UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549

                                 Form 10-KSB


(Mark one)

[X]   Annual  report  Pursuant  to  Section  13 or  15(d)  of  the  Securities
      Exchange Act of 1934

For the fiscal year ended December 31, 1999.

                                      OR

[ ]   Transition  Report  Pursuant  to Section  13 or 15(d) of the  Securities
      Exchange Act of 1934

For the transition period from             to

Commission file number  333-72049



                             FIRST BANCORP, INC.
                             -------------------
                (Name of small business issuer in its charter)

             DELAWARE                                     92-0166346
      -----------------------                        ---------------------
     (State of Incorporation)                            (IRS Employer
                                                    Identification Number)

                               331 Dock Street
                           Ketchikan, Alaska 99901
                   (Address of principal executive offices)

                                (907) 228-4219
                         (Issuer's telephone number)

Securities registered under Section 12(b) of the Exchange Act:  [ None]

Securities registered under Section 12(g) of the Exchange Act: [ None]




<PAGE>

Check  whether  the issuer (1) has filed all  reports  required to be filed by
Section  13 or  15(d)  of the  Securities  Exchange  Act of  1934  during  the
preceding 12 months (or for shorter  period that the  registrant  was required
to file such  reports),  and (2) has been subject to such filing  requirements
for the past 90 days.  Yes [X]  No[ ]

Check if there is no disclosure  of delinquent  filers in response to Item 405
of  Regulation  S-B  contained  in  this  form,  and  no  disclosure  will  be
contained,  to the best of  registrant's  knowledge,  in  definitive  proxy or
information  statements  incorporated  by  reference  in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.  [X]

State issuer's revenues for the most recent fiscal year.  [$18,100,659]

State the aggregate  market value of the voting and  non-voting  common equity
held by non-affiliates.   [$14,177,800]

State the  number of shares  outstanding  of each of the  issuer's  classes of
common equity, as of the latest practicable date.  [175,312]

Documents incorporated by reference.  [None]

Transitional Small Business Disclosure Format (check one).      Yes [ ]  No[X]




                                       2
<PAGE>

                              FIRST BANCORP, INC.

                                  FORM 10-KSB

                               DECEMBER 31, 1999

                                     INDEX



PART I                                                  PAGE REFERENCE

Item 1:  Description of Business...............................5

Item 2:  Description of Property...............................7

Item 3:  Legal Proceedings.....................................7

Item 4:  Submission of Matters to Vote of Security
         Holders...............................................7

PART II

Item 5:  Market for Common Equity and Related Stockholder
         Matters...............................................8

Item 6:  Management's Discussion and Analysis .................8

PART II - FINANCIAL INFORMATION

Item 7:  Financial Statements

         Consolidated  Balance Sheets of First Bancorp,
         Inc.  - December  31,  1999 and  December  31,
         1998.................................................18

         Consolidated   Statements   of  Income   First
         Bancorp,    Inc.-    Twelve    months    ended
         December31,   1999,  December  31,  1998  and
         December 31, 1997....................................19

         Consolidated    Statements   of   Changes   in
         Shareholders' Equity of First Bancorp,  Inc. -
         twelve   months   ended   December  31,  1999,
         December    31,   1998   and    December   31,
         1997.................................................20



                                       3
<PAGE>

         Consolidated Statements of Cash Flows of First
         Bancorp, Inc. - Twelve months ended December 31,
         1999,  December  31,  1998  and  December  31,
         1997.................................................21

         Notes      to      consolidated      financial
         statements...........................................22

Item 8:  Changes in and Disagreements with Accountants
         on Accounting and Financial Disclosure...............37

PART III

Item 9:  Directors, Executive Officers, Promoters and
         Control Persons, Compliance With Section 16(a)
         of the Exchange Act..................................37

Item 10: Executive Compensation...............................39

Item 11: Security Ownership of certain Beneficial Owners
         and Management.......................................40

Item 12: Certain Relationships and Related Transactions.......40

Item 13: Exhibits and Reports on Form 8-K.....................41

Signatures....................................................42

Financial Data Schedule.......................................43


                                       4
<PAGE>

                                    PART I

                              FIRST BANCORP, INC.



Item 1. Description of Business.

General

First Bancorp,  Inc. is a single-bank  holding  company  registered  under the
Bank Holding Company Act of 1956. The  administrative  office of First Bancorp
is located in  Ketchikan,  Alaska.  The  Company  was  organized  as a holding
company for its principal banking  subsidiary,  First Bank, a state chartered,
FDIC insured  commercial  bank,  through a  reorganization  completed in 1989.
First  Bancorp's only operating  subsidiary,  First Bank, is the fifth largest
commercial bank in Alaska,  currently operating eight full-service branches in
the boroughs of Ketchikan, Sitka, Wrangell, Petersburg, Craig, and Juneau.

First Bancorp  offers  commercial  banking  products and services to small and
medium  size  businesses,  professionals  and retail  customers  in the bank's
market  area  in  southeast  Alaska.   These  products  and  services  include
commercial loans,  accounts receivable and inventory financing,  SBA loans for
equipment purchases and leasehold  improvements,  consumer  installment loans,
acceptance of deposits,  and personal savings and checking  accounts.  Through
third-party  vendors,  the bank offers  credit  life/credit  health & accident
insurance to its loan  customers.  No  commissions  or other  compensation  is
paid to any  officer  for the sale of this  insurance.  Through a  subsidiary,
the Bank acts as a title insurance agent.

The Bank's  deposit  accounts  are  insured by the Federal  Deposit  Insurance
Corporation.  At December 31, 1999,  First Bank had assets of $258million and
deposits of $234million.

Industry

The commercial  banking industry  continues to undergo increased  competition,
consolidation  and change.  Non-insured  financial  service  companies such as
mutual funds,  brokerage firms,  insurance  companies,  mortgage companies and
leasing  companies  are  offering  alternative  investment  opportunities  for
customers'  funds or lending sources for their needs.  Banks have been granted
extended  powers  to  better  compete;  including  the  limited  right to sell
insurance  and   securities   products,   but  the   percentage  of  financial
transactions  handled by commercial banks has dropped  steadily.  Although the
amount of deposits in banks is remaining steady,  such deposits represent less
than 20% of household  financial assets compared to over 35% twenty-five years
ago. This trend represents a continuing shift to stocks,  bonds,  mutual funds
and retirement accounts.

Nonetheless,   commercial  banks  are  reducing  costs  by  consolidation  and
exploring alternative ways of providing bank products.  Although new community


                                      5
<PAGE>

banks  continue  to  be  organized,   bank  mergers   substantially   outstrip
formations.  In the last  dozen  years,  the  number of  commercial  banks has
dropped from 14,000 to 9,500, and this trend is expected to continue.

To more  effectively and efficiently  deliver its products,  banks are opening
in-store branches,  installing more ATMs and investing in technology to permit
telephone,  personal  computer  and  internet  banking.  While  all  banks are
experiencing  the  effects of the  changing  environment,  the manner in which
banks choose to compete is increasing  the gap between  larger  super-regional
banks,  committed to becoming  national or regional "brand names"  providing a
broad  selection  of products at low cost and with  advanced  technology,  and
community  banks which provide most of the same products but with a commitment
to personal  service and with local ties to the customers and communities they
serve.

Competition

First  Bancorp  is  a  one-bank   holding  company   operating  a  traditional
commercial  bank  in  southeast   Alaska.   In  this  regard,   the  Company's
subsidiary  bank competes with a full range of modern  financial  institutions
from commercial  banks and thrifts to credit unions,  brokerage  outfits,  and
insurance companies.

At the present time the competition is fairly stable.  The primary  commercial
banking  competition  is the National Bank of Alaska,  the First National Bank
of Anchorage,  and Key Bank.  National Bank of Alaska recently announced their
sale to Wells Fargo Bank,  which is to be consummated by year-end 2000.  These
financial  institutions are very strong  competitors that price their products
rationally  and  evaluate  risk  return  relationships  professionally.  These
organizations  are all  significantly  larger  than First  Bancorp.  They have
extensive  operations in other parts of the state, and both Key Bank and Wells
Fargo  has  a  strong  national   presence.   These  competitors  can  conduct
wide-ranging  advertising  campaigns  and  allocate  assets  to  much  broader
geographic  regions.  By virtue of their greater  capitalization,  these banks
also have substantially  higher lending limits.  These  organizations are also
financially  capable of offering a variety of products from trust  services to
international banking that First Bancorp is not prepared to offer.

In addition to  commercial  banks,  First  Bancorp  competes  with a number of
credit unions  operating in its market area.  In general,  these credit unions
tend  to  be  smaller  than  the  commercial  banks.  However,  credit  unions
continue to prosper in southeast  Alaska as a result of their  favorable  cost
structure  and  traditional  appeal  to a  broad  section  of the  population.
Nationwide,  surveys  indicate that credit unions attract a higher  percentage
of high income,  well-educated  professional  customers than their traditional
blue-collar  roots would imply.  Recent  legislation at the national level has
liberalized  membership  rules.  As a result,  credit union  membership is now
available  to  virtually  anyone  living in southeast  Alaska.  Credit  unions
offer  many  of the  same  consumer  financial  products  that  First  Bancorp
offers.  These include a full range of consumer loan and deposit products.

Alaska  Federal  Savings Bank is the only savings bank  operating in southeast
Alaska.  It  currently  operates  branches  in  Juneau,  Sitka,  Wrangell  and
Ketchikan.  In recent years the laws and regulations  affecting  Savings Banks
have been  liberalized.  As a result,  savings  banks  currently  offer  their
customers essentially the same products available at a commercial bank.



                                      6
<PAGE>

In  addition  to  the  traditional  competitive  financial  institutions,  the
development of  alternative  financial  products and delivery  systems such as
internet  banking,  has  disrupted  banking's  traditional  control  over  the
payments system and expanded the level of competition  for financial  services
in  southeast  Alaska.  At  the  same  time,  deposit  disintermediation  is a
problem in both the consumer and commercial  deposit  sectors.  Interest rates
on demand and time  deposits  remain at  relatively  low levels while the bull
market for stocks has  continued to advance.  This has  encouraged  an outflow
of funds from traditional deposit products to alternative  investment vehicles
such as mutual funds.

Employees

As of  December  31,  1999,  we  had  a  total  of  110  full-time  equivalent
employees.  None of the  employees  are  subject  to a  collective  bargaining
agreement.  We consider our relationship with our employees to be good.

Item 2. Description of Property.

First Bancorp's  principal  office is located at the main office of First Bank
in Ketchikan,  Alaska. We conduct business through eight full-service branches
located in Ketchikan (2), Craig, Petersburg,  Sitka, Wrangell, and Juneau (2).
The Totem Branch in  Ketchikan,  as well as the  Petersburg,  Wrangell and the
Mendenhall  Branch in Juneau have  drive-up  windows.  We have nine  automated
teller  machines,  of which five are  located at branches  in  Ketchikan  (2),
Petersburg,  and Juneau  (2).  The bank or the  holding  company  owns all but
four  branches.  We have  options  to extend  existing  leases  on the  leased
facilities.  The eight branches range in size from approximately  1,000 square
feet to slightly more than 15,000 square feet.

Item 3.     Legal Proceedings.

We are,  from time to time, a party to various  legal  actions  arising in the
normal  course of business.  We are not currently a party to any pending legal
proceeding,  which, if determined  adversely,  would have a material effect on
our business or financial position

Item 4.     Submission of Matter to a Vote of Security Holders.

None



                                      7
<PAGE>

                                    PART II

                              FIRST BANCORP, INC.

Item 5. Market for Common Equity and Related Shareholder Matters.

No registered broker/dealer makes a market in First Bancorp common stock and
the stock is not listed on any stock exchange.  Trading is infrequent and
those transactions that have taken place in First Bancorp common stock cannot
be characterized as an established public market.  Generally First Bancorp
common stock is traded by individuals on a personal basis, and prices
reported reflect only the transactions known to management.  Due to the
limited information available, the following data may not accurately reflect
the actual market value of First Bancorp common stock.

<TABLE>
<CAPTION>

                                Number of Shares       Common Stock Prices      Cash Dividends
                                                    -------------------------
                   Period      Reported as Traded       High         Low      Declared per Share
--------------------------------------------------------------------------------------------------
<S>                 <C>              <C>                  <C>          <C>                 <C>
Year Ended          1999             2,673                $ 175        $ 115               $ 5.00
Year Ended          1998               822                $ 115        $ 115               $ 5.00
Year Ended          1997             2,496                $ 100         $ 91               $ 5.00
</TABLE>

As of December 31, 1999, we had approximately 65 shareholders.

      First Bancorp's  Dividend  Policy.  Our dividend policy is to review the
bank's financial  performance,  capital  adequacy,  regulatory  compliance and
cash  resources on a quarterly  basis,  and, if such review is  favorable,  to
declare  and pay a cash  dividend  to  stockholders.  Although  we  expect  to
continue  to pay  cash  dividends,  future  dividends  are  subject  to  these
limitations  and to the  discretion  of the Board of  Directors,  and could be
reduced or eliminated.

Item 6.  Management's  Discussion  and  Analysis of  Financial  Condition  and
         Results of Operations.

This discussion should be read in conjunction with the consolidated  financial
statements  of  First  Bancorp,   Inc.  (the   "Company")  and  notes  thereto
presented  in Item 7 of  this  report.  In the  following  discussion,  unless
otherwise  noted,  references to increases or decreases in average balances in
items of  income  and  expense  for a  particular  period  and  balances  at a
particular  date refer to the comparison  with  corresponding  amounts for the
period or date one year earlier.

This  discussion  contains  certain  forward-looking   statements  within  the
meaning of the  federal  securities  laws.  Actual  results  and the timing of
certain  events  could  differ   materially   from  those   projected  in  the
forward-looking  statements  due to a  number  of  factors.  Specific  factors
include  the  Company's  ability to compete  on price and other  factors  with
other  financial  institutions;   customer  acceptance  of  new  products  and
services;   general  trends  in  the  banking   industry  and  the  regulatory
environment,  as they  relate to the  Company's  cost of funds and  returns on
assets.  In  addition,  there  are  risks  inherent  in the  banking  industry
relating to  collectibility  of loans and changes in interest rates.  Further,


                                      8
<PAGE>

actual results could differ materially from the forward looking  statements in
this report as a result of general  economic  conditions  and their  impact on
capital  expenditures;  business  technology  and  evolving  banking  industry
standards;  competitive  standards;  competitive factors,  including increased
competition  with  community,  regional and national  financial  institutions;
fluctuating  interest rate  environments;  and similar matters.  The reader is
advised that this list of risks is not  exhaustive and should not be construed
as any  prediction by the Company as to which risks would cause actual results
to differ materially from those indicated by the forward-looking statements.

OVERVIEW

On March  15,  1999,  First  Bancorp  entered  into an  Agreement  and Plan of
Reorganization  (the "Plan") for the purpose of becoming an S corporation  for
income tax  purposes.  The Plan  provided for the merger of First Bancorp with
and into Newco Alaska, Inc., a newly formed Delaware corporation  organized at
the direction of First Bancorp solely to effect the Plan. Newco Alaska,  prior
to the  merger,  had no  material  operations  or assets,  and had  elected to
become an S  corporation  effective  on January  1, 2000.  The merger of First
Bancorp  into Newco Alaska was  completed  on June 1, 1999,  with Newco Alaska
being the surviving corporation under the name "First Bancorp, Inc.".

The Plan provided that eligible  shareholders would receive one share of Newco
Alaska,  Inc. common stock for each share of First Bancorp,  Inc. common stock
held of record on the  effective  date of the merger.  All other  shareholders
would  receive  $175.00  per share  for  their  First  Bancorp  common  stock.
Eligible  shareholders  could elect to tender  their First  Bancorp  stock for
cash  instead of Newco Alaska  stock,  and at the  discretion  of the Board of
Directors of the  surviving  corporation,  those shares would be purchased for
cash at the same price.

Upon  consummation of the merger,  the Company purchased 32,963 shares held by
127  shareholders  at a cost of $5,768,525.  Of that number four  shareholders
representing  9,674 shares at a value of $1,692,950  exercised  their right to
dissent  from  the  reorganization  and  funds  were  reserved  pending  final
settlement.  As of  July  31,  1999  all of the  dissenting  shareholders  had
withdrawn their demand for an appraisal and had been paid in full.

The $5,768,525  stock repurchase was funded in part from a long-term loan from
Seafirst  Bank.  The loan is  structured  to provide  for  quarterly  interest
payments and six annual principal  payments $500,000 with maturity on June 30,
2005.  Interest is calculated at a floating rate of LIBOR plus 2.50%.

FINANCIAL CONDITION

The  Company's  total  assets were $258.1  million at December  31,  1999,  an
increase of $3.3  million,  or 1.3% from $254.8  million at December 31, 1998.
Cash and deposit  balances  due from banks was $10.3  million on December  31,
1999  compared to $9.8 million on December  31, 1998,  an increase of $493,000
or 5.0%.  Earning assets increased $3.3 million,  or 1.4% from $235 million on
December 31, 1998 to $238.3  million on December 31, 1999.  As of December 31,
1999  earning  assets  were  92.3% of total  assets,  compared  with  92.2% on
December 31, 1998. Loans and investment  securities available for sale are the
primary  components of earning  assets.  On December 31, 1999 gross loans were
$134 million,  an increase of $10.9  million,  or 8.8% from $123.1  million on
December 31,  1998.  On December 31, 1999  investment  securities  were $105.9


                                      9
<PAGE>

million,  an increase of $2.1 million,  or 2%, from $103.8 million on December
31,  1998.  On December  31, 1999 net loans were 51.3% of total  assets and on
December  31,  1998  they  were  47.8%.   On  December  31,  1999   investment
securities were 41% of total assets and on December 31, 1998 they were 40.7%.

Total deposits  increased $4.5 million,  or 2% from $229.5 million on December
31,  1998 to $234  million on  December  31,  1999.  Deposit  comparisons  for
December 31, 1999 and December 31, 1998 follows:

<TABLE>
<CAPTION>

                                           December 31,   December 31,       Dollar         Percent
(in thousands  - unaudited)                    1999           1998           Change         Change
--------------------------------------------------------------------------------------------------------
Deposits
<S>                                          <C>             <C>             <C>          <C>   <C>
Demand                                       $ 72,472        $ 68,133        $ 4,339      6.37% 4,339
Savings                                      $ 50,954        $ 48,847        $ 2,107      4.31% 2,107
Time deposits of $100,000 or more            $ 59,963        $ 60,814        $ (851)     -1.40% (851)
Other time deposits                          $ 50,645        $ 51,734       $ (1,089)    -2.10% ,089)
Total Deposits                               $ 234,034      $ 229,528        $ 4,506      1.96% 4,506
</TABLE>


When  comparing  December 31, 1998 with December 31, 1999,  demand and savings
(the lowest cost component of interest bearing deposits)  increased while time
deposits   (the  highest  cost   component  of  interest   bearing   deposits)
decreased.  Demand  deposits  increased by $4.3 million,  or 6.4%, and savings
deposits  increased  $2.1 million,  or 4.3%.  However,  time deposits  greater
that $100,000 (large  deposits)  decreased  $851,000,  or 1.4%. and other time
deposits  declined  $1.1 million,  or 2.1%.  At the present  time,  all of the
Company's large deposits come from  established  customers in our market area.
The  Company has a strict  policy  against  the use of  brokered  deposits.  A
significant  portion of large  deposits is generally  made up of reserve funds
of various  municipal  communities  where the Company has branch offices.  For
the most part,  these deposits are priced on the basis of competitive  bid and
have  relatively  short  maturities.  On  December  31,  1999 and  1998,  time
deposits  greater than $100,000  represented  23.2% and 23.9% of total assets,
respectively.

CONSOLIDATED EARNINGS

The Company's net income for the  twelve-months  ending  December 31, 1999 was
$1.86  million or $9.89 per  weighted  average  share.  This  compares  to net
income for the twelve- months ending  December 31, 1998 of $2.32  million,  or
$11.12 per weighted  average share.  The decrease in net income from the prior
year is primarily as a result of a $613,000 or 14.6%  decline in  non-interest
income.  The decrease in  non-interest  income is primarily  attributable to a
decline in  mortgage  loan  activity  and the  resulting  impact on  servicing
rights income and income from the Company's title insurance subsidiary.

NET INTEREST INCOME

Net interest  income is the largest  component of earnings,  representing  the
difference  between  interest and fees  generated  from earning assets and the
interest  costs of deposits  and other funds needed to support  those  assets.
For the  twelve-months  ending  December 31, 1999, net interest  income before
provision for loan losses was $9.9  million,  an increase of $184,000 or 1.9%,
when  compared  to $9.7  million for the twelve  months  ending  December  31,
1998.  Growth in net  interest  income  has been  primarily  due to  continued
growth in loan volume,  the highest yielding  component of earning assets.  At
December 31, 1999 gross loans had increased  10.9% to $134 million from $123.1
million on December 31, 1998.



                                      10
<PAGE>

For the twelve  months  ending  December  31, 1999,  net interest  margin (net
interest  income  divided by average  interest-bearing  assets)  increased  to
3.66% in 1999 from  3.52% in 1998.  Average  interest-bearing  assets  grew to
$239.9  million  as of  December  31,  1999,  compared  with $236  million  on
December   31,  1998,   an  increase  of  $3.9   million  or  1.67%.   Average
interest-bearing  liabilities  grew to $210.3  million on  December  31,  1999
compared to $202  million on December  31,  1998,  an increase of $8.3 million
or  4.11%.   The  average   yield  on   interest-bearing   assets  during  the
twelve-month  period ending  December 31, 1999 decreased to 7.55% in 1999 from
7.74% in 1998,  a decrease  of 19 basis  points or 2.5%.  In  comparison,  the
average cost of interest-bearing  liabilities during the same period decreased
to 3.89% in 1999 from 4.22% in 1998, a decrease of 33 basis points or 7.8%.

<TABLE>
<CAPTION>
Analysis of Net Interest Margin
First Bancorp, Inc.

                                         Twelve months ended
                                             December 31,
                                       ------------------------       Increase
                                         1999           1998         (Decrease)    Change
                                       ---------      ---------       --------    --------
(amounts in thousands, except percentages)

<S>                                    <C>            <C>              <C>           <C>
Average interest-bearing assets        $ 239,900      $ 235,956        $ 3,944       1.67%
Average interest-bearing liabilities   $ 210,304      $ 201,999        $ 8,305       4.11%
Average yields earned                      7.55%          7.74%         -0.19%      -2.45%
Average rates paid                         3.89%          4.22%         -0.33%      -7.82%
                                       ---------      ---------        -------     -------
Net interest spread (including loan
   placement fees)                         3.66%          3.52%          0.14%       3.98%
                                       =========      =========        =======     =======
Net interest income to average
      interest-earning assets              4.13%          4.13%          0.00%       0.00%
</TABLE>


NONINTEREST INCOME

Noninterest  income  decreased  $613,000 to $3.6 million,  or a -14.6% for the
twelve months ending  December 31, 1999,  when compared with $4.2 million over
the  same  period  in 1998.  This  decrease  is  primarily  due to the  steady
increase in interest  rates which began in early 1999  resulting in modest new
mortgage loan activity in 1999 and lower  origination  fee,  servicing  rights
income  and title  insurance  agency  revenue,  especially  when  compared  to
exceptionally  strong  activity in 1998.  In addition,  $73,000 in  securities
gains was taken in 1998 while only $15,000 was taken in 1999.

NONINTEREST EXPENSE

Total noninterest  expense increased  $141,000,  or 1.4%, to $10.1 million for
the  twelve-month  period  ending  December  31,  1999 when  compared  to $9.9
million for the same  period in 1998.  Salaries  and  employee  benefits,  the
largest  component of noninterest  expense,  increased  $185,000,  or 3.3%, to
$5.74  million for the  twelve-month  period  ending  December 31, 1999,  when
compared to $5.56  million for the  twelve-month  period  ending  December 31,
1999.  Occupancy  expenses  decreased $71,000 to $547,000,  or -11.5%, for the
twelve-month  period ending  December 31, 1999,  compared to $618,000  million
for the twelve-month period ending December 31, 1998



                                      11
<PAGE>

INCOME TAXES

The provision for income taxes decreased  $104,000,  or -7.4%, to $1.3 milling
for the period  ending  December  31,  1999,  compared to $1.4 million for the
period  ending  December  31,  1998.  The  effective  tax rate for the  period
ending  December  31,  1999 is 42% as  compared  to 38% for the period  ending
December 31, 1998.
PROVISION AND ALLOWANCE FOR LOAN LOSS

The  provision  for loan losses is an accrual  charge or expense  based on the
Company's  estimate of the amount  necessary  to maintain  the  allowance  for
possible  loan losses at a level  adequate to absorb any losses that may occur
in the loan portfolio  over time. For the twelve month period ending  December
31, 1999 the provision  for loan losses was  $240,000,  a decrease of $12,000,
or -4.76% over the same period  ending  December  31,  1998 at  $252,000.  The
actual loan loss experience for the twelve-month  period ending December 31 of
1998 and 1999 are as follows:

<TABLE>
<CAPTION>

Loan Losses and Recoveries
First Bancorp, Inc.

                                                 Twelve Months Ended
                                                     December 31,
                                              -------------------------
                                                  1999          1998

(in thousands)

<S>                                            <C>           <C>
Loans outstanding at end period                $ 134,009     $ 123,122
Reserve balance, beginning of period               1,421         1,294
Recoveries                                            22            16
Loans charged off                                    (67)         (141)
Net loans charged off                                (45)         (125)
Provision charged to expense                         240           252
                                               ---------     ---------
Reserve balance, end of period                   $ 1,616     $   1,421
                                               =========     =========

Reserve as a percentage of outstanding loans       1.21%         1.15%

Minimum objective for reserve as
a percentage of outstanding loans                  1.00%

Net loans charged off as a
percentage of outstanding loans                    0.03%         0.10%

</TABLE>

The  provision  for loan losses and the adequacy of the allowance for possible
loan  losses  are  periodically   reviewed  by  the  Board  of  Directors  and
management based upon an assessment of historic credit losses,  delinquent and
problem loan trends,  peer group experience,  economic outlook and anticipated
growth.  Additionally,  various  regulatory  agencies,  as an integral part of


                                      12
<PAGE>

their examination  process,  periodically review the allowance.  Such agencies
may require the  recognition  of additions  and  reductions  to the  allowance
based on  their  judgment  of  information  available  to them at the time of
their examination.

For the  twelve-months  ending December 31, 1999,  management  reviewed all of
the salient  factors in determining  the provision for loan loss.  Total loans
increased  from  $123.1  million  on  December  31,  1998 to $134  million  on
December 31, 1999, an 8.8%  increase,  and the reserve for loan loss increased
from $1.42 million to $1.62 million,  or 13.7% during that same period.  There
are a number of reasons  management  feels that both the reserve and provision
are adequate:

1.   Reserve for loan loss is currently  1.21% of total  loans,  21% above the
     minimum objective of 1.0%.

2.   Charge-offs  decreased from $141,000, or .01% of outstanding loans during
     the twelve-months  ending December 31, 1998 to $67,000, or .004%, for the
     twelve-months  ending  December  31,  1999.  Charge off  amounts  remains
     relatively  minimal and the  percentage of net loan losses  remains below
     our peer group average of .18% as of June 30, 1999.

3.   Loan  quality  continues  to remain  sound  (see  "Nonperforming  Assets"
     section below).

NONPERFORMING ASSETS

In  general,  nonperforming  assets  consist of loans that are 90 days or more
past due,  loans on which the accrual of interest has been  discontinued,  and
other real estate (ORE).  Other real estate  represents real property that was
acquired through foreclosure or taken in lieu of foreclosure.

As of  December  31,  1999 the  Company  had $83,000 in loans past due over 90
days,  no loans in  nonaccrual  status and  $185,000 in ORE for  nonperforming
assets  totaling  $268,000  which  represent  .1% of total assets and 1.67% of
shareholders'  equity.  This is a  significant  improvement  over December 31,
1998  totals  of  $265,000  in  loans  past  due  over 90  days,  no  loans in
nonaccrual  status,  and  $222,000 in ORE for  nonperforming  assets  totaling
$487,000  which  represent  0.19% of total  assets and 2.10% of  shareholders'
equity.


                                      13
<PAGE>

<TABLE>
<CAPTION>

Past Due and Nonperforming Loans
First Bancorp, Inc.

(in thousands except for percentages)

                                             December 31, 1999                  December 31, 1998

Outstanding at end of period:

<S>                                              <C>                                <C>
                        Total loans              $134,009                           $123,122

                        Total assets             $258,096                           $254,795

                        Shareholders' equity     $16,079                            $23,193
</TABLE>


<TABLE>
<CAPTION>

                                                 December 31, 1999            December 31, 1998
                                            ---------------------------    ------------------------
                                                   Past Due Loans               Past Due Loans
                                            ---------------------------    ------------------------
                                               30-89 days      90+ days     30-89 days     90+ days
                                            ---------------  ----------    ------------  ----------
Past due and nonperforming loans:

<S>                                                 <C>           <C>           <C>           <C>
Real estate loans ........................          $253          $--           $124          $--
Consumer loans ...........................           306            76           212            11
Credit cards .............................            23             7           --              6
Commercial loans .........................           270           --            366           248
                                                    ----          ----          ----          ----
Total past due loans .....................          $852          $ 83          $702          $265
                                                    ====          ====          ====          ====

Non-accrual loans ........................          $--           $--           $--           $--
Other real estate owned ..................          $--           $185          $--           $222
                                                    ----          ----          ----          ----
Total past due & non-accrual loans and ORE          $852          $268          $702          $487
                                                    ====          ====          ====          ====
</TABLE>

<TABLE>
<CAPTION>

Past due & non-accrual loans
 and ORE as a percentage of:

<S>                                                     <C>              <C>               <C>            <C>
              Total loans                               0.64%            0.20%             0.57%          0.40%
              Total assets                              0.33%            0.10%             0.28%          0.19%
              Total shareholders' equity                5.30%            1.67%             3.03%          2.10%
</TABLE>




                                      14
<PAGE>

YEAR 2000 ASSESSMENT

First Bank  experienced no problems  whatsoever at the millennium date change.
Additionally  we have not  experienced  any problems  associated with Year 200
issues  subsequent to January 1, 2000. In preparation  for Year 2000 readiness
First Bank tracked  hard costs  associated  with the effort,  but not all soft
costs.  Management's best estimate is that approximately  $100,000 in expenses
were incurred with the Year 2000 readiness program.

Management is aware of the  guidelines  established  by the Federal  Financial
Institutions  Examination  Council  ("FFIEC") and the importance of monitoring
our computer  systems on their future  defined  potential  problem  dates.  We
will continue to comply with the FFIEC guidelines.

PROSPECTIVE ACCOUNTING ANNOUNCEMENTS

In June of 1998, the Financial  Accounting  Standards  (FASB) issued Statement
of Financial  Accounting  Standards (SFAS) No. 133, "Accounting for Derivative
Instruments  and  Hedging  Activities".  In June of 1999 FASB  issued SFAS No.
137, "Accounting for Derivative  Instruments and Hedging Activities - Deferral
of the Effective Date of FASB  Statement No. 133".  These  statements  provide
standards for accounting for derivative  instruments  and hedging  activities.
SFAS No. 133 will be effective in First Bancorp's 2000 financial statements.

The most  important  measure of the safety and soundness of a commercial  bank
is the quality of its assets.  The statistics  outlined above are key measures
of asset quality and reflect  favorably on the soundness of the Company.  They
provide a clear picture of  management's  careful,  ongoing  attention to this
important area of the Company.


                                      15
<PAGE>

LIQUIDITY

The Company has adopted policies to maintain  adequate  liquidity to enable it
to respond to changes in the Company's  needs and financial  environment.  The
Company's  primary  sources  of  funds  are  customer   deposits,   sales  and
maturities  of  investment  securities,  the  use of  federal  funds  markets,
advances  from the Federal Home Loan Bank of Seattle and net cash  provided by
operating  activities.  Scheduled  loan  repayments  are a  relatively  stable
source of funds,  while  deposit  inflows and  unscheduled  loan  prepayments,
which  are  influenced  by  general  interest  rate  levels,   interest  rates
available on other  investments,  competition,  economic  conditions and other
factors, are not.

CAPITAL PLANNING AND STOCKHOLDERS' EQUITY

The policy of the  Company is to  maintain  capital  adequate  to support  the
Company's  activities and meet the needs of its customers.  Current and future
capital needs are evaluated  periodically  based upon an analysis of asset and
earnings  trends,  asset and liability  diversification  and  maturity,  asset
quality,  industry comparisons and economic conditions.  In evaluating the use
of  capital,   management   considers   economic   conditions  and  cash  flow
expectations  as well as effects on  reported  earnings.  The  current  market
values of assets and liabilities  and  off-balance  sheet items and contingent
liabilities such as letters of credit are also considered.

As of December 31, 1999, total  stockholders'  equity was $16.1 million.  This
was down from $23.2  million on  December  31,  1998.  This  decrease  was the
result of June 1, 1999  reorganization  of the  Company.  The Federal  Reserve
has  established  risk-based  standards  for  evaluating  a holding  company's
capital  adequacy.  These standards  require the Company to maintain a minimum
ratio of qualifying  total capital to risk weighted  assets of 8%, of which at
least  4%  must  be in the  form of core  capital  (TIER  1  capital).  TIER 1
capital  includes the Company's  stockholders'  equity,  minus all  intangible
assets.  As of  December  31,  1999  the  Company  had a TIER 1 risk  weighted
capital  ratio of 12.56%.  As of  December  31,  1998 the Company had a TIER 1
risk weighted capital ratio of 16.5%.


                                      16
<PAGE>

Item 7.  Financial Statements:



                         Independent Auditors' Report

The Board of Directors
First Bancorp, Inc.:

We  have  audited  the  accompanying  consolidated  balance  sheets  of  First
Bancorp,  Inc.  and  subsidiary  as of  December31,  1999 and  1998,  and the
related  consolidated  statements of income,  changes in stockholders'  equity
and  comprehensive  income,  and  cash  flows  for  each of the  years  in the
three-year  period  ended  December31,  1999.  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
Bancorp,  Inc.  and  subsidiary  as of  December31,  1999 and  1998,  and the
results of their  operations and their cash flows for each of the years in the
three-year  period  ended  December31,  1999  in  conformity  with  generally
accepted accounting principles.


January 20, 2000


Anchorage, Alaska                                           KPMG, LLP


                                      17
<PAGE>


                      FIRST BANCORP, INC. AND SUBSIDIARY

                          Consolidated Balance Sheets
                          December 31, 1999 and 1998


<TABLE>
<CAPTION>
                                  Assets                                              1999                    1998
                                                                              ---------------------    --------------------

<S>                                                                         <C>                                  <C>
Cash and due from banks (note 2)                                            $           10,276,639               9,783,427
Federal funds sold                                                                               --               9,391,000
Investment securities available for sale (note 3)                                      102,804,268             100,960,973
Investment in Federal Home Loan Bank stock                                               3,120,100               2,896,900
Loans (note 4)                                                                         134,008,713             123,122,057
     Less allowance for possible loan losses (note 5)                                    1,616,163               1,421,352
                                                                              ---------------------    --------------------
                      Net loans                                                        132,392,550             121,700,705
                                                                              ---------------------    --------------------

Premises and equipment, net (note 6)                                                     5,753,010               5,796,522
Accrued interest receivable                                                              1,993,758               1,756,967
Other assets (note 8)                                                                    1,756,095               2,508,378
                                                                              ---------------------    --------------------
                      Total assets                                          $          258,096,420             254,794,872
                                                                              =====================    ====================

                   Liabilities and Stockholders' Equity

Liabilities:
     Deposits:
        Demand                                                              $           72,472,131              68,133,335
        Savings                                                                         50,953,775              48,846,681
        Time deposits of $100,000 or more (note 7)                                      59,962,542              60,814,472
        Other time deposits                                                             50,645,183              51,733,617
                                                                              ---------------------    --------------------
                      Total deposits                                                   234,033,631             229,528,105

     Accrued interest payable                                                              504,148                 516,779
     Federal funds purchased                                                             3,900,000                       --
     Note payable (note 11)                                                              3,000,000                       --
     Other liabilities                                                                     580,042               1,557,627
                                                                              ---------------------    --------------------
                      Total liabilities                                                242,017,821             231,602,511
                                                                              ---------------------    --------------------

Stockholders' equity:
     Common stock of $5 par value.  Authorized
        1,000,000 shares; issued and outstanding
        175,312 shares in 1999 and  214,040 shares in 1998                                 876,560               1,070,200
     Surplus                                                                             5,254,039               6,414,704
     Undivided profits                                                                  12,127,014              16,051,970
     Accumulated other comprehensive income - net
        unrealized gain (loss) on securities available for sale                         (1,921,939)                184,012
     Treasury stock, at cost (1,469 shares in 1999 and
        5,765 shares in 1998)                                                             (257,075)               (528,525)
                                                                              ---------------------    --------------------
                      Total stockholders' equity                                        16,078,599              23,192,361

Commitments and contingencies (notes 8, 10, 11 and 15)
                                                                              ---------------------    --------------------
                      Total liabilities and stockholders' equity            $          258,096,420             254,794,872
                                                                              =====================    ====================
</TABLE>

See accompanying notes to consolidated financial statements.



                                      18
<PAGE>

                              FIRST BANCORP, INC.
                                AND SUBSIDIARY

                       Consolidated Statements of Income

                 Years ended December 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                 1999               1998               1997
                                                                            ----------------   ----------------   ----------------
Interest income:
<S>                                                                            <C>                <C>                <C>
     Interest on loans                                                         $ 12,039,708       $ 11,383,100       $ 10,284,722
     Interest on federal funds sold                                                 210,752            550,272            478,661
     Interest-bearing deposits in other banks                                        40,179             69,617             68,611
     Interest on securities available for sale:
          Taxable (note 3)                                                        5,712,440          6,146,080          6,510,753
          Exempt from federal income taxes                                           97,580            106,482             66,936
                                                                            ----------------   ----------------   ----------------
                 Total interest income                                         $ 18,100,659       $ 18,255,551       $ 17,409,683

Interest expense:
     Interest on deposits:
          Time deposits of $100,000 or more                                     $ 2,680,135        $ 2,780,460        $ 2,445,427
          Other                                                                   5,309,891          5,689,568          5,612,024
     Interest on federal funds purchased                                             26,628             12,969             40,288
     Other interest                                                                 164,627             36,734            135,926
                                                                            ----------------   ----------------   ----------------
                 Total interest expense                                         $ 8,181,281        $ 8,519,731        $ 8,233,665
                                                                            ----------------   ----------------   ----------------

                 Net interest income                                              9,919,378          9,735,820          9,176,018

Provision for loan losses (note 5)                                                  240,000            252,000            232,000
                                                                            ----------------   ----------------   ----------------
                 Net interest income after provision for loan losses            $ 9,679,378        $ 9,483,820        $ 8,944,018
                                                                            ----------------   ----------------   ----------------

Other operating income:
     Net realized gains on sales of securities available for sale (note 3)         $ 14,661           $ 73,149          $ 225,240
     Service charges on deposit accounts                                            622,680            645,722            637,960
     Loan placement fees                                                          1,369,572          1,704,721          1,181,208
     Other                                                                        1,565,888          1,762,175          1,409,805
                                                                            ----------------   ----------------   ----------------
                 Total other operating income                                   $ 3,572,801        $ 4,185,767        $ 3,454,213
                                                                            ----------------   ----------------   ----------------

Other operating expenses
     Salaries and employee benefits                                             $ 5,743,325        $ 5,558,140        $ 5,174,585
     Occupancy, net                                                                 547,278            618,077            640,190
     Equipment                                                                    1,134,961          1,061,888            960,273
     Federal Deposit Insurance Corporation assessments                               42,611             15,610             25,365
     Other                                                                        2,591,743          2,664,893          2,342,562
                                                                            ----------------   ----------------   ----------------
                 Total other operating expenses                                $ 10,059,918        $ 9,918,608        $ 9,142,975
                                                                            ----------------   ----------------   ----------------

                 Income before income taxes                                       3,192,261          3,750,979          3,255,256

Provision for income taxes (note 8)                                               1,328,270          1,432,235          1,065,956
                                                                            ----------------   ----------------   ----------------
                 Net income                                                     $ 1,863,991        $ 2,318,744        $ 2,189,300
                                                                            ================   ================   ================

Per share amounts - net income                                                       $ 9.89           $ 11.129           $ 10.482
                                                                            ================   ================   ================
Weighted average shares outstanding                                               $ 188,383          $ 208,460          $ 208,980
                                                                            ================   ================   ================

</TABLE>

See accompanying notes to consolidated financial statements.



                                      19
<PAGE>

FIRST BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders' Equity
and Comprehensive Income

Years ended December 31, 1999, 1998 and 1997


<TABLE>
<CAPTION>
                                                                                                     Accumulated
                                                                                                        Other
                                           Common                       Undivided      Treasury     Comprehensive
                                            Stock         Surplus        Profits         Stock          Income         Total
                                         -----------    -----------    -----------    -----------    -----------    -----------

<S>                                       <C>            <C>           <C>              <C>            <C>          <C>
Balance at December 31, 1996 .........    $1,058,300      6,316,648     13,630,182       (369,640)      (196,926)    20,438,564

Comprehensive income:
  Net income .........................          --             --        2,189,300           --             --        2,189,300
  Change in unrealized holding loss on
    securities available for sale, net
    of taxes of $11,538 ..............          --             --             --             --           17,309         17,309

       Total comprehensive income ....     2,206,609

Cash dividends ($5 per share) ........          --             --       (1,044,483)          --             --       (1,044,483)
Purchase of 1,125 shares of
  treasury stock, at cost ............          --             --             --         (106,100)          --         (106,100)
Exercise 2,380 shares of stock
  options (note 10) ..................        11,900         98,056           --             --             --          109,956
                                         -----------    -----------    -----------    -----------    -----------    -----------

Balance at December 31, 1997 .........     1,070,200      6,414,704     14,774,999       (475,740)      (179,617)    21,604,546

Comprehensive income:
  Net income .........................          --             --        2,318,744           --             --        2,318,744
  Change in unrealized holding loss on
    securities available for sale, net
    of taxes of $243,447 .............          --             --             --             --          363,629        363,629

       Total comprehensive income ....     2,682,373

Cash dividends ($5 per share) ........          --             --       (1,041,773)          --             --       (1,041,773)
Purchase of 459 shares of treasury
  stock, at cost .....................          --             --             --          (52,785)          --          (52,785)
                                         -----------    -----------    -----------    -----------    -----------    -----------
                                                                                                                    -----------
Balance at December 31, 1998 .........     1,070,200      6,414,704     16,051,970       (528,525)       184,012     23,192,361
Comprehensive income:
  Net income .........................          --             --        1,863,991           --             --        1,863,991
  Change in unrealized holding loss on
    securities available for sale, net
    of taxes of $123,701 .............          --             --             --             --       (2,105,951)    (2,105,951)

       Total comprehensive income ....      (241,960)

Cash dividends ($5 per share) ........          --             --         (697,395)          --             --         (697,395)
Reorganization (retired 38,728 shares)      (193,640)    (1,160,665)    (5,091,552)       528,525           --       (5,917,332)
Purchase of 1,469 shares of
  treasury stock, at cost ............          --             --             --         (257,075)          --         (257,075)
                                         -----------    -----------    -----------    -----------    -----------    -----------
                                                                                                                    -----------
Balance at December 31, 1999 .........     $ 876,560      5,254,039     12,127,014       (257,075)    (1,921,939)    16,078,599
                                         ===========    ===========    ===========    ===========    ===========    ===========

</TABLE>

See accompanying notes to consolidated financial statements.


                                      20
<PAGE>

                              FIRST BANCORP, INC.
                                AND SUBSIDIARY

                     Consolidated Statements of Cash Flows

                 Years ended December 31, 1999, 1998, and 1997


<TABLE>
<CAPTION>

                                                                      1999           1998            1997
                                                                 ------------    ------------    ------------
Operating activities:
<S>                                                             <C>                       <C>               <C>
    Net income ...............................................   $  1,863,991       2,318,744       2,189,300
    Adjustments to reconcile net income to net cash
       provided by operating activities:
         Provision for loan losses ...........................        240,000         252,000         232,000
         Provision for losses on other real estate ...........         37,540          37,542           3,128
         Depreciation and amortization .......................        786,036         752,609         699,611
         Deferred income taxes ...............................        131,820          36,786         (45,886)
         Amortization of investment security premiums ........         97,852         103,822         143,462
         Accretion of investment security discounts ..........        (99,936)       (159,566)       (171,364)
         Net gains on sale of investment securities ..........        (14,661)        (73,149)       (225,240)
         Gain from sale of bank premises and equipment .......        (11,507)        (21,239)           --
         (Increase) decrease in interest receivable ..........       (236,791)        181,844          33,569
         Increase (decrease) in interest payable .............        (12,631)         40,064          (5,506)
         (Increase) decrease in other assets .................        706,624        (671,611)       (305,640)
         Increase (decrease) in other liabilities ............       (977,585)        506,650         378,898
                                                                 ------------    ------------    ------------

            Net cash provided by operating activities ........      2,510,752       3,304,496       2,926,332
                                                                 ------------    ------------    ------------

Investing activities:
    Proceeds from sale of securities available for sale ......     13,968,644      35,011,052      21,993,955
    Proceeds from maturity of securities available for sale ..     37,435,780      67,728,216      57,633,806
    Purchase of securities available for sale ................    (55,683,827)    (91,259,519)    (81,689,001)
    Net increase in loans ....................................     (7,931,844)    (16,317,313)    (15,988,430)
    Purchase of bank premises and equipment ..................       (707,717)       (816,481)       (639,234)
    Proceeds from sale of bank premises and equipment ........        (23,300)        (24,000)           --
                                                                 ------------    ------------    ------------

            Net cash used in investing activities ............    (12,942,264)     (5,678,045)    (18,688,904)
                                                                 ------------    ------------    ------------

Financing activities:
    Net increase in demand deposit and savings accounts ......      6,445,890       1,583,497       4,127,941
    Net increase (decrease) in time deposits .................     (1,940,364)      8,272,460       7,639,208
    Net (increase) decrease in federal funds sold ............     13,291,000      (5,456,000)      6,742,000
    Net decrease in Federal Home Loan Bank advances ..........           --        (1,000,000)     (1,000,000)
    Net (increase) decrease in treasury stock ................       (257,075)        (52,785)       (106,100)
    Proceeds from sale of stock options ......................           --              --           109,956
    Reorganization ...........................................     (5,917,332)           --              --
    Cash dividends paid ......................................       (697,395)     (1,041,773)     (1,044,483)
                                                                 ------------    ------------    ------------

            Net cash provided by financing activities ........     10,924,724       2,305,399      16,468,522
                                                                 ------------    ------------    ------------

            Net increase (decrease) in cash and due from banks        493,212         (68,150)        705,950

Cash and due from banks at beginning of year .................      9,783,427       9,851,577       9,145,627
                                                                 ------------    ------------    ------------

Cash and due from banks at end of year .......................   $ 10,276,639       9,783,427       9,851,577
                                                                 ============    ============    ============

Supplemental disclosure of cash flow information:
    Cash paid during the year for interest ...................   $  8,193,912       8,479,667       8,239,171
                                                                 ============    ============    ============

    Cash paid during the year for income taxes ...............   $  1,329,333       1,267,000         909,500
                                                                 ============    ============    ============

</TABLE>

See accompanying notes to consolidated financial statements.


                                      21
<PAGE>


                         FIRST BANCORP AND SUBSIDIARY

                  Notes to Consolidated Financial Statements

                          December 31, 1999 and 1998

(1)   Summary of Significant Accounting Policies

In preparing the consolidated financial statements,  management is required to
make estimates and assumptions  that affect the reported amounts of assets and
liabilities  disclosure of contingent assets and liabilities as of the date of
the balance  sheet,  and revenue and expenses for the period.  Actual  results
could differ from those  estimates.  The  significant  policies and  estimates
applied in the  preparation  of these  consolidated  financial  statements are
discussed below.

The Company's  primary  market area is Southeast  Alaska where the majority of
its activities has been with Alaska businesses and individuals.

The Bank has  identified  only  one  reportable  segment  in  accordance  with
Statement of Financial  Accounting Standard (SFAS) No. 131,  Disclosures about
Segments of an Enterprise and Related Information.

On March  15,  1999,  First  Bancorp  entered  into an  Agreement  and Plan of
Reorganization  (the "Plan") for the purpose of becoming an S corporation  for
income tax  purposes.  The Plan  provided for the merger of First Bancorp with
and into Newco Alaska, Inc., a newly formed Delaware corporation  organized at
the direction of First Bancorp solely to effect the Plan. Newco Alaska,  prior
to the merger, had no material operations or assets, and had elected to become
an S  corporation  effective on January 1, 2000.  The merger of First  Bancorp
into Newco Alaska was  completed on June 1, 1999,  with Newco Alaska being the
surviving corporation under the name "First Bancorp, Inc."

The Plan provided that eligible  shareholders would receive one share of Newco
Alaska,  Inc. common stock for each share of First Bancorp,  Inc. common stock
held of record on the  effective  date of the merger.  All other  shareholders
would  receive $175 per share for their First Bancorp  common stock.  Eligible
shareholders  could elect to tender their First Bancorp stock for cash instead
of Newco Alaska stock,  and at the discretion of the Board of Directors of the
surviving  corporation,  those shares would be purchased  for cash at the same
price.

Upon  consummation  of the merger,  the company  purchased and retired  32,963
shares held by 127  shareholders  at a cost of  $5,768,525.  The Company  also
retired  5,765  shares of  treasury  stock with a cost of  $528,525.  Costs of
reorganization of $148,807 were charged to undivided profits.

The $5,768,525  stock repurchase was funded in part from a long-term loan from
Seafirst Bank (see note 11).



                                      22
<PAGE>

      (a)   Consolidation

      The  consolidated  financial  statements  include the  accounts of First
      Bancorp,  Inc.  and its  wholly-owned  subsidiary,  First Bank,  and its
      wholly-owned  subsidiaries,  Dock Street  Building  Corporation and Dock
      Street   Title   Agency,   Incorporated   (Company).   All   significant
      intercompany accounts and transactions have been eliminated.

      (b)   Reclassifications

      Certain  prior year balances have been changed to conform to the present
      year presentation.

      (c)   Investments

      Securities  available for sale are stated at fair value with  unrealized
      holding  gains and losses  excluded  from earnings and reported as a net
      amount in a separate component of other comprehensive income. Securities
      are classified as available for sale when management intends to hold the
      securities  for an indefinite  period of time or when the securities may
      be utilized for tactical  asset/liability  purposes and may be sold from
      time to time to effectively  manage interest rate exposure and resultant
      prepayment risk and liquidity needs.

      Federal Home Loan Bank stock is carried at cost which is its  redeemable
      (fair) value since the market for this stock is limited.

      Premiums are amortized  (deducted) and discounts are accreted (added) to
      interest income on investment  securities using methods that approximate
      the  level-yield  method.  Gains and losses on sales of  securities  are
      computed using the  specific-identification  method of  determining  the
      cost of securities sold.

      (d)   Loans

      Loans are stated at the principal amount outstanding.  Interest on loans
      is taken into income when  earned.  Loan  origination  fees  received in
      excess of direct  origination costs are deferred and amortized to income
      by a method approximating the level-yield method over the estimated loan
      term.

      Interest  income  on loans is  recorded  on an  accrual  basis  until an
      interest or  principal  payment is more than 90 days past due and in the
      opinion  of  management  the   collectibility  of  such  income  becomes
      doubtful. The deferral or nonrecognition of interest does not constitute
      forgiveness of the borrower's obligation.

      (e)   Allowance for Loan Losses

      The  allowance  for loan  losses is a  general  reserve  established  by
      management  to  absorb   unidentified   losses  in  the  Company's  loan
      portfolio.  In  determining  the adequacy of the  allowance,  management
      evaluates   prevailing   economic   conditions,   results   of   regular
      examinations  and  evaluations  of the quality of the loan  portfolio by
      external  parties,  actual loan loss experience,  the extent of existing
      risks in the loan portfolio and other pertinent factors. The allowance


                                      23
<PAGE>

      for impaired  loans is based on  discounted  cash flows using the loans'
      initial interest rates or, if the loan is secured, the fair value of the
      collateral.

      Future  additions to the allowance may be necessary  based on changes in
      economic  conditions  and  other  factors  used in  evaluating  the loan
      portfolio.  Additionally,  various regulatory  agencies,  as an integral
      part of their examination  process,  periodically  review the allowance.
      Such agencies may require the  recognition of additions to the allowance
      based on their judgment of information  available to them at the time of
      their examination.

      (f)   Loan Servicing

      The cost of mortgage servicing rights is amortized in proportion to, and
      over the period of,  estimated  net  servicing  revenues.  Impairment of
      mortgage  servicing  rights is assessed based on the fair value of those
      rights. Fair values are estimated using discounted cash flows based on a
      current market interest rate. The amount of impairment recognized is the
      amount by which the capitalized  mortgage  servicing rights exceed their
      fair value.

      (g)   Other Real Estate

      Other real estate represents  properties acquired through foreclosure or
      its equivalent.  Prior to foreclosure, the carrying value is adjusted to
      the lower of cost or fair market value of the real estate to be acquired
      by a charge to the allowance for loan losses.  Any subsequent  reduction
      in carrying value is charged against operating expenses.

      (h)   Premises and Equipment

      Premises  and  equipment  are  stated  at cost,  less  amortization  and
      accumulated depreciation. Depreciation expense on leasehold improvements
      is computed by use of the  straight-line  method over the shorter of the
      estimated  useful  lives  of  the  assets  or  leasehold   improvements.
      Expenditures   for  remodeling,   improvements   and   construction  are
      capitalized,  while expenditures for maintenance and repairs are charged
      to expense.

      (i)   Income Taxes

      Through  December 31, 1999,  income taxes were  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  were measured  using enacted tax rates expected to apply to
      taxable  income  in the  years in which the  temporary  differences  are
      expected to be recovered  or settled.  The effect on deferred tax assets
      and liabilities of a change in tax rates was recognized in income in the
      period that includes the enactment date.

      In 1999,  the  Company  elected,  effective  January 1, 2000,  to report
      earnings under Subchapter S of the Internal  Revenue Code,  whereby such
      earnings  are  reported  by the  individual  stockholders.  Accordingly,
      deferred income tax assets and  liabilities  were eliminated and charged
      to income tax expense in 1999.  The Company may be required to pay taxes
      on certain  built-in  gains  realized  in the future  years  relating to
      assets acquired prior to election of Subchapter S status. Taxes on these
      gains would be realized only if the Company were to dispose of the


                                      24
<PAGE>

      assets within the next ten years after electing  Subchapter S status and
      then  only  to the  extent  of the  lesser  of the  built-in  gains  tax
      associated with the disposal or the Company's current year corporate tax
      liability.

      (j)   Net Income Per Share

      Per share amounts are calculated based on the weighted average number of
      shares  and  common  share  equivalents  outstanding  during  each year.
      Outstanding stock options are common stock equivalents and therefore are
      included in the  calculation  of the weighted  average  number of shares
      outstanding, if dilutive.

      (k)   Comprehensive Income

      The Company applies  Statement of Financial  Accounting  Standard (SFAS)
      No.  130,  Reporting  Comprehensive  Income.  SFAS No.  130  establishes
      standards for reporting and presentation of comprehensive income and its
      components in a full set of financial  statements.  Comprehensive income
      consists of net income and net  unrealized  gains (losses) on securities
      and is presented in the consolidated  statements of stockholders' equity
      and  comprehensive   income.  The  statement  requires  only  additional
      disclosures in the consolidated financial statements; it does not affect
      the Company's  financial  position or results of operations.  Prior year
      financial   statements   have  been   reclassified  to  conform  to  the
      requirements of SFAS No. 130.

(2)   Cash and Due from Banks

The Company is required to maintain a $200,000  minimum  average daily balance
with the  Federal  Reserve  Bank  (FRB) for  purposes  of  settling  financial
transactions  and charges for FRB  services.  The Company is also  required to
maintain  sufficient  cash  balances  or  deposits  with  the FRB to meet  its
statutory  reserve  requirements.  The reserve  requirement  for the  two-week
maintenance period, which included  December31,  1999 was satisfied by cash on
hand in the Company's vault and on deposit with the FRB.



                                      25
<PAGE>

(3)   Investment Securities

The following is a comparative summary of investment  securities available for
sale at December 31:

<TABLE>
<CAPTION>
                                                             Gross           Gross
                                            Amortized     unrealized       unrealized        Market
                                               cost          gains           losses           value
                                           ------------   ------------    ------------    ------------
1999:
<S>                                        <C>            <C>             <C>             <C>
    U.S. Government and federal agencies   $ 64,488,627          8,264        (503,307)     63,993,584
    States and political subdivisions ..         50,000          4,707         (13,426)         41,281
    Corporate securities ...............      4,065,384         27,139         (34,215)      4,058,308
    Mortgage-backed securities .........     36,112,189         34,241      (1,537,451)     34,608,979
    Federal National Mortgage
       Association stock ...............         10,007         92,109            --           102,116
                                           ------------   ------------    ------------    ------------
                                           $104,726,207        166,460      (2,088,399)    102,804,268
                                           ============   ============    ============    ============

1998:
    U.S. Government and federal agencies   $ 54,763,462        438,739         (24,211)     55,177,990
    States and political subdivisions ..      1,707,699         85,846            --         1,793,545
    Corporate securities ...............      8,963,078         80,739            (338)      9,043,479
    Mortgage-backed securities .........     33,796,314        110,906        (496,797)     33,410,423
    Other debt securities ..............      1,414,450          1,973            --         1,416,423
    Federal National Mortgage
       Association stock ...............          8,257        110,856            --           119,113
                                           ------------   ------------    ------------    ------------
                                           $100,653,260        829,059        (521,346)    100,960,973
                                           ============   ============    ============    ============

</TABLE>

The amortized  cost and market value of available for sale debt  securities at
December31,  1999, are  distributed  by  contractual  maturity as shown below.
Expected maturities will differ from contractual  maturities because borrowers
may have the  right to call or  prepay  obligations  with or  without  call or
prepayment penalties.

<TABLE>
<CAPTION>
   Securities             Within       One to        Five to      Due after     Amortized       Market
available for sale       one year    five years     ten years     ten years        cost         value
                       -----------   -----------   -----------   -----------   -----------   -----------
U.S. Government and
<S>                    <C>            <C>            <C>           <C>          <C>           <C>
   federal agencies    $19,994,664    36,666,222     3,420,869     4,406,872    64,488,627    63,993,584
State and political
   subdivisions ....        50,000          --            --            --          50,000        41,281
Corporate securities     1,046,563     3,018,821          --            --       4,065,384     4,058,308
Mortgage-backed
   securities ......          --       6,778,023     3,315,419    26,018,747    36,112,189    34,608,979
                       -----------   -----------   -----------   -----------   -----------   -----------
                       $21,091,227    46,463,066     6,736,288    30,425,619   104,716,200   102,702,152
                       ===========   ===========   ===========   ===========   ===========   ===========
</TABLE>

Proceeds from sales of available  for sale  securities  during 1999,  1998 and
1997 were $13,968,644, $35,011,052 and $21,993,955,  respectively. Gross gains
of $15,483, $94,602 and $241,917 and gross losses of $822, $21,453 and $16,677
were realized on those sales for the years ended  December31,  1999,  1998 and
1997, respectively.



                                      26
<PAGE>

Market  value  of  investment  securities  of  approximately  $52,682,029  and
$45,753,000  are pledged to secure  public  deposits at  December31,  1999 and
1998, respectively.

A summary of taxable  interest on  securities  available for sale for the year
ended December31 follows:

                                    1999         1998         1997
                                 ----------   ----------   ----------

U.S. Treasury securities .....   $2,127,514    1,534,168    1,288,127
Obligations of U.S. Government
     agencies and corporations    2,908,923    3,943,459    4,674,469
Other ........................      676,003      668,453      548,157
                                 ----------   ----------   ----------
                                 $5,712,440    6,146,080    6,510,753
                                 ==========   ==========   ==========

(4)   Loans

The Company's primary market area is Southeast  Alaska,  where the majority of
its lending is with Alaska  businesses and individuals.  Approximately  66% of
the Company's  loans at December 31, 1999,  are for general  commercial  uses,
including timber, tourism,  retail and small businesses.  Substantially all of
these loans are  collateralized  and repayment is expected from the borrowers'
cash flow or,  secondarily,  the collateral.  The Company's exposure to credit
loss,  if any,  is the  outstanding  amount of the loan if the  collateral  is
proved to be of no value.

The carrying amount of the loan portfolio is as follows at December 31:

                                                 1999           1998
                                         ------------   ------------

Mortgage .............................   $  7,263,721      8,653,771
Commercial ...........................     89,470,851     82,214,463
Consumer .............................     37,961,586     32,906,260
                                         ------------   ------------
                                          134,696,158    123,774,494

Less unamortized loan origination fees        687,445        652,437
                                         ------------   ------------
                                         $134,008,713    123,122,057
                                         ============   ============


The following  table sets forth the maturity  distribution  and sensitivity to
changes in interest  rates of the  Company's  loan  portfolio  at December 31,
1999.

                        Within         One to         After
                       one year      five years     five years        Total
                      -----------    -----------    -----------    -----------

Mortgage .........    $     2,495        152,590      7,108,636      7,263,721
Commercial .......     17,274,685     40,850,826     31,349,735     89,475,246
Consumer .........      8,029,089     28,575,673      1,352,429     37,957,191
                      -----------    -----------    -----------    -----------
                      $25,306,269     69,579,089     39,810,800    134,696,158
                      ===========    ===========    ===========    ===========




                                      27
<PAGE>

The  Company  has and will  continue  to have  banking  transactions  with its
directors,   officers,  principal  shareholders  and  its  associates  in  the
ordinary  course  of  business.  It is  Company  policy  that  all  such  loan
transactions  be on the same terms,  including  interest rates and collateral,
as  those  prevailing  at the  same  time  for  comparable  transactions  with
others.  An analysis of these loan transactions at December 31 follows:

                                                     1999              1998
                                                  ----------        ----------

Balance at beginning of year .............        $2,759,339         2,646,307
Net additions (deletions) ................         2,732,510           113,032
                                                  ----------        ----------
Balance at end of year ...................        $5,491,849         2,759,339
                                                  ==========        ==========

Mortgage  loans  serviced  for others  are not  included  in the  accompanying
consolidated  balance sheets.  The unpaid principal balances of mortgage loans
serviced  for  others  were  $106,976,112,  $100,712,256  and  $86,690,480  at
December 31, 1999, 1998 and 1997 respectively.

Custodial  escrow  balances  maintained in connection  with the foregoing loan
servicing,  and included in demand deposits,  were approximately  $552,000 and
$461,000 at December 31, 1999 and 1998, respectively.

Mortgage servicing rights of $229,295,  $379,422 and $153,286 were capitalized
during 1999, 1998, and 1997,  respectively.  The carrying value of unamortized
mortgage  servicing  rights of $730,692  and  $576,021  approximates  its fair
value  as of  December  31,  1999  and  1998,  respectively.  Amortization  of
mortgage  servicing rights was $74,624,  $80,682 and $19,029 in 1999, 1998 and
1997, respectively.

(5)   Allowance for Loan Losses

A summary of the allowance for loan losses as of December31 follows:

                                     1999           1998           1997
                                 -----------    -----------    -----------

Balance at beginning of year .   $ 1,421,352      1,293,512      1,103,414
Recoveries on loans previously
     charged off .............        22,154         16,225         49,524
Provision charged to expense .       240,000        252,000        232,000
Loans charged off ............       (67,343)      (140,385)       (91,426)
                                 -----------    -----------    -----------
Balance at end of year .......   $ 1,616,163      1,421,352      1,293,512
                                 ===========    ===========    ===========


The amount of any  impaired  loans is  insignificant  at December 31, 1999 and
1998.  The Company had no loans on nonaccrual  status at December 31, 1999 and
1998.



                                      28
<PAGE>

(6)   Premises and Equipment

A summary of premises and equipment at December 31 follows:

                                                   1999               1998
                                               -----------        -----------

Company premises .......................       $ 4,681,300          4,659,484
Equipment ..............................         4,918,063          4,869,636
                                               -----------        -----------
                                                 9,599,363          9,529,120
Less accumulated depreciation ..........        (5,921,141)        (5,357,475)
                                               -----------        -----------
                                                 3,678,222          4,171,645

Construction work in process ...........           532,705             82,794
Land ...................................         1,542,083          1,542,083
                                               -----------        -----------
     Total fixed assets ................       $ 5,753,010          5,796,522
                                               ===========        ===========

(7)   Deposits

Time  deposits in amounts of $100,000 or more and their  remaining  maturities
at December31 are as follows:

                                                     1999              1998
                                                 -----------       -----------

Three months or less .....................       $30,222,217        27,611,027
Three through twelve months ..............        25,132,136        28,056,872
Over twelve months .......................         4,608,189         5,146,573
                                                 -----------       -----------

                                                 $59,962,542        60,814,472
                                                 ===========       ===========

Income Taxes

In 1999, the Company  elected,  effective  January 1, 2000, to report earnings
under  Subchapter S of the Internal  Revenue  Code,  whereby such earnings are
reported by the  individual  stockholders.  Accordingly,  deferred  income tax
assets and  liabilities  were  eliminated and charged to income tax expense in
1999.  The Company  will be required  to pay taxes on certain  built-in  gains
realized in the future years relating to assets  acquired prior to election of
Subchapter  S  status.  Taxes on these  gains  would be  realized  only if the
Company  were to  dispose  of the  assets  within  the  next ten  years  after
electing  Subchapter S status and then only to the extent of the lesser of the
built-in gains tax associated with the disposal or the Company's  current year
corporate tax liability.



                                      29
<PAGE>

Components of regular income tax expense (benefit) are as follows:

<TABLE>
<CAPTION>
                                           Current      Deferred         Total
                                        -----------    -----------    -----------
1999:
<S>                                     <C>                <C>         <C>
     Federal ........................   $ 1,004,084        (19,293)       984,791
     State ..........................       192,366         (5,861)       186,505
                                        -----------    -----------    -----------
             Regular ................     1,196,450        (25,154)     1,171,296

     Elimination of deferred taxes
         as a result of Sub Chapter S
         conversion .................          --          156,974        156,974
                                        -----------    -----------    -----------
                                        $ 1,196,450        131,820      1,328,270
                                        ===========    ===========    ===========
1998:
     Federal ........................   $ 1,129,357         33,536      1,162,893
     State ..........................       266,092          3,250        269,342
                                        -----------    -----------    -----------
                                        $ 1,395,449         36,786      1,432,235
                                        ===========    ===========    ===========
1997:
     Federal ........................   $ 1,010,936        (44,073)       966,863
     State ..........................       100,906         (1,813)        99,093
                                        -----------    -----------    -----------
                                        $ 1,111,842        (45,886)     1,065,956
                                        ===========    ===========    ===========
</TABLE>

The actual tax expense for 1999,  1998 and 1997  differs  from the  "expected"
tax expense for those years (computed by applying the U.S.  Federal  statutory
tax rate of 34% to earnings before income taxes) as follows:

                                        1999           1998           1997
                                    -----------    -----------    -----------

Computed "expected" income taxes    $ 1,085,369      1,275,333      1,106,787
State income taxes ..............       123,093        177,767         65,401
Tax-exempt interest .............       (52,091)       (69,838)       (49,834)
Other ...........................        14,925         48,973        (56,398)
                                    -----------    -----------    -----------
         Regular tax ............     1,171,296      1,432,235      1,065,956

Elimination of deferred taxes
     as a result of Sub Chapter S
     conversion .................       156,974           --             --
                                    -----------    -----------    -----------
                                    $ 1,328,270      1,432,235      1,065,956
                                    ===========    ===========    ===========

The Company  will be subject to a  corporate-level  tax on the net  unrealized
built-in gain at the date of conversion  that is realized  during the ten-year
period after  conversion.  The net  unrealized  built-in gain is the excess of
the fair value of the S  corporation's  assets at the effective  date of the S
corporation  election over the aggregate adjusted tax bases of those assets at
that  date.  The  taxable  built-in  gain  is  that  portion  of a gain on the
disposition  of  an  asset  during  the  ten-year  period  subsequent  to  the
conversion  that is  attributable  to a difference  between the fair value and
the tax  basis of the asset at the date of  conversion.  During  the  ten-year
period after conversion,  tax is computed by applying the applicable corporate
tax  rate  for  the  year.  The  company  has  performed  an  analysis  of its
potential  built-in gain tax liability and after  considering  its current tax
planning  strategies to reduce those gains has estimated their liability to be
zero.



                                      30
<PAGE>

The Company has  approximately  $1,700,000 of built-in gains  attributable  to
the Federal  Home Loan Bank (FHLB) stock  dividends  they have  received.  The
Company has the ability and anticipates  holding the stock beyond the ten-year
holding  period.  However,  the FHLB has  notified  the Company  that they may
redeem a portion of the  Company's  outstanding  stock,  which would trigger a
built-in  gains tax  liability.  The Company is unable to estimate the amount,
if any that may be  redeemed  and  therefore  has not  recorded  a  liability.
Management  believes that the ultimate  outcome of this  uncertainty  will not
have a material affect on the Company's  financial  position but may on future
results of operations.

The  components of and changes in the net deferred tax asset  (liability)  are
as follows:

<TABLE>
<CAPTION>
                                                                                         Balance
                                                                                         charged
                                              (Deferred                   (Deferred      to 1999
                               December 31,    expense)    December 31,    expense)     Income tax
                                   1997        benefit         1998        benefit       expense
                                ----------    ----------    ----------    ----------    ----------
Deferred tax assets:
<S>                             <C>               <C>          <C>           <C>           <C>
    Bad debt deduction ......   $  342,122        95,860       437,982       122,781       560,763
    Loan fees ...............      255,883         6,397       262,280        14,073       276,353
    Depreciation ............      168,606        19,292       187,898        26,796       214,694
    Other real estate owned .       19,390        15,092        34,482        15,087        49,569
    Unrealized loss (gain) on
       available sale
       investment securities       119,746      (243,447)     (123,701)      123,701             --
    Other ...................       24,758        14,886        39,644        (9,102)       30,542
                                ----------    ----------    ----------    ----------    ----------
         Total gross deferred
            tax assets ......      930,505       (91,920)      838,585       293,336     1,131,921
                                ----------    ----------    ----------    ----------    ----------
Deferred tax liabilities:
    Federal Home Loan
       Bank stock dividends .     (503,987)      (85,988)     (589,975)      (89,725)     (679,700)
    Accretion on bonds ......      (26,699)       17,768        (8,931)        7,422        (1,509)
    Loan servicing rights ...     (111,467)     (120,093)     (231,560)      (62,178)     (293,738)
                                ----------    ----------    ----------    ----------    ----------
         Total deferred
            tax liabilities .     (642,153)     (188,313)     (830,466)     (144,481)     (974,947)
                                ----------    ----------    ----------    ----------    ----------

Valuation allowance .........           --            --            --            --            --
                                ----------    ----------    ----------    ----------    ----------
         Net deferred
            tax asset .......   $  288,352      (280,233)        8,119       148,855       156,974
                                ==========                  ==========                  ==========
</TABLE>

<TABLE>
<CAPTION>

Amounts attributed to gain (loss)
    on available for sale investment
    securities and recorded as a
    reduction to unrealized
<S>                                              <C>                        <C>
    holding gain or loss                         243,447                    (123,701)
                                              ----------                  ----------
                                             $   (36,786)                     25,154
                                              ==========                  ==========
</TABLE>


A valuation  allowance  on a deferred  tax asset is  provided  when it is more
likely  than not that some  portion  of the  deferred  tax  asset  will not be
realized.  The Company had  available  tax  planning  strategies,  anticipated


                                      31
<PAGE>

future taxable income and historically had had taxable income;  accordingly, a
valuation  allowance was not established.  In 1998, the net deferred tax asset
was included in other assets.

(9)   Comprehensive Income

At December 31, 1999,  the related tax effects  allocated to each component of
other comprehensive income follows:

                                      Before        (expense)      Net of
                                     tax amount      benefit     tax amount
                                     ----------    ----------    ----------
Unrealized holding losses
     on securities available for
     sale arising during 1999 ....  $(2,214,991)     (117,837)   (2,097,154)
Less:  reclassification adjustment
     for net gains realized
     in net income ...............       14,661         5,864         8,797
                                     ----------    ----------    ----------
              Net unrealized gains  $(2,229,652)     (123,701)   (2,105,951)
                                     ==========    ==========    ==========

(10)  Employee Benefit Plans

On  January  1,  1992,  the  Company  merged  approximately  60% of its profit
sharing plan into the existing  noncontributory  defined  contribution  401(k)
retirement  plan.  Contributions  made  to the  401(k)  plan  and  charged  to
expense  amounted to  $75,000,  $100,000  and $75,000 in 1999,  1998 and 1997,
respectively.

Concurrently,  the Company established an employee stock ownership plan (ESOP)
with the  remaining 40% of the profit  sharing  plan's  assets.  Contributions
made to the ESOP and  charged to expense  amounted  to  $50,000,  $75,000  and
$50,000 in 1999, 1998 and 1997, respectively.

Participation  in the plans is available to employees  who have  completed six
months of service with the Company.

(11)  Commitments and Contingencies

      (a)   General

      The Company  from time to time may be a defendant  in legal  proceedings
      related  to the  conduct  of its  banking  business.  In the  opinion of
      management,  the Company's  financial position and results of operations
      will not be  affected  materially  by the final  outcome of any  present
      legal proceedings.



                                      32
<PAGE>

      (b)   Lease

      The  Company  is  obligated  under  noncancelable  operating  leases for
      premises,  some of which have renewal options. Net future minimum rental
      payments required under the lease are as follows:

      Year ending December 31:                               Amount
      ------------------------                        -------------------

               2000                                $         197,801
               2001                                          159,156
               2002                                          159,156
               2003                                          142,068
               2004                                           97,845
            Thereafter                                        37,000
                                                      -------------------
                                                   $         793,026
                                                      ===================

      Rental expense amounted to $220,358, $198,385 and $196,950 in 1999, 1998
      and 1997, respectively.

(c)   Off-Balance Sheet Financial Instruments

      In the  ordinary  course of  business,  the Company  enters into various
      types  of  transactions,   which  involve  financial   instruments  with
      off-balance sheet risk. These instruments  include commitments to extend
      credit  and  standby  and  commercial  letters  of  credit  and  are not
      reflected in the  accompanying  balance sheets.  These  transactions may
      involve, to varying degrees,  credit and interest rate risk in excess of
      the  amount,  if any,  recognized  in the  balance  sheets.  The Company
      applies the same credit  standards to these  contracts as it uses in its
      lending process.  Management does not anticipate any loss to result from
      these commitments.

      As of December 31, the Company's  off-balance sheet credit risk exposure
      is the contractual amount of commitments to extend credit and letters of
      credit, is as follows:

                                                      1999            1998
                                                  -----------      -----------
      Off-balance sheet commitments:
        Commitments to extend credit ........     $15,264,000        8,741,433
        Standby and commercial
          letters of credit .................         200,000          395,120


(d)   Line of Credit

      The  Company  has a line of credit up to 20% of assets or  approximately
      $52,000,000 at December31,  1999 with the Federal Home Loan Bank (FHLB).
      There is no outstanding balance on the credit line at December 31, 1999.
      The Company has pledged its FHLB stock and other assets as collateral on
      the line of credit.

(e)   Note Payable

      On June 1, 1999, the Company borrowed $3,000,000 from Bank of America at
      2.5% above LIBOR, which is adjusted quarterly. The Company will make six
      annual principal  paydowns of $500,000 on June 30 of each year until the
      loan is paid in full on June 30, 2005.



                                      33
<PAGE>

(12)  Regulatory Matters

The  Federal  Deposit   Insurance   Corporation  has  established   risk-based
standards for evaluating a bank's capital  adequacy.  These standards  require
the Company to maintain  minimum  ratio of  qualifying  total  capital to risk
weighted  assets  of 8% of  which  at  least  4% must  be in the  form of core
capital (TIER 1).  Management  believes as of December 31, 1999 and 1998, that
the Company meets all capital adequacy  requirements.  TIER 1 capital includes
the  Company's   stockholders'   equity,  minus  all  intangible  assets.  The
Company's actual capital amounts at December 31 are as follows:

                                                          1999           1998
                                                         -------         ------

Total risk-based capital ratio ................           13.73%         17.6%
TIER 1 risk-based capital ratio ...............           12.56%         16.5%
Leverage capital ratio ........................            6.87%          8.8%


(13)  Fair Value of Financial Instruments

The  following  methods  and  assumptions  were used to  estimate  fair  value
disclosures  as defined  under SFAS No.107,  Disclosures  About Fair Value of
Financial Instruments:

Cash  and due  from  banks  and  federal  funds  sold - the  carrying  amounts
reported in the balance sheet represent their fair values.

Investment  securities - fair values for  investment  securities  are based on
quoted  market  prices,  where  available.  If quoted  market  prices  are not
available,  fair  values  are based on  quoted  market  prices  of  comparable
instruments.  Investments  in the  Federal  Reserve  Bank  (FRB)  and FHLB are
recorded at cost, which also represents fair market value.

Loans - for  variable-rate  loans that  reprice  frequently,  fair  values are
based  on  carrying  amounts.   Fair  values  of  residential  mortgages  with
commitments to sell within 90 days are based on the amounts  receivable  under
the commitments.  An estimate of the fair value of the remaining  portfolio is
based on  discounted  cash flow  analyses  applied to pools of similar  loans,
using weighted average coupon rate,  weighted average  maturity,  and interest
rates  currently  being  offered for similar  loans.  The  carrying  amount of
accrued interest receivable approximates its fair value.

Deposit  liabilities  - the fair  values of demand and  savings  deposits  are
equal to the carrying  amount at the reporting  date. The carrying  amount for
variable  rate time  deposits  approximate  their fair value.  Fair values for
fixed  rate  time  deposits  are  estimated   using  a  discounted  cash  flow
calculation  that applies  currently  offered  interest rates to a schedule of
aggregate  expected monthly  maturities of time deposits.  The carrying amount
of accrued interest payable approximates its fair value.

Short-term  borrowings - for FHLB  advances and Federal funds  purchased  with
maturities  less than 90 days,  the  carrying  amount  represents  their  fair
value.  For FHLB advances and federal funds purchased with  maturities  longer
than 90  days,  fair  values  are  estimated  using  a  discounted  cash  flow
calculation using current interest rates for similar borrowings.

Commitments  to Extend  Credit and Standby  Letters of Credit - The fair value
of  commitments is estimated  using the fees  currently  charged to enter into


                                      34
<PAGE>

similar agreements,  taking into account the remaining terms of the agreements
and the present  creditworthiness of the  counterparties.  For fixed-rate loan
commitments,  fair value also considers the difference  between current levels
of  interest  rates and the  committed  rates.  The fair  value of  letters of
credit is based on fees  currently  charged for similar  agreements  or on the
estimated cost to terminate them or otherwise  settle the obligation  with the
counterparties at the reporting date.

Limitations  - Fair  value  estimates  are made at a  specific  point in time,
based on relevant  market  information  and  information  about the  financial
instrument.  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
significant  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.

Fair value of financial instruments is as follows:

<TABLE>
<CAPTION>
                                                 1999                                  1998
                                           ------------------------------------  -------------------------------------
                                               Carrying             Fair             Carrying              Fair
                                                amount             value              amount              value
                                           -----------------  -----------------  ------------------  -----------------
Financial assets:
<S>                                      <C>                      <C>                  <C>                <C>
    Cash and due from banks              $       10,276,639         10,276,639           9,783,427          9,783,427
    Federal funds sold                                    -                  -           9,391,000          9,391,000
    Investment securities                       102,804,268        102,804,268         100,960,973        100,960,973
    Loans                                       134,696,158        133,901,666         123,744,494        125,101,850
    Accrued interest receivables                  1,993,758          1,993,758           1,756,967          1,756,967

Financial liabilities:
    Deposits                                    234,033,631        234,247,207         229,528,105        229,929,659
    Accrued interest payable                        504,148            504,148             516,779            516,779
    Short-term borrowings                         3,900,000          3,900,000                   -                  -
    Note payable                                  3,000,000          3,000,000                   -                  -

Unrecognized financial instruments:
    Commitments to extend credit                 15,264,000            152,640           8,741,433             87,414
    Standby and commercial letters
      of credit                                     200,000              2,000             395,120              3,951

</TABLE>

                                      35
<PAGE>

4)    Quarterly Results of Operations

<TABLE>
<CAPTION>
(in thousands except per share data. Unaudited.)

                                                                          Quarter ended
                                           ----------------------------------------------------------------------------
                 1999                          Dec. 31             Sept. 30            June 30             Mar. 31
                                           -----------------   -----------------   -----------------   ----------------

<S>                                     <C>                              <C>                 <C>                 <C>
Total interest income                   $               4,083             4,829               4,599              4,589
Total interest expense                                  2,225             2,106               1,939              1,911
                                           -----------------   -----------------   -----------------   ----------------
           Net interest income                        1,858               2,723               2,660              2,678

Provision for loan losses                                48                  72                  48                 72
Other operating income                                1,873                 551                 563                572
Other operating expense                               2,982               2,299               2,343              2,436
Securities gains                                          -                   -                   -                 14
                                           -----------------   -----------------   -----------------   ----------------
        Income before income taxes                      701                 903                 832                756

Income taxes                                            459                 312                 271                286
                                           -----------------   -----------------   -----------------   ----------------
Net income                              $               242                 591                 561                470
                                           =================   =================   =================   ================
Earnings per share                      $              1.40                3.39                2.84               2.26
                                           =================   =================   =================   ================
</TABLE>

<TABLE>
<CAPTION>
                                                                          Quarter ended
                                           ----------------------------------------------------------------------------
                 1998                          Dec. 31             Sept. 30            June 30             Mar. 31
                                           -----------------   -----------------   -----------------   ----------------

<S>                                     <C>                               <C>                 <C>                <C>
Total interest income                   $             3,911               4,886               4,795              4,664
Total interest expense                                2,136               2,189               2,130              2,065
                                           -----------------   -----------------   -----------------   ----------------
        Net interest income                           1,775               2,697               2,665              2,599

Provision for loan losses                                48                  72                  60                 72
Other operating income                                2,292                 682                 598                541
Other operating expense                               3,116               2,233               2,273              2,297
Securities gains                                         13                  16                  44                  -
                                           -----------------   -----------------   -----------------   ----------------
        Income before income taxes                      916               1,090                 974                771

Income taxes                                            523                 387                 247                275
                                           -----------------   -----------------   -----------------   ----------------
Net income                              $               393                 703                 727                496
                                           =================   =================   =================   ================
Earnings per share                      $              1.88                3.37                3.49               2.38
                                           =================   =================   =================   ================
</TABLE>


Total  interest  income of  $808,000 in 1999 and  $1,071,000  in 1998 has been
reclassed to other  operating  income in fourth  quarter to purposely  reflect
loan placement fees  originally  included in total interest  income during the
first  three-quarters  of each year.  Additionally,  other operating income of
$748,000 in 1999 and $631,000 in 1998 has been released  from other  operating
expense in the fourth quarter to reflect bankcard fees originally  included as
a reduction of other operating  expenses in the first  three-quarters  of each
year.


                                      36
<PAGE>

(15)  Subsequent Event

In January  2000,  the Board of  Directors  approved  a dividend  of $1.25 per
share.

Item 8. Changes in and  Disagreements  with  Accountants  on  Accounting  and
        Financial Disclosure.

None.


                                   PART III

                             FIRST BANCORP, INC.

Item 9. Directors,  Executive  Officers,  Promoters  and Control  Persons,
        Compliance With Section 16(a) of the Exchange Act.

The following describes certain information about each director and each
executive officer of First Bancorp.  The business experience of each of the
directors and executive officers for the past five years has been as follows:

William  G.  Moran,  Sr.,  age 81,  serves  as the  Chairman  of the  Board of
Directors. Mr. Moran has been with First Bank for approximately 46 years

William G. Moran, Jr., age 46, serves as a director,  and as the President and
Chief Executive  Officer,  a position he has had for over 16 years.  Mr. Moran
is the son of  William G.  Moran,  Sr.  and the  brother  of Joseph M.  Moran,
another director.

Joseph M.  Moran,  age 48, has served as a director  of First Bank since 1984.
Mr.  Moran is an attorney  and is  president  of his law firm,  DeLisio  Moran
Geraghty & Zobel PC in  Anchorage,  where he has  practiced for over 20 years.
Mr.  Moran is the son of  William  G.  Moran,  Sr.,  Chairman  of the Board of
Directors and brother of William G. Moran, Jr., President of First Bancorp.

Ernest J.  Anderes,  age 71, has served as a director of First Bank since 1975
and of First  Bancorp since its  inception in 1989.  Mr.  Anderes has been the
owner of Anderes  Oil,  Inc. a  petroleum  products  distributor,  for over 25
years.

                                      37
<PAGE>


Michael  J.  Cessnun,  age 44,  has been a pilot for  Alaska  Airlines  for 18
years. He has served as a director of First Bancorp since 1994.

Michael  J.  Elerding,  age 47,  has  served as a  director  since  1990.  Mr.
Elerding  is the owner of  Northern  Sales Co. of  Alaska,  a  wholesale  food
distributor,  and  currently  serves as its  president.  Prior to joining that
company  in  1983,  Mr.  Elerding  was  employed  by  First  Bank as a  branch
manager.

Lisa  A.  Murkowski,  age  42,  has  served  as a  director  since  1990.  Ms.
Murkowski  is an attorney in  Anchorage  where she has  practiced  for over 10
years.   Ms   Murkowski   is  an  elected   member  of  the  Alaska  House  of
Representatives.

Kay D.  Sims,  age 60, is a  long-time  resident  of  Ketchikan,  and has been
active  in  the  community,   both  in  business  and  in  community   service
organizations.  Ms. Sims is a managing member of Hospitality  Unlimited,  LLC,
the owner and  operator  of the Best  Western  Landing  Hotel and  Annabelle's
Famous Keg and  Chowder  House,  in  Ketchikan,  and the  Prospector  Hotel in
Juneau.

James C.  Sarvela,  age 44,  serves  as Vice  President  and  Chief  Financial
Officer,  a position he has had for over 10 years.  Mr.  Sarvela has more than
20 years of banking experience, most of which is with First Bank.

Jack E. Vaughn,  age 52, serves as Vice President and Senior Lending  Officer.
Mr.  Vaughn has over 22 years of banking  experience  and has been employed by
First Bank since 1985 in various positions,  including loan officer and branch
manager.

E.  Michael  Youngblood,  age 49,  serves as Vice  President  and oversees the
Systems  Development  Department.  Mr. Youngblood has been with First Bank for
over 20 years.



                                      38
<PAGE>

Item 10.    Executive Compensation.

The  following  table  sets  forth the  aggregate  compensation  for  services
rendered to the Bank in all  capacities  paid or accrued for the fiscal  years
ended December 31, 1999,  1998 and 1997 to each person serving as an executive
officer  of the  Bank  whose  aggregate  cash  and  cash  equivalent  forms of
compensation exceeded $100,000:

<TABLE>
<CAPTION>

                                                                  Annual Compensation
                                              --------------------------------------------------------------   ----------------
                                                                                               Other Annual*    All Other
Name and Principal Position                   Year              Salary         Bonus           Compensation    Compensation
------------------------------------------    ----            ---------      ---------         -------------   ------------
<S>                                           <C>             <C>            <C>                   <C>
William G. Moran, Jr.                         1999            $ 208,866      $ 110,000             $ 6,120          None
  President of First Bancorp                  1998            $ 198,721      $ 105,000             $ 8,459
  Chief Executive Officer, First Bank         1997            $ 200,214      $ 100,000             $ 5,684

James C. Sarvela                              1999            $ 113,512      $   9,000             $ 3,968          None
  Vice President, Chief Financial Officer     1998            $ 110,643      $   8,000             $ 5,701
                                              1997            $ 107,364      $   7,000             $ 3,949

E. Michael Youngblood                         1999            $ 120,463      $   9,000             $ 4,159          None
  Vice President, Chief Information Officer   1998            $ 117,491      $   8,000             $ 6,153
                                              1997            $ 113,892      $   7,000             $ 4,265

Jack E. Vaughn                                1999            $ 102,789      $   8,500             $ 3,505          None
  Vice President, Senior Lending Officer      1998            $ 100,417      $   7,500             $ 5,278
                                              1997            $  97,025      $   6,500             $ 3,660

*Contributions to 401(k) and ESOP.

</TABLE>



                                      39
<PAGE>

Item 11.    Security Ownership of Certain Beneficial Owners and Management.

The following  table set forth certain  information  concerning the beneficial
ownership  of the Bank's  common  stock as of  December  31,  1999 by (i) each
director;  (ii) Executive  Officers;  and (iii) persons known to management to
beneficially own more than five percent (5%) of the outstanding common stock:

<TABLE>
<CAPTION>

            Name and Address of                          Amount and Nature of       Percent of
            Beneficial Owner (1)                         Beneficial Ownership(2)       Class
---------------------------------------------------    ------------------------     -----------

<S>                                                                   <C>              <C>
William G. Moran - Director, Chairman of the Board                    20,593 (3)       11.8%

William G. Moran, Jr. - Director, President                           21,902           12.5

Ernest J. Anderes                                                      9,461 (4)        5.4%

Lisa A. Murkowski                                                      8,359 (4)        4.8%

Joseph M. Moran                                                        6,030 (3)        3.4%

Kay D. Sims                                                            5,617            3.2%

Michael J. Cessnun                                                     1,200            0.7%

Michael J. Elerding                                                     223  (4)        0.1%

All Directors and Executive Officers as a Group (8)                   52,792           41.9%

</TABLE>

(1)   The address of all directors  and executive  officers of the Bank is 331
      Dock Street Ketchikan, Alaska 99901.

(2)   Unless  otherwise  indicated,  shares  are all held  directly  with sold
      voting and investment power.

(3)   Includes shares held jointly with spouse.

(4)   Includes  shares held in the Employee Stock  Ownership  Program of which
      this person serves as a trustee.


Item 12.    Certain Relationships and Related Transactions.

From time to time, some of the directors and officers of the Bank,  members of
their  immediate  families,  and firms and  corporations  with  which they are
associated  do business  with First Bank.  Generally  this  business  involves
ordinary  banking  transactions,  such as borrowings  and  investments in time
deposits.  All such loans and  investments  in time deposits have been made in
the ordinary  course of  business,  have been made on  substantially  the same
terms,  including interest rates paid or charged and collateral  required,  as
those  prevailing at the time for comparable  transactions  with  unaffiliated
persons.   These  loans  do  not   involve   more  than  the  normal  risk  of
collectibility  or have other  features that would be  disadvantageous  to the


                                      40
<PAGE>

bank. As of December31,  1999, the aggregate  outstanding amount of all loans
to officers and  directors  was  approximately  $4,594,000  which  represented
28.6% of the Bank's  consolidated  stockholders'  equity at that date.  All of
these loans are  currently in good  standing and are being paid in  accordance
with their terms.

Item 13.    Exhibits and Reports on Form 8-K.

(a)   Exhibits

      The  following  exhibits  are being filed  herewith or  incorporated  by
      reference and this shall constitute the Exhibit Index:

      3.1   Certificate of Incorporation of First Bancorp, Inc. *

      3.2   Bylaws of First Bancorp, Inc. *

      10.1  Lease,  dated April 24, 1989, by and between  Clifford White et al
            and First Bank, relating to the Wrangell branch *

      10.2  Lease,  dated April 20, 1990, by and between Sealaska  Corporation
            and First Bank, relating to the Downtown (Juneau) branch *

      10.3  Lease, dated July 1, 1998, by and between ADV Properties and First
            Bank, relating to the Mendenhall mall (Juneau) branch. *

      10.4  Agreement  of Lease,  dated  August 11,  1980,  by and between the
            Sitka Professional  Center I and First Bank, relating to the Sitka
            branch *

      27    Financial Data Schedule



* Incorporated  by reference to the  registration  statement on Form S-4 (file
  number  333-72049)  and declared  effective by the  Commission  on March 26,
  1999.



(b)   Reports on Form 8-K

      None.


                                      41
<PAGE>

                                   SIGNATURES

In accordance  with Section 13 or 15(d)  Exchange Act of 1934,  the registrant
has duly  caused  this  report to be signed on its behalf by the  undersigned
thereunto duly Authorized on March 15, 2000.

                                        First Bancorp, Inc. (Registrant)

                                        /s/ William G. Moran, Jr.       3/10/00
                                        ---------------------------------------
                                        William G. Moran, Jr.           Date


In accordance  with the Exchange Act, this report has been signed below by the
following Persons on behalf of the registrant and in the capacities and on the
dates indicated.

                                        /s/ William G. Moran, Jr.       3/10/00
                                        ---------------------------------------
                                        William G. Moran, Jr.           Date
                                        President and Chief Executive Officer


                                        /s/ James C. Sarvela            3/10/00
                                        ---------------------------------------
                                        James C. Sarvela                Date
                                        Vice President & Chief Financial Officer
                                        (Principal Accounting Officer)


                                   --------------------------------------------
                                   William G. Moran, Chairman           Date
                                        of the Board


                                   --------------------------------------------
                                   Ernest J. Anderes, Director          Date


                                   /s/ Lisa A. Murkowski                3/20/00
                                   --------------------------------------------
                                   Lisa A. Murkowski, Director          Date


                                   /s/ Joseph M. Moran                  3/20/00
                                   --------------------------------------------
                                   Joseph M. Moran, Director            Date


                                   /s/ Kay D. Sims                      3/20/00
                                   --------------------------------------------
                                   Kay D. Sims, Director                Date


                                   /s/ Michael J. Cessnun               3/20/00
                                   --------------------------------------------
                                   Michael J. Cessnun, Director         Date


                                   /s/ Michael J. Elerding              3/20/00
                                   --------------------------------------------
                                   Michael J. Elerding, Director        Date


Supplemental  Information to be furnished with reports filed to Section 1(d)of
the Exchange Act by non-reporting issuers:

Annual report and proxy material have been sent to security holders concurrent
with the filing of this report,  and copies have been submitted by mail to the
Commission.

                                      42