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



                                    FORM 10-Q


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

                For the quarterly period ended September 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 of          (I.R.S. Employer Identification No.)
    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 October 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>


                                                                                    September 30,     December 31,
                                                                                        2001              2000
                                                                                        ----              ----


                                      ASSETS
                                      ------


Cash and cash equivalents:
<S>                                                                                   <C>                  <C>
     Cash and due from banks.......................................................   $    155,720         167,474
     Interest-bearing deposits with other financial institutions
       with maturities of three months or less.....................................          4,753           4,005
     Federal funds sold............................................................         48,600          26,800
                                                                                      ------------     -----------
               Total cash and cash equivalents.....................................        209,073         198,279
                                                                                      ------------     -----------

Investment securities:
     Available for sale, at fair value.............................................        511,530         539,386
     Held to maturity, at amortized cost (fair value of $22,508 and $24,507
       at September 30, 2001 and December 31, 2000, respectively)..................         21,619          24,148
                                                                                      ------------     -----------
               Total investment securities.........................................        533,149         563,534
                                                                                      ------------     -----------

Loans:
     Commercial, financial and agricultural........................................      1,499,528       1,496,284
     Real estate construction and development......................................        855,763         809,682
     Real estate mortgage..........................................................      2,186,203       2,202,857
     Consumer and installment......................................................        108,212         181,602
     Loans held for sale...........................................................        134,237          69,105
                                                                                      ------------     -----------
               Total loans.........................................................      4,783,943       4,759,530
     Unearned discount.............................................................         (9,643)         (7,265)
     Allowance for loan losses.....................................................        (80,748)        (81,592)
                                                                                      ------------     -----------
               Net loans...........................................................      4,693,552       4,670,673
                                                                                      ------------     -----------

Derivative instruments.............................................................         88,879              --
Bank premises and equipment, net of depreciation and amortization..................        131,281         114,771
Intangibles associated with the purchase of subsidiaries, net of amortization......         81,713          85,021
Accrued interest receivable........................................................         39,738          45,226
Deferred income taxes..............................................................         69,010          75,699
Other assets.......................................................................        130,378         123,488
                                                                                      ------------     -----------
               Total assets........................................................   $  5,976,773       5,876,691
                                                                                      ============     ===========

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

<PAGE>

<TABLE>
<CAPTION>



                                FIRST BANKS, INC.

                    CONSOLIDATED BALANCE SHEETS (CONTINUED) - (UNAUDITED)
        (dollars expressed in thousands, except share and per share data)


                                                                                    September 30,     December 31,
                                                                                        2001              2000
                                                                                        ----              ----


                                   LIABILITIES
                                   -----------
Deposits:
     Demand:
<S>                                                                                   <C>                  <C>
       Non-interest-bearing........................................................   $    748,016         808,251
       Interest-bearing............................................................        513,905         448,146
     Savings.......................................................................      1,590,950       1,447,898
     Time:
       Time deposits of $100 or more...............................................        467,368         499,956
       Other time deposits.........................................................      1,751,851       1,808,164
                                                                                      ------------     -----------
          Total deposits...........................................................      5,072,090       5,012,415
Short-term borrowings..............................................................        135,152         140,569
Note payable.......................................................................         29,500          83,000
Accrued interest payable...........................................................         22,962          23,227
Deferred income taxes..............................................................         45,622          12,774
Accrued expenses and other liabilities.............................................         33,044          54,944
Minority interest in subsidiary....................................................         16,629          14,067
                                                                                      ------------     -----------
          Total liabilities........................................................      5,354,999       5,340,996
                                                                                      ------------     -----------

Guaranteed preferred beneficial interests in:
     First Banks, Inc. subordinated debentures.....................................        138,618         138,569
     First Banks America, Inc. subordinated debentures.............................         44,327          44,280
                                                                                      ------------     -----------
          Total guaranteed preferred beneficial interests in
              subordinated debentures..............................................        182,945         182,849
                                                                                      ------------     -----------

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

Preferred stock:
     $1.00 par value, 5,000,000 shares authorized, no shares issued
       and outstanding at September 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....................................................................          2,526           2,267
Retained earnings..................................................................        359,688         325,580
Accumulated other comprehensive income.............................................         57,637           6,021
                                                                                      ------------     -----------
          Total stockholders' equity...............................................        438,829         352,846
                                                                                      ------------     -----------
          Total liabilities and stockholders' equity...............................   $  5,976,773       5,876,691
                                                                                      ============     ===========

</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                FIRST BANKS, INC.

                 CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
             (dollars expressed in thousands, except per share data)


                                                                             Three months ended   Nine Months Ended
                                                                                September 30,       September 30,
                                                                             ------------------   ----------------
                                                                               2001       2000     2001     2000
                                                                               ----       ----     ----     ----
Interest income:
<S>                                                                         <C>         <C>       <C>      <C>
     Interest and fees on loans............................................ $102,181    99,758    315,098  285,584
     Investment securities.................................................    6,098     7,085     20,919   21,104
     Federal funds sold and other..........................................    2,445       739      4,100    2,772
                                                                            --------   -------   --------  -------
          Total interest income............................................  110,724   107,582    340,117  309,460
                                                                            --------   -------   --------  -------
Interest expense:
     Deposits:
       Interest-bearing demand.............................................    1,892     1,480      5,372    4,365
       Savings.............................................................   12,402    13,176     39,927   37,246
       Time deposits of $100 or more.......................................    6,788     7,932     22,117   13,787
       Other time deposits.................................................   23,486    22,691     76,629   72,913
     Short-term borrowings.................................................    1,338     1,641      5,000    4,156
     Note payable..........................................................      555     1,220      2,328    3,731
                                                                            --------   -------   --------  -------
          Total interest expense...........................................   46,461    48,140    151,373  136,198
                                                                            --------   -------   --------  -------
          Net interest income..............................................   64,263    59,442    188,744  173,262
Provision for loan losses..................................................    6,800     3,865     13,910   11,067
                                                                            --------   -------   --------  -------
          Net interest income after provision for loan losses..............   57,463    55,577    174,834  162,195
                                                                            --------   -------   --------  -------
Noninterest income:
     Service charges on deposit accounts and customer service fees.........    5,731     5,184     16,268   14,648
     Gain on mortgage loans sold and held for sale.........................    2,386     1,898      9,718    5,166
     Gain on sale of credit card portfolio, net of expenses................     (422)       --      1,853       --
     Net gain (loss) on sales of available-for-sale securities.............      (32)     (180)      (145)     199
     Gain on derivative instruments, net...................................    8,915        --     14,401       --
     Other.................................................................    5,268     3,848     15,649   11,772
                                                                            --------   -------   --------  -------
          Total noninterest income.........................................   21,846    10,750     57,744   31,785
                                                                            --------   -------   --------  -------
Noninterest expense:
     Salaries and employee benefits........................................   23,092    18,200     68,889   53,437
     Occupancy, net of rental income.......................................    4,163     3,754     12,379   10,409
     Furniture and equipment...............................................    3,228     2,851      8,845    8,524
     Postage, printing and supplies........................................    1,270     1,027      3,528    3,210
     Data processing fees..................................................    6,940     5,714     19,891   16,377
     Legal, examination and professional fees..............................    1,991     1,108      5,415    3,111
     Amortization of intangibles associated with the
       purchase of subsidiaries............................................    1,861     1,312      5,573    3,685
     Guaranteed preferred debentures.......................................    4,489     2,996     13,467    9,008
     Other.................................................................    7,778     5,814     32,841   14,725
                                                                            --------   -------   --------  -------
          Total noninterest expense........................................   54,812    42,776    170,828  122,486
                                                                            --------   -------   --------  -------
          Income before provision for income taxes,
             minority interest in income of subsidiary
             and cumulative effect of change in accounting
             principle.....................................................   24,497    23,551     61,750   71,494
Provision for income taxes.................................................    9,539     8,947     24,120   26,688
                                                                            --------   -------   --------  -------
          Income before minority interest in income
             of subsidiary and cumulative
             effect of change in accounting principle .....................   14,958    14,604     37,630   44,806
Minority interest in income of subsidiary..................................      577       546      1,622    1,489
                                                                            --------   -------   --------  -------
          Income before cumulative effect of change
             in accounting principle.......................................   14,381    14,058     36,008   43,317
Cumulative effect of change in accounting principle, net of tax............       --        --     (1,376)      --
                                                                            --------   -------   --------  -------
          Net income.......................................................   14,381    14,058     34,632   43,317
Preferred stock dividends..................................................      196       196        524      524
                                                                            --------   -------   --------  -------
          Net income available to common stockholders...................... $ 14,185    13,862     34,108   42,793
                                                                            ========   =======   ========  =======
</TABLE>

<PAGE>

<TABLE>
<CAPTION>


Earnings per common share:
     Basic:
<S>                                                                         <C>         <C>      <C>      <C>
       Income before cumulative effect of change in accounting principle... $  599.47   585.87   1,499.67  1,808.59
       Cumulative effect of change in accounting principle, net of tax.....        --       --     (58.16)       --
       Basic............................................................... $  599.47   585.87   1,441.51  1,808.59
                                                                            =========  ========  ========  ========
Diluted:
       Income before cumulative effect of change in accounting principle... $  587.93   570.33   1,468.14  1,750.62
       Cumulative effect of change in accounting principle, net of tax.....        --       --     (58.16)       --
                                                                            ---------  -------   --------  --------
       Diluted............................................................. $  587.93   570.33   1,409.98  1,750.62
                                                                            =========  =======   ========  ========

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)
              Nine months ended September 30, 2001 and 2000 and three months ended December 31, 2000
                            (dollars expressed in thousands, except per share data)




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

<S>                                                <C>          <C>    <C>       <C>     <C>      <C>        <C>    <C>
Consolidated balances, December 31, 1999.........  $12,822      241    5,915     3,318            270,259    2,350  294,905
Nine months ended September 30, 2000:
    Comprehensive income:
      Net income.................................       --       --       --        --   43,317    43,317       --   43,317
      Other comprehensive income, net of tax:
        Unrealized gains on securities, net of
          reclassification adjustment (1)........       --       --       --        --      550        --      550      550
                                                                                         ------
      Comprehensive income.......................                                        43,867
                                                                                         ======
    Class A preferred stock dividends,
        $0.80 per share..........................       --       --       --        --               (513)      --     (513)
    Class B preferred stock dividends,
        $0.07 per share..........................       --       --       --        --                (11)      --      (11)
    Effect of capital stock transactions of
      majority-owned subsidiary..................       --       --       --      (321)                --       --     (321)
                                                   -------    -----    -----     -----            -------   ------  -------
Consolidated balances, September 30, 2000........   12,822      241    5,915     2,997            313,052    2,900  337,927
Three months ended December 31, 2000:
    Comprehensive income:
      Net income.................................       --       --       --        --   12,790    12,790       --   12,790
      Other comprehensive income, net of tax:
        Unrealized gains on securities, net of
          reclassification adjustment (1)........       --       --       --        --    3,121        --    3,121    3,121
                                                                                         ------
      Comprehensive income.......................                                        15,911
                                                                                         ======
    Class A preferred stock dividends,
        $0.40 per share..........................       --       --       --        --               (256)      --     (256)
    Class B preferred stock dividends,
        $0.04 per share..........................       --       --       --        --                 (6)      --       (6)
    Effect of capital stock transactions of
      majority-owned subsidiary..................       --       --       --      (730)                --       --     (730)
                                                   -------    -----    -----     -----            -------   ------  -------
Consolidated balances, December 31, 2000.........   12,822      241    5,915     2,267            325,580    6,021  352,846
Nine months ended September 30, 2001:
    Comprehensive income:
      Net income.................................       --       --       --        --   34,632    34,632       --   34,632
      Other comprehensive income, net of tax:
        Unrealized gains on securities, net of
          reclassification adjustment (1)........       --       --       --        --   10,555        --   10,555   10,555
        Derivative instruments:
          Cumulative effect of change in
             accounting principle, net...........       --       --       --        --    9,069        --    9,069    9,069
          Current period transactions............       --       --       --        --   34,919        --   34,919   34,919
          Reclassification to earnings...........       --       --       --        --   (2,927)       --   (2,927)  (2,927)
                                                                                         ------
      Comprehensive income.......................                                        86,248
                                                                                         ======
    Class A preferred stock dividends,
       $0.80 per share...........................       --       --       --        --               (513)      --     (513)
    Class B preferred stock dividends,
       $0.07 per share...........................       --       --       --        --                (11)      --      (11)
    Effect of capital stock transactions of
      majority-owned subsidiary..................       --       --       --       259                 --       --      259
                                                   -------    -----    -----     -----            -------   ------  -------
Consolidated balances, September 30, 2001........  $12,822      241    5,915     2,526            359,688   57,637  438,829
                                                   =======    =====    =====     =====            =======   ======  =======
</TABLE>
<PAGE>


-------------------------
(1)  Disclosure of reclassification adjustment:
<TABLE>
<CAPTION>
                                                                  Three months ended   Nine months ended      Three months ended
                                                                       September 30,      September 30,           December 31,
                                                                       -------------      -------------           ------------
                                                                   2001      2000        2001     2000               2000
                                                                   ----      ----        ----     ----               ----

     Unrealized gains on investment securities arising
<S>                                                               <C>       <C>         <C>        <C>              <C>
       during the period.......................................   $1,005    1,900       10,461     679              3,101
     Less reclassification adjustment for (losses)
       gains included in net income............................      (21)    (117)         (94)    129                (20)
                                                                  ------    -----       ------    ----              -----
     Unrealized gains on investment securities.................   $1,026    2,017       10,555     550              3,121
                                                                  ======    =====       ======    ====              =====

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

<PAGE>
                                FIRST BANKS, INC.

               CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
                        (dollars expressed in thousands)
<TABLE>
<CAPTION>

                                                                                               Nine months ended
                                                                                                 September 30,
                                                                                           -------------------------
                                                                                               2001           2000
                                                                                               ----           ----
Cash flows from operating activities:
<S>                                                                                       <C>                <C>
     Net income                                                                           $    34,632        43,317
     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.....................        8,954         6,967
       Amortization, net of accretion...................................................        6,641         5,878
       Originations and purchases of loans held for sale................................   (1,088,069)     (378,628)
       Proceeds from the sale of loans held for sale....................................      982,205       290,102
       Provision for loan losses........................................................       13,910        11,067
       Provision for income taxes.......................................................       24,120        26,688
       Payments of income taxes.........................................................      (21,290)       (7,684)
       Decrease (increase) in accrued interest receivable...............................        5,488        (3,262)
       Interest accrued on liabilities..................................................      151,373       136,198
       Payments of interest on liabilities..............................................     (151,638)     (129,984)
       Gain on sale of branch facility..................................................           --        (1,355)
       Gain on sale of credit card portfolio............................................       (1,853)           --
       Net loss (gain) on sales of available-for-sale investment securities.............          145          (199)
       Other operating activities, net..................................................      (43,047)      (18,648)
       Minority interest in income of subsidiary........................................        1,622         1,489
                                                                                          -----------     ---------
          Net cash used in operating activities.........................................      (75,431)      (18,054)
                                                                                          -----------     ---------
Cash flows from investing activities:
     Cash paid for acquired entities, net of cash and cash equivalents received.........           --        (9,115)
     Proceeds from sales of investment securities available for sale....................       74,991        28,488
     Maturities of investment securities available for sale.............................      425,492       256,998
     Maturities of investment securities held to maturity...............................        2,765           712
     Purchases of investment securities available for sale..............................     (455,190)     (150,180)
     Purchases of investment securities held to maturity................................         (240)         (769)
     Net decrease (increase) in loans...................................................       57,944      (265,191)
     Recoveries of loans previously charged-off.........................................        7,202         7,954
     Purchases of bank premises and equipment...........................................      (29,212)      (21,022)
     Other investing activities, net....................................................        8,543         3,960
                                                                                          -----------     ---------
          Net cash provided by (used in) investing activities...........................       92,295      (148,165)
                                                                                          -----------     ---------
Cash flows from financing activities:
     Increase in demand and savings deposits............................................      148,576        83,733
     (Decrease) increase in time deposits...............................................      (95,111)       70,473
     Increase in federal funds purchased................................................           --         1,900
     Increase in Federal Home Loan Bank advances........................................           --            --
     (Decrease) increase in securities sold under agreements to repurchase..............       (5,417)       28,054
     Advances drawn on note payable.....................................................        5,000        (9,500)
     Repayments of note payable.........................................................      (58,500)           --
     Payment of preferred stock dividends...............................................         (524)         (524)
     Sale of branch deposits............................................................           --           892
     Other financing activities, net....................................................          (94)          (23)
                                                                                          -----------     ---------
          Net cash (used in) provided by financing activities...........................       (6,070)      175,005
                                                                                          -----------     ---------
          Net increase in cash and cash equivalents.....................................       10,794         8,786
Cash and cash equivalents, beginning of period..........................................      198,279       170,894
                                                                                          -----------     ---------
Cash and cash equivalents, end of period................................................  $   209,073       179,680
                                                                                          ===========     =========
Noncash investing and financing activities:
     Loans transferred to other real estate.............................................  $     2,821         1,226
     Reductions of deferred tax asset valuation reserve.................................          565         1,267
     Loans held for sale transferred to available-for-sale investment securities........           --        18,584
     Loans exchanged for and transferred to available-for-sale investment securities....           --        37,634
     Loans held for sale transferred to loans...........................................       35,074        63,783
                                                                                          ===========     =========

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 nine months
ended September 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 93.27% and 92.86% owned by First Banks at
September 30, 2001 and December 31, 2000, respectively.

(2)      ACQUISITIONS

         On October 16, 2001, FBA completed its  acquisition of Charter  Pacific
Bank (Charter Pacific),  Agoura Hills, California, in exchange for $19.3 million
in cash. Charter Pacific was headquartered in Agoura Hills, California,  and had
one  other  branch  office  in  Beverly  Hills,  California.  At the time of the
transaction,  Charter Pacific had $101.5 million in total assets,  $70.2 million
in loans, net of unearned  discount,  $7.5 million in investment  securities and
$89.0  million in deposits.  FBA funded the  acquisition  from an advance on the
revolving  line of credit it  maintains  with First Banks.  Charter  Pacific was
merged with and into First Bank & Trust at the time of the transaction.

         On October 31,  2001,  FBA  completed  its  acquisition  of BYL Bancorp
(BYL), and its wholly owned banking subsidiary,  BYL Bank Group, in exchange for
$49.0 million in cash. BYL was headquartered in Orange,  California, and had six
other branch offices  located in Orange and Riverside  counties.  At the time of
the  transaction,  BYL had $281.5  million in total  assets,  $175.0  million in
loans,  net of unearned  discount,  $12.6 million in investment  securities  and
$251.8 million in deposits.  FBA funded the  acquisition  using a combination of
dividends from FB&T,  borrowings under a line of credit FBA maintains with First
Banks and the sale of approximately 804,000 shares of additional common stock to
First Banks.  The common  stock was sold to First Banks for $32.50 per share,  a
price set by FBA's Board of Directors  based on recent  trading prices for FBA's
stock on the New York Stock  Exchange.  FBA intends to conduct a rights offering
during the first quarter of 2002,  whereby all of its stockholders will be given
the right to  purchase  proportionate  amounts of FBA  common  stock at the same
price paid by First  Banks.  BYL Bank Group was merged with and into FB&T at the
time of the transaction.
<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 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 September 30, 2001,  UFG had $362.0
million in total  assets,  $271.3  million in loans,  net of unearned  discount,
$66.7 million in investment  securities  and $298.2  million in deposits.  First
Banks expects this transaction,  which is subject to regulatory approvals, to 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.  Under the terms of the agreement,  the  shareholders of PFC will receive
$293.07 per share in cash, or a total of  approximately  $36.5  million.  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 September 30,
2001,  PFC had $255.2 million in total assets,  $149.8 million in loans,  net of
unearned discount,  $85.5 million in investment securities and $219.7 million in
deposits.  First Banks expects this transaction,  which is subject to regulatory
approvals, to be completed during the first quarter of 2002.
<PAGE>

(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.

         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 noninterest  income on
each monthly measurement date.

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

         Forward Contracts to Sell Mortgage-Backed Securities. Forward 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.
<PAGE>

         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 September 30, 2001:
<S>                                                                          <C>               <C>         <C>
         Basic EPS - income before cumulative effect.....................    $  14,185         23,661      $   599.47
         Cumulative effect of change in accounting principle,
           net of tax....................................................           --             --              --
                                                                             ---------        -------      ----------
         Basic EPS - income available to common stockholders.............       14,185         23,661          599.47
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          192            791          (11.54)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  14,377         24,452      $   587.93
                                                                             =========        =======      ==========

     Three months ended September 30, 2000:
         Basic EPS - income available to common stockholders.............    $  13,862         23,661      $   585.87
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          192            982          (15.54)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  14,054         24,643      $   570.33
                                                                             =========        =======      ==========

     Nine months ended September 30, 2001:
         Basic EPS - income before cumulative effect.....................    $  35,484         23,661      $ 1,499.67
         Cumulative effect of change in accounting principle,
           net of tax....................................................       (1,376)            --          (58.16)
                                                                             ---------        -------      ----------
         Basic EPS - income available to common stockholders.............       34,108         23,661        1,441.51
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          513            893          (31.53)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  34,621         24,554      $ 1,409.98
                                                                             =========        =======      ==========

     Nine months ended September 30, 2000:
         Basic EPS - income available to common stockholders.............    $  42,793         23,661      $ 1,808.59
         Effect of dilutive securities:
           Class A convertible preferred stock...........................          513          1,076          (57.97)
                                                                             ---------        -------      ----------
         Diluted EPS - income available to common stockholders...........    $  43,306         24,737      $ 1,750.62
                                                                             =========        =======      ==========
</TABLE>

(5)      TRANSACTIONS WITH RELATED PARTIES

         First Brokerage  America,  L.L.C., a limited liability company which is
indirectly  owned by First Banks' Chairman and members of his immediate  family,
received  approximately  $600,000 and $2.0 million for the three and nine months
ended  September  30, 2001,  and  $500,000  and $1.6 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
Banks'  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 $6.0 million and $16.9 million
for the three and nine months ended  September  30,  2001,  and $5.0 million and
$14.2 million for the comparable periods in 2000, respectively. During the three
months ended September 30, 2001 and 2000, First Services,  L.P. paid First Banks
$516,000 and $411,000,  respectively, and during the nine months ended September
30, 2001 and 2000,  First Services,  L.P. paid First Banks $1.5 million and $1.3
million,  respectively,  in rental fees for the use of data processing and other
equipment owned by First Banks.
<PAGE>

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

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

         As of  September  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  September  30, 2001 and  December  31,  2000,  First Banks' and the
Subsidiary Banks' required and actual capital ratios were as follows:
<TABLE>
<CAPTION>
                                                               Actual                                    To be well
                                                     ---------------------------                      capitalized under
                                                     September 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.............................    10.98%       10.21%            8.0%               10.0%
              First Bank..............................    10.50        10.71             8.0                10.0
              FB&T....................................    11.09        10.58             8.0                10.0
              BSF (1).................................       --        22.38             8.0                10.0

     Tier 1 capital (to risk-weighted assets):
              First Banks.............................     8.48%        7.56             4.0                 6.0
              First Bank..............................     9.24         9.46             4.0                 6.0
              FB&T....................................     9.84         9.32             4.0                 6.0
              BSF (1).................................       --        21.42             4.0                 6.0

     Tier 1 capital (to average assets):
              First Banks.............................     7.66%        7.45             3.0                 5.0
              First Bank..............................     8.25         8.49             3.0                 5.0
              FB&T....................................     9.19         9.27             3.0                 5.0
              BSF (1).................................       --        22.00             3.0                 5.0

</TABLE>
--------------------
(1) BSF was acquired by FBA on December 31, 2000. FB&T merged with BSF on March
    29, 2001, and was renamed First Bank & Trust.

<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  eastern  Missouri,  Illinois,  southern and northern
California and Houston,  Dallas,  Irving and McKinney,  Texas.  The products and
services are offered to customers  primarily within their respective  geographic
areas, with the exception of loan participations executed between the Subsidiary
Banks.

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

         The business segment results are summarized as follows:
<TABLE>
<CAPTION>
                                                                             First Bank                First Bank & Trust (1)
                                                                 ------------------------------   ----------------------------
                                                                  September 30,    December 31,    September 30, December 31,
                                                                      2001             2000            2001          2000
                                                                      ----             ----            ----          ----
                                                                                   (dollars expressed in thousands)
Balance sheet information:

<S>                                                                  <C>                <C>            <C>          <C>
Investment securities...........................................   $  164,088           214,005        342,074      330,478
Loans, net of unearned discount.................................    2,750,177         2,694,005      2,035,926    2,058,628
Total assets....................................................    3,227,149         3,152,885      2,734,952    2,733,545
Deposits........................................................    2,794,299         2,729,489      2,290,127    2,306,469
Stockholders' equity............................................      293,777           273,848        338,738      333,186
                                                                   ==========         =========      =========    =========

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

Interest income.................................................   $   59,779            63,621         50,773       44,945
Interest expense................................................       27,266            29,939         18,818       18,381
                                                                   ----------         ---------      ---------    ---------
     Net interest income........................................       32,513            33,682         31,955       26,564
Provision for loan losses.......................................        4,800             3,500          2,000          365
                                                                   ----------         ---------      ---------    ---------
     Net interest income after provision for loan losses........       27,713            30,182         29,955       26,199
                                                                   ----------         ---------      ---------    ---------
Noninterest income..............................................       13,187             7,965          9,023        3,354
Noninterest expense.............................................       26,943            22,914         22,383       15,950
                                                                   ----------         ---------      ---------    ---------
     Income (loss) before provision (benefit)
       for income taxes and minority interest
       in income of subsidiary..................................       13,957            15,233         16,595       13,603
Provision (benefit) for income taxes............................        4,922             5,324          6,751        5,392
                                                                   ----------         ---------      ---------    ---------
     Income (loss) before minority interest in income of
       subsidiary...............................................        9,035             9,909          9,844        8,211
Minority interest in income of subsidiary.......................           --                --             --           --
                                                                   ----------         ---------      ---------    ---------
      Net income.................................................       9,035             9,909          9,844        8,211
                                                                   ==========         =========      =========    =========

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

Interest income.................................................   $  182,765           184,248        157,851      126,413
Interest expense................................................       88,563            84,459         61,870       50,422
                                                                   ----------         ---------      ---------    ---------
     Net interest income........................................       94,202            99,789         95,981       75,991
Provision for loan losses.......................................       11,000             9,250          2,910        1,817
                                                                   ----------         ---------      ---------    ---------
     Net interest income after provision for loan losses........       83,202            90,539         93,071       74,174
                                                                   ----------         ---------      ---------    ---------
Noninterest income..............................................       38,992            23,930         19,876        9,197
Noninterest expense.............................................       75,810            64,840         65,346       47,068
                                                                   ----------         ---------      ---------    ---------
     Income (loss) before provision (benefit) for
       income taxes, minority interest
       in income of subsidiary and cumulative
       effect of change in accounting principle.................       46,384            49,629         47,601       36,303
Provision (benefit) for income taxes............................       16,249            17,254         18,807       14,419
                                                                   ----------         ---------      ---------    ---------
     Income (loss) before minority interest in income of
       subsidiary and cumulative effect of change in
       accounting principle.....................................       30,135            32,375         28,794       21,884
Minority interest in income of subsidiary.......................           --                --             --           --
                                                                   ----------         ---------      ---------    ---------
     Income before cumulative effect of change in
       accounting principle.....................................       30,135            32,375         28,794       21,884
Cumulative effect of change in accounting principle, net of tax.          917                --            459           --
                                                                   ----------         ---------      ---------    ---------
     Net income.................................................       29,218            32,375         28,335       21,884
                                                                   ==========         =========      =========    =========
<PAGE>

---------------------------
(1)  Includes BSF, which was acquired by  FBA  on  December 31, 2000.  FB&T  was merged with BSF on March 29, 2001. BSF  was renamed
     First Bank & Trust.
(2)  Corporate  and  other  includes  $2.9 million and  $8.7 million  of  guaranteed preferred debentures expense, after  applicable
     income tax benefit of $1.6 million and $4.8 million for  the three and nine months ended  September 30, 2001, and  $1.0 million
     and $5.9 million  of guaranteed preferred debentures expense, after  applicable  income tax  benefit  of $2.0 million  and $3.1
     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
                            -------------------------------------               ---------------------------------
                             September 30,        December 31,                  September 30,       December 31,
                                 2001                 2000                          2001                2000
                                 ----                 ----                          ----                ----
                                                          (dollars expressed in thousands)


<S>                             <C>                  <C>                         <C>                    <C>
                                26,987               19,051                      533,149                563,534
                               (11,803)                (368)                   4,774,300              4,752,265
                                14,672               (9,739)                   5,976,773              5,876,691
                               (12,336)             (23,543)                   5,072,090              5,012,415
                              (193,686)            (254,188)                     438,829                352,846
                             =========             ========                    =========              =========

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

                                   172                 (984)                     110,724                107,582
                                   377                 (180)                      46,461                 48,140
                             ---------             --------                    ---------                -------
                                  (205)                (804)                      64,263                 59,442
                                    --                   --                        6,800                  3,865
                             ---------             --------                    ---------              ---------
                                  (205)                (804)                      57,463                 55,577
                             ---------             --------                    ---------              ---------
                                  (364)                (569)                      21,846                 10,750
                                 5,486                3,912                       54,812                 42,776
                             ---------             --------                    ---------              ---------

                                (6,055)              (5,285)                      24,497                 23,551
                                (2,134)              (1,769)                       9,539                  8,947
                             ---------             --------                    ---------              ---------

                                (3,921)              (3,516)                      14,958                 14,604
                                   577                  546                          577                    546
                             ---------             --------                    ---------              ---------

                                (4,498)              (4,062)                      14,381                 14,058
                             =========             ========                    =========              =========

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


                                  (499)              (1,201)                     340,117                309,460
                                   940                1,317                      151,373                136,198
                             ---------             --------                    ---------              ---------
                                (1,439)              (2,518)                     188,744                173,262
                                    --                   --                       13,910                 11,067
                             ---------             --------                    ---------              ---------
                                (1,439)              (2,518)                     174,834                162,195
                             ---------             --------                    ---------              ---------
                                (1,124)              (1,342)                      57,744                 31,785
                                29,672               10,578                      170,828                122,486
                             ---------             --------                    ---------              ---------


                               (32,235)             (14,438)                      61,750                 71,494
                               (10,936)              (4,985)                      24,120                 26,688
                             ---------             --------                    ---------              ---------


                               (21,299)              (9,453)                      37,630                 44,806
                                 1,622                1,489                        1,622                  1,489
                             ---------             --------                    ---------              ---------

                               (22,921)             (10,942)                      36,008                 43,317
                                    --                   --                        1,376                     --
                             ---------             --------                    ---------              ---------
                               (22,921)             (10,942)                      34,632                 43,317
                             =========             ========                    =========              =========
</TABLE>


(8)      SUBSEQUENT EVENT

         On November 15, 2001,  First Preferred  Capital Trust III (FPCT III), a
newly-formed Delaware business trust subsidiary of First Banks, expects to issue
1.92 million shares of 9.00%  cumulative  trust preferred  securities at $25 per
share in an underwritten  public offering,  and to issue 59,382 shares of common
securities  to First  Banks at $25 per  share.  First  Banks will own all of the
common securities of FPCT III. The gross proceeds of the offering are to be used
by FPCT III to purchase  $48.0  million of 9.00%  subordinated  debentures  from
First  Banks,   maturing  on  December  31,  2031.  The  maturity  date  of  the
subordinated debentures may be shortened to a date not earlier than December 31,
2006, if certain  conditions are met. The subordinated  debentures are to be the
sole  asset  of FPCT  III.  In  connection  with  the  issuance  of the FPCT III
preferred  securities,  First Banks will make certain guarantees and commitments
that, in the aggregate,  constitute a full and unconditional  guarantee by First
Banks of the  obligations  of FPCT III under the FPCT III preferred  securities.
First Banks' proceeds from the issuance of the  subordinated  debentures to FPCT
III,  net of  underwriting  fees  and  offering  expenses,  are  expected  to be
approximately  $45.9 million  (which may be increased up to $52.9 million if the
underwriters'  overallotment  option  is  exercised).  We  expect to use the net
proceeds to reduce indebtedness currently outstanding under our revolving credit
line  with  a  group  of  unaffiliated  banks.  Distributions  on the  FPCT  III
securities are payable quarterly on March 31, June 30, September 30 and December
31.


<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, including the negative impact on the economy resulting
from the events of September 11, 2001 in New York City and Washington  D.C.; 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 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 142 branch
offices throughout  California,  Illinois,  Missouri and Texas. At September 30,
2001, we had total assets of $5.98 billion,  loans, net of unearned discount, of
$4.77 billion, total deposits of $5.07 billion and total stockholders' equity of
$438.8 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 93.27% and 92.86% of FBA at September  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, internet banking, automated teller machines, telephone
banking,  bankruptcy,  escrow and stock option services,  safe deposit boxes 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 $5.98  billion and $5.88 billion at September 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 $22.0  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 $30.4  million  to $533.1  million at
September  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 nine months ended September 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 $21.8 million in federal funds
sold to $48.6  million at September  30, 2001 from $26.8 million at December 31,
2000.  The  increase in assets is also due to  derivative  instruments  of $88.9
million at  September  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 $16.5 million to
$131.3  million at September 30, 2001 from $114.8  million at December 31, 2000.
We primarily  attribute  this  increase to the purchase and  remodeling of a new
operations  center  and  corporate   administrative   building.  Total  deposits
increased by $60.0  million to $5.07  billion at  September  30, 2001 from $5.01
billion at December 31, 2000.  The increase  primarily  reflects  higher savings
deposits offset by reductions in time deposits,  including $50.0 million in time
deposits of $100,000  or more that  either  matured or were called in  September
2001, and an anticipated level of attrition  associated with our acquisitions in
the fourth quarter of 2000. Our note payable decreased by $53.5 million to $29.5
million at September 30, 2001 from $83.0  million at December 31, 2000,  and was
primarily funded with dividends from our subsidiaries.  In addition,  the merger
of our  former  subsidiary,  First  Bank & Trust,  with  Bank of San  Francisco,
effective March 29, 2001,  allowed us to further reduce our note payable through
a capital reduction of $23.0 million.  In conjunction with this merger,  Bank of
San Francisco was renamed First Bank & Trust. In addition,  accrued expenses and
other  liabilities  decreased by $21.9 million to $33.0 million at September 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 $14.4 million,  or $587.93 per common share on a diluted
basis,  for the three months ended  September  30, 2001,  in comparison to $14.1
million,  or $570.33 per common  share on a diluted  basis,  for the  comparable
period in 2000.  For the nine months  ended  September  30,  2001 and 2000,  net
income was $34.6 million,  or $1,409.98 per common share on a diluted basis,  in
comparison  to $43.3  million,  or $1,750.62 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 $36.0  million,  or $1,468.14 per common share on a diluted
basis,  for the nine  months  ended  September  30,  2001.  The  accounting  for
derivatives  under the  requirements  of SFAS No. 133 will  continue  to have an
impact on future  financial  results as further  discussed under  "--Noninterest
Income."  The primary  factors  that led to the decline in earnings for the nine
months ended September 30, 2001 were continued reductions in prevailing interest
rates,  an increased  provision for loan losses 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  increased  primarily as a result of increased
earning  assets   generated   through   internal  loan  growth  along  with  our
acquisitions of Lippo Bank,  certain assets of FCG, Bank of Ventura,  Commercial
Bank of San  Francisco,  Millennium  Bank and Bank of San  Francisco,  completed
during 2000. The  improvement  in net interest  income,  however,  was partially
offset by continued reductions in prevailing interest rates throughout the first
nine months of 2001.  During the three and nine months ended September 30, 2001,
noninterest  income  increased to $21.8  million and $57.7  million,  from $10.8
million and $31.8 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 $54.8 million and $170.8 million for
the three and nine months ended  September  30, 2001,  compared to $42.8 million
and  $122.5  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 for an unfunded letter of credit.

         Guaranteed  preferred  debentures  expense  of $1.5  million  and  $4.5
million for the three and nine months ended September 30, 2001, respectively, on
the trust preferred  securities  issued by First  Preferred  Capital Trust II in
October 2000 also  contributed  to the overall  increase in operating  expenses.
These higher operating expenses,  exclusive of the litigation settlement and the
specific  reserve  for  the  unfunded  letter  of  credit,   are  reflective  of
significant investments that have been made in personnel, technology, equipment,
facilities and new product and business  lines in  conjunction  with our overall
strategic  growth plan.  The payback on these  investments  is expected to occur
over time through higher and more diversified revenue streams.

Net Interest Income

         Net interest income  (expressed on a tax equivalent basis) increased to
$64.4 million, or 4.75% of  interest-earning  assets, for the three months ended
September 30, 2001, from $59.7 million, or 4.98% of interest-earning assets, for
the comparable period in 2000, respectively. For the nine months ended September
30, 2001 and 2000, net interest income (expressed on a tax equivalent basis) was
$189.3 million,  or 4.74% of  interest-earning  assets,  and $173.9 million,  or
4.92% of  interest-earning  assets,  respectively.  We credit the  increased net
interest income for the three and nine months ended September 30, 2001 primarily
to the net interest-earning assets provided by our 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
prevailing interest rates throughout the first nine months of 2001.

         Average loans, net of unearned  discount,  were $4.83 billion and $4.84
billion for the three and nine months ended September 30, 2001, in comparison to
$4.32   billion  and  $4.23  billion  for  the   comparable   periods  in  2000,
respectively.  The yield on our loan portfolio,  however, decreased to 8.40% and
8.72% for the three and nine months ended  September  30, 2001, in comparison to
9.20% and 9.03% for the  comparable  periods in 2000,  respectively.  This was a
major  contributor  to the decline in our net  interest  rate margin of 23 basis
points and 18 basis  points for the three and nine months  ended  September  30,
2001,  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 prevailing interest rates throughout the first nine months of 2001.
During the period from December 31, 2000 through  September 30, 2001,  the Board
of Governors of the Federal Reserve System  decreased the targeted Federal funds
rate eight  times,  resulting  in eight  decreases in the prime rate of interest
from 9.5% to 6.0%.  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 nine months
ended September 30, 2001, these agreements  provided net interest income of $7.1
million and $12.8 million,  respectively,  in comparison to net interest expense
of $1.4 million and $3.1 million incurred for the comparable periods in 2000.
<PAGE>

         For the three and nine months ended  September 30, 2001,  the aggregate
weighted  average  rate paid on our  deposit  portfolio  decreased  to 4.09% and
4.51%,  compared  to  4.72%  and  4.52%  for the  comparable  periods  in  2000,
respectively.  We  attribute  the  decline  primarily  to rates  paid on savings
deposits,  which have  continued to decline in  conjunction  with  interest rate
reductions as previously  discussed.  The overall decrease in rates paid for the
three and nine  months  ended  September  30,  2001,  is a result  of  generally
decreasing  interest  rates  during the first nine months of 2001 as compared to
generally  increasing  rates  for the  comparable  period  in  2000,  offset  by
increased  rates paid by us to attract and retain deposits due to the high level
of  competition  within our market areas.  In addition,  the aggregate  weighted
average rate paid on our note payable decreased to 7.09% and 6.84% for the three
and nine months ended  September 30, 2001,  respectively,  compared to 8.56% and
7.85% 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
significantly  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 nine months ended September 30, 2001
as compared to the comparable periods in 2000,  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 nine months ended September 30, 2001 and 2000:
<TABLE>
<CAPTION>

                                            Three months ended September 30,                   Nine months ended September 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>   <C>        <C>     <C>
   Loans (1)(2)(3)(4).......... $4,828,254  102,244 8.40% $4,317,762  99,858 9.20% $4,836,210 315,305 8.72% $4,226,438 285,845 9.03%
   Investment securities (4)...    414,968    6,216 5.94     412,501   7,214 6.96     424,200  21,288 6.71     431,104  21,493 6.66
   Federal funds sold and other    137,255    2,445 7.07      40,462     739 7.27      84,093   4,100 6.52      60,300   2,772 6.14
                                ----------  -------       ---------- -------       ---------- --------      ---------- -------
        Total interest-earning
          assets...............  5,380,477  110,905 8.18   4,770,725 107,811 8.99   5,344,503 340,693 8.52   4,717,842 310,110 8.78
                                            -------                  -------                  -------                  -------
Nonearning assets..............    559,510                   395,230                  536,149                  378,382
                                ----------                ----------               ----------               ----------
        Total assets........... $5,939,987                $5,165,955               $5,880,652               $5,096,224
                                ==========                ==========               ==========              ==========

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

Interest-bearing liabilities:
   Interest-bearing deposits:
     Interest-bearing demand
       deposits................ $  515,406    1,892 1.46% $  416,302   1,480 1.41% $  482,891   5,372 1.49% $  420,442   4,365 1.39%
     Savings deposits..........  1,551,180   12,402 3.17   1,277,167  13,176 4.10   1,485,391  39,927 3.59   1,253,312  37,246 3.97
     Time deposits (3).........  2,258,644   30,274 5.32   2,120,397  30,623 5.75   2,301,246  98,746 5.74   2,118,313  86,700 5.47
                                ----------  -------       ----------  ------       ---------- -------       ---------- -------
        Total interest-bearing
          deposits.............  4,325,230   44,568 4.09   3,813,866  45,279 4.72   4,269,528 144,045 4.51   3,792,067 128,311 4.52
   Short-term borrowings.......    151,823    1,338 3.50     110,545   1,641 5.91     161,755   5,000 4.13     100,920   4,156 5.50
   Note payable................     31,059      555 7.09      56,708   1,220 8.56      45,521   2,328 6.84      63,482   3,731 7.85
                                ----------  -------       ----------  ------       ---------- -------       ---------- -------
        Total interest-bearing
          liabilities..........  4,508,112   46,461 4.09   3,981,119  48,140 4.81   4,476,804 151,373 4.52   3,956,469 136,198 4.60
                                            -------                   ------                  -------                  -------
Noninterest-bearing liabilities:
   Demand deposits.............    725,624                   644,158                  718,468                  616,359
   Other liabilities...........    294,864                   209,687                  295,678                  209,139
                                ----------                ----------               ----------               ----------
        Total liabilities......  5,528,600                 4,834,964                5,490,950                4,781,967
Stockholders' equity...........    411,387                   330,991                  389,702                  314,257
                                ----------                ----------               ----------               ----------
        Total liabilities and
          stockholders' equity. $5,939,987                $5,165,955               $5,880,652               $5,096,224
                                ==========                ==========               ==========               ==========

Net interest income............              64,444                   59,671                  189,320                  173,912
                                            =======                   ======                  =======                  =======
Interest rate spread...........                     4.09                     4.18                     4.00                     4.18
Net interest margin............                     4.75%                    4.98%                    4.74%                    4.92%
                                                    ====                     ====                     ====                     ====
--------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income/expense 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
    $181,000 and $576,000 for the three and nine months ended September 30, 2001, and  $229,000  and  $650,000  for  the  comparable
    periods in 2000, respectively.
</TABLE>




<PAGE>


Provision for Loan Losses

         The  provision  for loan losses was $6.8 million and $13.9  million for
the three and nine months ended September 30, 2001, compared to $3.9 million and
$11.1 million for the comparable  periods in 2000,  respectively.  The provision
for loan losses  reflects  the level of loan  charge-offs  and  recoveries,  the
adequacy of the allowance for loan losses and the effect of economic  conditions
within our markets.  The increased  provision for loan losses is attributable to
loan portfolio  growth as well as an increase in net loan  charge-offs  and past
due loans, largely resulting from the slow down in economic conditions prevalent
within our markets. Loan charge-offs were $6.6 million and $22.0 million for the
three and nine months ended  September  30, 2001,  in comparison to $3.7 million
and $8.7 million for the comparable periods in 2000, respectively.  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 slow down in economic
conditions  prevalent within our markets.  Loan recoveries were $3.4 million and
$7.2  million  for the  three and nine  months  ended  September  30,  2001,  in
comparison to $1.8 million and $8.0 million for the comparable  periods in 2000,
respectively.  Past-due  loans  have  increased  during  the nine  months  ended
September  30,  2001,  and we  anticipate  this trend 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 $21.8  million and $57.7  million for the three
and nine months ended  September  30, 2001,  in  comparison to $10.8 million and
$31.8  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 $5.7
million  and $16.3  million for the three and nine months  ended  September  30,
2001, in comparison to $5.2 million and $14.6 million for the comparable periods
in 2000, respectively. We attribute the increase in service charges and customer
service fees to:

         >> increased savings and interest-bearing  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 July 1, 2001, 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 $2.4 million and
$9.7  million  for the  three and nine  months  ended  September  30,  2001,  in
comparison to $1.9 million and $5.2 million for the comparable  periods in 2000,
respectively.  The overall  increase 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 nine months
of 2001 as well as the continued  expansion of our mortgage  banking  activities
into new and existing markets.

         During the nine months ended  September  30,  2001,  we recorded a $1.9
million pre-tax gain on the sale of our credit card portfolio.  The reduction in
the net gain of $422,000 recorded for the three months ended September 30, 2001,
represents an adjustment to the initial  settlement in accordance with the terms
of the underlying sale agreement.  The sale of this portfolio is 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  nine  months  ended  September  30,  2001
included a net loss on the sale of  available-for-sale  investment securities of
$145,000,  in  comparison  to a net  gain  on  the  sale  of  available-for-sale
investment  securities of $199,000 for the  comparable  period in 2000.  The net
loss for 2001 resulted  primarily  from the  liquidation  of certain  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 $8.9  million  and  $14.4
million for the three and nine months ended  September  30, 2001,  respectively,
includes  $3.8  million  of gains  resulting  from the  termination  of  certain
interest rate swap agreements in April and June 2001 to adjust our interest rate
hedge position  consistent  with changes in the portfolio  structure and mix. In
addition,  the net gain reflects  changes in the fair value of our interest rate
cap  agreements,  interest  rate  floor  agreements  and fair value  hedges,  in
accordance  with the  requirements  of SFAS  No.  133,  as  amended,  which  was
implemented  on  January  1,  2001.  See  Note 3 to our  consolidated  financial
statements.

         Other income was $5.3 million and $15.6  million for the three and nine
months ended September 30, 2001, in comparison to $3.8 million and $11.8 million
for the  comparable  periods in 2000,  respectively.  We  attribute  the primary
components of the increase for the nine months ended September 30, 2001 to:

         >> our acquisitions completed during 2000;

         >> increased portfolio management fee income of $2.5 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 in December 2000;

         >> increased  rental  income  of  $1.3  million   associated  with  our
            commercial leasing activities that were acquired in conjunction with
            our acquisition of FCG in February 2000; and

         >> income of approximately  $900,000  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 $54.8 million and $170.8 million for the three
and nine months ended  September  30, 2001,  in  comparison to $42.8 million and
$122.5 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 $23.1 million and $68.9 million for
the three and nine months ended  September  30,  2001,  in  comparison  to $18.2
million and $53.4 million for the comparable periods in 2000,  respectively.  We
primarily   associate  the  increase  with  our  2000  acquisitions  and  higher
commissions  paid to mortgage  loan  originators  due to increased  volume.  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  $7.4  million and $21.2  million  for the three and nine  months  ended
September  30, 2001,  in  comparison  to $6.6 million and $18.9  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 $6.9 million and $19.9 million for the three
and nine months ended  September  30, 2001,  in  comparison  to $5.7 million and
$16.4 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,  Bank of San
Francisco and Millennium Bank, completed in February 2001, March 2001, June 2001
and July 2001, respectively.

         Legal,  examination  and  professional  fees were $2.0 million and $5.4
million for the three and nine months ended September 30, 2001, in comparison to
$1.1 million and $3.1 million for the comparable periods in 2000,  respectively.
We primarily  attribute the increase in these fees to certain litigation and the
continued expansion of overall corporate  activities,  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 $5.6  million for the three and nine months
ended September 30, 2001, in comparison to $1.3 million and $3.7 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 $13.5
million for the three and nine months ended September 30, 2001, in comparison to
$3.0 million and $9.0 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 $7.8 million and $32.8 million for the three and nine
months ended September 30, 2001, in comparison to $5.8 million and $14.7 million
for the  comparable  periods in 2000,  respectively.  Other expense  encompasses
numerous  general  and  administrative  expenses  including  travel,  meals  and
entertainment,  insurance,  freight and  courier  services,  correspondent  bank
charges,   advertising  and  business  development,   miscellaneous  losses  and
recoveries, memberships and subscriptions,  transfer agent fees and sales taxes.
We attribute the majority of the increase in other expense to:

         >> our acquisitions completed during 2000;

         >> 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 during June 2001 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 for an unfunded letter of
            credit in the amount of $1.8 million; and

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

Provision for Income Taxes

         The  provision  for income taxes was $9.5 million and $24.1 million for
the three and nine months ended  September 30, 2001,  representing  an effective
income tax rate of 38.9% and 39.1%, respectively,  in comparison to $8.9 million
and $26.7 million,  representing an effective income tax rate of 38.0% and 37.3%
for the comparable periods in 2000, respectively.  The increase in the effective
income  tax rate for the three  and nine  months  ended  September  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
<PAGE>

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


                          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>

                                                                   September 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       1,591      1,055,000         3,449
         Fair value hedges....................................     200,000       3,200         50,000           758
         Interest rate floor agreements.......................     275,000      13,401         35,000             6
         Interest rate cap agreements.........................     450,000       1,063        450,000         3,753
         Interest rate lock commitments.......................      28,000          --          4,100            --
         Forward commitments to sell
         mortgage-backed securities...........................     113,000          --         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 nine months  ended  September  30,  2001,  the net
interest  income  realized  on our  derivative  financial  instruments  was $7.1
million and $12.8 million,  respectively,  in comparison to net interest expense
of  $1.4  million  and  $3.1  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  $365,000 and $224,000 at
September 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  September  30, 2001 and December  31,  2000,  respectively,  and the
amount payable by us under the swap agreements was $2.4 million and $1.2 million
at September 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 September 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)

         September 30, 2001:
<S>                    <C> <C>                                 <C>               <C>           <C>       <C>
             September 16, 2002..............................  $   75,000        3.80%         5.36%     $   1,929
             September 20, 2004..............................     600,000        3.30          6.78         48,135
             March 21, 2005..................................     200,000        3.18          5.24          7,510
             April 2, 2006...................................     175,000        3.38          5.45          8,142
                                                               ----------                                ---------
                                                               $1,050,000        3.33          6.16      $  65,716
                                                               ==========        ====          ====      =========

         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 were  designated  as fair value  hedges,  provided 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 provided for
us to pay  interest  on a  quarterly  basis  and  receive  interest  either on a
semiannual or an annual basis.  In September  2001,  the one-year  interest rate
swap agreements  matured,  and we terminated the five and one-half year interest
rate swap agreements as a result of the underlying interest-bearing  liabilities
maturing or being called by their respective  counterparties.  There was no gain
or loss recorded as a result of the terminations.

         During January 2001, we entered into $50.0 million  notional  amount of
three-year  interest rate swap agreements and $150.0 million  notional amount of
five-year  interest rate swap  agreements 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 $2.5 million at September 30, 2001, and the amount
payable by us under the swap agreements was $1.8 million at September 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 September 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)

         September 30, 2001:
<S>                  <C>                                       <C>               <C>           <C>       <C>
             January 9, 2004.................................  $   50,000        3.82%         5.37%     $   1,999
             January 9, 2006.................................     150,000        3.82          5.51          6,699
                                                               ----------                                ---------
                                                               $  200,000        3.82          5.47      $   8,698
                                                               ==========        ====          ====      =========

         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 September 30, 2001, the carrying value of
the interest rate floor agreements,  which is included in derivative instruments
in the  consolidated  balance sheet at fair value,  was $13.4  million.  For the
three and nine months ended September 30, 2001,  these  agreements  provided net
interest income of $1.1 million and $1.4 million, respectively.

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
September 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 $1.1 million and $3.8 million, respectively.

Pledged Collateral

         At September 30, 2001, we had pledged investment  securities  available
for sale with a carrying  value of $2.2 million in connection  with our interest
rate swap  agreements.  In  addition,  at September  30,  2001,  we had accepted
investment  securities  with a fair  value of $73.8  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
September 30, 2001, we had not sold or repledged any of this collateral.
<PAGE>

                       Loans and Allowance for Loan Losses

         Interest earned on our loan portfolio  represents the principal  source
of income for our  subsidiary  banks.  Interest and fees on loans were 92.3% and
92.6% of total interest income for the three and nine months ended September 30,
2001,  in  comparison  to 92.7% and 92.3% for the  comparable  periods  in 2000,
respectively.  Total loans, net of unearned discount, increased $22.0 million to
$4.77  billion,  or 79.9% of total assets,  at September  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  $65.1  million  in our  loans  held  for sale
portfolio to $134.2 million at September 30, 2001 from $69.1 million at December
31, 2000. We primarily attribute this increase to a significantly  higher volume
of residential mortgage loans originated, including both new fundings as well as
refinancings,  as a result of continued  declining  interest  rates  experienced
during the first nine months of 2001.  This  increase was offset by a decline in
our consumer  and  installment  portfolio,  net of unearned  discount,  to $98.6
million at September  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 consumer
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>

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

         Commercial, financial and agricultural:
<S>                                                                               <C>                 <C>
              Nonaccrual.....................................................    $    25,402          22,437
              Restructured terms.............................................             --              22
         Real estate construction and development:
              Nonaccrual.....................................................            465          11,068
         Real estate mortgage:
              Nonaccrual.....................................................         15,909          16,524
              Restructured terms.............................................          2,918           2,952
         Consumer and installment:
              Nonaccrual.....................................................            396             155
              Restructured terms.............................................              7               8
                                                                                 -----------      ----------
                  Total nonperforming loans..................................         45,097          53,166
         Other real estate...................................................          3,707           2,487
                                                                                 -----------      ----------
                  Total nonperforming assets.................................    $    48,804          55,653
                                                                                 ===========      ==========

         Loans, net of unearned discount.....................................    $ 4,774,300       4,752,265
                                                                                 ===========      ==========

         Loans past due 90 days or more and still accruing...................    $     8,514           3,009
                                                                                 ===========      ==========

         Allowance for loan losses to loans..................................           1.69%           1.72%
         Nonperforming loans to loans........................................           0.94            1.12
         Allowance for loan losses to nonperforming loans....................         179.05          153.47
         Nonperforming assets to loans and other real estate.................           1.02            1.17
                                                                                 ===========      ==========
</TABLE>


<PAGE>

         Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and
certain  restructured  loans,  were $45.1  million at  September  30,  2001,  in
comparison  to $53.2  million at December  31,  2000.  The decrease is primarily
attributable to the removal of a single borrowing  relationship of $14.3 million
and $10.9  million at September  30, 2001 and  December 31, 2000,  respectively,
from nonaccrual real estate  construction and development loans during the third
quarter of 2001.  The  relationship  relates to a residential  and  recreational
development project that had significant financial  difficulties and experienced
inadequate  project  financing  at  inception,  project  delays and weak project
management.  Financing  for  this  project  has  since  been  recast  with a new
borrower, and is presently meeting developmental expectations. Exclusive of this
borrowing  relationship,  nonperforming  loans increased $2.8 million during the
nine months ended September 30, 2001. We attribute the increase in nonperforming
loans and  past-due  loans for the nine months  ended  September  30, 2001 to be
reflective  of cyclical  trends  experienced  within the  banking  industry as a
result of economic  slow down.  Consistent  with the general  economic slow down
experienced  within our primary markets,  we anticipate this trend will continue
in the upcoming months.

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

                                                                       Three months ended      Nine months ended
                                                                          September 30,          September 30,
                                                                       ------------------     -----------------
                                                                        2001        2000       2001       2000
                                                                        ----        ----       ----       ----
                                                                            (dollars expressed in thousands)

<S>                                                                    <C>         <C>         <C>       <C>
         Allowance for loan losses, beginning of period..............  $77,141     77,822      81,592    68,611
         Acquired allowances for loan losses.........................       --        547          --     1,346
                                                                       -------     ------      ------    ------
                                                                        77,141     78,369      81,592    69,957
                                                                       -------     ------      ------    ------
         Loans charged-off...........................................   (6,620)    (3,697)    (21,956)   (8,667)
         Recoveries of loans previously charged-off..................    3,427      1,774       7,202     7,954
                                                                       -------     ------      ------    ------
         Net loan charge-offs........................................    3,193)    (1,923)    (14,754)     (713)
                                                                       -------    ------      -------    ------
         Provision for loan losses...................................    6,800      3,865      13,910    11,067
                                                                       -------     ------      ------    ------
         Allowance for loan losses, end of period....................  $80,748     80,311      80,748    80,311
                                                                       =======     ======      ======    ======
</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.
<PAGE>

                                    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  $632.0  million  and $723.5  million at  September  30,  2001 and
December 31, 2000, respectively.

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

                                                                                 (dollars expressed in thousands)

<S>                                                                                          <C>
         Three months or less..........................................................      $280,931
         Over three months through six months..........................................        97,435
         Over six months through twelve months.........................................       140,490
         Over twelve months............................................................       113,164
                                                                                             --------
                Total..................................................................      $632,020
                                                                                             ========
</TABLE>

         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 September  30, 2001 and  December 31, 2000,  the
borrowing   capacity  of  our  subsidiary   banks  under  these  agreements  was
approximately $1.18 billion and $1.24 billion,  respectively.  In addition,  our
subsidiary  banks'  borrowing  capacity  through  their  relationships  with the
Federal Home Loan Banks was  approximately  $279.8 million and $262.1 million at
September 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, First Preferred Capital Trust II
and First  Preferred  Capital Trust III, and FBA's financing  subsidiary,  First
America Capital Trust.
<PAGE>

                       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 No. 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  after  June  30,  2001  as  well  as  all  purchase  method  business
combinations completed after June 30, 2001. SFAS No. 141 also specifies criteria
intangible  assets acquired in a purchase method business  combination must meet
to be recognized and reported  apart from  goodwill.  SFAS No. 142 requires that
goodwill  and  intangible  assets  with  indefinite  useful  lives no  longer be
amortized,  but instead  tested for  impairment at least  annually in accordance
with the provisions of SFAS No. 142. SFAS No. 142 also requires that  intangible
assets with definite useful lives be amortized over their  respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance  with SFAS No. 121 --  Accounting  for the  Impairment  of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. The amortization of goodwill
ceases upon  adoption of SFAS No. 142,  which for calendar  year-end  companies,
will be January 1, 2002.

         As of  January  1,  2002,  the  date of  adoption,  we  expect  to have
unamortized  goodwill,  exclusive of our closed  acquisitions of Charter Pacific
and BYL and our pending acquisition of UFG, of approximately $79.9 million,  all
of which will be subject to the  transition  provisions of SFAS No. 141 and SFAS
No.  142.   Amortization   of  intangibles   associated  with  the  purchase  of
subsidiaries  was $1.9  million  and $5.6  million for the three and nine months
ended September 30, 2001, in comparison to $1.3 million and $3.7 million for the
comparable  periods  in 2000,  respectively.  We are  currently  evaluating  the
additional  requirements  of SFAS No.  141 and SFAS No. 142 to  determine  their
potential impact on our consolidated financial statements.

         In August  2001,  the FASB  issued SFAS No. 144 --  Accounting  for the
Impairment or Disposal of Long-Lived Assets. This Statement  supersedes SFAS No.
121,  Accounting  for the  Impairment  of Long-Lived  Assets and for  Long-Lived
Assets to be  Disposed  Of.  SFAS No. 144  addresses  financial  accounting  and
reporting for the impairment or disposal of long-lived  assets and requires that
one accounting  model be used for  long-lived  assets to be disposed of by sale,
whether  previously held and used or newly  acquired.  SFAS No. 144 broadens the
presentation of discontinued  operations to include more disposal  transactions.
Therefore, the accounting for similar events and circumstances will be the same.
The provisions of SFAS No. 144 are effective for financial statements issued for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years, with early application encouraged.  The provisions of SFAS No. 144
generally  are to be applied  prospectively.  We are  currently  evaluating  the
requirements  of  SFAS  No.  144  to  determine  its  potential  impact  on  our
consolidated financial statements. However, we do not believe these requirements
will have a material effect 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  September  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 nine
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 prevailing  interest
rates throughout the last nine months,  is reflected in our reduced net interest
rate margin for the three and nine months  ended  September  30, 2001 as further
discussed  under  "--Results  of  Operations."  During the three and nine months
ended   September   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
                    --------------                      -----------

                         10.1              $120,000,000 Secured CreditAgreement,
                                           dated as  of  August  23, 2001, among
                                           First Banks, Inc., and   Wells  Fargo
                                           Bank Minnesota, National Association,
                                           American   National  Bank  and  Trust
                                           Company of  Chicago, Harris Trust and
                                           Savings  Bank, The   Northern   Trust
                                           Company,  Union  Bank  of  California
                                           N.A.,   SunTrust   Bank,   Nashville,
                                           LaSalle Bank National Association and
                                           Wells Fargo Bank  Minnesota, National
                                           Association,  as  Agent (incorporated
                                           herein by reference  to  Exhibit 10.6
                                           to    the    Company's   Registration
                                           Statement   on   Form  S-2,  File No.
                                           333-71652, dated October 15, 2001).

(b)      We  filed  a current report on Form 8-K on July 27, 2001. Item 5 of the
         report  is  a  press  release  announcing First Banks, Inc.'s financial
         results for the three and six months ended June 30, 2001. A copy of the
         press release was attached as Exhibit 99.1.




<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.



November 13, 2001                 By: /s/  James F. Dierberg
                                      -----------------------------------------
                                           James F. Dierberg
                                           Chairman of the Board of Directors
                                           and Chief Executive Officer
                                           (Principal Executive Officer)


November 13, 2001                 By: /s/  Allen H. Blake
                                      ----------------------------------------
                                           Allen H. Blake
                                           President,
                                           Chief Operating Officer and
                                           Chief Financial Officer
                                           (Principal Financial and Accounting
                                           Officer)