3,607    3,607
                                                                                               -------
       Comprehensive income......................       --       --      --      --       --  $19,306
                                                                                              =======
  Class C preferred stock dividends,
        $.56 per share...........................       --       --      --      --       --            (2,159)     --   (2,159)
  Class A preferred stock dividends,
        $.30 per share...........................       --       --      --      --       --              (321)     --     (321)
  Class B preferred stock dividends,
        $.03 per share...........................       --       --      --      --       --                (7)     --       (7)
  Purchase and retirement of Class C shares......   (6,575)      --      --      --     (155)               --      --   (6,730)
  Effect of capital stock transactions of
       majority-owned subsidiary.................       --       --      --      --     (282)               --      --     (282)
                                                  --------    -----    ----     ----  ------          --------   -----  -------
Consolidated balances, June 30, 1997.............   47,312    12,822    241    5,915   2,852           184,394   7,660  261,196
Six months ended December 31, 1997: 
 Comprehensive income:
       Net income................................       --       --      --       --     -- $ 17,328    17,328      --   17,328
       Other comprehensive income, net of tax (1) -
         Unrealized gains on securities, net of
           reclassification adjustment (2).......       --       --      --       --     --    1,778       --   1,778    1,778
                                                                                             -------
       Comprehensive income.......................      --       --      --       --     -- $ 19,106
                                                                                            ========
  Class C preferred stock dividends, 
        $1.69 per share..........................       --       --      --       --     --             (2,120)    --   (2,120)
  Class A preferred stock dividends, 
        $.90 per share...........................       --       --      --       --     --               (449)    --     (449)
  Class B preferred stock dividends,
        $.08 per share...........................       --       --      --       --     --                (10)    --      (10)
    Purchase and retirement of Class C shares....     (199)      --      --       --     (6)                --     --     (205)
    Redemption of Class C preferred shares.......  (47,113)      --      --       --     --                 --     --  (47,113)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --       --      --       --  1,132                 --     --    1,132
                                                  --------    -----     ---     ----  -----            -------  ------ -------
Consolidated balances, December 31,1997..........       --    12,822    241     5,915 3,978            199,143   9,438 231,537
Six months ended June 30, 1998: Comprehensive income:
       Net income................................       --       --      --        --     --   $ 14,242 14,242      --   14,242
       Other comprehensive income, net of tax (1) -
         Unrealized gains on securities, net of
           reclassification adjustment (2).......       --       --      --        --     --      1,023     --    1,023   1,023
                                                                                               --------
       Comprehensive income......................       --       --      --        --     --   $ 15,265
                                                                                               ========
  Class A preferred stock dividends,
        $.30 per share...........................       --       --      --        --     --              (321)      --    (321)
  Class B preferred stock dividends, 
        $.03 per share...........................       --       --      --        --     --                (7)      --      (7)
    Effect of capital stock transactions of
       majority-owned subsidiary.................       --       --      --        --   (1,999)             --      --   (1,999)
                                                  --------    -----     ---      ----   ------          ------  ------ --------
Consolidated balances, June 30, 1998............. $     --    12,822    241      5,915   1,979          213,057 10,461  244,475
                                                  ========    ======    ===      =====  ======          ======= ====== ========
</TABLE>
---------------
(1)  Components of other comprehensive income are shown net of tax.
(2)  Disclosure of reclassification amount:
<TABLE>
<CAPTION>

                                                                                           Six months ended    Six months ended
                                                                                               June 30,         December 31,
                                                                                            --------------      -----------
                                                                                             1998      1997          1997


                                                                                             ----      ----          ----

<S>                                                                                         <C>        <C>           <C>  
Unrealized gains arising during the period..............................................    $1,279     3,607         4,113
Less: reclassification adjustment for gains included
     in net income......................................................................       256        --         2,335
                                                                                            ------     -----         -----
Unrealized gain on securities...........................................................    $1,023     3,607         1,778
                                                                                            ======     =====         =====
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>


                       FIRST BANKS, INC. AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (unaudited)
             (dollars expressed in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                          Six months ended
                                                                                              June 30,
                                                                                        -------------------
                                                                                        1998           1997
                                                                                        ----           ----
Cash flows from operating activities:
<S>                                                                                  <C>              <C>   
     Net income...................................................................   $   14,242       15,699
     Adjustments to reconcile net income to net cash (used in) provided
       by operating activities:
         Depreciation and amortization of bank premises and equipment.............        2,519        2,938
         Amortization, net of accretion...........................................        5,210        1,685
         Originations and purchases of loans held for sale........................     (239,632)     (55,669)
         Proceeds from sales of loans held for sale ..............................      195,617       54,952
         Provision for possible loan losses.......................................        3,950        6,025
         Provision for income taxes...............................................        8,390        7,765
         Payments of income taxes.................................................       (9,862)      (5,035)
         Decrease (increase) in accrued interest receivable ......................          801       (3,504)
         Net increase in trading securities.......................................       (1,392)      (2,298)
         Interest accrued on liabilities..........................................       81,722       73,373
         Payments of interest on liabilities......................................      (82,068)     (74,348)
         Other operating activities, net..........................................      (10,676)      (2,875)
         Minority interest in income of subsidiaries..............................          621          577
                                                                                     ----------     --------
              Net cash (used in) provided by operating activities.................      (30,558)      19,285
                                                                                     ----------     --------
Cash flows from investing activities:
     Cash and cash equivalents received from acquisitions, net of cash paid.......       16,895       40,361
     Sale of investment securities available for sale.............................       42,558           --
     Maturities of investment securities available for sale.......................      230,922      205,734
     Maturities of investment securities held to maturity.........................        1,074        1,207
     Purchases of investment securities available for sale........................     (139,067)    (197,044)
     Purchases of investment securities held to maturity..........................       (1,091)        (654)
     Net increase in loans........................................................     (161,963)    (103,828)
     Recoveries of loans previously charged-off...................................        4,384        5,550
     Purchases of bank premises and equipment.....................................       (9,811)      (2,601)
     Other investing activities...................................................       (2,930)       2,901
                                                                                     ----------     --------
              Net cash used in investing activities...............................      (19,029)     (48,374)
                                                                                     ----------     --------
Cash flows from financing activities:
     Other increases (decreases) in deposits:
         Demand and savings deposits..............................................       73,905       53,224
         Time deposits............................................................      (25,389)      16,228
     Decrease in Federal Home Loan Bank advances..................................       (1,514)     (36,401)
     Increase in other borrowings.................................................       10,447       11,980
     Decrease in notes payable....................................................       (7,637)     (68,675)
     Purchase and retirement of Class C preferred stock...........................           --       (6,575)
     Proceeds from issuance of guaranteed preferred
         subordinated debenture...................................................           --       83,086
     Payment of preferred stock dividends.........................................         (328)      (2,485)
                                                                                     ----------     --------
              Net cash provided by financing activities ..........................       49,484       50,382
                                                                                     ----------     --------
              Net increase (decrease) in cash and cash equivalents ...............         (103)      21,293
Cash and cash equivalents, beginning of period ...................................      168,480      227,954
                                                                                     ----------     --------
Cash and cash equivalents, end of period..........................................   $  168,377      249,247
                                                                                     ==========     ========

Noncash investing and financing activities:
     Loans transferred to other real estate.......................................   $    1,808        2,303
                                                                                     ==========    =========

</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>

                                FIRST BANKS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Basis of Presentation

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

         First Banks' primary subsidiaries (Subsidiary Banks) are:

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

         First Banks' ownership  interest in FBA was 72.6% and 65.9% at June 30,
1998 and December 31, 1997, respectively.

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

(2)  Mergers and Acquisitions

         On June 8, 1998,  FBA  executed an  Agreement  in  Principle to acquire
Redwood  Bancorp,  and its  wholly-owned  subsidiary,  Redwood  Bank,  for  cash
consideration of $26.0 million.  Redwood Bank is headquartered in San Francisco,
California  and operates  four banking  locations in the San Francisco Bay area.
Redwood Bank had $153.8 million in total assets, $119.4 million in loans, net of
unearned  discount,  and  $139.0  million  in  deposits  at June 30,  1998.  FBA
anticipates that the transaction,  which is subject to various conditions,  will
be completed by the end of the fourth quarter.

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

         The transaction was accounted for as a business combination of entities
under common control.  Accordingly,  FBA assumed First Banks' 61.48% interest in
FCB at its historical cost basis. The remaining  38.52%,  or minority  interest,

<PAGE>

owned by unaffiliated parties was recorded at fair value. The excess of the cost
over the fair value of the  minority  interest's  share in the fair value of the
net assets acquired was $1.6 million and is being amortized over 15 years.

         On February 2, 1998, FBA completed its acquisition of Pacific Bay Bank,
San  Pablo,  California  (Pacific  Bay).  Under  the  terms of the  Pacific  Bay
Agreement,  Pacific Bay shareholders received $14.00 per share in cash for their
stock, an aggregate of $4.2 million. The transaction was accounted for using the
purchase method of accounting. The excess of the cost over the fair value of the
net assets acquired was $1.5 million and is being amortized over 15 years.  This
transaction was funded from an advance under First Banks' credit  agreement with
a group of unaffiliated financial institutions.

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

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

(3)  Regulatory Capital

         First Banks and the Subsidiary Banks are subject to various  regulatory
capital  requirements  administered  by the federal and state banking  agencies.
Failure to meet minimum capital  requirements can initiate certain mandatory and
possibly  additional  discretionary  actions by regulators  that, if undertaken,
could have a direct  material  effect on First Banks' and the Subsidiary  Banks'
financial  statements.  Under capital  adequacy  guidelines  and the  regulatory
framework for Prompt Corrective  Action, the Subsidiary Banks must meet specific
capital guidelines that involve  quantitative  measures of the Subsidiary Banks'
assets,  liabilities  and certain  off-balance-sheet  items as calculated  under
regulatory  accounting  practices.  The Subsidiary  Banks'  capital  amounts and
classification are also subject to qualitative judgments by the regulators about
components, risk weightings and other factors.

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

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

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

<S>                                           <C>       <C>             <C>       <C>              <C>      <C>  
         First Banks......................    9.96%     10.26%          8.61%     8.78%            6.78%    6.80%
         First Bank.......................   10.51      10.78           9.26      9.52             7.33     7.19
         FB&T.............................   11.00      12.71           9.74     11.45             7.07     7.70
         BankTEXAS........................   12.48      12.26          11.23     11.00             9.27     8.90
         FB California....................   11.35      13.03          11.09     11.77             8.06    13.80
         First Commercial (1).............      --      11.25             --      9.98                --    7.96
</TABLE>
----------
(1) Merged into FB California effective February 2, 1998.
<PAGE>

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

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

         The  proceeds  from  the  offering  will be used to  repay  outstanding
indebtedness  under First Banks' note payable to a group of unaffiliated  banks,
for acquisitions  (including the pending acquisition of Redwood Bancorp) and for
general corporate purposes.  Available proceeds will be temporarily  invested in
short-term securities.




<PAGE>


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

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

                                     General

         First Banks is a  registered  bank  holding  company,  incorporated  in
Missouri in 1978 and  headquartered in St. Louis County,  Missouri.  At June 30,
1998,  First Banks had $4.28  billion in total  assets;  $3.23  billion in total
loans,  net of unearned  discount;  $3.78  billion in total  deposits;  and $244
million in total stockholders' equity.

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

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

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

<S>                                             <C>        <C>                  <C>             <C>      
First Bank..............................        98         $ 2,897,457          2,288,800       2,602,307
FBA:
   BankTEXAS............................         6             268,434            177,418         231,359
   FB California........................        11             401,841            291,774         355,084
CCB:
   FB&T.................................        18             694,617            475,283         610,798
</TABLE>

                               Financial Condition

         First Banks' total  assets  increased by $110 million to $4.28  billion
from $4.17  billion at June 30, 1998 and December 31, 1997,  respectively.  This
increase is primarily  attributable  to the increase in deposits of $100 million
to $3.78  billion  from $3.68  billion at June 30, 1998 and  December  31, 1997,
respectively.  The funds  generated by the  increase in deposits  along with the
funds  provided by the decrease in investment  securities of $132 million during
the same period were primarily utilized to fund loan growth of $230 million.
<PAGE>


                              Results of Operations

Net Income

         Net income for the three months  ended June 30, 1998 was $6.9  million,
compared  to $7.9  million  for the  same  period  in  1997.  While  net  income
decreased,  earnings  per share on a diluted  basis  increased  to $274.34  from
$267.97 for the three  months  ended June 30, 1998 and 1997,  respectively.  Net
income for the six months  ended June 30,  1998 and 1997 was $14.2  million  and
$15.7   million,   or  $568.22  and  $534.73  per  share  on  a  diluted  basis,
respectively.  The  increase in earnings  per share  reflects  the effect of the
redemption  of First Banks' Class C preferred  stock in December  1997,  and the
resulting   reduction  of  First  Banks'  quarterly   dividend   requirement  by
approximately  $1.2 million and $2.4 million for the three and six month periods
ended  June  30,  1998,  respectively.  However,  the  funds  required  for  the
redemption  were  borrowed,  resulting  in an increase  in  interest  expense of
$900,000  and $1.9  million for the three and six month  periods  ended June 30,
1998,  respectively.  Since the Class C dividend  requirement is not deducted in
the determination of net income, whereas interest expense is, the effect of this
was to reduce  1998 net income by $585,000  and $1.24  million for the three and
six month periods, respectively, when compared to the same periods in 1997.

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

Net Interest Income

         Net interest income  (expressed on a tax-equivalent  basis) improved to
$40.1 million, or 4.07% of average interest earning assets, for the three months
ended June 30, 1998, from $35.6 million,  or 4.10% of average  interest  earning
assets,  for the same period in 1997. For the six months ended June 30, 1998 and
1997,  net  interest  income  (expressed  on a  tax-equivalent  basis) was $78.6
million,  or 4.06%,  and $69.2 million,  or 4.04%, of average  interest  earning
assets, respectively.

         The  increased  net  interest  income for 1998 is  attributable  to the
increase in average interest-earning assets of $459.4 million and $453.4 million
for the three and six month periods ended June 30, 1998, respectively,  compared
to the same  periods  in 1997.  The  increase  is  attributable  to loans  which
increased on average by $352.0  million and $304.1 million for the three and six
month periods ended June 30, 1998, respectively,  over the same periods in 1997.
Contributing further to the improved net interest income was the decrease in the
cost of  interest-bearing  liabilities  to 4.81% and 4.86% for the three and six
month  periods  ended June 30,  1998,  compared  to 4.94% and 4.91% for the same
periods in 1997, respectively. This reflects the continual process of realigning
the deposit  portfolios  of acquired  entities  and the overall  increase in the
percentage of demand deposits and savings deposits to total deposits.

         Offsetting the increase in net interest income is the  amortization and
periodic  costs of hedging the interest rate risk  position of First Banks.  The
cost of hedging  totaled  $991,000  and $2.0 million for the three and six month
periods  ended June 30, 1998,  compared to $1.2 million and $2.4 million for the
same  periods  in  1997.  The  decrease  in the  cost  of  hedging  for  1998 is
attributable  to the reduced  level of  interest  rate risk  resulting  from the
realignment  of the loan  portfolio,  combined  with the gradual  changes in the
composition  of  the  investment   securities  portfolios  from  mortgage-backed
securities to U.S. Treasury and generic U.S. government agencies securities, and
changes in the composition of interest-bearing liabilities.



<PAGE>



         The following  table sets forth,  on a  tax-equivalent  basis,  certain
information  relating to First Banks' average  balance  sheet,  and reflects the
average  yield  earned  on   interest-earning   assets,   the  average  cost  of
interest-bearing liabilities and the resulting net interest income for the three
and six month periods ended June 30:

<TABLE>
<CAPTION>



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

Interest-earning assets:
<S>                              <C>         <C>    <C>    <C>        <C>    <C>    <C>                <C>  <C>        <C>     <C>  
   Loans.......................  $3,170,735  69,507 8.79%  $2,818,728 62,957 8.96%  $3,102,837136,322  8.86%$2,798,761 123,277 8.88%
   Investment securities.......     712,523  10,809 6.08      564,395  8,633 6.14      727,515 22,005  6.10    559,550  16,752 6.04
   Federal funds sold and other      61,897     854 5.53      102,653  1,407 5.50       72,611  1,990  5.53     91,263   2,502 5.53
                                 ---------- -------        ---------- ------        ---------- ------       ---------- -------
       Total interest-earning
         assets................   3,945,155  81,170 8.25    3,485,776 72,997 8.40    3,902,963 160,317 8.28  3,449,574 142,531 8.33
                                            -------                   ------                   -------                 -------
Nonearning assets..............     303,401                   219,363                  298,518                 226,733
                                 ----------                ----------               ----------              ----------
       Total assets............  $4,248,556                $3,705,139               $4,201,481              $3,676,307
                                 ==========                ==========               ==========              ==========

   Liabilities and Stockholders' Equity

Interest-bearing liabilities:
   Interest-bearing demand
     deposits..................  $  353,276   1,329 1.51%  $  330,058  1,400 1.71%  $  351,974  2,803  1.61% $ 332,005   2,805 1.70%
   Savings deposits............   1,031,642  10,232 3.98      685,316  5,641 3.31      999,149 19,785  3.99    683,355  11,039 3.26
   Time deposits of $100
     or more (1)...............     230,423   3,446 6.00      182,833  2,708 5.96      220,327  6,594  6.04    174,037   5,085 5.89
   Other time deposits (1).....   1,707,704  24,567 5.77    1,696,548 24,882 5.90    1,719,013 49,444  5.80  1,686,728  49,138 5.87
                                 ---------- -------        ---------- ------        ---------- ------       ----------  ------
       Total interest-bearing
         deposits..............   3,323,045  39,574 4.78    2,894,755 34,631 4.81    3,290,463 78,626  4.82  2,876,125  68,067 4.77
   Notes payable and other (1).     103,393   1,547 6.00      137,421  2,728 7.98      103,458  3,096  6.03    138,889   5,306 7.70
                                 ---------- -------        ---------- ------        ---------- ------       ---------- -------
       Total interest-bearing
         liabilities...........   3,426,438  41,121 4.81    3,032,176 37,359 4.94    3,393,921 81,722  4.86  3,015,014  73,373 4.91
                                            -------                   ------                   ------                  -------
Noninterest-bearing liabilities:
   Demand deposits.............     454,792                   382,355                  442,112                 372,741
   Other liabilities...........     127,397                    37,684                  128,217                  37,163
                                 ----------                ----------               ----------              ----------
       Total liabilities.......   4,008,627                 3,452,215                3,964,250               3,424,918
Stockholders' equity...........     239,929                   252,924                  237,231                 251,389
                                 ----------                ----------               ----------              ----------
       Total liabilities and
         stockholders' equity..  $4,248,556                $3,705,139               $4,201,481               $3,676,307
                                 ==========                ==========               ==========               ==========

Net interest income............              40,049                   35,638                   78,595                   69,158
                                            =======                   ======                   ======                  =======
Net interest margin............                     4.07%                    4.10%                     4.06%                   4.04%
                                                    ====                     ====                      ====                    ====
------------
(1) Includes the effects of interest rate exchange agreements.
</TABLE>



<PAGE>



18


Provision for Possible Loan Losses

         The  provision  for  possible  loan  losses was $1.9  million  and $4.0
million for the three and six month  periods  ended June 30,  1998,  compared to
$3.2 million and $6.0 million for the same  periods in 1997,  respectively.  The
decrease in the provision for possible loan losses is primarily  attributable to
loan loss  experience.  For the six months  ended  June 30,  1998,  First  Banks
experienced  net  loan  recoveries  of  $247,000,  in  comparison  to  net  loan
charge-offs  of $5.1  million for the same period in 1997.  The  acquisition  of
Pacific Bay provided $885,000 in additional allowance for possible loan losses.


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

Noninterest Income

         Noninterest income was $8.4 million and $16.2 million for the three and
six month  periods ended June 30, 1998,  respectively,  compared to $5.7 million
and  $10.9  million  for the same  period  in 1997.  The  largest  component  of
noninterest  income is service  charges on deposit  accounts and other non-yield
customer service fees.

         Service charges on deposit accounts and customer service fees were $3.5
million  and $6.9  million  for the three and six month  periods  ended June 30,
1998,  respectively,  compared  to $3.0  million  and 6.0  million  for the same
periods in 1997. The increase in service charges  corresponds to the increase in
deposit balances provided both by internal growth and the acquisitions of Surety
Bank and Pacific Bay.

         The gain on mortgage loans sold and held for sale increased to $863,000
and $1.9 million for the three and six month periods  ended June 30, 1998,  from
$87,000 and $208,000 for the same periods in 1997,  respectively.  This increase
is  attributable to an increased  volume of loans held for sale  precipitated by
the increased demand for fixed rate  residential  mortgage loans and the overall
expansion of First Banks' mortgage banking activities in California.

         Other  income was $2.1  million and $4.2  million for the three and six
month periods ended June 30, 1998, compared to $1.5 million and $2.4 million for
the same periods in 1997. The primary  component of the increase is $761,000 and
$1.4 million  recognized as income on a bank-owned life insurance policy for the
three and six month periods ended June 30, 1998, respectively.

Noninterest Expense

         Noninterest  expense was $35.0  million and $67.1 million for the three
and six month  periods  ended June 30,  1998,  respectively,  compared  to $27.8
million  and  $52.9  million  for the same  periods  in 1997.  The  increase  in
noninterest  expense is  attributable  to the  acquisitions  of Surety  Bank and
Pacific Bay and the continued  expansion of First Banks'  commercial  and retail
functions within existing markets.

         Salaries  and employee  benefits  have  increased to $14.4  million and
$27.3  million for the three and six month  periods  ended June 30,  1998,  from
$10.6  million and $20.9  million for the same periods in 1997.  The increase is
attributable to the newly acquired banks and First Banks'  continued  commitment
to expanding its commercial and retail business development capabilities.

         Data processing fees for the three and six month periods ended June 30,
1998 were $3.0  million  and $6.0  million,  compared  to $2.4  million and $3.5
million for the same  periods in 1997,  respectively.  Effective  April 1, 1997,
First Services,  L.P., a limited  partnership  indirectly  owned by First Banks'
Chairman and his immediate  family,  began providing data processing and related
services for First Banks. These services were previously  provided by FirstServ,
Inc. a wholly owned subsidiary of First Banks. As a result,  expenses related to
data  processing  and related  services  were  recorded  in various  noninterest
expense  categories  for the periods prior to April 1, 1997.  Subsequent to that
date, these expenses are reflected as data processing expenses.
<PAGE>

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

                          Lending and Credit Management

         Interest  earned on the loan  portfolio is the primary source of income
of First Banks.  Total loans, net of unearned  discount,  represented  75.6% and
72.1% of total assets as of June 30, 1998 and  December 31, 1997,  respectively.
Total  loans,  excluding  loans  held  for sale  and net of  unearned  discount,
increased  by $185.7  million  to $3.13  billion  at June 30,  1998,  from $2.94
billion at December 31, 1997.  The increase  reflects  continued  growth  within
corporate  lending of $225.8 million,  offset by the decrease of the residential
mortgage and consumer  and  installment  loan  portfolios  of $74.9  million and
$968,000,  respectively,  at June 30, 1998 in  comparison  to December 31, 1997.
These  decreases are  attributable  to the  reductions  of new loan  origination
volumes that are held for investment and the continued repayment of principal on
the existing portfolios.
<TABLE>
<CAPTION>

         The following is a summary of nonperforming assets by category:

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

<S>                                                                             <C>                      <C>  
Commercial, financial and agricultural.......................................   $    7,875               6,025
Real estate construction and development.....................................        5,102               4,097
Real estate mortgage.........................................................       23,522              19,305
Consumer and installment.....................................................           91                  94
                                                                                ----------         -----------
         Total nonperforming loans...........................................       36,590              29,521
Other real estate............................................................        5,815               7,324
                                                                                ----------         -----------
         Total nonperforming assets..........................................   $   42,405              36,845
                                                                                ==========         ===========

Loans, net of unearned discount..............................................   $3,232,240           3,002,200
                                                                                ==========         ===========

Loans past due 90 days or more
   and still accruing........................................................   $    2,738               2,725
                                                                                ==========         ===========

Asset Quality Ratios:
   Allowance for possible loan losses to loans ..............................         1.72%               1.68%
   Nonperforming loans to loans..............................................         1.13                0.98
   Allowance for possible loan losses
      to nonperforming loans.................................................       151.93              171.10
   Nonperforming assets to loans and other real estate.......................         1.31                1.22
                                                                                ==========         ===========
</TABLE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
restructured  loans,  were $36.6 million at June 30, 1998 in comparison to $29.5
million at December 31, 1997.  The  increase is  primarily  attributable  to the
modest increase in corporate banking loans,  including commercial and financial,
construction  and commercial real estate loans,  and the loans obtained  through
the acquisition of Pacific Bay. The acquired  allowance for possible loan losses
totaled $885,000 at the acquisition date.

         Impaired loans,  consisting of nonaccrual loans, were $33.8 million and
$24.1 million at June 30, 1998 and December 31, 1997, respectively.

<PAGE>

<TABLE>
<CAPTION>

         The  following is a summary of loan loss  experience  for the three and
six month periods ended June 30:
                                  
                                                                            Three months ended     Six months ended
                                                                                 June 30,             June 30,
                                                                              --------------      -----------------
                                                                              1998      1997      1998       1997
                                                                              ----      ----      ----       ----
                                                                                (dollars expressed in thousands)
Allowance for possible loan losses,
<S>                                                                        <C>          <C>       <C>       <C>   
    beginning of period..................................................  $ 54,043     47,523    50,509    46,781
Acquired allowances for possible loan losses.............................        --         --       885        --
                                                                           --------   --------   -------  --------
                                                                             54,043     47,523    51,394    46,781
                                                                           --------   --------   -------  --------
Loans charged-off........................................................    (2,082)    (5,907)   (4,138)  (10,648)
Recoveries of loans previously charged-off...............................     1,780      2,917     4,385     5,550
                                                                           --------   --------   -------  --------
     Net loan (charge-offs) recoveries...................................      (302)    (2,990)      247    (5,098)
                                                                           ---------  --------   -------  --------
Provision for possible loan losses.......................................     1,850      3,175     3,950     6,025
                                                                           --------   --------   -------  --------
Allowance for possible loan losses, end of period........................  $ 55,591     47,708    55,591    47,708
                                                                           ========   ========   =======  ========
</TABLE>

         The allowance for possible loan losses is monitored on a monthly basis.
Each month, credit administration provides First Banks' management with detailed
lists of loans on the watch list and  summaries of the entire loan  portfolio of
each Subsidiary Bank by risk rating.  These are coupled with analyses of changes
in the risk profiles of the  portfolios,  changes in past due and  nonperforming
loans and changes in watch list and classified  loans over time. In this manner,
the overall  increases or decreases in the levels of risk in the  portfolios are
monitored  continually.  Factors  are  applied to the loan  portfolios  for each
category of loan risk to determine  acceptable  levels of allowance for possible
loan losses. These factors are derived primarily from the actual loss experience
of the  Subsidiary  Banks and from  published  national  surveys of norms in the
industry.  The  calculated  allowances  required  for the  portfolios  are  then
compared to the actual allowance balances to determine the provisions  necessary
to maintain the  allowances  at  appropriate  levels.  In  addition,  management
exercises  judgment in its  analysis  of  determining  the overall  level of the
allowance for possible losses. In its analysis,  management considers the change
in the portfolio,  including growth and composition, and the economic conditions
of the regions in which First Banks  operates.  Based on this  quantitative  and
qualitative analysis,  the allowance for possible loan losses is adjusted.  Such
adjustments are reflected in the consolidated statements of income.

                          Interest Rate Risk Management
<TABLE>
<CAPTION>

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

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

<S>                                                 <C>               <C>                           
   Interest rate swap agreement..................   $  15,000         57              --          --
   Interest rate floor agreements................      70,000          5          70,000          26
   Interest rate cap agreement...................      10,000        131          10,000         222
   Forward commitments to sell
     mortgage-backed securities..................      78,000         --          60,000          --

</TABLE>
         The  notional  amounts  of  derivative  financial  instruments  do  not
represent amounts exchanged by the parties and, therefore,  are not a measure of
First  Banks'  credit   exposure   through  its  use  of  derivative   financial
instruments.  The amounts  exchanged are determined by reference to the notional
amounts and the other terms of the derivatives.

         First  Bank  utilizes  interest  rate  swap  agreements  to  alter  the
repricing characteristics of certain interest-bearing  liabilities to correspond
more closely with its assets,  with the  objective of  stabilizing  net interest

<PAGE>

income over time.  The  utilization  of swaps  decreased  with the change in the
composition  of the balance  sheet,  resulting in no open swap  agreements as of
December 31, 1997.  The net interest  expense for these  agreements,  consisting
solely of amortization of deferred losses, was $2.0 million and $1.5 million for
the six month  periods  ended  June 30,  1998 and 1997,  respectively.  Deferred
losses on terminated swap agreements are being amortized over the remaining life
of the swap agreement.  If all or any portion of the underlying  liabilities are
repaid, the related deferred losses are charged to operations.  At June 30, 1998
and December 31, 1997, the  unamortized  balance of these  deferred  losses were
$7.4 million and $9.4 million, respectively.

         In June 1998,  First Bank entered into a $15.0  million  interest  rate
swap  agreement   (Swap   Agreement)  to   effectively   shorten  the  repricing
characteristics  of certain  interest-bearing  liabilities  to  correspond  more
closely with its assets,  with the objective of stabilizing  net interest income
over time.  The Swap  Agreement,  which  matures on June 11, 2002,  provides for
First Bank to receive a fixed rate of  interest  of 5.99% and pay an  adjustable
rate equivalent to the 90 day London  interbank  offering rate (LIBOR).  The net
amount due to First Bank under the Swap Agreement was $2,000 at June 30, 1998.

         First Banks has interest rate cap and floor  agreements  outstanding to
limit the interest expense associated with certain interest-bearing liabilities.
At June 30,  1998 and  December  31,  1997,  the  unamortized  costs  for  these
agreements were $224,000 and $290,000,  respectively, and were included in other
assets.

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

                                    Liquidity

         The liquidity of First Banks and its Subsidiary Banks is the ability to
maintain  a cash  flow  which  is  adequate  to fund  operations,  service  debt
obligations and meet other commitments on a timely basis. The primary sources of
funds  for  liquidity  are  derived  from  customer  deposits,   loan  payments,
maturities, sales of investments and earnings.

         In addition,  First Banks and its Subsidiary Banks may avail themselves
of more volatile sources of funds through issuance of certificates of deposit in
denominations of $100,000 or more, federal funds borrowed, securities sold under
agreements  to  repurchase  and other  borrowings,  including  First  Banks' $90
million credit  agreement with a group of unaffiliated  financial  institutions.
The aggregate  funds acquired from those sources were $352.0 million at June 30,
1998 and $328.7 million at December 31, 1997.

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

                                                        (dollars expressed in
                                                               thousands)

         Three months or less..........................       $ 149,694
         Over three months through six months..........          41,044
         Over six months through twelve months.........          74,043
         Over twelve months............................          87,202
                                                              ---------
           Total.......................................       $ 351,983
                                                              =========
                                                                               
         Management believes the future earnings of its Subsidiary Banks will be
sufficient  to  provide  funds for  growth  and to permit  the  distribution  of
dividends  to First Banks  sufficient  to meet First Banks'  operating  and debt
service  requirements  both on a short-term  and long-term  basis and to pay the
dividends on the Preferred Securities.
<PAGE>



                                    Year 2000

         First Banks and the  Subsidiary  Banks are subject to risks  associated
with the "Year 2000"  problem,  a term which refers to  uncertainties  about the
ability of various data  processing  hardware and software  systems to interpret
dates correctly after the beginning of the Year 2000.  Generally,  most software
used by First Banks is purchased from outside vendors. Consequently, First Banks
has been working with these vendors to determine  whether these issues are being
adequately  addressed.  First Banks has been developing  testing  procedures and
schedules  to verify the ability of  equipment  and software to handle Year 2000
issues. This testing will be implemented during the third and fourth quarters of
1998. Certain equipment known to be incompatible with Year 2000 is scheduled for
replacement during the fourth quarter of 1998 and first quarter of 1999.

         First  Banks'  process  of  evaluating  potential  effects of Year 2000
issues on customers of the  Subsidiary  Banks is in its early stages,  and it is
therefore  impossible to quantify the potential  adverse effects of incompatible
systems on customers of the Subsidiary  Banks.  The failure of a commercial bank
customer  to  prepare  adequately  for  Year  2000  compatibility  could  have a
significant adverse effect on such customer's  operations and profitability,  in
turn  inhibiting  its ability to repay loans in  accordance  with their terms or
requiring  the use of its  deposited  funds.  Until  sufficient  information  is
accumulated  from  customers  of the banks to enable  First  Banks to assess the
degree to which  customers'  operations are  susceptible to potential  problems,
First Banks will be unable to quantify the  potential  effect on its  commercial
customers.   In  addressing  the  uncertainty,   First  Banks  has  revised  its
methodology  with respect to the  adequacy of its  allowance  for possible  loan
losses to include an allocation for the estimated risks associated with the Year
2000 issue.


                       Effects of New Accounting Standards

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

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

          In June 1998, the FASB issued SFAS No. 133 - Accounting for Derivative
Instruments and Hedging  Activities  (SFAS 133). SFAS 133 establishes  standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities.  It requires an entity to recognize
all  derivatives  as either assets or  liabilities in the statement of financial
position and measure those  instruments at fair value. SFAS 133 is effective for
all fiscal years beginning after June 15, 1999. Earlier  application of SFAS 133
is encouraged but should not be applied retroactively to financial statements of
prior periods.  First Banks is currently  evaluating the requirements and impact
of SFAS 133.




                           Part II- OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

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

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

                 11        Calculations of Earnings Per Share.

                 27        Article 9 - Financial Data Schedule (EDGAR only)

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



<PAGE>



                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.






                                        FIRST BANKS, INC.
                                        Registrant


Date:  August 13, 1998                  By: /s/ James F. Dierberg
                                            ---------------------
                                                James F. Dierberg
                                                Chairman, President and
                                                   Chief Executive Officer



Date:  August 13, 1998                  By: /s/ Allen H. Blake
                                            ------------------
                                                Allen H. Blake
                                                Executive Vice President
                                                   and Chief Financial Officer
                                                   (Principal Financial Officer)


<PAGE>



                                   Exhibit 11


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

                                                                      Income         Shares         Per-share
                                                                    (numerator)   (denominator)      Amount
                                                                    -----------   -------------      ------
                                                             (dollars expressed in thousands, except per share data)
Three months ended June 30, 1998:
<S>                                                                  <C>               <C>         <C>     
     Basic EPS-income available to common stockholders.........      $  6,745          23,661      $ 285.02
                                                                                                   ========
     Effect of dilutive securities:
       Class A convertible preferred stock.....................           128           1,389
                                                                     --------        --------
     Diluted EPS-income available to common stockholders.......      $  6,873          25,050      $ 274.34
                                                                     ========        ========      ========

Three months ended June 30, 1997:
     Basic EPS-income available to common stockholders.........      $  6,654          23,661      $ 281.23
                                                                                                   ========
     Effect of dilutive securities:
       Class A convertible preferred stock.....................           128           1,645
                                                                     --------        --------
     Diluted EPS-income available to common stockholders.......      $  6,782          25,306      $ 267.97
                                                                     ========        ========      ========


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

Six months ended June 30, 1997:
     Basic EPS-income available to common stockholders.........      $ 13,211          23,661      $ 558.33
                                                                                                   ========
     Effect of dilutive securities:
       Class A convertible preferred stock.....................           321           1,645
                                                                     --------        --------
     Diluted EPS-income available to common stockholders.......      $ 13,532          25,306      $ 534.73
                                                                     ========        ========      ========
</TABLE>