EXHIBIT 13


                          ANNUAL REPORT TO STOCKHOLDERS

<PAGE>


First Colorado Bancorp, Inc.
1997 Annual Report







<PAGE>


                       First Colorado Bancorp Stock Price
                                   By Quarter
<TABLE>
<CAPTION>
                              3/31/96   6/30/96   9/30/96   12/31/96  3/31/97   6/30/97   9/30/97   12/31/97
                              -------   -------   -------   --------  -------   -------   -------   --------

<S>                           <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
Low Stock Price by Quarter    $11.00    $11.750   $12.50    $14.9375  $16.375   $15.75    $17.25    $19.25
High Stock Price by Quarter   $12.50    $13.75    $15.625   $17.875   $19.00    $19.875   $21.50    $26.125
</TABLE>




                               FCB First Colorado
                                  Bancorp, Inc.

                       Consolidated Financial Highlights


<TABLE>
<CAPTION>
                              3/31/96   6/30/96   9/30/96   12/31/96  3/31/97   6/30/97   9/30/97   12/31/97
                              -------   -------   -------   --------  -------   -------   -------   --------

<S>                           <C>       <C>       <C>      <C>       <C>       <C>       <C>       <C>
Dividends                     $0.075    $0.08     $0.08    $0.09     $0.10     $0.11     $0.12     $0.13
</TABLE>


<PAGE>



Table of Contents

A Letter from the Chairman                                          2

Business of the Company                                             3

Selected Consolidated Financial and Other Data                      4

Key Operating Ratios                                                5

Management's Discussion of 1997 Results                             6

Common Stock and Related Matters                                    17

Independent Auditor's Report                                        19

Consolidated Statements of Financial Condition                      20

Consolidated Statements of Operations                               21

Consolidated Statements of Stockholders' Equity                     22

Consolidated Statements of Cash Flows                               23

Notes to Consolidated Financial Statements                          26

Consolidating Schedule - Financial Condition                        54

Consolidating Schedule - Operations and Retained Earnings           55

Boards of Director                                                  56

Corporate Information                                               57

Officers                                                            57

Branch Locations                                                    58

                                       1


<PAGE>



To our stockholders and friends:

First Colorado Bancorp, Inc. completed a very successful year in 1997.

Our deposits totaled $1.2 billion at year end, a 4.1% increase from 1996.

Lending activity was also very strong as our loans receivable  increased 9.7% in
1997.  Loans  closed were $355  million  for the year,  of which 66% were single
family mortgage loans, 20% were consumer loans, and the balance  commercial real
estate and construction loans.

The company's net income was a record $1.25 per share, and stockholders'  equity
increased  to $12.45 per share.  Return on assets was 1.31% and return on equity
was 9.92%.  We were able to increase our declared  dividend each quarter  during
1997,  from $0.09 per share in fourth  quarter 1996 to $0.13 per share in fourth
quarter 1997.

Expansion  also  continued  for the bank as we added a new  branch in  Highlands
Ranch in the southern metro Denver area. Our Montbello  office was relocated and
expanded  as well.  In  addition,  First  Federal  acquired  the assets of Delta
Federal Savings in Delta, Colorado, and we're serving those new customers at our
Delta branch at 564 Main Street.

Colorado's  economy  remains one of the  strongest in the nation as we move into
1998. The real estate market for both new and previously  occupied homes is very
strong and suggests a strong source of business and increased  revenue for First
Federal and First Colorado Bancorp in 1998.

This strong  economy also  suggested that 1998 would be a time to look for other
opportunities in banking. That is why, on March 8th of this year, First Colorado
Bancorp entered into an agreement to merge with Commercial Federal  Corporation.
Commercial  Federal is an $8.5  billion  bank with  branches in Iowa,  Nebraska,
Kansas,  Oklahoma,  and  Colorado.  When  the  merger  with  First  Colorado  is
completed, Commercial Federal will have $2.5 billion in Colorado deposits and 48
branches. This larger combined bank will be a major force in this market.

The  merger  allows  us to  combine  with a larger  organization,  offer a wider
product line, and undergo minimal change in our branch network and employees. We
feel it is a good deal for our shareholders and will ask for their approval at a
special  meeting later this year. All of us at First Colorado  Bancorp thank you
for your continued support.

Sincerely,

/s/ Malcolm E. Collier,

Malcolm E. Collier,
Chairman and Chief Executive Officer
                                        2


<PAGE>



Business of the Company

         First Colorado Bancorp,  Inc. (the "Company") is a Colorado corporation
organized  in September  1995 to  facilitate  the  conversion  of First  Savings
Capital,  M.H.C. (the "Mutual Holding Company") from the mutual to stock form of
ownership and to acquire and hold all of the capital stock of First Federal Bank
of Colorado (the "Bank" or "First Federal Bank"), (collectively, the "Conversion
and  Reorganization").  The Mutual Holding  Company  previously was the majority
stockholder   of  the  Bank  and  upon   consummation   of  the  conversion  and
Reorganization  on December 29, 1995, the Mutual Holding Company was merged with
and  into  the  Bank  and  the  Company  acquired  the  Bank as a  wholly  owned
subsidiary.  In connection with the Conversion and  Reorganization,  the Company
sold  13,403,798  shares of its common stock to the public in an initial  public
offering and issued 6,619,539  shares in exchange for the outstanding  shares of
the Bank held by persons other than the Mutual Holding  Company.  As of December
31, 1997,  the Company had total assets of $1.6 billion,  total deposits of $1.2
billion, and stockholders' equity of $209.3 million, or 13.5% of total assets.

         The Company is a unitary  savings and loan  holding  company and has no
significant  assets or  activities  other than  holding  all of the  outstanding
shares of the Bank and a note evidencing the Company's $10.5 million loan to the
Bank's Employee Stock Ownership Plan ("ESOP"),  and investing the portion of the
net proceeds from the offering retained by the Company, which as of December 31,
1997, was invested in a loan to the Bank and in deposits in the Bank.  Since the
conversion,  the Company has utilized $58.9 million of the net proceeds from the
offering to repurchase its common stock (3.7 million shares) in the open market.
The Company neither owns nor leases any property, but instead uses the premises,
equipment and furniture of the Bank.  Currently,  the Company does not intend to
employ any persons other than executive officers who are also executive officers
of the Bank,  and the Company  will  utilize the support  staff of the Bank from
time to time.

Business of the Bank

         First  Federal  Bank  is  a  federally-chartered  stock  savings  bank,
originally  chartered by the State of Colorado as the  Cooperative  Building and
Loan Association on April 26, 1885. A federal charter was granted to the Bank in
1934. In connection with the Conversion and Reorganization, the Bank changed its
name from First Federal  Savings Bank of Colorado to its current name and became
a wholly  owned  subsidiary  of the  Company.  It is  believed  to be the oldest
savings  institution  headquartered  in  Colorado.  The Bank's  deposits are now
insured by the Federal Deposit Insurance  Corporation ("FDIC") under the Savings
Association Insurance Fund ("SAIF"),  and the Bank is regulated by the Office of
Thrift Supervision ("OTS").

         The principal  business of the Bank is the  acceptance of deposits from
the general  public and the  origination  and purchase of mortgage loans for the
purpose of constructing,  financing or refinancing one-to-four family residences
and other  improved  residential  and commercial  real estate.  The Bank is also
active in the origination of home equity loans.  Excess liquidity is invested in
investment securities and in mortgage-backed securities.

         First Federal Bank  primarily  serves the Colorado  counties of Denver,
Adams, Arapahoe, Jefferson, Douglas, Boulder, Mesa, Delta and Montrose through a
network of 27 offices, providing a full
range of retail banking services.

                                        3


<PAGE>
<TABLE>
<CAPTION>
                                                         As of and for the years ended December 31,

Selected financial condition data                            1993            1994           1995            1996            1997*
                                                          --------------------------      --------------------------   ------------

                                                                                   (Dollars in thousands)

<S>                                                       <C>             <C>             <C>             <C>          <C>
Assets                                                    $1,224,119      $1,302,879      $1,482,497      $1,514,088   $1,556,026

Mortgage loans receivable, net                               510,319         641,545         795,691         894,561      994,788(4)

Non-mortgage loans receivable, net                            96,224         118,398         135,468         166,963      169,814(4)

Mortgage-backed and other asset-backed securities, net:

Available-for-sale, net at market value                          N/A          29,145           8,506           7,687        6,839(4)

  Held-to-maturity, at amortized cost                        433,870         374,549         302,380         273,602      209,543

Investment securities/FHLB stock:

  Available-for-sale, net at market value                        N/A          39,068          33,246          20,653       17,228

  Held-to-maturity, at amortized cost                         89,605          31,018          54,362          61,642       73,944

Deposits                                                   1,031,783(1)    1,018,687(2)    1,080,289       1,135,823    1,182,727(4)

FHLB advances                                                 59,450         141,948         125,670         122,515      122,410(4)

Other borrowed money                                          10,688           6,929           5,543           5,009        4,479

Stockholders' equity                                          98,690         108,014         238,718(3)      216,624      209,309
</TABLE>
(1)      Deposits in the amount of $162.2 million were purchased in 1993.
(2)      Deposits in the amount of $45.6 million were sold in 1994.
(3)      Includes  $117,620,000  form the net  proceeds  from the sale of common
         stock  in  December,  1995,  in  connection  with  the  conversion  and
         reorganization.
(4)      Mortgage loans in the amount of $28.9 million,non-mortgage loans in the
         amount of $6.2  million,  mortgage-backed  securities  in the amount of
         $0.5  million,  deposits  in the  amount  of  $30.0  million,  and FHLB
         advances in the amount of $6.9 million, were acquired in 1997.

Selected operating data
<TABLE>
<CAPTION>
<S>                                                     <C>         <C>          <C>          <C>          <C>
Interest income                                         $  73,841   $  79,255    $  94,263    $ 104,628    $ 107,948
Interest expense                                           37,392      42,785       58,863       57,194       60,014
                                                        ---------   ---------    ---------    ---------    ---------
  Net interest income                                      36,449      36,470       35,400       47,434       47,934
Provision (credit) for losses on loans                        193        (411)        (495)       1,143         (739)
                                                        ---------   ---------    ---------    ---------    ---------
  Net interest income after provision (credit)
    for losses on loans                                    36,256      36,881       35,895       46,291       48,673
                                                        ---------   ---------    ---------    ---------    ---------
Noninterest income:
  Fees and service charges                                  3,704       3,818        4,195        4,773        5,336
  Gain (loss) on sale of loans, net                           961         146           (1)         218          251
  Gain (loss) on sale of securities, net                       --         317         (381)          --        1,260
  Net income from real estate operations                      214         762        1,222          337        1,148
  Rental income                                               159         169          171          170          187
                                                        ---------   ---------    ---------    ---------    ---------
    Total noninterest income                                5,038       5,212        5,206        5,498        8,182
                                                        ---------   ---------    ---------    ---------    ---------
Noninterest expense:
  Compensation                                              8,651      10,025       10,666       12,215       14,708
  Occupancy                                                 2,977       3,411        3,703        3,805        4,118
  Provision (credit) for losses
    on real estate owned                                      172         448          (95)           3         (114)
  Provision (credit) for losses on federal funds sold          --          --          618         (618)          --
  Professional fees                                           692         642          667          779          710
  Advertising                                                 733         837          899        1,002          995
  Printing, supplies and postage                            1,022       1,038        1,095        1,093        1,136
  FDIC premiums                                             1,820       2,291        2,391        9,392          729
  Other, net                                                1,522       1,964        1,373        2,835        2,834
                                                        ---------   ---------    ---------    ---------    ---------
    Total noninterest expense                              17,589      20,656       21,317       30,506       25,116
                                                        ---------   ---------    ---------    ---------    ---------
Earnings before income taxes                               23,705      21,437       19,784       21,283       31,739
Income tax expense                                          8,850       7,891        7,146        7,911       11,825
                                                        ---------   ---------    ---------    ---------    ---------

NET EARNINGS                                            $  14,855   $  13,546    $  12,638    $  13,372    $  19,914
                                                        =========   =========    =========    =========    =========
</TABLE>


-------------------
*        All information prior to 1995 relates to the Bank. Information for 1995
         represents  consolidated  financial information for the Company and the
         Bank  as a  result  of  the  Conversion  and  Reorganization  completed
         December  29,   1995.   Information   for  1996  and  1997   represents
         consolidated financial information for the Company.

                                        4


<PAGE>

                                     Selected Financial and Key Operating Ratios
--------------------------------------------------------------------------------
Key Operating Ratios
<TABLE>
<CAPTION>
                                                                        At or for the year ended December 31,
                                                            1993          1994          1995              1996             1997
                                                            ----          ----          ----              ----             ----
<S>                                                       <C>           <C>           <C>            <C>
Return on average assets (net earnings
  divided by average total assets)                          1.33%         1.08%         0.92%             0.89%            1.31%
                                                              --            --            --              1.18(1)            --
Return on average equity (net earnings
  divided by average equity)                               16.25         13.03         11.03              5.72             9.92
                                                              --            --            --              7.57(1)            --
Average equity to average assets ratio
  (average equity divided by average
    total assets)                                           8.20          8.26          8.36             15.62            13.19
Equity to assets at year end                                8.06          8.29         16.10             14.31            13.46
Net interest rate spread                                    3.21          2.82          2.41              2.68             2.74
Net interest margin (net interest income as a
  percentage of average interest-earning assets)            3.43          3.04          2.71              3.33             3.29
Net interest income to average assets                       3.27          2.90          2.58              3.17             3.15
Non-performing loans to total loans(2)                      0.24          0.16          0.21              0.14             0.18
Non-performing assets to total assets                       0.32          0.42          0.27              0.19             0.15
Allowance for loan losses to total loans(2)                 0.59          0.44          0.31              0.36             0.40
Average interest-earning assets to
  average interest-bearing liabilities                    106.21        106.28        106.55            116.16           113.29
Noninterest expense/average assets                          1.58          1.64          1.56              2.04             1.65
                                                              --            --            --              1.57(1)            --
Net interest income after provision (credit)
  for loan losses to noninterest expenses                 206.13        178.55        168.39            151.74           193.79
                                                              --            --            --            197.11(1)            --
Number of:
  Mortgage loans serviced                                  8,991         9,001         9,753            10,285           11,060
  Non-mortgage loans serviced                              8,637         9,998        11,986            14,561           14,471
  Deposit accounts                                       124,607       122,481       129,482           135,763          139,661
  Offices (all full service)                                  23            23            25                26               27

Per Share Data
  Book value per share                                       NM             NM            NM         $   11.91       $    12.45
  Earnings per common share                                  NM             NM            NM              0.74             1.29
  Earnings per common share, assuming dilution               NM             NM            NM              0.73             1.25
  Dividends declared per share                               NM             NM            NM             0.325             0.46
  Dividend payout ratio                                      NM             NM            NM              46.94%          38.37%
</TABLE>
------------------
(1) Excluding the one-time SAIF Special Assessment of $7.0 million before taxes.
(2) Total loans exclude mortgage-backed and other asset-backed securities.

NM -- Not meaningful as a result of the Conversion and Reorganization  completed
December 29, 1995.

                                       5
<PAGE>

FCBI----------------------------------------------------------------------------

General

         Since the Conversion and  Reorganization  was completed  until December
29,1 995, the consolidated  results of operations of the Company for years ended
prior  to  December  31,  1996  essentially  relate  solely  to the  results  of
operations  for First Federal Bank.  Since the Company is a unitary  savings and
loan holding company and First Federal Bank is the primary asset of the Company,
in  the   discussion  to  follow  the  terms   "Company"  and  "Bank"  are  used
interchangeably.

         First Federal Bank's  results of operations are primarily  dependent on
its net interest income,  which is the difference between interest income earned
on its loan,  mortgage-backed  and other asset-backed  securities and investment
portfolios,  and its cost of funds,  consisting of interest paid on deposits and
borrowings.  Operating  results also are affected to a lesser extent by the type
of lending, each of which has a different rate and fee structure. The Bank's net
earnings are also  affected by its  provision  for loan  losses,  as well as the
amount of  non-interest  income,  including  loan  origination  fees and service
charges,  and non-interest  expense.  The Bank's operating expenses  principally
consist of employee compensation,  occupancy expenses, federal deposit insurance
premiums and other  general and  administrative  expenses.  Earnings of the Bank
also are affected significantly by general economic and competitive  conditions,
particularly  changes in market interest rates,  government policies and actions
of regulatory authorities.

         The Company and the Bank accessed the capital  markets in December 1995
and raised $117.6 million of equity through the initial public  offering.  These
additional  funds were  initially  used to decrease  borrowings  and to increase
short-term  investments,  specifically  Federal funds sold.  Throughout 1996 and
1997,   those   short-term   investments   have   bene   reallocated   to  other
interest-earning assets, specifically loans receivable.

         On March 8, 1998, the company entered into a Reorganization  and Merger
Agreement  ("the  agreement") to be acquired by Commercial  Federal  Corporation
("Commercial  Federal").  Under the terms of the agreement,  Commercial  Federal
will acquire through a tax-free  reorganization all of the outstanding shares of
the Company's  common stock in exchange for Commercial  Federal's  common stock.
The exchange  ratio will be determined  based upon the average  closing price of
Commercial Federal's common stock during a twenty consecutive trading day period
ending five trading days prior to closing. Based on Commercial Federal's closing
price prior to March 8, 1998,  First Colorado  shareholders  would receive .8807
shares of  Commercial  Federal  common  stock for each  share of First  Colorado
Bancorp,  Inc. common stock. The acquisition is subject to regulatory approvals,
the Company's and Commercial Federal's shareholder approval and other conditions
and is expected to close in the third quarter of 1998. Regardless of whether the
proposed  acquisition is  consummated,  the following  discussion  addresses the
financial condition,  results of operation,  liquidity and capital resources and
ongoing strategy of the Company.

Management Strategy

         First  Federal  Bank's   management   strategy  has  been  to  maintain
profitability  and a strong capital  position through growth at a rate that does
not exceed its ability to generate  earnings.  The Bank's  lending  strategy has
historically  focused  on the  origination  of  traditional  one-to-four  family
mortgages and, to a lesser extent,  multi-family residential and commercial real
estate loans. This focus and relatively conservative  underwriting standards are
designed  to  reduce  the risk of  losses  on its loan  portfolio.  This lack of
diversification  in its asset structure does,  however,  make the portfolio more
susceptible  to declines in real estate values in its market area.  The risk has
been mitigated in part through investments in mortgage-backed securities.

         First Federal Bank, like most other financial institutions,  is subject
to  interest  rate  risk  as a  result  of the  difference  in the  maturity  on
interest-bearing  liabilities and interest-earning  assets and the volatility of
interest rates.  Due to their shorter terms to maturity,  most deposit  accounts
react  more  quickly  to market  interest  rate  movements  than do  traditional
mortgage loans.  Therefore,  sharp increases in interest rates, such as occurred
in 1994, will generally  adversely affect the Bank's earnings.  Conversely,  the
Bank will generally benefit during periods of declining or stable interest rates
such as existed in 1995, 1996, and 1997.

         Since the early  1980's,  management  has been  working to increase the
interest rate  sensitivity of the Bank's assets and decrease the  sensitivity of
its  liabilities,  while  maintaining  asset  quality.  This  strategy  has been
accomplished primarily by (i) maintaining a high asset quality, (ii) maintaining
a higher level of  interest-earning  assets than  interest-bearing  liabilities,
(iii)  originating  and  purchasing  for  its  own  portfolio   adjustable  rate
one-to-four  family  residential  mortgage  ("ARM")  loans  and  mortgage-backed
securities,  (iv)  originating  30-year  fixed-rate  mortgages  for  sale in the
secondary  market,  (v) expanding the Bank's  consumer loan and home equity loan
portfolio, (vi) investing in shorter term investment securities,  (vii) managing
deposit rates and maintaining a strong deposit base by providing  convenient and
quality services and locations, and (viii) controlling operating expenses.

                                        6


<PAGE>

                                    Management's Discussion of Financial Results
--------------------------------------------------------------------------------

Other aspects of management's current strategy include the following:

         Loan diversification. First Federal Bank will continue to actively seek
         to originate  consumer loans at its branch offices,  most of which have
         historically  consisted of home equity loans.  Consumer loans generally
         have shorter terms and higher rates than first mortgage loans. Consumer
         loans  comprised 10.9% of total assets as of December 31, 1997, and the
         Bank will  attempt  to  increase  such  loans to  approximately  15% of
         assets.  In this regard,  First Federal Bank has targeted its marketing
         efforts toward  consumer loan  originations  and provided branch office
         personnel   with  specific   goals  for  consumer   loan   origination.
         Furthermore,  the  Bank is  actively  pursuing  the  origination,  on a
         selective  basis,  of  loans  secured  by  multi-family  dwellings  and
         commercial  real estate  located in its primary  market area.  The Bank
         believes it has an opportunity to selectively  originate  quality,  low
         loan-to-value,  commercial real estate loans in its market area,  which
         generally yield a higher rate of interest and are at adjustable  rates.
         The  success  of such  strategy  will  depend on a number  of  factors,
         including,  but  not  limited  to,  consumer  demand,  pricing  of  the
         competition, and general economic conditions.

         Deposits. First Federal Bank will continue to monitor its deposit costs
         by adjusting  the  interest  rates  offered on its deposit  accounts in
         accordance  with market  conditions.  The Bank will  continue to stress
         checking and money market type  accounts  that are not as interest rate
         sensitive as certificates of deposit.

         Property.  During  the  past  several  years,  the  Bank  has  invested
         significant  amounts in building new offices and in remodelling several
         of its existing offices. After constructing two branch offices in 1995,
         one in 1996, and one in 1997, First Federal Bank currently has plans to
         open one new branch office in 1998.

         Profitability. For the year ended December 31, 1997, First Federal Bank
         had a net interest  rate spread of 2.74%.  This  increased  spread over
         fiscal 1996  resulted in increased  profits.  Although the net interest
         rate  spread may  decrease as the cost of funds rise for  deposits  and
         borrowings,  the Bank  believes  that its net interest rate spread will
         remain favorable as it continues to implement its strategies.  The Bank
         intends  to  further  enhance  its  profits  by  further  reducing  its
         operating expenses and maintaining asset quality,  thereby limiting the
         need for additional increases in the allowance for loan losses.

         The Bank's ratio of  non-interest  expenses to average assets was 1.65%
         for the year ended December 31, 1997. An objective of the Bank for 1998
         is to maintain and, if possible,  reduce this operating  ratio.  During
         the  past  several  years,  however,  the  Bank  has  added  additional
         employees as a result of growth,  expansion  of services and  increased
         regulatory reporting.

         The Bank will seek to maintain  asset  quality  through  the  continued
         origination  of  single  family  mortgages,  underwritten  on the  same
         conservative  basis as in the past. In connection  with commercial real
         estate loans, the Bank has implemented  several changes in an effort to
         improve asset quality, including: (i) reducing amortization terms while
         increasing  the frequency of requiring  balloon  payments on new loans,
         (ii) reducing  loan-to-value  ratios to an average of approximately 70%
         and  (iii)  increasing  periodic  inspections  of  collateral  with the
         objective  of  addressing  and  resolving  any   deterioration  of  the
         collateral  with  the  borrower  as it  arises.  Profitability  is also
         dependent  upon a number of  factors  beyond  the  control of the Bank,
         including  general  and  local  economic  conditions  and  governmental
         regulations.

Net Portfolio Value - Market Risk

         OTS  regulations  require  the Bank to measure its  interest  rate risk
("IRR") by  computing  the net  present  value of its cash  flows  from  assets,
liabilities  and  off-balance  sheet  items  ("NPV")  in the event of a range of
assumed changes in market interest rates. These computations estimate the effect
on the Bank's NPV of sudden and  sustained 1% to 4% increases  and  decreases in
market interest rates.  The regulations  provide that the OTS will calculate the
IRR  component  quarterly for each  institution  from the  institution's  Thrift
Financial  Reports.  A resulting  change in NPV of more than 2% of the estimated
market of its assets will require an  institution to deduct from its capital 50%
of the excess  change.  The OTS has  deferred  for the present  time the date on
which savings institutions must deduct the IRR component from capital.

         The table on page 8 presents the Bank's NPV as of December 31, 1997, as
calculated by the OTS based on information provided to the OTS by the Bank.

         As the table  shows,  increases  in interest  rates would result in net
decreases in the Bank's NPV,  while  decreases in interest  rates will result in
relatively  smaller  net  increases  in the  Bank's  NPV.  Based  upon the above
calculations  as of December 31, 1997,  the Bank would not be required to make a
deduction  from total capita for purposes of calculating  the Bank's  risk-based
capital  requirement.  (Bank's NPV decreases by 1.85% if interest rates increase
by 200 basis points.)  Certain  shortcoming are inherent in the methodology used
in the table. Modeling changes in NPV requires the making of certain assumptions
that may tend to  oversimplify  the  manner  in which  actual  yields  and costs
respond to changes in market interest rates. First, the model

                                        7


<PAGE>

FCBI----------------------------------------------------------------------------

assumes  that the  composition  of the  Bank's  interest  sensitive  assets  and
liabilities  existing at the  beginning of a period  remains  constant  over the
period being  measured.  Second,  the model assumes that a particular  change in
interest rates is reflected  uniformly  across the yield curve regardless of the
duration  to  maturity  of  repricing  of  specific   assets  and   liabilities.
Accordingly,  although  the NPV  measurements  do provide an  indication  of the
Bank's  interest  rate  risk  exposure  at a  particular  point  in  time,  such
measurements  are not  intended  to provide a precise  forecast of the effect of
changes in market interest rates on the Bank's net interest income.

         The Bank  also  measures  interest  rate  risk by  computing  estimated
changes in its net interest  income  ("NII") over a four quarter  period.  These
computations estimate the effect on the Bank's NII of sudden and sustained 1% to
4% increases and decreases in market interest  rates.  (The OTS does not provide
estimated changes in the Bank's NII.)

         Computations  of  prospective  effects of  hypothetical  interest rates
changes are based on numerous  assumptions,  including relative levels of market
interest rates, prepayments and deposit runoffs and should not be relied upon as
indicative  of  actual  results.  Certain  shortcomings  are  inherent  in  such
computations.   Although   certain  assets  and  liabilities  may  have  similar
maturities  or periods of  repricing,  they may react at different  times and in
different degrees to changes in the market interest rates. The interest rates on
certain types of assets and  liabilities  may fluctuate in advance of changes in
market  rates,  while  rates on other  types of assets and  liabilities  may lag
behind changes in market interest rates. Certain assets, such as adjustable rate
mortgages, generally have features which restrict changes in interest rates on a
short-term  basis  and over the life of the  asset.  In the event of a change in
interest  rates,   prepayments  and  early   withdrawal   levels  could  deviate
significantly  from  those  assumed  in making  calculations  set  forth  above.
Additionally,  an  increased  credit risk may result in the event of an interest
rate  increase  as the  ability  of many  borrowers  to  service  their debt may
deteriorate.

         The Bank's Board of Directors is  responsible  for reviewing the Bank's
asset and liability policies.  The Board meets quarterly to review interest rate
risk and trends,  as well as liquidity and capital ratios and  requirements.  In
connection  with NPV and NII  calculations,  the Bank's Board of  Directors  has
adopted an  interest  rate risk  policy  which  establishes  certain  percentage
changes in the Bank's NPV and NII that the Board deems to be  acceptable  in the
event of  increases or decreases in interest  rates.  The Bank's  management  is
responsible for  administering  the policies and  determinations of the Board of
Directors with respect to the Bank's asset and liability  goals and  strategies.
Management  expects that the Bank's asset and liability  policies and strategies
will  continue  as  described  above  so  long  as  competitive  and  regulatory
conditions  in the  financial  institution  industry and market  interest  rates
continue as they have in recent years.

<TABLE>
<CAPTION>
                                            Net Portfolio Value
                       --------------------------------------------------------------------
                                                          (Dollars in thousands)
                                                                           Change in NPV
Change in Interest                                                           as a % of
Rates in Basis Points                                                      Estimated Market
(Rate Shock)(1)         $ Amount         $ Change         % Change         value of Assets
---------------        ----------        ----------       --------         ----------------
                                         (Dollars in Thousands)
<S>                     <C>              <C>                  <C>              <C>
   +400 bp              $ 148,204        $ (83,365)           (36)%             (4.56)%
   +300 bp                172,897          (58,673)           (25)              (3.13)
   +200 bp                195,966          (35,604)           (15)              (1.85)
   +100 bp                215,990          (15,579)            (7)              (0.79)
   Static                  231,569               --             --                  --
   -100 bp                242,499           10,929             +5               +0.52
   -200 bp                250,383           18,814             +8               +0.86
   -300 bp                258,427           26,857            +12               +1.20
   -400 bp                271,196           39,626            +17              + 1.78
</TABLE>


                                        8


<PAGE>

                                                 Analysis of Net Interest Income
--------------------------------------------------------------------------------

         General.  First Federal  Bank's  earnings  depend  primarily on its net
interest  income.  Net  interest  income  is  affected  by  (i)  the  amount  of
interest-earning   assets  and  interest-bearing   liabilities,   and  (ii)  the
difference  ("interest  rate  spread")  between  rates  of  interest  earned  on
interest-earning  assets and rates paid on  interest-bearing  liabilities.  When
interest-earning assets approximate or exceed interest-bearing  liabilities, any
positive interest rate spread will generate net interest income.

         Rate/Volume  Analysis.  Changes in net interest income are attributable
to  three  factors:  a  change  in  volume  of  an  interest-earning   asset  or
interest-bearing  liability,  a  change  in  rates  or  a  change  caused  by  a
combination  of changes in volume and rate.  The table below sets forth  certain
information  regarding  changes in interest  income and interest  expense of the
Bank for the periods indicated.  For each category of interest-earning asset and
interest-bearing  liability,  information is provided on changes attributable to
(1) changes in volume  (changes  in average  volume  multiple by old rate);  (2)
changes in rates  (changes in rate  multiplied by old average  volume);  and (3)
changes  in  rate-volume  (changes  in rate  multiplied  by  changes  in average
volume).

Rate/Volume Analysis
<TABLE>
<CAPTION>

                                                                  Year Ended December 31,
                                              1995 vs 1996                                       1996 vs 1997
                                        Increase (Decrease) due to:                       Increase (Decrease) due to:
                                               Rate/                                                     Rate/
                                 Volume        Rate     Volume         Net      Volume        Rate       Volume        Net
                                 ------        ----     ------         ---      ------        ----       ------        ---
                                                                                                    (In thousands)
Interest income:
<S>                             <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
  Mortgage loan portfolio       $  7,795    $  1,124    $    155    $  9,074    $  7,404    ($   404)   ($    46)   $  6,954
  Non-mortgage loan portfolio      2,222         352          75       2,649       1,467          63           7       1,537
  Mortgage/Asset-backed
    securities                    (2,939)       (452)         59      (3,332)     (3,471)       (750)        136      (4,085)
  Investment securities/
    FHLB Stock                       958         (26)         (5)        927        (410)        217         (16)       (209)
  Fed Funds old and other
    interest-earning assets          442         172         433       1,047        (820)       (174)        117        (877)
                                --------    --------    --------    --------    --------    --------    --------    --------
  Total change in interest
    income                      $  8,478    $  1,170    $    717    $ 10,365    $  4,170    ($ 1,048)   $    198    $  3,320
                                ========    ========    ========    ========    ========    ========    ========    ========
Interest expense:
  Time Deposits                 $  1,245    ($   269)   ($    10)   $    966    $  1,911    $     48    $      3    $  1,962
  Other Deposits                     356        (628)        (16)       (288)        571        (267)        (11)        293
  Borrowings                      (2,223)       (157)         33      (2,347)        400         157           8         565
                                --------    --------    --------    --------    --------    --------    --------    --------
  Total change in interest      $   (622)   ($ 1,054)   $      7    ($ 1,669)   $  2,882    ($    62)   $      0    $  2,820
                                ========    ========    ========    ========    ========    ========    ========    ========
    expense
NET CHANGE IN NET
  INTEREST INCOME               $  9,100    $  2,224    $    710    $ 12,034    $  1,288    ($   986)   $    198    $    500
                                ========    ========    ========    ========    ========    ========    ========    ========
</TABLE>


                                        9


<PAGE>
The following table sets forth for the periods indicated, information regarding
the total dollar amounts of interest income from interest-earning assets and
the resulting average yields, the total dollar amount of interest expense on
interest bearing liabilities and the resulting average costs, net interest
income, interest rate spread, the net yield earned on interest-earned on
interest-earning assets, and the ratio of total interest-earning assets to total
interest-bearing liabilities.


<TABLE>
<CAPTION>
                              Year Ended December 31,         Year Ended December 31,       Year Ended December 31,  At December 31,
                                       1995                             1996                        1997                    1997
                         --------------------------------  ----------------------------- --------------------------         -----
                                               Average                       Average                    Average
                         Average               Yield/    Average             Yield/  Average             Yield/              Yield/
                         Balance   Interest    Cost      Balance   Interest  Cost    Balance   Interest   Cost    Balance     Cost
                         -------   --------    ----      -------   --------  ----    -------   --------   ----    -------    ------

<S>                    <C>       <C>          <C>      <C>       <C>       <C>     <C>       <C>        <C>     <C>       <C>
Interest-
earning
assets:
  Mortgage
  loan
  portfolio,
  net                  $  741,381  $56,637      7.64%  $  843,414 $ 65,711    7.79% $ 938,456 $ 72,666    7.74% $  994,788    7.70%
  Non-mortgage
    loan
    portfolio,
    net                   127,567   10,482      8.22      154,610   13,131    8.49%   171,880   14,668    8.53%    169,814    8.68
  Mortgage/
    asset
    backed
    securities,
    net                   352,148   22,455      6.38      306,055   19,123    6.25%   250,498   15,038    6.00     216,382    6.64
  Investment
    securities/
    FHLB stock             80,343    4,513      5.62       97,403    5,440    5.59     90,070    5,231    5.81      91,172    6.01
  Federal funds
    sold and
    other
    interest-
    earning
    assets                  7,078      176      2.49       24,759    1,223    4.94      8,168     346     4.24      16,687    3.44
                         --------   ------               --------   ------           -------- -------             --------
      Total
        interest-
        earning
        assets         $1,308,517  $94,263      7.20%  $1,426,241 $104,628    7.34%$1,459,072$107,949     7.40% $1,488,843    7.50%
                       ----------  =======  ========              ========   =====           ========     ====
Non interest-
  earning assets           61,376                          69,015                      62,537                       67,183
                       ----------                      ----------                    --------                    ---------
      Total assets     $1,369,893                      $1,495,256                  $1,521,609                   $1,556,026
                       ==========                      ==========                    ========                    =========
Interest-
bearing liabilities:
    Time deposits      $  618,034  $34,332      5.56%  $  640,439  $35,298    5.51%$  657,121 $37,260     5.52%    687,866    5.75%
    Other deposits        448,234   13,982      3.12      459,633   13,694    2.98    478,810 $13,987     2.92     494,861    2.89
    Borrowings            161,808   10,549      6.52      127,710    8,202    6.42    133,937   8,767     6.55     126,889    6.47
                       ----------  -------              --------- -------            -------  ------           ----------
      Total interest-
        bearing
        liabilities    $1,228,076  $58,863      4.79%  $1,227,782  $57,194    4.66%$1,287,868 $60,014     4.66% $1,309,616    4.74%
                                   =======                         =======         ========== =======     ====                ====
Non interest-
  bearing liabilities      27,287                          33,864                      33,006                       37,101
                       ----------                      ----------                  ----------                   ----------
     Total liabilities $1,255,363                      $1,261,646                  $1,320,874                   $1,346,717
Stockholders' equity      114,530                         233,610                     200,735                      209,309
                       ----------                      ----------                  ----------                   ----------
     Total liabilities
       and Stockholders'
       equity          $1,369,893                      $1,495,256                  $1,521,609                   $1,556,026
                       ==========                      ==========                  ==========                   ==========
Net interest income                $35,400                         $47,434                    $47,935
                                   =======                         =======                    =======
Interest rate
  spread                                        2.41%                         2.68%                       2.74%               2.76%
                                                ====                          ====                        ====                ====
Net interst
  margin(2)                                     2.71%                         3.33%                       3.29%
                                                ====                          ====                        ====

Ratio of average
  interest-earning
  assets to
  average interest-
  bearing
  liabilities                                 106,55%                       116.16%                     113,29%
                                              ======                        ======                      ======

Ratio of interst-
  earning assets
  to interest-
  bearing
  liabilities                                                                                                               113.69%
                                                                                                                            ======
</TABLE>

(1)  Excludes income earned on loan origination and commitment fees.  Average
     balances include non accrual loans.
(2)  Net interest margin represents net interest income as a percentage of
     average interest-earning assets.

                                       10
<PAGE>

                                              Comparison of Financial Condition:
--------------------------------------------------------------------------------
Comparison of Financial Condition:

         1997-1996

         The total assets of the Company increased $41.9 million,  or 2.8%, from
$1,514.1  million at December 31, 1996 to $1,556.0 million at December 31, 1997.
A major factor in this increase was the acquisition,  effective October 1, 1997,
of Delta  Federal  Savings,  F.S.B.  ("Delta")  which had total  assets of $40.5
million as of  September  30,  1997.  The increase is also due to an increase in
loan  receivable of $103.1  million,  or 9.7%, with $35.1 million being acquired
from Delta and much of the  remaining  increase due to the  production  from the
Bank's correspondent lending program. Investment securities also increased, from
$72.8 at December 31, 1996,  to $79.9  million at December 31, 1997, an increase
of $7.1 million,  or 9.8%. Cash and cash equivalents  decreased $4.6 million, or
9.3%,  from $49.2  million at December 31, 1996 to $44.6 million at December 31,
1997,  and  mortgage-backed   and  other  asset-backed   securities  into  loans
receivable.

         As of December 31, 1997, non-performing assets totaled $2.3 million, or
0.15% of total assets as compared to $2.9 million,  or 0.19% of total assets, as
of December 31, 1996.  The decrease was due primarily to the sale of real estate
property  previously  held  as  REO  and  to the  recovery  of a  non-performing
investment.

         Total  liabilities  increase  $49.3  million,  or 3.8%,  from  $1,297.4
million at December 31,  1996,  to $1,346.7  million at December  31, 1997.  The
increase in  liabilities  primarily  occurred in the  deposit  portfolio,  which
increased $46.9 million, or 4.1%, from $1,135.8 million at December 31, 1996, to
$1,182.7 million at December 31, 1997, due primarily to the acquisition of Delta
with a $30.0  million  deposit  portfolio  and to the  interest  credited to the
existing  portfolio.  Total  advances  from the Federal Home Loan Bank  ("FHLB")
decreased by $105,000,  or 0.1%, from $122.5 million as of December 31, 1996, to
$122.4 million s of December 31, 1997.

         Stockholders'  equity  decreased  $7.3  million,  or 3.4%,  from $216.6
million at December 31, 1996 to $209.3  million at December 31, 1997, due to net
earnings of $19.9 million for the year ended December 31, 1997,  being offset by
treasury stock  purchases  totaling  $29.7 million and by dividends  declared of
$7.6 million.

Comparison of Operating Results

         1997-1996

General

         Net earnings  for the year ended  December  31,  1997,  increased  $6.5
million,  or 48.9%,  to $19.19  million  from  $13.4  million  or the year ended
December 31, 1996. The increase was primarily due to a decrease in  non-interest
expense and to increases in noninterest income and in the provision (credit) for
losses on loans,  as well s to one-time  gains on sale of equity  securities and
real estate. The decrease in net noninterest expense can be attributed primarily
to the FDIC  premium,  specifically  a one-time  SAIF  special  assessment  that
occurred in 1996.  President  Clinton signed  legislation on September  30,,1996
requiring  all banks and  savings  association  with  accounts  insured  by SAID
(administered by the FDIC) to pay a special assessment to recapitalize the fund.
The Bank's  assessment was $7.0 million before taxes ($4.3 million after taxes),
which was charged to earnings  during the third  quarter of 1996. As a result of
the  recapitalization,  the Bank believes the SAIF premium it will pay in future
years will be reduced significantly from its current assessment, which will have
a positive effect on future earnings.

Net Interest Income

         Net interest  income  increased  $500,000,  or 1.1%, from $47.4 million
during the year ended  December 31, 1996 to $47.9 million  during the year ended
December  31, 1997.  This  increase  was  primarily  due to an increase in total
interest income of $3.3 million, or 3.2%, from $104.6 million for the year ended
December 31, 1996 to $107.9 million for the year ended  December 31, 1996.  This
increase  was  primarily  the result of an increase in interest  income on loans
receivable  from  $78.8  million in the year ended  December  31,  1996 to $87.3
million in the year ended December 31, 1997, due to a three basis point decrease
in the interest rate earned on loans  receivable  being offset by an increase in
the  average  balance  of loans  receivable  of  $112.3  million,  or 11.3 %, to
$1,110.3  million for the year ended December 31, 1997,  from $998.0 million for
the year ended December 31, 1996.  The increase in the average  balance of loans
receivable resulted primarily from a strong economy in the

                                       11

<PAGE>

FCBI----------------------------------------------------------------------------

Company's  market area  coupled with an  aggressive  program to attract new loan
originations in both the mortgage and non-mortgage  portfolios,  as well as from
the acquisition of Delta.  This increase in interest income on loans  receivable
was partially offset by decreases in other interest income categories.  Interest
income on investment  securities  (including those available for sale) decreased
from $5.4  million in the year ended  December  31, 1996 to $5.2  million in the
year ended December 31, 1997, from $97.4 million for the year ended December 31,
1996. The decrease in the average investment portfolio balance was primarily due
to  the  reallocation  of  funds  to  loans   receivable.   Interest  income  on
mortgage-backed and other asset-backed securities (including those available for
sale) decreased $4.1 million,  or $21.4%,  to $15.0,  million for the year ended
December 31, 1997,  from $19.1 million for the year ended December 31, 1996, due
primarily to the decrease in the average  balance of $55.6 million,  o 18.2%, to
$250.5 million for the year ended December 31, 1997, from $306.1 million for the
year  ended  December  31,  1996.  The  decrease  in  the  average   balance  of
mortgage-backed  and  other  asset-backed  securities  is  due  to  management's
decision to reinvest the cash flows from those securities in loans receivable.

         The increase in interest  income was combined with an increase in total
expense of $2.8 million, or 4.9%, from $57.2 million for the year ended December
31, 1996, to $60.0 million for the year ended  December 31, 1997.  Interest paid
on deposits increased $2.2 million, or 4.6%, to $51.2 million for the year ended
December 31, 1996, from $49.0 million for the year ended December 31, 1996. This
increase  was  primarily  due to the  increase  in the  average  balance  of the
deposits  of $53.8  million,  or 4.9%,  to  $1,253.9  million for the year ended
December 31, 1997,  from $1,100.1  million for the year ended December 31, 1996,
offset  slightly by a decrease of one basis point in the cost of deposits.  This
increase in interest paid on deposits was accompanied by an increase in interest
paid on borrowed funds of $565,000,  or 6.9%, to $8.8 million for the year ended
December 31, 1997,  from $8.2 million for the year ended  December 31, 1996, due
to an increase in the average  balance of FHLB advances and other borrowed money
of $6.2  million,  or 4.9%,  to $133.9  million for the year ended  December 31,
1997,  from $127.7 million for the year ended  December 31, 1996.  This increase
reflects the use of borrowings to fund loans receivable.

Provision (Credit) for Losses on Loans

         In determining the provision for losses on loans,  management analyzes,
among other things, the Bank's loan portfolio,  market conditions and the Bank's
market  area.  The  provision  (credit)  for losses on loans  decreased  by $1.9
million in 1997 compared to 1996,  from a provision of $1.1 million for the year
ended  December 31, 1996 to a credit of $739,000 for the year ended December 31,
1997.  That credit was due primarily to the recovery of $1.5 million on one loan
that had  previously  been written off.  Taking that recovery into account,  the
credit for the year ended December 31, 1997 reflects management's recognition of
and desire to appropriately reserve the Bank's loan growth.  Management believes
that the allowance  for loan losses is adequate at December 31, 1997.  There can
be no assurances  that the allowance  will be adequate to cover losses which may
in fact be realized  in the future and that  additional  provisions  will not be
required.

Noninterest Income

         Noninterest income increased by $2.7 million,  48.8%, from $5.5 million
for the year ended December 31, 1996 to $8.2 million for the year ended December
31,  1997.  This  increase  was  primarily  the  result  of gains on the sale of
investment  in 1997 and an increase  in net income from real estate  operations.
Gains on the sale of loans and of investment,  combined, increased $1.3 million,
or 593.1%,  for 1997,  primarily  due to gains on the sale of  equities  of $1.3
million in fourth quarter 1997. Net income from real estate operations increased
$811,000,  or 240.7%,  in 1997,  primarily  due to the sale of real  estate in a
service corporation, First Savings Investment Corporation, resulting in a profit
of $832,000 in the fourth quarter of 1997.  Fees and service  charges  increased
$63,00, or 11.8%, due to increased transaction account activity in 1997.

Noninterest Expense

         Noninterest  expense  decreased by $5.4 million,  or 17.7% for the year
ended  December 31, 1997 as compared to the year ended  December  31, 1996.  The
majority of the decrease  related to the 1996 one-time  special SAIF  assessment
expense of 47.0 million, as previously  discussed.  The major increases occurred
in compensation expense ($2.5 million),  and in the credit for losses on federal
funds sold ($618,000). Additional increases in occupancy expense ($2.5 million),
and in the  credit  for  losses on  federal  funds  sold  ($618,00).  Additional
increases in occupancy  expense of $313,000 due to depreciation and other office
expenses  associated  with the two new offices  opened in 1996 and 1996,  and in
printing,  supplies and postage of $3,000 due primarily to  stockholder  related
matters,  were offset by  decreases  of $117,000 in the  provision  (credit) for
losses on real estate owned and of $69,000 in professional fees to contribute to
the net increase in noninterest expense.

         The Bank experienced increased compensation costs during the year ended
December  31,  1997,  primarily  due to an  increase  of  $710,000  in  employee
compensation,  resulting from increased  staffing due to the added offices,  and
from an

                                       12


<PAGE>
                                    Comparison of Financial Condition, Continued
--------------------------------------------------------------------------------

increase of $1.7 million  related to  compensation  expense  recognized on stock
benefit plans due to the price  appreciation  of the fair market value of common
stock of the Company held by such plans.  In 1995 the ESOP  purchased  1,340,379
shares with a 10 year loan from the Company.  Shares are expensed at fair market
value as they are  released.  In the third  quarter of 1996,  the Company  began
experiencing additional compensation expense due to the adoption by shareholders
of a Management Stock Bonus Plan ("MSBP") whereby various officers and directors
of the Bank were  granted  restricted  stock over a five-year  period.  The MSBP
purchased  shares of common  stock of the  Company  for the plan in open  market
purchases.  The MSBP shares are being expensed over a five year period beginning
July 24, 1996 based on the fair market value as of that date.

         The credit for losses on  federal  funds sold  booked in 1996  resulted
from the actions of the  Superintendent  of Banks of the State of New York,  who
took possession of the business and property of Nationar,  a New  York-chartered
trust company in 1995.  The Bank wrote down its $1.0 million  federal funds sold
to Nationar to $382,500 and filed a proof of claim for the monies due. A partial
payment on the claim totaling  $400,000 was received in June,  1996 and resulted
in a recovery  of $18,000 in the second  quarter of 1996.  Final  payment on the
claim  totaling  $600,000  was  received  in  December,  1996 and  resulted in a
recovery of $600,000 in the fourth  quarter of 1996 and of $618,000 for the year
ended December 31, 1996.

Income Tax Expense

         Federal and state income taxes increased by $3.9 million, or 49.5%, for
the year ended  December 31, 1997 compared to the year ended  December 31, 1996,
due primarily to the increase in earnings before income taxes.


Comparison of Operating Results:

  1996-1995

General

         Net earnings for the year ended December 31, 1996,  increased $734,000,
or 5.8%,  to $13.4  million from $12.6  million for the year ended  December 31,
1995. The increase was primarily due to an increase in net interest income being
significantly  offset by an increase in net noninterest expense. The substantial
increase in net interest  income can be attributed  primarily to the increase in
capital,  as the proceeds from the conversion and  reorganization of the Company
increased the average balance of  interest-earning  assets.  The increase in net
noninterest   expense  can  be   attributed   primarily  to  the  FDIC  premium,
specifically  a one-time  SAIF  special  assessment.  President  Clinton  signed
legislation on September 30, 1996  requiring all banks and savings  associations
with  accounts  insured  by SAIF  (administered  by the  FDIC) to pay a  special
assessment to  recapitalize  the fund.  The Bank's  assessment  was $7.0 million
before taxes ($4.3 million after  taxes),  which was charged to earnings  during
the  third  quarter  of 1996.  As a  result  of the  recapitalization,  the Bank
believes  the  SAIF  premium  it  will  pay in  future  years  will  be  reduced
significantly from its current assessment,  which will have a positive effect on
future earnings.

Net Interest Income

         Net interest  income  increased  $12.0  million,  or 34.0%,  from $35.4
million during the year ended December 31, 1995 to $47.4 million during the year
ended December 31, 1996. This increase was primarily due to an increase in total
interest  income of $10.4  million,  or 11.0%,  from $94.3  million for the year
ended  December 31, 1995 to $104.6 million for the year ended December 31, 1996.
This  increase  was  primarily  the result of an increase in interest  income on
loans receivable from $67.1 million in the year ended December 31, 1995 to $78.8
million in the year ended  December 31, 1996,  due to an 18 basis point increase
in the  interest  rate  earned on loans  receivable  and to an  increase  in the
average  balance of loans  receivable  of $129.1  million,  or 14.9%,  to $998.0
million for the year ended  December 31, 1996,  from $868.9 million for the year
ended December 31, 1995. The increase in the average balance of loans receivable
resulted  primarily from a strong  economy in the Company's  market area coupled
with an aggressive program to attract new loan originations in both the mortgage
and nonmortgage portfolios.  Interest income on investment securities (including
those  available for sale) also  increased,  from $4.5 million in the year ended
December  31, 1995 to $5.4 million in the year ended  December 31, 1996,  due to
the increase in the average  portfolio  balance of $17.1 million,  or 21.2%,  to
$97.4 million for the year ended  December 31, 1996,  from $80.3 million for the
year ended December 31, 1995. The increase in the average  investment  portfolio
balance was primarily due to the investment of proceeds from the offering. These
increases  in interest  income were  partially  offset by a decrease in interest
income on  mortgage-backed  and other asset-backed  securities  (including those
available  for sale) of $3.3  million,  or 14.8%,  to $19.1 million for the year
ended  December 31,  1996,  from $22.4  million for the year ended  December 31,
1995, due to the decrease in the average balance of $46.1 million, or $13.1%, to
$306.1 million for the year ended December 31, 1996, from $352.2 mil-

                                       13
<PAGE>

FCBI----------------------------------------------------------------------------

lion for the year ended December 31, 1995.  The decrease in the average  balance
of  mortgage-backed  and other  asset-backed  securities is due to  management's
decision to reinvest the cash flows from those securities in loans receivable.

         The increase in interest  income was combined  with a decrease in total
interest expense of $1.7 million, or 2.8%, from $58.9 million for the year ended
December  31,  1995,  to $57.2  million for the year ended  December  31,  1996.
Interest paid on deposits increased $678,000,  or 1.4%, to $49.0 million for the
year ended December 31, 1996, from $48.3 million for the year ended December 31,
1995.  This increase was primarily due to the increase in the average balance of
the deposits of $33.8 million,  or 3.2%, to $1,100.1  million for the year ended
December 31, 1996,  from $1,066.3  million for the year ended December 31, 1995,
offset  somewhat by a decrease of eight  basis  points in the cost of  deposits.
This  increase in interest paid on deposits was offset by a decrease in interest
paid on borrowed funds of $2.3 million,  or 22.2%,  to $8.2 million for the year
ended  December 31,  1996,  from $10.5  million for the year ended  December 31,
1995,  due to a  decrease  in the  average  balance of FHLB  advances  and other
borrowed money of $34.1 million,  or 21.1%, to $127.7 million for the year ended
December 31,  1996,  from $161.8  million for the year ended  December 31, 1995.
This decrease  reflects the use of a portion of the proceeds from the Conversion
and Reorganization to repay borrowings.

Provision (Credit) for Losses on Loans

         In determining the provision for losses on loans,  management analyzes,
among other things, the Bank's loan portfolio,  market conditions and the Bank's
market  area.  The  provision  (credit)  for losses on loans  increased  by $1.6
million in 1996  compared to 1995,  from a credit of $495,000 for the year ended
December 31 1995 to a provision of $1.1 million for the year ended  December 31,
1996.  The credit for the year ended  December 31, 1995 was due primarily to the
favorable market conditions in the Colorado real estate market, resulting in the
historical  loss  factors  used for the general loss  provision  being  adjusted
downward  and the  excess  reserve  being  recognized  as a credit for losses on
loans. The provision for the year ended December 31, 1996 reflects  management's
recognition of and desire to  appropriately  reserve for the Bank's loan growth.
Management  believes  that the allowance for loan losses is adequate at December
31, 1996.  There can be no  assurances  that the  allowance  will be adequate to
cover  losses  which may in fact be realized  in the future and that  additional
provisions will not be required.

Noninterest Income

         Noninterest  income  increased by $292,000,  or 5.6%, from $5.2 million
for the year ended December 31, 1995 to $5.5 million for the year ended December
31, 1996.  This increase was primarily the result of an absence of any losses on
the ale of mortgage-backed and other asset-backed securities in 1996. During the
first  quarter  of  1995,  the  Bank  sold  available-for-sale   mortgage-backed
securities for a loss of $381,000. Furthermore, the Bank experienced an increase
in the gain on the sale loans of $219,000 due to increased loan activity, and an
increase in fees and service  charges of $578,000 due to  increased  transaction
account activity, offset by a decrease in net income from real estate operations
of  $885,000,  primarily  due to a gain on the sale of real estate  owned in the
first  quarter  of 1995.  There  were no  comparable  sales  of  mortgage-backed
securities or real estate owned during the year ended December 31, 1996.

Noninterest Expense

         Noninterest  expense  increased by $9.2 million,  or 43.1% for the year
ended  December 31, 1996 as compared to the year ended  December  31, 1995.  The
majority of the increase related to the one-time special SAIF assessment expense
of $7.0 million, as previously discussed.  The other major increases occurred in
the other, net,  noninterest expense category ($1.5 million) and in compensation
expense ($1.5 million).  Additional  increases in occupancy  expense of $102,000
due to  depreciation  and other office  expenses  associated  with the three new
offices  opened in 1995 and 1996,  in  advertising  expense of  $103,000  due to
additional  advertising  programs in 1996, and in professional  fees of $112,000
due primarily to  stockholder  related  matters,  were offset by the decrease of
$1.2 million in the provision for losses on federal funds sold. The Bank expects
additional occupancy expense due to the construction of one new branch office in
fiscal 1997.

         During the year ended December 31, 1995, the Bank recognized  income of
$809,000 in  settlement of an IRS audit as an offset to other,  net  noninterest
expense,  which  represents  the majority of the $1.5 million total  increase in
other, net noninterest expense for the year periods ending December 31, 1996 and
1995.  Additional items impacting other,  net,  noninterest  expense included an
increase in income from a  subsidiary,  First  Savings  Insurance  Services,  of
$230,000  in 1996 and a gain on the sale of fixed  assets of  $180,000  in 1995,
which offset 1995 other, net, noninterest expense.

         In addition,  the Bank experienced increased  compensation costs during
the year ended  December 31, 1996,  primarily  due to an increase of $585,000 in
employee  compensation,  resulting  from  increased  staffing  due to the  added
offices,  and from an  increase  of  $963,000  related to  compensation  expense
recognized on stock benefit plans due to the price appreciation of the


                                       14

<PAGE>
                                    Comparison of Financial Condition, Continued
--------------------------------------------------------------------------------

fair market value of common stock of the Company held by such plans. In 1995 the
ESOP purchased 1,340,379 shares with a 10 year loan from the Company. Shares are
expended as they are released.  In the third quarter of 1996,  the Company began
experiencing additional compensation expense due to the adoption by shareholders
of a Management Stock Bonus Plan ("MSBP") whereby various officers and directors
of the Bank were  granted  restricted  stock over a five-year  period.  The MSBP
purchased  shares of common  stock of the  Company  for the plan in open  market
purchases.  The MSBP shares are being expended over a five year period beginning
July 24, 1996 based on the fair market value as of that date.

         The  provision for losses on federal funds sold booked in 1995 resulted
when the Superintendent of Banks of the State of New York took possession of the
business and property of Nationar, a New York- chartered trust company. The Bank
wrote down its $1.0 million federal funds sold to Nationar to $382,500 and filed
a proof of claim for the  monies  due. A partial  payment on the claim  totaling
$400,000 was received in June, 1996 and resulted in a recovery of $18,000 in the
second  quarter  of 1996.  Final  payment  on the claim  totaling  $600,000  was
received in December,  1996 and resulted in a recovery of $600,000 in the fourth
quarter of 1996 and of $618,000 for the year ended December 31, 1996.

Income Tax Expense

         Federal and state income taxes increased by $765,000, or 10.7%, for the
year ended  December 31, 1996 compared to the year ended  December 31, 1995, due
primarily to the increase in earnings before income taxes.

Liquidity and Capital Resources

         First Federal  Bank's primary  sources of funds are deposits,  proceeds
from  principal and interest  payments on loans and  mortgaged-backed  and other
asset-backed  securities  and,  to a lesser  extent,  advances  from the FHLB of
Topeka. While maturities and scheduled amortization of loans and mortgage-backed
securities  are a  predictable  source of  funds,  deposit  flows  and  mortgage
prepayments  are greatly  influenced  by interest  rates,  economic  conditions,
competition and, most recently,  the  restructuring  of the thrift industry.  In
1995 the  Company and the Bank  accessed  the  capital  markets to raise  $117.6
million in funds from an initial public offering.

         The  primary  investment  activity  of the Bank is the  origination  of
mortgage  loans.  During the years ended  December 31, 1995,  1996 and 1997, the
Bank originated mortgage loans in the amounts of $275.6 million, $299.8 million,
and  $283.0   million,   respectively.   The  Bank  also  purchases   loans  and
mortgage-backed  and  other  asset-backed   securities  on  occasion  to  reduce
liquidity  not otherwise  required for local loan demand.  Purchases of mortgage
loans and  mortgaged-backed  and other  asset-backed  securities  in those  same
periods totalled $17.9 million,  $34.1 million,  and $1.7 million  respectively.
Other investment  activities  include  investment in short term  certificates of
deposits of other financial  institutions,  FHLB of Topeka stock, consumer loans
and, to a lesser extent, U.S. government and federal agency obligations.

         First  Federal  Bank  has  other  sources  of  liquidity  if a need for
additional  funds  arises.  Additional  sources of funds  include FHLB of Topeka
advances which, as of December 3, 1997,  totalled $122.4 million. If needed, the
Bank has additional borrowing ability with the FHLB of Topeka. The Bank also has
borrowing  authority with two Colorado  commercial banks in an amount up to $8.0
million.  First Federal also  established  a finance  subsidiary in 1988 for the
purpose of  borrowing  funds  through  participation  in a Real Estate  Mortgage
Investment Conduit ("REMIC"). As of December 31, 1997, $4.5 million of the REMIC
bond was  outstanding.  Other  sources of  liquidity  can be found in the Bank's
statement of financial condition,  such as investment securities maturing within
one  year  and   unencumbered   mortgage-backed   securities  that  are  readily
marketable.

         First  Federal  Bank is required to maintain  minimum  levels of liquid
assets as defined by OTS regulations.  This requirement,  which may be varied at
the direction of the OTS depending  upon economic  conditions and deposit flows,
is based upon a percentage of deposits and short-term  borrowings.  The required
minimum ratio is currently 4.0%. The Bank's  liquidity  ratios were 13.0%,  9.7%
and 9.6% as of December 31, 1995, 1996 and 1997, respectively.

         The Bank had tangible,  core and  risk-based  capital ratios of 12.25%,
12.49% and 23.76%,  respectively,  at December 31, 1997,  which greatly exceeded
the  OTS's  respective   minimum   requirements  of  1.50%,   3.00%  and  8.00%,
respectively.  The Bank was  classified  as "well  capitalized"  institution  at
December 31, 1997.

         First Federal Bank's most liquid assets are cash and cash  equivalents,
which include investments in highly liquid short-term investments.  The level of
these assets are  dependent on the Bank's  operating,  financing  and  investing
activities  during any given period.  At December 31, 1995, 1996, and 1997, cash
and cash equivalents  totalled $113.7 million,  $49.2 million and $44.7 million,
respectively.

         First  Federal  Bank  anticipates  that it will have  sufficient  funds
available to meet its current commitments. As of December 31, 1997, the Bank had
commitments  to fund  loans and  standby  letters  of  credit of $55.7  million.
Certificates of deposit which



                                       15

<PAGE>

FCBI----------------------------------------------------------------------------

are  scheduled to mature in one year or less as of December  31, 1997,  totalled
$498.4 million.  Management believes that a significant portion of such deposits
will remain with the Bank.

Impact of Inflation

         The  Consolidated  Financial  Statements  of  the  Company,   presented
elsewhere  herein,  have been prepared in  accordance  with  generally  accepted
accounting principles,  which, with the exception of market value accounting for
available-for-sale  securities  under  SFAS  No.  115,  Accounting  for  Certain
Investments in Debt and Equity Securities,  generally require the measurement of
financial  position and operating results in terms of historical dollars without
considering the change in the relative  purchasing  power of money over time and
due to inflation.  The impact of inflation is reflected in the increased cost of
the  Company's  operations.  Unlike most  industrial  companies,  nearly all the
assets and  liabilities  of the  Company are  monetary  in nature.  As a result,
interest  rates have a greater impact on the Company's  performance  than do the
effects of general levels of inflation.  Interest rates do not necessarily  move
in the same direction or to the same extent as the prices of goods and services.

Impact of New Accounting Standards

         The Financial  Accounting  Standard  Board (FASB)  issued  Statement of
Financial  Accounting  Standards  (SFAS) No. 125,  Accounting  for Transfers and
Servicing of Financial Assets and  Extinguishments of Liabilities (SFAS 125) and
SFAS No.  127,  Deferral of the  Effective  Date of Certain  Provisions  of FASB
Statement No. 125 (SFAS 127) in June and December 1996,  respectively,  SFAS 125
provides  accounting  and  reporting  standards  for  transfers and servicing of
financial assets and  extinguishments  of liabilities.  It requires  entities to
recognize  servicing  assets  and  liabilities  for  all  contracts  to  service
financial  assets,  unless  the  assets  is  securitized  and all  servicing  is
retained.  The  servicing  assets are measured  initially at fair values and are
amortized over the estimated useful lives of the servicing  assets. In addition,
the impairment of servicing assets is recognized through a valuation  allowance.
SFAS 125 also addresses the  accounting  and reporting  standards for securities
lending,  dollar-rolls,  repurchase  agreements  and similar  transactions.  The
Company  prospectively  adopted  SFAS  125  on  January  1,  1997.  However,  in
accordance  with SFAS 127, the Company  deferred  adoption of the standard as it
relates to securities lending,  dollar-rolls,  repurchase agreements and similar
transactions  until  January 1, 1998.  The  adoption  of SFAS 125 did not have a
material impact on its 1997 consolidated financial statements.

         In March 1997,  the FASB issued SFAS No. 128,  Earnings Per Share (SFAS
128) which  replaced APB Opinion No. 15 related to standards  for  computing and
presenting  earnings per share (EPS) and applies to entities  with publicly held
common stock or potential  common stock.  SFAS 128 replaces the  presentation of
primary EPS with a presentation  of basic EPS and requires dual  presentation of
basic and diluted EPS on the face of the income  statement for all entities with
complex  capital  structures.  Also, SFAS 128 requires a  reconciliation  of the
numerator  and  denominator  of the basic EPS  computation  to the numerator and
denominator of the diluted EPS computation.  SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997,  including interim
periods,  SFAS  128 also  requires  restatement  of all  prior  period  EPS data
presented.  The Company  adopted SFAS 128 in December 1997, and restated all per
share  amounts  for  prior  periods.  The  adoptions  of SFAS 128 did not have a
material impact on the Company's reported earnings per share.

         In June 1997,  the FASB issued SFAS No.  130,  Reporting  Comprehensive
Income (SFAS 130). SFAS 130, which is effective for fiscal years beginning after
December  15,  1997,   establishes   standards  for  reporting  and  display  of
comprehensive  income  and its  components  in a full set of  general-  purchase
financial statements.  Comprehensive income represents the change in equity of a
business  enterprise  during a period  from  transitions  and other  events from
nonowner  sources.  Comprehensive  income is  comprised  of net income and other
comprehensive  income.  SFAS 130 does not change the  classifications  currently
comprising net income.  Other  comprehensive  income is classified  into foreign
currency items,  minimum pension liability  adjustments and unrealized gains and
losses on certain  investments in debt and equity securities.  All components of
comprehensive  income  shall  be  reported  in the  period  in  which  they  are
recognized  and be displayed  in the  financial  statements.  The total of other
comprehensive  income for a period shall be transferred to a component of equity
on a separate  line-item.  As such,  net  unrealized  gain (loss) on  securities
available  for-sale will become a component of other  comprehensive  income upon
implementation of SFAS 130. The Company will adopt SFAS 130 in 1998.

         In June 1997, the FASB issued SFAS No. 131,  Disclosures about Segments
of an Enterprise and Related Information (SFAS 131). This Statement  establishes
standards  relating to public  business  enterprises'  reporting of  information
about operating  segments in financial  reports issued to shareholders.  It also
established  standards  for related  disclosures  about  products and  services,
geographic areas, and major customers. This Statement is effective for financial
statements for periods beginning after December 15, 1997. In the initial year of
application, comparative information for earlier years is to be restat-

                                       16
<PAGE>

                                                Common Stock and Related Matters
--------------------------------------------------------------------------------

ed. This  Statement need not be applied to interim  financial  statements in the
initial year of  application.  SFAS 131 is not expected to change the  reporting
requirements of the Company.

         In January 1997,  the SEC issued  Release No.  33-7386,  which requires
enhanced   descriptions   of  accounting   policies  for  derivative   financial
instruments and derivative  commodity  instruments in the footnotes to financial
statements.  The release also  requires  certain  quantitative  and  qualitative
disclosures  outside financial  statements about market risks inherent in market
risk sensitive  instruments and other financial  instruments.  The  requirements
regarding  accounting  policy  descriptions were effective for any fiscal period
ending after June 15, 1997. However,  because derivative financial and commodity
instruments have not materially  affected the Company's  consolidated  financial
position, cash flows or results of operations, this part of the release does not
affect the Company's 1997 financial statements disclosures. The quantitative and
qualitative  disclosures  required by the release will be initially  provided in
the Company's annual report on Form 10-K for the year ending December 31, 1998.

Impact of Year 2000 Issue

         As issue  exists for all  companies  that rely on computers as the year
2000 approaches. The "Year 2000" problems is the result of past practices in the
computer  industry  of  using  two  digits  rather  than  four to  identify  the
application  year. This practice will result in incorrect results when computers
perform arithmetic operations, comparisons or data field sorting involving years
later than 1999. The Company anticipates that it will be able to test its entire
system using its internal programming staff and outside computer consultants and
intends  to make  any  necessary  modifications  to  prevent  disruption  to its
operations.  Costs in connection with any such modifications are not expected to
be material.


First Colorado Bancorp, Inc.
Common Stock and Related Matters

         The  Company's  offering of common  stock  closed on December 29, 1995.
Shares of common  stock  were  issued  and sold in that  offering  at $10.00 per
share.

         As of February 28, 1998, the Company had 4,090  stockholders  of record
and 16,826,798  outstanding  shares of common stock.  The number of stockholders
does not  reflect  those whose  stock is in nominee or  "street"  name  accounts
through brokers.

         Payment of dividends  on the common  stock is subject to  determination
and  declaration  by the Board of  Directors  and will  depend  upon a number of
factors,  including capital requirements,  regulatory limitations on the payment
of dividends,  the Company's results of operations and financial condition,  tax
considerations and general economic  conditions.  No assurance can be given that
dividends  will be declared or, if declared,  what the amount of dividends  will
be, or whether such dividends, once declared, will continue.

         The  Company  is not  subject  to OTS  regulatory  restrictions  on the
payment of dividends to its stockholders,  although the source of such dividends
will be, in part,  dependent upon the factors  enumerated  above. The Company is
subject,  however,  to the  requirements  of Colorado law, which generally limit
dividends to an amount equal to the excess of the net assets of the Company (the
amount by which total assets exceed total  liabilities) over its stated capital,
or if  there  is no such  excess,  to its net  profits  for the  current  and/or
immediately  preceding fiscal year. First Colorado Bancorp,  Inc., completed the
reorganization  from a federally  chartered mutual holding company to a Colorado
stock  holding  company  on  December  29,  1995,  and only  eight  quarters  of
historical data can be provided in regard to the common stock of the Company.

First Colorado Bancorp, 1996-1997
<TABLE>
<CAPTION>

--------------------------------------------------------------------------------
               12/31/97         9/30/97        6/30/97       3/31/97        12/31/96        9/30/96         6/30/96        3/31/96
               --------         -------        -------       -------        --------        -------         -------        -------

<S>           <C>             <C>            <C>           <C>            <C>             <C>             <C>            <C>
# shares      16,808,372      16,484,530     16,561,425    16,555,197     18,184,108      19,030,844      20,134,256     20,096,940

High         $   26.1250          21.500         19.875        18.875       17.8750           15.625          13.750         12.500

Low          $   19.8125          17.375         16.000        16.500       14.9375           12.500          11.750         11.000

Dividends
Declared     $      0.13            0.12           0.11          0.10          0.09             0.08            0.08          0.075
(per share)
--------------------------------------------------------------------------------
</TABLE>

                                       17

<PAGE>


                      This page is intentionally left blank






                                       18

<PAGE>




                          Independent Auditors' Report
                          ----------------------------




The Board of Directors and Stockholders
First Colorado Bancorp, Inc.:


We have audited the accompanying  consolidated statements of financial condition
of First Colorado  Bancorp,  Inc. and  subsidiaries  as of December 31, 1997 and
1996,  and the related  consolidated  statements  of  operations,  stockholders'
equity  and cash  flows for each of the  years in the  three-year  period  ended
December  31,   1997.   These   consolidated   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of First  Colorado
Bancorp, Inc. and subsidiaries as of December 31, 1997 and 1996, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.

Our audits were made for the  purpose of forming an opinion on the  consolidated
financial  statements  taken  as  a  whole.  The  consolidating  information  is
presented  for purposes of  additional  analysis of the  consolidated  financial
statements  rather  than to  present  the  financial  position  and  results  of
operations of the individual companies.  The consolidating  information has been
subjected to the auditing  procedures  applied in the audits of the consolidated
financial  statements  and, in our  opinion,  is fairly  stated in all  material
respects in relation to the consolidated financial statements taken as a whole.



                                              /s/KPMG Peat Marwick LLP
                                              ------------------------
                                              KPMG Peat Marwick LLP


Denver, Colorado
March 9, 1998

                                       19

<PAGE>
FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Consolidated Statements of Financial Condition

December 31, 1996 and 1997

(Amounts in Thousands, Except Share Data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets                                                                                                    1996              1997
------                                                                                             -------------       ------------

<S>                                                                                                <C>                 <C>
Cash and due from banks                                                                            $      21,449            27,970
Federal funds sold, net (note 11)                                                                         15,000             8,100
Other interest-earning assets                                                                             12,783             8,587
                                                                                                   -------------       ------------
              Cash and cash equivalents                                                                   49,232            44,657
Investment securities (notes 3 and 11):
    Held-to-maturity, at amortized cost (market value of $61,701 and 73,952 in 1996
       and 1997, respectively)                                                                            61,642            73,944
    Available-for-sale, at market value (amortized cost of $10,487 and $5,959 in 1996
       and 1997, respectively)                                                                            11,099             5,951
                                                                                                   -------------       ------------
                                                                                                          72,741            79,895
                                                                                                   -------------       ------------
Mortgage-backed  and  other  asset-backed  securities  (notes  4, 5, 11 and 12):
    Held-to-maturity,  at amortized  cost (market value of $268,043 and $208,228
    in 1996 and 1997, respectively)                                                                      273,602           209,543
    Available-for-sale, at market value (amortized cost of $7,708 and $7,168 in 1996
       and 1997, respectively)                                                                             7,687             6,839
                                                                                                     -----------       ------------
                                                                                                         281,289           216,382
                                                                                                     -----------       ------------
Loans receivable, net (notes 5, 8 and 11)                                                              1,061,524         1,164,602
Accrued interest receivable (note 6)                                                                       8,059             8,356
Federal Home Loan Bank stock, at cost (note 11)                                                            9,554            11,277
Real estate owned, net (notes 7 and 8)                                                                     1,457               225
Office properties and equipment, net of accumulated depreciation and
    amortization (note 9)                                                                                 22,930            23,606
Real estate held for investment and development                                                            2,025             1,197
Income taxes receivable (note 14)                                                                            589                 -
Other assets                                                                                               4,688             5,829
                                                                                                     -----------       ------------
              Total assets                                                                           $ 1,514,088         1,556,026
                                                                                                     ===========       ===========
Liabilities and Stockholders' Equity
------------------------------------
Deposits (note 10)                                                                                   $ 1,135,823         1,182,727
Advances from Federal Home Loan Bank (note 11)                                                           122,515           122,410
Bonds payable (note 12)                                                                                    5,009             4,479
Advances by borrowers for taxes and insurance                                                              8,312             8,369
Deferred income taxes (note 14)                                                                            5,118             4,720
Deferred income                                                                                              722               604
Other liabilities                                                                                         19,965            23,408
                                                                                                     ----------       ------------
              Total liabilities                                                                        1,297,464         1,346,717
Stockholders' equity (note 13):
    Preferred stock, $0.10 par value.  25,000,000 shares authorized; none issued                               -                 -
    Common stock, $0.10 par value.  50,000,000 shares authorized; 20,134,256 shares
       issued at December 31, 1996 and 1997; 18,184,108 and 16,808,372 shares
       outstanding at December 31, 1996 and 1997, respectively                                             2,013             2,013
    Additional paid-in capital                                                                           151,581           155,047
    Treasury stock (1,950,148 and 3,325,884 shares at December 31, 1996 and
       1997, respectively, at cost)                                                                      (28,957)          (53,562)
    Unearned ESOP shares                                                                                 (12,063)          (10,523)
    Unearned MRP/MSBP shares                                                                              (3,929)           (3,338)
    Net unrealized gain (loss) on securities available-for-sale (net of tax effect of $226 and
       $(122) in 1996 and 1997, respectively)                                                                365              (215)
    Retained earnings, partially restricted (note 14)                                                    107,614           119,887
                                                                                                     -----------       ------------
              Total stockholders' equity                                                                 216,624           209,309

Commitments and contingencies (notes 5, 13, 14, 16 and 18)
                                                                                                     -----------       ------------
              Total liabilities and stockholders' equity                                             $ 1,514,088         1,556,026
                                                                                                     ===========         =========
 </TABLE>

See accompanying notes to consolidated financial statements.

                                       20

<PAGE>
FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Consolidated Statements of Operations

(Amounts in Thousands, Except Share and Per Share Data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                              Year ended December 31
                                                                                  ----------------------------------------------
                                                                                     1995              1996              1997
                                                                                  --------          ---------          --------
<S>                                                                               <C>                  <C>               <C>
Interest income:
    Interest on loans receivable                                                  $ 67,119             78,842            87,333
    Interest on mortgage-backed and other asset-backed securities                   22,455             19,123            15,038
    Interest and dividends on investment securities                                  4,513              5,440             5,231
    Interest on federal funds sold and other interest-earning assets                   176              1,223               346
                                                                                  --------           --------          --------
          Total interest income                                                     94,263            104,628           107,948
                                                                                  --------           --------          --------

Interest expense:
    Interest on deposits (note 10)                                                  48,314             48,992            51,247
    Interest on advances from Federal Home Loan Bank                                 9,927              7,702             8,226
    Other interest expense                                                             622                500               541
                                                                                  --------           --------          --------
          Total interest expense                                                    58,863             57,194            60,014
                                                                                  --------           --------          --------

          Net interest income                                                       35,400             47,434            47,934

Provision (credit) for losses on loans (note 8)                                       (495)             1,143              (739)
                                                                                  --------           --------          --------
          Net interest income after provision (credit) for
              losses on loans                                                       35,895             46,291            48,673
                                                                                  --------           --------          --------

Noninterest income:
    Fees and service charges                                                         4,195              4,773             5,336
    Gain (loss) on sale of loans, net                                                   (1)               218               251
    Gain on sale of investment securities available-for-sale                             -                  -             1,260
    Loss on sale of mortgage-backed and other asset-backed
       securities, net                                                                (381)              -                    -
    Income from real estate operations, net                                          1,222                337             1,148
    Rental income                                                                      171                170               187
                                                                                  --------           --------          --------
                                                                                     5,206              5,498             8,182
                                                                                  --------           --------          --------
Noninterest expense:
    Compensation (note 13)                                                          10,666             12,215            14,708
    Occupancy                                                                        3,703              3,805             4,118
    Provision (credit) for losses on real estate owned (note 8)                        (95)                 3              (114)
    Provision (credit) for losses on federal funds sold                                618               (618)                -
    Professional fees                                                                  667                779               710
    Advertising                                                                        899              1,002               995
    Printing, supplies and postage                                                   1,095              1,093             1,136
    FDIC premiums (note 2)                                                           2,391              9,392               729
    Other, net                                                                       1,373              2,835             2,834
                                                                                  --------           --------          --------
                                                                                    21,317             30,506            25,116
                                                                                  --------           --------          --------
          Earnings before income taxes                                              19,784             21,283            31,739

Income tax expense (benefit) (note 14):
    Current                                                                          5,817              7,902            11,875
    Deferred                                                                         1,329                  9               (50)
                                                                                  --------           --------          --------
                                                                                     7,146              7,911            11,825
                                                                                  --------           --------          --------
          Net earnings                                                            $ 12,638             13,372            19,914
                                                                                  ========           ========          ========

Earnings per common share (note 13)                                               $   2.00                .74              1.29
                                                                                  ========                ===              ====

Earnings per common share, assuming dilution (note 13)                            $   1.96                .73              1.25
                                                                                  ========                ===              ====
</TABLE>
See accompanying notes to consolidated financial statements.
                                       21
<PAGE>

FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity

Three-Year Period Ended December 31, 1997

(Amounts in Thousands, Except Share Amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>



                                                        Common stock,        Common stock,
                                                       $1.00 par value      $0.10 par value
                                                       ---------------      ---------------
                                                       Shares    Amount     Shares   Amount
                                                       ------    ------     ------   ------
<S>                                               <C>           <C>      <C>         <C>
Balance, December 31, 1994                           6,331,622  $ 6,332        --    $ --
Exercise of employee stock options                      39,515       40        --      --
Payment of ESOP liability                                 --       --          --      --
Contribution by First Savings Capital, M.H.C              --       --          --      --
Exchange of common stock (note 13)                  (6,371,137)  (6,372)  6,619,539     662
Common stock issued for cash, net of
    offering costs (note 13)                              --       --    12,063,419   1,206
Common stock issued to ESOP for note
    receivable (note 13)                                  --       --     1,340,379     134
Employees' vesting in MRP (note 13)                       --       --          --      --
Dividends declared ($0.88 per share)                      --       --          --      --
Reversal of dividends previously waived by
    First Savings Capital, M.H.C                          --       --          --      --
Change in net unrealized gain/loss on
    securities available-for-sale                         --       --          --      --
Net earnings                                              --       --          --      --
                                                  ------------  -------  ----------  ------
Balance, December 31, 1995                                --       --    20,023,337   2,002
Exercise of employee stock options (note 13)              --       --       123,875      11
Additional offering costs on common
    stock issued for cash                                 --       --          --      --
Payment of ESOP liability (note 13)                       --       --          --      --
Common stock purchased by MSBP (note 13)                  --       --          --      --
Employees' vesting in ESOP/MRP/MSBP
    (note 13)                                             --       --          --      --
Purchase of treasury stock                                --       --    (1,963,104)   --
Dividends declared ($0.325 per share)                     --       --          --      --
Change in net unrealized gain/loss on
    securities available-for-sale                         --       --          --      --
Net earnings                                              --       --          --      --
                                                  ------------  -------  ----------  ------
Balance, December 31, 1996                                --       --    18,184,108   2,013
Exercise of employee stock options (note 13)              --       --        61,162    --
Acquisition of financial institution (note 1)             --       --       301,952    --
Payment of ESOP liability (note 13)                       --       --          --      --
Employees' vesting in ESOP/MRP/MSBP (note 13)             --       --          --      --
Purchase of treasury stock                                --       --    (1,738,850)   --
Dividends declared ($0.46 per share)                      --       --          --      --
Change in net unrealized gain/loss on securities
    available-for-sale                                    --       --          --      --
Net earnings                                              --       --          --      --
                                                  ------------  -------  ----------  ------
Balance, December 31, 1997                                --    $  --    16,808,372  $2,013
                                                  ============  =======  ==========  ======
</TABLE>

<TABLE>
<CAPTION>

                                                                                          Net
                                                                                       unrealized
                                                             Common          Unearned  gain (loss)
                                                  Additional stock   Unearned  MRP/   on securities
                                                   paid-in  treasury   ESOP    MSBP     available-    Retained
                                                   capital   shares   shares  shares    for-sale      earnings   Total
                                                   -------   ------   ------  ------    --------      --------   -----
<S>                                                <C>      <C>      <C>      <C>      <C>           <C>       <C>
Balance, December 31, 1994                          18,151     --       (446)   (258)   (1,370)        85,605   108,014
Exercise of employee stock options                     224     --       --      --        --             --         264
Payment of ESOP liability                             --       --        446    --        --             --         446
Contribution by First Savings Capital, M.H.C            31     --       --      --        --             --          31
Exchange of common stock (note 13)                   5,710     --       --      --        --             --        --
Common stock issued for cash, net of
    offering costs (note 13)                       116,414     --       --      --        --             --     117,620
Common stock issued to ESOP for note
    receivable (note 13)                            13,270     --    (13,404)   --        --             --        --
Employees' vesting in MRP (note 13)                    224     --       --        76      --             --         300
Dividends declared ($0.88 per share)                  --       --       --      --        --           (1,911)   (1,911)
Reversal of dividends previously waived by
    First Savings Capital, M.H.C                    (4,187)    --       --      --        --            4,187      --
Change in net unrealized gain/loss on
    securities available-for-sale                     --       --       --      --       1,316           --       1,316
Net earnings                                          --       --       --      --        --           12,638    12,638
                                                   -------  -------  -------  ------   -------        -------   -------
Balance, December 31, 1995                         149,837     --    (13,404)   (182)      (54)       100,519   238,718
Exercise of employee stock options (note 13)            78      183     --      --        --             --         272
Additional offering costs on common
    stock issued for cash                             (175)    --       --      --        --             --        (175)
Payment of ESOP liability (note 13)                   --       --      1,341    --        --             --       1,341
Common stock purchased by MSBP (note 13)              --       --       --    (3,848)     --             --      (3,848)
Employees' vesting in ESOP/MRP/MSBP
    (note 13)                                        1,841     --       --       101      --             --       1,942
Purchase of treasury stock                            --    (29,140)    --      --        --             --     (29,140)
Dividends declared ($0.325 per share)                 --       --       --      --        --           (6,277)   (6,277)
Change in net unrealized gain/loss on
    securities available-for-sale                     --       --       --      --         419           --         419
Net earnings                                          --       --       --      --        --           13,372    13,372
                                                   -------  -------  -------  ------   -------        -------   -------
Balance, December 31, 1996                         151,581  (28,957) (12,063) (3,929)      365        107,614   216,624
Exercise of employee stock options (note 13)          (661)     866     --      --        --             --         205
Acquisition of financial institution (note 1)        1,646    4,278     --      --        --             --       5,924
Payment of ESOP liability (note 13)                   --       --      1,540    --        --             --       1,540
Employees' vesting in ESOP/MRP/MSBP (note 13)        2,481     --       --       591      --             --       3,072
Purchase of treasury stock                            --    (29,749)    --      --        --             --     (29,749)
Dividends declared ($0.46 per share)                  --       --       --      --        --           (7,641)   (7,641)
Change in net unrealized gain/loss on securities
    available-for-sale                                --       --       --      --        (580)          --        (580)
Net earnings                                          --       --       --      --        --           19,914    19,914
                                                   -------  -------  -------  ------   -------        -------   -------
Balance, December 31, 1997                         155,047  (53,562) (10,523) (3,338)     (215)       119,887   209,309
                                                   =======  =======  =======  ======   =======        =======   =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       22
<PAGE>
FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Amounts in Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                            Year ended December 31
                                                                              --------------------------------------------------
                                                                                 1995                1996                1997
                                                                              -----------        -----------         -----------
<S>                                                                           <C>                <C>                 <C>
Cash flows from operating activities:
   Interest and dividends from loans receivable, mortgage-backed,
     other-asset backed and investment securities                             $  92,154             103,767             106,940
   Fees and service charges received                                              5,519               6,457               6,717
   Rental income received                                                           171                 171                 187
   Proceeds from sale of loans held for sale                                      6,468              25,258              15,283
   Originations of loans held for sale                                           (7,493)            (25,276)            (14,950)
   Interest paid                                                                (15,475)            (13,175)            (13,233)
   Cash paid to suppliers and employees                                         (20,270)            (28,078)            (21,244)
   Income taxes paid                                                             (4,745)             (8,286)            (11,265)
                                                                             ----------           ---------            --------
       Net cash provided by operating activities                                 56,329              60,838              68,435
                                                                             ----------           ---------            --------
Cash flows from investing activities, net of effect of business combination:
     Proceeds from sales of investment and mortgage-
       backed securities available-for-sale                                      24,469                -                  1,028
     Proceeds from maturities of investment and mortgage-backed
       securities available-for-sale                                              8,000              12,000               5,950
     Proceeds from maturities of investment and mortgage-backed
       securities held-to-maturity                                               38,500              84,450              68,613
     Purchase of investment securities available-for-sale                        (2,027)               -                 (2,025)
     Purchase of investment securities held-to-maturity                         (59,578)            (90,023)            (79,857)
     Principal repayments of mortgage-backed and
       asset-backed securities                                                   68,370              63,959              65,345
     Purchase of mortgage-backed and other asset-backed
       securities held-to-maturity                                                    -             (35,066)               (293)
     Origination of loans receivable                                           (331,692)           (358,245)           (338,854)
     Net increases in customers' lines of credit                                 (2,663)            (11,357)             (2,698)
     Principal repayments of loans receivable                                   182,529             238,232             275,635
     Purchase of loans receivable                                               (17,932)               -                      -
     Cash acquired in business combination (note 1)                                   -                   -               1,660
     Purchase of Federal Home Loan Bank stock                                      (941)               (136)                (19)
     Proceeds from sales of real estate owned                                     3,875                 906               2,056
     Proceeds from sale of office properties
       and equipment                                                                274                   4                 161
     Purchase of office properties and equipment                                 (3,725)             (2,940)             (2,108)
     Proceeds from sale of real estate held for investment
       and development                                                              622                 344               1,781
     Purchase of real estate held for investment and development                    (11)               -                      -
     Other, net                                                                     350                 294                 362
                                                                             ----------           ---------            --------
         Net cash used by investing activities                                  (91,580)            (97,578)             (3,263)
                                                                             ----------           ---------            --------
</TABLE>

                                                                     (continued)
                                       23

<PAGE>
FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Consolidated Statements of Cash Flows, Continued

(Amounts in Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                             Year ended December 31
                                                                              -------------------------------------------------
                                                                                1995                1996                1997
                                                                              ---------           ---------           ---------
<S>                                                                           <C>                 <C>                <C>
Cash flows from financing activities, net of effect of business combination:
     Net increase (decrease) in deposits                                      $  18,236              11,533             (29,208)
     Proceeds of advances from Federal Home Loan Bank                           403,700             146,300             286,400
     Repayment of advances from Federal Home Loan Bank                         (419,978)           (149,455)           (293,405)
     Repayment of bonds payable                                                  (1,005)               (553)               (637)
     Repayment of note payable                                                     (446)               -                      -
     Net increase (decrease) in advances by borrowers for
       taxes and insurance                                                        1,216              (1,036)                 57
     Proceeds from issuance of common stock                                     120,634                -                      -
     Purchase of treasury shares                                                   -                (29,140)            (29,749)
     Cash paid for stock offering and conversion costs                           (3,014)             (2,310)                  -
     Proceeds from exercised stock options                                          264                 272                 205
     Cash paid for MRP/MSBP                                                           -              (3,848)                  -
     Proceeds from ESOP for repayment of debt                                       446               1,341               1,540
     Dividends paid                                                              (1,859)             (5,121)             (7,093)
     Other, net                                                                     488               4,319               2,143
                                                                              ---------           ---------           ---------
         Net cash provided (used) by financing activities                       118,682             (27,698)            (69,747)
                                                                              ---------           ---------           ---------
         Net increase (decrease) in cash and cash equivalents                    83,431             (64,438)             (4,575)

Cash and cash equivalents at beginning of year                                   30,239             113,670              49,232
                                                                              ---------           ---------           ---------
Cash and cash equivalents at end of year                                      $ 113,670              49,232              44,657
                                                                              =========           =========           =========
</TABLE>
                                                                (continued)

                                       24
<PAGE>

FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
(Amounts in Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                         Year ended December 31
                                                                    ------------------------------
                                                                      1995         1996       1997
                                                                      ----         ----       ----

<S>                                                                 <C>          <C>         <C>
Reconciliation of net earnings to net cash provided by operating
   activities, net of effect of business combination:
     Net earnings                                                   $ 12,638      13,372      19,914
     Adjustments to reconcile net earnings to net cash
       provided by operating activities:
         Amortization of premiums and discounts
          on investment and mortgage-backed securities, net              256       1,597       1,258
         Loss (gain) on sale of loans, net                                 1        (218)       (251)
         Loss on sale of mortgage-backed and
          other asset-backed securities                                  381           -           -
         Gain on sale of investment securities available-for-sale          -           -      (1,260)
         Amortization of deferred loan origination fee income           (896)       (777)       (788)
         Deferred loan origination fee income, net of
          deferred costs                                                 362         332        (185)
         Provision (credit) for losses on loans receivable,
          federal funds sold and real estate owned                        28         528        (853)
         Gain on sale of real estate owned, net                         (976)       (172)       (103)
         Gain on sale of real estate held for
          investment and development                                    (357)        (24)       (879)
         Stock dividends from Federal Home Loan Bank                    (143)       (589)     (1,174)
         Depreciation and amortization                                 1,607       1,794       1,821
         Loss (gain) on sale of office properties and
          equipment                                                        6           -          (9)
         Increase (decrease) in deferred income taxes                  1,329           9         (50)
         Interest expense credited to deposit accounts                43,366      44,001      46,112
         Amortization of unearned discounts and
          deferred income                                               (127)       (225)       (131)
         Employee vesting in MRP/MSBP                                      -       1,942       3,072
         Decrease (increase) in loans held for sale                     (907)        (18)        333
         Increase in accrued interest receivable                      (1,232)       (252)       (109)
         Decrease (increase) in other assets                            (182)        369         374
         Decrease (increase) in income taxes receivable                 (128)       (385)        589
         Increase (decrease) in other liabilities                        315        (516)        730
         Other, net                                                      988          70          24
                                                                    --------    --------     -------
           Net cash provided by operating activities                $ 56,329      60,838      68,435
                                                                    ========    ========     =======
Noncash investing and financing transactions:
   Foreclosure of collateral securing loans, net of reserve         $    948         546         564
                                                                    ========    ========     =======
   Dividends reversed by parent                                     $ (4,187)          -           -
                                                                    ========    ========     =======
   Change in net unrealized gain (loss) on securities
     available-for-sale, net of tax effect                          $  1,316         419        (580)
                                                                    ========    ========     =======
   Deferred tax effect of change in unrealized gain (loss) on
     securities available-for-sale                                  $    813         226        (122)
                                                                    ========    ========     =======
   Net assets acquired in business combination, net of cash
     acquired of $1,660 (note 1)                                    $      -           -       4,264
                                                                    ========    ========     =======
</TABLE>

See accompanying notes to consolidated financial statements.

                                       25
<PAGE>

FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 1995, 1996 and 1997
--------------------------------------------------------------------------------

(1)      Summary of Significant Accounting Policies

         Business and Basis of Presentation

         The accompanying consolidated financial statements include the accounts
         of First Colorado Bancorp,  Inc. (FCB) and its wholly owned subsidiary,
         First Federal Bank of Colorado  (FFB).  The accounts of FFB include its
         three wholly owned subsidiaries,  First Investment  Corporation (FSIC),
         First Savings Insurance  Services (FSIS),  and First Savings Securities
         Corporation   (FSSC)   (Collectively,   the  Bank).  All  entities  are
         collectively  referred to as the Company. All significant  intercompany
         accounts and transactions have been eliminated in consolidation.

         The Company is a Colorado stock corporation organized in September 1995
         to facilitate the conversion of the Bank's  holding  company  (formerly
         First  Savings  Capital,  M.H.C.)  from the  mutual  to  stock  form of
         ownership and to acquire and hold all of the capital stock of the Bank.
         In connection with the conversion, First Savings Capital, M.H.C., which
         had owned 66% of the Bank's common stock,  was merged with and into the
         Bank, and its shares of the Bank were  canceled.  On December 29, 1995,
         the Company issued  6,619,539 shares of its common stock for all of the
         remaining  outstanding  shares of the Bank. In 1995, 1996 and 1997, the
         Company  engaged in no  significant  business  activity  other than its
         ownership of the Bank's common stock.

         FFB  provides a full range of banking  and  thrift-related  services to
         customers  through its home office and branch  facilities  in Colorado.
         FFB is subject to both completion from other financial institutions and
         to  regulations  of  certain  federal  agencies,   including   periodic
         examinations  by those  regulatory  agencies.  FFB is also  subject  to
         minimum regulatory capital requirements as described more fully in note
         2 to the consolidated financial statements.

         FSIC  develops,  leases  and sells  real  estate  property.  FSIS sells
         health,  life and credit life insurance products and also offers mutual
         funds and annuity  products to customers.  FSSC was formed expressly to
         participate in a real estate mortgage investment conduit.

         In preparing the accompanying  consolidated  financial statements,  the
         Company is required to make estimates and  assumptions  that affect the
         reported  amounts of assets,  liabilities,  revenue,  and  expenses and
         disclosure of contingent  assets and liabilities.  Actual results could
         differ  from those  estimates.  Those  estimates  and  assumptions  are
         described in the following significant accounting policies.

         Cash and Cash Equivalents

         For purposes of the consolidated  statements of cash flows, the Company
         considers all highly liquid debt instruments  with original  maturities
         of  three  months  or  less to be cash  equivalents.


                                       26

<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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


(1)      Summary of Significant Accounting Policies (continued)

         Cash  equivalents  include   uninsured   deposits  in  other  financial
         institutions  approximating $1,903,000  and  $4,707,000 at December 31,
         1996 and 1997, respectively,  other  than  amounts  on  deposit  at the
         Federal Home Loan Bank of Topeka and the Federal Reserve Bank.

         The Federal  Reserve Board requires banks to maintain  certain  average
         reserve  balances  composed of cash on hand and balances  maintained at
         the Federal Reserve Bank. These reserve balances are based primarily on
         deposit level.

         Investment, Mortgage-Backed, and Other Asset-Backed Securities

         The  Company  classifies  its  investment,  mortgage-backed,  and other
         asset-backed   securities   in  one  of  three   categories:   trading,
         available-for-sale, or held-to-maturity.  Trading securities are bought
         and held  principally for the purpose of selling them in the near term.
         Held-to-maturity  securities are those  securities in which the Company
         has the ability and intent to hold until  maturity.  All securities not
         classified  as either  trading or held-to  maturity are  classified  as
         available-for-sale.   The  Company  has  no  securities  classified  as
         trading.

         Held-to-maturity   securities  are  recorded  at  cost,   adjusted  for
         amortization  or  accretion  of  premiums  or  discounts.  Trading  and
         available-for-sale  securities  are recorded at fair value.  Unrealized
         gains and  losses on  trading  securities  are  included  in  earnings.
         Unrealized  gains  and  losses,  net  of the  related  tax  effect,  on
         available-for-sale  securities  are  excluded  from  earnings  and  are
         reported as a separate component of stockholders' equity.  Transfers of
         securities between categories are recorded at fair value at the date of
         transfer.

         Realized    gains   and   losses   for    securities    classified   as
         available-for-sale and held-to-maturity are recognized in earnings upon
         sale or redemption at maturity.  The specific  identification method is
         used to determine  the cost of securities  sold.  Discounts or premiums
         are accredit or amortized using the  level-yield  method to the earlier
         of call date or maturity of the related held-to-maturity security.

         Loans Receivable, Real Estate Owned, and Provisions for Losses

         Effective January 1, 1995, the Company  prospectively adopted Statement
         of  Financial  Accounting  Standards  (SFAS)  No.  114,  Accounting  by
         Creditors  for  Impairment of a Loan,  and SFAS No. 118,  Accounting by
         Creditors for Impairment of a Loan-Income  Recognition  and Disclosures
         (collectively  referred to as Statement  114).  Statement 114 addresses
         the accounting  treatment of certain  impaired  loans,  excluding large
         groups of smaller-balance, homogenous loans.

                                       27

<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued
--------------------------------------------------------------------------------

(1)      Summary of Significant Accounting Policies (continued)


         Loans are considered impaired when it is probable that the Company will
         not fully collect amounts due in accordance with the contractual  terms
         of the loans.  For these  loans,  the  Company  measures  the amount of
         impairment  using  discounted cash flows,  except when it is determined
         that  the  sole  source  of  repayment  for the  loan is  operation  or
         liquidation of the collateral.  In such case, the current fair value of
         the collateral, reduced by estimated selling costs, is used in place of
         discounted  cash flows. If the measurement of the impaired loan is less
         than the recorded  investment-in the loan,  impairment is recognized by
         creating or  adjusting  an existing  allocation  of the  allowance  for
         losses on loans.

         The  allowance  for losses on impaired  loans is one  component  of the
         methodology  for  determining  the allowance  for losses on loans.  The
         remaining  components  of the allowance for losses on loans provide for
         estimated losses on problem mortgages and loans and a general allowance
         for estimated  losses on loans not  specifically  identified as problem
         loans which is base don factors such as historical  loss experience and
         business and economic conditions.

         Interest on loans is accrued only if deemed collectible and is credited
         to income as earned.  Interest  payments received on impaired loans are
         recorded as interest income unless collection of the remaining recorded
         investment is doubtful, at which time payments received are recorded as
         reductions of loan  principal.  The Company stops accruing  interest on
         loans for which  payments are more than 90 days past due as well as any
         other loans for which it is probable  that the Company will not collect
         all of its outstanding principal.

         Various regulatory  agencies,  as an integral part of their examination
         process,  periodically  review the Company's  allowances  for losses on
         loans and real estate. These agencies may require the Company to record
         additional  provisions  for  losses  based  upon  their  evaluation  of
         information available at the time of their examination.

         The  Company  calculates  gains or  losses  on  sales of  participating
         interests in loans receivable by determining the difference between the
         weighted  average yield of the loans sold and the yield rate guaranteed
         to the  purchaser,  adjusted for the  estimated  cost of servicing  the
         loans  receivable.  The  resulting  premium or discount is amortized or
         accredited  to interest  income  using the level- yield method over the
         contractual life of the loans.  Loans held for sale are recorded at the
         lower of cost or estimated market value.

         Loan Origination Income and Costs

         Loan fees and certain  direct loan  origination  costs are deferred and
         recognized as an adjustment of yield using the level-yield  method over
         the contractual life of the loans.

         Effective January 1, 1996, the Company  prospectively  adopted SFAS No.
         122,  Accounting for Mortgage  Servicing  Rights,  an amendment of FASB
         Statement  No. 65  (Statement  122).  SFAS 65,  Accounting  for Certain
         Mortgage Banking Activities, requires the capitalization and subsequent
         amortization of mortgage  servicing  rights which are acquired  through

                                       28
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

--------------------------------------------------------------------------------
(1)      Summary of Significant Accounting Policies (continued)

         purchase   transactions.   Effective   January  1,  1997,  the  Company
         prospectively  adopted  SFAS No.  125,  Accounting  for  Transfers  and
         Servicing  of  Financial  Assets and  Extinguishments  of  Liabilities,
         (Statement 125) which supersedes  Statement 122. Both Statement 125 and
         Statement 122 eliminate the  accounting  distinction  between rights to
         service  mortgage  loans for  others  that are  acquired  through  loan
         origination    activities   and   those   acquired   through   purchase
         transactions.  Any costs of acquiring  mortgage  loans,  either through
         origination  or  purchase,  are  allocated  between the loans and their
         related  mortgage  servicing  rights.  Consistent  with  Statement  65,
         mortgage  servicing  rights are amortized in proportion to and over the
         period of estimated net servicing income.  In addition,  the rights are
         evaluated based on their fair value. Statement 125 requires entities to
         recognize servicing assets and liabilities for all contracts to service
         financial  assets,  unless the assets are securitized and all servicing
         is retained. The servicing assets are initially measured at fair value,
         and are amortized  consistent  with the method  prescribed by Statement
         122.  In  addition,   the  impairment  of  the  servicing   assets  and
         liabilities  are assessed by strata and recognized  through a valuation
         allowance.  Adoption of Statement 125 did not have a significant impact
         on the Company's consolidated financial statements.

         Real Estate Owned

         Real  estate  owned is  accounted  for at the lower of cost  (principal
         balance of former mortgage loan) or estimated fair value. Fair value is
         determined primarily by discounted cash flow calculations.  Expenses of
         holding  foreclosed  properties,  net of rental  income,  are generally
         charged to operations as incurred.  Costs  incurred in connection  with
         improvements to the properties are capitalized unless such costs result
         in an amount in excess of net  realizable  value.  Gains and  losses on
         dispositions  of these  properties  are recognized in the year in which
         the sales occur.

         Office Properties and Equipment

         Land,  buildings and  equipment  are recorded at cost less  accumulated
         depreciation  and  amortization.  Depreciation is calculated  using the
         straight-line  method over the  estimated  useful  lives of the related
         assets.  Leasehold  improvements are amortized over the remaining terms
         of the leases.

         Estimated useful lives are as follows:  furniture and equipment - 4 to
         12 years; automobiles - 4 years; buildings - 20 to 40 years.

                                       29

<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(1)      Summary of Significant Accounting Policies (continued)


         Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

         The Company adopted the provisions of SFAS No. 121,  Accounting for the
         Impairment  of Long-  Lived  Assets  and for  Long-Lived  Assets  to Be
         Disposed Of (Statement 121), on January 1, 1996. Statement 121 requires
         that long-lived assets and certain identifiable intangibles be reviewed
         for impairment  whenever  events or changes in  circumstances  indicate
         that  the  carrying   amount  of  an  asset  may  not  be  recoverable.
         Recoverability  of assets is measured by a  comparison  of the carrying
         amount of the assets to future net cash flows  expected to be generated
         by the  assets.  If such  assets are  considered  to be  impaired,  the
         impairment  is  measured  as the amount by which the  assets'  carrying
         amount  exceed their fair value.  Assets to be disposed of are reported
         at the lower of the  carrying  amount or fair value less costs to sell.
         Adoption  of  Statement  121 did not have a  significant  impact on the
         Company's financial position, results of operations, or liquidity.

         Real Estate Held for Investment and Development

         Real  estate held for  investment  and  development  is recorded at the
         lower of cost or estimated net realizable value.

         Concentrations of Credit Risk

         Concentrations  of credit  risk arise  when a number of  counterparties
         have similar economic characteristics that would cause their ability to
         meet  contractual  obligations  to be similarly  affected by changes in
         economic or other  conditions.  The Company's loan  portfolio  consists
         primarily of  residential  mortgages  located in  Colorado,  making the
         value of the  portfolio  more  susceptible  to  declines in real estate
         values and other  changes in economic  conditions  in Colorado  and the
         Rocky Mountain region. The Company does not have a significant exposure
         to any individual customer.

         Disclosures of Fair Value of Financial Instruments

         SFAS No. 107,  Disclosures  about Fair Value of  Financial  Instruments
         (Statement 107), requires the Company to disclose estimated fair values
         of its  financial  instruments.  Fair  value  estimates  are  made at a
         specific point in time,  based on relevant  market  information.  These
         estimates do not reflect any premium or discount that could result from
         offering  for sale at one  time  the  Company's  entire  holdings  of a
         particular financial instrument. Because no market exists for a portion
         of the Company's financial instruments,  fair value estimates are based
         on  judgments  regarding  future  expected  loss  experience,   current
         economic   conditions,   risk   characteristics  of  various  financial
         instruments,  and other  factors.  These  estimates  are  subjective in
         nature and involve  uncertainties  and matters of significant  judgment
         and  therefore   cannot  be  determined  with  precision.   Changes  in
         assumptions could significantly affect the estimates.



                                       30


<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(1)      Summary of Significant Accounting Policies (continued)

         Fair  value  estimates  are  based on  financial  instruments  owned at
         December 31, 1996 and 1997 without  attempting to estimate the value of
         anticipated  future  business  and the value of assets and  liabilities
         that are not considered financial  instruments,  including deferred tax
         assets and premises and equipment.  In addition,  the tax ramifications
         related to the realization of the unrealized  gains and losses can have
         a  significant  effect  on fair  value  estimates  and  have  not  been
         considered in these estimates.

         The Company uses derivative  financial  instruments to a limited extent
         to meet the objectives of the  investment  policy and for management of
         interest rate risk. The Company held one derivative security, a Federal
         National Mortgage Association Swap Trust with an outstanding  principal
         balance of $7,708,000  and $6,724,000 as of December 31, 1996 and 1997,
         respectively.  The security, which is classified as available-for-sale,
         has a market value of $7,687,000 and $6,384,000 as of December 31, 1996
         and 1997,  respectively.  The structure of the instrument  integrates a
         fixed-rate  bond equal those  scheduled  in the swap,  then the Company
         will earn  interest  based on the  one-month  LIBOR  rate plus 30 basis
         points.  The Company is exposed to interest  rate risk if  repayment of
         the bound precedes the amortizing swap.

         Income Taxes

         Income taxes are accounted  for under the asset and  liability  method.
         Deferred tax assets and  liabilities  are recognized for the future tax
         consequences   attributable   to  differences   between  the  financial
         statement carrying amounts of existing assets and liabilities and their
         respective tax bases.  Deferred tax assets and liabilities are measured
         using  enacted  tax rates  expected  to apply to taxable  income in the
         years in which those temporary differences are expected to be recovered
         or settled.  The effect on  deferred  taxes of a change in tax rates is
         recognized in income in the period that includes the enactment date.

         Earnings Per Share

         In February  1997,  the FASB issued  SFAS No. 128,  Earnings  per Share
         (Statement 128).  Statement 128 supersedes APB Opinion No. 15, Earnings
         per Share, and specifies the computation,  presentation, and disclosure
         requirements  for earnings per share for entities  with  publicly  held
         common  stock.  Statement  128 is  effective  for period  ending  after
         December 15, 1997. The Company computes two measures, basic and diluted
         earnings  per share.  Basic  earnings per share is computed by dividing
         net  earnings  by  the   weighted-average   number  of  common   shares
         outstanding  during the period.  Diluted earnings per share is computed
         similar to basic  earnings per share,  except that the  denominator  is
         increased to include the number of additional  common shares that would
         have been  outstanding  if dilutive  potential  common  shares had been
         issued.  In addition,  the numerator is adjusted for any changes in net
         earnings that would have  resulted  from the assumed  conversion of the
         potential common shares.  Consistent with the requirements of Statement
         128, the Company has restated all prior-period  earnings per share data
         presented,   including  interim   financial   statements  and  selected
         quarterly financial data.


                                       31


<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(1)      Summary of Significant Accounting Policies (continued)

         The weighted  average number of shares of common stock and common stock
         equivalents  outstanding at December 31, 1995 have not been adjusted to
         reflect  the  December  29,  1995 stock  offering  and  exchange of the
         outstanding  common shares of the Bank for common shares of the Company
         because of the immaterial  effect of  consummating  the  transaction at
         December 29, 1995 (see note 13).

         Business Combination

         On October 1, 1997,  the Company  acquired Delta Federal  Savings,  FSB
         (Delta) for  $5,924,000  in the  Company's  stock.  The Company  issued
         301,952 shares from treasury for the  acquisition.  The acquisition has
         been accounted for by the purchase method and, accordingly, the results
         of operations of Delta have been included in the Company's consolidated
         financial  statements from October 1, 1997. The excess of $1,128,000 of
         the  purchase  price  over the fair  value of the  identifiable  assets
         acquired of  $4,796,000  has been  recorded  as  goodwill  and is being
         amortized using the straight-line method over 15 years.

         Reclassification

         Certain  previously  reported amounts have been reclassified to conform
         to the Company's 1997 presentation.

(2)      Regulatory Matters

         The  Company  is  subject  to  assessment  by the  Savings  Association
         Insurance  Fund  (SAIF).   In  1996,  the  Federal  Deposit   Insurance
         Corporation  (FDIC) assessed a special  premium on deposits  insured by
         the SAIF.  The  Company's  assessment  approximated  $7,000,000  and is
         included in FDIC premiums in the accompanying  consolidated  statements
         of operations.

         The  Bank  is  subject  to  various  regulatory  capital   requirements
         administered  by  federal  agencies.  Failure to meet  minimum  capital
         requirements can initiate certain  mandatory - and possible  additional
         discretionary - actions by regulators that, if undertaken, could have a
         direct  material  effect  on  the  Company's   consolidated   financial
         statements.  Under  capital  adequacy  guidelines  and  the  regulatory
         framework  for prompt  corrective  action,  the Bank must meet specific
         capital  guidelines  that involve  quantitative  measures of the Bank's
         assets, liabilities,  and certain off- statement of financial condition
         items as calculated under regulatory accounting  practices.  The Bank's
         capital  amounts and  classification  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  the Bank to maintain  minimum  amounts and ratios of
         total and Tier I capital  to  risk-weighted  assets,  core  capital  to
         adjusted tangible assets and tangible capital to adjusted total assets.
         Management  believes,  as of December 31, 1997, that the Bank meets all
         capital adequacy requirements to which it is subject.

                                       32
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         At December 31, 1997, the most recent  notification  from the Office of
         Thrift  Supervision  categorized the Bank as well capitalized under the
         regulatory framework for prompt corrective action. To be categorized as
         well capitalized, the Bank must maintain minimum total capital (to risk
         weighted  assets),  Tier I  capital  (to risk  weighted  assets),  core
         capital (to adjusted tangible assets) and tangible capital (to adjusted
         total  assets)  ratios as set forth in the table  below.  There are not
         conditions or events since that notification  that management  believes
         have changed the Bank's regulatory capital category.

         The Bank's  actual  capital  amounts  and ratios are  presented  in the
         following table (dollars in thousands):

<TABLE>
<CAPTION>

                                                                                                             To be well capitalized
                                                                                        For capital                under prompt
                                                                                          adequacy               corrective action
                                                           Actual                         purposes                  provisions
                                                   -----------------------         ---------------------     ----------------------
                                                     Amount          Ratio         Amount          Ratio         Amount     Ratio
                                                     ------          -----         ------          -----         ------     -----

As of December 31, 1997:

<S>                                                <C>              <C>            <C>             <C>          <C>         <C>
  Total capital (to risk weighted assets)          $197,080          23.76%        $66,355          8.0%         $82,943     10.0%

  Core capital (to adjusted tangible assets)        194,110          12.49          46,479          3.0           77,465      5.0

  Tangible capital (to adjusted total assets)       189,589          12.25          23,239          1.5              N/A      N/A

  Tier I capital (to risk weighted assets)          194,110          23.40             N/A          N/A           49,766      6.0

As of December 31, 1996:

  Total capital (to risk weighted assets)           183,728          23.84          61,654          8.0           77,067     10.0

  Core capital (to adjusted tangible assets)        181,733          12.03          45,320          3.0           75,533      5.0

  Tangible capital (to adjusted total assets)       178,976          11.87          22,625          1.5              N/A      N/A

  Tier I capital (to risk weighted assets)          181,733          23.58             N/A          N/A           46,240      6.0

</TABLE>

(3)      Investment Securities

         Investment securities at December 31 consist of (amounts in thousands):


                                                   1996              1997
                                                   ----              ----

Held-to-maturity, at amortized cost              $61,642           73,944

Available-for-sale, at market price               11,099            5,951
                                                  ------           ------

                                                 $72,741          $79,895
                                                  ======           ======


                                       33
<PAGE>
FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         As of December 31, 1996 and 1997,  gross unrealized gains and losses of
         investment securities are as follows (amounts in thousands):
<TABLE>
<CAPTION>
                                                                              Gross            Gross
                                                         Amortized           unrealized      unrealized         Market
                                                           cost               gains            losses           Value
                                                           ----               -----            ------            -----
<S>                                                        <C>                 <C>            <C>            <C>
1996
Held-to-maturity
U.S. government and agency securities                      $61,642                88             (29)           61,701
                                                            ======                ==              ==            ======

Available-for-sale
U.S. government and agency securities                      $ 9,999                 1             (13)            9,987

Equity securities                                              488               624               --            1,112
                                                            ------               ---               --           ------
                                                           $10,487               625             (13)           11,099
                                                            ======               ===              ==            ======

1997
Held-to-maturity
U.S. government and agency securities                      $73,944                26             (18)           73,952
                                                            ======                ==              ==            ======
Available-for-sale
U.S. government and agency securities                      $ 5,959                --              (8)            5,951
                                                            ======                ==               =             =====
</TABLE>

         Maturities of investment securities at December 31, 1997 are as follows
(amounts in thousands):
<TABLE>
<CAPTION>
                                                                                 Amortized                Market
                                                                                   cost                   value
                                                                                   ----                   -----
<S>                                                                              <C>                      <C>
Held-to-maturity
Obligations of the U.S. government and its agencies:
Due within one year                                                              $73,944                  73,952
                                                                                  ======                  ======
Available-for-sale
Obligations of the U.S. government and its agencies:
Due within one year                                                              $ 5,200                   5,193
Due after one year to five years                                                     759                     758
                                                                                  ------                  ------
                                                                                 $ 5,959                   5,951
                                                                                  ======                  ======

</TABLE>

(4)      Mortgage-Backed and Other Asset-Backed Securities

         Mortgage-backed  and  other  asset-backed  securities  at  December  31
         consist of amounts in thousands):

                                                       1996             1997
                                                       ----             ----

Held-to-maturity, at amortized cost                  $273,602           209,543
Available-for-sale, at market value                     7,687             6,839
                                                      -------           -------

                                                     $281,289           216,382
                                                      =======           =======

                                       34
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(4)      Mortgage-Backed and Other Asset-Backed Securities (continued)


         As of December 31, 1996 and 1997,  gross unrealized gains and losses of
         mortgage-backed  and  other  asset-backed  securities  are  as  follows
         (amounts in thousands):

<TABLE>
<CAPTION>

                                                                               Gross         Gross
                                                           Amortized         unrealized    unrealized          Market
                                                              cost              gains        losses            value
                                                              ----              -----        ------            -----
<S>                                                         <C>              <C>            <C>               <C>
1996
Held-to-maturity
Federal Home Loan Mortgage Corporation                       $48,584             953          (1,597)           47,940
Federal National Mortgage Association                         23,795             388            (249)           23,934
Government National Mortgage Association                         419              12               --              431
Collateralized mortgage obligations and other
mortgage-backed securities                                   200,804             153          (5,219)          195,738
                                                             -------           -----           -----           -------
                                                            $273,602           1,506          (7,065)          268,043
                                                             =======           =====           =====           =======
Available-for-Sale
Federal National Mortgage Association                       $  7,708              --             (21)            7,687
                                                             =======           =====           =====             =====
1997
Held-to-maturity
Federal Home Loan Mortgage Corporation                      $ 29,913             638            (165)           30,386
Federal National Mortgage Association                         17,272             341             (35)           17,578
Government National Mortgage Association                         285               8               --              293
Collateralized mortgage obligations and other
mortgage-backed securities                                   162,073             534          (2,636)          159,971
                                                             -------           -----           -----           -------
                                                            $209,543           1,521          (2,836)          208,228
                                                             =======           =====           =====           =======

Available-for-Sale
Federal Home Loan Mortgage Corporation                      $    249               5               --              254
Federal National Mortgage Association                          6,919              --            (334)            6,585
                                                             -------           -----            ----           -------
                                                            $  7,168               5            (334)            6,839
                                                             =======           =====            ====           =======
</TABLE>


                                       35



<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(4)      Mortgage-Backed and Other Asset-Backed Securities (continued)

         Expected   maturities  of   mortgage-backed   and  other   asset-backed
         securities at December 31, 1997 are as follows (amounts in thousands):
<TABLE>
<CAPTION>
                                                                               Amortized             Market
                                                                                  Cost               value
                                                                                  ----               -----
<S>                                                                             <C>                 <C>

Held-to-maturity
Federal Home Loan Mortgage Corporation:
         Due within one year                                                    $    256                 256
         Due after five years to ten years                                           325                 333
         Due after ten years                                                      29,332              29,797
Federal National Mortgage Association:
         Due after one year to five years                                            278                 281
         Due after ten years                                                      16,994              17,297
Government National Mortgage Association:
         Due after ten years                                                         285                 293
Collateralized mortgage obligations and other
         mortgage-backed securities:
         Due within one year                                                      70,803              70,130
         Due after one year to five years                                         43,802              43,313
         Due after five years to ten years                                        22,022              21,643
         Due after ten years                                                      25,446              24,885
                                                                                 -------             -------
                                                                                $209,543             208,228
                                                                                 =======             =======

Available-for-sale
Federal Home Loan Mortgage Corporation:
         Due within one year                                                    $    249                 254
Federal National Mortgage Association:
         Due after one year to five years                                          6,919               6,585
                                                                                 -------             -------
                                                                                $  7,168               6,839
                                                                                 =======             =======

         At  December  31,  1997,  the  Company  held  collateralized   mortgage
         obligations  (CMOs) with an aggregate carrying amount of $162,073 which
         consisted of $21,797  federal  agency CMOs and $140,276  private  issue
         CMOs.
</TABLE>


                                       36

<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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


(5)      Loans Receivable

         Loans receivable consist of (amounts in thousands):
<TABLE>
<CAPTION>
                                                                                                  December 31
                                                                                       ---------------------------------
                                                                                           1996                   1997
                                                                                           ----                   ----
<S>                                                                                    <C>                  <C>
First mortgage loans:
         Conventional                                                                  $  798,608                915,871
         Partially guaranteed by the Veterans Administration or                                                    2,757
         insured by the Federal Housing Administration                                      3,706
         Real estate construction loans                                                    27,931                 16,098
         Purchased loans and equity in participation loans                                 79,087                 68,939
                                                                                        ---------              ---------
                  Total first mortgage loans, net                                         909,332              1,003,665
Home improvement, home equity, commercial, and consumer
   loans                                                                                  167,820                170,459
                                                                                        ---------              ---------
                                                                                        1,077,152              1,174,124
Less:
         Undisbursed proceeds of loans in process                                           9,758                  4,650
         Unearned premiums and discounts, net                                                  10                  (997)
         Deferred loan origination fees, net                                                2,010                  1,153
         Allowance for losses on loans (see note 8)                                         3,850                  4,716
                                                                                        ---------              ---------
                                                                                       $1,061,524              1,164,602
                                                                                        =========              =========
</TABLE>

         First  mortgage  loans  secured  by   one-to-four   family   residences
         approximated  $855,992,000  and  $964,629,000  at December 31, 1996 and
         1997, respectively.

         Under certain  economic or legal  circumstances,  the Company may grant
         concessions to a borrower.  These concessions may include restructuring
         loans to change payment terms,  reduce the stated interest rate, reduce
         the amount of interest  due, or extend the  maturity  date.  The new or
         modified loan constitutes a troubled debt restructuring loans to change
         payment terms,  reduce the stated  interest rate,  reduce the amount of
         interest  due, or extend the maturity  date.  The new or modified  loan
         constitutes a troubled debt  restructuring  under SFAS No. 15. The Bank
         had no troubled  debt  restructurings  at  December  31, 1996 and 1997.
         Loans, net of allowances for losses, on nonaccrual status  approximated
         $1,457,000 and $2,113,000 at December 31, 1996 and 1997, respectively.

         Interest income that would have been recorded for nonaccrual  loans and
         troubled debt restructuring had they been performing in accordance with
         their  contractual  requirements  approximated  $858,000,  $883,000 and
         $866,000  for the  years  ended  December  31,  1995,  1996  and  1997,
         respectively. Actually interest income recorded for these loans totaled
         $576,000,  $617,000 and $567,000 for the years ended December 31, 1995,
         1996 and 1997, respectively.

                                       37
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         Loans receivable and mortgage-backed  securities with combined carrying
         values  approximating  $18,341,000 and $19,624,000 at December 31, 1996
         and  1997,  respectively,  were  pledged  to  secure  uninsured  public
         deposits  approximating  $7,878,000 and $5,147,000 at December 31, 1996
         and 1997, respectively.

         Loans serviced by the Company for the benefit of others at December 31,
         1996 and 1997 approximated $145,563,000 and $132,197,000, respectively.

         At December 31, 1996 and 1997, the Company had outstanding  commitments
         to fund loans and standby letters of credit  approximating  $52,355,000
         and $55,687,000,  respectively.  Of the total outstanding  commitments,
         fixed rate  commitments  at  December  31,  1996 and 1997  approximated
         $3,179,000  and  $3,659,000,   respectively,  having  weighted  average
         interest rates of 7.3% and 7.1%,  respectively.  These  commitments are
         generally  at the market rate of  interest at the time of closing.  The
         Company's policy is to required  customers to provide  collateral prior
         to the disbursement of approved loans.

         At  December  31,  1996 and  1997,  loans  held  for sale  approximated
         $925,000 and $950,000, respectively.

(6)      Accrued Interest Receivable

         Accrued  interest  receivable  is  summarized  as follows  (amounts  in
thousands):
<TABLE>
<CAPTION>
                                                                    December 31
                                                            --------------------------
                                                              1996               1997
                                                              ----               ----
<S>                                                         <C>                 <C>
Loans receivable                                            $5,166              5,808
Investment securities                                        1,065              1,132
Mortgage-backed and other asset-backed securities            1,828              1,416
                                                             -----              -----
                                                            $8,059              8,356
                                                             =====              =====

</TABLE>
(7)      Real Estate Owned

         Real estate owned consists of (amounts in thousands):
<TABLE>
<CAPTION>

                                                                     December 31
                                                             -------------------------
                                                              1996                1997
                                                              ----                ----
<S>                                                          <C>                   <C>
Real estate acquired by foreclosure                          $2,148                748
Less allowance for estimated losses (see note 8)                691                523
                                                              -----                ---
                                                             $1,457                225
                                                              =====                ===

</TABLE>

                                       38

<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(8)      Allowances for Losses on Loans Receivable and Real Estate Owned

         The Company provides  allowances for potential  losses  associated with
         its lending and real estate activities. changes in these allowances are
         summarized as follows (amounts in thousands):

<TABLE>
<CAPTION>

                                                             Loans           Real estate
                                                           receivable           owned
                                                           ----------           -----
<S>                                                          <C>                 <C>
Balance, December 31, 1994                                  $ 3,310             1,105
Credit for losses                                             (495)              (95)
Charge-offs                                                   (121)              (98)
Recoveries                                                     232                --
                                                              ----              ----
Balance, December 31, 1995                                    2,926              912
Provisions for losses                                         1,143                3
Charge-offs                                                    (305)            (224)
Recoveries                                                       86               --
                                                              -----             ----
Balance, December 31, 1996                                    3,850              691
Acquired in business combination                                269               --
Credit for Losses                                              (739)            (114)
Charge-Offs                                                    (424)             (54)
Recoveries                                                    1,760               --
                                                             ------             ----
Balance, December 31, 1997                                  $ 4,716              523
                  === ====                                  ======              ====
</TABLE>


The recorded  investment in impaired loans and the related impairment  allowance
determined  under  Statement  114  (included  within the allowance for losses on
loans   receivable  at  December  31  are  summarized  as  follows  (amounts  in
thousands):

<TABLE>
<CAPTION>


                                                               Statement 114
                                                     Recorded   impairment
                                                    Investment   allowance
                                                    ----------   ---------
1996
----
<S>                                                   <C>           <C>
Impaired loans:
  Statement 114 allowance                             $1,906           529
  Statement 114 allowance not required                 1,815            --
                                                      ------        ------
Total impaired loans                                  $3,721           529
                                                      ======        ======
1997
----
Impaired loans:
  Statement 114 allowance required                    $  583           547
  Statement 114 allowance not required                   887          --
                                                      ------        ------
Total Impaired Loans                                  $1,470           547
                                                      ======        ======

</TABLE>

                                       39
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         The majority of impaired loans  requiring a Statement 114 allowance are
         measured using the fair value of the underlying  collateral since these
         loans are considered collateral dependent.

         The average  recorded  investment in impaired loans for the years ended
         December 31, 1997 and 1997 was $3,160,000 and $2,866,000, respectively.
         Interest  recorded on impaired  loans for the years ended  December 31,
         1995, 1996 and 1997 was $98,000, $102,000 and $64,000, respectively.

(9)      Office Properties and Equipment

         Office  properties and equipment and related  accumulated  depreciation
         and amortization are summarized as follows (amounts in thousands):

                                                                 December 31
                                                             -------------------
                                                               1996        1997
                                                               ----        ----
Land                                                         $ 7,068       6,976
Buildings                                                     18,483      20,317
Furniture, equipment leasehold improvements and               10,790      11,850
  automobiles
Construction-in-progress                                         115          25
                                                             -------     -------
                                                              36,456      39,168
Less accumulated depreciation and amortization                13,526      15,562
                                                             -------     -------
                                                             $22,930      23,606
                                                             =======     =======

         Depreciation  and   amortization   expense   approximated   $1,607,000,
         $1,794,000 and  $1,821,000 for the years ended December 31, 1995,  1996
         and 1997, respectively.


                                       40
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(10)     Deposits

         Deposits are summarized as follows (amounts in thousands):
<TABLE>
<CAPTION>
                                                                               December 31
                                         ------------------------------------------------------------------------
                                                            1996                                       1997
                                         --------------------------------       ---------------------------------
                                                              Weighted                                 Weighted
                                                              average                                  average
                                          Amount               rate                Amount               rate
                                          ------               ----                ------               ----
<S>                                    <C>                     <C>             <C>                      <C>
NOW Accounts and Money
Market Demand Deposits
  Money market                         $  139,990               3.50%           $  142,643               3.50%
  Checking with interest                  100,306               1.99               105,794               1.75
  Commercial demand deposits               23,124               0.74                28,365               0.64
  Retirement accounts                      81,834               5.31                84,388               5.19
  Non-interest-bearing                     33,408               --                  39,181               --
    checking accounts
Savings Accounts
  Regular savings accounts                 92,945               2.71                94,940               2.71
Time Deposits
  Fixed rate and fixed                    572,626               5.43               605,757               5.54
    term certificates
  Retirement accounts                      83,495               6.08                73,225               5.98
  Jumbo certificates                        8,095               5.24                 8,884               5.77
                                       ----------                               ----------
         Total deposits                $1,135,823               4.58%           $1,182,727               4.57%
                                       ==========               ====            ==========               ====
</TABLE>

         Time  deposits  of  $100,000  and  over  approximated  $47,245,000  and
         $64,556,000  at  December  31,  1996 and  1997,  respectively.  Deposit
         balances in excess of $100,000 are not federally insured.
         At December  31, 1997,  scheduled  maturities  of time  deposits are as
         follows (amounts in thousands):
<TABLE>
<CAPTION>
                                           Year ending December 31
                       ---------------------------------------------------------------
                                                                     2002
                                                                      and
                         1998        1999       2000       2001    thereafter   Total
                         ----        ----       ----       ----    ----------   -----
<S>                    <C>         <C>        <C>        <C>        <C>       <C>
Fixed rate and fixed
  term certificates    $470,010     76,791     20,634     14,042     24,280    605,757
                       --------     ------     ------     ------     ------    -------
Retirement accounts      21,190      3,388     19,516      9,875     19,256     73,225
Jumbo certificates        7,166      1,296        200         99        123      8,884
                       --------   --------   --------   --------   --------   --------
                       $498,366     81,475     40,350     24,016     43,659    687,866
                       ========   ========   ========   ========   ========   ========
</TABLE>

                                       41
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         Interest  expense on  deposits  consists of the  following  (amounts in
thousands):

                                   Year ended December 31
                                ---------------------------
                                  1995      1996      1997
                                  ----      ----      ----
Time Deposits                   $39,029    39,573    41,803
NOW accounts and money market
  demand deposits                 6,709     6,878     6,966
Savings accounts                  2,576     2,541    2,4785
                                -------   -------   -------
                                 48,314    48,992    51,247
                                =======   =======   =======



(11)     Advances from Federal Home Loan Bank

         Advances from the FHLB are secured by the  Company's  FHLB stock and by
         qualifying loans receivable,  investment securities and mortgage-backed
         securities.

Advances  from  the  FHLB at  December  31,  1997  are as  follows  (amounts  in
thousands):

                                 Weighted average
               Maturity           interest rate            Amount
               --------           -------------            ------

                 1998                  5.95              $ 38,410
                 1999                  7.96                 4,000
                 2000                  6.93                32,000
                 2001                  5,82                 1,000
                 2002                  6.21                47,000
                                                           ------
                                                         $122,410
                                                         ========

         As a member of the FHLB  system,  the Bank is  required  to maintain an
         investment  in stock of the FHLB equal to the  greater of 1% of certain
         residential  mortgages or 5% of FHLB  advances.  The Bank has a blanket
         pledge with the FHLB and has pledged all of its stock in the FHLB,  and
         all otherwise unpledged or unencumbered federal funds sold, U.S. agency
         securities, certain qualifying loans, and mortgage-backed securities.

(12)     Bonds Payable

         Bonds  payable of  $5,009,000  and  $4,479,000 at December 31, 1996 and
         1997,  respectively,  consist of Ryland Acceptance  Corporation  Four's
         Collateralized  Mortgage Bonds,  Series 63, issued in March 1988 with a
         fixed  interest rate of 8.75%.  FSSC's  original  principal  amount was
         $22,009,000 with stated final maturities through 2019. Bond issue costs
         with a  remaining  unamortized  balance  of  $176,000  and  $69,000  at
         December 31, 1996 and 1997,  respectively,  are netted against the bond
         principal   balance   in  the   accompanying   consolidated   financial
         statements.

                                       42


<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         The bonds are  secured  by  mortgage-backed  securities  with  carrying
         values and  market  values  approximating  $4,887,000  and  $5,169,000,
         respectively, at December 31, 1997. All remaining bonds outstanding are
         scheduled to mature in 2019.

(13)     Stockholders' Equity

         On December 29,  1995,  the Company  completed  its  conversion  from a
         mutual holding  company to a savings  institution  holding  company and
         acquired  all of the  capital  stock  of the  Bank  by  exchanging  all
         outstanding shares of the Bank from 6,619,539 shares of the Company. In
         connection with the conversion,  the Company issued and sold 13,403,798
         shares  of  common  stock at a price  of $10 per  share.  Net  proceeds
         received from the conversion and costs  associated  with the conversion
         approximated $117,620,000 and $3,014,000, respectively. Included in the
         number of shares sold are  1,340,379  shares  purchased by the employee
         stock ownership plan in exchange for a note payable to the Company.

         For the purpose of granting  eligible members of the Bank a priority in
         the event of future  liquidation,  the Bank  established  a liquidation
         account equal to the aggregate  amount of the dividends waived by First
         Savings Capital, M.H.C. plus 67.08% of the Bank's total stockholders'
         equity as of September  30, 1995. In the event (and only in such event)
         of future  liquidation  of the  converted  Bank,  an  eligible  savings
         account  holder who  continues to maintain a savings  account  shall be
         entitled to receive a distribution from the liquidation account, in the
         proportionate  amount  of  the  then-current  adjusted  balance  of the
         savings  deposits then held before any  distributions  may be made with
         respect to capital stock.

         Present regulations provide that the Bank may not declare or pay a cash
         dividend  on or  repurchase  any of its  capital  stock  if the  result
         thereof would be to reduce the regulatory capital of the Bank below the
         amount required for the liquidation  account or the regulatory  capital
         requirement.  Further,  any dividend declared or paid on, or repurchase
         of the Bank's  capital stock shall be in compliance  with the rules and
         regulations of the Office of Thrift  Supervision,  or other  applicable
         regulations.

         All references to options and option prices below have been adjusted to
         reflect the December 29, 1995 exchange of the outstanding common shares
         of the Bank for common shares of the Company.

                                       43
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(13)      Stockholders' Equity (continued)

         (a)      Earnings per Share

                  The following tables reconcile the numerators and denominators
                  of the basic and diluted earnings per share (EPS) computations
                  (amounts in thousands, except share and per share data).
<TABLE>
<CAPTION>
                                                                          Year Ended December 31, 1995
                                                   --------------------------------------------------------------------------
                                                                                Weighted
                                                                                average
                                                     Earnings                   common shares           Per share
                                                     (numerator)                (denominator)             amount
                                                     -----------                -------------             ------
<S>                                                  <C>                        <C>                       <C>
Basic EPS -
  net earnings                                       $ 12,638                   6,325,611                 $ 2.00
                                                                                                          ======
Effect of dilutive securities:
  Stock options                                          --                        81,883
  Nonvested MRP Shares                                   --                        26,344
                                                     --------                   ---------
Diluted EPS -
  net earnings plus assumed conversions              $ 12,638                   6,433,838                 $ 1.96
                                                     ========                   =========                 ======
</TABLE>

<TABLE>
<CAPTION>
                                                                         Year Ended December 31, 1996
                                                   --------------------------------------------------------------------------
                                                                                Weighted
                                                                                average
                                                     Earnings                   common shares             Per share
                                                     (numerator)                (denominator)             amount
                                                     -----------                -------------             ------
<S>                                                  <C>                       <C>                       <C>
Basic EPS -
  net earnings                                       $ 13,372                  18,064,252                $ .74
                                                                                                         =====
Effect of dilutive securities:
  Stock options                                          --                       255,113
  Nonvested MRP/MSBP shares                              --                        34,902
                                                      -------                  ----------
Diluted EPS -
  net earnings plus assumed conversions              $ 13,372                  18,354,268                $ .73
                                                     ========                  ==========                =====
</TABLE>

                                       44

<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                          Year Ended December 31, 1997
                                                   --------------------------------------------------------------------------
<S>                                                  <C>                        <C>                       <C>
Basic EPS -
  net earnings                                       $ 19,914                   15,407,378                $ 1.29
                                                                                                          ======

Effect of Dilutive Securities:
  Stock options                                         --                         500,808
  Nonvested MRP/MSBP shares                             --                          54,076
                                                     -------                    ----------
Diluted EPS -
  net earnings plus assumed conversions              $ 19,914                   15,962,262                $ 1.25
                                                     ========                   ==========                ======
</TABLE>


         (b)      Stock Option Plans

                   In 1992,  the  Company  established  a stock  option plan for
                  certain  employees and reserved 631,325 shares of common stock
                  for issuance  under the plan.  As of December  31,  1997,  all
                  631,325  options  had been  granted at $2.20 per option  which
                  represented  fair  market  value at the date of grant.  Of the
                  options  granted,  622,  232 are  considered  incentive  stock
                  options  and  9,093  are  nonincentive.   All  options  became
                  exercisable  on November 1, 1993 and expire ten years from the
                  date of  grant.  During  1995,  1996 and  1997,  respectively,
                  119,770,  123,875 and 55,162  options  were  exercised.  As of
                  December 31, 1997, 145,667 options remain exercisable.

                  In 1996, the Company  established  an additional  stock option
                  plan  for  certain   employees   and  directors  and  reserved
                  1,340,379  shares of common stock under the plan.  At December
                  31,  1997,  1,289,000  options had been granted at $13.563 per
                  option,  30,000  options  had been  granted  at  $17.188,  and
                  $21.379 options had been granted at $24.875, which represented
                  fair market value at the date of grant. Of the options granted

                  to date  1,119,434 are considered incentive  stock options and
                  220,945 are  nonincentive. Options vest at the rate of 20% per
                  year over five years, beginning one year from grant date, and
                  expire ten years from grant date. Awards vest immediately upon
                  death,  disability, or change in control of the Company.During
                  1997, 6,000 options were exercised.

                                       45

<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         (c)      Employee Stock Ownership Plan

                  In 1992, the Company  established an employee stock  ownership
                  plan (ESOP)  covering all employees with more than one year of
                  service  with the  Company.  Participant  benefits  become 30%
                  vested after three years of service,  increasing to 50% vested
                  after fours of service,  and by 20% annually  thereafter until
                  benefits are 100% vested after 7 years.  Contributions  to the
                  plan are  determined by the  Company's  Board of Directors and
                  approximated  $359,000,  $1,026,000 and $975,000 in 1995, 1996
                  and 1997 respectively.

                  The ESOP  borrowed  $972,000 to fund the  purchase of the ESOP
                  shares in 1992.  This loan was  repaid by the end of 1995.  On
                  December 29, 1995, the ESOP purchased 10% of the common shares
                  sold by the Company in connection  with its conversion  with a
                  $13,404,000  loan  extended  by  the  Company.  The  principal
                  balance of the note,  which  matures on December 28, 2005,  is
                  payable in 10 equal installments of $1,340,379. The note bears
                  interest at the prime rate, payable  quarterly.  The borrowing
                  is to be repaid by  contributions by the Bank and dividends on
                  common shares held by the ESOP. The shares are released to the
                  ESOP  as the  debt is  repaid.  ESOP  shares  that  have  been
                  committed  to  be  released  are  considered  outstanding  for
                  purposes  of   computing   earnings   per  common  and  common
                  equivalent share.

                  During 1995,  1996 and 1997, the ESOP received  dividends from
                  the Company  approximating  $122,000,  $315,000 and  $565,000,
                  respectively, which were used to fund debt repayments.

         (d)      Management Recognition Plan

                  Effective July 14, 1992, the Company  established a Management
                  Recognition  Plan (MRP) o reward certain key employees with an
                  equality  interest  in the Company as  compensation  for their
                  future professional  service.  The Company contributed 182,208
                  shares of common stock.  Shares are granted at the  discretion
                  of a committee  appointed by the Board of Directors and, while
                  initially  and  currently  vesting at the rate of 20% per year
                  over  5  years,  ultimately  vest  at  the  discretion  of the
                  committee   appointed  by  the  board.   The  Company  records
                  compensation  expense and an increase in equity as  individual
                  employees vest in allocated  shares. At December 31, 1997, the
                  MRP has granted 170,785 shares to employees, all of which have
                  vested. Compensation expense  recorded  for  vesting   of  MRP
                  shares  approximated  $300,000, $418,000 and  $449,000 for the
                  years ended  December 31, 1995, 1996 and 1997, respectively.


                                       46
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(13)      Stockholders' Equity (continued)

         (e)      Management Stock Bonus Plan

                  In 1996, the Company established a Management Stock Bonus Plan
                  (MSBP) to reward directors, officer, and certain key employees
                  with an equity  interest  in the Company as  compensation  for
                  their future  professional  service.  The Company  contributed
                  268,075  shares of common stock through  purchases in the open
                  market.  Shares are granted at the  discretion  of a committee
                  appointed by the Board of Directors  and vest at a rate of 20%
                  per year over 5 years.  All  awards  become  immediately  100%
                  vested  upon  death,  disability,  or  termination  of service
                  following  a change in control  of the  Company.  The  Company
                  records  compensation  expense  and an  increase  in equity as
                  individual employees vest in allocated shares. At December 31,
                  1997 the MSBP has  granted  195,000  shares,  of which  38,300
                  shares have vested.  Compensation expense recorded for vesting
                  of MSBP shares approximated $14,000 and $505,000 for the years
                  ended December 31, 1996 and 1997, respectively.

         (f)      Purchase Rights

                  On July 24,  1996,  the  Board  of  Directors  of the  Company
                  declared  a  dividend  distribution  of  one  Preferred  Share
                  Purchase Right on each outstanding  share of common stock. The
                  rights will be exercisable  only if a person or group acquires
                  15% or more of the  Company's  common  stock  or  announces  a
                  tender  offer,  the  consummation  of which  would  result  in
                  ownership  by a person  or group of 15% or more of the  common
                  stock.

         During  1996,  the  Company  adopted  SFAS  No.  123,   Accounting  for
         Stock-Based Compensation (Statement 123), which provides an alternative
         to APB  Opinion  No.  25,  Accounting  for Stock  Issued  to  Employees
         (Opinion No. 25), in accounting for stock-based  compensation issued to
         employees.  Statement  123  allows  for a fair  value-based  method  of
         accounting for employee  stock options and similar equity  instruments.
         However,  for  companies  that  continue  to  account  for  stock-based
         compensation  arrangements under Opinion No. 25, Statement 123 requires
         disclosure of the pro forma effect on net income and earnings per share
         as if the fair  value-based  method of accounting  defined in Statement
         123 had been applied.  The Company will continue to use the  accounting
         prescribed by Opinion No. 25, and provide the required  disclosures  of
         Statement 123.

         The per share  weighted-average  fair  value of stock  options  granted
         during  1996 and 1997 was $5.11  and $8.53 on the dates of grant  using
         the   Black-Scholes    option-pricing    model   with   the   following
         weighted-average  assumptions:  risk  free  interest  rate of 6.57% and
         5.66%, an expected life of 7.1 and 6.0 years,  and expected  volatility
         of 22%and  35%  for  the  years  ended  December  31,  1996  and  1997,
         respectively.   No  stock  options   were  granted  in  1995.  It   was
         assumed  that  quarterly  dividends  of  $0.10  per  share and dividend
         growth will be 10% per year.


                                       47
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         The Company  applies the intrinsic  value method in accounting  for its
         equity incentive plans and, accordingly,  no compensation cost has been
         recognized for such plans in the consolidated financial statements. Had
         the Company determined compensation cost based on the fair value at the
         grant  date for its stock  options,  the  Company's  net  earnings  and
         earnings per common share, assuming dilution would have been reduced to
         the proforma amounts indicated below:

                                                  1996                   1997
                                                  ----                   ----
                                                     (In thousands, except per
                                                       share amounts)
                                                       --------------
Net earnings                   As reported     $ 13,372                 19,914
                               Pro Forma         12,493                 14,332

Earnings per common share      As reported        .74                     1.29
                               Pro Forma          .69                      .93

Earnings per common
  share, assuming dilution     As reported        .73                     1.25
                               Pro forma          .68                      .90


         The effects of applying SFAS 123 for  providing  pro forma  disclosures
         may not be  representative  of the effects on reported net earnings for
         future years.

(14)     Income Taxes

         The Company  files  consolidated  federal and state income tax returns.
         Prior to 1996,  the Company  computed its bad debt deduction for income
         tax purposes pursuant to the thrift bad debt reserve method of Internal
         Revenue Code Section 593.  Effective for taxable years  beginning after
         December  31,  1995,  the Section 593  reserve  method was  repealed by
         Congress. The Company is now required to compute its bad debt deduction
         for income tax  purposes  suing the  specific  charge-off  method.  The
         change in method will result in the Company  recapturing  approximately
         $7,491,000  into income for taxable years 1998 through  2003.  Retained
         earnings at December  31, 1997  include  approximately  $11,974,000  of
         accumulated  tax bad debt deductions for which no provision for federal
         income taxes has been made. If, in the future, this portion of retained
         earnings is used for any purpose  other than to absorb bad debt losses,
         then  federal  income  taxes  may be  imposed  at the  tax  rates  then
         applicable.

         Income tax expense (benefit) for the year ended December 32, 1995, 1996
         and 1997 consists of (amounts in thousands):
<TABLE>
<CAPTION>
                                             Current                Deferred                   Total
                                             -------                --------                   -----
<S>                                         <C>                       <C>                      <C>
Year ended December 31, 1995:
  Federal                                   $ 5,188                   1,156                    6,344
  State and local                               629                     173                      802
                                            -------                   -----                    -----
                                            $ 5,817                   1,329                    7,146
                                            =======                   =====                    =====
</TABLE>
                                                                     (continued)

                                       48
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(14)      Income Taxes (continued)
                                             Current     Deferred       Total
                                             -------     --------       -----

Year ended December 31, 1996:
  Federal                                    $ 7,064         8          7,072
  State and local                                838         1            839
                                             -------        ---         -----
                                             $ 7,902         9          7,911
                                             =======        ===         =====
Year ended December 31, 1997:
  Federal                                   $ 10,545       (43)        10,502
  State and local                              1,330        (7)         1,323
                                            --------       ---         ------
                                            $ 11,875       (50)        11,825
                                            ========       ====        ======



         The tax effects of temporary  differences that give rise to significant
         portions of the  deferred  tax assets and  liabilities  at December 31,
         1996 and 1997 are presented below (amounts in thousands):

                                                          1996      1997
                                                          ----      ----
Deferred tax assets:
  Net unrealized loss on securities available-for-sale   $ --        122
  Other                                                    --        185
                                                         ------   ------
         Total gross deferred tax assets                   --        307
                                                         ------   ------
Deferred tax liabilities:
  Loans receivable due primarily to deferred loan fees    1,938    1,957
  Allowance for losses on loans receivable                1,332    1,068
  FHLB stock, due to stock dividends                      1,362    1,689
  Net unrealized gain on securities available-for-sale      226     --
  Prepaid FDIC premiums                                      15       71
  Deferred premiums on loan sales                           112       78
  Other                                                     133      164
                                                         ------   ------
         Total gross deferred tax liabilities             5,118    5,027
                                                         ------   ------
         Net deferred tax liability                     $ 5,118    4,720
                                                        =======    =====

                                       49
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         Income tax expense  differs  from the amounts  computed by applying the
         U.S.  federal  income tax rate to  earnings  before  income  taxes as a
         result of the following (dollar amounts in thousands):


                                          Year ended December 31
                      ----------------------------------------------------------
                                1995             1996                1997
                      ----------------------------------------------------------
                                    % of               % of              % of
                                   pretax             pretax             pretax
                        Amount    earnings  Amount   earnings   Amount  earnings
Computed statutory
  federal tax
  expense             $  6,924      35.0  $  7,449      35.0  $ 11,108    35.0
Change in tax
  expense resulting
  from:
    State income
    taxes, net of
    federal income
    tax effect             521       2.6       553       2.6       914     2.9
    Employee
    benefit
    deductions not
    expensed for
    book purposes         (120)      (.6)     (193)      (.9)     (322)   (1.0)
    Tax-exempt
    interest income        (42)      (.2)      (45)      (.2)      (44)    (.1)
    Other, net            (137)      (.7)      147        .7       169      .5
                      --------      ----    --------    ----    --------  ----

Total income tax
  expense             $  7,146      36.1  $  7,911      37.2  $ 11,825    37.3
                      ========      ====  ========      ====  ========    ====



(15)     401(k) Plan

         Until  1996,  the  Company  had a  profit  sharing  plan  covering  all
         employees after one year of service. In 1996, the structure of the plan
         was changed to a 401(k)plan  format.  The Company made no contributions
         to the  401(k)  plan in 1996  and  1997.  Contributions  to the  profit
         sharing  plan  for  the  year  ended  December  31,  1995  approximated
         $817,000.

(16)     Contingencies

         In the normal  course of  business,  the Company is involved in various
         legal actions  arising from its lending and collection  activities.  In
         the opinion of management,  the outcome of these legal actions will not
         significantly  affect  the  consolidated   financial  position  of  the
         Company.


                                       50
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         The  Company's  operations  depend  on the  smooth  functioning  of the
         Company's computer systems. Many computer software systems in use today
         cannot  distinguish the year 2000 from the year 1900 because of the way
         dates are encoded and  calculated.  That failure  could have a negative
         impact  on  the  Company's  operations.   During  1997,  the  Company's
         management   developed  a  plan  to  schedule   the  timing  of  future
         remediation  to its  computer  systems to deal with the year 2000.  The
         Company has expensed  $5,000 to date on year 2000 efforts and estimates
         total  remediation  cost to be  $120,000.  Management  expects that its
         systems will be adapted in time for that event,  although  there cannot
         be assurance of success.

(17)     Fair Value of Financial Instruments

         The following  table  presents the carrying  amounts and estimated fair
         values  of  financial  instruments  at  December  31,  1996  and  1997.
         Statement  107 defines the fair value of a financial  instrument as the
         amount  at  which  the  instrument  could  be  exchanged  in a  current
         transaction  between  willing  parties,  other  than  in  a  forced  or
         liquidation sale (amounts in thousands):
<TABLE>
<CAPTION>
                                          1996                     1997
                                --------------------------------------------------
                                              Estimated                Estimated
                                   Carrying     fair        Carrying     fair
                                   Amount       value        Amount      value
                                   ------     ----------     ------    -----------

<S>                             <C>          <C>          <C>          <C>
Financial assets:
  Cash and cash equivalents     $   49,232       49,232       44,657       44,657
  Investment securities             72,741       72,800       79,895       79,903
  Mortgage-backed and other
    asset-back securities          273,602      268,043      209,998      208,683
  Mortgage-backed derivatives        7,687        7,687        6,384        6,384
  Loans receivable, net          1,061,524    1,080,881    1,164,602    1,184,150
  FHLB stock                         9,554        9,554       11,277       11,277

Financial liabilities:
  Deposits                       1,135,823    1,165,576    1,182,727    1,211,210
  Advances from Federal Home
    Loan Bank                      122,515      123,478      122,410      122,923
  Bonds Payable                      5,009        5,582        4,479        5,349
  Advances by borrows for
    taxes and insurance              8,312        8,312        8,369        8,369

</TABLE>

         The  following  summarizes  the major methods and  assumptions  used in
         estimating the fair values of financial instruments.

         Cash and cash equivalents are valued at their carrying  amounts,  which
         are  reasonable  estimates  of fair value due to the  relatively  short
         period to maturity of the instruments.



                                       51
<PAGE>


FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

         The  carrying  amounts for federal  funds sold,  Federal Home Loan Bank
         (FHLB)   overnight   deposits,   and  other   interest-earning   assets
         approximate  fair value  because  they mature in 90 days or less and do
         not present  unanticipated credit concerns.  The carrying amount of the
         Company's  investment  in FHLB stock  approximates  fair value  because
         excess stock held can be sole for par value to the FHLB.

         Investment,  mortgage-backed  and  other  asset-backed  securities  are
         valued based on bid prices  published in  financial  newspapers  or bid
         quotations  received from securities dealers or brokers.  Statement 107
         specifies  that fair values should be calculated  based on the value of
         one unit without regard to any premium or discount that may result from
         concentrations  of  ownership of a financial  instrument,  possible tax
         ramifications, or estimated transaction costs.

         Fair values of loans are estimated for portfolios of loans with similar
         financial  characteristics.  Loans  are  segregated  by  type  such  as
         residential mortgages,  nonresidential mortgages, and other loans. Each
         loan  category  is  further  segmented into fixed and  adjustable  rate
         interest  terms and by performing  and nonperforming  categories.  Fair
         values of loans,  except  performing residential  mortgage  loans,  are
         calculated  by  discounting  scheduled cash flows through the estimated
         maturity,  based on the Company's historical experience with repayments
         for each loan  classification, modified as required,  by an estimate of
         the effect of current  economic and lending conditions.  For performing
         residential  mortgage  loans,  fair value is estimated  by  discounting
         contractual  cash  flows  adjusted  for  prepayment estimates  based on
         industry  averages.  The  estimated  market  discount rates used in the
         calculations  are the new loan rates  offered by the Company on similar
         types of loans.

         Fair   values   of   deposits   with  no  stated   maturity,   such  as
         non-interest-bearing  demand deposits, savings accounts and advances by
         borrowers  for taxes and  insurance,  are  determined  to be the amount
         payable on demand. The fair values of certificates of deposit, advances
         from the  Federal  Home Loan Bank,  and bonds  payable are based on the
         discounted  value of  contractual  cash flows.  The discount  rates are
         estimated  using the rates  currently  offered for similar  instruments
         with similar remaining maturities.

         Unrecorded  financial  instruments consist of commitments to fund loans
         and  standby  letters of credit.  The fair value of these  commitments,
         based  on  fees  currently  charged  for  similar  commitments,  is not
         significant.

(18)     Subsequent Event

         On March 8, 1998 the Company's Board of Directors approved an agreement
         for Commercial Federal Corporation  (Commercial Federal) to acquire the
         Company in a stock  swap  valued at  approximately  $525  million.  The
         acquisition,  which  is  contingent  upon  being  accounted  for  as  a
         pooling-of-interests,  is expected to close during the third quarter of
         1998,  subject to  approval  by the  shareholders  of the  Company  and
         Commercial Federal and by regulatory agencies.


                                       52
<PAGE>

FIRST COLORADO BANCORP, INC.
AND SUBSIDIARIES

Notes to Consolidated Financial Statements, Continued

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

(19) Selected Quarterly Financial Data (Unaudited)

     Selected  quarterly  financial  data of the Company for the eight  quarters
     ended  December 31,  1997 are as follows (amounts in thousands,  except per
     share data):
<TABLE>
<CAPTION>
                                                           1996                                           1997
                                      -----------------------------------------------  -------------------------------------------
                                      March 31  June 30   September 30   December 31   March 31  June 30 September 30  December 31
                                      --------  -------   ------------   -----------   --------  --------------------  -----------

<S>                                   <C>        <C>         <C>            <C>         <C>       <C>       <C>          <C>
Total interest income                 $25,525    26,111      26,320         26,672      26,715    26,233    27,227       27,773
Net interest income                    11,517    12,188      11,803         11,926      12,248    11,301    12,047       12,338
Provision (credit) for losses
    on loans                              230        77         218            618         219       335    (1,320)          27
Net interest income after provision
    (credit) for losses on loans       11,287    12,111      11,585         11,308      12,029    10,966    13,367       12,311
Earnings (loss) before income taxes     6,854     7,711        (333)         7,051       7,679     6,403     8,368        9,289
Net earnings (loss)                     4,337     4,927        (172)         4,280       4,815     4,025     5,180        5,894
Earnings (loss) per common share          .23       .26        (.01)           .26         .31       .26       .34          .38
Earnings (loss) per common share,
  assuming dilution                       .23       .26      (.01)             .25         .30       .26       .33          .36
</TABLE>


                                       53
<PAGE>
FIRST COLORADO BANCORP, INC. AND SUBSIDIARIES
Consolidating Schedule - Financial Condition
December 31, 1997
(Amounts in thousands)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          Elimin-     Consolidated           Elimin-   Consolidated
Assets                                     FFB     FSIC     FSIS   FSSC   ations          FFB         FCB     ations       FCB
------                             -----------     -----    ----   -----   ------      ---------    -------  --------  ---------
<S>                                <C>             <C>      <C>    <C>     <C>         <C>          <C>      <C>       <C>
Cash and due from banks            $    27,208     1,393    153       44   (1,590)        27,208        841       (79)    27,970
Federal funds sold                       8,100       --     --       --       --           8,100        --        --       8,100
Other interest-earning assets            8,573       --     --         7      --           8,580          7       --       8,587
                                   -----------     -----    ---    -----   ------      ---------    -------  --------  ---------
     Cash and cash equivalents          43,881     1,393    153       51   (1,590)        43,888        848       (79)    44,657
Investment securities                   79,895       --     --       --       --          79,895        --        --      79,895
Mortgage-backed and other
  asset-backed securities              211,495       --     --     4,887      --         216,382        --        --     216,382
Loans receivable, net                1,164,602       --     --       --       --       1,164,602     14,163   (14,163) 1,164,602
Accrued interest receivable              8,290       --     --        66      --           8,356        --        --       8,356
Federal Home Loan Bank stock,
  at cost                               11,277       --     --       --       --          11,277        --        --      11,277
Real estate owned, net                     225       --     --       --       --             225        --        --         225
Office properties and equipment,
  net of accumulated
  depreciation and amortization         23,586       --      20      --       --          23,606        --        --      23,606
Real estate held for investment
  and development                           --     1,197    --       --       --           1,197        --        --       1,197
Investment in subsidiaries               3,231       --     --       --    (3,231)           --     196,557  (196,557)       --
Income taxes receivable                    120       (48)     6      --       --              78        (89)       11        --
Other assets                             5,766        47      1      --       --           5,814         15       --       5,829
                                   -----------     -----    ---    -----   ------      ---------    -------  --------  ---------
     Total assets                  $ 1,552,368     2,589    180    5,004   (4,821)     1,555,320    211,494  (210,788) 1,556,026
                                   ===========     =====    ===    =====   ======      =========    =======  ========  =========

Liabilities and
  Stockholders' Equity
----------------------
Deposits                           $ 1,184,396       --     --       --    (1,590)     1,182,806        --        (79) 1,182,727
Advances from Federal
  Home Loan Bank                       122,410       --     --       --       --        122,410         --        --     122,410
Bonds payable                               --       --     --     4,479      --           4,479        --                 4,479
Note payable to FCB                     14,163       --     --       --       --          14,163        --    (14,163)       --
Advances by borrowers
  for taxes and insurance                8,369       --     --       --       --           8,369        --        --       8,369
Advances from FCB                           --       --     --     1,515   (1,515)          --          --        --         --
Deferred income taxes                    4,739       (18)    (1)     --       --           4,720        --        --       4,720
Deferred income                            604       --     --       --       --             604        --        --         604
Other liabilities                       21,130         3     46       33      --          21,212      2,185        11     23,408
                                   -----------     -----    ---    -----   ------      ---------    -------  --------  ---------
                                     1,355,811       (15)    45    6,027   (3,105)     1,358,763      2,185   (14,231) 1,346,717
Stockholders' equity (deficit):
  Common stock                             100     3,821     50       10   (3,881)           100      2,013      (100)     2,013
  Additional paid-in-capital            79,360       --     --       --       --          79,360    241,490  (165,803)   155,047
  Treasury stock                            --       --     --       --       --             --     (53,562)      --     (53,562)
  Unearned ESOP shares                 (10,523)      --     --       --       --         (10,523)       --        --     (10,523)
  Unearned MRP/MSBP shares              (3,338)      --     --       --       --          (3,338)       --        --      (3,338)
  Net unrealized loss on
    securities
    available-for-sale                    (215)      --     --       --       --            (215)       --        --        (215)
  Retained earnings (deficit),
     partially restricted              131,173    (1,217)    85   (1,033)   2,165        131,173     19,368   (30,654)   119,887
                                   -----------     -----    ---    -----   ------      ---------    -------  --------  ---------
       Total stockholders'
         equity (deficit)              196,557     2,604    135   (1,023)  (1,716)       196,557    209,309  (196,557)   209,309
                                   -----------     -----    ---    -----   ------      ---------    -------  --------  ---------
       Total liabilities and
         stockholders' equity      $ 1,552,368     2,589    180    5,004   (4,821)     1,555,320    211,494  (210,788) 1,556,026
                                   ===========     =====    ===    =====   ======      =========    =======  ========  =========
</TABLE>

See accompanying independent auditors' report.

                                       54
<PAGE>
FIRST COLORADO BANCORP, INC. AND SUBSIDIARIES
Consolidating Schedule - Operations and Retained Earnings
Year Ended December 31, 1997
(Amounts in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                          Consoli-                     Consoli-
                                                                                   Elimin-  dated              Elimin-  idated
                                                 FFB      FSIC     FSIS    FSSC    ations    FFB      FCB      ations     FCB
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
<S>                                          <C>         <C>     <C>      <C>      <C>     <C>       <C>       <C>      <C>
Interest income:
    Interest on loans receivable             $  87,480       --      --       --      --    87,480    1,316     (1,463)  87,333
    Interest on mortgage-backed
      and other asset-backed securities         14,619       --      --      419      --    15,038       --         --   15,038
    Interest and dividends on investment
      securities                                 5,216       --      --        6      --     5,222        9         --    5,231
    Interest on federal funds sold
      and other interest-earning assets            337        9      --       --      --       346       --         --      346
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
          Total interest income                107,652        9      --      425      --   108,086    1,325     (1,463) 107,948
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
Interest expense:
    Interest on deposits                        51,247       --      --       --      --    51,247       --         --   51,247
    Interest on advances from
      Federal Home Loan Bank                     8,226       --      --       --      --     8,226       --         --    8,226
    Other interest expense                         349       --      --      540      --       889      146       (494)     541
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
          Total interest expense                59,822       --      --      540      --    60,362      146       (494)  60,014
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
          Net interest income (expense)         47,830        9      --     (115)     --    47,724    1,179       (969)  47,934
Credit for losses on loans                        (739)      --      --       --      --      (739)      --         --     (739)
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
          Net interest income (expense)
            after credit for losses on loans    48,569        9      --     (115)     --    48,463    1,179       (969)  48,673
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
Noninterest income:
    Fees and service charges                     5,336       --      --       --      --     5,336       --         --    5,336
    Gain on sale of loans, net                     251       --      --       --      --       251       --         --      251
Gain on sale of investment securities
  available-for-sale                               983       --      --       --      --       983      277         --    1,260
    Equity in income of subsidiaries               598       --      --       --    (598)       --   19,254    (19,254)      --
    Income from real estate operations, net         83    1,065      --       --      --     1,148       --         --    1,148
    Rental income                                  205       --      --       --     (18)      187       --         --      187
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
                                                 7,456    1,065      --       --    (616)    7,905   19,531    (19,254)   8,182
Noninterest expense:
    Compensation                                15,373       --     304       --      --    15,677       --       (969)  14,708
    Occupancy                                    4,111        5      18        2     (18)    4,118       --         --    4,118
    Credit for losses on real estate owned        (114)      --      --       --      --      (114)      --         --     (114)
    Professional fees                              609        2      --       40      --       651       59         --      710
    Advertising                                    994       --       1       --      --       995       --         --      995
    Printing, supplies and postage               1,102       --       5       --      --     1,107       29         --    1,136
    FDIC premiums                                  729       --      --       --      --       729       --         --      729
    Other, net                                   3,016       19    (467)       2      --     2,570      264         --    2,834
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
                                                25,820       26    (139)      44     (18)   25,733      352       (969)  25,116
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
          Earnings (loss) before income taxes   30,205    1,048     139     (159)   (598)   30,635   20,358    (19,254)  31,739
Income tax expense (benefit):
    Current                                     10,841      562      54      (26)     --    11,431      444         --   11,875
     Deferred                                      110     (160)     --       --      --      (50)       --         --     (50)
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
          Total income tax expense (benefit)    10,951      402      54      (26)     --    11,381      444         --   11,825
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
          Net earnings (loss)                   19,254      646      85     (133)   (598)   19,254   19,914    (19,254)  19,914
Retained earnings (deficit),
  beginning of year                            111,919   (1,613)    121     (900)  2,392   111,919    7,095    (11,400) 107,614
Dividends declared                                  --     (250)   (121)      --     371        --   (7,641)        --   (7,641)
                                             ---------   ------   -----   ------   -----   -------   ------    -------  -------
Retained earnings (deficit), end of year     $ 131,173   (1,217)     85   (1,033)  2,165   131,173   19,368    (30,654) 119,887
                                             =========   ======   =====   ======   =====   ======   ======    =======  =======
</TABLE>

See accompanying independent auditors' report.

                                       55

<PAGE>

                                                              Board of Directors
FCBI----------------------------------------------------------------------------

The Board of Directors of First  Colorado  Bancorp:  (standing left to right) E.
Wmanager, manager of Foerster, Jr., James R. Wexels, John J. Nicholl, Malcolm E.
Collier  (Seated left to right) Robert T. Person,  Jr.,  Stephen A.  Burkholder,
Polly Baca, Robert W. Richards, Leeon E. Hayden.

Malcolm E. Collier, Jr., has been a director of the Bank since 1966 and has been
Chief  Executive  Officer and Chairman of First Federal Bank since 1972 and 1989
respectively,  and President,  Chairman,  and C.E.O.  of First Colorado  Bancorp
since its  formation  in  September,  1995.  He has  served in  various  officer
capacities with the Bank since 1962.

Robert W. Richards began his service on the Board of Directors shortly after his
appointment  as President  and Chief  Operating  Officer of First Federal Ban in
1996. A First Federal Bank  employee  since 1976,  Mr.  Richards has served as a
branch officer of the bank.

Leeon E.  Hayden has been a director  of the Bank since 1956 and of the  Company
since its formation in September,  1995.  Mr. Hayden is a retired  attorney from
the first of Leeon E. Hayden, P.C.

John J.  Nicholl  has been a director  of the Bank since 1969 and of the Company
since its formation in September,  1995. Mr. Nicholl served as a Commissioner of
Arapahoe  County  from 1989 until his  retirement  in  January of 1997.  He also
served in that position from 1965 to 1980. He was  self-employed  (semi-retired)
from 1981 to 1988. Prior to that time, he owned and operated Arapahoe Surveys, a
land survey company.

E. William Foerster,  Jr., has been a director of the Bank since 1973 and of the
Company since its formation in September,  1995.  Mr.  Foerster is the President
and a majority stockholder of EZT Fastener Co., Inc., Englewood,  Colorado,  and
three other companies, all of which engage in manufacturing and distributing.

Robert T.  Person,  Jr.,  has been a director  of the Bank since 1975 and of the
Company  since its formation in  September,  1995.  Mr. Person has been the sole
owner of Robert  Person  Communications,  a  management  consulting  practice in
Denver,  Colorado,  commencing  in 1991.  He was Vice  President  of the  Public
Service  Company of Colorado,  a gas and electric  utility in Denver,  Colorado,
from 1978 to 1991.

Stephen  A.  Burkholder  has been a  director  of the Bank since 1987 and of the
Company since its formation in September, 1995. Mr. Burkholder has been the sole
owner of the A&S Group, a marketing and distribution firm in Lakewood,  Colorado
since  April of  1994.  He was a long  term  care  specialists  with  AMEX  Life
Assurance  Company since August,  1993. Prior to that time, he served as Western
Regional  Manager of Hirsh USA, a watch  company,  commencing  in 1991,  Western
Regional  Sales Manager for CSC Time  Corporation  commencing in 1990, and Sales
Representative of Seiko Time Corporation from 1973 to 1990.

Polly Baca has been a director of the Bank since 1990 and of the  Company  since
its   formation  in   September,   1995.  Ms  Baca  is  presently  the  Regional
Administrator  of  the  United  States  General  Services  Administration  Rocky
Mountain Region.  In 1994 she served as a Special Assistant to President Clinton
and Director of the United State Office of Consumer  Affairs.  She was Executive
Director of the Colorado  Institute  for Hispanic  Education  from 1989 to 1993,
President and Sole  Proprietor of the  consulting  from Sierra Baca Systems from
1985 to 1989, and served as Colorado State Senator from 1979 to 1986.

James R.  Wexels has been a director  of the Bank since 1993 and of the  Company
since its formation in September,  1995.  Mr. Wexels has been employed by Public
Service  Company  of  Colorado,  a gas and  electric  utility,  since  1966  and
currently serves as Manager, Governmental Affairs.

                                       56

<PAGE>

FCBI----------------------------------------------------------------------------
<TABLE>
<CAPTION>

<S>                                                     <C>
Officers of the Company                                 EXECUTIVE OFFICES
Malcolm E. Collier, Chairman, President/C.E.O.
Brian L. Johnson, Executive Vice President/Treasurer    First Colorado Bancorp, Inc.
Robert W. Richards, Vice President                      215 S. Wadsworth Blvd.
William Marcoux, Vice President                         Lakewood, Colorado  80226
Eliane M. Samuelson, Secretary                          (303)232-2121  FAX: (303)237-2494

Officers of the Bank                                    STOCK TRANSFER AGENT

Malcolm E. Collier, Chairman/C.E.O.                     American Securities Transfer &
Robert W. Richards, President/C.O.O.                     Trust, Inc.
Brian L. John, Executive Vice President/C.F.O.          938 Quail Street, Suite 101
James M. Rooney, Executive Vice President               Lakewood, Colorado  80215-5513
Robert P. Easterly, Senior Vice President
Robert A. Francis, Senior Vice President                NATIONAL MARKET SYSTEM
Elaine M. Samuelson, Senior Vice President/Secretary
Kenneth I. Boggs, Vice President                        NASDAQ
Cecil L. Cooksey, Vice President
Linda A. Erickson, Vice President/Controller            STOCK SYMBOL
DAvid Esmoer, Vice President
George E. Hamblin, Jr., Vice President                  FFBA
David A. Humphries, Vice President
John H. Johnson, Vice President                         FINANCIAL PAPER LISTING
William G. Marcoux, Vice President/Treasurer
Patricia McMillan, Vice President                       FtColoBcp
Annette Spreier, Vice President
James C. Burkey, Vice President/Regional Manager        LEGAL COUNSEL
Lew deSpain, Vice President/Regional Manager
Jennifer L. Swanson, Vice President/Regional Manager    Malizia, Spidi, Sloane & Fisch, P.C.
Barbara D. Timson, Vice President/Regional Manager      1301 K Street, N.W.
Linda L. Chavez, Vice President/Branch Manager          Washington, D.C. 20005
J.W. Edwards, Vice President/Branch Manager
Leroy Binder, Assistant Vice President                  AUDITORS
Jacqueline L. Brown, Assistant Vice President
Tom W. Deitemeyer, Assistant Vice President             KPMG Peat Marwick LLP
Scott E. greene, Assistant Vice President               707 17th Street
Julie A. Haynes, Assistant Vice President               Denver, Colorado  80202
Jill Kennedy, Assistant Vice President
Cathy J. Law, Assistant Vice President                  ANNUAL MEETING
Tracy E. Law, Assistant Vice President
Jeanne C. Nelson, Assistant Vice President              The annual meeting of stockholders of
Renee A. Nichol, Assistant Vice President               First Colorado Bancorp will be held on Monday,
M. Jean Orr, Assistant Vice President                   May 4, 1998 at 3:00 pm,. at the Arvada Center for
Lori Siegling, Assistnat Vice President                 the Arts and Humanities, 6901 Wadsworth Blvd.,
Vronica Ware, Assistant Vice President                  Arvada, Colorado
Nina L. Willlis, Assistant Vice President
                                                        FORM 10-K

                                                        A copy of the 1997  Form 10-K,  as filed with the
                                                        Securities  and Exchange Commission,  will   be
                                                        furnished without charge to  stockholders  as  of
                                                        the  record   date  upon written  request  to the
                                                        Secretary,  First Colorado Bancorp,  Inc.,
                                                        215  S. Wadsworth Blvd., Lakewood, Colorado 80226
</TABLE>

                                       57
<PAGE>

                                  Officers, Corporate Information, and Branches
FCBI----------------------------------------------------------------------------
<TABLE>
<CAPTION>


<S>                                                      <C>           <C>                                                 <C>
Arvada                                                                 Grand Junction
5805 Car St., 80004                                      202-5478      130 N. 4th St., 81502                               242-6642
  Virginia Hoskins, Asst. Vice President/Manager                         Jim Burkey, Vice President/Regional Manager
12880 W. 64th Avenue, 80004                              202-5529      2452 Patterson Rd., 81502                           245-5234
  Jennifer Swanson, Vice President/Regional Manager                      Bob Callaway, Asst. Vice President/Manager


Aurora                                                                 Highlands Ranch
1389 S. Havana, 80012                                    202-5306      7120 E. County Line Road, 80126                     202-5412
  Vivienne Alvarez, Asst. Vice President/Manager                         Kathy Buck, Asst. Vice President/Manager
13781 E. Yale Avenue, 80014                              202-5539
  Kay Pugh, Asst. Vice President/Manager                               Highlands Ranch West
16778 Smoky Hill Road, 80015                             202-5480      9285 S. Broadway, 80126                             202-5420
  Lew deSpain, Vice President/Regional Manager                           Terry Miller, Asst. Vice President/Manager


Brighton                                                               Lakewood
1795 E. Bridge St., 80601                                202-5330      215 S. Wadsworth, 80226                             202-5536
  J.W. Edwards, Vice President/Manager                                   Bill Christopher, Asst. Vice President/Manager


Commerce City                                                          Littleton
7326 Magnolia St., 80022                                 202-5333      6775 W. Ken Caryl, 80123 (Columbine)                202-5534
  Kathleen Tipton, Asst. Vice President/Manager                          Wally Sackett, Asst. Vice President/Manager


Delta                                                                  Louisville
564 Main St., 81416                                      874-8636      865 S. Boulder Rd., 80027                           202-5455
  Bill Clanton, Asst. Vice President/Manager                             Joe Dawson, Asst. Vice President


Denver                                                                 Greenwood Village
216 16th St., Denver, 80202                              202-5535      6050 S. Holly St., 80121                            202-5472
  Barbara Timson, Vice President/Regional Manager                        Barry Hill, Asst. Vice President/Manager
750 S. University, 80209                                 202-5452
3610 E. 1st Ave., Denver, 80206                          202-5445
  Steve Kessler, Asst. Vice President/Manager
3460 W. 38th Ave., 80211                                 202-5307
  Lawrence L. Lucero, Asst. Vice President/Manager                     Montrose
2050 S. Downing, 80210                                   202-5521      1105 S. Townsend Ave., 81401                        249-9667
  Melinda Anderson, Asst. Vice President/Manager                         Tracy Wich, Asst. Vice President/Manager
4850 Chambers Rd., 80239                                 202-5537
  Dennis Young, Asst. Vice President/Manager
                                                                       Thornton
                                                                       12080 Colorado Blvd., 802
Englewood
4301 S. Broadway, 80110                                  202-5479
  Linda Chavez, Vice President/Manager                                 Westminster
                                                                       9150 N. Sheridan, 80030                             202-5545
Golden                                                                   Cindy Lauffenberger, Asst. Vice President/Manager
701 13th St., 80401                                      202-5533
  Brenda Kottke, Asst. Vice President/Manager
</TABLE>



                                       58
<PAGE>




==============================================================================
COMMERCE CITY                                           LAKEWOOD
==============================================================================
DELTA                                                   LITTLETON
------------------------------------------------------------------------------
DENVER                                                  LOUISVILLE
------------------------------------------------------------------------------
                                                        GREENWOOD VILLAGE
------------------------------------------------------------------------------
                                                        MONTROSE
------------------------------------------------------------------------------
ENGLEWOOD                                               THORNTON
------------------------------------------------------------------------------
GOLDEN                                                  WESTMINSTER
------------------------------------------------------------------------------
ARVADA                                                  GRAND JUNCTION
------------------------------------------------------------------------------
AURORA                                                  HIGHLANDS RANCH
------------------------------------------------------------------------------
BRIGHTONGOLDEN                                          HIGHLANDS RANCH WEST
==============================================================================