FIRST BANKS INC, 424B4, 2000-10-17

FIRST BANKS INC
424B4, 2000-10-17
NATIONAL COMMERCIAL BANKS

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Filed pursuant to Rule 424(b)(4)
Registration Nos. 333-46270
333-46270-01

PROSPECTUS

2,000,000 PREFERRED SECURITIES

FIRST PREFERRED CAPITAL TRUST II

10.24% CUMULATIVE TRUST PREFERRED SECURITIES

(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)

FULLY, IRREVOCABLY AND UNCONDITIONALLY GUARANTEED [FIRST BANKS
ON A SUBORDINATED BASIS, AS DESCRIBED IN THIS PROSPECTUS, BY LOGO]

FIRST BANKS, INC.

___________________

The preferred securities represent undivided beneficial interests
in the assets of First Preferred Capital Trust II. The trust will
invest all of the proceeds of this offering of preferred securities to
purchase 10.24% subordinated debentures due 2030 of First Banks, Inc.

For each of the preferred securities that you own, you will
receive cumulative cash distributions at an annual rate of 10.24% on
March 31, June 30, September 30 and December 31 of each year, beginning
December 31, 2000, from payments on the subordinated debentures. We may
defer payments of distributions at any time for up to 20 consecutive
quarters. The preferred securities are effectively subordinated to all
of our senior and subordinated indebtedness and that of our
subsidiaries. The subordinated debentures mature and the preferred
securities must be redeemed by September 30, 2030. The trust may redeem
the preferred securities, at a redemption price of $25 per preferred
security plus accrued and unpaid distributions, at any time on or after
September 30, 2005, or earlier under circumstances specified in this
prospectus.

___________________

INVESTING IN THE PREFERRED SECURITIES INVOLVES RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 9.
___________________

The preferred securities are not savings accounts, deposits or
obligations of any bank and are not insured by the Bank Insurance Fund
of the Federal Deposit Insurance Corporation or any other governmental
agency.

<TABLE>
<CAPTION>
PER PREFERRED
SECURITY TOTAL
------------- -----------
<S> <C> <C>
Public offering price . . . . . . . . . . $25.00 $50,000,000
Proceeds to the trust . . . . . . . . . . $25.00 $50,000,000
</TABLE>

This is a firm commitment underwriting. We will pay underwriting
commissions of $0.9375 per preferred security, or a total of $1,875,000,
for arranging the investment in our subordinated debentures. The
underwriters have been granted a 30-day option to purchase up to an
additional 300,000 preferred securities to cover over-allotments, if any.

------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to
the contrary is a criminal offense.
------------------------------------------------------------------------
STIFEL, NICOLAUS & COMPANY
INCORPORATED
DAIN RAUSCHER WESSELS
FAHNESTOCK & CO. INC.

October 16, 2000

<TABLE>
FIRST BANKS, INC. AND SUBSIDIARIES
MAP OF LOCATIONS

<CAPTION>
AS OF SEPTEMBER 30, 2000
------------------------------------------------------------------------------------
FIRST BANK
------------------------------------------------------------------------------------
CENTRAL
AND
METRO REGIONAL SOUTHERN NORTHERN
MISSOURI MISSOURI ILLINOIS ILLINOIS
-------- -------- -------- --------
<S> <C> <C> <C> <C>

[MAP OF MISSOURI & ILLINOIS, INDICATING
LOCATIONS OF BRANCHES] Arnold Beaufort Belleville Bartonville
Ballwin Bismarck Breese Canton
Chesterfield (2) Dutzow Carbondale Chicago
Clayton Fulton Chester (2) Galesburg (2)
Creve Coeur (3) Gerald Columbia Havana
Ellisville Hermann Fairview Heights Hillside
Florissant (3) Lake St. Louis Granite City Jacksonville
Kirkwood Middletown Greenville Knoxville
Manchester Montgomery City Johnston City Peoria (4)
O'Fallon Morrison Lawrenceville (2) Pittsfield
Shrewsbury Owensville O'Fallon Quincy (2)
St. Charles (3) Park Hills (2) Red Bud Roodhouse
St. Louis City (3) Warrenton Salem (2) Springfield
St. Louis County (3) Washington Shiloh Sterling
St. Peters Wentzville Valmeyer Winchester
Warson Woods Vandalia
Webster Groves Waterloo
West Frankfort (2)

<CAPTION>
FIRST BANK FIRST BANK REDWOOD FIRST BANK
& TRUST OF CALIFORNIA BANK TEXAS N.A.
------- ------------- ---- ----------
<S> <C> <C> <C> <C>

[MAP OF CALIFORNIA & TEXAS, INDICATING
LOCATIONS OF BRANCHES] Beverly Hills Campbell San Francisco Dallas
Encino Concord San Rafael Irving
Fountain Valley Fairfield San Mateo McKinney
Fullerton Los Angeles Napa Houston (3)
Gardena Rancho
Huntington Beach (2) Cordova
Irvine Roseville (2)
Laguna Niguel Sacramento
Lakewood San Francisco (2)
Long Beach (3) San Jose
Los Angeles (2) San Pablo
Malibu Vallejo
Marina del Rey
Newport Beach
San Jose
Santa Barbara
Santa Maria
Solvang
Torrance
Ventura
Walnut Creek
Westlake Village
Woodland Hills
</TABLE>

<PAGE>
<PAGE>
SUMMARY

This summary highlights information contained elsewhere in, or
incorporated by reference into, this prospectus. Because this is a
summary, it may not contain all of the information that is important to
you. Therefore, you should also read the more detailed information set
forth in this prospectus, our financial statements and the other
information that is incorporated by reference in this prospectus.
Unless otherwise indicated, the information in this prospectus assumes
that the underwriters will not exercise their option to purchase
additional preferred securities to cover over-allotments.

FIRST BANKS, INC.

WHO WE ARE

First Banks, Inc. is a bank holding company headquartered in St.
Louis County, Missouri. Through the operation of our subsidiaries, we
offer a broad array of financial services to consumer and commercial
customers. Over the years, our organization has grown significantly,
primarily as a result of our acquisition strategy, as well as through
internal growth. We currently operate banking subsidiaries in
California, Illinois, Missouri and Texas. As of June 30, 2000, we had
total assets of $5.18 billion, total deposits of $4.46 billion and
loans, net of unearned discount, of $4.33 billion.

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

We operate through five subsidiary banks, a subsidiary bank
holding company, and through our subsidiary leasing company, as follows:

<TABLE>
<CAPTION>
TOTAL
LOCATIONS TOTAL ASSETS
AT JUNE 30, AT JUNE 30,
NAME HEADQUARTERS 2000 2000
---------------------------------------------- -------------------------- ----------- ------------------
(DOLLARS EXPRESSED
IN THOUSANDS)
<S> <C> <C> <C>
First Bank St. Louis County, Missouri 87 $3,150,764
First Bank & Trust Newport Beach, California 26 1,000,541
First Capital Group, Inc. (leasing subsidiary) Albuquerque, New Mexico 1 193<F1>
First Banks America, Inc., and its wholly
owned subsidiaries:
First Bank Texas N.A. Houston, Texas 6 303,570
First Bank of California Sacramento, California 13 566,314
Redwood Bank San Francisco, California 4 199,256
<FN>
-------------------
<F1> First Capital Group, Inc. was purchased on February 29, 2000.
As of June 30, 2000, there were approximately $82.5 million of
commercial leases. The commercial leases are recorded as assets
of our subsidiary banks.
</TABLE>

Acquisitions may serve to enhance our presence in a given market,
to expand the extent of our market area or to enable us to enter into
new or noncontiguous markets. Initially, we made acquisitions solely
within our primary Missouri-Illinois market areas. However, in the
early 1990's, the pricing of acquisitions in these areas escalated
beyond the levels we believed were desirable, causing us to explore
acquisitions in other markets. As a result, in 1994 we acquired a bank
in Texas with total assets of $367.0 million, and between January 1,
1995 and June 30, 2000, we completed 17 acquisitions in California, with
total assets of approximately $1.69 billion. In addition, in February 2000,
we acquired certain assets and assumed certain liabilities of First Capital
Group, Inc., a commercial leasing company headquartered in Albuquerque,
New Mexico, and in August 2000, we acquired Bank of Ventura, a bank
headquartered in Ventura, California, with $63.8 million in total
assets. We currently have agreements to acquire three more banks in
California which have combined total assets of approximately $485.9
million.

Our subsidiary banks and First Capital Group, or FCG, are wholly
owned by their respective parent companies. We owned 84.33% of First
Banks America, Inc., or FBA, at June 30, 2000. On June 29, 2000, we
executed a definitive agreement with FBA providing for the acquisition
by FBA of First Bank & Trust for approximately 6.5 million shares of FBA
common stock. Following this transaction, we will own 92.76% of
FBA. This transaction and related internal reorganizations will allow
FBA and us to merge our Texas and California interests by merging First
Bank Texas N.A., First Bank of California and First Bank & Trust into
Redwood Bank. The resulting banking entity will operate under the
First Bank & Trust name. We expect this transaction to be completed
in the fourth quarter of 2000.

Various trusts, which were created by and are administered by and
for the benefit of Mr. James F. Dierberg, our Chairman of the Board and
Chief Executive Officer, and his adult children, own all of our voting stock.
Mr. Dierberg and his family, therefore, control our management and policies.

GROWTH STRATEGY

We believe significant opportunities exist for financial
organizations to grow and prosper by delivering quality products and by
providing personal service to individuals and small to mid-sized
businesses. Consequently, we emphasize continually improving the
knowledge and skills of our people, enhancing our service quality, and
making our services competitive in the marketplace and convenient to
our customers. By combining these attributes, we believe we can realize
many of the efficiencies available to larger organizations and still
provide the opportunity for customers to receive the personalized
service that they find attractive in smaller organizations.

At the same time, we recognize that consolidation within the
banking industry and increasing competition from substantially larger
banks, as well as organizations other than banks, create pressures on
interest margins and operating costs. We believe that to counteract
these pressures we must operate efficiently and achieve a greater long-
term growth rate than can be accomplished solely by our marketing and
business development efforts. Therefore, we supplement these growth
efforts with acquisitions of other financial services entities.

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

FINANCIAL SUMMARY

To support this growth, we emphasize consistent earnings
performance, as well as retaining and investing those earnings.
Consequently, we have never paid, and have no present intention to pay,
dividends on our common stock. Furthermore, the dividends paid on our
Class A and B preferred stock currently represent less than 2.0% of our
current net income before dividends. As a result, between December 31,
1995 and June 30, 2000, our common shareholders' equity grew at a
compound annual growth rate of approximately 14.7%.

<TABLE>
<CAPTION>
COMPOUND
GROWTH OR
AVERAGE FOR
THE FIVE
YEARS
SIX MONTHS ENDED ENDED
JUNE 30, DECEMBER 31, FIVE YEARS ENDED DECEMBER 31,
---------------------- ------------ -------------------------------------------------------
2000 1999 1999<F1> 1999 1998 1997 1996 1995
---------- --------- ------------ ---------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net income . . . . . . . . . . . . . $ 29,259 21,830 15.9% $ 44,178 33,510 33,027 20,218 24,471
Loans, net of unearned discount. . . 4,326,393 3,768,094 9.9 3,996,324 3,580,105 3,002,200 2,767,969 2,744,219
Total assets . . . . . . . . . . . . 5,180,472 4,572,869 7.7 4,867,747 4,554,810 4,165,014 3,689,154 3,622,962
Common shareholders' equity. . . . . 308,977 264,116 14.1 281,842 250,300 218,474 184,439 166,542
Total shareholders' equity . . . . . 322,040 277,179 5.9 294,905 263,363 231,537 251,389 234,605
Return on average shareholders'
equity. . . . . . . . . . . . . . . 19.23% 16.22% 12.31% 15.79% 13.64% 12.91% 8.43% 10.79%
Number of locations. . . . . . . . . 137 131 -- 135 135 131 126 125
<FN>
------------------------------
<F1> For the period indicated, these figures represent compound annual
growth rate of net income, loans, net of unearned discount, total
assets, common shareholders' equity, total shareholders' equity
and average return on average total shareholders' equity.
</TABLE>

Our address is 135 North Meramec, Clayton, Missouri 63105, and our
telephone number is (314) 854-4600.

FIRST PREFERRED CAPITAL TRUST II

We recently formed the trust as an additional financing
subsidiary. Upon issuance of the preferred securities offered by this
prospectus, the purchasers in this offering will own all of the issued
and outstanding preferred securities of the trust. In exchange for our
capital contribution to the trust, we will own all of the common
securities of the trust. The trust exists exclusively for the following
purposes:

* issuing the preferred securities to the public for cash;

* issuing the common securities to us;

* investing the proceeds from the sale of the preferred and
common securities in an equivalent amount of 10.24%
subordinated debentures due September 30, 2030, to be issued
by us; and

* engaging in activities that are incidental to those listed
above.

The trust's address is 135 North Meramec, Clayton, Missouri 63105,
and its telephone number is (314) 854-4600.

<TABLE>
THE OFFERING
<C> <C>
The issuer. . . . . . . . . . . . . . . First Preferred Capital Trust II

Securities being offered. . . . . . . . 2,000,000 preferred securities, which represent preferred undivided beneficial
interests in the assets of the trust. Those assets will consist solely of the
subordinated debentures and payments received on the subordinated debentures.

The trust will sell the preferred securities to the public for cash. The trust
will use that cash to buy the subordinated debentures from us.

Offering price. . . . . . . . . . . . . $25 per preferred security.

When we will pay distributions to you . Your purchase of the preferred securities entitles you to receive cumulative cash
distributions at a 10.24% annual rate. Distributions will accumulate from the
date the trust issues the preferred securities and are to be paid quarterly on
March 31, June 30, September 30 and December 31 of each year, beginning December
31, 2000. As long as the preferred securities are represented by a global
security, the record date for distributions on the preferred securities will be
the business day prior to the distribution date. We may defer the payment of cash
distributions, as described below.

When we must redeem the preferred
securities. . . . . . . . . . . . . . The subordinated debentures will mature and the preferred securities must be
redeemed by September 30, 2030. We have the option, however, to shorten the
maturity date to a date not earlier than September 30, 2005. We will not shorten
the maturity date unless we have received the prior approval of the Board of
Governors of the Federal Reserve System, if required.

Redemption of the preferred
securities before September 30,
2030 is possible. . . . . . . . . . . The trust must redeem the preferred securities when the subordinated debentures
are paid at maturity or upon any earlier redemption of the subordinated
debentures. We may redeem all or part of the subordinated debentures at any time
on or after September 30, 2005. In addition, we may redeem, at any time, all of
the subordinated debentures if:

* the interest we pay on the subordinated debentures is no longer deductible by
us for federal income tax purposes; or the trust becomes subject to federal
income tax; or the trust becomes or will become subject to certain other taxes
or governmental charges;

* existing laws or regulations change in a manner requiring the trust to
register as an investment company; or

* the capital adequacy guidelines of the Federal Reserve change so that the
preferred securities are not eligible to be counted as Tier I capital.

<PAGE>
<PAGE>
We may also redeem the subordinated debentures at any time, and from time to time,
in an amount equal to the liquidation amount of any preferred securities we
repurchase, plus a proportionate amount of common securities of the trust, but
only in exchange for a like amount of the preferred securities and common
securities of the trust then owned by us.

Redemption of the subordinated debentures prior to maturity will be subject to the
prior approval of the Federal Reserve, if approval is then required. If your
preferred securities are redeemed by the trust, you will receive the liquidation
amount of $25 per preferred security, plus any accrued and unpaid distributions to
the date of redemption.

We have the option to extend the
interest payment period . . . . . . . The trust will rely solely on payments made by us under the subordinated
debentures to pay distributions on the preferred securities. As long as we are
not in default under the indenture relating to the subordinated debentures, we
may, at one or more times, defer interest payments on the subordinated debentures
for up to 20 consecutive quarters, but not beyond September 30, 2030. If we defer
interest payments on the subordinated debentures:

* the trust will also defer distributions on the preferred securities;

* the distributions you are entitled to will accumulate; and

* these accumulated distributions will earn interest at an annual rate of 10.24%,
compounded quarterly, until paid.

At the end of any deferral period, we will pay to the trust all accrued and unpaid
interest under the subordinated debentures. The trust will then pay all
accumulated and unpaid distributions to you.

You will still be taxed if
distributions on the preferred
securities are deferred . . . . . . . If a deferral of payment occurs, you must recognize the deferred amounts as income
for United States federal income tax purposes in advance of receiving these
amounts, even if you are a cash basis taxpayer.

Our guarantee of payment. . . . . . . . We guarantee the trust will use its assets to pay the distributions on the
preferred securities and the liquidation amount upon liquidation of the trust.
However, the guarantee does not apply when the trust does not have sufficient
funds to make the payments. If we do not make payments on the subordinated
debentures, the trust will not have sufficient funds to make payments on the
preferred securities. In this event, your remedy is to institute a legal
proceeding directly against us for enforcement of payments under the subordinated
debentures.

<PAGE>
<PAGE>
We may distribute the subordinated
debentures directly to you. . . . . . We may, at any time, dissolve the trust and distribute the subordinated debentures
to you, subject to the prior approval of the Federal Reserve, if required. If we
distribute the subordinated debentures, we will use our reasonable efforts to list
them on a national securities exchange or comparable automated quotation system.

How the securities will rank in
right of payment. . . . . . . . . . . Our obligations under the preferred securities, subordinated debentures and
guarantee are unsecured and will rank as follows with regard to right of payment:

* the preferred securities will rank equally with the common securities of the
trust. The trust will pay distributions on the preferred securities and the
common securities pro rata. However, if we default with respect to the
subordinated debentures, then no distributions on the common securities of the
trust or our common stock will be paid until all accumulated and unpaid
distributions on the preferred securities have been paid;

* our obligations under the subordinated debentures and the guarantee are
unsecured and generally will rank: (1) junior in priority to our existing and
future senior and senior subordinated indebtedness, and (2) equal in priority
to our subordinated debentures associated with the $88.9 million of trust
preferred securities that our other financing subsidiary currently has
outstanding; and

* because we are a holding company, the subordinated debentures and the
guarantee will effectively be subordinated to all existing and future
liabilities of our subsidiaries with respect to the assets of each such
subsidiary. These liabilities include all depositors' claims, as well as the
subordinated debentures associated with the $47.4 million of outstanding trust
preferred securities issued by a financing subsidiary of our subsidiary, FBA.

Voting rights of the preferred
securities. . . . . . . . . . . . . . Except in limited circumstances, holders of the preferred securities will have no
voting rights.

The Nasdaq National Market symbol . . . "FBNKN"

You will not receive certificates . . . The preferred securities will be represented by a global security that will be
deposited with and registered in the name of The Depository Trust Company, New
York, New York, or its nominee. This means that you will not receive a
certificate for the preferred securities, and your beneficial ownership interests
will be recorded through the DTC book-entry system.

<PAGE>
<PAGE>
How the proceeds of this offering
will be used. . . . . . . . . . . . . The trust will invest the proceeds from the sale of the preferred securities in
the subordinated debentures. We estimate the net proceeds to us from the sale of
the subordinated debentures to the trust, after deducting underwriting expenses
and commissions, will be approximately $47.8 million. We expect to use the
net proceeds from the sale of the subordinated debentures to repay indebtedness
currently outstanding under our revolving credit line. In the future, we
anticipate using amounts remaining available under the revolving credit line to
finance further expansion, including pending and potential acquisitions of banks
and other financial institutions.
</TABLE>

Before purchasing the preferred securities being offered, you
should carefully consider the "Risk Factors" beginning on page 9.

<PAGE>
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data set forth below, insofar as
they relate to the five years ended December 31, 1999, are derived from
our consolidated financial statements, which have been audited by KPMG
LLP. The summary consolidated data set forth below for the six-month
periods ended June 30, 2000 and 1999, are derived from unaudited
consolidated financial statements. In our opinion, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of results as of and for the six-month periods indicated
have been included. This information is qualified by reference to our
consolidated financial statements included herein, and this information
should be read in conjunction with such consolidated financial
statements and related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Results for
past periods are not necessarily indicative of results that may be
expected for future periods, and results for the six-month period ended
June 30, 2000 are not necessarily indicative of results that may be
expected for the entire year ending December 31, 2000.

<TABLE>
<CAPTION>
AS OF OR FOR THE
SIX MONTHS ENDED
JUNE 30,<F1> AS OF OR FOR THE YEAR ENDED DECEMBER 31,<F1>
--------------------- ------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- --------- --------- --------- --------- --------- ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income. . . . . . . . . . . . . . . . $ 201,878 168,201 353,082 327,860 295,101 266,021 261,621
Interest expense . . . . . . . . . . . . . . . 88,058 77,116 158,701 162,179 148,831 141,670 144,945
---------- --------- --------- --------- --------- --------- ---------
Net interest income. . . . . . . . . . . . . . 113,820 91,085 194,381 165,681 146,270 124,351 116,676
Provision for loan losses. . . . . . . . . . . 7,202 5,863 13,073 9,000 11,300 11,494 10,361
---------- --------- --------- --------- --------- --------- ---------
Net interest income after provision for
loan losses. . . . . . . . . . . . . . . . . 106,618 85,222 181,308 156,681 134,970 112,857 106,315
Noninterest income . . . . . . . . . . . . . . 21,035 23,118 41,650 36,497 25,697 20,721 19,407
Noninterest expense. . . . . . . . . . . . . . 79,710 72,735 150,807 138,704 110,287 105,741 91,566
---------- --------- --------- --------- --------- --------- ---------
Income before provision for income taxes
and minority interest in (income) loss
of subsidiary. . . . . . . . . . . . . . . . 47,943 35,605 72,151 54,474 50,380 27,837 34,156
Provision for income taxes . . . . . . . . . . 17,741 13,103 26,313 19,693 16,083 6,960 11,038
---------- --------- --------- --------- --------- --------- ---------
Income before minority interest in (income)
loss of subsidiary . . . . . . . . . . . . . 30,202 22,502 45,838 34,781 34,297 20,877 23,118
Minority interest in (income) loss of
subsidiary . . . . . . . . . . . . . . . . . (943) (672) (1,660) (1,271) (1,270) (659) 1,353
---------- --------- --------- --------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . . . . $ 29,259 21,830 44,178 33,510 33,027 20,218 24,471
========== ========= ========= ========= ========= ========= =========
DIVIDENDS:
Preferred stock. . . . . . . . . . . . . . . . $ 328 328 786 786 5,067 5,728 5,736
Common stock . . . . . . . . . . . . . . . . . - - - - - - -
Ratio of total dividends declared to net
income . . . . . . . . . . . . . . . . . . . 1.12% 1.50% 1.78% 2.35% 15.34% 28.33% 23.44%
BALANCE SHEET DATA:
Investment securities. . . . . . . . . . . . . $ 436,320 397,114 451,647 534,796 795,530 552,801 508,323
Loans, net of unearned discount. . . . . . . . 4,326,393 3,768,094 3,996,624 3,580,105 3,002,200 2,767,969 2,744,219
Total assets . . . . . . . . . . . . . . . . . 5,180,472 4,572,869 4,867,747 4,554,810 4,165,014 3,689,154 3,622,962
Total deposits . . . . . . . . . . . . . . . . 4,456,453 3,990,490 4,251,814 3,939,985 3,684,595 3,238,567 3,183,691
Notes payable. . . . . . . . . . . . . . . . . 58,500 48,000 64,000 50,048 55,144 76,330 88,135
Guaranteed preferred beneficial interests
in First Banks, Inc. and First Banks
America, Inc. subordinated debentures. . . . 127,695 127,527 127,611 127,443 83,183 - -
Common stockholders' equity. . . . . . . . . . 308,977 264,116 281,842 250,300 218,474 184,439 166,542
Total stockholders' equity . . . . . . . . . . 322,040 277,179 294,905 263,363 231,537 251,389 234,605
EARNINGS RATIOS:
Return on average total assets<F2> . . . . . . 1.17% 0.97% 0.95% 0.78% 0.87% 0.57% 0.70%
Return on average total stockholders'
equity<F2> . . . . . . . . . . . . . . . . . 19.23 16.22 15.79 13.64 12.91 8.43 10.79
Efficiency ratio<F3> . . . . . . . . . . . . . 59.11 63.89 63.89 68.80 64.13 72.89 67.29
Net interest margin<F2><F4>. . . . . . . . . . 4.90 4.40 4.52 4.19 4.09 3.79 3.60
ASSET QUALITY RATIOS:
Allowance for loan losses to loans . . . . . . 1.80 1.72 1.72 1.70 1.68 1.69 1.92
Nonperforming loans to loans<F5> . . . . . . . 0.85 1.21 0.99 1.22 0.80 1.09 1.44
Allowance for loan losses to
nonperforming loans<F5>. . . . . . . . . . . 211.39 142.99 172.66 140.04 209.88 154.55 133.70
Nonperforming assets to loans and other
real estate<F6>. . . . . . . . . . . . . . . 0.89 1.27 1.05 1.32 1.04 1.47 1.71
Net loan charge-offs (recoveries) to
average loans<F2>. . . . . . . . . . . . . . (0.06) 0.18 0.22 0.05 0.27 0.72 0.41
CAPITAL RATIOS:
Average total stockholders' equity to average
total assets . . . . . . . . . . . . . . . . 6.07 5.98 6.00 5.73 6.70 6.79 6.49
Total risk-based capital ratio . . . . . . . . 10.26 10.29 10.05 10.28 10.26 9.23 9.34
Leverage ratio . . . . . . . . . . . . . . . . 7.80 6.99 7.14 7.77 6.80 5.99 5.32

<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES:<F7>
Including interest on deposits . . . . . . . . 1.52x 1.44x 1.43x 1.33x 1.33x 1.19x 1.23x
Excluding interest on deposits . . . . . . . . 5.83 4.68 4.54 4.53 4.32 2.32 2.06
<FN>
----------------------
<F1> The comparability of the selected data presented is affected by
the acquisitions of ten banks and three savings banks during the
five-year period ended December 31, 1999 and one bank and one
leasing company during the six-month period ended June 30, 2000.
These acquisitions were accounted for as purchases and,
accordingly, the selected data includes the financial position and
results of operations of each acquired entity only for the periods
subsequent to its respective date of acquisition.
<F2> Ratios for the six-month periods are annualized.
<F3> Efficiency ratio is the ratio of noninterest expense to the sum of
net interest income and noninterest income.
<F4> Net interest margin is the ratio of net interest income (expressed
on a tax-equivalent basis) to average interest-earning assets.
<F5> Nonperforming loans consist of nonaccrual loans and certain loans
with restructured terms.
<F6> Nonperforming assets consist of nonperforming loans and other real
estate.
<F7> For purposes of calculating the ratio of earnings to fixed
charges, earnings consist of income before taxes plus interest and
rent expense. Fixed charges consist of interest and rent expense.

</TABLE>

<PAGE>
<PAGE>
RISK FACTORS

An investment in the preferred securities involves a number of
risks. We urge you to read all of the information contained in this
prospectus. In addition, we urge you to consider carefully the
following factors in evaluating an investment in the trust before you
purchase the preferred securities offered by this prospectus.

Because the trust will rely on the payments it receives on the
subordinated debentures to fund all payments on the preferred
securities, and because the trust may distribute the subordinated
debentures in exchange for the preferred securities, purchasers of the
preferred securities are making an investment decision that relates to
the subordinated debentures being issued by First Banks, Inc. as well as
the preferred securities. Purchasers should carefully review the
information in this prospectus about the preferred securities, the
subordinated debentures and the guarantee.

RISKS RELATED TO FIRST BANKS, INC.

WE PURSUE ACQUISITIONS TO SUPPLEMENT INTERNAL GROWTH.

We pursue a strategy of supplementing internal growth by acquiring
other financial institutions and related entities in order to achieve
certain size objectives that we believe are necessary to compete
effectively with our larger competitors. However, there are risks
associated with this strategy, including the following:

* Because of our ownership structure, we do not use our common
stock as a portion of the purchase price. This can be a
disadvantage in acquisitions relative to other prospective
acquirors in those instances in which selling shareholders
require a tax-free exchange, or in transactions in which the
pooling of interests method of accounting is preferable to
purchase accounting. Additionally, cash acquisitions by
their nature initially reduce our regulatory capital ratios;

* With the overall strength of the banking industry, numerous
potential acquirors exist for most acquisition candidates,
creating intense competition, particularly with respect to
price. In many cases this competition involves
organizations with significantly greater resources than we
have available;

* We may be exposed to potential asset quality issues or
unknown or contingent liabilities of the banks or businesses
we acquire. If these issues or liabilities exceed our
estimates, our earnings and financial condition may be
adversely affected;

* Prices at which acquisitions can be made fluctuate with
market conditions. We have experienced times during which
acquisitions could not be made in specific markets at prices
our management considered acceptable and expect that we will
experience this condition in the future in one or more
markets; and

* The acquisition of other entities generally requires
integration of systems and procedures of the acquired entity
in order to make the transaction economically feasible.
This integration process is complicated and time consuming
to us, and it can also be disruptive to the customers of the
acquired business. If the integration process is not
conducted successfully and with minimal effect on the
business and its customers, we may not realize the
anticipated economic benefits of particular acquisitions
within the expected time frame, and we may lose customers or
employees of the acquired business.

GEOGRAPHIC DISPERSION CREATES ADDITIONAL OPERATING REQUIREMENTS.

The geographic distance between the offices of our subsidiaries in
California, Illinois, Missouri, New Mexico and Texas create additional
operating requirements that are not present in other businesses that
operate in contiguous markets. These operating requirements include:

* Operation of data processing and item processing functions
at remote locations;

* Control of correspondent accounts, reserve balances and wire
transfers in different time zones;

* Providing administrative support, including accounting,
human resources, loan servicing, internal audit and credit
review at significant distances; and

* Establishing and monitoring compliance with our corporate
policies and procedures in different areas.

The geographic distances between our operations increase the cost
of management and make it more difficult to standardize our business
practices and procedures.

OUR BUSINESS IS SUBJECT TO CREDIT RISKS.

As a financial institution, we are subject to the risk that
customers to whom our subsidiary banks have made loans will be unable to
repay these loans according to their terms and that the collateral
securing these loans, if any, may not have a value equal to amounts owed
under the loans. A substantial portion of the loans made by our
subsidiary banks is secured by real estate. Adverse developments
affecting real estate in one or more of our markets could increase the
credit risk associated with our loan portfolio.

IF OUR ALLOWANCE FOR LOAN LOSSES IS INSUFFICIENT TO ABSORB PROBABLE
LOSSES IN OUR LOAN PORTFOLIO, IT WILL ADVERSELY AFFECT OUR FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

Some borrowers may not repay loans that we make to them. This
risk is inherent in the banking business. Like all comparable financial
institutions, we maintain an allowance for loan losses to absorb
probable loan losses in our loan portfolio. However, we cannot predict
loan losses with certainty, and we cannot assure you that our allowance
will be sufficient. Loan losses in excess of our reserves would have an
adverse effect on our financial condition and results of operations.

WE MAY BE ADVERSELY AFFECTED BY INTEREST RATE CHANGES.

Our earnings are derived from the operations of our subsidiaries,
and we are principally dependent on net interest income, calculated as
the difference between interest earned on loans and investments and the
interest expense paid on deposits and other borrowings. Like other
banks and financial institutions, First Banks' interest income and
interest expense are affected by general economic conditions and by the
policies of regulatory authorities, including the monetary policies of
the Federal Reserve. Changes in the economic environment may affect
loan and deposit pricing, influence the growth rate of loans and
deposits and alter the quality of our loan portfolio. While management
has taken measures, such as employing various off-balance-sheet
financial instruments, including derivatives, when appropriate, intended
to manage the risks of operating in a changing interest rate
environment, there can be no assurance that such measures will be
effective in avoiding undue interest rate risk. There are also costs
associated with these measures and risks that counterparties may not
perform these obligations. Under our current interest rate risk
position, our net interest income could be negatively affected by a
decline in interest rates.

OUR FUTURE SUCCESS IS DEPENDENT ON OUR ABILITY TO COMPETE EFFECTIVELY IN
THE HIGHLY COMPETITIVE BANKING INDUSTRY.

The financial services business is highly competitive, and we
encounter strong direct competition for deposits, loans and other
financial services in all of our market areas. Our principal
competitors include other commercial banks, savings banks, savings and
loan associations, mutual funds, finance companies, trust companies,
insurance companies, leasing companies, credit unions, mortgage
companies, private issuers of debt obligations and suppliers of other
investment alternatives, such as securities firms and financial holding
companies. Many of our non-bank competitors are not subject to the same
degree of regulation as that imposed on bank holding companies,
federally insured banks and national or state chartered banks. As a
result, such non-bank competitors have advantages over us in providing
certain services. We also compete with major multi-bank holding companies
which are significantly larger than us and have greater access to capital
and other resources.

OUR BUSINESS MAY BE ADVERSELY AFFECTED BY THE HIGHLY REGULATED
ENVIRONMENT IN WHICH WE OPERATE.

We and our subsidiaries are subject to extensive federal and state
legislation, regulation and supervision. Recently enacted, proposed and
future legislation and regulations have had, will continue to have or
may have a significant impact on the financial services industry. Some
of the legislative and regulatory changes may benefit us and our
subsidiaries; however, other changes could increase our costs of doing
business or reduce our ability to compete in certain markets.

WE CONTINUALLY ENCOUNTER TECHNOLOGICAL CHANGE, AND WE MAY HAVE FEWER
RESOURCES THAN MANY OF OUR COMPETITORS TO CONTINUE TO INVEST IN
TECHNOLOGICAL IMPROVEMENTS.

The financial services industry is undergoing rapid technological
changes, with frequent introductions of new technology-driven products
and services. In addition to better serving customers, the effective
use of technology increases efficiency and enables financial
institutions to reduce costs. Our future success will depend, in part,
upon our ability to address the needs of our customers by using
technology to provide products and services that will satisfy customer
demands for convenience, as well as to create additional efficiencies in
our operations. Many of our competitors have substantially greater
resources to invest in technological improvements. We cannot assure you
that we will be able to effectively implement new technology-driven
products and services or be successful in marketing these products and
services to our customers.

ONE FAMILY MAINTAINS VOTING CONTROL OVER FIRST BANKS.

Various trusts, which were created by and are administered by and
for the benefit of Mr. James F. Dierberg, our Chairman of the Board and
Chief Executive Officer, and his adult children, own all of our voting
stock. Mr. Dierberg and his family, therefore, control our management
and policies.

<PAGE>
<PAGE>
RISKS RELATED TO AN INVESTMENT IN THE PREFERRED SECURITIES

IF WE DO NOT MAKE INTEREST PAYMENTS UNDER THE SUBORDINATED DEBENTURES,
THE TRUST WILL BE UNABLE TO PAY DISTRIBUTIONS AND LIQUIDATION AMOUNTS.
THE GUARANTEE WILL NOT APPLY BECAUSE THE GUARANTEE COVERS PAYMENTS ONLY
IF THE TRUST HAS FUNDS AVAILABLE.

The trust will depend solely on our payments on the subordinated
debentures to pay amounts due to you on the preferred securities. If we
default on our obligation to pay the principal or interest on the
subordinated debentures, the trust will not have sufficient funds to pay
distributions or the liquidation amount on the preferred securities. In
that case, you will not be able to rely on the guarantee for payment of
these amounts because the guarantee only applies if the trust has
sufficient funds to make distributions on or to pay the liquidation
amount of the preferred securities. Instead, you or the property
trustee will have to institute a direct action against us to enforce the
property trustee's rights under the indenture relating to the
subordinated debentures.

OUR ABILITY TO MAKE INTEREST PAYMENTS ON THE SUBORDINATED DEBENTURES TO
THE TRUST MAY BE RESTRICTED.

We are a holding company, and substantially all of our assets are held
by our subsidiaries. Our ability to make payments on the subordinated
debentures when due will depend primarily on available cash resources at
the bank holding company level and on dividends from our subsidiaries.
The ability of each banking subsidiary to pay dividends is subject to
its profitability, financial condition, capital expenditures and other
cash flow requirements. Furthermore, the terms of the subordinated
debentures associated with the $47.4 million of trust preferred
securities issued by First Banks America's financing subsidiary prevent
FBA's payment of dividends to us under certain circumstances. Dividend
payments or extensions of credit from our banking subsidiaries are also
subject to regulatory limitations, generally based on capital levels and
current and retained earnings, imposed by the various regulatory
agencies with authority over such subsidiaries. Based on applicable
regulatory limitations, our banking subsidiaries had the capacity to pay
a total of approximately $56.8 million as dividends to First Banks as of
June 30, 2000, subject to our need to maintain adequate capital ratios
at each bank. We may also be precluded from making interest payments on
the subordinated debentures by our regulators in order to address any
perceived deficiencies in liquidity or regulatory capital levels at the
holding company level. Such regulatory action would require us to
obtain consent from our regulators prior to paying dividends on our
capital stock or interest on the subordinated debentures. In the event
our regulators withheld their consent to our payment of interest on the
subordinated debentures, we would exercise our right to defer interest
payments on the subordinated debentures, and the trust would not have
funds available to make distributions on the preferred securities during
such period. The commencement of a deferral period would likely cause
the market price of the preferred securities to decline. We cannot
assure you that our subsidiaries will be able to pay dividends in the
future or that our regulators will not attempt to preclude us from
making interest payments on the subordinated debentures.

THE SUBORDINATED DEBENTURES AND THE GUARANTEE RANK LOWER THAN MOST OF
OUR OTHER INDEBTEDNESS AND OUR HOLDING COMPANY STRUCTURE EFFECTIVELY
SUBORDINATES ANY CLAIMS AGAINST US TO THOSE OF OUR SUBSIDIARIES'
CREDITORS.

Our obligations under the subordinated debentures and the
guarantee are unsecured and will rank junior in priority of payment to
our existing and future senior and senior subordinated indebtedness,
which totaled $58.5 million at June 30, 2000, and will rank equally with
our subordinated debentures associated with the $88.9 million of trust
preferred securities our other financing subsidiary currently has
outstanding. The issuance of the subordinated debentures and the
preferred securities does not limit our ability or the ability of our
subsidiaries to incur additional indebtedness, guarantees or other
liabilities.

Because we are a holding company, the creditors of our
subsidiaries, including depositors and the holders of subordinated
debentures associated with the $47.4 million of trust preferred
securities issued by a financing subsidiary of our subsidiary, FBA, also
will have priority over you in any distribution of our subsidiaries'
assets in liquidation, reorganization or otherwise. Accordingly, the
subordinated

<PAGE>
<PAGE>
debentures and the guarantee will be effectively subordinated to all existing
and future liabilities of our subsidiaries with respect to the assets of
each such subsidiary, and you should look only to our assets for payments on
the preferred securities and the subordinated debentures.

WE HAVE THE OPTION TO DEFER INTEREST PAYMENTS ON THE SUBORDINATED
DEBENTURES FOR SUBSTANTIAL PERIODS.

We may, at one or more times, defer interest payments on the
subordinated debentures for up to 20 consecutive quarters. If we defer
interest payments on the subordinated debentures, the trust will defer

distributions on the preferred securities during any deferral period.
During a deferral period, you will be required to recognize as income
for federal income tax purposes the amount approximately equal to the
interest that accrues on your proportionate share of the subordinated
debentures held by the trust in the tax year in which that interest
accrues, even though you will not receive these amounts until a later
date. You will also not receive the cash related to any accrued and
unpaid interest from the trust if you sell the preferred securities
before the end of any deferral period. During a deferral period,
accrued but unpaid distributions will increase your tax basis in the
preferred securities. If you sell the preferred securities during a
deferral period, your increased tax basis will decrease the amount of
any capital gain or increase the amount of any capital loss that you may
have otherwise realized on the sale. A capital loss, except in certain
limited circumstances, cannot be applied to offset ordinary income. As
a result, deferral of distributions could result in ordinary income, and
a related tax liability for the holder, and a capital loss that may only
be used to offset a capital gain.

We do not currently intend to exercise our right to defer interest
payments on the subordinated debentures. However, if we exercise our
right in the future, the market price of the preferred securities would
likely be adversely affected. The preferred securities may trade at a
price that does not fully reflect the value of accrued but unpaid
interest on the subordinated debentures. If you sell the preferred
securities during a deferral period, you may not receive the same return
on investment as someone who continues to hold the preferred securities.
Due to our right to defer interest payments, the market price of the
preferred securities may be more volatile than the market prices of
other securities without the deferral feature.

WE HAVE MADE ONLY LIMITED COVENANTS IN THE INDENTURE AND THE TRUST
AGREEMENT.

The indenture governing the subordinated debentures and the trust
agreement governing the trust do not require us to maintain any
financial ratios or specified levels of net worth, revenues, income,
cash flow or liquidity, and therefore do not protect holders of the
subordinated debentures or the preferred securities in the event we
experience significant adverse changes in our financial condition or
results of operations. In addition, neither the indenture nor the trust
agreement limits our ability or the ability of any subsidiary to incur
additional indebtedness. Therefore, you should not consider the
provisions of these governing instruments as a significant factor in
evaluating whether we will be able to comply with our obligations under
the subordinated debentures or the guarantee.

WE MAY REDEEM THE SUBORDINATED DEBENTURES BEFORE SEPTEMBER 30, 2030.

Under the following circumstances, we may redeem the subordinated
debentures before their stated maturity:

* We may redeem the subordinated debentures, in whole or in
part, at any time on or after September 30, 2005.

* We may redeem the subordinated debentures in whole, but not
in part, within 180 days after certain occurrences at any
time during the life of the trust. These occurrences may
include adverse tax, investment company or bank regulatory
developments. See "Description of the Subordinated
Debentures--Redemption."

You should assume that we will exercise our redemption option if
we are able to obtain capital at a lower cost than we must pay on the
subordinated debentures or if it is otherwise in our interest to

<PAGE>
<PAGE>
redeem the subordinated debentures. If the subordinated debentures are
redeemed, the trust must redeem preferred securities having an aggregate
liquidation amount equal to the aggregate principal amount of
subordinated debentures redeemed, and you may be required to reinvest
your principal at a time when you may not be able to earn a return that
is as high as you were earning on the preferred securities.

WE CAN DISTRIBUTE THE DEBENTURES TO YOU, WHICH MAY HAVE ADVERSE TAX
CONSEQUENCES FOR YOU AND WHICH MAY ADVERSELY AFFECT THE MARKET PRICE OF
THE PREFERRED SECURITIES.

The trust may be dissolved at any time before maturity of the
subordinated debentures on September 30, 2030. As a result, and subject
to the terms of the trust agreement, the trustees may distribute the
subordinated debentures to you.

We cannot predict the market prices for the subordinated
debentures that may be distributed in exchange for preferred securities
upon liquidation of the trust. The preferred securities, or the
subordinated debentures that you may receive if the trust is liquidated,
may trade at a discount to the price that you paid to purchase the
preferred securities. Because you may receive subordinated debentures,
your investment decision with regard to the preferred securities will
also be an investment decision with regard to the subordinated
debentures. You should carefully review all of the information
contained in this prospectus regarding the subordinated debentures.

Under current interpretations of United States federal income tax
laws supporting classification of the trust as a grantor trust for tax
purposes, a distribution of the subordinated debentures to you upon the
dissolution of the trust would not be a taxable event to you.
Nevertheless, if the trust is classified for United States income tax
purposes as an association taxable as a corporation at the time it is
dissolved, the distribution of the subordinated debentures would be a
taxable event to you. In addition, if there is a change in law, a
distribution of subordinated debentures upon the dissolution of the
trust could be a taxable event to you.

YOU ARE SUBJECT TO REPAYMENT RISK BECAUSE POSSIBLE TAX LAW CHANGES COULD
RESULT IN A REDEMPTION OF THE PREFERRED SECURITIES.

Future legislation may be enacted that could adversely affect our
ability to deduct our interest payments on the subordinated debentures
for federal income tax purposes, making redemption of the subordinated
debentures likely and resulting in a redemption of the preferred
securities.

From time to time, the current administration has proposed federal
income tax law changes that would, among other things, generally deny
interest deductions to a corporate issuer if the debt instrument has a
term exceeding 15 years and if the debt instrument is not reflected as
indebtedness on the issuer's consolidated balance sheet. Other proposed
tax law changes would have denied interest deductions if the debt
instrument had a term exceeding 20 years. These proposals were not
enacted into law. Although it is impossible to predict future
proposals, if a future proposal of this sort were to become effective in
a form applicable to already issued and outstanding securities, we could
be precluded from deducting interest on the subordinated debentures.
Enactment of this type of proposal might in turn give rise to a tax
event as described under "Description of the Preferred Securities --
Redemption or Exchange -- Redemption upon a Tax Event, Investment
Company Event or Capital Treatment Event."

TRADING CHARACTERISTICS OF THE PREFERRED SECURITIES MAY CREATE ADVERSE
TAX CONSEQUENCES FOR YOU.

The preferred securities may trade at a price that does not
reflect the value of accrued but unpaid interest on the underlying
subordinated debentures. If you dispose of your preferred securities
between record dates for payments on the preferred securities, you may
have adverse tax consequences. Under these circumstances, you will be
required to include accrued but unpaid interest on the subordinated
debentures allocable to the preferred securities through the date of
disposition in your income as ordinary income if you use the accrual
method of accounting or if this interest represents original issue
discount.

If interest on the subordinated debentures is included in income
under the original issue discount provisions, you would add this amount
to your adjusted tax basis in your share of the underlying subordinated
debentures deemed disposed. If your selling price is less than your
adjusted tax basis, which will include all accrued but unpaid original
issue discount interest included in your income, you could recognize a
capital loss which, subject to limited exceptions, cannot be applied to
offset ordinary income for federal income tax purposes. See "Federal
Income Tax Consequences" for more information on possible adverse tax
consequences to you.

THERE IS NO CURRENT PUBLIC MARKET FOR THE PREFERRED SECURITIES AND THEIR
MARKET PRICE MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS.

There is currently no public market for the preferred securities.
The preferred securities have been designated for inclusion in the
Nasdaq National Market, and trading is expected to commence on or prior
to delivery of the preferred securities. However, there is no guarantee that
an active or liquid trading market will develop for the preferred securities
or that the quotation of the preferred securities will continue in the Nasdaq
National Market. If an active trading market does not develop, the
market price and liquidity of the preferred securities will be adversely
affected. Even if an active public market does develop, there is no
guarantee that the market price for the preferred securities will equal
or exceed the price you pay for the preferred securities.

Future trading prices of the preferred securities may be subject
to significant fluctuations in response to prevailing interest rates,
our future operating results and financial condition, the market for
similar securities and general economic and market conditions. The
initial public offering price of the preferred securities has been set
at the liquidation amount of the preferred securities and may be greater
than the market price following the offering.

The market price for the preferred securities, or the subordinated
debentures that you may receive in a distribution, is also likely to
decline during any period that we are deferring interest payments on the
subordinated debentures.

YOU MUST RELY ON THE PROPERTY TRUSTEE TO ENFORCE YOUR RIGHTS IF THERE IS
AN EVENT OF DEFAULT UNDER THE INDENTURE.

You may not be able to directly enforce your rights against us if
an event of default under the indenture occurs. If an event of default
under the indenture occurs and is continuing, this event will also be an
event of default under the trust agreement. In that case, you must rely
on the enforcement by the property trustee of its rights as holder of
the subordinated debentures. The holders of a majority in liquidation
amount of the preferred securities will have the right to direct the
property trustee to enforce its rights. If the property trustee does
not enforce its rights following an event of default and a request by
the record holders to do so, any record holder may, to the extent
permitted by applicable law, take action directly against us to enforce
the property trustee's rights. If an event of default occurs under the
trust agreement that is attributable to our failure to pay interest or
principal on the subordinated debentures, or if we default under the
guarantee, you may proceed directly against us. You will not be able
to exercise directly any other remedies available to the holders of the
subordinated debentures unless the property trustee fails to do so.

AS A HOLDER OF PREFERRED SECURITIES YOU HAVE LIMITED VOTING RIGHTS.

Holders of preferred securities have limited voting rights. Your
voting rights pertain primarily to amendments to the trust agreement.
In general, only we can replace or remove any of the trustees. However,
if an event of default under the trust agreement occurs and is
continuing, the holders of at least a majority in aggregate liquidation
amount of the preferred securities may replace the property trustee and
the Delaware trustee.

<PAGE>
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in or incorporated by reference into
this prospectus constitute forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. We intend for such forward-looking
statements to be covered by the safe harbor provisions for forward-
looking statements contained in the Private Securities Litigation Reform
Act of 1995, and we are including this statement for purposes of invoking
these safe harbor provisions. You can identify these statements from our
use of the words "estimate," "project," "believe," "intend," "anticipate,"
"expect," "target" and similar expressions. These forward-looking
statements may include, among other things:

* statements relating to projected growth; anticipated
improvements in earnings, earnings per share, and other
financial performance measures; and management's long term
performance goals;

* statements relating to the anticipated effects on results of
operations or financial condition from expected developments
or events;

* statements relating to our business and growth strategies,
including potential acquisitions; and

* any other statements which are not historical facts.

Such forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause our actual
results, performance or achievements, or industry results, to differ
materially from our expectations of future results, performance or
achievements expressed or implied by such forward-looking statements.
In addition, our past results of operations do not necessarily indicate
our future results. We discuss these and other uncertainties in the
"Risk Factors" section of this prospectus.

USE OF PROCEEDS

The trust will invest all of the proceeds from the sale of the
preferred securities in the subordinated debentures. We anticipate that
the net proceeds from the sale of the subordinated debentures will be
approximately $47.8 million after deduction of offering expenses
estimated to be $350,000 and underwriting commissions.

We expect to use the net proceeds to repay indebtedness currently
outstanding under our revolving credit line with a group of unaffiliated
banks. At August 31, 2000, approximately $63.0 million was outstanding
under the revolving credit line. The revolving credit line provides for
maximum borrowings of $120.0 million. Interest is payable on
outstanding principal balances on a monthly basis, at a floating rate
equal to, at our option, either the lender's prime rate or the
Eurodollar rate plus a margin determined by the outstanding balance and
our profitability. The borrowings outstanding under the revolving credit
line mature on August 23, 2001. The revolving credit line is secured by
a pledge of the stock of each of our direct subsidiaries. After we repay
the current borrowings, we plan to keep the revolving credit line available
for future borrowings.

In the future, we anticipate using the amounts remaining available
under the credit line to finance further expansion and potential
acquisitions of banks and other financial institutions. Currently, we
are a party to agreements to acquire three California banks having
aggregate assets of approximately $485.9 million. The aggregate cash
purchase price for these acquisitions is approximately $113.2 million.
We expect these transactions to close no later than the first quarter of
2001. While we are currently evaluating other possible acquisition
candidates, there are no other transactions currently pending.

<PAGE>
<PAGE>
ACCOUNTING TREATMENT

The trust will be treated, for financial reporting purposes, as
our subsidiary and, accordingly, the accounts of the trust will be
included in our consolidated statements of income as part of noninterest
expense. The preferred securities will be presented as a separate line
item in our consolidated balance sheet under the caption "Guaranteed
preferred beneficial interests in First Banks, Inc. subordinated
debentures," or other similar caption. In addition, appropriate
disclosures about the preferred securities, the guarantee and the
subordinated debentures will be included in the notes to our
consolidated financial statements. For financial reporting purposes, we
will record distributions payable on the preferred securities within the
noninterest expense section of our consolidated statements of income.

Our future reports filed under the Securities Exchange Act of 1934
will include a footnote to the audited consolidated financial statements
stating that:

* the trust is wholly-owned;

* the sole assets of the trust are the subordinated
debentures, specifying the subordinated debentures'
outstanding principal amount, interest rate and maturity
date; and

* our obligations described in this prospectus, in the
aggregate, constitute a full, irrevocable and unconditional
guarantee on a subordinated basis by us of the obligations
of the trust under the preferred securities.

We have not included separate financial statements of the trust in
this prospectus. We do not consider that separate financial statements
would be material to holders of preferred securities because we will own
all of the trust's voting securities, the trust has no independent
operations and we guarantee the payments on the preferred securities to
the extent described in this prospectus.

MARKET FOR THE PREFERRED SECURITIES

The preferred securities have been designated for inclusion in the Nasdaq
National Market under the symbol "FBNKN." Trading is expected to commence on
or prior to the delivery of the preferred securities. We are not sure, however,
whether an active and liquid trading market will develop, or if developed, will
continue. The public offering price and distribution rate have been determined
by negotiations among our representatives and the underwriters, and the public
offering price of the preferred securities may not be indicative of the market
price following the offering. See "Underwriting."

<PAGE>
<PAGE>
CAPITALIZATION

The following table sets forth (i) our consolidated capitalization
at June 30, 2000 and (ii) our consolidated capitalization giving effect
to the issuance of the preferred securities hereby offered by the trust
and our receipt of the net proceeds from the corresponding sale of the
subordinated debentures to the trust, as if the sale of the preferred
securities had been consummated on June 30, 2000, and assuming the
underwriters' over-allotment option was not exercised. This data should
be read in conjunction with our consolidated financial statements and
notes thereto.

<TABLE>
<CAPTION>
JUNE 30, 2000
--------------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT:
Notes payable<F1> . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,500 $ 10,725
-------- --------

GUARANTEED PREFERRED BENEFICIAL INTERESTS IN FIRST BANKS, INC. AND FIRST BANKS AMERICA, INC.
SUBORDINATED DEBENTURES:

Guaranteed preferred beneficial interests in First Banks, Inc. subordinated debentures. . . . . . 86,250 136,250
Guaranteed preferred beneficial interests in First Banks America, Inc. subordinated debentures. . 46,000 46,000
-------- --------
Total guaranteed preferred beneficial interests in subordinated debentures . . . . . . . . . . 132,250 182,250
Less expenses relating to the issuance of the preferred securities. . . . . . . . . . . . . . . . (4,555) (6,780)
-------- --------
Total guaranteed preferred beneficial interests in subordinated debentures, net of expenses. . 127,695 175,470
-------- --------

STOCKHOLDERS' EQUITY:
Preferred stock:
$1.00 par value, 5,000,000 shares authorized, no shares issued
and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Class A convertible, adjustable rate, $20.00 par value, 750,000
shares authorized, 641,082 shares issued and outstanding. . . . . . . . . . . . . . . . . . . 12,822 12,822
Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
160,505 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 241
Common stock, $250.00 par value, 25,000 shares authorized,
23,661 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,915 5,915
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,989 2,989
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299,190 299,190
Accumulated other comprehensive income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 883 883
-------- --------
Total stockholders' equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 322,040 322,040
-------- --------
Total capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $508,235 $508,235
======== ========

CAPITAL RATIOS<F2>:
Leverage ratio<F3><F4>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.80% 7.80%
Tier I capital ratio<F4>. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.49 8.49
Total risk based capital ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.26 11.33
<FN>
--------------
<F1> The proceeds of this offering will be used in their entirety to
temporarily reduce the indebtedness outstanding under First Banks'
revolving credit line. See "Use of Proceeds" for a description of
the revolving credit line and the amounts outstanding thereunder
as of certain dates.
<F2> The capital ratios, as adjusted, are computed including the total
estimated net proceeds from the sale of the preferred securities,
in a manner consistent with Federal Reserve regulations.
<F3> The leverage ratio is Tier I capital divided by average quarterly
assets, after deducting intangible assets and net deferred tax
assets in excess of regulatory maximum limits.
<F4> The preferred securities have been structured to qualify as Tier I
capital. However, in calculating the amount of Tier I qualifying
capital, the preferred securities, together with any outstanding
cumulative preferred stock of First Banks that may be outstanding
in the future, may only be included up to the amount constituting
25% of Tier I core capital elements (including the preferred
securities). Initially, none of the preferred securities will be
considered Tier I capital.
</TABLE>

<PAGE>
<PAGE>
SELECTED CONSOLIDATED AND OTHER FINANCIAL DATA

The selected consolidated financial data set forth below, insofar
as they relate to the five years ended December 31, 1999, are derived
from our consolidated financial statements, which have been audited by
KPMG LLP. The selected consolidated data set forth below for the six-
month periods ended June 30, 2000 and 1999, are derived from unaudited
consolidated financial statements. In our opinion, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of results as of and for the six-month periods indicated
have been included. This information is qualified by reference to our
consolidated financial statements included herein, and this information
should be read in conjunction with such consolidated financial
statements and related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." Results for
past periods are not necessarily indicative of results that may be
expected for future periods, and results for the six-month period ended
June 30, 2000 are not necessarily indicative of results that may be
expected for the entire year ending December 31, 2000

<TABLE>
<CAPTION>
AS OF OR FOR THE SIX
MONTHS ENDED
JUNE 30,<F1> AS OF OR FOR THE YEAR ENDED DECEMBER 31,<F1>
--------------------- ------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- --------- --------- --------- --------- --------- ---------
(DOLLARS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income. . . . . . . . . . . . . $ 201,878 168,201 353,082 327,860 295,101 266,021 261,621
Interest expense . . . . . . . . . . . . 88,058 77,116 158,701 162,179 148,831 141,670 144,945
---------- --------- --------- --------- --------- --------- ---------
Net interest income. . . . . . . . . . . 113,820 91,085 194,381 165,681 146,270 124,351 116,676
Provision for loan losses. . . . . . . . 7,202 5,863 13,073 9,000 11,300 11,494 10,361
---------- --------- --------- --------- --------- --------- ---------
Net interest income after provision
for loan losses . . . . . . . . . . . . 106,618 85,222 181,308 156,681 134,970 112,857 106,315
Noninterest income . . . . . . . . . . . 21,035 23,118 41,650 36,497 25,697 20,721 19,407
Noninterest expense. . . . . . . . . . . 79,710 72,735 150,807 138,704 110,287 105,741 91,566
---------- --------- --------- --------- --------- --------- ---------
Income before provision for income
taxes and minority interest in (income)
loss of subsidiary. . . . . . . . . . . 47,943 35,605 72,151 54,474 50,380 27,837 34,156
Provision for income taxes . . . . . . . 17,741 13,103 26,313 19,693 16,083 6,960 11,038
---------- --------- --------- --------- --------- --------- ---------
Income before minority interest in
(income) loss of subsidiary . . . . . . 30,202 22,502 45,838 34,781 34,297 20,877 23,118
Minority interest in (income) loss
of subsidiary . . . . . . . . . . . . . (943) (672) (1,660) (1,271) (1,270) (659) 1,353
---------- --------- --------- --------- --------- --------- ---------
Net income . . . . . . . . . . . . . . . $ 29,259 21,830 44,178 33,510 33,027 20,218 24,471
========== ========= ========= ========= ========= ========= =========
DIVIDENDS:
Preferred stock. . . . . . . . . . . . . $ 328 328 786 786 5,067 5,728 5,736
Common stock - - - - - - -
Ratio of total dividends declared
to net income . . . . . . . . . . . . . 1.12% 1.50% 1.78% 2.35% 15.34% 28.33% 23.44%
PER SHARE DATA:
Earnings per common share:
Basic . . . . . . . . . . . . . . . . $ 1,222.71 908.75 1,833.91 1,383.04 1,181.69 612.46 791.82
Diluted . . . . . . . . . . . . . . . 1,182.47 877.36 1,775.47 1,337.09 1,134.28 596.83 759.09
Weighted average common stock
outstanding . . . . . . . . . . . . . . 23,661 23,661 23,661 23,661 23,661 23,661 23,661
BALANCE SHEET DATA:
Investment securities. . . . . . . . . . $ 436,320 397,114 451,647 534,796 795,530 552,801 508,323
Loans, net of unearned discount. . . . . 4,326,393 3,768,094 3,996,624 3,580,105 3,002,200 2,767,969 2,744,219
Total assets . . . . . . . . . . . . . . 5,180,472 4,572,869 4,867,747 4,554,810 4,165,014 3,689,154 3,622,962
Total deposits . . . . . . . . . . . . . 4,456,453 3,990,490 4,251,814 3,939,985 3,684,595 3,238,567 3,183,691
Notes payable. . . . . . . . . . . . . . 58,500 48,000 64,000 50,048 55,144 76,330 88,135
Guaranteed preferred beneficial
interests in First Banks, Inc.
and First Banks America, Inc.
subordinated debentures . . . . . . . . 127,695 127,527 127,611 127,443 83,183 - -
Common stockholders' equity. . . . . . . 308,977 264,116 281,842 250,300 218,474 184,439 166,542
Total stockholders' equity . . . . . . . 322,040 277,179 294,905 263,363 231,537 251,389 234,605
EARNINGS RATIOS:
Return on average total assets<F2> . . . 1.17 0.97 0.95 0.78 0.87 0.57 0.70
Return on average total stockholders'
equity<F2>. . . . . . . . . . . . . . . 19.23 16.22 15.79 13.64 12.91 8.43 10.79
Efficiency ratio<F3> . . . . . . . . . . 59.11 63.89 63.89 68.60 64.13 72.89 67.29
Net interest margin<F2><F4>. . . . . . . 4.90 4.40 4.52 4.19 4.09 3.79 3.60
ASSET QUALITY RATIOS:
Allowance for loan losses to loans . . . 1.80 1.72 1.72 1.70 1.68 1.69 1.92
Nonperforming loans to loans<F5> . . . . 0.85 1.21 0.99 1.22 0.80 1.09 1.44
Allowance for loan losses to
nonperforming loans<F5> . . . . . . . . 211.39 142.99 172.66 140.04 209.88 154.55 133.70
Nonperforming assets to loans and other
real estate<F6> . . . . . . . . . . . . 0.89 1.27 1.05 1.32 1.04 1.47 1.71
Net loan charge-offs (recoveries) to
average loans<F2> . . . . . . . . . . . (0.06) 0.18 0.22 0.05 0.27 0.72 0.41

<PAGE>
CAPITAL RATIOS:
Average total stockholders' equity to
average total assets. . . . . . . . . . 6.07 5.98 6.00 5.73 6.70 6.79 6.49
Total risk-based capital ratio . . . . . 10.26 10.29 10.05 10.28 10.26 9.23 9.34
Leverage ratio . . . . . . . . . . . . . 7.80 6.99 7.14 7.77 6.80 5.99 5.32
RATIO OF EARNINGS TO FIXED CHARGES:<F7>
Including interest on deposits . . . . . 1.52x 1.44x 1.43x 1.33x 1.33x 1.19x 1.23x
Excluding interest on deposits . . . . . 5.83 4.68 4.54 4.53 4.32 2.32 2.06
<FN>
----------------------
<F1> The comparability of the selected data presented is affected by
the acquisitions of ten banks and three savings banks during the
five-year period ended December 31, 1999 and one bank and one
leasing company during the six-month period ended June 30, 2000.
These acquisitions were accounted for as purchases and,
accordingly, the selected data includes the financial position and
results of operations of each acquired entity only for the periods
subsequent to its respective date of acquisition.
<F2> Ratios for the six-month periods are annualized.
<F3> Efficiency ratio is the ratio of noninterest expense to the sum of
net interest income and noninterest income.
<F4> Net interest margin is the ratio of net interest income (expressed
on a tax-equivalent basis) to average interest-earning assets.
<F5> Nonperforming loans consist of nonaccrual loans and certain loans
with restructured terms.
<F6> Nonperforming assets consist of nonperforming loans and other real
estate.
<F7> For purposes of calculating the ratio of earnings to fixed
charges, earnings consist of income before taxes plus interest and
rent expense. Fixed charges consist of interest and rent expense.
</TABLE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following presents management's discussion and analysis of our
financial condition and results of operations as of the dates and for
the periods indicated. You should read this discussion in conjunction
with our "Selected Consolidated and Other Financial Data," our
consolidated financial statements and the related notes thereto, and the
other financial data contained elsewhere in this prospectus.

This discussion contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ significantly
from those anticipated in these forward-looking statements as a result
of various factors, including those discussed in "Risk Factors"
contained elsewhere in this prospectus. See "Special Note Regarding
Forward-Looking Statements."

GENERAL

We are a bank holding company headquartered in St. Louis County,
Missouri. Through the operation of our subsidiaries, we offer a broad
array of financial services to consumer and commercial customers. Over
the years, our organization has grown significantly, primarily as a
result of our acquisition strategy, as well as through internal growth.
We currently operate banking subsidiaries in California, Illinois,
Missouri and Texas. As of June 30, 2000, we had total assets of $5.18
billion, total deposits of $4.46 billion and loans, net of unearned
discount of $4.33 billion.

We operate through five subsidiary banks, a subsidiary bank
holding company, and through our subsidiary leasing company, as follows:

<TABLE>
<CAPTION>
TOTAL
LOCATIONS AT
JUNE 30, TOTAL ASSETS AT
NAME HEADQUARTERS 2000 JUNE 30, 2000
---------------------------------------------- -------------------------- ------------ ------------------
(DOLLARS EXPRESSED
IN THOUSANDS)
<S> <C> <C> <C>
First Bank St. Louis County, Missouri 87 $3,150,764
First Bank & Trust Newport Beach, California 26 1,000,541
First Capital Group, Inc. (leasing subsidiary) Albuquerque, New Mexico 1 193<F1>
First Banks America, Inc., and its wholly
owned subsidiaries:
First Bank Texas N.A. Houston, Texas 6 303,570
First Bank of California Sacramento, California 13 566,314
Redwood Bank San Francisco, California 4 199,256
<FN>
--------
<F1> First Capital Group, Inc. was purchased on February 29, 2000.
As of June 30, 2000, there were approximately $82.5 million of
commercial leases. The commercial leases are recorded as assets
of our subsidiary banks.
</TABLE>

Our subsidiary banks and First Capital Group, Inc., or FCG, are wholly
owned by their respective parent companies. We owned 84.33% of FBA at
June 30, 2000. On June 29, 2000, we executed a definitive agreement
with FBA providing for the acquisition by FBA of First Bank & Trust for

<PAGE>
<PAGE>
approximately 6.5 million shares of FBA common stock. Following this
transaction, we will own 92.76% of FBA. This transaction and related
internal reorganizations will allow FBA and us to merge our Texas and
California interests by merging First Bank Texas N.A, First Bank of
California and First Bank & Trust into Redwood Bank. The resulting
banking entity will operate under the First Bank & Trust name. We
expect this transaction to be completed in the fourth quarter of 2000.

Various trusts, which were created by and are administered by and
for the benefit of Mr. James F. Dierberg, our Chairman of the Board and
Chief Executive Officer, and his adult children, own all of
our voting stock. Mr. Dierberg and his family, therefore, control our
management and policies.

In the development of our banking franchise, we emphasize
acquiring other financial institutions as one means of achieving our
growth objectives. Acquisitions may serve to enhance our presence in a
given market, to expand the extent of our market area or to enable us to
enter into new or noncontiguous markets. However, by using cash in our
acquisitions, the characteristics of the acquisition arena may, at
times, place us at a competitive disadvantage relative to other
acquirers offering stock transactions. This results from the market
attractiveness of other financial institutions' stock, the advantages of
tax-free exchanges to the selling shareholders, and the financial
reporting flexibility inherent in structuring stock transactions.
Consequently, our acquisition activities appear somewhat sporadic
because we consummate multiple transactions in a particular period,
followed by substantially less active acquisition periods. Furthermore,
the intangible assets recorded in conjunction with these acquisitions
create an immediate reduction in regulatory capital. This reduction, as
required by regulatory policy, provides further financial disincentives
to paying large premiums in cash acquisitions.

Recognizing these facts, we follow certain patterns in our
acquisitions. First, we typically acquire several smaller institutions,
sometimes over an extended period of time, rather than a single larger
one. We attribute this to the constraints imposed by the amount of
funds required for a larger transaction, as well as the opportunity to
minimize the aggregate premium required through smaller individual
transactions. Secondly, in some acquisitions, we may acquire
institutions having significant asset-quality problems. This diminishes
their attractiveness to other potential acquirers, and therefore reduces
the amount of acquisition premiums required. Finally, we may pursue our
acquisition strategy in other geographic areas, or pursue internal
growth more aggressively because cash transactions are not economically
viable in extremely competitive acquisition markets.

During 1994 and 1995, we completed twelve acquisitions, which
provided an aggregate of $1.96 billion in total assets and 43 banking
locations. Relative to the entire organization, these acquisitions
represented an increase in our total assets of 78% over the same two-
year time period. Our acquisitions provided us with access into several
new major market areas and, accordingly, an opportunity for future
growth and profitability. As acquisition pricing in these areas
escalated, our level of acquisition activity decreased from 1996 through
1999. Management continues to meld the acquired entities into our
operations, systems and culture. Many of the acquired institutions
exhibited elements of financial distress prior to their acquisitions,
which contributed to marginal earnings performance. Generally, these
elements resulted from asset quality problems and/or high noninterest
expenses.

Following our acquisitions, the most immediate tasks included the
improvement of asset quality and the elimination of unnecessary
expenses. Although many improvements were instituted shortly after
acquisition, many of the problems were indigenous, and required a much
longer time period to resolve. These problems involved not only those
problem assets that had no apparent short-term solution, but also other
elements of expense, such as:

* maintaining, repairing and, in some cases, refurbishing bank
premises necessitated by the deferral of such projects by
the acquired entities;

* renegotiating long-term leases which provided space in
excess of that necessary for banking activities and/or rates
in excess of current market rates or subleasing excess space
to third parties;

* relocating branch offices which were not adequate, conducive
or convenient for banking operations; and

* managing lawsuits that existed with respect to acquired
entities to minimize the overall cost of negotiation,
settlement or litigation.

However, the post-acquisition process not only required the
reduction of expenses and improvement of asset quality, but also the
combining of separate and distinct entities together to form a cohesive
organization with common objectives and focus. We invested significant
resources to reorganize staff, recruit personnel where needed, and
establish the direction and focus necessary for the combined entities to
take advantage of the opportunities available to them. This investment
contributed to the increases in noninterest expense during the five
years ended December 31, 1999, and resulted in the creation of new
banking entities, which conveyed a more consistent image and quality of
service. The new banking entities provide a broad array of banking
products to their customers and compete effectively in their
marketplaces, even in the presence of other financial institutions with
much greater resources.

While some of these integration activities did not contribute to
reductions of noninterest expense, they contributed to the commercial
and retail business development efforts of the banks, and ultimately to
their overall ability to improve future profitability. The following
table reflects contribution to consolidated net income for Missouri and
Illinois, California and Texas:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31:
-----------------------------------------------------------------------------
MISSOURI AND ILLINOIS CALIFORNIA TEXAS
----------------------- ---------------------- ----------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
---- ---- ---- ---- ---- ---- ---- ---- ----
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity in income of subsidiaries . . . . . $ 40,737 33,271 31,686 14,275 7,168 7,488 3,303 2,303 1,675

Average investment in subsidiaries . . . . 252,146 232,518 220,134 156,235 91,243 76,330 24,682 23,389 25,178

Return on average investment . . . . . . . 16.16% 14.31% 14.39% 9.14% 7.86% 9.81% 13.38% 9.85% 6.65%
</TABLE>

Anticipating that increasing acquisition pricing would eventually
make growth solely by acquisition economically less viable and
recognizing that rapid consolidation within the banking industry would
create new business development opportunities, beginning in 1993, we
implemented a program to enhance our capabilities to achieve and manage
internal growth. This program required significant increases in the
resources dedicated to commercial and retail business development,
financial service product line and delivery systems, branch development
and training, advertising and marketing programs and administrative and
operational support. These efforts resulted in various changes within
our organization.

In February 1997, our other financing subsidiary issued $86.25
million of 9.25% trust preferred securities. In addition, in July 1998,
a financing subsidiary of FBA, issued $46.0 million of 8.50% trust
preferred securities. The trust preferred securities issued by our
financing subsidiary are publicly held and traded in the Nasdaq National
Market. The trust preferred securities issued by FBA's financing subsidiary

<PAGE>
<PAGE>
are publicly held and traded on the New York Stock Exchange. These trust
preferred securities have no voting rights except in certain limited
circumstances. We pay distributions on these trust preferred securities
quarterly in arrears on March 31, June 30, September 30 and December 31
of each year.

LENDING ACTIVITIES

Our enhanced business development resources assisted in the
realignment of certain acquired loan portfolios, which were skewed
toward loan types which reflected the abilities and experiences of the
management of the acquired entities. This was particularly evident in
acquisitions of savings banks, which had portfolios heavily concentrated
in single family and/or multi-family residential real estate lending,
and in our Texas bank, which had a portfolio consisting primarily of
indirect automobile loans. In order to achieve a more diversified
portfolio, to address asset quality issues in our portfolios and to
achieve a higher interest yield on our loan portfolio, we reduced a
substantial portion of the loans which were acquired during this time
through payments, refinancing with other financial institutions, charge-
offs, and, in two instances, sales of loans. As a result, our portfolio
of one-to-four family residential real estate loans, after reaching a
maximum of approximately $1.20 billion at December 31, 1995, was reduced
to approximately $1.06 billion at December 31, 1996, $915.2 million at
December 31, 1997, $739.4 million at December 31, 1998 and $720.6 million
at December 31, 1999 and increased slightly to $738.9 million at June 30,
2000. Similarly, our portfolio of consumer and installment loans, net of
unearned discount, decreased from $413.6 million at December 31, 1995, to
$333.3 million, $279.3 million, $274.4 million and $225.3 million at
December 31, 1996, 1997, 1998 and 1999, respectively, and to $188.8
million at June 30, 2000. A substantial portion of the consumer and
installment loan portfolio still consists of indirect automobile loans.

As these components of our loan portfolio decreased, we replaced
them with more diversified and higher yielding loans that were
internally generated by our business development function. With our
acquisitions, we expanded our business development function into the new
market areas in which we were then operating. Consequently, in spite of
relatively large reductions in acquired portfolios, our aggregate loan
portfolio, net of unearned discount, increased from $2.74 billion at
December 31, 1995 to $2.77 billion, $3.00 billion, $3.58 billion and
$4.00 billion at December 31, 1996, 1997, 1998 and 1999, respectively,
and to $4.33 billion at June 30, 2000.

Our expanded level of commercial lending carries with it greater
credit risk which, although managed through loan policies and
procedures, underwriting and credit administration, must be recognized
through adequate allowances for loan losses. We associate the increased
level of commercial lending activities with the increase in
nonperforming and other problem loans of $12.8 million as of December
31, 1998, compared to December 31, 1997. Two loans totaling $6.0
million and our acquisitions of Pacific Bay Bank in February 1998 and
Republic Bank in September 1998, primarily account for the increase.

In addition to restructuring our loan portfolio, we also have
changed the composition of our deposit base. Several of the
institutions that we have acquired since 1990 were savings banks.
Traditionally, savings banks have placed greater reliance on time
deposits as a source of funding than their commercial banking
counterparts. Although time deposits are generally a stable source of
funds, they are typically the highest cost deposits available, the
depositors tend to be relatively sensitive to interest rates in the
market, and frequently the customers have no other banking relationships
with the financial institution. These characteristics suggest that many
of these customers move their deposits between financial institutions
readily and have limited loyalty to any particular institution.
Consequently, we direct our deposit development programs toward
increased transaction accounts, such as demand and savings accounts,
rather than time deposits. We also emphasize attracting more than one
account relationship with customers by cross-selling to them through
packaging various account types and offering incentives to deposit
customers on other deposit or non-deposit services. In addition,
commercial borrowers are encouraged to maintain their operating deposit
accounts with us. As a result, our net growth in deposits has been
focused in transaction accounts rather than time accounts. At December
31, 1995 and 1996, total time deposits were $1.80 billion and $1.81
billion, or 56.4% and 55.9% of total

<PAGE>
<PAGE>
deposits, respectively. Although total deposits have continued to
increase, average time deposits have remained relatively constant but
have decreased to 46.7% of total deposits at December 31, 1999 and 48.3%
of total deposits at June 30, 2000.

The simultaneous growth by acquisition of financial institutions
and the building of the infrastructure necessary to achieve significant
internal growth has adversely impacted our operating results. However,
despite the significant expenses we incurred in the amalgamation of the
acquired entities into our corporate culture and systems, and in the
expansion of our organizational capabilities, the earnings of the
acquired entities and the improved net interest income resulting from
the transition in the composition of our loan and deposit portfolios
have contributed to improving net income during 1999 and 1998. For the
years ended December 31, 1999 and 1998, net income was $44.2 million and
$33.5 million, respectively, compared with $33.0 million, $20.2 million
and $24.5 million in 1997, 1996 and 1995, respectively. For the six
months ended June 30, 2000, net income was $29.3 million compared with
$21.8 million for the comparable period in 1999. While we anticipate
certain short-term adverse effects on our operating results associated
with acquisitions, we believe the long-term benefits of our acquisition
program exceed the short-term issues encountered with selected
acquisitions. As such, in addition to concentrating on internal growth
through continued efforts to further develop our corporate
infrastructure and product and service offerings, we expect to continue
to identify and pursue opportunities for growth through acquisitions.

ACQUISITIONS

To enhance our banking franchise, we emphasize acquiring other
financial institutions as a means of accelerating our growth, in order
to significantly expand our presence in a given market, to increase the
extent of our market area or to enter into new or noncontiguous market
areas. After we consummate an acquisition, we expect to enhance the
franchise of the acquired entity by supplementing the marketing and
business development efforts to broaden the customer bases, strengthening
particular segments of the business or filling voids in the overall market
coverage. We have utilized cash, borrowings, FBA's voting stock and the
issuance of additional securities to meet our growth objectives under our
acquisition program.

During the three years ended December 31, 1999, we completed five
acquisitions and five branch office purchases. Additionally, in the
first nine months of 2000, we completed three acquisitions and have
three others pending. As demonstrated below, our acquisitions during
this period have primarily served to increase our presence in markets
that we originally entered into during 1995. These transactions are
summarized as follows:

<TABLE>
<CAPTION>
LOANS AND
LEASES,
NET OF NUMBER OF
TOTAL UNEARNED INVESTMENT BANKING
ENTITY CLOSING DATE ASSETS<F1> DISCOUNT<F1> SECURITIES<F1> DEPOSITS<F1> LOCATIONS
------ ------------ ---------- ------------ -------------- ------------ ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
PENDING
Bank of San Francisco
San Francisco, California - $203,000 101,400 40,000 155,800 1

Millenium Bank
San Francisco, California - 104,500 72,100 24,700 91,900 2

Commercial Bank of San Francisco
San Francisco, California - 178,400 97,400 63,800 132,700 1
-------- ------- ------- ------- --
$485,900 270,900 128,500 380,400 4
======== ======= ======= ======= ==
2000
Bank of Ventura<F2>
Ventura, California August 31, 2000 $ 63,800 39,400 15,500 57,300 1

First Capital Group, Inc.
Albuquerque, New Mexico February 29, 2000 64,600 64,600 - - 1

Lippo Bank
San Francisco, California<F3> February 29, 2000 85,300 40,900 37,400 76,400 3
-------- ------- ------ ------- --
$213,700 144,900 52,900 133,700 5
======== ======= ====== ======= ==
1999
Brentwood Bank of California
Malibu, California branch office<F4> September 17, 1999 $ 23,600 6,300 - 17,300 1

Century Bank
Beverly Hills, California<F2> August 31, 1999 156,000 94,800 26,100 132,000 6

Redwood Bancorp
San Francisco, California<F5> March 4, 1999 183,900 134,400 34,400 162,900 4
-------- ------- ------ ------- --
$363,500 235,500 60,500 312,200 11
======== ======= ====== ======= ==
1998
Republic Bank
Torrance, California<F2> September 15, 1998 $124,100 97,900 7,500 117,200 3

Bank of America
Solvang, California
branch office<F4> March 19, 1998 15,500 - - 15,500 1

Pacific Bay Bank
San Pablo, California<F3> February 2, 1998 38,300 29,700 232 35,200 1
-------- ------- ------ ------- --
$177,900 127,600 7,732 167,900 5
======== ======= ====== ======= ==
1997
Surety Bank
Vallejo, California<F3> December 1, 1997 $ 72,800 54,400 11,800 67,500 2

Highland Federal Savings Bank,
F.S.B. Woodland Hills, California
branch office<F6> September 30, 1997 42,500 100 - 42,400 1

Highland Federal Savings Bank,
F.S.B. Long Beach, California
branch offices<F6> March 31, 1997 40,500 100 - 40,400 2
-------- ------- ------ ------- --
$155,800 54,600 11,800 150,300 5
======== ======= ====== ======= ==

<PAGE>
<FN>
--------
<F1> For pending acquisitions, these figures are as of June 30, 2000.
For closed acquisitions, these figures are as of the respective
closing date.
<F2> Bank of Ventura, Century Bank and Republic Bank were merged into
First Bank & Trust.
<F3> Lippo Bank, Pacific Bay Bank and Surety Bank were merged into
First Bank of California.
<F4> The Malibu branch office of Brentwood Bank of California and the
Solvang branch office of Bank of America were acquired by First
Bank & Trust through a purchase of certain assets and assumption
of deposit liabilities of each branch office. Total assets consist
primarily of cash received upon assumption of the deposit
liabilities and selected loans.

<PAGE>
<PAGE>
<F5> Redwood Bancorp was a wholly owned subsidiary of FBA. Redwood
Bancorp operated through its wholly owned subsidiary bank, Redwood
Bank. On July 17, 2000, First Banks completed a downstream merger
of Redwood Bancorp with and into Redwood Bank.
<F6> The Woodland Hills branch office and the Long Beach branch offices
of Highland Federal Savings Bank, F.S.B. were acquired by First
Bank & Trust through a purchase of certain assets and assumption
of deposit liabilities of the branch offices. Total assets
consist primarily of cash received upon assumption of deposit
liabilities and selected loans.
</TABLE>

Except for our acquisition of Surety Bank, all of the listed
acquisitions are or were cash transactions. We used available cash
reserves from the sales and maturities of available-for-sale investment
securities, borrowings under our revolving credit line with a group of
unaffiliated banks and the proceeds of the issuance of trust preferred
securities by our financing subsidiaries. We funded the 49% cash
portion of the acquisition of Surety Bank from available cash. We
acquired the remaining 51% through an exchange of shares of FBA common
stock.

PENDING

On September 22, 2000, FBA executed a definitive agreement to
acquire The San Francisco Company and its wholly-owned banking
subsidiary, Bank of San Francisco. Under the terms of this agreement,
the shareholders of The San Francisco Company will receive $1.95 per
share in cash, or a total of approximately $63.0 million. Bank of San
Francisco has one office in the San Francisco, California financial
district. At June 30, 2000, Bank of San Francisco had $203.0 million in
total assets, $101.4 million in loans, net of unearned discount, $40.0
million in investment securities and $155.8 million in deposits. FBA
expects this transaction, which is subject to regulatory approvals and
other conditions, to be completed during the first quarter of 2001.

On August 23, 2000, FBA executed a definitive agreement to acquire
Millenium Bank. Under the terms of this agreement, the shareholders of
Millenium Bank will receive $8.10 per share in cash, or a total of
approximately $20.7 million. Millenium Bank has one office in the San
Francisco, California financial district and one office in Oakland,
California. At June 30, 2000, Millenium Bank had $104.5 million in
total assets, $72.1 million in loans, net of unearned discount, $24.7
million in investment securities and $91.9 million in deposits. FBA
expects this transaction, which is subject to regulatory and shareholder
approvals, to be completed during or before the first quarter of 2001.

On June 29, 2000, we executed a definitive agreement with FBA
providing for the acquisition by FBA of First Bank & Trust. Under the
terms of the agreement, we will exchange all of the outstanding stock of
First Bank & Trust for approximately 6.5 million shares of common stock of
FBA, which will increase our ownership percentage of FBA to 92.76%.
First Bank & Trust currently operates 26 banking locations in the
counties of Los Angeles, Orange, Ventura and Santa Barbara, California
as well as branches in San Jose and Walnut Creek, in Northern
California. This transaction and related internal reorganizations will
allow FBA and us to merge our Texas and California interests by merging
First Bank Texas N.A., First Bank of California and First Bank & Trust
into Redwood Bank. The resulting entity will operate under the First
Bank & Trust name. We expect this transaction to help eliminate market
confusion regarding our banks and branch locations and result in certain
operating efficiencies. We expect this transaction to be completed during
the fourth quarter of 2000.

On June 27, 2000, FBA executed a definitive agreement with
Commercial Bank of San Francisco (Commercial Bank) providing for the
acquisition of Commercial Bank by FBA. Under the terms of the
agreement, the shareholders of Commercial Bank will receive $17.75 per
share in cash, or a total of approximately $29.5 million. Commercial
Bank operates one branch office in the San Francisco financial district.
At June 30, 2000, Commercial Bank had $178.4 million in total assets,
$97.4 million in loans, net of unearned discount, $63.8 million in
investment securities and $132.7 million in deposits. FBA expects this
transaction, which is subject to regulatory approvals and the approval
of Commercial Bank shareholders, to be completed during the fourth
quarter of 2000.

CLOSED

of approximately $14.2 million. At the time of the transaction,
Bank of Ventura had $63.8 million in total assets, $39.4 million in
loans, net of unearned discount, $15.5 million in investment securities
and $57.3 million in deposits.

On February 29, 2000, we completed our acquisition of certain
assets and liabilities of First Capital Group, Inc., Albuquerque, New
Mexico (FCG), in exchange for $65.1 million in cash, which represented a
premium on the lease portfolio of $1.5 million. FCG operates a multi-
state commercial leasing business. We intend to amortize the premium as
a yield adjustment on the acquired leases over approximately four years.
At the time of the transaction, FCG had $64.6 million in total assets,
consisting almost solely of commercial leases, net of unearned income.

On February 29, 2000, FBA completed its acquisition of Lippo Bank,
San Francisco, California, in exchange for $17.2 million in cash. Lippo
Bank operated three banking locations in San Francisco, San Jose and Los
Angeles, California. At the time of the transaction, Lippo Bank had
$85.3 million in total assets, $40.9 million in loans, net of unearned
discount, $37.4 million in investment securities and $76.4 million in
deposits. Lippo Bank was merged into First Bank of California on May
31, 2000.

FINANCIAL CONDITION AND AVERAGE BALANCES

Our average total assets were $5.04 billion for the six months
ended June 30, 2000, compared to $4.54 billion for the six months ended
June 30, 1999. Our total assets at June 30, 2000 were $5.18 billion, an
increase of $310.0 million or 6.37% over total assets of $4.87 billion
at December 31, 1999. During the six months ended June 30, 2000, the
acquisitions of Lippo Bank and First Capital Group provided assets of
$85.3 million and $64.6 million, respectively. During this period,
loans, net of unearned discount, excluding the loans acquired in the
Lippo Bank acquisition and leases acquired in the FCG acquisition,
increased by $224.6 million. We offset the overall increase in total
assets and provided an additional source of funds for continued internal
loan growth by reducing our investment securities by $52.7 million to
$436.3 million at June 30, 2000. The reduction in our investment
securities was partially offset by $37.4 million of investment
securities acquired from Lippo Bank. Total deposits, excluding the
$76.4 million of deposits provided by our acquisition of Lippo Bank,
increased by $128.2 million to $4.46 billion at June 30, 2000. The
funds generated from the deposit growth were primarily utilized to fund
internal loan growth and our acquisition of the FCG leases.

Total assets at December 31, 1999 were $4.87 billion, an increase
of $312.9 million, or 6.87%, over total assets of $4.55 billion at
December 31, 1998. Our average total assets were $4.66 billion for the
year ended December 31, 1999, compared to $4.29 billion and $3.82
billion for the years ended December 31, 1998 and 1997, respectively.
We attribute the increase of $377.6 million in total average assets for
1999 primarily to:

* the acquisitions of Redwood and Century Bank, which provided total
assets of $183.9 million and $156.0 million, respectively;

* the purchase of the deposit accounts of the Malibu, California
banking location of Brentwood Bank of California;

* internal loan growth resulting from the continued expansion and
development of the business development staff; and

* the issuance by FBA's financing subsidiary of trust preferred
securities during 1998.

The increase in assets for 1999 was primarily funded by an
increase in total average deposits of $283.3 million to $4.06 billion at
December 31, 1999, an increase in average short-term borrowings of $26.2
million and a decrease in average investment securities of $221.3
million. Similarly, we funded the increase in assets for 1998 by an
increase in average total deposits of $427.7 million to $3.78 billion at
December 31, 1998, from $3.35 billion at December 31, 1997, and a
decrease in average investment securities of $58.0 million during 1998.
We attribute the increase in deposits for 1998 to our acquisitions
of Republic Bank, Pacific Bay Bank, the purchase of the deposit accounts
of the Solvang, California banking location of Bank of America and
internal deposit growth of $92.1 million.

Loans, net of unearned discount, averaged $4.18 billion and $3.71
billion for the six months ended June 30, 2000 and 1999, respectively.
Our acquisition of Lippo Bank on February 29, 2000

<PAGE>
<PAGE>
provided loans, net of unearned discount, of $40.9 million. In addition
to the growth provided by this acquisition, during the first six months
of 2000, $306.8 million of net loan growth was provided by corporate banking
business development, consisting of an increase of $189.3 million of
commercial, financial and agricultural loans, $21.6 million of real
estate construction and land development loans and $95.9 million of
commercial real estate loans. These increases were partially offset by
a continuing reduction in consumer and installment loans, net of
unearned discount, principally indirect automobile loans.

Loans, net of unearned discount, averaged $3.81 billion, $3.25
billion and $2.85 billion for the years ended December 31, 1999, 1998
and 1997, respectively. The acquisitions completed during 1999 and 1998
provided loans, net of unearned discount, of $235.5 million and $127.6
million, respectively. In addition to growth provided by these
acquisitions, for 1999, $363.4 million of net loan growth was provided
by corporate banking business development, consisting of an increase of
$148.3 million of commercial, financial and agricultural loans, $31.5
million of real estate construction and land development loans and
$183.6 million of commercial real estate loans. These increases were
partially offset by continuing reductions in residential real estate
loans of $126.4 million and in consumer and installment loans, net of
unearned discount, which consist primarily of indirect automobile loans,
of $56.3 million. These changes result from the focus which we have
placed on our business development efforts and the portfolio
repositioning which began in 1995. This repositioning provided for
substantially all of our conforming residential mortgage loan production
to be sold in the secondary mortgage market and the origination of
indirect automobile loans to be substantially reduced.

Investment securities averaged $440.4 million and $470.6 million
for the six months ended June 30, 2000 and 1999, respectively.
Investment securities averaged $454.4 million, $675.7 million and $617.7
million for the years ended December 31, 1999, 1998 and 1997,
respectively. The average balance of investment securities decreased by
$221.3 million for the year ended December 31, 1999 and by $14.0 million
for the six month period ended June 30, 2000. We attribute these
decreases primarily to the liquidation of certain acquired investment
securities and to sales of investment securities available for sale
necessary to provide an additional source of funds for our loan growth.
The investment securities that we obtained in conjunction with our
acquisitions of Redwood, Century Bank and Lippo Bank and that we
retained in our portfolio partially offset the decreases.

We use deposits as our primary funding source and acquire them
from a broad base of local markets, including both individual and
corporate customers. Deposits averaged $4.38 billion and $3.95 billion
for the six months ended June 30, 2000 and 1999, respectively. Deposits
averaged $4.06 billion, $3.78 billion and $3.35 billion for the years
ended December 31, 1999, 1998 and 1997, respectively. We credit the
increases primarily to our acquisitions completed during the respective
periods and the expansion of the deposit product and service offerings
available to our customer base. The divestiture of certain branches in
1999, which resulted in a reduction in our deposit base of approximately
$54.8 million, partially offset the overall increase.

During July 1998, FBA's financing subsidiary issued $46.0 million
of 8.50% trust preferred securities. Proceeds from this offering, net
of underwriting fees and offering expenses, were approximately $44.0
million and were used to reduce borrowings, to support possible
repurchases of FBA's common stock from time to time and for general
corporate purposes. FBA temporarily invested the remaining proceeds in
interest-bearing deposits and used them to fund the acquisition of
Redwood. In addition, in February 1997, our other financing subsidiary
issued $86.25 million of 9.25% trust preferred securities. The proceeds
from this offering, net of underwriting fees and offering expenses, were
$83.1 million and were used to reduce borrowings, for purchases of
shares of our Class C 9.00% Increasing Rate, Redeemable, Cumulative
Preferred Stock and for various short-term investments.

Stockholders' equity averaged $305.9 million and $271.5 million
for the six months ended June 30, 2000 and 1999, respectively.
Stockholders' equity averaged $279.8 million, $245.6 million and $255.9
million for the years ended December 31, 1999, 1998 and 1997,
respectively. The increase in the first six months of 2000 primarily
reflects net income of $29.3 million for that period. We associate the
increase for 1999 primarily with net income of $44.2 million and a reduction
of the deferred tax valuation reserve of $811,000 relating to the utilization
of tax net operating losses incurred by certain subsidiary banks prior to
completing quasi-reorganizations. The increase was partially offset by a
$9.4 million reduction in other

<PAGE>
<PAGE>
comprehensive income, resulting from the change in unrealized gains and losses
on available-for-sale investment securities, and repurchases by FBA of common
stock for treasury during the year ended December 31, 1999. We attribute the
decrease for 1998 primarily to the redemption of all of our remaining
outstanding Class C preferred stock for $47.1 million. The redemption
effectively reduced our total stockholders' equity, and consequently regulatory
capital, by the amount of the redemption. However, the structure of the trust
preferred securities issued by our financing subsidiary and by FBA's financing
subsidiary satisfies the regulatory requirements for inclusion in our
capital base, subject to certain limitations, in a manner similar to the
Class C Preferred Stock.

The following table sets forth, on a tax-equivalent basis, certain
information relating to First Banks' average balance sheets, and
reflects the average yield earned on interest-earning assets, the
average cost of interest-bearing liabilities and the resulting net
interest income for the periods indicated.

<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
--------------------------------------------------------------------------------
2000 1999
------------------------------------- --------------------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- -------- ------ ---------- -------- ------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS

Interest-earning assets:
Loans:<F1><F2><F3>
Taxable . . . . . . . . . . . . . . . $4,171,402 185,527 8.94% $3,702,139 153,429 8.36%
Tax-exempt<F4>. . . . . . . . . . . . 9,374 460 9.87 6,769 323 9.62

Investment securities:
Taxable . . . . . . . . . . . . . . . 421,437 13,537 6.46 452,921 13,590 6.05
Tax-exempt<F4>. . . . . . . . . . . . 18,968 742 7.87 19,645 795 8.16
Federal funds sold . . . . . . . . . . . 67,737 1,943 5.77 13,995 410 5.91
Other. . . . . . . . . . . . . . . . . . 2,485 90 7.28 1,408 45 6.45
---------- ------- ---------- -------
Total interest-earning
assets. . . . . . . . . . . . . 4,691,403 202,299 8.67 4,196,877 168,592 8.10
------- -------
Nonearning assets . . . . . . . . . . . . . 348,529 340,373
---------- ----------
Total assets . . . . . . . . . . . $5,039,932 $4,537,250
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand
deposits . . . . . . . . . . . . . $ 422,512 2,885 1.37% $ 379,746 2,296 1.22%
Savings deposits. . . . . . . . . . . 1,241,385 24,070 3.90 1,222,916 22,014 3.63
Time deposits of $100
or more<F3>. . . . . . . . . . . . 223,941 5,855 5.26 212,252 5,752 5.46
Other time deposits<F3> . . . . . . . 1,893,330 50,222 5.33 1,608,657 43,130 5.41
---------- ------- ---------- -------
Total interest-bearing
deposits. . . . . . . . . . . . 3,781,168 83,032 4.42 3,423,571 73,192 4.31
Short-term borrowings<F3>. . . . . . . . 96,109 2,515 5.26 98,188 2,391 4.91
Note payable . . . . . . . . . . . . . . 66,869 2,511 7.55 49,527 1,533 6.24
---------- ------- ---------- -------
Total interest-bearing
liabilities . . . . . . . . . . 3,944,146 88,058 4.49 3,571,286 77,116 4.35
------- ------
Noninterest-bearing liabilities:
Demand deposits. . . . . . . . . . . . . 602,459 521,461
Other liabilities. . . . . . . . . . . . 187,437 173,033
---------- ----------
Total liabilities. . . . . . . . . 4,734,042 4,265,780
Stockholders' equity. . . . . . . . . . . . 305,890 271,470
---------- ----------
Total liabilities and
stockholders' equity. . . . . . $5,039,932 $4,537,250
========== ==========
Net interest income . . . . . . . . . . . . 114,241 91,476
======= =======
Interest rate spread. . . . . . . . . . . . 4.18 3.75
Net interest margin . . . . . . . . . . . . 4.90% 4.40%
==== ====
<FN>
--------
<F1> For purposes of these computations, nonaccrual loans are included
in the average loan amounts.
<F2> Interest income on loans includes loan fees.
<F3> Includes the effects of interest rate exchange agreements.
<F4> Information is presented on a tax-equivalent basis assuming a tax
rate of 35%. The tax-equivalent adjustments were approximately
$421,000 and $391,000 for the six months ended June 30, 2000 and
1999, respectively.
</TABLE>
29

<PAGE>
<PAGE>
The following table sets forth, on a tax-equivalent basis, certain
information relating to First Banks' average balance sheets, and
reflects the average yield earned on interest-earning assets, the
average cost of interest-bearing liabilities and the resulting net
interest income for the periods indicated.

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------
1999 1998
-------------------------------- -------------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
---------- -------- -------- ------- -------- ------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS

Interest-earning assets:
Loans:<F1><F2><F3>
Taxable . . . . . . . . . . . . . $3,805,351 322,703 8.48% $3,243,183 283,661 8.75%
Tax-exempt<F4>. . . . . . . . . . 7,157 775 10.83 7,536 794 10.54
Investment securities:
Taxable . . . . . . . . . . . . . 435,189 26,206 6.02 657,385 39,898 6.07
Tax-exempt<F4>. . . . . . . . . . 19,247 1,442 7.49 18,318 1,515 8.27
Federal funds sold . . . . . . . . . 49,464 2,617 5.29 46,509 2,630 5.65
Other. . . . . . . . . . . . . . . . 1,878 115 6.12 2,853 170 5.96
---------- ------- ---------- -------
Total interest-earning
assets . . . . . . . . . . . 4,318,286 353,858 8.19 3,975,784 328,668 8.27
------- -------
Nonearning assets. . . . . . . . . . . 344,942 309,811
---------- ----------
Total assets. . . . . . . . . . $4,663,228 $4,285,595
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand
deposits. . . . . . . . . . . . $ 391,892 5,098 1.30% $ 357,463 5,135 1.44%
Savings deposits. . . . . . . . . 1,220,425 44,101 3.61 1,076,524 42,591 3.96
Time deposits of $100
or more<F3> . . . . . . . . . . 230,520 12,480 5.41 212,691 12,442 5.85
Other time deposits<F3> . . . . . 1,668,698 89,173 5.34 1,669,638 95,577 5.72
---------- ------- ---------- -------
Total interest-bearing
deposits . . . . . . . . . . 3,511,535 150,852 4.30 3,316,316 155,745 4.70
Short-term borrowings<F3>. . . . . . 87,374 4,220 4.83 61,178 2,959 4.84
Note payable . . . . . . . . . . . . 56,376 3,629 6.44 50,718 3,475 6.85
---------- ------- ---------- -------
Total interest-bearing
liabilities. . . . . . . . . 3,655,285 158,701 4.34 3,428,212 162,179 4.73
------- -------
Noninterest-bearing liabilities:
Demand deposits. . . . . . . . . . . 552,029 463,939
Other liabilities. . . . . . . . . . 176,102 147,849
---------- ----------
Total liabilities . . . . . . . 4,383,416 4,040,000
Stockholders' equity . . . . . . . . . 279,812 245,595
---------- ----------
Total liabilities and
stockholders' equity . . . . $4,663,228 $4,285,595
========== ==========

Net interest income. . . . . . . . . . 195,157 166,489
======= =======

Interest rate spread . . . . . . . . . 3.85 3.54
Net interest margin. . . . . . . . . . 4.52% 4.19%
==== ====

<PAGE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1997
--------------------------------
INTEREST
AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE
---------- -------- --------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
ASSETS

Interest-earning assets:
Loans:<F1><F2><F3>
Taxable . . . . . . . . . . . . . $2,837,190 252,089 8.89%
Tax-exempt<F4>. . . . . . . . . . 8,967 1,042 11.62
Investment securities:
Taxable . . . . . . . . . . . . . 598,660 35,248 5.89
Tax-exempt<F4>. . . . . . . . . . 19,056 1,552 8.15
Federal funds sold . . . . . . . . . 125,825 5,322 4.23
Other. . . . . . . . . . . . . . . . 12,138 757 6.24
---------- -------
Total interest-earning
assets . . . . . . . . . . . 3,601,836 296,010 8.22
-------
Nonearning assets. . . . . . . . . . . 215,890
----------
Total assets. . . . . . . . . . $3,817,726
==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand
deposits. . . . . . . . . . . . $ 332,712 5,648 1.70%
Savings deposits. . . . . . . . . 761,052 27,383 3.60
Time deposits of $100
or more<F3> . . . . . . . . . . 183,223 11,008 6.01
Other time deposits<F3> . . . . . 1,681,014 100,954 6.01
---------- -------
Total interest-bearing
deposits . . . . . . . . . . 2,958,001 144,993 4.90
Short-term borrowings<F3>. . . . . . 75,016 2,463 3.28
Note payable . . . . . . . . . . . . 17,883 1,375 7.69
---------- -------
Total interest-bearing
liabilities. . . . . . . . . 3,050,900 148,831 4.88
-------
Noninterest-bearing liabilities:
Demand deposits. . . . . . . . . . . 394,580
Other liabilities. . . . . . . . . . 116,359
----------
Total liabilities . . . . . . . 3,561,839
Stockholders' equity . . . . . . . . . 255,887
----------
Total liabilities and
stockholders' equity . . . . $3,817,726
==========

Net interest income. . . . . . . . . . 147,179
=======

Interest rate spread . . . . . . . . . 3.34
Net interest margin. . . . . . . . . . 4.09%
====

<FN>
--------
<F1> For purposes of these computations, nonaccrual loans are included
in the average loan amounts.
<F2> Interest income on loans includes loan fees.
<F3> Includes the effects of interest rate exchange agreements.
<F4> Information is presented on a tax-equivalent basis assuming a tax
rate of 35%. The tax-equivalent adjustments were approximately
$776,000, $808,000 and $909,000 for the years ended December 31, 1999,
1998 and 1997, respectively.
</TABLE>

The following table indicates, on a tax-equivalent basis, the changes
in interest income and interest expense which are attributable to changes
in average volume and changes in average rates, in comparison with the
preceding period. We allocated the change in interest due to the combined
rate/volume variance to rate and volume changes in proportion to the
dollar amounts of the change in each:

<TABLE>
<CAPTION>
INCREASE (DECREASE) ATTRIBUTABLE TO CHANGE IN:
----------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2000 YEAR ENDED DECEMBER 31, 1999
COMPARED TO COMPARED TO
SIX MONTHS ENDED JUNE 30, 1999 YEAR ENDED DECEMBER 31, 1998
------------------------------------- ----------------------------------
NET NET
VOLUME RATE CHANGE VOLUME RATE CHANGE
------- ------ ------ ------- ------- -------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans:<F1><F2><F3>
Taxable . . . . . . . . . . . . . . . . . . $20,744 11,354 32,098 48,009 (8,967) 39,042
Tax-exempt<F4>. . . . . . . . . . . . . . . 128 9 137 (41) 22 (19)
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . (1,907) 1,854 (53) (13,366) (326) (13,692)
Tax exempt<F4>. . . . . . . . . . . . . . . (26) (27) (53) 74 (147) (73)
Federal funds sold . . . . . . . . . . . . . . 1,563 (30) 1,533 161 (174) (13)
Other. . . . . . . . . . . . . . . . . . . . . 39 6 45 (59) 4 (55)
------- ------ ------ ------- ------- -------
Total interest income. . . . . . . . . . 20,541 13,166 33,707 34,778 (9,588) 25,190
------- ------ ------ ------- ------- -------
Interest paid on:
Interest-bearing demand deposits . . . . . . . 282 307 589 480 (517) (37)
Savings deposits . . . . . . . . . . . . . . . 347 1,709 2,056 5,445 (3,935) 1,510
Time deposits of $100 more<F3> . . . . . . . . 572 (469) 103 1,007 (969) 38
Other time deposits<F3>. . . . . . . . . . . . 8,920 (1,828) 7,092 (54) (6,350) (6,404)
Short-term borrowings<F3>. . . . . . . . . . . (129) 253 124 1,267 (6) 1,261
Notes payable and other. . . . . . . . . . . . 611 367 978 371 (217) 154
------- ------ ------ ------- ------- -------
Total interest expense . . . . . . . . . 10,603 339 10,942 8,516 (11,994) (3,478)
------- ------ ------ ------- ------- -------
Net Interest income. . . . . . . . . . . $ 9,938 12,827 22,765 26,262 2,406 28,668
======= ====== ====== ======= ======= =======

<CAPTION>
INCREASE (DECREASE) ATTRIBUTABLE
TO CHANGE IN:
-------------------------------------
YEAR ENDED DECEMBER 31, 1998
COMPARED TO
YEAR ENDED DECEMBER 31, 1997
-------------------------------------
NET
VOLUME RATE CHANGE
------- ------ ------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C>
Interest earned on:
Loans:<F1><F2><F3>
Taxable . . . . . . . . . . . . . . . . . . 35,476 (3,904) 31,572
Tax-exempt<F4>. . . . . . . . . . . . . . . (157) (91) (248)
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . 3,545 1,105 4,650
Tax exempt<F4>. . . . . . . . . . . . . . . (60) 23 (37)
Federal funds sold . . . . . . . . . . . . . . (5,759) 3,067 (2,692)
Other. . . . . . . . . . . . . . . . . . . . . (554) (33) (587)
------ ------ ------
Total interest income. . . . . . . . . . 32,491 167 32,658
------ ------ ------
Interest paid on:
Interest-bearing demand deposits . . . . . . . 486 (999) (513)
Savings deposits . . . . . . . . . . . . . . . 12,252 2,956 15,208
Time deposits of $100 more<F3> . . . . . . . . 1,718 (284) 1,434
Other time deposits<F3>. . . . . . . . . . . . (661) (4,716) (5,377)
Short-term borrowings<F3>. . . . . . . . . . . (314) 810 496
Notes payable and other. . . . . . . . . . . . 2,233 (133) 2,100
------ ------ ------
Total interest expense . . . . . . . . . 15,714 (2,366) 13,348
------ ------ ------
Net Interest income. . . . . . . . . . . 16,777 2,533 19,310
====== ====== ======

<FN>
--------------
<F1> For purposes of these computations, nonaccrual loans are included
in the average loan amounts.
<F2> Interest income on loans includes loan fees.
<F3> Includes the effect of interest rate exchange agreements.
<F4> Information is presented on a tax-equivalent basis assuming a tax
rate of 35%.
</TABLE>
<PAGE>
NET INTEREST INCOME

The primary source of our income is net interest income, which is
the difference between the interest earned on our interest-earning
assets and the interest paid on our interest-bearing liabilities. Net
interest income (expressed on a tax-equivalent basis) improved to $114.2
million or 4.90% of average interest-earning assets for the six months
ended June 30, 2000, from $91.5 million or 4.40% of average interest-
earning assets for the six months ended June 30, 1999. Net interest
income (expressed on a tax-equivalent basis) improved to $195.2 million,
or 4.52% of average interest-earning assets, for the year ended December
31, 1999, from $166.5 million, or 4.19% of average interest-earning
assets, and $147.2 million, or 4.09% of average interest-earning assets,
for the years ended December 31, 1998 and 1997, respectively. We credit
the improved net interest income primarily to the net interest-earning
assets provided by our acquisitions of Century Bank, Redwood, Pacific
Bay Bank, Republic Bank and Lippo Bank, internal loan growth and
increases in the prime-lending rate. Average total loans, net of
unearned discount, increased by $471.9 million to $4.18 billion for the
six months ended June 30, 2000 from $3.71 billion for the six months
ended June 30, 1999. Average total loans, net of unearned discount,
increased by $561.8 million to $3.81 billion for the year ended December
31, 1999 from $3.25 billion and $2.85 billion for years ended December
31, 1998 and 1997, respectively. During the period from July 1, 1999
through June 30, 2000, the Board of Governors of the Federal Reserve
System increased the discount rate

<PAGE>
<PAGE>
three times, resulting in multiple increases in the prime rate of
interest from 8.00% to 9.50%. This is reflected not only in the
rate of interest earned on loans that are indexed to the prime rate,
but also in other assets and liabilities which either have variable
or adjustable rates, or which matured or repriced during this period.
The effect of the following contributed further to our improved net
interest income in 1999 and 1998:

* the reduction of First Bank's deposit base associated with
the divested branches, which was primarily concentrated in
certificates of deposit; and

* a decrease in the cost of interest-bearing liabilities to
4.34% from 4.73% and 4.88% for the years ended December 31,
1999, 1998 and 1997, respectively.

During the first six months of 2000, the cost of interest-bearing
liabilities increased as the result of increased prevailing interest
rates. However, this increase was less dramatic than the increase in
earnings on interest-earning assets, contributing to an improvement in
net interest margins.

The yield on our loan portfolio increased to 8.94% for the six
months ended June 30, 2000 from 8.36% for the six months ended June 30,
1999, principally as the result of an increase in prevailing interest
rates. Although the net interest rate margin improved, the yield on our
loan portfolio declined to 8.48% for the year ended December 31, 1999 in
comparison to 8.75% and 8.89% for the years ended December 31, 1998 and
1997, respectively. This reduction primarily resulted from the overall
decline in prevailing interest rates that occurred during the latter
part of 1998. In addition, increased competition within the market
areas we serve led to reduced lending rates. The effect of the reduced
yield on our loan portfolio was partially mitigated by the earnings
impact of the interest rate swap agreements entered into by us and a
reduced rate paid on average interest-bearing liabilities. For the six
months ended June 30, 2000 and 1999, the aggregate weighted average rate
paid on our deposit portfolio was 4.42% and 4.31%, respectively. This
increase reflected increased rates paid by us to provide a funding
source for continued loan growth. In addition, the aggregate weighted
average rate on the amounts outstanding under our revolving credit line
increased to 7.55% for the six months ended June 30, 2000 from 6.24% for
the comparable period in 1999, reflecting an increase in market interest
rates. Amounts outstanding under our $120.0 million revolving credit
line with a group of unaffiliated banks bear interest at the lead bank's
corporate base rate or, at our option, at the Eurodollar rate plus a
margin determined by the outstanding balance and our profitability.
Thus, the revolving credit line represents a relatively high-cost
funding source, so that increased advances under the revolving credit
line have the effect of increasing the weighted average rate of non-
deposit liabilities. For the years ended December 31, 1999, 1998 and
1997, the aggregate weighted average rate paid on our deposit portfolio
was 4.30%, 4.70% and 4.90%, respectively, representing our ongoing
realignment of the portfolio.

During the six months ended June 30, 2000 and the three years
ended December 31, 1999, our net interest income and net interest margin
have continued to improve. However, during 1996 and 1995, the net
interest margin fell below average for commercial banks. During periods
of rapid growth through cash acquisitions, the net interest margin
frequently decreases because the reduction of interest income on
internally generated funds used in acquisitions and the interest expense
on debt incurred in the transactions offset a portion of the net
interest income of the entities acquired. As a result, during those
periods, interest-earning assets increase more rapidly than net interest
income, contributing to a lower net interest margin. In addition, since
1990, we have acquired ten savings banks in various transactions. The
regulatory requirements and the historic customer bases of savings banks
tend to result in balance sheets which are predominantly comprised of
residential mortgage loans, frequently supplemented by mortgage-backed
securities, for interest-earning assets, and certificates of deposit as
a primary source of funds. Because of the competitive, homogeneous
nature of residential mortgage loans and certificates of deposit, the
interest rate spreads between them tend to be narrower than other types
of loans and funding sources.

<PAGE>
<PAGE>
Our average yield on residential real estate loans and average cost
of certificates of deposit, compared to those of other segments of our
loan portfolio and interest-bearing deposits, respectively, were as
follows:

<TABLE>
<CAPTION>
AVERAGE PERCENT OF INTEREST
BALANCES TOTAL INCOME/EXPENSE YIELD/RATE
---------- ---------- -------------- ----------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Six months ended June 30, 2000:
Residential mortgage loans. . . . . . . $ 771,835 18.46% $ 30,584 7.97%
Other loans . . . . . . . . . . . . . . 3,408,941 81.54 155,403 9.17
---------- ------ --------
Total loans. . . . . . . . . . . . . $4,180,776 100.00% $185,987 8.94
========== ====== ========
Certificates of deposit . . . . . . . . $2,117,271 56.00% $ 56,077 5.33%
Other interest-bearing deposits . . . . 1,663,897 44.00 26,955 3.26
---------- ------ --------
Total interest-bearing deposits. . . $3,781,168 100.00% $ 83,032 4.42
========== ====== ========
Year ended December 31, 1999:
Residential mortgage loans. . . . . . . $ 797,137 20.91% $ 61,505 7.72%
Other loans . . . . . . . . . . . . . . 3,015,371 79.09 261,973 8.69
---------- ------ --------
Total loans. . . . . . . . . . . . . $3,812,508 100.00% $323,478 8.48
========== ====== ========
Certificates of deposit . . . . . . . . $1,899,218 54.09% $101,653 5.35%
Other interest-bearing deposits . . . . 1,612,317 45.91 49,199 3.05
---------- ------ --------
Total interest-bearing deposits. . . $3,511,535 100.00% $150,852 4.30
========== ====== ========
Year ended December 31, 1998:
Residential mortgage loans. . . . . . . $ 928,805 28.57% $ 74,792 8.05%
Other loans . . . . . . . . . . . . . . 2,321,914 71.43 209,663 9.03
---------- ------ --------
Total loans. . . . . . . . . . . . . $3,250,719 100.00% $284,455 8.75
========== ====== ========
Certificates of deposit . . . . . . . . $1,882,329 56.76% $108,019 5.74%
Other interest-bearing deposits . . . . 1,433,987 43.24 47,726 3.33
---------- ------ --------
Total interest-bearing deposits. . . $3,316,316 100.00% $155,745 4.70
========== ====== ========
Year ended December 31, 1997:
Residential mortgage loans. . . . . . . $1,025,442 36.03% $ 83,248 8.12%
Other loans . . . . . . . . . . . . . . 1,820,715 63.97 169,883 9.33
---------- ------ --------
Total loans. . . . . . . . . . . . . $2,846,157 100.00% $253,131 8.89
========== ====== ========
Certificates of deposit . . . . . . . . $1,864,237 63.02% $111,962 6.01%
Other interest-bearing deposits . . . . 1,093,764 36.98 33,031 3.02
---------- ------ --------
Total interest-bearing deposits. . . $2,958,001 100.00% $144,993 4.90
========== ====== ========
</TABLE>

In addition to the narrow interest rate spread between the yield
on residential mortgage loans and the rates paid on certificates of
deposit, residential mortgage loans introduce various prepayment
alternatives for borrowers. When combined with inexpensive refinancing
opportunities, these alternatives can accelerate principal repayments in
periods of declining interest rates, thereby exacerbating their inherent
interest rate risk.

In order to enhance our net interest income through increased
yields on our loan portfolio and to reduce the interest rate risk
associated with residential mortgage loans, we have reduced our reliance
on residential mortgage loans within our portfolio. This change in the
composition of our portfolio required the concurrent internal generation of
other types of loans, particularly commercial, financial and agricultural,
real estate construction and development, and commercial real estate loans,
a process that we had previously initiated. This process focused on
continuing to build this business development function, as well as the
control and servicing staff necessary to support it. As the growth of
other loans

<PAGE>
<PAGE>
developed, we expanded our sale of conforming residential mortgage loans
in the secondary market to include essentially all new loan production.

In order to limit our interest rate risk, we expanded our risk
management capabilities to improve our risk measurement techniques and
reporting and increase our risk control alternatives. We initiated a
program of using derivative financial instruments to reduce interest
rate exposure. We use a combination of interest rate swap, floor and
cap agreements to reduce our exposure and although these financial
instruments are effective in reducing interest rate risk, the expense
associated with them has had an overall negative impact on net interest
income. The increase in the cost of such financial instruments resulted
from the liquidation of a portion of the underlying interest-bearing
liabilities. The increase also primarily reflects the branch
divestitures. This reduction in interest-bearing liabilities resulted
in the additional recognition of a portion of the related deferred
losses on the previously terminated interest rate swap agreements. The
following table summarizes the cost of the interest rate swap, floor and
cap agreements for the periods indicated:

<TABLE>
<CAPTION>
REDUCTION OF NET INTEREST INCOME REDUCTION OF NET INTEREST MARGIN<F1>
-------------------------------- ------------------------------------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C>
Year ended December 31:
1999 . . . . . . . . . . . . $5,397 0.12%
1998 . . . . . . . . . . . . 3,810 0.10%
1997 . . . . . . . . . . . . 6,574 0.18%

<FN>
--------
<F1> Effect on net interest margin is expressed as a reduction of net
interest income divided by average interest-earning assets.
</TABLE>

INTEREST RATE RISK MANAGEMENT

For financial institutions, the maintenance of a satisfactory
level of net interest income is a primary factor in achieving acceptable
income levels. However, the maturity and repricing characteristics of
the institution's loan and investment portfolios, relative to those
within its deposit structure, may differ significantly. The nature of
the loan and deposit markets within which such institution operates, and
its objectives for business development within those markets at any point
in time influence these characteristics. In addition, the ability of
borrowers to repay loans and depositors to withdraw funds prior to
stated maturity dates introduces divergent option characteristics which
operate primarily as interest rates change. These factors cause various
elements of the institution's balance sheet to react in different
manners and at different times relative to changes in interest rates,
thereby leading to increases or decreases in net interest income over
time. Depending upon the direction and velocity of interest rate
movements and their effect on the specific components of the
institution's balance sheet, the effects on net interest income can be
substantial. Consequently, managing a financial institution requires
establishing effective control of the exposure of the institution to
changes in interest rates.

We manage our interest rate risk by:

* maintaining an Asset Liability Committee, or ALCO,
responsible to our Board of Directors to review the overall
interest rate risk management activity and approve actions
taken to reduce risk;

* maintaining an effective simulation model to determine our
exposure to changes in interest rates;

* coordinating the lending, investing and deposit-generating
functions to control the assumption of interest rate risk;
and

* employing various off-balance-sheet financial instruments,
including derivatives, to offset inherent interest rate risk
when it becomes excessive. The objective of these
procedures is to limit the adverse impact which changes in
interest rates may have on net interest income.

The ALCO has overall responsibility for the effective management
of interest rate risk and the approval of policy guidelines. The ALCO
includes our Chairman and Chief Executive Officer, the senior executives
of investments, credit, banking support and finance, and certain other
officers. The Asset Liability Management Group, which monitors interest
rate risk, supports the ALCO, prepares analyses for review by the ALCO
and implements actions which are either specifically directed by the
ALCO or established by policy guidelines.

In interest sensitivity management, we strive to optimize earnings
results, while managing, within internal policy constraints, interest
rate risk. Regarding rate sensitivity, our policy is to manage exposure
to potential risks associated with changing interest rates by
maintaining a balance sheet posture in which annual net interest income
is not significantly impacted by reasonably possible near-term changes
in interest rates. To measure the effect of interest rate changes, we
calculate our net income over two one-year horizons on a pro forma
basis. The analysis assumes various scenarios for increases and
decreases in interest rates including both instantaneous and gradual and
parallel and non-parallel shifts in the yield curve, in varying amounts.
For purposes of arriving at reasonably possible near-term changes in
interest rates, we include scenarios based on actual changes in interest
rates, which have occurred over a two-year period, simulating both a
declining and rising interest rate scenario. We are "asset-sensitive,"
and our simulation model indicates a loss of projected net interest
income should interest rates decline. While a decline in interest rates
of less than 100 basis points has a minimal impact on our net interest
income, a decline in interest rates of 100 basis points indicates a pre-
tax projected loss of approximately 7.0% of net interest income based on
assets and liabilities at June 30, 2000.

As previously discussed, we utilize off-balance-sheet derivative
financial instruments to assist in our management of interest rate
sensitivity and to modify the repricing, maturity and option
characteristics of on-balance-sheet assets and liabilities. We limit
the use of such derivative financial instruments to reduce our interest
rate exposure. The derivative financial instruments we hold, for
purposes of managing interest rate risk, are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------------------
JUNE 30, 2000 1999 1998
------------------------- ------------------------ ------------------------
NOTIONAL CREDIT NOTIONAL CREDIT NOTIONAL CREDIT
AMOUNT EXPOSURE AMOUNT EXPOSURE AMOUNT EXPOSURE
-------- -------- -------- -------- -------- --------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest rate swap agreements -- pay
adjustable rate, receive adjustable rate $ --- --- 500,000 --- --- ---

Interest rate swap agreements -- pay
adjustable rate, receive fixed rate . . . 455,000 3,339 455,000 3,349 280,000 3,526

Interest rate floor agreements . . . . . . . 35,000 9 35,000 13 70,000 29

Interest rate cap agreements . . . . . . . . --- --- 10,000 26 10,000 132

Forward commitments to sell
mortgage-backed securities. . . . . . . . 39,000 --- 33,000 --- 95,000 237
======== ===== ======= ===== ======= =====
</TABLE>

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

Previously, we utilized interest rate swap agreements to extend
the repricing characteristics of certain interest-bearing liabilities to
more closely correspond with our assets, with the objective of
stabilizing cash flow, and accordingly, net interest income, over time.
We terminated these swap agreements in July 1995, November 1996 and July
1997 as the result of a change in the composition of our balance sheet.
The change in the composition of the balance sheet was primarily driven
by the

<PAGE>
<PAGE>
significant decline in interest rates experienced during 1995, which
caused an increase in the principal prepayments of residential mortgage
loans. The net interest expense associated with these agreements,
consisting primarily of amortization of deferred losses, was $5.7 million,
$3.7 million and $6.4 million for the years ended December 31, 1999, 1998
and 1997, respectively. The deferred losses on terminated swap agreements
were amortized over the remaining lives of the agreements, unless the
underlying liabilities were repaid, in which case the deferred losses were
immediately charged to operations. There were no remaining unamortized
deferred losses on the terminated swap agreements at December 31, 1999.
The unamortized balance of these losses was $5.7 million and $9.4 million
at December 31, 1998 and 1997, respectively, and was included in other
assets.

During 1998, we entered into $280.0 million notional amount of
interest rate swap agreements. The swap agreements effectively lengthen
the repricing characteristics of certain interest-earning assets to
correspond more closely with their funding source with the objective of
stabilizing cash flow, and accordingly, net interest income, over time.
The swap agreements initially provided for us to receive a fixed rate of
interest and pay an adjustable rate equivalent to the 90-day London
Interbank Offering Rate. In March 2000, the terms of the swap
agreements were modified such that we currently pay an adjustable rate
of interest equivalent to the daily weighted average prime lending rate
minus 2.705%. The terms of the swap agreements provide for us to pay
quarterly and receive payment semiannually. The amount receivable by us
under the swap agreements was $4.1 million at June 30, 2000 and December
31, 1999 and $4.2 million at December 31, 1998 and the amount payable by
us under the swap agreements was $748,000, $770,000 and $640,000 at June
30, 2000 and December 31, 1999 and 1998, respectively.

During May 1999, we entered into $500.0 million notional amount of
interest rate swap agreements with the objective of stabilizing the net
interest margin during the six-month period surrounding the Year 2000
century date change. The swap agreements provided for us to receive an
adjustable rate of interest equivalent to the daily weighted average 30-
day London Interbank Offering Rate and pay an adjustable rate of
interest equivalent to the daily weighted average prime lending rate
minus 2.665%. The terms of the swap agreements, which had an effective
date of October 1, 1999 and a maturity date of March 31, 2000, provided
for us to pay and receive interest on a monthly basis. In January 2000,
we determined these swap agreements were no longer necessary based upon
the results of the Year 2000 transition and terminated these agreements
at a cost of $150,000.

During September 1999, we entered into $175.0 million notional
amount of interest rate swap agreements to effectively lengthen the
repricing characteristics of certain interest-earning assets to
correspond more closely with their funding source with the objective of
stabilizing cash flow, and accordingly, net interest income, over time.
The swap agreements provide for us to receive a fixed rate of interest
and pay an adjustable rate equivalent to the weighted average prime
lending rate minus 2.70%. The terms of the swap agreements provide for
us to pay and receive interest on a quarterly basis. The amount
receivable by us under the swap agreements was $119,000 at June 30, 2000
and December 31, 1999 and the amount payable by us under the swap
agreements was $132,000 and $141,000 at June 30, 1999 and December 31,
1999, respectively.

<PAGE>
<PAGE>
The maturity dates, notional amounts, interest rates paid and
received, and fair values of interest rate swap agreements outstanding
as of June 30, 2000 and December 31, 1999 were as follows:

<TABLE>
<CAPTION>
NOTIONAL INTEREST RATE INTEREST RATE FAIR VALUE
MATURITY DATE AMOUNT PAID RECEIVED GAIN (LOSS)
------------- -------- ---- -------- -----------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
June 30, 2000:
September 27, 2001 . . . . . . . . $ 75,000 6.80% 6.14% $ (869)
September 27, 2001 . . . . . . . . 45,000 6.80 6.14 (521)
September 27, 2001 . . . . . . . . 40,000 6.80 6.14 (464)
September 27, 2001 . . . . . . . . 15,000 6.80 6.14 (174)
June 11, 2002. . . . . . . . . . . 15,000 6.80 6.00 (330)
September 16, 2002 . . . . . . . . 175,000 6.80 5.36 (6,568)
September 16, 2002 . . . . . . . . 20,000 6.80 5.36 (754)
September 18, 2002 . . . . . . . . 40,000 6.80 5.33 (1,540)
September 18, 2002 . . . . . . . . 30,000 6.80 5.33 (1,155)
-------- --------
$455,000 6.80% 5.68% $(12,375)
======== ==== ==== ========
December 31, 1999:
March 31, 2000 . . . . . . . . . . $350,000 5.84% 6.45% $ 87
March 31, 2000 . . . . . . . . . . 75,000 5.84 6.45 19
March 31, 2000 . . . . . . . . . . 50,000 5.84 6.45 12
March 31, 2000 . . . . . . . . . . 25,000 5.84 6.45 6
September 27, 2001 . . . . . . . . 75,000 5.80 6.14 (685)
September 27, 2001 . . . . . . . . 45,000 5.80 6.14 (411)
September 27, 2001 . . . . . . . . 40,000 5.80 6.14 (365)
September 27, 2001 . . . . . . . . 15,000 5.80 6.14 (137)
June 11, 2002. . . . . . . . . . . 15,000 6.12 6.00 (291)
September 16, 2002 . . . . . . . . 175,000 6.12 5.36 (6,574)
September 16, 2002 . . . . . . . . 20,000 6.12 5.36 (751)
September 18, 2002 . . . . . . . . 40,000 6.14 5.33 (1,543)
September 18, 2002 . . . . . . . . 30,000 6.14 5.33 (1,157)
-------- --------
$955,000 5.91% 6.08% $(11,790)
======== ==== ==== ========
</TABLE>

We also utilize interest rate cap and floor agreements to limit
the interest expense associated with certain interest-bearing
liabilities and the net expense of certain interest rate swap
agreements, respectively. At June 30, 2000 and December 31, 1999 and
1998, the unamortized costs of these agreements were $9,000, $32,000 and
$159,000, respectively, and were included in other assets.

During September 2000, we entered into $600.0 million notional
amount of four-year interest rate swap agreements to effectively
lengthen the repricing characteristics of certain interest-earning
assets to correspond more closely with their funding source with the
objective of stabilizing cash flow, and accordingly, net interest
income, over time. The swap agreements provide for us to receive a
fixed rate of interest of 6.7750% and pay an adjustable rate equivalent
to the weighted average prime lending rate minus 2.70%. The terms of
the swap agreements provide for us to pay and receive interest on a
quarterly basis. In conjunction with these interest rate swap
agreements, we also entered into $450.0 million notional amount of
interest rate cap agreements to limit the net interest expense
associated with the interest rate swap agreements. The interest rate
cap agreements provide for us to receive a quarterly adjustable rate of
interest equivalent to the three-month London Interbank Offering Rate,
should such rate exceed the predetermined interest rate of 7.50%. The
cost of the interest rate cap agreements totaled $4.1 million.

<PAGE>
<PAGE>
three-month London Interbank Offering Rate minus 0.02%. The terms of
the swap agreements provide for us to pay interest on a quarterly basis
and receive interest on an annual basis.

During September 2000, we entered into $12.5 million notional amount
of one-year interest rate swap agreements to effectively shorten the
repricing characteristics of certain interest-bearing liabilities with
the objective of stabilizing cash flow, and accordingly, net interest
income, over time. The swap agreements provide for us to receive a
fixed rate of interest and pay an adjustable rate equivalent to the
three-month London Interbank Offering Rate minus 0.05%. The terms of
the swap agreements provide for us to pay interest on a quarterly basis
and receive interest on an annual basis.

During September 2000, we entered into $25.0 million notional amount
of five and one-half year interest rate swap agreements to effectively
shorten the repricing characteristics of certain interest-bearing
liabilities with the objective of stabilizing cash flow, and
accordingly, net interest income, over time. The swap agreements
provide for us to receive a fixed rate of interest and pay an adjustable
rate equivalent to the three-month London Interbank Offering Rate minus
0.11%. The terms of the swap agreements provide for us to pay interest
on a quarterly basis and receive interest on a semi-annual basis.

Our interest sensitivity position has been modified as a result of
the derivative instruments entered into during September 2000. After
consideration of these derivative instruments, we are still "asset-
sensitive," however, our simulation model now indicates a loss of
projected net interest income should interest rates decline or should
interest rates increase up to a maximum of 100 basis points. While a
decline or increase in interest rates of less than 100 basis points has
a minimal impact on our net interest income, a decline in interest rates
of 100 basis points indicates a pre-tax projected loss of approximately
4.9% of net interest income based on assets and liabilities at June 30,
2000, whereas an increase in interest rates of 100 basis points indicates
a pre-tax projected loss of approximately 0.3% of net interest income,
based on assets and liabilities at June 30, 2000.

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

In addition to the simulation model employed by us, a more
traditional interest rate sensitivity position is prepared and reviewed
in conjunction with the results of the simulation model. The following
table presents the projected maturities and periods to repricing of our
rate sensitive assets and liabilities as of December 31, 1999, adjusted
to account for anticipated prepayments:

<TABLE>
<CAPTION>
OVER SIX
OVER THREE THROUGH OVER ONE
THREE MONTHS THROUGH SIX TWELVE THROUGH FIVE OVER FIVE
OR LESS MONTHS MONTHS YEARS YEARS TOTAL
------------ ----------- -------- ------------ --------- ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans, net of unearned discount . . . . $2,362,848 265,534 489,082 843,979 34,881 3,996,324
Investment securities . . . . . . . . . 154,056 22,272 97,498 109,598 68,223 451,647
Federal funds sold. . . . . . . . . . . 42,500 --- --- --- --- 42,500
Interest-bearing deposits with other
financial institutions . . . . . . . . 1,324 250 --- 100 --- 1,674
---------- -------- -------- --------- -------- ---------
Total interest-earning assets . . 2,560,728 288,056 586,580 953,677 103,104 4,492,145
Effect of interest rate swap agreements (455,000) --- --- 455,000 --- ---
---------- -------- -------- --------- -------- ---------
Total interest-earning assets
after the effect of interest
rate swap agreements . . . . . . $2,105,728 288,056 586,580 1,408,677 103,104 4,492,145
========== ======== ======== ========= ======== =========

Interest-bearing liabilities:
Interest-bearing demand accounts . . $ 153,592 95,476 62,267 45,662 58,116 415,113
Savings accounts . . . . . . . . . . 115,973 95,507 81,863 115,973 272,879 682,195
Money market demand accounts . . . . 516,119 --- --- --- --- 516,119
Time deposits. . . . . . . . . . . . 413,602 455,947 776,916 385,135 723 2,032,323
Other borrowed funds . . . . . . . . 137,010 --- --- 544 --- 137,554
---------- -------- -------- --------- -------- ---------
Total interest-bearing
liabilities. . . . . . . . . . . $1,336,296 646,930 921,046 547,314 331,718 3,783,304
========== ======== ======== ========= ======== =========

Interest sensitivity gap:
Periodic . . . . . . . . . . . . . . $ 769,432 (358,874) (334,466) 861,363 (228,614) 708,841
=========
Cumulative . . . . . . . . . . . . . 769,432 410,558 76,092 937,455 708,841
========== ======== ======== ========= ========

Ratio of interest-sensitive assets to
interest-sensitive liabilities:
Periodic . . . . . . . . . . . . . . 1.58 0.45 0.64 2.57 0.31 1.19
=========
Cumulative . . . . . . . . . . . . . 1.58 1.21 1.03 1.27 1.19
========== ======== ======== ========= ========
</TABLE>

Management made certain assumptions in preparing the table above.
These assumptions included:

* loans will repay at projected repayment speeds;

* mortgage-backed securities, included in investment
securities, will repay at projected repayment speeds;

* interest-bearing demand accounts and savings accounts are
interest-sensitive in percentages ranging from 11% to 37%
and 12% to 40%, respectively, of the remaining balance for
each period presented; and

* fixed maturity deposits will not be withdrawn prior to
maturity.

A significant variance in actual results from one or more of these
assumptions could materially affect the results reflected in the table.

At December 31, 1999 and 1998, our asset-sensitive position on a
cumulative basis through the twelve-month time horizon was $76.1
million, or 1.56% of total assets, and $333.2 million, or 7.32% of total
assets, respectively. The asset sensitive position is attributable to
the composition of our loan and investment security portfolios as
compared to the deposit base. We attribute the decrease for 1999 to the
interest rate swap agreements entered into in June 1998, September 1998
and September 1999.

The interest sensitivity position is one of several measurements
of the impact of interest rate changes on net interest income. Its
usefulness in assessing the effect of potential changes in net interest
income varies with the constant change in the composition of our assets
and liabilities and changes in interest rates. For this reason, we
place greater emphasis on a simulation model for monitoring our interest
rate risk exposure.

MORTGAGE BANKING ACTIVITIES

Our mortgage banking activities consist of the origination,
purchase and servicing of residential mortgage loans. Generally, we
sell our production of residential mortgage loans in the secondary loan
markets. Servicing rights are retained with respect to conforming
fixed-rate residential mortgage loans. We sell other loans, including
adjustable-rate and nonconforming residential mortgage loans, on a
servicing released basis.

For the six months ended June 30, 2000 and 1999, we originated and
purchased loans for resale totaling $238.5 million and $297.6 million,
and sold loans totaling $185.3 million and $352.4 million, respectively.
For the three years ended December 31, 1999, 1998 and 1997, we
originated and purchased loans for resale totaling $452.9 million,
$628.5 million and $174.3 million and sold loans totaling $507.1
million, $521.0 million and $148.4 million, respectively. The
origination and purchase of residential mortgage loans and the related
sale of the loans provides us with additional sources of income
including the gain realized upon sale, the interest income earned while
the loan is held awaiting sale and the ongoing loan servicing fees from
the loans sold with servicing rights retained. Mortgage loans serviced
for investors aggregated $943.0 million, $957.0 million, $923.0 million
and $784.0 million at June 30, 2000 and December 31, 1999, 1998 and
1997, respectively.

The gain on mortgage loans originated for resale, including loans
sold and held for sale, was $3.3 million and $3.8 million for the six
months ended June 30, 2000 and 1999, respectively, and $6.9 million,
$5.6 million and $716,000 for the years ended December 31, 1999, 1998
and 1997, respectively. We determine these gains, net of losses, on a
lower of cost or market basis. These gains are realized at the time of
sale. The cost basis reflects: (1) adjustments of the carrying values
of loans held for sale to the lower of cost, adjusted to include the
cost of hedging the loans held for sale, or current market values; and
(2) adjustments for any gains or losses on loan commitments for which
the interest rate has been established, net of anticipated underwriting
"fallout," adjusted for the cost of hedging these loan commitments. We
credit the increases for 2000, 1999 and 1998 to the continued expansion
of our mortgage banking activities into the California and Texas markets
and the related additional volume of nonconforming loans prominent in
that market.

The interest income on loans held for sale was $1.5 million for
the six months ended June 30, 2000, compared to $3.2 million for the six
months ended June 30, 1999. The interest income on loans held for sale
was $4.9 million for the year ended December 31, 1999, in comparison to
$6.8 million and $3.2 million for the years ended December 31, 1998 and
1997, respectively. The amount of interest income realized on loans
held for sale is a function of the average balance of loans held for
sale, the period for which the loans are held and the prevailing
interest rates when the loans are made. The average balance of loans
held for sale was $45.1 million and $104.9 million for the six months
ended June 30, 2000 and 1999, respectively, and $79.1 million, $102.7
million and $35.4 million for the years ended December 31, 1999, 1998
and 1997, respectively. On an annualized basis, our yield on the
portfolio of loans held for sale was 6.19%, 6.62% and 7.07% for the
years ended December 31, 1999, 1998 and 1997, respectively. This
compares with our cost of funds, as a percentage of average interest-
bearing liabilities, of 4.49% and 4.35% for the six months ended June
30, 2000 and 1999, respectively, and 4.34%, 4.73% and 4.88% for the
years ended December 31, 1999, 1998 and 1997, respectively.

We report mortgage loan servicing fees net of amortization of
mortgage servicing rights, interest shortfall and mortgage-backed
security guarantee fee expense. Interest shortfall equals the
difference between the interest collected from a loan-servicing customer
upon prepayment of the loan and a full month's interest that is required
to be remitted to the security owner. Loan servicing fees, net, were

<PAGE>
<PAGE>
$231,000 and $283,000 for the six months ended June 30, 2000 and 1999,
respectively, and $657,000, $1.0 million and $1.6 million for the years
ended December 31, 1999, 1998 and 1997, respectively. We attribute the
decrease in loan servicing fees primarily to increased amortization of
mortgage servicing rights, which resulted from high refinancing
activity, and our strategy of selling the new production of adjustable-
rate and nonconforming residential mortgage loans on a servicing
released basis. In addition, mortgage-backed security expense increased
by $57,000 to $625,000 from $568,000 for the six months ended June 30,
2000 and 1999, respectively, and increased by $333,000 to $1.2 million
from $867,000 for the years ended December 31, 1999 and 1998,
respectively, reflecting the increased level of serviced loans sold into
the secondary market in the form of securities.

Our interest rate risk management policy provides certain hedging
parameters to reduce the interest rate risk exposure arising from
changes in loan prices from the time of commitment until the sale of the
security or loan. To reduce this exposure, we use forward commitments
to sell fixed-rate mortgage-backed securities at a specified date in the
future. At June 30, 2000, December 31, 1999, 1998 and 1997, we had
$45.7 million, $31.5 million, $103.1 million and $67.4 million,
respectively, of loans held for sale and related commitments, net of
committed loan sales and estimated underwriting fallout, of which $39.0
million, $33.0 million, $95.0 million and $60.0 million, respectively,
were hedged through the use of such forward commitments.

COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30,
2000 AND 1999

NET INCOME. Net income was $29.3 million for the six months ended
June 30, 2000, in comparison to $21.8 million for the comparable period
in 1999. A significant element in the earnings progress was increased
net interest income generated from our acquisitions of Lippo Bank, First
Commercial Group, Century Bank and Redwood Bank, the continued change in
the composition of our loan portfolio, increased yields on earning
assets and internal loan growth. We funded the overall loan growth
primarily through internal deposit growth.

The increase in net income was partially offset by a reduced level
of noninterest income, an increased provision for loan losses and an
increase in operating expenses of $7.0 million for the six months ended
June 30, 2000, in comparison to the comparable period in 1999. The
reduced level of noninterest income resulted primarily from a reduction
in non-recurring gains on sales of branch facilities. The increased
operating expenses reflect the operating expenses of Lippo Bank, FCG,
Century Bank and Redwood Bank subsequent to their respective acquisition
dates, increased salaries and employee benefits expenses, increased data
processing fees and increased amortization of intangibles associated with
the purchase of subsidiaries. A reduction in legal, examination and
professional fees partially offset this increase in operating expenses.

PROVISION FOR LOAN LOSSES. The provision for loan losses was $7.2
million for the six months ended June 30, 2000, in comparison to $5.9
million for the comparable period in 1999. We attribute the increase in
the provision for loan losses primarily to the overall growth, both
internal and through acquisitions, and increased risk associated with
the continued changing composition of our loan portfolio. Loan charge-
offs were $5.0 million for the six months ended June 30, 2000 in
comparison to $7.5 million for the comparable period in 1999. The
decrease in loan charge-offs shows the generally strong economic
conditions prevalent in our markets, as well as a decline in
nonperforming assets and management's continued efforts to effectively
monitor and manage our loan portfolio. For the six months ended June
30, 2000, loan charge-offs include a charge-off of $1.6 million on a
single loan. Loan recoveries increased to $6.2 million for the six
months ended June 30, 2000 from $4.2 million for the comparable period
in 1999, reflecting continued aggressive collection efforts. Our
acquisitions of Lippo Bank, completed on February 29, 2000, and Redwood
Bank, completed on March 4, 1999, provided $799,000 and $1.5 million,
respectively, in additional allowance for loan losses.

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

NONINTEREST INCOME AND EXPENSE. The following table summarizes
noninterest income and noninterest expense for the six months ended June
30, 2000 and 1999:

<TABLE>
<CAPTION>
JUNE 30, INCREASE (DECREASE)
---------------------- ---------------------
2000 1999 AMOUNT %
------- ------ ------ --------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Noninterest income:
Service charges on deposit accounts and customer service fees $ 9,464 8,357 1,107 13.25%
Credit card fees . . . . . . . . . . . . . . . . . . . . . . . 91 327 (236) (72.17)
Loan servicing fees, net . . . . . . . . . . . . . . . . . . . 231 283 (52) (18.37)
Gain on mortgage loans sold and held for sale. . . . . . . . . 3,268 3,834 (566) (14.76)
Net gain on sales of available-for-sale securities . . . . . . 379 792 (413) (52.15)
Net (loss) gain on trading securities. . . . . . . . . . . . . --- (303) 303 100.00
Gain on sales of branches, net of expenses . . . . . . . . . . 1,355 4,406 (3,051) (69.25)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,247 5,422 825 15.22
------- ------ ------
Total noninterest income. . . . . . . . . . . . . . . . . . $21,035 23,118 (2,083) (9.01)
======= ====== ====== ========

Noninterest expense:
Salaries and employee benefits . . . . . . . . . . . . . . . . $35,237 30,071 5,166 17.18%
Occupancy, net of rental income. . . . . . . . . . . . . . . . 6,655 5,842 813 13.92
Furniture and equipment. . . . . . . . . . . . . . . . . . . . 5,673 3,999 1,674 41.86
Federal Deposit Insurance Corporation premiums . . . . . . . . 460 657 (197) (29.98)
Postage, printing and supplies . . . . . . . . . . . . . . . . 2,183 2,153 30 1.39
Data processing fees . . . . . . . . . . . . . . . . . . . . . 10,663 9,223 1,440 15.61
Legal, examination and professional fees . . . . . . . . . . . 2,003 3,242 (1,239) (38.22)
Credit card. . . . . . . . . . . . . . . . . . . . . . . . . . 259 367 (108) (29.43)
Communications . . . . . . . . . . . . . . . . . . . . . . . . 1,233 1,263 (30) (2.38)
Advertising and business development . . . . . . . . . . . . . 1,661 1,547 114 7.37
Gain on sales of other real estate, net of expenses. . . . . . (224) (14) (210) 1,500.00
Guaranteed preferred debentures. . . . . . . . . . . . . . . . 6,012 6,028 (16) (0.27)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,895 8,357 (462) (5.53)
------- ------ ------
Total noninterest expense $79,710 72,735 6,975 9.59
======= ====== ====== ========
</TABLE>

NONINTEREST INCOME. Noninterest income was $21.0 million for the
six months ended June 30, 2000, in comparison to $23.1 million for the
comparable period in 1999. Noninterest income consists primarily of
service charges on deposit accounts and customer service fees, mortgage
banking revenues and other income.

Service charges on deposit accounts and customer service fees were
$9.5 million for the six months ended June 30, 2000, in comparison to
$8.4 million for the comparable period in 1999. We attribute the
increase in service charges and customer service fees to:

* increased deposit balances provided by internal growth;

* the acquisitions of Lippo Bank, Century Bank and Redwood
Bank;

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

* increased fee income resulting from revisions of customer
service charge rates effective April 1, 1999 and enhanced
control of fee waivers; and

* increased income associated with automatic teller machine
services and debit and credit cards.

The gain on mortgage loans sold and held for sale was $3.3 million
for the six months ended June 30, 2000, in comparison to $3.8 million
for the comparable period in 1999. The overall decrease for the six

<PAGE>
<PAGE>
months ended June 30, 2000 results from a reduced volume of loans
originated and sold that is commensurate with the increases in mortgage
loan rates experienced in recent months.

The net gain on sales of available-for-sale securities was
$379,000 for the six months ended June 30, 2000, compared with net gains
of $792,000 for the comparable period in 1999. These gains primarily
resulted from sales of available-for-sale securities necessary to
facilitate the funding of our loan growth. The decrease in the net
gains reflects the sales, at a loss, of certain investment securities
that did not meet our overall investment objectives.

The net loss on trading securities of $303,000 for the six months
ended June 30, 1999 resulted from the termination of our trading
division, effective December 31, 1998, and the liquidation of all
trading securities during the first quarter of 1999.

The gain on sales of branches, net of expenses, was $1.4 million
for the six months ended June 30, 2000, in comparison to $4.4 million
for the comparable period in 1999. The reduction in these gains results
from a reduced number of branch divestitures during these periods. For
the six months ended June 30, 2000, we divested one of our branch
locations in central Illinois, whereas in the same period in 1999 we
divested seven branch offices in central and northern Illinois.

Other income was $6.2 million for the six months ended June 30,
2000, in comparison to $5.4 million for the comparable period in 1999.
The increase in other income is primarily attributable to increased
income earned on our investment in bank-owned life insurance, rental
income associated with FCG's leasing activities and increased rental
fees received from First Services, L.P. for the use of data processing
and other equipment owned by us. The increase in rental fees
corresponds to the replacement of our teller system and certain other
technological upgrades, including local and wide area network-based
systems, networks, core processors and item processing equipment that
were replaced in 1999 in preparation for the Year 2000 transition.

NONINTEREST EXPENSE. Noninterest expense was $79.7 million for
the six months ended June 30, 2000, in comparison to $72.7 million for
the comparable period in 1999. The increase reflects:

* the noninterest expense of Lippo Bank, FCG, Century Bank and
Redwood Bank subsequent to their respective acquisition
dates, including certain nonrecurring expenses associated
with those acquisitions;

* increased salaries and employee benefits expenses;

* increased data processing fees;

* increased amortization of intangibles associated with the
purchase of subsidiaries; and

* increased expenses associated with our internal
restructuring process.

A decrease in legal, examination and professional fees partially
offset the overall increase in noninterest expense.

During 1999, we began an internal restructuring process designed
to better position us for future growth and opportunities expected to
become available as consolidation and changes continue in the delivery
of financial services. The magnitude of this project was extensive and
covered almost every area within First Banks. The primary objectives of
the restructuring process were to:

* redesign the corporate organization to provide clearer lines
of authority which are more conducive to the effective
delivery of services to customers;

* enhance our technological strength to enable us to more
effectively and efficiently provide the products, services
and delivery channels necessary to remain competitive in the
financial services industry of the future;

* establish the infrastructure necessary to better support our
service delivery and business development efforts, and to
provide more efficient, better quality services to
customers;

* increase the depth and abilities of all levels of our
management and provide supervision to lead its efforts to
accomplish its corporate objectives; and

* improve internal monitoring systems in order to better
assess the progress of all our areas in achieving our
corporate objectives.

Although these efforts have primarily led to increased capital
expenditures and noninterest expenses in the short-term as further
discussed below, we anticipate they will lead to more effective internal
growth, more efficient operations and improved profitability over the
long term.

Salaries and employee benefits were $35.2 million for the six
months ended June 30, 2000, in comparison to $30.1 million for the
comparable period in 1999. We primarily associate the increase with the
acquisitions of Lippo Bank, First Capital Group, Century Bank and
Redwood Bank. However, the increase also reflects the competitive
environment in the employment market that has resulted in a higher
demand for limited resources, thus escalating industry salary and
employee benefit costs associated with employing and retaining qualified
personnel. In addition, the increase includes various additions to our
staff to enhance executive and senior management expertise, improve
technological support and strengthen centralized operational functions.

Occupancy, net of rental income, and furniture and equipment
expense totaled $12.3 million for the six months ended June 30, 2000, in
comparison to $9.8 million for the comparable period in 1999. The
increase is primarily attributable to acquisitions, the relocation of
certain California and Texas branches and to increased depreciation
expense associated with numerous capital expenditures made throughout
1999, including the implementation of our new teller system. Our
selective elimination of 15 branch offices by sales, mergers or closures
during 1999 and 2000 has partially offset this increase.

Data processing fees were $10.7 million for the six months ended
June 30, 2000, in comparison to $9.2 million for the comparable period
in 1999. We attribute the increased data processing fees to growth and
technological advancements consistent with our product and service
offerings and upgrades to technological equipment, networks and
communication channels.

Legal, examination and professional fees were $2.0 million for the
six months ended June 30, 2000, in comparison to $3.2 million for the
comparable period in 1999. The decrease in these fees results from a
decline in our utilization of external consultants who provided
assistance throughout 1999 associated with the development and expansion
of selected business initiatives. The decrease also reflects the
settlement of certain litigation completed in 1999.

Other expense was $7.9 million for the six months ended June 30,
2000, in comparison to $8.4 million for the comparable period in 1999.
Other expense encompasses numerous general administrative expenses,
including travel, meals and entertainment, insurance, freight and
courier services, correspondent bank charges, amortization of intangibles
associated with the purchase of our subsidiaries, miscellaneous
losses and recoveries and sales taxes. The overall decrease in these
expenses for the six months ended June 30, 2000 is a function of:

* recoveries from loans of acquired entities that had been
fully charged-off prior to the acquisition dates;

* management's continued efforts to control these costs; and

* reduced fraud losses.

Offsetting the overall decrease in other expenses in 2000 was an
increase of $285,000 in amortization of intangibles associated with the
completion of the acquisitions; increases in freight and courier
services; and a $300,000 provision for an estimated loss on equipment
underlying leases associated with a previously acquired entity.

COMPARISON OF RESULTS OF OPERATIONS FOR 1999 AND 1998

NET INCOME. Net income was $44.2 million for the year ended
December 31, 1999, compared to $33.5 million for 1998. We associate the
improved operating results for 1999 with our efforts to realign the
composition of the loan portfolio through further diversification and
growth; the improvement in the composition of the interest-earning
assets and interest-bearing liabilities; the results of our acquisitions
of Century Bank and Redwood; and, the divestiture of certain branch
facilities. Net interest income (expressed on a tax-equivalent basis)
improved to $195.2 million, or 4.52% of average interest-earning assets,
from $166.5 million, or 4.19% of average interest-earning assets, for
1999 and 1998, respectively.

An increased provision for loan losses and an increase in
operating expenses partially offset the improvement in net income. The
increased operating expense reflects the additional cost of the trust
preferred securities issued by FBA in July 1998; the continuing
expansion of commercial and retail banking activities; the acquisitions
of Century Bank and Redwood; increased legal, examination and
professional fees; and increased data processing fees primarily
associated with Year 2000 activities.

PROVISION FOR LOAN LOSSES. The provision for loan losses was
$13.1 million and $9.0 million for the years ended December 31, 1999 and
1998, respectively. We primarily attribute the increase in the
provision for loan losses for 1999 to the continued growth and changing
composition of our loan portfolio, combined with an increase in loans
charged-off. Net loan charge-offs were $8.4 million for the year ended
December 31, 1999, compared to $1.7 million for 1998. The increase in
net loan charge-offs reflects overall growth in our loan portfolio and
increased risk associated with the continued change in the composition
of our loan portfolio. In addition, nonperforming assets have, in
general, increased at December 31, 1999 and 1998, in comparison to
previous periods. The allowances for loan losses of Redwood and Century
Bank at their dates of acquisition added approximately $3.0 million to
our consolidated allowance for loan losses.

The following table represents a summary of loan loss experience
and nonperforming assets by geographic area for the years ended December
31, 1999 and 1998:

<TABLE>
<CAPTION>
MISSOURI AND ILLINOIS CALIFORNIA TEXAS TOTAL
---------------------- --------------------- ----------------- ---------------------
1999 1998 1999 1998 1999 1998 1999 1998
---------- --------- --------- --------- ------- ------- --------- ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total loans . . . . . . . . . . . . . $2,527,231 2,490,139 1,255,362 888,540 213,731 201,426 3,996,324 3,580,105
Total assets. . . . . . . . . . . . . 3,003,027 3,039,759 1,575,997 1,203,319 288,723 311,732 4,867,747 4,554,810
Provision for loan losses . . . . . . 8,890 7,250 4,093 1,415 90 335 13,073 9,000
Net loan (charge-offs) recoveries . . (6,494) (1,150) (2,524) (344) 578 (245) (8,440) (1,739)
Net loan (charge-offs) recoveries
as a percentage of average loans. . (0.26)% (0.05)% (0.23)% (0.05)% 0.27% (0.13)% (0.22)% (0.05)%
Nonperforming loans . . . . . . . . . $ 23,493 18,494 16,204 24,954 40 90 39,737 43,538
Nonperforming assets. . . . . . . . . 25,233 21,268 16,593 25,889 40 90 41,866 47,247
</TABLE>

NONINTEREST INCOME AND EXPENSE. The following table summarizes
noninterest income and noninterest expense for the years ended
December 31, 1999 and 1998:

<TABLE>
<CAPTION>
DECEMBER 31, INCREASE (DECREASE)
----------------------- ---------------------
1999 1998 AMOUNT %
-------- ------- ------ -------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Noninterest income:
Service charges on deposit accounts and customer service fees. . $ 17,676 14,876 2,800 18.82%
Credit card fees . . . . . . . . . . . . . . . . . . . . . . . . 409 2,999 (2,590) (86.36)
Loan servicing fees, net . . . . . . . . . . . . . . . . . . . . 657 1,017 (360) (35.40)
Gain on mortgage loans sold and held for sale. . . . . . . . . . 6,909 5,563 1,346 24.20
Net gain on sales of available-for-sale securities . . . . . . . 791 1,466 (675) (46.04)
Net (loss) gain on trading securities. . . . . . . . . . . . . . (303) 607 (910) (149.92)
Gain on sales of branches, net of expenses . . . . . . . . . . . 4,406 --- 4,406 ---
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,105 9,969 1,136 11.40
-------- ------- ------
Total noninterest income. . . . . . . . . . . . . . . . . . . $ 41,650 36,497 5,153 14.12
======== ======= ====== =======

Noninterest expense:
Salaries and employee benefits . . . . . . . . . . . . . . . . . $ 61,524 55,907 5,617 10.05%
Occupancy, net of rental income. . . . . . . . . . . . . . . . . 12,518 11,037 1,481 13.42
Furniture and equipment. . . . . . . . . . . . . . . . . . . . . 8,520 8,122 398 4.90
Federal Deposit Insurance Corporation premiums . . . . . . . . . 1,310 1,370 (60) (4.38)
Postage, printing and supplies . . . . . . . . . . . . . . . . . 4,244 5,230 (986) (18.85)
Data processing fees . . . . . . . . . . . . . . . . . . . . . . 18,567 13,917 4,650 33.41
Legal, examination and professional fees . . . . . . . . . . . . 9,109 5,326 3,783 71.03
Credit card. . . . . . . . . . . . . . . . . . . . . . . . . . . 667 3,396 (2,729) (80.36)
Communications . . . . . . . . . . . . . . . . . . . . . . . . . 2,488 2,874 (386) (13.43)
Advertising and business development . . . . . . . . . . . . . . 3,734 4,668 (934) (20.01)
(Gain) loss on sales of other real estate, net of expenses . . . (622) 81 (703) (867.90)
Guaranteed preferred debentures. . . . . . . . . . . . . . . . . 12,050 9,842 2,208 22.43
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,698 16,934 (236) (1.39)
-------- ------- ------
Total noninterest expense . . . . . . . . . . . . . . . . . . $150,807 138,704 12,103 8.73
======== ======= ====== =======
</TABLE>

NONINTEREST INCOME. Noninterest income was $41.7 million for the
year ended December 31, 1999, compared to $36.5 million for 1998.
Noninterest income consists primarily of service charges on deposit
accounts and customer service fees, mortgage banking revenues and other
income.

Service charges on deposit accounts and customer service fees
increased to $17.7 million for 1999, from $14.9 million for 1998. The
increase in service charges and customer service fees is attributable to:

* increased deposit balances provided by internal growth;

* the acquisitions of Century Bank, Redwood, Pacific Bay Bank
and Republic Bank;

* additional products and services available and utilized by
First Banks' expanding base of retail and commercial
customers;

* increased fee income resulting from revisions of customer
service charge rates effective April 1, 1999, and enhanced
control of fee waivers; and

* increased interchange income associated with automatic
teller machine services and debit and credit cards.

As described below, this increase was partially offset by the
foregone revenue associated with the divestiture of certain branches in
1999, which resulted in a reduction in our deposit base of approximately
$54.8 million.

Credit card fees declined to $409,000 for 1999, from $3.0 million for
1998. The reduction in credit card fees primarily results from the
liquidation of our merchant credit card processing operation effective
December 31, 1998.

Our mortgage banking revenues consist primarily of loan servicing
fees, net, and gain on mortgage loans sold and held for sale. Loan
servicing fees, net, decreased to $657,000 from $1.0 million for the years
ended December 31, 1999 and 1998, respectively. We attribute the decrease
in loan servicing fees primarily to aggregate increases of $698,000 in
additional amortization of mortgage servicing rights, interest shortfall
and mortgage-backed security expense. This decrease in loan servicing fees
was partially offset by an increase in loan servicing fees resulting from
the increase in the portfolio of loans serviced for others. The gain on
mortgage loans sold and held for sale increased to $6.9 million from $5.6
million for 1999 and 1998, respectively. This increase regarding mortgage
loans is attributable to an increased volume of loans sold and held for
sale, including fixed rate residential mortgage loans, which are sold on a
servicing retained basis, and adjustable-rate and non-conforming
residential mortgage loans, which are sold on a servicing released basis.

Net gain on sales of available-for-sale securities was $791,000 and
$1.5 million for the years ended December 31, 1999 and 1998, respectively.
These gains resulted from sales of available-for-sale securities necessary
to facilitate the funding of loan growth.

Net loss on sales of trading securities was $303,000 for the year
ended December 31, 1999, in comparison to a net gain of $607,000 for 1998.
The loss for 1999 resulted from the termination of our trading division,
effective December 31, 1998, and the liquidation of all trading portfolio
securities.

The gain on sales of branches, net of expenses, of $4.4 million
resulted from our divestiture of seven branches in the central and northern
Illinois market areas.

Other income was $11.1 million and $10.0 million for the years ended
December 31, 1999 and 1998, respectively. The primary components of the
increase are attributable to increased income earned on our investment in
bank-owned life insurance and expanded brokerage and private banking and
trust services. The bank-owned life insurance income increased to $3.9
million for 1999, in comparison to $3.1 million for 1998. This increase
primarily results from twelve months of earnings on FBA's investment in
bank-owned life insurance in 1999, in comparison to nine months of earnings
in 1998. In addition, private banking and trust services income increased
to $1.8 million for 1999 from $1.4 million for 1998 due to the continued
expansion of these services primarily in the California and Texas market
areas.

NONINTEREST EXPENSE. Noninterest expense increased to $150.8 million
for the year ended December 31, 1999 from $138.7 million for 1998. The
increase reflects:

* the acquisitions of Century Bank, Redwood, Pacific Bay Bank
and Republic Bank;

* increased data processing fees primarily associated with
our Year 2000 program;

* increased legal, examination and professional fees; and

* FBA's issuance of the trust preferred securities in July
1998.

The overall increase in noninterest expense was partially offset by a
decline in credit card expenses and a reduction in advertising and business
development expenses, postage, printing and supplies expenses and
communications expenses. This is consistent with management's efforts to
more effectively manage these expenditures.

Specifically, salaries and employee benefits increased by $5.6
million to $61.5 million from $55.9 million for the years ended December
31, 1999 and 1998, respectively. We associate the increase with the newly
acquired banks and our continued commitment to expanding our commercial,
mortgage banking and retail business development capabilities associated
with the expansion and delivery of our products and services. The overall
increase also reflects the competitive environment in the employment market
that has resulted in a higher demand for limited resources, thus escalating
industry salary and employee benefit costs.

Data processing fees were $18.6 million and $13.9 million for 1999
and 1998, respectively. First Services, L.P., a limited partnership
indirectly owned by our Chairman and his adult children, provides
data processing and various related services to us and our subsidiary banks
under the terms of data processing agreements. We attribute the increase
in data processing fees to growth and technological advancements consistent
with our product and service offerings, increased expenses attributable to
communication data lines related to the expansion of the branch network
infrastructure and expenses associated with our Year 2000 program.

Legal, examination and professional fees increased by $3.8 million to
$9.1 million in 1999, from $5.3 million in 1998. We attribute the increase
in these fees primarily to our expanded utilization of external consultants
in conjunction with the development and expansion of selected business
initiatives. Increased legal expenditures associated with the settlement
of certain litigation further contributed to the overall increase.

Credit card expenses declined by $2.7 million to $667,000 from $3.4
million for the years ended December 31, 1999 and 1998, respectively. As
previously discussed, this decline primarily results from the liquidation
of our merchant credit card processing operation, effective December 31,
1998.

Guaranteed preferred debentures increased by $2.2 million to $12.1
million from $9.8 million for the years ended December 31, 1999 and 1998,
respectively. We associate the increase for 1999 with the issuance by
FBA's financing subsidiary of its trust preferred securities in July 1998.

COMPARISON OF RESULTS OF OPERATIONS FOR 1998 AND 1997

NET INCOME. Net income for the year ended December 31, 1998 was
$33.5 million, compared to $33.0 million for 1997. We credit the
improvement in operating results for 1998, as compared to 1997, to the
improvement in the composition of interest-earning assets and interest-
bearing liabilities and noninterest income. Net interest income (expressed
on a tax-equivalent basis) improved to $166.5 million, or 4.19% of
interest-earning assets, from $147.2 million, or 4.09% of interest-earning
assets, for 1998 and 1997, respectively. This improvement, coupled with
improved noninterest income, was substantially offset by increased
noninterest expense. During 1998, noninterest expense increased to $138.7
million, or 3.24% of average total assets, from $110.3 million, or 2.89% of
average total assets, for 1997. The increase in noninterest expense of
$28.4 million, or 0.66% of total average assets, reflects the additional
costs of acquired entities and the continued investment in improving our
technology and franchise to achieve planned growth.

PROVISION FOR LOAN LOSSES. The provision for loan losses was $9.0
million for the year ended December 31, 1998, compared to $11.3 million for
1997. Net loan charge-offs were $1.7 million for the year ended December
31, 1998, compared to $7.6 million for 1997. We attribute the increased
provision for loan losses for 1998 primarily to the continued growth and
changing composition of our portfolio. As our portfolio has changed from
one with a significant preponderance in residential real estate loans, to
one having substantial portions of commercial, financial and agricultural
loans, real estate construction and development loans and commercial real
estate loans, the credit risk profile of our portfolio has increased.
Typically, residential real estate lending has resulted in relatively minor
credit losses. However, commercial lending carries with it greater credit
risk which, although managed through appropriate loan policies and
procedures, underwriting and credit administration, must be recognized
through adequate allowances for loan losses. We associate the increased
level of commercial lending activities with the increase in nonperforming
and other problem loans of $12.8 million as of December 31, 1998, compared
to December 31, 1997. Two loans totaling $6.0 million and the acquisitions
of Republic Bank and Pacific Bay Bank primarily account for the increase.

The following summarizes loan loss experience and nonperforming
assets by geographic area for the years ended December 31, 1998 and 1997:

<TABLE>
<CAPTION>
MISSOURI AND ILLINOIS CALIFORNIA TEXAS TOTAL
--------------------- ---------------- -------------- ----------------
1998 1997 1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ---- ---- ----
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total loans . . . . . . . . . . . . . $2,490,139 2,185,493 888,540 640,366 201,426 176,341 3,580,105 3,002,200
Total assets. . . . . . . . . . . . . 3,039,759 2,850,349 1,203,319 1,042,979 311,732 271,686 4,554,810 4,165,014
Provision for loan losses . . . . . . 7,250 7,300 1,415 2,500 335 1,500 9,000 11,300
Net loan charge-offs. . . . . . . . . 1,150 5,001 344 1,510 245 1,091 1,739 7,602
Net loan charge-offs as a percentage
of average loans . . . . . . . . . 0.05% 0.23% 0.05% 0.30% 0.13% 0.63% 0.05% 0.27%
Nonperforming loans . . . . . . . . . $ 18,494 18,307 24,954 5,548 90 211 43,538 24,066
Nonperforming assets. . . . . . . . . 21,268 23,377 25,889 7,717 90 296 47,247 31,390
</TABLE>

NONINTEREST INCOME AND EXPENSE. The following table summarizes
noninterest income and noninterest expense for the years ended
December 31, 1998 and 1997:

<TABLE>
<CAPTION>
DECEMBER 31, INCREASE (DECREASE)
------------------- -------------------
1998 1997 AMOUNT %
-------- ------- ------ -------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Noninterest income:
Service charges on deposit accounts and customer service fees. . . . . . $ 14,876 12,491 2,385 19.09%
Credit card fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,999 2,914 85 2.92
Loan servicing fees, net . . . . . . . . . . . . . . . . . . . . . . . . 1,017 1,628 (611) (37.53)
Gain on mortgage loans sold and held for sale. . . . . . . . . . . . . . 5,563 716 4,847 676.96
Trust and brokerage fees . . . . . . . . . . . . . . . . . . . . . . . . 1,506 893 613 68.65
Net gain on sales of securities. . . . . . . . . . . . . . . . . . . . . 2,073 2,456 (383) (15.59)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,463 4,599 3,864 84.02
-------- ------- ------
Total noninterest income. . . . . . . . . . . . . . . . . . . . . . . $ 36,497 25,697 10,800 42.03
======== ======= ====== =======

Noninterest expense:
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . $ 55,907 43,011 12,896 29.98%
Occupancy, net of rental income. . . . . . . . . . . . . . . . . . . . . 11,037 10,617 420 3.96
Furniture and equipment. . . . . . . . . . . . . . . . . . . . . . . . . 8,122 7,618 504 6.62
Federal Deposit Insurance Corporation premiums . . . . . . . . . . . . . 1,370 804 566 70.40
Postage, printing and supplies . . . . . . . . . . . . . . . . . . . . . 5,230 4,187 1,043 24.91
Data processing fees . . . . . . . . . . . . . . . . . . . . . . . . . . 13,917 8,450 5,467 64.70
Legal, examination and professional fees . . . . . . . . . . . . . . . . 5,326 4,587 739 16.11
Credit card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,396 3,343 53 1.59
Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,874 2,611 263 10.07
Advertising and business development . . . . . . . . . . . . . . . . . . 4,668 4,054 614 15.15
Loss (gain) on sales of other real estate, net of expenses . . . . . . . 81 (331) 412 (124.47)
Guaranteed preferred debentures. . . . . . . . . . . . . . . . . . . . . 9,842 7,322 2,520 34.42
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,934 14,014 2,920 20.84
-------- ------- ------
Total noninterest expense . . . . . . . . . . . . . . . . . . . . . . $138,704 110,287 28,417 25.77
======== ======= ====== =======
</TABLE>

NONINTEREST INCOME. Noninterest income was $36.5 million for the
year ended December 31, 1998, compared to $25.7 million for 1997. We
attribute the increase primarily to our core operating units, which
realized improved service charges on deposit accounts and customer
service fees, gains on mortgage loans sold and held for sale and trust
and brokerage fees.

Service charges on deposit accounts and customer service fees
increased to $14.9 million from $12.5 million for the years ended
December 31, 1998 and 1997, respectively. The increase in service
charges corresponds to the increase in deposit balances provided by
internal growth, the acquisitions of

<PAGE>
<PAGE>
Surety Bank, Pacific Bay Bank and Republic Bank and the additional
services available to and utilized by our commercial customers.

Our mortgage banking revenues consist primarily of loan servicing
fees, net, and gain on mortgage loans sold and held for sale. Loan
servicing fees, net, decreased to $1.0 million from $1.6 million for the
years ended December 31, 1998 and 1997, respectively. We attribute the
decrease in loan servicing fees primarily to aggregate increases of
$827,000 consisting of additional amortization of mortgage servicing
rights and increased interest shortfall and mortgage-backed security
expense. Offsetting the decrease was the increase in loan servicing
fees, resulting from the increase in the portfolio of loans serviced for
others.

The gain on mortgage loans sold and held for sale increased to
$5.6 million from $716,000 for 1998 and 1997, respectively. We
attribute this increase to an increased volume of loans sold and held
for sale including fixed rate residential mortgage loans, which are sold
on a servicing retained basis, and adjustable rate and non-conforming
residential mortgage loans, which are sold on a servicing released basis.

The gain on sales of securities was $2.1 million and $2.5 million
for the years ended December 31, 1998 and 1997, respectively. For 1998,
the gains resulted from sales of available-for-sale securities to
facilitate the funding of loan growth. The gain on sale of securities
for 1997 resulted from the sales of certain residual securities that had
been acquired by us through an acquisition completed in 1995.

Other income was $8.5 million and $4.6 million for the years ended
December 31, 1998 and 1997, respectively. The primary component of the
increase consists of $3.1 million of income earned on a bank-owned life
insurance policy entered into in 1998. The bank-owned life insurance
balance was $75.7 million at December 31, 1998 and is included in other
assets. Other noninterest income also includes rental fees of $799,000
and $1.1 million for 1998 and 1997, respectively, paid by First
Services, L.P. for the use of data processing and other equipment owned
by us. In addition, noninterest income includes $1.6 million from the
repayment of an acquired loan in excess of our historical cost basis.

NONINTEREST EXPENSE. Noninterest expense increased to $138.7
million for the year ended December 31, 1998 from $110.3 million for
1997. The most significant changes in noninterest expense were
increases in salaries and employee benefits, data processing fees and
guaranteed preferred debentures expense.

Salaries and employee benefits have increased to $55.9 million
from $43.0 million for the years ended December 31, 1998 and 1997,
respectively. We credit the increase to our newly acquired banks and our
continued commitment to expanding our commercial, mortgage banking and
retail business development capabilities.

Data processing fees for the year ended December 31, 1998 were
$13.9 million, compared to $8.5 million for 1997. Effective April 1,
1997, First Services, L.P., a limited partnership indirectly owned by
our Chairman and his adult children, began providing data processing
and related services for First Banks. FirstServ, Inc., our wholly owned
subsidiary, previously provided these services. As a result, expenses
related to data processing and related services were recorded in various
noninterest expense categories for the periods prior to April 1, 1997.
Subsequent to that date, these expenses are reflected as data processing
expenses. We attribute the increase for 1998 primarily to the
additional services provided by First Services, L.P. to meet the
increasing technology requirements of the banking industry and the
additional costs associated with the data processing conversions of
newly acquired entities and system upgrades. The Year 2000 costs billed
from First Services, L.P. were $600,000 for 1998.

The guaranteed preferred debenture expense contributed further to
the increase in noninterest expense. For the years ended December 31,
1998 and 1997, the cost was $9.8 million and $7.3 million, respectively.
We attribute the increase for 1998 to the issuance by FBA's financing
subsidiary of its trust preferred securities in July 1998 and the
issuance by our other financing subsidiary of its trust preferred
securities in February 1997.

Advertising and business development expenses also increased to
$4.7 million from $4.1 million for the years ended December 31, 1998 and
1997, respectively. We attribute the increase to programs instituted in
prior years and our continued commitment to expand our presence in each
of our market areas.

In addition, other noninterest expense for 1998 includes a $1.1
million charitable contribution to the Affordable Housing Assistance
Program and a $500,000 charge that we incurred in the settlement of two
lawsuits.

INVESTMENT SECURITIES

We classify the securities within our investment portfolio as held
to maturity or available for sale. We no longer engage in the trading
of investment securities. The investment security portfolio consists
primarily of securities designated as available for sale. The
investment security portfolio was $436.3 million and $451.6 million at
June 30, 2000 and December 31, 1999, respectively, compared to $534.8
million and $795.5 million at December 31, 1998 and 1997, respectively.

LOANS AND ALLOWANCE FOR LOAN LOSSES

Interest earned on our loan portfolio represents the principal
source of income for First Banks and our subsidiary banks. Interest and
fees on loans were 92.0% and 91.3% of total interest income for the six
months ended June 30, 2000 and 1999, respectively, and 91.5%, 86.7% and
85.7% of total interest income for the years ended December 31, 1999,
1998 and 1997, respectively. Loans, net of unearned discount,
represented 83.5% and 82.1% of total assets as of June 30, 2000 and
December 31, 1999, respectively, compared to 78.6% and 72.1% of total
assets at December 31, 1998 and 1997, respectively. Total loans, net of
unearned discount, increased $420.0 million for the year ended December
31, 1999 to $4.00 billion, and $580.0 million for the year ended
December 31, 1998 to $3.58 billion. We view the quality, yield and
growth of our loan portfolio to be instrumental elements in our growth
and profitability.

As summarized in the composition of loan portfolio table, during
the five years ended December 31, 1999, total loans, net of unearned
discount, increased 46.0% from $2.74 billion at December 31, 1995 to
$4.00 billion at December 31, 1999. At June 30, 2000, total loans, net
of unearned discount, were $4.33 billion. In 1993, we began a process
of substantially enhancing our capabilities to achieve and manage
internal growth. We expanded our corporate business development staff
which is responsible for the internal development of both loan and
deposit relationships with commercial customers. These customers
require loans categorized by type of collateral as commercial, financial
and agricultural loans, real estate construction and land development
loans and commercial real estate loans.

While this process was occurring, in order to achieve more
diversification, a higher level of interest yield and a reduction in
interest rate risk within our loan portfolio, we also focused on
repositioning our portfolio. As the corporate business development
effort continued to originate a substantial volume of new loans,
substantially all of our conforming residential mortgage loan production
has been sold in the secondary mortgage market, and we have substantially
reduced our origination of indirect automobile loans. This allowed
us to fund part of the growth in corporate lending through reductions in
residential real estate and indirect automobile lending.

In addition, our acquisitions added substantial portfolios of new
loans. However, many of these portfolios, particularly those related to
the acquisitions completed in 1995, contained significant loan problems.
As we resolved the asset quality issues, the portfolios of the acquired
entities tended to decline because many of the resources which would
otherwise be directed toward generating new loans were concentrated on
improving or eliminating existing relationships.

<PAGE>
<PAGE>
This table summarizes the effects of these factors on our loan
portfolio for the six months ended June 30, 2000 and four years ended
December 31, 1999:

<TABLE>
<CAPTION>
INCREASE (DECREASE) INCREASE (DECREASE) FOR THE YEAR ENDED DECEMBER 31,
FOR THE SIX MONTHS ---------------------------------------------------
ENDED JUNE 30, 2000 1999 1998 1997 1996
------------------- -------- -------- -------- --------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Internal loan volume increase (decrease):
Commercial lending . . . . . . . . . . . . . . . . . . $245,226 363,486 633,660 378,882 209,251
Residential real estate lending. . . . . . . . . . . . 20,918 (126,418) (152,849) (144,707) (164,400)
Consumer lending, net of unearned discount . . . . . . (40,075) (56,349) (30,506) (54,305) (82,231)
Loans provided by acquisitions. . . . . . . . . . . . . . 104,000 235,500 127,600 54,361 61,130
-------- -------- -------- -------- --------
Total increase in loans, net of unearned discount. . . $330,069 416,219 577,905 234,231 23,750
======== ======== ======== ======== ========

Increase (decrease) in potential problem loans <F1> . . . $ 15,800 11,200 12,800 (9,800) (25,500)
======== ======== ======== ======== ========

<FN>
---------------------

<F1> Potential problem loans include nonperforming loans and other
loans identified by management as having potential credit
problems.
</TABLE>

Our lending strategy stresses quality, growth and diversification
by collateral, geography and industry. Throughout our organization, we
employ a common credit underwriting structure. Our commercial lenders
focus principally on small to middle-market companies. Retail lenders
focus principally on residential loans, including home equity loans,
automobile financing and other consumer financing needs arising out of
our branch banking network.

Commercial, financial and agricultural loans include loans that
are made primarily based on the borrowers' general credit strength and
ability to generate repayment cash flows from income sources even though
such loans may also be secured by real estate or other assets. Real
estate construction and development loans, primarily relating to
residential properties and smaller commercial properties, represent
interim financing secured by real estate under construction. Real
estate mortgage loans consist primarily of loans secured by single-
family, owner-occupied properties and various types of commercial
properties on which the income from the property is the intended source
of repayment. Consumer and installment loans consist primarily of loans
to individuals secured by automobiles. Loans held for sale are
primarily fixed and adjustable rate residential loans pending sale in
the secondary mortgage market in the form of a mortgage-backed security,
or to various private third-party investors.

The following table summarizes the composition of our loan
portfolio by major category and the percent of each category to the
total portfolio as of the dates presented:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------------------------------
JUNE 30, 2000 1999 1998 1997 1996 1995
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT % AMOUNT %
------ - ------ - ------ - ------ - ------ - ------ -
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial
and agricultural. . . $1,284,606 30.0% $1,086,919 27.4% $ 920,007 26.7% $ 621,618 21.1% $ 457,186 16.7% $ 364,018 13.5%
Real estate
construction
and development . . . 816,687 19.1 795,081 20.1 720,910 20.9 413,107 14.0 289,378 10.5 209,802 7.8
Real estate mortgage:
One-to-four family
residential loans. 738,893 17.2 720,630 18.2 739,442 21.5 915,205 31.1 1,059,770 38.7 1,199,491 44.4
Other real estate
loans. . . . . . . 1,257,372 29.3 1,130,939 28.6 789,735 22.9 713,910 24.3 600,810 21.9 512,264 19.0
Consumer and
installment, net of
unearned discount . . 188,768 4.4 225,343 5.7 274,392 8.0 279,279 9.5 333,340 12.2 413,609 15.3
---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- ----- ---------- -----
Total loans,
excluding loans
held for sale . 4,286,326 100.0% 3,958,912 100.0% 3,444,486 100.0% 2,943,119 100.0% 2,740,484 100.0% 2,699,184 100.0%
===== ===== ===== ===== ===== =====
Loans held for sale. . . 40,067 37,412 135,619 59,081 27,485 45,035
---------- ---------- ---------- ---------- ---------- ----------
Total loans. . . . $4,326,393 $3,996,324 $3,580,105 $3,002,200 $2,767,969 $2,744,219
========== ========== ========== ========== ========== ==========
</TABLE>

Loans at December 31, 1999 mature as follows:

<TABLE>
<CAPTION>
OVER ONE YEAR
THROUGH FIVE YEARS OVER FIVE YEARS
ONE YEAR OR -------------------------- --------------------------
LESS FIXED RATE FLOATING RATE FIXED RATE FLOATING RATE TOTAL
----------- ---------- ------------- ---------- ------------- ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural . . . . . . $ 904,017 142,382 30,007 10,286 227 1,086,919
Real estate construction and development . . . . . 765,037 8,776 19,758 1,173 337 795,081
Real estate mortgage . . . . . . . . . . . . . . . 889,691 433,884 281,482 176,901 69,611 1,851,569
Consumer and installment, net of unearned
discount. . . . . . . . . . . . . . . . . . . . 54,334 164,078 513 6,348 70 225,343
Loans held for sale. . . . . . . . . . . . . . . . 37,412 --- --- --- --- 37,412
---------- ------- ------- ------- ------ ---------
Total loans . . . . . . . . . . . . . . . . . . $2,650,491 749,120 331,760 194,708 70,245 3,996,324
========== ======= ======= ======= ====== =========
</TABLE>

<PAGE>
<PAGE>
The following table is a summary of loan loss experience for the
six months ended June 30, 2000 and 1999 and for the five years ended
December 31, 1999:

<TABLE>
<CAPTION>
AS OF OR FOR THE SIX
MONTHS ENDED JUNE 30, AS OF OR FOR THE YEARS ENDED DECEMBER 31,
---------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- --------- --------- --------- --------- --------- ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Allowance for loan losses, beginning of period $ 68,611 60,970 60,970 50,509 46,781 52,665 28,410
Acquired allowances for loan losses . . . . . . 799 1,466 3,008 3,200 30 2,338 24,655
---------- --------- --------- --------- --------- --------- ---------
69,410 62,436 63,978 53,709 46,811 55,003 53,065
---------- --------- --------- --------- --------- --------- ---------
Loans charged-off:
Commercial, financial and agricultural . . . (2,949) (3,786) (10,855) (3,908) (2,308) (8,918) (2,337)
Real estate construction and development . . (1) (321) (577) (185) (2,242) (1,241) (275)
Real estate mortgage . . . . . . . . . . . . (378) (1,362) (2,561) (2,389) (6,250) (10,308) (5,948)
Consumer and installment . . . . . . . . . . (1,642) (2,059) (3,728) (3,701) (6,032) (8,549) (7,060)
---------- --------- --------- --------- --------- --------- ---------
Total . . . . . . . . . . . . . . . . . . (4,970) (7,528) (17,721) (10,183) (16,832) (29,016) (15,620)
---------- --------- --------- --------- --------- --------- ---------
Recoveries of loans previously charged off:
Commercial, financial and agricultural . . . 3,684 1,794 3,602 3,417 2,146 2,642 1,714
Real estate construction and development . . 244 345 849 342 269 495 666
Real estate mortgage . . . . . . . . . . . . 1,149 813 2,357 2,029 3,666 3,255 290
Consumer and installment . . . . . . . . . . 1,103 1,254 2,473 2,656 3,149 2,908 2,189
---------- --------- --------- --------- --------- --------- ---------
Total . . . . . . . . . . . . . . . . . . 6,180 4,206 9,281 8,444 9,230 9,300 4,859
---------- --------- --------- --------- --------- --------- ---------
Net loans recovered (charged-off) . . . . 1,210 (3,322) (8,440) (1,739) (7,602) (19,716) (10,761)
---------- --------- --------- --------- --------- --------- ---------
Provision for loan losses . . . . . . . . . . . 7,202 5,863 13,073 9,000 11,300 11,494 10,361
---------- --------- --------- --------- --------- --------- ---------
Allowance for loan losses, end of period. . . . $ 77,822 64,977 68,611 60,970 50,509 46,781 52,665
========== ========= ========= ========= ========= ========= =========

Loans outstanding:
Average. . . . . . . . . . . . . . . . . . . $4,180,776 3,708,908 3,812,508 3,250,719 2,846,157 2,726,297 2,598,936
End of period. . . . . . . . . . . . . . . . 4,326,393 3,768,094 3,996,324 3,580,105 3,002,200 2,767,969 2,744,219
End of period, excluding loans held for sale 4,286,326 3,705,194 3,958,912 3,444,486 2,943,119 2,740,484 2,699,184
========== ========= ========= ========= ========= ========= =========

Ratio of allowance for loan losses to loans
outstanding:
Average. . . . . . . . . . . . . . . . . . . 1.86% 1.75% 1.80% 1.88% 1.77% 1.72% 2.03%
End of period. . . . . . . . . . . . . . . . 1.80 1.72 1.72 1.70 1.68 1.69 1.92
End of period, excluding loans held for sale 1.82 1.75 1.73 1.77 1.72 1.71 1.95
Ratio of recoveries (charge offs) to average
loans outstanding<F1>. . . . . . . . . . . . . 0.06 (0.18) (0.22) (0.05) (0.27) (0.72) (0.41)
Ratio of current year recoveries to preceding
year's total charge-offs . . . . . . . . . . . 82.09 101.64 91.14 50.17 31.81 59.54 72.57
========== ========= ========= ========= ========= ========= =========

Allocation of allowance for loan losses at end
of period:
Commercial, financial and agricultural . . . $ 28,240 20,503 24,898 19,239 14,879 13,579 12,501
Real estate construction and development . . 15,045 16,064 13,264 15,073 7,148 4,584 4,665
Real estate mortgage . . . . . . . . . . . . 23,536 20,008 20,750 18,774 18,317 14,081 19,849
Consumer and installment . . . . . . . . . . 4,979 5,520 4,390 5,180 5,089 10,296 10,016
Unallocated. . . . . . . . . . . . . . . . . 6,022 2,882 5,309 2,704 5,076 4,241 5,634
---------- --------- --------- --------- --------- --------- ---------
Total . . . . . . . . . . . . . . . . . . $ 77,822 64,977 68,611 60,970 50,509 46,781 52,665
========== ========= ========= ========= ========= ========= =========

Percent of categories to loans, net of unearned
discount:
Commercial, financial and agricultural . . . 29.69% 27.03% 27.20% 25.70% 20.71% 16.52% 13.27%
Real estate construction and development . . 18.88 20.95 19.90 20.14 13.76 10.45 7.65
Real estate mortgage . . . . . . . . . . . . 46.14 43.44 46.33 42.71 54.26 60.00 62.49
Consumer and installment . . . . . . . . . . 4.36 6.91 5.64 7.66 9.30 12.04 14.95
Loans held for sale. . . . . . . . . . . . . 0.93 1.67 0.93 3.79 1.97 0.99 1.64
---------- --------- --------- --------- --------- --------- ---------
Total . . . . . . . . . . . . . . . . . . 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
========== ========= ========= ========= ========= ========= =========

<FN>
----------------------------

<F1> Ratios for the six-month periods are annualized.
</TABLE>

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

<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
---------------------- ---------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------- --------- --------- --------- --------- --------- ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and agricultural:
Nonaccrual . . . . . . . . . . . . . . . . . $ 14,824 17,548 18,397 15,385 4,017 4,113 9,930
Restructured terms . . . . . . . . . . . . . 22 --- 29 --- --- 130 ---
Real estate construction and development:
Nonaccrual . . . . . . . . . . . . . . . . . 2,392 4,904 1,886 3,858 4,097 817 2,002
Real estate mortgage:
Nonaccrual . . . . . . . . . . . . . . . . . 16,398 18,318 16,414 18,858 10,402 24,486 27,159
Restructured terms . . . . . . . . . . . . . 2,971 4,553 2,979 5,221 5,456 278 ---
Consumer and installment:
Nonaccrual . . . . . . . . . . . . . . . . . 208 91 32 216 94 440 300
Restructured terms . . . . . . . . . . . . . --- 29 --- --- --- 5 ---
---------- --------- --------- --------- --------- --------- ---------
Total nonperforming loans . . . . . . . . 36,815 45,443 39,737 43,538 24,066 30,269 39,391
Other real estate . . . . . . . . . . . . . . . 1,903 2,545 2,129 3,709 7,324 10,607 7,753
---------- --------- --------- --------- --------- --------- ---------
Total nonperforming assets. . . . . . . . $ 38,718 47,988 41,866 47,247 31,390 40,876 47,144
========== ========= ========= ========= ========= ========= =========

Loans, net of unearned discount . . . . . . . . $4,326,393 3,768,094 3,996,324 3,580,105 3,002,200 2,767,969 2,744,219
========== ========= ========= ========= ========= ========= =========

Loans past due 90 days or more and still
accruing . . . . . . . . . . . . . . . . . . . $ 3,477 6,957 5,844 4,674 2,725 3,779 8,474
========== ========= ========= ========= ========= ========= =========

Allowance for loan losses to loans. . . . . . . 1.80% 1.72% 1.72% 1.70% 1.68% 1.69% 1.92%
Nonperforming loans to loans. . . . . . . . . . 0.85 1.21 0.99 1.22 0.80 1.09 1.44
Allowance for loan losses to nonperforming
loans. . . . . . . . . . . . . . . . . . . . . 211.39 142.99 172.66 140.04 209.88 154.55 133.70
Nonperforming assets to loans and other real
estate . . . . . . . . . . . . . . . . . . . . 0.89 1.27 1.05 1.32 1.04 1.47 1.71
========== ========= ========= ========= ========= ========= =========
</TABLE>

Nonperforming loans (also considered impaired loans), consisting
of loans on nonaccrual status and certain restructured loans, were $36.8
million at June 30, 2000 and $39.7 million at December 31, 1999 in
comparison to $43.5 million at December 31, 1998. The decrease in
nonperforming loans in 2000 and 1999 primarily results from continued
aggressive collection efforts and management's continued efforts to
effectively monitor and manage the loan portfolios of acquired entities.
As previously discussed, certain acquired loan portfolios, particularly
those acquired during 1994 and 1995, exhibited varying degrees of
distress prior to their purchase by First Banks. While these problems
had been identified and considered in the acquisition pricing, our
acquisitions led to an increase in nonperforming assets and problem
loans (as defined below) to $95.0 million at December 31, 1995 from
$41.3 million at December 31, 1994. As we worked to correct these asset
quality problems, such assets were reduced to $59.3 million at December
31, 1997. At December 31, 1998, nonperforming assets and problem loans
increased to $68.5 million. We associate the increase for 1998
primarily with two commercial loans totaling $6.0 million, net of
charge-off, our acquisitions of Republic Bank and Pacific Bay Bank and
the overall growth of our loan portfolio, principally within commercial,
financial and agricultural, real estate construction and development and
commercial real estate loans. While nonperforming assets and problem
loans have, in general, increased in 1998 and 1999, we do not believe
such increases to be indicative of distress or negative trends within
any of our major loan concentration areas.

As of June 30, 2000 and December 31, 1999, 1998, 1997, 1996 and
1995, $55.0 million, $36.3 million, $21.3 million, $27.9 million, $31.5
million and $47.9 million, respectively, of loans not included in the
table above were identified by management as having potential credit
problems (problem loans) which raised doubt as to the ability of the
borrowers to comply with the present loan repayment terms.

Our credit management policy and procedures focus on identifying,
measuring and controlling credit exposure. These procedures employ a
lender-initiated system of rating credits, which is ratified in

<PAGE>
<PAGE>
the loan approval process and subsequently tested in internal loan
reviews, external audits and regulatory bank examinations. The system
requires rating all loans at the time they are originated, except for
homogeneous categories of loans, such as residential real estate mortgage
loans, indirect automobile loans and credit card loans. These homogeneous
loans are assigned an initial rating based on our experience with each
type of loan. We adjust these ratings based on payment experience
subsequent to their origination.

We include adversely rated credits, including loans requiring
close monitoring which would not normally be considered criticized
credits by regulators, on a monthly loan watch list. Loans may be added
to our watch list for reasons which are temporary and correctable, such
as the absence of current financial statements of the borrower or a
deficiency in loan documentation. Other loans are added whenever any
adverse circumstance is detected which might affect the borrower's
ability to meet the terms of the loan. The delinquency of a scheduled
loan payment, a deterioration in the borrower's financial condition
identified in a review of periodic financial statements, a decrease in
the value of the collateral securing the loan, or a change in the
economic environment within which the borrower operates could initiate
the addition of a loan to the list. Loans on our watch list require
periodic detailed loan status reports prepared by the responsible
officer, which are discussed in formal meetings with loan review and
credit administration staff members. Downgrades of loan risk ratings
may be initiated by the responsible loan officer at any time. However,
upgrades of risk ratings may only be made with the concurrence of
selected loan review and credit administration staff members generally
at the time of the formal watch list review meetings.

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

We do not engage in lending in foreign countries or based on
activities in foreign countries. Additionally, we do not have any
concentrations of loans exceeding 10% of total loans that are not
otherwise disclosed in the loan portfolio composition table. We do not
have a material amount of interest-earning assets that would have been
included in nonaccrual, past due or restructured loans if such assets
were loans.

<PAGE>
<PAGE>
DEPOSITS

Deposits are the primary source of funds for our subsidiary banks.
Our deposits consist principally of core deposits from each bank's local
market areas, including individual and corporate customers. The
following table sets forth the distribution of our average deposit
accounts at the dates indicated and the weighted average interest rates
on each category of deposit:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
SIX MONTHS ENDED -----------------------------------------------------------------------
JUNE 30, 2000 1999 1998 1997
--------------------- --------------------- --------------------- ---------------------
PERCENT PERCENT PERCENT PERCENT
OF OF OF OF
AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE AMOUNT DEPOSITS RATE
------ -------- ---- ------ -------- ---- ------ -------- ---- ------ -------- ----
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest-bearing demand . . . $ 602,459 13.74% --% $ 552,029 13.59% --% $ 463,939 12.27% --% $ 394,580 11.77% --%
Interest-bearing demand. . . . . 422,512 9.64 1.37 391,892 9.65 1.30 357,463 9.45 1.44 332,712 9.92 1.70
Savings. . . . . . . . . . . . . 1,241,385 28.32 3.90 1,220,425 30.03 3.61 1,076,524 28.48 3.96 761,052 22.70 3.60
Time deposits of $100 or
more . . . . . . . . . . . . . 223,941 5.11 5.26 230,520 5.67 5.41 212,691 5.63 5.85 183,223 5.47 6.01
Other time . . . . . . . . . . . 1,893,330 43.19 5.33 1,668,698 41.06 5.34 1,669,638 44.17 5.72 1,681,014 50.14 6.01
---------- ------ ==== ---------- ------ ==== ---------- ------ ==== ---------- ------ ====
Total average deposits . . . . . $4,383,627 100.00% $4,063,564 100.00% $3,780,255 100.00% $3,352,581 100.00%
========== ====== ========== ====== ========== ====== ========== ======
</TABLE>

CAPITAL AND DIVIDENDS

Historically, First Banks has accumulated capital to support its
acquisitions by retaining most of its earnings. We pay relatively small
dividends on the Class A convertible, adjustable rate preferred stock
and the Class B adjustable rate preferred stock, totaling $786,000 for
the years ended December 31, 1999, 1998 and 1997. The dividends paid on
the Class C Preferred Stock, which was redeemed in December 1997, were
$4.28 million for the year ended December 31, 1997. We have never paid,
and have no present intention to pay, dividends on our common stock.

Management believes as of June 30, 2000, December 31, 1999 and
1998, First Banks and the subsidiary banks were "well capitalized" as
defined by the Federal Deposit Insurance Corporation Improvement Act of
1991.

In December 1996, we formed our other financing subsidiary for the
purpose of issuing $86.25 million of trust preferred securities. In
June 1998, FBA formed its financing subsidiary for the purpose of
issuing $46.0 million of trust preferred securities. For regulatory
reporting purposes, these trust preferred securities are eligible for
inclusion, subject to certain limitations, in our Tier I capital.

LIQUIDITY

The liquidity of First Banks and our subsidiary banks is the
ability to maintain a cash flow which is adequate to fund operations,
service debt obligations and meet obligations and other commitments on a
timely basis. Our subsidiary banks receive funds for liquidity from
customer deposits, loan payments, maturities of loans and investments,
sales of investments and earnings. In addition, we may avail ourselves
of more volatile sources of funds by issuing certificates of deposit in
denominations of $100,000 or more, borrowing federal funds, selling
securities under agreements to repurchase and utilizing borrowings from
the Federal Home Loan Banks and other borrowings, including borrowings
under our revolving credit line. The aggregate funds acquired from
these more volatile sources were $563.2 million, $476.8 million and
$391.4 million at June 30, 2000 and December 31, 1999 and 1998,
respectively.

The following table presents the maturity structure of volatile
funds, which consists of certificates of deposit of $100,000 or more,
short-term borrowings and the note payable, at June 30, 2000:

<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C>
Three months or less . . . . . . . . . . $344,648
Over three months through six months . . 69,448
Over six months through twelve months. . 85,925
Over twelve months . . . . . . . . . . . 63,130
--------
Total . . . . . . . . . . . . . . . . $563,151
========
</TABLE>

In addition to these more volatile sources of funds, in 1999,
First Bank, First Bank & Trust, First Bank of California and First Bank
Texas N.A. established borrowing relationships with the Federal Reserve
Bank in their respective districts. These borrowing relationships,
which are secured by commercial loans, provide an additional liquidity
facility that may be utilized for contingency purposes. At June 30,
2000 and December 31, 1999, the borrowing capacity of our subsidiary
banks under these agreements was approximately $1.29 billion and $1.67
billion, respectively. In addition, our subsidiary banks' borrowing
capacity through their relationships with the Federal Home Loan Banks
was approximately $318.2 million and $395.9 million at June 30, 2000 and
December 31, 1999, respectively.

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

YEAR 2000 COMPATIBILITY

First Banks and our subsidiary banks were subject to risks
associated with the "Year 2000" issue, a term which referred to
uncertainties about the ability of various data processing hardware and
software systems to interpret dates correctly surrounding the beginning
of the Year 2000. Financial institutions were particularly vulnerable
to Year 2000 issues because of heavy reliance in the industry on
electronic data processing and funds transfer systems.

We successfully completed all phases of our Year 2000 program
within the appropriate timeframes established by the regulatory
agencies. In addition, we did not encounter any significant business
disruptions or processing problems as a result of the Year 2000 century
date change. Furthermore, we are unaware of any Year 2000 issues
encountered by our more significant borrowers and vendors that would
inhibit their ability to repay obligations or provide goods or services.
The total cost of our Year 2000 program was $14.9 million, comprised of
capital improvements of $12.3 million and direct expenses reimbursable
to First Services, L.P. of $2.6 million. We are charging the capital
improvements to expense in the form of depreciation expense or lease
expense, generally over a period of 60 months. We incurred direct
expenses related to our Year 2000 program of approximately $195,000 for
the six months ended June 30, 2000, and $900,000 for the comparable
period in 1999, respectively, and $1.8 million for the year ended
December 31, 1999.

EFFECTS OF NEW ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 133 --
Accounting for Derivative Instruments and Hedging Activities (SFAS 133).
SFAS 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS 133 requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. If certain conditions are met, a derivative

<PAGE>
<PAGE>
may be specifically designated as a hedge in one of three categories.
The accounting for changes in the fair value of a derivative (that is,
gains and losses) depends on the intended use of the derivative and the
resulting designation. Under SFAS 133, an entity that elects to apply
hedge accounting is required to establish, at the inception of the
hedge, the method it will use for assessing the effectiveness of the
hedging derivative and the measurement approach for determining the
ineffective aspect of the hedge. Those methods must be consistent
with the entity's approach to managing risk. SFAS 133 applies to all
entities.

In June 1999, the FASB issued SFAS No. 137 -- Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of FASB Statement No. 133, an Amendment of FASB Statement
No. 133, which defers the effective date of SFAS 133 from fiscal years
beginning after June 15, 1999 to fiscal years beginning after June 15,
2000. Initial application should be as of the beginning of an entity's
fiscal quarter; on that date, hedging relationships must be designated
and documented pursuant to the provisions of SFAS 133, as amended.
Earlier application of all of the provisions is encouraged but is
permitted only as of the beginning of any fiscal quarter that begins
after the issuance date of SFAS 133, as amended. Additionally, SFAS
133, as amended, should not be applied retroactively to financial
statements of prior periods.

In June 2000, the FASB issued SFAS No. 138 -- Accounting for
Derivative Instruments and Hedging Activities, an Amendment of FASB
Statement No. 133, which addresses a limited number of issues causing
implementation difficulties for numerous entities that apply SFAS 133,
as amended. SFAS 138 amends the accounting and reporting standards of
SFAS 133, as amended, for certain derivative instruments, certain
hedging activities and for decisions made by the FASB relating to the
Derivatives Implementation Group (DIG) process. The DIG presently has
additional issues and questions pending and continues to release
guidance and interpretations as such issues are resolved. We continue
to consider the actions and conclusions of the DIG as they are released
in order to determine their potential impact on our consolidated financial
statements.

We are currently evaluating the requirements of SFAS 133, as
amended, to determine its potential impact on our consolidated financial
statements.

EFFECTS OF INFLATION

Inflation affects financial institutions less than other types of
companies. Financial institutions make relatively few significant asset
acquisitions that are directly affected by changing prices. Instead,
the assets and liabilities are primarily monetary in nature.
Consequently, interest rates are more significant to the performance of
financial institutions than the effect of general inflation levels.
While a relationship exists between the inflation rate and interest
rates, we believe this is generally manageable through our asset-
liability management program.

<PAGE>
<PAGE>
BUSINESS

WHO WE ARE

We are a bank holding company headquartered in St. Louis
County, Missouri. Through the operation of our subsidiaries, we
offer a broad array of financial services to consumer and
commercial customers. Over the years, our organization has grown
significantly, primarily as a result of our acquisition strategy,
as well as internal growth. We currently operate banking
subsidiaries in California, Illinois, Missouri and Texas. As of
June 30, 2000, we had total assets of $5.18 billion, total
deposits of $4.46 billion and loans, net of unearned discount, of
$4.33 billion.

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

We operate through five subsidiary banks, a subsidiary bank
holding company, and through our subsidiary leasing company, as follows:

<TABLE>
<CAPTION>
TOTAL
LOCATIONS AT
JUNE 30, TOTAL ASSETS
NAME HEADQUARTERS 2000 AT JUNE 30, 2000
---------------------------------------------- ---------------------------- ------------ ------------------
(DOLLARS EXPRESSED
IN THOUSANDS)
<S> <C> <C> <C>

First Bank St. Louis County, Missouri 87 $3,150,764
First Bank & Trust Newport Beach, California 26 1,000,541
First Capital Group, Inc. (leasing subsidiary) Albuquerque, New Mexico 1 193<F1>
First Banks America, Inc., and its wholly
owned subsidiaries:
First Bank Texas N.A. Houston, Texas 6 303,570
First Bank of California Sacramento, California 13 566,314
Redwood Bank San Francisco, California 4 199,256

<FN>
--------
<F1> First Capital Group, Inc. was purchased on February 29, 2000.
As of June 30, 2000, there were approximately $82.5 million
of commercial leases. The commercial leases are recorded as
assets of our subsidiary banks.
</TABLE>

Our subsidiary banks and First Capital Group are wholly
owned by their respective parent companies. We owned 84.33% of
FBA at June 30, 2000. On June 29, 2000, we executed a definitive
agreement with FBA providing for the acquisition by FBA of First
Bank & Trust for approximately 6.5 million shares of FBA common
stock. Following this transaction, we will own 92.76%
of FBA. This transaction and related internal reorganizations
will allow FBA and us to merge our Texas and California interests
by merging First Bank Texas N.A., First Bank of California and
First Bank & Trust into Redwood Bank. The resulting banking entity
will operate under the First Bank & Trust name. We expect this
transaction to be completed in the fourth quarter of 2000.

Various trusts, which were created by and are administered
by and for the benefit of Mr. James F. Dierberg, our Chairman of
the Board and Chief Executive Officer, and his adult children,
own all of our voting stock. Mr. Dierberg and his family,
therefore, control our management and policies.

ACQUISITIONS

Prior to 1994, we concentrated our acquisitions within the
market areas of eastern Missouri and central and southern
Illinois. The premiums required to successfully pursue
acquisitions escalated sharply in 1993, reducing the economic
viability of many potential acquisitions in that area.
Recognizing this, we began to expand the geographic area in which
we approached acquisition candidates. While we were successful in
making acquisitions in Chicago and northern Illinois, we noted that
acquisition pricing in Chicago and other areas being considered was
similar to that in our eastern Missouri and central and southern
Illinois acquisition areas. As a result, while we continued to
pursue acquisitions within these areas, we turned much of our
attention to institutions which could be acquired at more attractive
prices that were within major metropolitan areas outside of these
market areas. This led to the acquisition of First Bank Texas N.A.
in 1994, which had offices in Dallas and Houston, Texas, and numerous
acquisitions of financial institutions that had offices in Los
Angeles, Orange County, Santa Barbara, San Francisco, San Jose and
Sacramento, California during the five years ended December 31,
1999. For the three years ended December 31, 1999, we completed
five acquisitions and five branch office purchases. These
transactions provided total assets of $697.2 million and 21
banking locations.

PENDING

On August 23, 2000, FBA executed a definitive agreement to
acquire Millenium Bank. Under the terms of this agreement, the
shareholders of Millenium Bank will receive $8.10 per share in
cash, or a total of approximately $20.7 million. Millenium Bank
has one office in the San Francisco, California financial district
and one office in Oakland, California. At June 30, 2000,
Millenium Bank had $104.5 million in total assets, $72.1 million
in loans, net of unearned discount, $24.7 million in investment
securities and $91.9 million in deposits. FBA expects this
transaction, which is subject to regulatory and shareholder
approvals, to be completed during or before the first quarter of
2001.

On June 29, 2000, we executed a definitive agreement with FBA
providing for the acquisition of First Bank & Trust. Under the
terms of the agreement, we will exchange all of the outstanding
stock of First Bank & Trust for approximately 6.5 million shares
of common stock of FBA, which will increase our ownership
percentage of FBA to 92.76%. First Bank & Trust currently
operates 26 banking locations in the counties of Los Angeles,
Orange, Ventura and Santa Barbara, California as well as branches
in San Jose and Walnut Creek, in Northern California. This
transaction and related internal reorganizations will allow FBA
and us to merge our Texas and California interests by merging
First Bank Texas N.A., First Bank of California and First Bank &
Trust into Redwood Bank. The resulting banking entity will
operate under the First Bank & Trust name. We expect this
transaction to help eliminate market confusion regarding our banks
and branch locations and result in certain operating efficiencies.
We expect this transaction to be completed during the fourth quarter
of 2000.

On June 27, 2000, FBA executed a definitive agreement with
Commercial Bank of San Francisco (Commercial Bank) providing for
the acquisition of Commercial Bank by FBA. Under the terms of the
agreement, the shareholders of Commercial Bank will receive $17.75
per share in cash, or a total of approximately $29.5 million.
Commercial Bank operates one branch office in the San Francisco
financial district. At June 30, 2000, Commercial Bank had $178.4
million in total assets, $97.4 million in loans, net of unearned
discount, $63.8 million in investment securities and $132.7
million in deposits. FBA expects this transaction, which is
subject to regulatory approvals and the approval of Commercial
Bank shareholders, to be completed during the fourth quarter of
2000.

CLOSED

On August 31, 2000, we completed our acquisition of Bank of
Ventura, which operates one office in Ventura, California. The
shareholders of Bank of Ventura received $26.47 per share in cash,
or a total of approximately $14.2 million. At the time of the
transaction, Bank of Ventura had $63.8 million in total assets,
$39.4 million in loans, net of unearned discount, $15.5 million in
investment securities and $57.3 million in deposits.

On February 29, 2000, we completed our acquisition of
certain assets and liabilities of First Capital Group, Inc.,
Albuquerque, New Mexico (FCG), in exchange for $65.1 million in
cash, which represented a premium on the lease portfolio of $1.5
million. FCG operates a multi-state commercial leasing business.
We intend to amortize the premium as a yield adjustment on the
acquired leases over approximately four years. At the time of the
transaction, FCG had $64.6 million in total assets, consisting
almost solely of commercial leases, net of unearned income.

On February 29, 2000, FBA completed its acquisition of Lippo
Bank, San Francisco, California, in exchange for $17.2 million in
cash. Lippo Bank operated three banking locations in San
Francisco, San Jose and Los Angeles, California. At the time of
the transaction, Lippo Bank had $85.3 million in total assets,
$40.9 million in loans, net of unearned discount, $37.4 million in
investment securities and $76.4 million in deposits. Lippo Bank
was merged into First Bank of California on May 31, 2000.

MARKET AREA

As of June 30, 2000, our subsidiary banks' 137 banking
facilities were located throughout eastern Missouri and in
Illinois, Texas and California. We service the St. Louis,
Missouri metropolitan area as our primary market area. Our second
and third largest market areas are central and southern Illinois
and southern and northern California, respectively. We also have
locations in the Houston, Dallas, Irving and McKinney, Texas
metropolitan areas, rural eastern Missouri and the greater
Chicago, Illinois metropolitan area.

COMPETITION AND BRANCH BANKING

Our subsidiary banks engage in highly competitive
activities. Those activities and the geographic markets served
primarily involve competition with other banks, some of which are
affiliated with large regional or national holding companies.
Financial institutions compete based upon interest rates offered
on deposit accounts, interest rates charged on loans and other
credit and service charges, the quality of services rendered, the
convenience of banking facilities and, in the case of loans to
large commercial borrowers, relative lending limits.

Our principal competitors include other commercial banks, savings
banks, savings and loan associations, mutual funds, finance
companies, trust companies, insurance companies, leasing
companies, credit unions, mortgage companies, private issuers of
debt obligations and suppliers of other investment alternatives,
such as securities firms and financial holding companies. Many of
our non-bank competitors are not subject to the same degree of
regulation as that imposed on bank holding companies, federally
insured banks and national or state chartered banks. As a result,
such non-bank competitors have advantages over us in providing
certain services. We also compete with major multi-bank holding
companies which are significantly larger than us and have greater
access to capital and other resources.

We believe we will continue to face competition in the
acquisition of independent banks and savings banks from bank and
financial holding companies. We often compete with larger
financial institutions that have substantially greater resources
available for making acquisitions.

Subject to regulatory approval, commercial banks situated in
Missouri, Illinois, Texas and California are permitted to
establish branches throughout their respective states, thereby
creating the potential for additional competition in our service
areas.

EMPLOYEES

As of August 31, 2000, we employed approximately 1,892
employees. None of the employees are subject to a collective
bargaining agreement. We consider our relationships with our
employees to be good.

LEGAL PROCEEDINGS

In the ordinary course of business, we and our subsidiaries become
involved in legal proceedings, including those described below. Our
management, in consultation with legal counsel, believes that the
ultimate resolution of the proceedings described below will not have a
material adverse effect on our business, financial condition or results
of operations.

Since 1996, the former majority owner of Lippo Bank and
various entities with which he is associated, including Lippo
Bank, have been a subject of federal investigations involving
alleged financial improprieties with respect to federal election
campaign laws. These alleged improprieties relate to various
transactions occurring between 1988 and 1996, particularly with
respect to 1994 federal election campaigns. Lippo Bank, which
has cooperated with authorities conducting the investigations,
has been informed that in the event other persons or entities,
which are the principal focus of the investigations, are charged
in connection with these alleged improprieties, Lippo Bank, now a
part of First Bank of California, may also be charged in either
civil or criminal proceedings. All of the matters under
investigation occurred years before FBA's acquisition of Lippo
Bank in February 2000. In the course of negotiating the
acquisition of Lippo Bank, FBA was informed of the ongoing
investigations and their potential outcome, and took steps to
protect itself against financial loss from this matter. These
steps included the establishment of an accrual for anticipated
legal defense costs and an escrow arrangement pursuant to which
Lippo Bank's former majority owner is required to indemnify FBA
for certain costs. FBA, with the advice of legal counsel,
believes that if any charges were to be instituted, the resolution
of those charges would not have a material adverse financial
effect on us.

In September 2000, an unaffiliated bank brought suit against one
of our subsidiaries and five individuals related to claims arising from
the recent employment by our subsidiary of individuals previously employed by
the plaintiff bank, as well as the conduct of those individuals while employed
by the plaintiff bank. Although this litigation is in its early stages, our
management, in consultation with legal counsel, believes the litigation is
without merit and our subsidiary has valid defenses. We intend to vigorously
defend this suit.

SUPERVISION AND REGULATION

GENERAL. Federal and state laws extensively regulate First
Banks and our subsidiary banks primarily to protect depositors and
customers of our subsidiary banks. To the extent this discussion
refers to statutory or regulatory provisions, it is not intended
to summarize all of such provisions and is qualified in its
entirety by reference to the relevant statutory and regulatory
provisions. Changes in applicable laws, regulations or regulatory
policies may have a material effect on our business and prospects.
We are unable to predict the nature or extent of the effects on
our business and earnings that new federal and state legislation
or regulation may have. The enactment of the legislation
described below has significantly affected the banking industry
generally and is likely to have ongoing effects on us and our
subsidiary banks in the future.

We are a registered bank holding company under the Bank
Holding Company Act of 1956 and, as such, the Board of Governors
of the Federal Reserve System regulates, supervises and examines
us. We file annual reports with the FRB and provide to the FRB
additional information as it may require.

Since First Bank is an institution chartered by the State of
Missouri, the State of Missouri Division of Finance supervises,
regulates and examines First Bank. First Bank & Trust, First Bank
of California and Redwood Bank are chartered by the State of
California and are subject to supervision, regulation and
examination by the California Department of Financial
Institutions. The Office of the

<PAGE>
<PAGE>
Comptroller of the Currency supervises, regulates and examines
First Bank Texas N.A. as a national bank. When our internal
restructuring is complete, First Bank Texas N.A. will be merged
with and into Redwood Bank and, therefore, will no longer be subject
to the jurisdiction of the OCC. Our subsidiary banks are also regulated
by the Federal Deposit Insurance Corporation, which provides deposit
insurance of up to $100,000 for each insured depositor.

BANK HOLDING COMPANY REGULATION. First Banks' activities
and those of our subsidiary banks have in the past been limited to
the business of banking and activities "closely related" or
"incidental" to banking. Under the Gramm-Leach-Bliley Act, which
was enacted in November 1999 and discussed below, bank holding
companies now have the opportunity to seek broadened authority,
subject to limitations on investment, to engage in activities that
are "financial in nature" if all of its subsidiary depository
institutions are well capitalized, well managed and have at least
a satisfactory rating under the Community Reinvestment Act
(discussed briefly below).

We are also subject to capital requirements applied on a
consolidated basis which are substantially similar to those
required of our subsidiary banks (briefly summarized below). The
Bank Holding Company Act also requires a bank holding company to
obtain approval from the FRB before:

* acquiring, directly or indirectly, ownership or control of
any voting shares of another bank or bank holding
company if, after such acquisition, it would own or
control more than 5% of such shares (unless it already
owns or controls a majority of such shares);

* acquiring all or substantially all of the assets of
another bank or bank holding company; or

* merging or consolidating with another bank holding
company.

The FRB will not approve any acquisition, merger or
consolidation that would have a substantially anti-competitive
result, unless the anti-competitive effects of the proposed
transaction are clearly outweighed by a greater public interest in
meeting the convenience and needs of the community to be served.
The FRB also considers capital adequacy and other financial and
managerial factors in reviewing acquisitions and mergers.

SAFETY AND SOUNDNESS AND SIMILAR REGULATIONS. First Banks
is subject to various regulations and regulatory policies directed
at the financial soundness of our subsidiary banks. These
include, but are not limited to, the FRB's source of strength
policy, which obligates a bank holding company such as First Banks
to provide financial and managerial strength to its subsidiary
banks; restrictions on the nature and size of certain affiliate
transactions between a bank holding company and its subsidiary
depository institutions; and restrictions on extensions of credit
by our subsidiary banks to executive officers, directors,
principal stockholders and the related interests of such persons.

REGULATORY CAPITAL STANDARDS. The federal bank regulatory
agencies have adopted substantially similar risk-based and
leverage capital guidelines for banking organizations. Risk-based
capital ratios are determined by classifying assets and specified
off-balance-sheet financial instruments into weighted categories,
with higher levels of capital being required for categories deemed
to represent greater risk. FRB policy also provides that banking
organizations generally, and in particular those that are
experiencing internal growth or actively making acquisitions, are
expected to maintain capital positions that are substantially
above the minimum supervisory levels, without significant reliance
on intangible assets.

Under the risk-based capital standard, the minimum
consolidated ratio of total capital to risk-adjusted assets
required for bank holding companies is 8%. At least one-half of
the total capital must be composed of common equity, retained
earnings, qualifying noncumulative perpetual preferred stock, a
limited amount of qualifying cumulative perpetual preferred stock
and minority interests in the equity accounts of consolidated
subsidiaries, less certain items such as goodwill and certain
other intangible assets, which amount is referred to in the
industry as Tier I capital. The remainder may consist of qualifying
hybrid capital instruments, perpetual debt, mandatory convertible
debt securities, a limited
64

<PAGE>
<PAGE>
amount of subordinated debt, preferred stock that does not qualify as
Tier I capital and a limited amount of loan and lease loss reserves,
which amount is referred to in the industry as Tier II capital.

In addition to the risk-based standard, we are subject to
minimum requirements with respect to the ratio of our Tier I
capital to our average assets less goodwill and certain other
intangible assets, or the Leverage Ratio. Applicable requirements
provide for a minimum Leverage Ratio of 3% for bank holding
companies that have the best supervisory rating, while all other
bank holding companies must maintain a minimum Leverage Ratio of
at least 4% to 5%. The OCC and the FDIC have established capital
requirements for banks under their respective jurisdictions that
are consistent with those imposed by the FRB on bank holding
companies.

The following table sets forth our required and actual
capital ratios, as well as those of our subsidiary banks at June
30, 2000 and December 31, 1999:

<TABLE>
<CAPTION>
ACTUAL TO BE WELL
-------------------------- CAPITALIZED UNDER
JUNE 30, DECEMBER 31, FOR CAPITAL PROMPT CORRECTIVE
2000 1999 ADEQUACY PURPOSES ACTION PROVISIONS
-------- ------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Total capital (to risk-weighted assets):
First Banks . . . . . . . . . . . . . . . 10.26% 10.05% 8.0% 10.0%
First Bank. . . . . . . . . . . . . . . . 10.69 10.60 8.0 10.0
First Bank & Trust. . . . . . . . . . . . 10.96 10.96 8.0 10.0
First Bank of California. . . . . . . . . 11.72 10.81 8.0 10.0
First Bank Texas N.A. . . . . . . . . . . 12.04 12.42 8.0 10.0
Redwood Bank. . . . . . . . . . . . . . . 11.55 11.17 8.0 10.0

Tier I capital (to risk-weighted assets):
First Banks . . . . . . . . . . . . . . . 8.49% 8.00% 4.0% 6.0%
First Bank. . . . . . . . . . . . . . . . 9.44 9.35 4.0 6.0
First Bank & Trust. . . . . . . . . . . . 9.70 9.70 4.0 6.0
First Bank of California. . . . . . . . . 10.46 9.56 4.0 6.0
First Bank Texas N.A. . . . . . . . . . . 10.78 11.17 4.0 6.0
Redwood Bank. . . . . . . . . . . . . . . 10.34 10.15 4.0 6.0

Tier I capital (to average assets):
First Banks . . . . . . . . . . . . . . . 7.80% 7.14% 3.0% 5.0%
First Bank. . . . . . . . . . . . . . . . 8.50 8.10 3.0 5.0
First Bank & Trust. . . . . . . . . . . . 8.97 8.57 3.0 5.0
First Bank of California. . . . . . . . . 9.72 9.95 3.0 5.0
First Bank Texas N.A. . . . . . . . . . . 10.32 10.39 3.0 5.0
Redwood Bank. . . . . . . . . . . . . . . 9.17 8.48 3.0 5.0
</TABLE>

PROMPT CORRECTIVE ACTION. The FDIC Improvement Act requires
the federal bank regulatory agencies to take prompt corrective
action in respect to depository institutions that do not meet
minimum capital requirements. A depository institution's status
under the prompt corrective action provisions depends upon how its
capital levels compare to various relevant capital measures and
other factors as established by regulation.

The federal regulatory agencies have adopted regulations
establishing relevant capital measures and relevant capital
levels. Under the regulations, a bank will be:

* "well capitalized" if it has a total capital ratio of
10% or greater, a Tier I capital ratio of 6% or
greater and a Leverage Ratio of 5% or greater and is
not subject to any order or written directive by any
such regulatory authority to meet and maintain a
specific capital level for any capital measure;

* "adequately capitalized" if it has a total capital
ratio of 8% or greater, a Tier I capital ratio of 4%
or greater and a Leverage Ratio of 4% or greater (3%
in certain circumstances);

* "undercapitalized" if it has a total capital ratio of
less than 8%, a Tier I capital ratio of less than 4%
or a Leverage Ratio of less than 4% (3% in certain
circumstances);

* "significantly undercapitalized" if it has a total
capital ratio of less than 6%, a Tier I capital ratio
of less than 3% or a Leverage Ratio of less than 3%;
and

* "critically undercapitalized" if its tangible equity
is equal to or less than 2% of average quarterly
tangible assets.

Under certain circumstances, a depository institution's
primary federal regulatory agency may use its authority to lower
the institution's capital category. The banking agencies are
permitted to establish individualized minimum capital requirements
exceeding the general requirements described above. Generally,
failing to maintain the status of "well capitalized" or "adequately
capitalized" subjects a bank to restrictions and limitations on its
business that are progressively more severe.

A bank is prohibited from making any capital distribution
(including payment of a dividend) or paying any management fee to
its holding company if the bank would thereafter be
"undercapitalized." Limitations exist for "undercapitalized"
depository institutions, regarding, among other things, asset
growth, acquisitions, branching, new lines of business, acceptance
of brokered deposits and borrowings from the Federal Reserve
System. These institutions are also required to submit a capital
restoration plan that includes a guarantee from the institution's
holding company. "Significantly undercapitalized" depository
institutions may be subject to a number of requirements and
restrictions, including orders to sell sufficient voting stock to
become "adequately capitalized," requirements to reduce total
assets and cessation of receipt of deposits from correspondent
banks. The appointment of a receiver or conservator may be
required for "critically undercapitalized" institutions.

DIVIDENDS. First Banks' primary source of funds in the
future is the dividends, if any, paid by our subsidiary banks.
The ability of our subsidiary banks to pay dividends is limited by
federal laws, by regulations promulgated by the bank regulatory
agencies and by principles of prudent bank management. The amount
of dividends our subsidiary banks may pay to us is also limited by
our credit agreement with a group of unaffiliated financial
institutions.

CUSTOMER PROTECTION. Our subsidiary banks are also subject
to consumer laws and regulations intended to protect consumers in
transactions with depository institutions, as well as other laws
or regulations affecting customers of financial institutions
generally. These laws and regulations mandate various disclosure
requirements and substantively regulate the manner in which
financial institutions must deal with their customers. Our
subsidiary banks must comply with numerous regulations in this
regard and are subject to periodic examinations with respect to
their compliance with the requirements.

COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act
of 1977 requires that, in connection with examinations of
financial institutions within their jurisdiction, the federal
banking regulators must evaluate the record of the financial
institutions in meeting the credit needs of their local
communities, including low and moderate income neighborhoods,
consistent with the safe and sound operation of those banks.
These factors are also considered in evaluating mergers,
acquisitions and other applications to expand.

THE GRAMM-LEACH-BLILEY ACT. The activities of bank holding
companies have historically been limited to the business of
banking and activities "closely related" or "incidental" to
banking. The Gramm-Leach-Bliley Act, enacted in 1999, relaxed or
removed many of the previous limitations and permits some bank
holding companies to engage in a broader range of financial
activities. Bank holding companies may elect to become financial
holding companies that may affiliate with securities firms and
insurance companies and engage in other activities that are
"financial in nature." In addition to lending, activities that
will be deemed "financial in nature" include securities
underwriting, dealing in or making a market in securities,
sponsoring mutual funds and investment companies, insurance
underwriting and agency activities, merchant banking activities
and other activities which the FRB determines to be "financial in
nature." A bank holding company may elect to become a financial
holding company only if each of its subsidiary banks is well
capitalized and well managed and has a rating of satisfactory or
higher
66

under CRA. A bank holding company that ceases to be in
compliance with those requirements may be required to stop
engaging in specified activities. Any bank holding company that
does not elect to become a financial holding company will remain
subject to current restrictions on activities by bank holding
companies. We have not elected to become a financial holding
company and remain subject to current restrictions on activities
by bank holding companies.

Under the new legislation, the FRB will have supervisory
authority over each parent company and limited authority over its
subsidiaries. The determination of which federal regulatory
agency is given primary authority over a subsidiary of a financial
holding company will depend on the types of activities conducted
by the subsidiary. In that regard, broker-dealer subsidiaries
will be regulated primarily by securities regulators and insurance
subsidiaries will primarily be regulated by insurance authorities.
Implementing regulations under the Gramm-Leach-Bliley Act have not
yet been promulgated, and we are not able to predict the likely
extent of the impact of the legislation.

RESERVE REQUIREMENTS; FEDERAL RESERVE SYSTEM AND FEDERAL
HOME LOAN BANK SYSTEM. The FRB requires all depository
institutions to maintain reserves against their transaction
accounts and non-personal time deposits. The balances maintained
to meet the reserve requirements imposed by the FRB may be used to
satisfy liquidity requirements. Institutions are authorized to
borrow from the Federal Reserve Bank "discount window," but FRB
regulations require institutions to exhaust other reasonable
alternative sources of funds, including advances from Federal Home
Loan Banks, before borrowing from the Federal Reserve Bank.

Certain of our subsidiary banks are members of the Federal Reserve
System (First Bank and First Bank Texas N.A.) and the Federal Home
Loan Bank System (First Bank, First Bank Texas N.A., First Bank &
Trust and First Bank of California) and are required to hold
investments in regional banks within those systems. Our
subsidiary banks were in compliance with these requirements at
June 30, 2000, with investments of $10.3 million in stock of the
Federal Home Loan Bank of Des Moines held by First Bank, $1.4
million in stock of the Federal Home Loan Bank of Dallas held by
First Bank Texas N.A., $579,000 and $1.2 million in stock of the
Federal Home Loan Bank of San Francisco held by First Bank & Trust
and First Bank of California, respectively, $4.9 million in stock
of the Federal Reserve Bank of St. Louis held by First Bank, and
$863,000 in stock of the Federal Reserve Bank of Dallas held by
First Bank Texas N.A.

MONETARY POLICY AND ECONOMIC CONTROL. The commercial
banking business is affected by legislation, regulatory policies
and general economic conditions as well as the monetary policies
of the FRB. The following instruments of monetary policy are
available to the FRB:

* changes in the discount rate on member bank
borrowings;

* the availability of credit at the "discount window;"

* open market operations;

* the imposition of changes in reserve requirements
against deposits and assets of foreign branches; and

* the imposition of and changes in reserve requirements
against certain borrowings by banks and their
affiliates.

These monetary policies are used in varying combinations to
influence overall growth and distributions of bank loans,
investments and deposits, and this use may affect interest rates
charged on loans or paid on liabilities. The monetary policies of
the FRB have had a significant effect on the operating results of
commercial banks and are expected to do so in the future. Such
policies are influenced by various factors, including inflation,
unemployment, and short-term and long-term changes in the
international trade balance and in the fiscal policies of the U.S.
Government. We cannot predict the effect that future changes in
monetary policy or in the discount rate on member bank borrowings
will have on our future business and earnings or those of our
subsidiary banks.

<PAGE>
<PAGE>
MANAGEMENT

BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

The members of our Board of Directors and our executive
officers are identified in the following table. Each of the
directors was elected or appointed to serve a one-year term and
until his successor has been duly qualified for office.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
DIRECTORS:
James F. Dierberg 62 Chairman of the Board of Directors and Chief Executive Officer
Allen H. Blake 57 Director and President, Chief Operating Officer and Secretary
Donald J. Gunn, Jr.<F1> 64 Director
George J. Markos <F1> 51 Director

EXECUTIVE OFFICERS NOT
SERVING AS DIRECTORS:
Michael F. Hickey 42 Executive Vice President and Chief Information Officer
Terrance M. McCarthy 45 Executive Vice President of FBA
Michael F. McWhortor 49 Executive Vice President -- Banking Support
Frank H. Sanfilippo 37 Executive Vice President and Chief Financial Officer
Mark T. Turkcan 44 Executive Vice President -- Consumer Lending and Mortgage Banking
Donald W. Williams 52 Executive Vice President and Chief Credit Officer

<FN>
--------
<F1> Member of the Audit Committee.
</TABLE>

JAMES F. DIERBERG has served as our Chairman of the Board of
Directors and Chief Executive Officer since 1988. He served as
our President from 1979 to 1992 and from 1994 to October 1999.
Mr. Dierberg has been the Chairman of the Board of Directors,
President and Chief Executive Officer of FBA since 1994 and a
trustee of our other financing subsidiary and FBA's financing
subsidiary since 1997 and 1998, respectively.

ALLEN H. BLAKE has served as our President since October
1999. He has served as our Chief Operating Officer since 1998 and
as our Secretary since 1988. Mr. Blake was our Senior Vice
President and Chief Financial Officer from 1992 to 1996 and
Executive Vice President and Chief Financial Officer from 1996 to
September 1999. Mr. Blake has served as a trustee of our other
financing subsidiary and FBA's financing subsidiary since 1997 and
1998, respectively.

DONALD J. GUNN, JR. serves as a Director. Mr. Gunn is also a
practicing attorney and shareholder in the law firm of Gunn &
Gunn, P.C. in St. Louis Missouri.

GEORGE J. MARKOS serves as a Director. Mr. Markos is
President of Profit Management Systems in Richardson, Texas.
Profit Management Systems is a company that provides consulting
services primarily to banks, savings and loans and related
businesses, including First Banks.

MICHAEL F. HICKEY has served as our Executive Vice President
and Chief Information Officer since November 1999. Mr. Hickey has
also served as a Director of First Bank and as the President of
First Services, L.P. since November of 1999. From 1996 to
November 1999, Mr. Hickey was Vice President--Senior Group Manager
of Information Systems for Mercantile Bank. Prior to that, from
1992 to 1996, Mr. Hickey was a Group Manager of Information
Systems for Mercantile Bank.

TERRANCE M. MCCARTHY has served in various executive
capacities with us since 1995. Mr. McCarthy is Executive Vice
President of FBA and Chairman of the Board of Directors, President
and Chief Executive Officer of First Bank of California.
Additionally, Mr. McCarthy is Director, President and Chief
Executive Officer of Redwood Bank.

MICHAEL F. MCWHORTOR has served as our Executive Vice President of
Banking Support since March 2000. Mr. McWhortor was Senior Vice
President and Manager of the Business Intelligence Group of Firstar
Bank, N.A. in St. Louis, Missouri from September 1999 to March 2000,
Senior Vice President and Manager of Retail Banking and Consumer
Products of Mercantile Bancorporation, Inc. in St. Louis, Missouri from
1998 to 1999; Vice President and Manager of Customer Information
Management of Mercantile Bancorporation, Inc. from 1997 to 1998; Vice
President and Regional Manager of the Western Region Credit Card
Division of Bank One Corp. in Phoenix, Arizona from 1996 to 1997; and
Chief Financial Officer of the Western Region Credit Card Division of
Bank One Corp in Phoenix, Arizona from 1995 to 1996.

FRANK H. SANFILIPPO serves as our Executive Vice President
and Chief Financial Officer. Mr. Sanfilippo has also served as
Executive Vice President and Chief Financial Officer of FBA since
September 1999, and Director, Executive Vice President, Chief
Financial Officer, Secretary and Treasurer of First Bank since
September 1999. Mr. Sanfilippo was Senior Vice President and
Director of Management Accounting of Mercantile Bancorporation,
Inc. in St. Louis, Missouri from 1998 to September 1999, and was
Vice President and Chief Financial Officer--Mercantile Bank
Operations Division from 1996 to 1997 and Vice President and
Assistant Comptroller of Mercantile Bank, N.A. from 1994 to 1996.

MARK T. TURKCAN serves as our Executive Vice President of
Consumer Lending and Mortgage Banking, and has been employed in
various executive capacities with us since 1990. Mr. Turkcan is
also a Director and Executive Vice President of First Bank.

DONALD W. WILLIAMS is our Senior Executive Vice President and Chief
Credit Officer, and has served in various executive capacities
with us since 1993. Mr. Williams is also Director, Executive Vice
President and Chief Credit Officer of FBA and Chairman of the Board,
President and Chief Executive Officer of First Bank. He is also a
Director of First Bank Texas N.A., First Bank & Trust and First
Bank of California. Finally, he serves as Chairman of the Board
of Directors of First Capital Group, Inc. and Redwood Bank.

DESCRIPTION OF THE TRUST

The trust is a statutory business trust formed pursuant to
the Delaware Business Trust Act under a trust agreement executed
by us, as sponsor for the trust, and the trustees, and a
certificate of trust filed with the Delaware Secretary of State.
The trust agreement will be amended and restated in its entirety
in the form filed as an exhibit to the registration statement of
which this prospectus is a part, as of the date the preferred
securities are initially issued. The trust agreement will be
qualified under the Trust Indenture Act of 1939.

The holders of the preferred securities issued pursuant to
the offering described in this prospectus will own all of the
issued and outstanding preferred securities of the trust which
have certain prior rights over the other securities of the trust.
We will not initially own any of the preferred securities. We
will acquire common securities in an amount equal to at least 3%
of the total capital of the trust and will initially own, directly
or indirectly, all of the issued and outstanding common
securities. The common securities, together with the preferred
securities, are called the trust securities.

The trust exists exclusively for the purposes of:

* issuing the preferred securities to the public for
cash;

* issuing its common securities to us in exchange for our
capitalization of the trust;

* investing the proceeds from the sale of the trust securities
in an equivalent amount of subordinated debentures; and

* engaging in other activities that are incidental to those
listed above.

The rights of the holders of the trust securities are as set
forth in the trust agreement, the Delaware Business Trust Act and
the Trust Indenture Act. The trust agreement does not permit the
trust to borrow money or make any investment other than in the
subordinated debentures. Other than with respect to the trust
securities, we have agreed to pay for all debts and obligations
and all costs and expenses of the trust, including the fees and
expenses of the trustees and any income taxes, duties and other
governmental charges, and all costs and expenses related to these
charges, to which the trust may become subject, except for United
States withholding taxes that are properly withheld.

The number of trustees of the trust will, pursuant to the
Trust Agreement, initially be five. Three of the trustees, or the
Administrative Trustees, will be persons who are employees or
officers of or who are affiliated with us. These individuals
include Allen H. Blake, Frank H. Sanfilippo and Lisa K. Vansickle.
The fourth trustee will be an entity that maintains its principal
place of business in the State of Delaware. It is the Delaware
trustee. Initially, Wilmington Trust Company, a Delaware banking
corporation, will act as Delaware trustee. The fifth trustee,
called the property trustee, will initially be State Street Bank
and Trust Company of Connecticut, National Association. The property
trustee is the institutional trustee under the trust agreement and
acts as the indenture trustee called for under the applicable
provisions of the Trust Indenture Act. Also for purposes of
compliance with the Trust Indenture Act, State Street Bank and
Trust Company of Connecticut, National Association will act as
guarantee trustee and indenture trustee under the guarantee
agreement and the indenture. See "Description of the Subordinated
Debentures" and "Description of the Guarantee." We, as holder of
all of the common securities, will have the right to appoint or
remove any trustee unless an event of default under the indenture
has occurred and is continuing, in which case only the holders of
the preferred securities may remove the Delaware trustee or the
property trustee. The trust has a term of approximately 31 years
but may terminate earlier as provided in the trust agreement.

The property trustee will hold the subordinated debentures
for the benefit of the holders of the trust securities and will
have the power to exercise all rights, powers and privileges under
the indenture as the holder of the subordinated debentures. In
addition, the property trustee will maintain exclusive control of
a segregated non-interest bearing "payment account" established
with Wilmington Trust Company to hold all payments made on the
subordinated debentures for the benefit of the holders of the
trust securities. The property trustee will make payments of
distributions and payments on liquidation,

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redemption and otherwise to the holders of the trust securities
out of funds from the payment account. The guarantee trustee will
hold the guarantee for the benefit of the holders of the preferred
securities. We will pay all fees and expenses related to the
trust and the offering of the preferred securities, including
the fees and expenses of the trustees.

DESCRIPTION OF THE PREFERRED SECURITIES

The preferred securities will be issued pursuant to the
trust agreement. For more information about the trust agreement,
see "Description of the Trust" beginning on page 70. State Street
Bank and Trust Company of Connecticut, National Association will
act as property trustee for the preferred securities under the trust
agreement for purposes of complying with the provisions of the Trust
Indenture Act. The terms of the preferred securities will include
those stated in the trust agreement and those made part of the trust
agreement by the Trust Indenture Act.

GENERAL

The trust agreement authorizes the administrative trustees,
on behalf of the trust, to issue the trust securities, which are
comprised of the preferred securities to be sold to the public and
the common securities. We will own all of the common securities
issued by the trust. The trust is not permitted to issue any
securities other than the trust securities or to incur any other
indebtedness.

The preferred securities will represent preferred undivided
beneficial interests in the assets of the trust, and the holders
of the preferred securities will be entitled to a preference over
the common securities upon an event of default with respect to
distributions and amounts payable on redemption or liquidation.
The preferred securities will rank equally, and payments on the
preferred securities will be made proportionally, with the common
securities, except as described under "--Subordination of Common
Securities" below.

The property trustee will hold legal title to the subordinated
debentures in trust for the benefit of the holders of the trust
securities. We will guarantee the payment of distributions out
of money held by the trust, and payments upon redemption of the
preferred securities or liquidation of the trust, to the extent
described under "Description of the Guarantee." The guarantee
agreement does not cover the payment of any distribution or the
liquidation amount when the trust does not have sufficient funds
available to make these payments.

DISTRIBUTIONS

SOURCE OF DISTRIBUTIONS. The funds of the trust available
for distribution to holders of the preferred securities will be
limited to payments made under the subordinated debentures, which
the trust will purchase with the proceeds from the sale of the
trust securities. Distributions will be paid through the property
trustee, which will hold the amounts received from our interest
payments on the subordinated debentures in the payment account for
the benefit of the holders of the trust securities. If we do not
make interest payments on the subordinated debentures, the
property trustee will not have funds available to pay
distributions on the preferred securities.

PAYMENT OF DISTRIBUTIONS. Distributions on the preferred
securities will be payable at the annual rate of 10.24% of the $25
stated liquidation amount, payable quarterly on March 31, June 30,
September 30 and December 31 of each year, to the holders of the
preferred securities on the relevant record dates. So long as the
preferred securities are represented by a global security, as
described below, the record date will be the business day
immediately preceding the relevant distribution date. The first
distribution date for the preferred securities will be December
31, 2000.

Distributions will accumulate from the date of issuance,
will be cumulative and will be computed on the basis of a 360-day
year of twelve 30-day months. If the distribution date is not a
business day, then payment of the distributions will be made on
the next day that is a business day, without any additional

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interest or other payment for the delay. However, if the next
business day is in the next calendar year, payment of the
distribution will be made on the business day immediately
preceding the scheduled distribution date. When we use the term
"business day," we mean any day other than a Saturday, a Sunday, a
day on which banking institutions in New York, New York are
authorized or required by law, regulation or executive order to
remain closed or a day on which the corporate trust office of the
property trustee or the indenture trustee is closed for business.

EXTENSION PERIOD. As long as no event of default under the
indenture has occurred and is continuing, we have the right to
defer the payment of interest on the subordinated debentures at
any time for a period not exceeding 20 consecutive quarters. We
refer to this period of deferral as an "extension period." No
extension period may extend beyond September 30, 2030 or end on a
date other than an interest payment date, which dates are the same
as the distribution dates. If we defer the payment of interest,
quarterly distributions on the preferred securities will also be
deferred during any such extension period. Any deferred
distributions under the preferred securities will accumulate
additional amounts at the annual rate of 10.24%, compounded
quarterly from the relevant distribution date. The term
"distributions" as used in this prospectus includes those
accumulated amounts.

During an extension period, neither we nor any of our subsidiaries may:

* declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of our capital stock (other than stock dividends,
noncash dividends in connection with the implementation of a
shareholder rights plan, purchases of common stock in
connection with employee benefit plans or in connection with
the reclassification of any class of our capital stock into
another class of capital stock) or allow any of our
subsidiaries to do the same with respect to their capital
stock (other than the payment of dividends or distributions
to us or to one of our subsidiaries);

* make any payment of principal, interest or premium on or repay,
repurchase or redeem any debt securities that rank equally
with (including the subordinated debentures issued to our
other financing subsidiary), or junior to, the subordinated
debentures or allow any of our subsidiaries to do the same;

* make any guarantee payments with respect to any other guarantee
by us of any other debt securities of any of our subsidiaries
if the guarantee ranks equally with or junior to the
subordinated debentures (other than payments under the
guarantee); or

* redeem, purchase or acquire less than all of the subordinated
debentures or any of the preferred securities.

AFTER THE TERMINATION OF ANY EXTENSION PERIOD AND THE PAYMENT OF
ALL AMOUNTS DUE, WE MAY ELECT TO BEGIN A NEW EXTENSION PERIOD,
SUBJECT TO THE ABOVE REQUIREMENTS.

We do not currently intend to exercise our right to defer
distributions on the preferred securities by deferring the payment
of interest on the subordinated debentures.

REDEMPTION OR EXCHANGE

GENERAL. Subject to the prior approval of the Federal
Reserve, if required, we will have the right to redeem the
subordinated debentures:

* in whole at any time, or in part from time to time, on or after
September 30, 2005; or

* at any time, in whole, within 180 days following the occurrence of
a Tax Event, an Investment Company Event or a Capital
Treatment Event, which terms we define below.

* at any time, to the extent of any preferred securities we
repurchase plus a proportionate amount of the common
securities we hold.

MANDATORY REDEMPTION. Upon our repayment or redemption, in
whole or in part, of any subordinated debentures, whether on
September 30, 2030 or earlier, the property trustee will apply the
proceeds to redeem the same amount of the trust securities, upon
not less than 30 days' nor more than 60 days' notice, at the
redemption price. The redemption price will equal 100% of the
aggregate liquidation amount of the trust securities plus
accumulated but unpaid distributions to the date of redemption.
If less than all of the subordinated debentures are to be repaid
or redeemed on a date of redemption, then the proceeds from such
repayment or redemption will be allocated to redemption of
preferred securities and common securities proportionately.

DISTRIBUTION OF SUBORDINATED DEBENTURES IN EXCHANGE FOR
PREFERRED SECURITIES. Upon prior approval of the Federal Reserve,
if required, we will have the right at any time to dissolve, wind-
up or terminate the trust and, after satisfaction of the
liabilities of creditors of the trust as provided by applicable
law, including, without limitation, amounts due and owing the
trustees of the trust, cause the subordinated debentures to be
distributed directly to the holders of trust securities in
liquidation of the trust. See "--Liquidation Distribution Upon
Termination."

After the liquidation date fixed for any distribution of
subordinated debentures in exchange for preferred securities:

* those trust securities will no longer be deemed to be
outstanding;

* certificates representing subordinated debentures in a principal
amount equal to the liquidation amount of those preferred
securities will be issued in exchange for the preferred
securities certificates;

* we will use our reasonable efforts to list the subordinated
debentures on the Nasdaq National Market or a national
exchange;

* any certificates representing trust securities that are not
surrendered for exchange will be deemed to represent
subordinated debentures with a principal amount equal to the
liquidation amount of those preferred securities, unpaid
interest in an amount equal to the accumulated and unpaid
distributions on the preferred securities and accruing
interest at the rate provided for in the subordinated
debentures from the last distribution date on the preferred
securities;

* all rights of the trust security holders other than the right
to receive subordinated debentures upon surrender of a
certificate representing trust securities will terminate.

We cannot assure you that the market prices for the
preferred securities or the subordinated debentures that may be
distributed if a dissolution and liquidation of the trust were
to occur would be favorable. The preferred securities that an
investor may purchase, or the subordinated debentures that an
investor may receive on dissolution and liquidation of the
trust, may trade at a discount to the price that the investor
paid to purchase the preferred securities.

REDEMPTION UPON A TAX EVENT, INVESTMENT COMPANY EVENT OR
CAPITAL TREATMENT EVENT. If a Tax Event, an Investment Company
Event or a Capital Treatment Event occurs, we will have the right
to redeem the subordinated debentures in whole, but not in part,
and thereby cause a mandatory redemption of the trust securities
in whole at the redemption price. If one of these events occurs
and we do not elect to redeem the subordinated debentures, or to
dissolve the trust and cause the subordinated debentures to be
distributed to holders of the trust securities, then the preferred
securities will remain outstanding and additional interest may be
payable on the subordinated debentures. See "Description of the
Subordinated Debentures -- Redemption."

"Tax Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters stating that there
is more than an insubstantial risk that:

* interest payable by us on the subordinated debentures is not, or
within 90 days of the date of the opinion will not be,
deductible by us, in whole or in part, for federal income
tax purposes;

* the trust is, or will be within 90 days after the date of the
opinion, subject to federal income tax with respect to
income received or accrued on the subordinated debentures;
or

* the trust is, or will be within 90 days after the date of opinion,
subject to more than an immaterial amount of other taxes,
duties, assessments or other governmental charges, as a
result of any amendment to any tax laws or regulations.

"Investment Company Event" means the receipt by the trust
and us of an opinion of counsel experienced in such matters to the
effect that the trust is or will be considered an "investment
company" that is required to be registered under the Investment
Company Act, as a result of a change in law or regulation or a
change in interpretation or application of law or regulation.

"Capital Treatment Event" means the receipt by the trust and
us of an opinion of counsel experienced in such matters to the
effect that there is more than an insubstantial risk of impairment
of our ability to treat the preferred securities as Tier I capital
for purposes of the current capital adequacy guidelines of the
Federal Reserve, as a result of any amendment to any laws or any
regulations.

For all of the events described above, we or the trust must
request and receive an opinion with regard to the event within a
reasonable period of time after we become aware of the possible
occurrence of an event of this kind.

REDEMPTION OF SUBORDINATED DEBENTURES IN EXCHANGE FOR
PREFERRED SECURITIES WE REPURCHASE. Upon prior approval of the
Federal Reserve, if required, we will also have the right at any
time, and from time to time, to redeem subordinated debentures in
exchange for any preferred securities we may have repurchased in
the market. If we elect to surrender any preferred securities
beneficially owned by us in exchange for redemption of a like
amount of subordinated debentures, we will also surrender a
proportionate amount of common securities in exchange for
subordinated debentures. Preferred securities owned by other
holders will not be called for redemption at any time when we
elect to exchange trust securities we own to redeem subordinated
debentures.

The common securities we surrender will be in the same
proportion to the preferred securities we surrender as are the
common securities then remaining outstanding to the preferred
securities then remaining outstanding. In exchange for the trust
securities surrendered by us, the trustee will cause to be
distributed to us subordinated debentures with a principal amount
equal to the liquidation amount of the trust securities, plus any
accumulated but unpaid distributions, if any, then held by the
trustee allocable to those trust securities. After the date of
redemption involving an exchange by us, the trust securities we
surrender and the subordinated debentures distributed to us in
exchange will no longer be deemed outstanding.

REDEMPTION PROCEDURES

Preferred securities will be redeemed at the redemption
price with the applicable proceeds from our contemporaneous
redemption of the subordinated debentures. Redemptions of the
preferred securities will be made, and the redemption price will
be payable, on each redemption date only to the extent that the
trust has funds available for the payment of the redemption price.

Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the date of redemption to each holder
of trust securities to be redeemed at its registered address.
Unless we default in payment of the redemption price on the
subordinated debentures, interest will cease to accumulate on the
subordinated debentures called for redemption on and after the
date of redemption.

If the trust gives notice of redemption of its trust
securities, then the property trustee, to the extent funds are
available, will irrevocably deposit with the depositary for the
trust securities funds sufficient to pay the aggregate redemption
price and will give the depositary for the trust securities
irrevocable instructions and authority to pay the redemption price
to the holders of the trust securities. See "Book-Entry
Issuance." If the preferred securities are no longer in book-entry
only form, the property trustee, to the extent funds are
available, will deposit with the designated paying agent for such
preferred securities funds sufficient to pay the aggregate
redemption price and will give the paying agent irrevocable
instructions and authority to pay the redemption price to the
holders upon surrender of their certificates evidencing the
preferred securities. Notwithstanding the foregoing,
distributions payable on or prior to the date of redemption for
any trust securities called for redemption will be payable to the
holders of the trust securities on the relevant record dates for
the related distribution dates.

If notice of redemption has been given and we have deposited
funds as required, then on the date of the deposit all rights of
the holders of the trust securities called for redemption will
cease, except the right to receive the redemption price, but
without interest on such redemption price after the date of
redemption. The trust securities will also cease to be
outstanding on the date of the deposit. If any date fixed for
redemption of trust securities is not a business day, then payment
of the redemption price payable on that date will be made on the
next day that is a business day without any additional interest or
other payment in respect of the delay. However, if the next
business day is in the next succeeding calendar year, payment of
the interest will be made on the immediately preceding business
day.

If payment of the redemption price in respect of trust
securities called for redemption is improperly withheld or refused
and not paid by the trust, or by us pursuant to the guarantee,
distributions on the trust securities will continue to accumulate
at the applicable rate from the date of redemption originally
established by the trust for the trust securities to the date the
redemption price is actually paid. In this case, the actual
payment date will be considered the date fixed for redemption for
purposes of calculating the redemption price. See "Description of
the Guarantee."

Payment of the redemption price on the preferred securities
and any distribution of subordinated debentures to holders of
preferred securities will be made to the applicable recordholders
as they appear on the register for the preferred securities on the
relevant record date. As long as the preferred securities are
represented by a global security, the record date will be the
business day immediately preceding the date of redemption or
liquidation date, as applicable.

If less than all of the trust securities are to be redeemed,
then the aggregate liquidation amount of the trust securities to
be redeemed will be allocated proportionately to those trust
securities based upon the relative liquidation amounts. The
particular preferred securities to be redeemed will be selected by
the property trustee from the outstanding preferred securities not
previously called for redemption by a method the property trustee
deems fair and appropriate. This method may provide for the
redemption of portions equal to $25 or an integral multiple of $25
of the liquidation amount of the preferred securities. The
property trustee will promptly notify the registrar for the
preferred securities in writing of the preferred securities
selected for redemption and, in the case of any preferred
securities selected for partial redemption, the liquidation amount
to be redeemed.

Subject to applicable law, and if we are not exercising our
right to defer interest payments on the subordinated debentures,
we may, at any time, purchase outstanding preferred securities.

SUBORDINATION OF COMMON SECURITIES

Payment of distributions on, and the redemption price of,
the preferred securities and common securities will be made based
on the liquidation amount of these securities. However, if an
event of default under the indenture has occurred and is
continuing, no distributions on or redemption of the common
securities may be made unless payment in full in cash of all
accumulated and unpaid distributions on all of the outstanding
preferred securities for all distribution periods terminating on
or before that time, or in the case of payment of the redemption
price, payment of the full amount of the redemption price on all
of the outstanding preferred securities then called for
redemption, has been made

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or provided for. All funds available to the property trustee will
first be applied to the payment in full in cash of all distributions
on, or the redemption price of, the preferred securities then due
and payable.

In the case of the occurrence and continuance of any event
of default under the trust agreement resulting from an event of
default under the indenture, we, as holder of the common
securities, will be deemed to have waived any right to act with
respect to that event of default under the trust agreement until
the effect of the event of default has been cured, waived or
otherwise eliminated. Until the event of default under the trust
agreement has been so cured, waived or otherwise eliminated, the
property trustee will act solely on behalf of the holders of the
preferred securities and not on our behalf, and only the holders
of the preferred securities will have the right to direct the
property trustee to act on their behalf.

LIQUIDATION DISTRIBUTION UPON TERMINATION

We will have the right at any time to dissolve, wind-up or
terminate the trust and cause the subordinated debentures to be
distributed to the holders of the preferred securities. This
right is subject, however, to us receiving approval of the Federal
Reserve, if required.

In addition, the trust will automatically terminate upon
expiration of its term and will terminate earlier on the first to
occur of:

* our bankruptcy, dissolution or liquidation;

* the distribution of a like amount of the subordinated debentures
to the holders of trust securities, if we have given written
direction to the property trustee to terminate the trust;

* redemption of all of the preferred securities as described on page
73 under "-- Redemption or Exchange -- Mandatory Redemption;"
or

* the entry of a court order for the dissolution of the trust.

With the exception of a redemption as described on page 73
under "-- Redemption or Exchange -- Mandatory Redemption," if an
early termination of the trust occurs, the trust will be
liquidated by the administrative trustees as expeditiously as they
determine to be possible. After satisfaction of liabilities to
creditors of the trust as provided by applicable law, the trustees
will distribute to the holders of trust securities subordinated
debentures:

* in an aggregate stated principal amount equal to the aggregate
stated liquidation amount of the trust securities;

* with an interest rate identical to the distribution rate on the
trust securities; and

* with accrued and unpaid interest equal to accumulated and unpaid
distributions on the trust securities.

However, if the property trustee determines that the
distribution is not practical, then the holders of trust
securities will be entitled to receive, instead of subordinated
debentures, a proportionate amount of the liquidation
distribution. The liquidation distribution will be the amount
equal to the aggregate of the liquidation amount plus accumulated
and unpaid distributions to the date of payment. If the
liquidation distribution can be paid only in part because the
trust has insufficient assets available to pay in full the
aggregate liquidation distribution, then the amounts payable
directly by the trust on the trust securities will be paid on a
proportional basis, based on liquidation amounts, to us, as the
holder of the common securities, and to the holders of the
preferred securities. However, if an event of default under
the indenture has occurred and is continuing, the preferred
securities will have a priority over the common securities.
See "-- Subordination of Common Securities."

Under current United States federal income tax law and
interpretations and assuming that the trust is treated as a
grantor trust, as is expected, a distribution of the subordinated
debentures should not be a taxable event to holders of the
preferred securities. Should there be a change in law, a change
in legal interpretation, a Tax Event or another circumstance,
however, the distribution could be a taxable

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event to holders of the preferred securities. See "Federal Income
Tax Consequences -- United States Holders -- Receipt of Subordinated
Debentures or Cash Upon Liquidation of First Preferred Capital
Trust II." If we do not elect to redeem the subordinated debentures
prior to maturity or to liquidate the trust and distribute the
subordinated debentures to holders of the preferred securities,
the preferred securities will remain outstanding until the
repayment of the subordinated debentures.

If we elect to dissolve the trust and thus cause the
subordinated debentures to be distributed to holders of the
preferred securities in liquidation of the trust, we will continue
to have the right to shorten the maturity of the subordinated
debentures. See "Description of the Subordinated Debentures --
General."

LIQUIDATION VALUE

The amount of the liquidation distribution payable on the
preferred securities in the event of any liquidation of the trust
is $25 per preferred security plus accumulated and unpaid
distributions to the date of payment, which may be in the form of
a distribution of subordinated debentures having a liquidation
value and accrued interest of an equal amount. See "--Liquidation
Distribution Upon Termination."

EVENTS OF DEFAULT; NOTICE

Any one of the following events constitutes an event of
default under the trust agreement with respect to the preferred
securities:

* the occurrence of an event of default under the indenture (see
"Description of the Subordinated Debentures -- Debenture
Events of Default");

* a default by the trust in the payment of any distribution when it
becomes due and payable, and continuation of the default for
a period of 30 days;

* a default by the trust in the payment of any redemption price of
any of the trust securities when it becomes due and payable;

* a default in the performance, or breach, in any material respect,
of any covenant or warranty of the trustees in the trust
agreement, other than those defaults covered in the previous
two points, and continuation of the default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the trustee(s) by the holders of at
least 25% in aggregate liquidation amount of the outstanding
preferred securities, a written notice specifying the
default or breach and requiring it to be remedied and
stating that the notice is a "Notice of Default" under the
trust agreement; or

* the occurrence of events of bankruptcy or insolvency with respect
to the property trustee and our failure to appoint a
successor property trustee within 60 days.

Within five business days after the occurrence of any event
of default actually known to the property trustee, the property
trustee will transmit notice of the event of default to the
holders of the preferred securities, the administrative trustees
and to us, unless the event of default has been cured or waived.
The administrative trustees and we are required to file annually
with the property trustee a certificate as to whether or not they
or we are in compliance with all the applicable conditions and covenants
under the trust agreement.

If an event of default under the indenture has occurred and
is continuing, the preferred securities will have preference over
the common securities upon termination of the trust. See
"--Subordination of Common Securities" and "Liquidation
Distribution Upon Termination." The existence of an event of
default under the trust agreement does not entitle the holders of
preferred securities to accelerate the maturity thereof, unless
the event of default is caused by the occurrence of an event of
default under the indenture and both the indenture trustee and
holders of at least 25% in principal amount of the subordinated
debentures fail to accelerate the maturity thereof.

REMOVAL OF THE TRUSTEES

Unless an event of default under the indenture has occurred
and is continuing, we may remove any trustee at any time. If an
event of default under the indenture has occurred and is
continuing, only the holders of a majority in liquidation amount
of the outstanding preferred securities may remove the property
trustee or the Delaware trustee. The holders of the preferred
securities have no right to vote to appoint, remove or replace the
administrative trustees. These rights are vested exclusively with
us as the holder of the common securities. No resignation or
removal of a trustee and no appointment of a successor trustee
will be effective until the successor trustee accepts the
appointment in accordance with the trust agreement.

CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE

Unless an event of default under the indenture has occurred
and is continuing, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in
which any part of the trust property may at the time be located,
we will have the power to appoint at any time or times, and upon
written request of the property trustee will appoint, one or more
persons or entities either (1) to act as a co-trustee, jointly
with the property trustee, of all or any part of the trust
property, or (2) to act as separate trustee of any trust property.
In either case, these trustees will have the powers that may be
provided in the instrument of appointment, and will have vested in
them any property, title, right or power deemed necessary or
desirable, subject to the provisions of the trust agreement. In
case an event of default under the indenture has occurred and is
continuing, the property trustee alone will have power to make the
appointment.

MERGER OR CONSOLIDATION OF TRUSTEES

Generally, any person or successor to any of the trustees
may be a successor trustee to any of the trustees, including a
successor resulting from a merger or consolidation. However, any
successor trustee must meet all of the qualifications and
eligibility standards to act as a trustee.

MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
TRUST

The trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any
corporation or other person, except as described below. For these
purposes, if we consolidate or merge with another entity, or
transfer or sell substantially all of our assets to another
entity, in some cases that transaction may be considered to
involve a replacement of the trust, and the conditions set forth
below would apply to such transaction. The trust may, at our
request, with the consent of the administrative trustees and
without the consent of the holders of the preferred securities,
the property trustee or the Delaware trustee, undertake a
transaction listed above if the following conditions are met:

* the successor entity either (a) expressly assumes all of the
obligations of the trust with respect to the preferred
securities, or (b) substitutes for the preferred securities
other securities having substantially the same terms as the
preferred securities (referred to as "successor securities")
so long as the successor securities rank the same in
priority as the preferred securities with respect to
distributions and payments upon liquidation, redemption and
otherwise;

* we appoint a trustee of the successor entity possessing
substantially the same powers and duties as the property
trustee in its capacity as the holder of the subordinated
debentures;

* the successor securities are listed or traded or will be
listed or traded on any national securities exchange or other
organization on which the preferred securities are then
listed, if any;

* the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the preferred
securities (including any successor securities) in any
material respect;

* the successor entity has a purpose substantially identical to that
of the trust;

* prior to the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, we have received an opinion
from independent counsel that (a) any transaction of this
kind does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities
(including any successor securities) in any material
respect, and (b) following the transaction, neither the
trust nor the successor entity will be required to register
as an "investment company" under the Investment Company Act;
and

* we own all of the common securities of the successor entity and
guarantee the obligations of the successor entity under the
successor securities at least to the extent provided by the
guarantee, the subordinated debentures, the trust agreement
and the expense agreement.

Notwithstanding the foregoing, the trust may not, except
with the consent of every holder of the preferred securities,
enter into any transaction of this kind if the transaction would
cause the trust or the successor entity not to be classified as a
grantor trust for United States federal income tax purposes.

VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT

Except as described below and under "Description of the
Guarantee -- Amendments and Assignment" and as otherwise required
by the Trust Indenture Act and the trust agreement, the holders of
the preferred securities will have no voting rights.

The trust agreement may be amended from time to time by us
and the trustees, without the consent of the holders of the
preferred securities, in the following circumstances:

* with respect to acceptance of appointment by a successor
trustee;

* to cure any ambiguity, correct or supplement any provisions
in the trust agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under the trust agreement, as
long as the amendment is not inconsistent with the other
provisions of the trust agreement and does not have a
material adverse effect on the interests of any holder of
trust securities; or

* to modify, eliminate or add to any provisions of the trust
agreement if necessary to ensure that the trust will be
classified for federal income tax purposes as a grantor
trust at all times that any trust securities are outstanding
or to ensure that the trust will not be required to register
as an "investment company" under the Investment Company Act.

With the consent of the holders of a majority of the
aggregate liquidation amount of the outstanding trust securities,
we and the trustees may amend the trust agreement if the trustees
receive an opinion of counsel to the effect that the amendment or
the exercise of any power granted to the trustees in accordance
with the amendment will not affect the trust's status as a grantor
trust for federal income tax purposes or the trust's exemption
from status as an "investment company" under the Investment
Company Act. However, without the consent of each holder of trust
securities, the trust agreement may not be amended to (a) change
the amount or timing of any distribution on the trust securities
or otherwise adversely affect the amount of any distribution
required to be made in respect of the trust securities as of a
specified date, or (b) restrict the right of a holder of trust
securities to institute suit for the enforcement of the payment on
or after that date.

As long as the property trustee holds any subordinated
debentures, the trustees will not, without obtaining the prior
approval of the holders of a majority in aggregate liquidation
amount of all outstanding preferred securities:

* direct the time, method and place of conducting any proceeding for
any remedy available to the indenture trustee, or executing
any trust or power conferred on the property trustee with
respect to the subordinated debentures;

* waive any past default that is waivable under the indenture;

* exercise any right to rescind or annul a declaration that the
principal of all the subordinated debentures will be due and
payable; or

* consent to any amendment or termination of the indenture or the
subordinated debentures, where the property trustee's
consent is required. However, where a consent under the
indenture requires the consent of each holder of the
affected subordinated debentures, no consent will be given
by the property trustee without the prior consent of each
holder of the preferred securities.

The trustees may not revoke any action previously authorized
or approved by a vote of the holders of the preferred securities
except by subsequent vote of the holders of the preferred
securities. The property trustee will notify each holder of
preferred securities of any notice of default with respect to the
subordinated debentures. In addition to obtaining the foregoing
approvals of the holders of the preferred securities, prior to
taking any of the foregoing actions, the trustees must obtain an
opinion of counsel experienced in these matters to the effect that
the trust will not be classified as an association taxable as a
corporation for federal income tax purposes on account of the
action.

Any required approval of holders of trust securities may be
given at a meeting or by written consent. The property trustee
will cause a notice of any meeting at which holders of the trust
securities are entitled to vote, or of any matter upon which
action by written consent of the holders is to be taken, to be
given to each holder of record of trust securities.

No vote or consent of the holders of preferred securities
will be required for the trust to redeem and cancel its preferred
securities in accordance with the trust agreement.

Notwithstanding the fact that holders of preferred
securities are entitled to vote or consent under any of the
circumstances described above, any of the preferred securities
that are owned by us, the trustees or any affiliate of ours or of
any trustee, will, for purposes of the vote or consent, be treated
as if they were not outstanding.

GLOBAL PREFERRED SECURITIES

The preferred securities will be represented by one or more
global preferred securities registered in the name of The
Depository Trust Company, New York, New York, or its nominee.
A global preferred security is a security representing
interests of more than one beneficial holder. Ownership of
beneficial interests in the global preferred securities will be
reflected in DTC participant account records through DTC's book-
entry transfer and registration system. Participants are brokers,
dealers, or others having accounts with DTC. Indirect beneficial
interests of other persons investing in the preferred securities
will be shown on, and transfers will be effected only through,
records maintained by DTC participants. Except as described
below, preferred securities in definitive form will not be issued
in exchange for the global preferred securities. See "Book-Entry
Issuance."

No global preferred security may be exchanged for preferred
securities registered in the names of persons other than DTC or
its nominee unless:

* DTC notifies the indenture trustee that it is unwilling or unable
to continue as a depositary for the global preferred
security and we are unable to locate a qualified successor
depositary;

* we execute and deliver to the indenture trustee a written order
stating that we elect to terminate the book-entry system
through DTC; or

* there shall have occurred and be continuing an event of
default under the indenture.

Any global preferred security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for definitive
certificates registered in the names as DTC shall direct. It is
expected that the instructions will be based upon directions
received by DTC with respect to ownership of beneficial interests
in the global preferred security. If preferred securities are
issued in definitive form, the preferred securities will be in
denominations of $25 and integral multiples of $25 and may be
transferred or exchanged at the offices described below.

Unless and until it is exchanged in whole or in part for the
individual preferred securities represented thereby, a global
preferred security may not be transferred except as a whole by DTC
to a nominee of DTC, by a nominee of DTC to DTC or another nominee
of DTC or by DTC or any nominee to a successor depositary or any
nominee of the successor.

Payments on global preferred securities will be made to DTC,
as the depositary for the global preferred securities. If the
preferred securities are issued in definitive form, distributions
will be payable by check mailed to the address of record of the
persons entitled to the distribution, and the transfer of the
preferred securities will be registrable, and preferred securities
will be exchangeable for preferred securities of other
denominations of a like aggregate liquidation amount, at the
corporate office of the property trustee, or at the offices of any
paying agent or transfer agent appointed by the administrative
trustees. In addition, if the preferred securities are issued in
definitive form, the record dates for payment of distributions
will be the 15th day of the month in which the relevant
distribution date occurs. For a description of the terms of DTC
arrangements relating to payments, transfers, voting rights,
redemptions and other notices and other matters, see "Book-Entry
Issuance."

Upon the issuance of one or more global preferred
securities, and the deposit of the global preferred security with
or on behalf of DTC or its nominee, DTC or its nominee will
credit, on its book-entry registration and transfer system, the
respective aggregate liquidation amounts of the individual
preferred securities represented by the global preferred security
to the designated accounts of persons that participate in the DTC
system. These participant accounts will be designated by the
dealers, underwriters or agents selling the preferred securities.
Ownership of beneficial interests in a global preferred security
will be limited to persons or entities having an account with DTC
or who may hold interests through participants. With respect to
interests of any person or entity that is a DTC participant,
ownership of beneficial interests in a global preferred security
will be shown on, and the transfer of that ownership will be
effected only through, records maintained by DTC or its nominee.
With respect to persons or entities who hold interests in a global
preferred security through a participant, the interest and any
transfer of the interest will be shown only on the participant's
records. The laws of some states require that certain purchasers
of securities take physical delivery of securities in definitive
form. These laws may impair the ability to transfer beneficial
interests in a global preferred security.

So long as DTC or another depositary, or its nominee, is the
registered owner of the global preferred security, the depositary
or the nominee, as the case may be, will be considered the sole
owner or holder of the preferred securities represented by the
global preferred security for all purposes under the trust
agreement. Except as described in this prospectus, owners of
beneficial interests in a global preferred security will not be
entitled to have any of the individual preferred securities
represented by the global preferred security registered in their
names, will not receive or be entitled to receive physical
delivery of any the preferred securities in definitive form and
will not be considered the owners or holders of the preferred
securities under the trust agreement.

None of us, the property trustee, any paying agent or the
securities registrar for the preferred securities will have any
responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests
of the global preferred security representing the

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preferred securities or for maintaining, supervising or reviewing
any records relating to the beneficial ownership interests.

We expect that DTC or its nominee, upon receipt of any
payment of the liquidation amount or distributions in respect of a
global preferred security, immediately will credit participants'
accounts with payments in amounts proportionate to their
respective beneficial interest in the aggregate liquidation amount
of the global preferred security as shown on the records of DTC or
its nominee. We also expect that payments by participants to
owners of beneficial interests in the global preferred security
held through the participants will be governed by standing
instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or
registered in "street name." The payments will be the
responsibility of the participants. See "Book-Entry Issuance."

PAYMENT AND PAYING AGENCY

Payments in respect of the preferred securities shall be
made to DTC, which shall credit the relevant accounts of
participants on the applicable distribution dates, or, if any of
the preferred securities are not held by DTC, the payments shall
be made by check mailed to the address of the holder as listed on
the register of holders of the preferred securities. The paying
agent for the preferred securities will initially be the property
trustee and any co-paying agent chosen by the property trustee and
acceptable to us and the administrative trustees. The paying
agent for the preferred securities may resign as paying agent upon
30 days' written notice to the administrative trustees, the
property trustee and us. If the property trustee no longer is the
paying agent for the preferred securities, the administrative
trustees will appoint a successor to act as paying agent. The
successor must be a bank or trust company acceptable to us and the
property trustee.

REGISTRAR AND TRANSFER AGENT

The property trustee will act as the registrar and the
transfer agent for the preferred securities. Registration of
transfers of preferred securities will be effected without charge
by or on behalf of the trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any
transfer or exchange. The trust and its registrar and transfer
agent will not be required to register or cause to be registered
the transfer of preferred securities after they have been called
for redemption.

INFORMATION CONCERNING THE PROPERTY TRUSTEE

The property trustee undertakes to perform only the duties
set forth in the trust agreement. After the occurrence of an
event of default that is continuing, the property trustee must
exercise the same degree of care and skill as a prudent person
exercises or uses in the conduct of its own affairs. The property
trustee is under no obligation to exercise any of the powers
vested in it by the trust agreement at the request of any holder
of preferred securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be
incurred. If no event of default under the trust agreement has
occurred and is continuing and the property trustee is required to
decide between alternative causes of action, construe ambiguous or
inconsistent provisions in the trust agreement or is unsure of the
application of any provision of the trust agreement, and the
matter is not one on which holders of preferred securities are
entitled to vote upon, then the property trustee will take the
action directed in writing by us. If the property trustee is not
so directed, then it will take the action it deems advisable and
in the best interests of the holders of the trust securities and
will have no liability except for its own bad faith, negligence or
willful misconduct.

MISCELLANEOUS

The administrative trustees are authorized and directed to
conduct the affairs of and to operate the trust in such a way
that:

* the trust will not be deemed to be an "investment company"
required to be registered under the Investment Company Act;

* the trust will not be classified as an association taxable
as a corporation for federal income tax purposes; and

* the subordinated debentures will be treated as indebtedness
of First Banks for federal income tax purposes.

In this regard, we and the administrative trustees are
authorized to take any action not inconsistent with applicable
law, the certificate of trust or the trust agreement, that we and
the administrative trustees determine to be necessary or desirable
for these purposes.

Holders of the preferred securities have no preemptive or
similar rights. The trust agreement and the trust securities will
be governed by Delaware law.

DESCRIPTION OF THE SUBORDINATED DEBENTURES

Concurrently with the issuance of the preferred securities,
the trust will invest the proceeds from the sale of the trust
securities in the subordinated debentures issued by us. The
subordinated debentures will be issued as unsecured debt under the
indenture between us and State Street Bank and Trust Company of
Connecticut, National Association, as indenture trustee. The
indenture will be qualified under the Trust Indenture Act.

The following discussion is subject to, and is qualified in
its entirety by reference to, the indenture and to the Trust Indenture
Act. We urge prospective investors to read the form of the
indenture, which is filed as an exhibit to the registration
statement of which this prospectus forms a part.

GENERAL

The subordinated debentures will be limited in aggregate
principal amount to $51,546,400 or $59,278,375 if the
Underwriters' over-allotment option is exercised in full. This
amount represents the sum of the aggregate stated liquidation
amounts of the trust securities. The subordinated debentures will
bear interest at the annual rate of 10.24% of the principal
amount. The interest will be payable quarterly on March 31, June
30, September 30 and December 31 of each year, beginning December
31, 2000, to the person in whose name each subordinated debenture
is registered at the close of business on the 15th day of the
last month of the calendar quarter. It is anticipated that, until
the liquidation, if any, of the trust, the subordinated debentures
will be held in the name of the property trustee in trust for the
benefit of the holders of the trust securities.

The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months.
If any date on which interest is payable on the subordinated
debentures is not a business day, then payment of interest will be
made on the next day that is a business day without any additional
interest or other payment in respect of the delay. However, if
the next business day is in the next calendar year, payment of
interest will be made on the immediately preceding business day.
Accrued interest that is not paid on the applicable interest
payment date will bear additional interest on the amount due at
the annual rate of 10.24%, compounded quarterly.

The subordinated debentures will mature on September 30,
2030, the stated maturity date. We may shorten this date once at
any time to any date not earlier than September 30, 2005, subject
to the prior approval of the Federal Reserve, if required.

We will give notice to the indenture trustee and the holders
of the subordinated debentures, no more than 180 days and no less
than 30 days prior to the effectiveness of any change in the
stated maturity date. We will not have the right to redeem the
subordinated debentures from the trust until after September 30,
2005, except if (a) a Tax Event, an Investment Company Event or a
Capital Treatment Event, which terms are defined on page 74, has
occurred, or (b) we repurchase preferred securities in the market,
in which case we can elect to redeem subordinated debentures
specifically in exchange for a like amount of preferred securities
owned by us plus a proportionate amount of common securities.

The subordinated debentures will be unsecured and will rank
junior to all of our senior and subordinated debt, including
indebtedness we may incur in the future. Because we are a holding
company, our right to participate in any distribution of assets of
any of our subsidiaries, upon any subsidiary's liquidation or
reorganization or otherwise, and thus the ability of holders of
the subordinated debentures to benefit indirectly from any
distribution by a subsidiary, is subject to the prior claim of
creditors of the subsidiary, except to the extent that we may be
recognized as a creditor of the subsidiary. The subordinated
debentures will, therefore, be effectively subordinated to all
existing and future liabilities of our subsidiaries, and holders
of subordinated debentures should look only to our assets for
payment. The indenture does not limit our ability to incur or
issue secured or unsecured senior and junior debt. See
"--Subordination."

The indenture does not contain provisions that afford
holders of the subordinated debentures protection in the event of
a highly leveraged transaction or other similar transaction
involving us, nor does it require us to maintain or achieve any
financial performance levels or to obtain or maintain any credit
rating on the subordinated debentures.

OPTION TO EXTEND INTEREST PAYMENT PERIOD

As long as no event of default under the indenture has
occurred and is continuing, we have the right under the indenture
to defer the payment of interest on the subordinated debentures at
any time for a period not exceeding 20 consecutive quarters.
However, no extension period may extend beyond the stated maturity
of the subordinated debentures or end on a date other than a date
interest is normally due. At the end of an extension period, we
must pay all interest then accrued and unpaid, together with
interest thereon at the annual rate of 10.24%, compounded quarterly.
During an extension period, interest will continue to accrue and
holders of subordinated debentures, or the holders of preferred
securities if they are then outstanding, will be required to
accrue and recognize as income for federal income tax purposes the
accrued but unpaid interest amounts in the year in which such
amounts accrued. See "Federal Income Tax Consequences."

During an extension period, neither we nor any of our subsidiaries may:

* declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of our capital stock (other than stock dividends, noncash
dividends in connection with the implementation of a shareholder
rights plan, purchases of common stock in connection with employee
benefit plans or in connection with the reclassifications of any
class of our capital stock into another class of capital stock)
with respect to their capital stock (other than payment of dividends
or distributions to us or to one of our subsidiaries);

* make any payment of principal, interest or premium on, or repay,
repurchase or redeem any debt securities that rank equally with
(including the subordinated debentures issued to our other financing
subsidiary), or junior to the subordinated debentures;

* make any guarantee payments with respect to any other guarantee by
us of any other debt securities of any of our subsidiaries if the
guarantee ranks equally with or junior to the subordinated
debentures (other than payments under the guarantee); or

* redeem, purchase or acquire less than all of the subordinated
debentures or any of the preferred securities.

Prior to the termination of any extension period, so long as
no event of default under the indenture is continuing, we may
further defer the payment of interest subject to the above stated
requirements. Upon the termination of any extension period and
the payment of all amounts then due, we may elect to begin a new
extension period at any time. We do not currently intend to
exercise our right to defer payments of interest on the
subordinated debentures.

We must give the property trustee, the administrative
trustees and the indenture trustee notice of our election of an
extension period at least two business days prior to the earlier
of (a) the next date on which distributions on the trust
securities would have been payable except for the election to
begin an extension period, or (b) the date we are required to give
notice of the record date, or the date the distributions are
payable, to the Nasdaq National Market, or other applicable self-
regulatory organization, or to holders of the preferred
securities, but in any event at least one business day prior to
the record date.

Other than as described above, there is no limitation on the
number of times that we may elect to begin an extension period.

ADDITIONAL SUMS TO BE PAID AS A RESULT OF ADDITIONAL TAXES

If the trust is required to pay any additional taxes,
duties, assessments or other governmental charges as a result of
the occurrence of a Tax Event, we will pay as additional interest
on the subordinated debentures any amounts which may be required
so that the net amounts received and retained by the trust after
paying any additional taxes, duties, assessments or other
governmental charges will not be less than the amounts the trust
would have received had the additional taxes, duties, assessments
or other governmental charges not been imposed.

REDEMPTION

Subject to prior approval of the Federal Reserve, if
required, we may redeem the subordinated debentures prior to
maturity:

* in whole at any time, or in part from time to time, on or
after September 30, 2005; or

* at any time, in whole, within 180 days following the occurrence
of a Tax Event, an Investment Company Event or a Capital
Treatment Event.

* at any time, to the extent of any preferred securities we
repurchase, plus a proportionate amount of the common
securities we hold.

In each case we will pay a redemption price equal to the
accrued and unpaid interest on the subordinated debentures so
redeemed to the date fixed for redemption, plus 100% of the
principal amount of the redeemed subordinated debentures.

Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder of
subordinated debentures to be redeemed at its registered address.
Redemption of less than all outstanding subordinated debentures
must be effected proportionately, by lot or in any other manner
deemed to be fair and appropriate by the indenture trustee.
Unless we default in payment of the redemption price for the
subordinated debentures, on and after the redemption date interest
will no longer accrue on the subordinated debentures or the
portions of the subordinated debentures called for redemption.

The subordinated debentures will not be subject to any
sinking fund.

DISTRIBUTION UPON LIQUIDATION

As described under "Description of the Preferred Securities
-- Liquidation Distribution Upon Termination," under certain
circumstances and with the Federal Reserve's approval, the
subordinated debentures may be distributed to the holders of the
preferred securities in liquidation of the trust after
satisfaction of liabilities to creditors of the trust. If this
occurs, we will use our reasonable efforts to list the
subordinated debentures on the Nasdaq National Market or other
stock exchange or national quotation system on which the preferred
securities are then listed, if any. There can be no assurance as
to the market price of any subordinated debentures that may be
distributed to the holders of preferred securities.

RESTRICTIONS ON PAYMENTS

We are restricted from making certain payments (as described
below) if we have chosen to defer payment of interest on the
subordinated debentures, if an event of default has occurred and
is continuing under the indenture, or if we are in default with
respect to our obligations under the guarantee.

If any of these events occur, neither we nor any of our subsidiaries will:

* declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with
respect to, any of our capital stock (other than stock dividends,
noncash dividends in connection with the implementation of a
shareholder rights plan, purchases of common stock in connection
with employee benefit plans or in connection with the
reclassification of any class of our capital stock into another
class of capital stock) or allow any of our subsidiaries to do the
same with respect to their capital stock (other than payment of
dividends or distributions to us or to one of our subsidiaries);

* make any payment of principal, interest or premium on, or repay or
repurchase or redeem any debt securities that rank equally with
(including the subordinated debentures issued to our other financing
subsidiary), or junior to the subordinated debentures;

* make any guarantee payments with respect to any guarantee by us
of the debt securities of any of our subsidiaries if the guarantee
ranks equally with or junior to the subordinated debentures (other
than payments under the guarantee); or

* redeem, purchase or acquire less than all of the subordinated
debentures or any of the preferred securities.

The term "capital stock" will not be deemed to include the preferred
securities issued by First Banks America's financing subsidiary in
July 1998.

SUBORDINATION

The subordinated debentures are subordinated and junior in
right of payment to all of our senior and subordinated debt, as
defined below. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up or
reorganization of First Banks, whether voluntary or involuntary in
bankruptcy, insolvency, receivership or other proceedings in
connection with any insolvency or bankruptcy proceedings, the
holders of our senior and subordinated debt will first be entitled
to receive payment in full of principal and interest before the
holders of subordinated debentures will be entitled to receive or
retain any payment in respect of the subordinated debentures.

If the maturity of any subordinated debentures is
accelerated, the holders of all of our senior and subordinated
debt outstanding at the time of the acceleration will also be
entitled to first receive payment in full of all amounts due to
them, including any amounts due upon acceleration, before the
holders of the subordinated debentures will be entitled to receive
or retain any principal or interest payments on the subordinated
debentures.

No payments of principal or interest on the subordinated
debentures may be made if there has occurred and is continuing a
default in any payment with respect to any of our senior or
subordinated debt or an event of default with respect to any of
our senior or subordinated debt resulting in the acceleration of
the maturity of the senior or subordinated debt, or if any
judicial proceeding is pending with respect to any default.

The term "debt" means, with respect to any person, whether
recourse is to all or a portion of the assets of the person and
whether or not contingent:

* every obligation of the person for money borrowed;

* every obligation of the person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred
in connection with the acquisition of property, assets or businesses;

* every reimbursement obligation of the person with respect to
letters of credit, bankers' acceptances or similar
facilities issued for the account of the person;

* every obligation of the person issued or assumed as the deferred
purchase price of property or services, excluding trade
accounts payable or accrued liabilities arising in the
ordinary course of business;

* every capital lease obligation of the person; and

* every obligation of the type referred to in the first five points
of another person and all dividends of another person the
payment of which, in either case, the first person has
guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.

The term "senior debt" means the principal of, and premium
and interest, including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to
us, on, debt, whether incurred on or prior to the date of the
indenture or incurred after the date. However, senior debt will
not be deemed to include:

* any debt where it is provided in the instrument creating the debt
that the obligations are not superior in right of payment to
the subordinated debentures or to other debt which is equal
with, or subordinated to, the subordinated debentures,
including our 9.25% subordinated debentures due 2027, issued
to our other financing subsidiary;

* any of our debt that when incurred and without regard to any
election under the federal bankruptcy laws, was without
recourse to us;

* any debt of ours to any of our subsidiaries;

* any debt to any of our employees;

* any debt that by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary
course of business to the extent that payments made to the
holders of the debt by the holders of the subordinated
debentures as a result of the subordination provisions of
the indenture would be greater than they otherwise would
have been as a result of any obligation of the holders to
pay amounts over to the obligees on the trade accounts
payable or accrued liabilities arising in the ordinary
course of business as a result of subordination provisions
to which the debt is subject; and

* debt which constitutes subordinated debt.

The term "subordinated debt" means the principal of, and
premium and interest, including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization
relating to us, on, debt. Subordinated debt includes debt
incurred on or prior to the date of the indenture or thereafter

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incurred, which is by its terms expressly provided to be junior
and subordinate to other debt of ours, other than the subordinated
debentures. However, subordinated debt will not be deemed to
include:

* any of our debt which when incurred and without regard to any
election under the federal bankruptcy laws was without
recourse to us;

* any debt of ours to any of our subsidiaries;

* any debt to any of our employees;

* any debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary
course of business to the extent that payments made to the
holders of the debt by the holders of the subordinated
debentures as a result of the subordination provisions of
the indenture would be greater than they otherwise would
have been as a result of any obligation of the holders to
pay amounts over to the obligees on the trade accounts
payable or accrued liabilities arising in the ordinary
course of business as a result of subordination provisions
to which the debt is subject;

* debt which constitutes senior debt; and

* any debt of ours under debt securities (and guarantees in respect
of these debt securities) initially issued to any trust, or
a trustee of a trust, partnership or other entity affiliated
with us that is, directly or indirectly, our financing
subsidiary in connection with the issuance by that entity of
preferred securities or other securities which are intended
to qualify for "Tier I" capital treatment, (such as the
approximately $88.9 million of 9.25% subordinated debentures
due 2027 that we issued to our other financing subsidiary in
1997 and the approximately $47.4 million of 8.50%
subordinated debentures due 2028 that FBA issued to its
financing subsidiary in 1998).

We expect from time to time to incur additional
indebtedness, and there is no limitation under the indenture on
the amount we may incur. We had consolidated senior and senior
subordinated debt of $58.5 million outstanding principal amount at
June 30, 2000. Although a portion of these amounts is expected to
be repaid with a portion of the proceeds from the sale of the
subordinated debentures, we expect to incur additional senior or
subordinated debt in the future.

PAYMENT AND PAYING AGENTS

Generally, payment of principal of and interest on the
subordinated debentures will be made at the office of the
indenture trustee in Hartford, Connecticut. However, we have the
option to make payment of any interest by (a) check mailed to the
address of the person entitled to payment at the address listed
in the register of holders of the subordinated debentures, or
(b) wire transfer to an account maintained by the person entitled
thereto as specified in the register of holders of the subordinated
debentures, provided that proper transfer instructions have been
received by the applicable record date. Payment of any interest on
subordinated debentures will be made to the person in whose name the
subordinated debenture is registered at the close of business on the
regular record date for the interest payment, except in the case of
defaulted interest.

Any moneys deposited with the indenture trustee or any
paying agent for the subordinated debentures, or then held by us
in trust, for the payment of the principal of or interest on the
subordinated debentures and remaining unclaimed for two years
after the principal or interest has become due and payable, will
be repaid to us on June 30 of each year. If we hold any of this
money in trust, then it will be discharged from the trust to us
and the holder of the subordinated debenture will thereafter look,
as a general unsecured creditor, only to us for payment.

REGISTRAR AND TRANSFER AGENT

The indenture trustee will act as the registrar and the
transfer agent for the subordinated debentures. Subordinated
debentures may be presented for registration of transfer, with the
form of

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transfer endorsed thereon, or a satisfactory written instrument
of transfer, duly executed, at the office of the registrar.
Provided that we maintain a transfer agent in Wilmington, Delaware,
we may rescind the designation of any transfer agent or approve a
change in the location through which any transfer agent acts. We
may at any time designate additional transfer agents with respect
to the subordinated debentures.

If we redeem any of the subordinated debentures, neither we
nor the indenture trustee will be required to (a) issue, register
the transfer of or exchange any subordinated debentures during a
period beginning at the opening of business 15 days before the day
of the mailing of and ending at the close of business on the day
of the mailing of the relevant notice of redemption, or (b)
transfer or exchange any subordinated debentures so selected for
redemption, except, in the case of any subordinated debentures
being redeemed in part, any portion not to be redeemed.

MODIFICATION OF INDENTURE

We and the indenture trustee may, from time to time without
the consent of the holders of the subordinated debentures, amend,
waive our rights under or supplement the indenture for purposes
which do not materially adversely affect the rights of the holders
of the subordinated debentures. Other changes may be made by us
and the indenture trustee with the consent of the holders of a
majority in principal amount of the outstanding subordinated
debentures. However, without the consent of the holder of each
outstanding subordinated debenture affected by the proposed
modification, no modification may:

* extend the maturity date of the subordinated debentures; or

* reduce the principal amount or the rate or extend the time of
payment of interest; or

* reduce the percentage of principal amount of subordinated
debentures required to amend the indenture.

As long as any of the preferred securities remain outstanding,
no modification of the indenture may be made that requires the
consent of the holders of the subordinated debentures, no
termination of the indenture may occur, and no waiver of any
event of default under the indenture may be effective, without
the prior consent of the holders of a majority of the aggregate
liquidation amount of the preferred securities.

SUBORDINATED DEBENTURE EVENTS OF DEFAULT

The indenture provides that any one or more of the following
events with respect to the subordinated debentures that has
occurred and is continuing constitutes an event of default under
the indenture:

* our failure to pay any interest on the subordinated
debentures for 30 days after the due date, except where we have
properly deferred the interest payment;

* our failure to pay any principal on the subordinated debentures
when due whether at maturity, upon redemption or otherwise;

* our failure to observe or perform in any material respect any
other covenants or agreements contained in the indenture for
90 days after written notice to us from the indenture
trustee or the holders of at least 25% in aggregate
outstanding principal amount of the subordinated debentures;
or

* our bankruptcy, insolvency or reorganization or dissolution of the
trust.

The holders of a majority of the aggregate outstanding
principal amount of the subordinated debentures have the right to
direct the time, method and place of conducting any proceeding for
any remedy available to the indenture trustee. The indenture
trustee, or the holders of at least 25% in aggregate outstanding
principal amount of the subordinated debentures, may declare the
principal due

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and payable immediately upon an event of default under the indenture.
The holders of a majority of the outstanding principal amount of the
subordinated debentures may rescind and annul the declaration and
waive the default if the default has been cured and a sum sufficient
to pay all matured installments of interest and principal due
otherwise than by acceleration, has been deposited with the indenture
trustee. The holders may not annul the declaration and waive a
default if the default is the non-payment of the principal of
the subordinated debentures which has become due solely by the
acceleration. Should the holders of the subordinated debentures
fail to annul the declaration and waive the default, the holders
of at least 25% in aggregate liquidation amount of the preferred
securities will have this right.

If an event of default under the indenture has occurred and
is continuing, the property trustee will have the right to declare
the principal of and the interest on the subordinated debentures,
and any other amounts payable under the indenture, to be
immediately due and payable and to enforce its other rights as a
creditor with respect to the subordinated debentures.

We are required to file annually with the indenture trustee
a certificate as to whether or not we are in compliance with all
of the conditions and covenants applicable to us under the
indenture.

ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED
SECURITIES

If an event of default under the indenture has occurred and
is continuing and the event is attributable to the failure by us
to pay interest on or principal of the subordinated debentures on
the date on which the payment is due and payable, then a holder of
preferred securities may institute a direct action against us to
compel us to make the payment. We may not amend the indenture to
remove the foregoing right to bring a direct action without the
prior written consent of all of the holders of the preferred
securities. If the right to bring a direct action is removed, the
trust may become subject to the reporting obligations under the
Securities Exchange Act of 1934.

The holders of the preferred securities will not be able to
exercise directly any remedies, other than those set forth in the
preceding paragraph, available to the holders of the subordinated
debentures unless there has been an event of default under the
trust agreement. See "Description of the Preferred Securities --
Events of Default; Notice."

CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS

We may not consolidate with or merge into any other entity
or convey or transfer our properties and assets substantially as
an entirety to any entity, and no entity may be consolidated with
or merged into us or sell, convey, transfer or otherwise dispose
of its properties and assets substantially as an entirety to us,
unless:

* if we consolidate with or merge into another person or convey
or transfer our properties and assets substantially as an
entirety to any person, the successor person is organized
under the laws of the United States or any state or the
District of Columbia, and the successor person expressly
assumes by supplemental indenture our obligations on the
subordinated debentures;

* immediately after the transaction, no event of default under
the indenture, and no event which, after notice or lapse of
time, or both, would become an event of default under the
indenture, has occurred and is continuing; and

* other conditions as prescribed in the indenture are met.

Under certain circumstances, if we consolidate or merge with
another entity, or transfer or sell substantially all of our
assets to another entity, such transaction may be considered to
involve a replacement of the trust, and the provisions of the
trust agreement relating to a replacement of the trust would apply
to such transaction. See "Description of the Preferred
Securities--Mergers, Consolidations, Amalgamations or Replacements
of the Trust."

SATISFACTION AND DISCHARGE

The indenture will cease to be of further effect and we will
be deemed to have satisfied and discharged our obligations under
the indenture when all subordinated debentures not previously
delivered to the indenture trustee for cancellation:

* have become due and payable;

* will become due and payable at their stated maturity within one
year or are to be called for redemption within one year, and
we deposit or cause to be deposited with the indenture
trustee funds, in trust, for the purpose and in an amount
sufficient to pay and discharge the entire indebtedness on
the subordinated debentures not previously delivered to the
indenture trustee for cancellation, for the principal and
interest due to the date of the deposit or to the stated
maturity or redemption date, as the case may be.

We may still be required to provide officers' certificates,
opinions of counsel and pay fees and expenses due after these
events occur.

GOVERNING LAW

The indenture and the subordinated debentures will be
governed by and construed in accordance with Missouri law.

INFORMATION CONCERNING THE INDENTURE TRUSTEE

The indenture trustee is subject to all the duties and
responsibilities specified with respect to an indenture trustee
under the Trust Indenture Act. Subject to these provisions, the
indenture trustee is under no obligation to exercise any of the
powers vested in it by the indenture at the request of any holder
of subordinated debentures, unless offered reasonable security or
indemnity by the holder against the costs, expenses and
liabilities which might be incurred. The indenture trustee is not
required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if
the indenture trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.

MISCELLANEOUS

We have agreed, pursuant to the indenture, for so long as
preferred securities remain outstanding:

* to maintain directly or indirectly 100% ownership of the common
securities of the trust, except that certain successors that
are permitted pursuant to the indenture may succeed to our
ownership of the common securities;

* not to voluntarily terminate, wind up or liquidate the trust
without prior approval of the Federal Reserve, if required;

* to use our reasonable efforts to cause the trust (a) to remain
a business trust (and to avoid involuntary termination,
winding up or liquidation), except in connection with a
distribution of subordinated debentures, the redemption of
all of the trust securities of the trust or mergers,
consolidations or amalgamations, each as permitted by the
trust agreement; and (b) to otherwise continue not to be
treated as an association taxable as a corporation or
partnership for federal income tax purposes; and

* to use our reasonable efforts to cause each holder of trust
securities to be treated as owning an individual beneficial
interest in the subordinated debentures.

BOOK-ENTRY ISSUANCE

GENERAL

DTC will act as securities depositary for the preferred
securities and may act as securities depositary for all of the
subordinated debentures in the event of the distribution of the
subordinated debentures to the holders of preferred securities.
Except as described below, the preferred securities will be issued
only as registered securities in the name of DTC's nominee, Cede &
Co. One or more global preferred securities will be issued for the
preferred securities and will be deposited with DTC.

DTC is a limited purpose trust company organized under New
York banking law, a "banking organization" within the meaning of
the New York banking law, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered
pursuant to Section 17A of the Securities Exchange Act of 1934.
DTC holds securities that its participants deposit with DTC. DTC
also facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a
number of its direct participants and by the New York Stock
Exchange, the American Stock Exchange and the National Association
of Securities Dealers, Inc. Access to the DTC system is also
available to indirect participants, such as securities brokers and
dealers, banks and trust companies that clear through or maintain
custodial relationships with direct participants, either directly
or indirectly. The rules applicable to DTC and its participants
are on file with the SEC.

Purchases of preferred securities within the DTC system must
be made by or through direct participants, which will receive a
credit for the preferred securities on DTC's records. The
ownership interest of each actual purchaser of each preferred
security is in turn to be recorded on the direct and indirect
participants' records. Beneficial owners will not receive written
confirmation from DTC of their purchases, but beneficial owners
are expected to receive written confirmations providing details
of the transactions, as well as periodic statements of their
holdings, from the direct or indirect participants through which
the beneficial owners purchased preferred securities. Transfers
of ownership interests in the preferred securities are to be
accomplished by entries made on the books of participants acting
on behalf of beneficial owners. Beneficial owners will not receive
certificates representing their ownership interest in preferred
securities, except if use of the book-entry-only system for the
preferred securities is discontinued.

DTC will have no knowledge of the actual beneficial owners
of the preferred securities; DTC's records reflect only the
identity of the direct participants to whose accounts the
preferred securities are credited, which may or may not be the
beneficial owners. The participants will remain responsible for
keeping account of their holdings on behalf of their customers.

The information in this section concerning DTC and DTC's
book-entry system has been obtained from sources that we believe
to be accurate, but we and the trust assume no responsibility
for the accuracy thereof. Neither we nor the trust have any
responsibility for the performance by DTC or its participants
of their respective obligations as described in this prospectus
or under the rules and procedures governing their respective
operations.

NOTICES AND VOTING

Conveyance of notices and other communications by DTC to
direct participants, by direct participants to indirect
participants, and by direct and indirect participants to
beneficial owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in
effect from time to time.

Redemption notices will be sent to Cede & Co. as the
registered holder of the preferred securities. If less than all
of the preferred securities are being redeemed, the amount to be
redeemed will be determined in accordance with the trust
agreement.

Although voting with respect to the preferred securities is
limited to the holders of record of the preferred securities, in
those instances in which a vote is required, neither DTC nor Cede
& Co. will itself consent or vote with respect to preferred
securities. Under its usual procedures, DTC would mail an omnibus
proxy to the property trustee as soon as possible after the record
date. The omnibus proxy assigns Cede & Co.'s consenting or voting
rights to those direct participants to whose accounts the
preferred securities are credited on the record date.

DISTRIBUTION OF FUNDS

The property trustee will make distribution payments on the
preferred securities to DTC. DTC's practice is to credit direct
participants' accounts on the relevant payment date in accordance
with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payments on the
payment date. Payments by participants to beneficial owners will
be governed by standing instructions and customary practices and
will be the responsibility of the participant and not of DTC, the
property trustee, the trust or us, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payment of distributions to DTC is the responsibility of the
property trustee, disbursement of the payments to direct
participants is the responsibility of DTC, and disbursements of
the payments to the beneficial owners is the responsibility of
direct and indirect participants.

SUCCESSOR DEPOSITARIES AND TERMINATION OF BOOK-ENTRY SYSTEM

DTC may discontinue providing its services with respect to
any of the preferred securities at any time by giving reasonable
notice to the property trustee or us. If no successor securities
depositary is obtained, definitive certificates representing the
preferred securities are required to be printed and delivered. We
also have the option to discontinue use of the system of book-
entry transfers through DTC, or a successor depositary. After an
event of default under the indenture, the holders of a majority in
liquidation amount of preferred securities may determine to
discontinue the system of book-entry transfers through DTC. In
these events, definitive certificates for the preferred securities
will be printed and delivered.

DESCRIPTION OF THE GUARANTEE

The preferred securities guarantee agreement will be
executed and delivered by us concurrently with the issuance of the
preferred securities for the benefit of the holders of the
preferred securities. The guarantee agreement will be qualified
as an indenture under the Trust Indenture Act. State Street Bank
and Trust Company of Connecticut, National Association, the
guarantee trustee, will act as trustee for purposes of complying
with the provisions of the Trust Indenture Act, and will also hold
the guarantee for the benefit of the holders of the preferred
securities. Prospective investors are urged to read the form of
the guarantee agreement, which has been filed as an exhibit to the
registration statement of which this prospectus forms a part.

GENERAL

We agree to pay in full on a subordinated basis, to the
extent described in the guarantee agreement, the guarantee
payments (as defined below) to the holders of the preferred
securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the trust may have or assert other
than the defense of payment.

The following payments with respect to the preferred
securities are called the "guarantee payments" and, to the extent
not paid or made by the trust and to the extent that the trust has
funds available for those distributions, will be subject to the
guarantee:

* any accumulated and unpaid distributions required to be paid on
the preferred securities;

* with respect to any preferred securities called for redemption,
the redemption price; and

* upon a voluntary or involuntary dissolution, winding up or
termination of the trust (other than in connection with the
distribution of subordinated debentures to the holders of
preferred securities in exchange for preferred securities),
the lesser of:

(a) the amount of the liquidation distribution; and

(b) the amount of assets of the trust remaining available for
distribution to holders of preferred securities in
liquidation of the trust.

We may satisfy our obligations to make a guarantee payment by
making a direct payment of the required amounts to the holders of
the preferred securities or by causing the trust to pay the
amounts to the holders.

The guarantee agreement is a guarantee, on a subordinated
basis, of the guarantee payments, but the guarantee only applies
to the extent the trust has funds available for those
distributions. If we do not make interest payments on the
subordinated debentures purchased by the trust, the trust will not
have funds available to make the distributions and will not pay
distributions on the preferred securities.

STATUS OF THE GUARANTEE

The guarantee constitutes our unsecured obligation that
ranks subordinate and junior in right of payment to all of our
senior and subordinated debt in the same manner as the
subordinated debentures and senior to our capital stock. We
expect to incur additional indebtedness in the future, although we
have no specific plans in this regard presently, and neither the
indenture nor the trust agreement limits the amounts of the
obligations that we may incur.

The guarantee constitutes a guarantee of payment and not of
collection. If we fail to make guarantee payments when required,
holders of preferred securities may institute a legal proceeding
directly against us to enforce their rights under the guarantee
without first instituting a legal proceeding against any other
person or entity.

The guarantee will not be discharged except by payment of
the guarantee payments in full to the extent not paid by the trust
or upon distribution of the subordinated debentures to the holders
of the

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preferred securities. Because we are a bank holding company, our
right to participate in any distribution of assets of any subsidiary
upon the subsidiary's liquidation or reorganization or otherwise is
subject to the prior claims of creditors of that subsidiary, except
to the extent we may be recognized as a creditor of that subsidiary.
Our obligations under the guarantee, therefore, will be effectively
subordinated to all existing and future liabilities of our
subsidiaries, and claimants should look only to our assets for
payments under the guarantee.

AMENDMENTS AND ASSIGNMENT

Except with respect to any changes that do not materially
adversely affect the rights of holders of the preferred
securities, in which case no vote will be required, the guarantee
may be amended only with the prior approval of the holders of a
majority of the aggregate liquidation amount of the outstanding
preferred securities. See "Description of the Preferred
Securities -- Voting Rights; Amendment of Trust Agreement."

EVENTS OF DEFAULT; REMEDIES

An event of default under the guarantee agreement will occur
upon our failure to make any required guarantee payments or to
perform any other obligations under the guarantee. The holders of
a majority in aggregate liquidation amount of the preferred
securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the
guarantee trustee in respect of the guarantee and may direct the
exercise of any power conferred upon the guarantee trustee under
the guarantee agreement.

Any holder of preferred securities may institute and
prosecute a legal proceeding directly against us to enforce its
rights under the guarantee without first instituting a legal
proceeding against the trust, the guarantee trustee or any other
person or entity.

We are required to provide to the guarantee trustee annually
a certificate as to whether or not we are in compliance with all
of the conditions and covenants applicable to us under the
guarantee agreement.

TERMINATION OF THE GUARANTEE

The guarantee will terminate and be of no further force and
effect upon:

* full payment of the redemption price of the preferred securities;

* full payment of the amounts payable upon liquidation of the trust;
or

* distribution of the subordinated debentures to the holders
of the preferred securities.

If at any time any holder of the preferred securities must restore
payment of any sums paid under the preferred securities or the
guarantee, the guarantee will continue to be effective or will be
reinstated with respect to such amounts.

INFORMATION CONCERNING THE GUARANTEE TRUSTEE

The guarantee trustee, other than during the occurrence and
continuance of our default in performance of the guarantee,
undertakes to perform only those duties as are specifically set
forth in the guarantee. When an event of default has occurred and
is continuing, the guarantee trustee must exercise the same degree
of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to those provisions,
the guarantee trustee is under no obligation to exercise any of
the powers vested in it by the guarantee at the request of any
holder of any preferred securities unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might
be incurred thereby.

EXPENSE AGREEMENT

We will, pursuant to the Agreement as to Expenses and
Liabilities entered into by us and the trust under the trust
agreement, irrevocably and unconditionally guarantee to each
person or entity to whom the trust becomes indebted or liable, the
full payment of any costs, expenses or liabilities of the trust,
other than obligations of the trust to pay to the holders of the
preferred securities or other similar interests in the trust of
the amounts due to the holders pursuant to the terms of the
preferred securities or other similar interests, as the case may
be. Third party creditors of the trust may proceed directly
against us under the expense agreement, regardless of whether they
had notice of the expense agreement.

GOVERNING LAW

The guarantee will be governed by Missouri law.

RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE
SUBORDINATED DEBENTURES AND THE GUARANTEE

FULL AND UNCONDITIONAL GUARANTEE

We irrevocably guarantee, as and to the extent described in
this prospectus, payments of distributions and other amounts due
on the preferred securities, to the extent the trust has funds
available for the payment of these amounts. We and the trust
believe that, taken together, our obligations under the
subordinated debentures, the indenture, the trust agreement, the
expense agreement and the guarantee agreement provide, in the
aggregate, a full, irrevocable and unconditional guarantee, on a
subordinated basis, of payment of distributions and other amounts
due on the preferred securities. No single document standing
alone or operating in conjunction with fewer than all of the other
documents constitutes a guarantee. It is only the combined
operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the obligations
of the trust under the preferred securities.

If and to the extent that we do not make payments on the
subordinated debentures, the trust will not pay distributions or
other amounts due on the preferred securities. The guarantee does
not cover payment of distributions when the trust does not have
sufficient funds to pay the distributions. In this event, the
remedy of a holder of preferred securities is to institute a legal
proceeding directly against us for enforcement of payment of the
distributions to the holder. Our obligations under the guarantee
are subordinated and junior in right of payment to all of our
other indebtedness.

SUFFICIENCY OF PAYMENTS

As long as payments of interest and other payments are made
when due on the subordinated debentures, these payments will be
sufficient to cover distributions and other payments due on the
preferred securities, primarily because:

* the aggregate principal amount of the subordinated debentures
will be equal to the sum of the aggregate stated liquidation
amount of the trust securities;

* the interest rate and interest and other payment dates on the
subordinated debentures will match the distribution rate and
distribution and other payment dates for the preferred
securities;

* we will pay for any and all costs, expenses and liabilities of the
trust, except the obligations of the trust to pay to holders
of the preferred securities the amounts due to the holders
pursuant to the terms of the preferred securities; and

* the trust will not engage in any activity that is not
consistent with the limited purposes of the trust.

ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES

A holder of any preferred security may institute a legal
proceeding directly against us to enforce its rights under the
guarantee without first instituting a legal proceeding against the
guarantee trustee, the trust or any other person. A default or
event of default under any of our senior or subordinated debt
would not constitute a default or event of default under the trust
agreement. In the event, however, of payment defaults under, or
acceleration of, our senior or subordinated debt, the
subordination provisions of the indenture provide that no payments
may be made in respect of the subordinated debentures until the
obligations have been paid in full or any payment default has been
cured or waived. Failure to make required payments on the
subordinated debentures would constitute an event of default under
the trust agreement.

LIMITED PURPOSE OF THE TRUST

The preferred securities evidence preferred undivided
beneficial interests in the assets of the trust. The trust exists
for the exclusive purposes of issuing the trust securities,
investing the proceeds thereof in subordinated debentures and
engaging in only those other activities necessary, advisable or
incidental thereto. A principal difference between the rights of
a holder of a preferred security and the rights of a holder of a
subordinated debenture is that a holder of a subordinated
debenture is entitled to receive from us the principal amount of
and interest accrued on subordinated debentures held, while a
holder of preferred securities is entitled to receive
distributions from the trust (or from us under the guarantee) if
and to the extent the trust has funds available for the payment of
the distributions.

RIGHTS UPON TERMINATION

Upon any voluntary or involuntary termination, winding-up or
liquidation of the trust involving the liquidation of the
subordinated debentures, the holders of the preferred securities
will be entitled to receive, out of assets held by the trust, the
liquidation distribution in cash. See "Description of the
Preferred Securities -- Liquidation Distribution Upon Termination."

Upon our voluntary or involuntary liquidation or bankruptcy,
the property trustee, as holder of the subordinated debentures,
would be a subordinated creditor of ours. Therefore, the property
trustee would be subordinated in right of payment to all of our
senior and subordinated debt, but is entitled to receive payment
in full of principal and interest before any of our shareholders
receive payments or distributions. Since we are the guarantor
under the guarantee and have agreed to pay for all costs, expenses
and liabilities of the trust other than the obligations of the
trust to pay to holders of the preferred securities the amounts
due to the holders pursuant to the terms of the preferred
securities, the positions of a holder of the preferred securities
and a holder of the subordinated debentures relative to our other
creditors and to our stockholders in the event of liquidation or
bankruptcy are expected to be substantially the same.

FEDERAL INCOME TAX CONSEQUENCES

GENERAL

The following discussion is the opinion of Jackson Walker
L.L.P., Dallas, Texas, as First Banks' counsel, concerning the
material United States federal income tax consequences of the
purchase, ownership and disposition of preferred securities. The
opinion of Tax Counsel is based on the representations, facts and
assumptions set forth in this prospectus, on certain factual
certifications of First Banks' management and the administrative
trustees of First Preferred Capital Trust II, and on certain
assumptions and qualifications set forth in its opinion.

The following discussion is general and may not apply to
your particular circumstances for any of the following, or other,
reasons:

* This discussion is based on United States federal income tax
laws, including the Internal Revenue Code of 1986, as
amended (the "Code"), Treasury regulations promulgated
thereunder and administrative and judicial
interpretations of these authorities, in effect as of
the date of this prospectus. Changes to any of these
laws, possibly on a retroactive basis, after this date
may affect the tax consequences described below.

* This discussion addresses only preferred securities
acquired at original issuance at the original offering
price and held as capital assets, within the meaning
of United States federal income tax law. It does not
discuss all of the tax consequences that may be relevant
to purchasers of preferred securities who are subject
to special rules, such as banks, savings institutions and
certain other financial institutions, real estate investment
trusts, regulated investment companies, insurance companies,
brokers and dealers in securities or currencies, certain
securities traders, tax-exempt investors, individual retirement
accounts, certain tax-deferred accounts and foreign investors.
This discussion also does not address tax consequences that may
be relevant to a purchaser in light of the purchaser's particular
circumstances, such as a purchaser holding a trust preferred
security as a position in a straddle, hedge, conversion or other
integrated investment.

* This discussion does not address:

(a) The income tax consequences to stockholders in, or
partners or beneficiaries of, a purchaser of preferred
securities;

(b) the United States alternative minimum tax consequences
or other collateral tax consequences of purchasing,
owning and disposing of preferred securities; or

The authorities on which this discussion is based are
subject to various interpretations, and the opinions of Tax
Counsel are not binding on the IRS or the courts, either of which
could take a contrary position. Moreover, no rulings have been or
will be sought from the IRS with respect to the transactions
described herein. Accordingly, no assurance can be given to
prospective investors that the IRS will not challenge the opinions
expressed herein or that a court would not sustain such a
challenge.

WE ADVISE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING THE
TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF THE
PREFERRED SECURITIES BASED ON YOUR PARTICULAR CIRCUMSTANCES AND
THE RELEVANT TAXING JURISDICTION.

UNITED STATES HOLDERS

IN GENERAL. For purposes of the following discussion, a
United States Holder (a "Holder") means:

* a citizen or individual resident of the United States;

* a corporation or partnership created or organized in or
under the laws of the United States or any political
subdivision;

* an estate the income of which is includible in its gross
income for United States federal income tax purposes
without regard to its source; or

* a trust if a court within the United States is able to
exercise primary supervision over its administration
and at least one United States person has the
authority to control all substantial decisions of the
trust.

CHARACTERIZATION OF FIRST PREFERRED CAPITAL TRUST II. Tax Counsel is
of the opinion that First Preferred Capital Trust II will be characterized
for United States federal income tax purposes as a grantor trust. Accordingly,
for United States federal income tax purposes, a Holder of a trust preferred
security will be considered the beneficial owner of an undivided interest in
the subordinated debentures owned by First Preferred Capital Trust II, and will
be required to include on its United States federal income tax return all
income or gain recognized for United States federal income tax purposes with
respect to its share of the subordinated debentures.

CHARACTERIZATION OF THE SUBORDINATED DEBENTURES. Tax Counsel is of the
opinion that the subordinated debentures are debt of First Banks for United
States federal income tax purposes. By acceptance of a beneficial interest
in a trust preferred security, a Holder agrees to treat the subordinated
debentures as First Banks' debt and the preferred securities as evidence
of a beneficial ownership interest in the subordinated debentures. The
remainder of this discussion assumes that the subordinated debentures
will be classified as debt for United States federal income tax purposes.

INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT. Under the
terms of the subordinated debentures, we have the ability to defer
payments of interest from time to time by extending the interest
payment period for a period not exceeding 20 consecutive quarterly
periods, but not beyond the stated maturity of the subordinated
debentures. Treasury regulations provide that debt instruments
like the subordinated debentures, assuming they will be issued at
face value, will not be considered issued with original issue
discount ("OID"), even if their issuer can defer payments of
interest, if the likelihood of any deferral is "remote."

Based on our factual representations to Tax Counsel, Tax
Counsel is of the opinion, and this discussion assumes, that, as
of the date of this prospectus, the likelihood of us deferring
payments of interest is "remote" within the meaning of the
applicable Treasury regulations. This conclusion is based in part
on the fact that exercising that option would (1) prevent us from
declaring dividends on our common stock and from making any payments
with respect to debt securities that rank equally with or junior to the
subordinated debentures, and (2) adversely effect our subsequent cost of
and ability to raise capital. Therefore, Tax Counsel is of the opinion,
and we believe and will take the position, that the subordinated debentures
will not be treated as issued with OID by reason of the deferral option
alone. Rather, Holders will be taxed on stated interest on the subordinated
debentures when it is paid or accrued in accordance with each Holder's method
of accounting for United States federal income tax purposes. This issue has
not been addressed in any published rulings or interpretations issued by the
IRS.

If we exercise our option to defer payments of interest, the
subordinated debentures would be treated as redeemed and reissued
for OID purposes. The sum of the remaining interest payments, and
any de minimis OID, on the subordinated debentures would thereafter
be treated as OID. The OID would accrue, and be includible in a
Holder's taxable income, on a daily economic accrual basis,
regardless of a Holder's method of accounting for income tax
purposes, over the remaining term of the subordinated debentures,
including any period of interest deferral, without regard to the
timing of

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payments under the subordinated debentures. The amount of OID that
would accrue in any period would approximately equal the amount of
interest that accrued on the subordinated debentures in that period
at the stated interest rate. Consequently, during any period of
interest deferral, a Holder will include OID in gross income in
advance of the receipt of cash, and if a Holder disposes of a
trust preferred security prior to the record date for payment of
distributions on the subordinated debentures following that
deferral period, a Holder will be subject to income tax on OID
accrued through the date of disposition and not previously
included in income, but will not receive cash from First
Preferred Capital Trust II with respect to the OID.

If the possibility that we would exercise our option to
defer payments of interest is not remote, the subordinated
debentures would be treated as initially issued with OID in an
amount equal to the aggregate stated interest, plus any de minimis
OID, over the term of the subordinated debentures. A Holder would
include that OID in its taxable income, over the term of the
subordinated debentures, on a daily economic accrual basis.

CHARACTERIZATION OF INCOME. Because for United States federal income
tax purposes the income underlying the preferred securities will, in the
opinion of Tax Counsel, be characterized as interest, and not as dividends, a
corporate Holder of preferred securities will not be entitled to a dividends-
received deduction for any income it recognizes with respect to the preferred
securities.

RECEIPT OF SUBORDINATED DEBENTURES OR CASH UPON LIQUIDATION
OF FIRST PREFERRED CAPITAL TRUST II. Under the circumstances
described above under "Description of the Preferred Securities,"
First Preferred Capital Trust II may distribute a pro-rata share
of the subordinated debentures to Holders in exchange for their
preferred securities and in liquidation of First Preferred Capital
Trust II. Except as discussed below, that type of a distribution
would not be a taxable event for United States federal income tax
purposes, and consequently a Holder (1) would have an aggregate
adjusted basis in the subordinated debentures received equal to the
Holder's aggregate adjusted basis in the Holder's preferred securities,
and (2) would have a holding period in the subordinated debentures
received that includes the period during which the Holder held the
preferred securities. After a distribution of subordinated debentures
to Holders, a Holder would recognize interest income in respect of the
subordinated debentures received in the manner described above under
"--Interest Income and Original Issue Discount."

Under circumstances described above under "Description of the
Preferred Securities--Redemption," First Banks may redeem subordinated
debentures for cash, the proceeds of which would be distributed to Holders
in redemption of their preferred securities. The redemption would be taxable
for United States federal income tax purposes, and a Holder would recognize
gain or loss as if it had sold the preferred securities for cash. See "--Sales
of Preferred Securities" below.

SALES OF PREFERRED SECURITIES. Upon the sale or other
taxable disposition, including a redemption for cash, of the
preferred securities, a Holder will recognize gain or loss in an
amount equal to the difference between its adjusted tax basis in
the preferred securities and the amount realized in the
sale, except to the extent of any amount received in respect of
accrued but unpaid interest or OID not previously included in
income. A Holder's adjusted tax basis in the preferred
securities generally will be its initial purchase price, increased
by OID, if any, previously includible in a Holder's gross income
to the date of disposition and decreased by payments, if any,
received on the preferred securities in respect of OID to
the date of disposition. The gain or loss generally will be a
capital gain or loss, and will be a long-term capital gain or loss
if the Holder has held the preferred securities for more
than one year prior to the date of disposition.

The preferred securities may trade at a price that
does not accurately reflect the value of accrued but unpaid
interest, or OID, with respect to the underlying subordinated
debentures. A Holder who disposes of its preferred
securities between record dates for payments of distributions
thereon will be required to include in its taxable income for
United States federal income tax purposes (1) any portion of the
amount realized that is attributable to the accrued but unpaid
interest to the extent not previously included in income or (2)
any amount of OID, in either case, that has accrued on its pro
rata share of the underlying subordinated debentures during the
taxable year of sale through the date of disposition. Any

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income inclusion will increase a Holder's adjusted tax basis in the
preferred securities of which it disposes. To the extent that the
amount realized in the sale is less than a Holder's adjusted tax
basis, a Holder will recognize a capital loss. Subject to certain
limited exceptions applicable to non-corporate taxpayers, capital
losses cannot be applied to offset ordinary income for United
States federal income tax purposes.

EFFECT OF CHANGES IN TAX LAWS

In recent years there have been several legislative proposals which,
if enacted, could have adversely affected the ability of First Banks to
deduct interest paid on the subordinated debentures. These proposals were
not enacted. Nevertheless, there can be no assurance that legislation
enacted after the date of this prospectus will not adversely affect the
ability of First Banks to deduct the interest payable on the subordinated
debentures or cause First Preferred Capital Trust II to become subject to
tax. Such legislation, as well as changes in law of similar import that
result from future administrative pronouncements or judicial decisions, may
cause a tax event. The occurrence of a tax event would give us the right to
redeem the subordinated debentures. See "Description of the Subordinated
Debentures -- Redemption" and "Description of Preferred Securities -- Redemption
or Exchange."

See "--Sales of Preferred Securities" above for the United States federal
income tax consequences of a redemption to a Holder.

NON-UNITED STATES HOLDERS

The following discussion applies to you if you are not a
"Holder" as described above.

Payments of interest, including OID, to a non-United States
Holder on a trust preferred security will generally not be subject
to withholding of income tax, provided that:

* the non-United States Holder did not, directly or
indirectly, actually or constructively, own 10% or
more of the total combined voting power of all classes
of our stock entitled to vote;

* the non-United States Holder is not a controlled foreign
corporation that is related to us through stock
ownership;

* the interest does not constitute contingent interest as
described in Section 871 (h) (4) of the Code;

* the non-United States Holder is not a bank receiving
interest described in Section 881 (c) (3) (A) of the
Code; and

* either (1) the non-United States Holder certifies to First
Preferred Capital Trust II or its agent under
penalties of perjury, that the non-United States
Holder is not a United States Holder and provides its
name and address, or (2) a securities clearing
organization, bank or other financial institution that
holds customers' securities in the ordinary course of
its trade or business (a "Financial Institution"), and
holds the trust preferred security in that capacity,
certifies to First Preferred Capital Trust II or its
agent, under penalties of perjury and in accordance
with applicable Treasury regulations, that it requires
and has received the required statement from the non-
United States Holder or another Financial Institution
between it and the holder in the chain of ownership,
and furnishes First Preferred Capital Trust II or its
agent with a copy.

Recently finalized Treasury regulations, that are generally
effective with respect to payments made after December 31, 2000,
would provide alternative methods for satisfying the certification
requirements described above.

As discussed above, it is possible that changes in the law
affecting the income tax consequences of the subordinated debentures
could adversely affect our ability to deduct interest payable on the
subordinated debentures. These changes could also cause the subordinated
debentures to be classified as equity rather than debt for United States
federal income tax purposes. This might cause the income derived from the
subordinated debentures to be characterized as dividends, generally subject
to a 30%

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withholding tax (or lower rate under an applicable income tax treaty)
when paid to you if you are not a United States Holder, rather than as
interest which, as discussed above, generally is exempt from withholding
tax in the hands of a foreign corporation or nonresident alien who is not
a United States Holder.

If a non-United States Holder holds the preferred securities
in connection with the active conduct of a United States trade
or business, the non-United States Holder will be subject to
income tax on all income and gains recognized with respect to
its proportionate share of the subordinated debentures.

INFORMATION REPORTING AND BACKUP WITHHOLDING

In general, information reporting requirements will apply to
payments made on, and proceeds from the sale of, the preferred
securities held by a noncorporate Holder within the United States.
In addition, payments made on, and payments of the proceeds from
the sale of, the preferred securities to or through the United
States office of a broker are subject to information reporting
unless the Holder certifies as to its non-United States Holder
status or otherwise establish as an exemption from information
reporting and backup withholding. Taxable income on the preferred
securities for a calendar year is required to be reported to United
States Holders on the appropriate forms by the following January 31st.

Payments made on, and proceeds from the sale of, the
preferred securities may be subject to a "backup" withholding tax
of 31% unless a Holder complies with various identification or
exemption requirements. Any amounts so withheld will be allowed
as a credit against a Holder's income tax liability, or refunded,
provided the required information is provided to the IRS.

In addition, a non-United States Holder will generally not
be subject to withholding of income tax on any gain realized upon
the sale or other disposition of a trust preferred security.

THE PRECEDING DISCUSSION IS ONLY A SUMMARY AND DOES NOT
ADDRESS THE CONSEQUENCES TO PARTICULAR PERSONS OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE PREFERRED SECURITIES.
POTENTIAL PURCHASERS OF THE PREFERRED SECURITIES ARE URGED
TO CONTACT THEIR OWN TAX ADVISORS TO DETERMINE THEIR PARTICULAR
TAX CONSEQUENCES.

ERISA CONSIDERATIONS

Employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, or Section 4975 of the
Internal Revenue Code, generally may purchase preferred
securities, subject to the investing fiduciary's determination
that the investment in preferred securities satisfies ERISA's
fiduciary standards and other requirements applicable to
investments by the plan.

In any case, we or any of our affiliates may be considered a
"party in interest" (within the meaning of ERISA) or a "disqualified
person" (within the meaning of Section 4975 of the Internal Revenue
Code) with respect to certain plans. These plans generally include
plans maintained or sponsored by, or contributed to by, any such persons
with respect to which we or any of our affiliates are a fiduciary or
plans for which we or any of our affiliates provide services. The
acquisition and ownership of preferred securities by a plan (or by an
individual retirement arrangement or other plans described in Section
4975(e)(1) of the Internal Revenue Code) with respect to which we or any
of our affiliates are considered a party in interest or a disqualified
person may constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Internal Revenue Code, unless the preferred securities
re acquired pursuant to and in accordance with an applicable exemption.

As a result, plans with respect to which we or any of our
affiliates or any affiliate of the plan are a party in interest or
a disqualified person should not acquire preferred securities
unless the preferred securities are acquired pursuant to and in
accordance with an applicable exemption. Any other plans or other
entities whose assets include plan assets subject to ERISA or
Section 4975 of the Internal Revenue Code proposing to acquire
preferred securities should consult with their own counsel.

102

UNDERWRITING

Subject to the terms and conditions of the underwriting
agreement among First Banks, the trust and the underwriters named
below, for whom Stifel, Nicolaus & Company, Incorporated, Dain
Rauscher Incorporated and Fahnestock & Co. Inc. are acting as representatives
(the "Representatives"), the underwriters have severally agreed to
purchase from the trust, and the trust has agreed to sell to them,
an aggregate of 2,000,000 preferred securities in the amounts set
forth below opposite their respective names.

NUMBER OF
UNDERWRITERS PREFERRED SECURITIES
------------ --------------------

Stifel, Nicolaus & Company, Incorporated. 545,000
Dain Rauscher Incorporated. . . . . . . . 545,000
Fahnestock & Co. Inc. . . . . . . . . . . 545,000
Bear, Stearns & Co. Inc.. . . . . . . . . 40,000
Advest, Inc.. . . . . . . . . . . . . . . 20,000
BB&T Capital Markets. . . . . . . . . . . 20,000
Dominick & Dominick LLC . . . . . . . . . 20,000
J.J.B. Hilliard, W.L. Lyons, Inc. . . . . 20,000
Howe Barnes Investments, Inc. . . . . . . 20,000
Janney Montgomery Scott LLC . . . . . . . 20,000
McDonald Investments Inc. . . . . . . . . 20,000
Morgan Keegan & Company, Inc. . . . . . . 20,000
Ormes Capital Markets, Inc. . . . . . . . 20,000
Sandler O'Neill & Partners, L.P.. . . . . 20,000
The Seidler Companies Incorporated. . . . 20,000
Stephens Inc. . . . . . . . . . . . . . . 20,000
Sutro & Co. Incorporated. . . . . . . . . 20,000
Wachovia Securities, Inc. . . . . . . . . 20,000
Dougherty Summit Securities LLC . . . . . 5,000
FBD Investment Services, Inc. . . . . . . 5,000
Edgar M. Norris & Co., Inc. . . . . . . . 5,000
Nutmeg Securities, Ltd. . . . . . . . . . 5,000
Redwine & Company, Inc. . . . . . . . . . 5,000
Schneider Securities, Inc.. . . . . . . . 5,000
Security Investment Company of Kansas
City. . . . . . . . . . . . . . . . . . 5,000
Smith, Moore & Co.. . . . . . . . . . . . 5,000
Wunderlich Securities, Inc. . . . . . . . 5,000

---------
Total . . . . . . . . . . . . . . . . 2,000,000
=========

In the underwriting agreement, the obligations of the
underwriters are subject to approval of certain legal matters by
their counsel and to various other conditions. Under the terms
and conditions of the underwriting agreement, the underwriters are
committed to accept and pay for all of the preferred securities,
if any are taken.

The underwriters propose to offer the preferred securities
directly to the public at the public offering price set forth on
the cover page of this prospectus, and to certain securities
dealers (who may include the underwriters) at this price, less a
concession not in excess of $0.50 per preferred security.
The underwriters may allow, and the selected dealers may reallow,
a concession not in excess of $0.10 per preferred security to
certain brokers and dealers. After the preferred securities are
released for sale to the public, the offering price and other
selling terms may from time to time be changed by the
underwriters.

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The trust has granted to the underwriters an option,
exercisable within 30 days after the date of this prospectus, to
purchase up to 300,000 additional preferred securities at the same
price per preferred security to be paid by the underwriters for
the other preferred securities being offered. If the underwriters
purchase any of the additional preferred securities under this
option, each underwriter will be committed to purchase the
additional shares in approximately the same proportion allocated
to them in the table above. The underwriters may exercise the
option only for the purpose of covering over-allotments, if any,
made in connection with the distribution of the preferred
securities being offered.

If the underwriters exercise their option to purchase
additional preferred securities, the trust will issue and sell to
us additional common securities and we will issue and sell
subordinated debentures to the trust in an aggregate principal
amount equal to the total aggregate liquidation amount of the
additional preferred securities being purchased under the option
and the additional common securities sold to First Banks.

The table below shows the price and proceeds on a per
preferred security and aggregate basis. The proceeds to be
received by the trust as shown in the table below do not reflect
estimated expenses of $350,000 payable by First Banks.

<TABLE>
<CAPTION>
PER PREFERRED
SECURITY TOTAL
------------- -----------
<S> <C> <C>
Public Offering Price . . . . . . . . . . . . . . $25.00 $50,000,000
Proceeds to First Preferred Capital Trust II. . . $25.00 $50,000,000
</TABLE>

In view of the fact that the proceeds of the sale of the
preferred securities will be used by the trust to purchase the
subordinated debentures from First Banks, First Banks has agreed
to pay the underwriters $0.9375 per preferred security, or a total of
$1,875,000, as compensation for arranging the investment in the
subordinated debentures. Should the underwriters exercise the
over-allotment option, an aggregate of $2,156,250 will be paid to
the underwriters for arranging the investment in the subordinated
debentures.

The offering of the preferred securities is made for
delivery when, as and if accepted by the underwriters and subject
to prior sale and to withdrawal, cancellation or modification of
the offering without notice. The underwriters reserve the right
to reject any order for the purchase of the preferred securities.

First Banks and the trust have agreed to indemnify the
several underwriters against several liabilities, including
liabilities under the Securities Act of 1933.

The preferred securities have been designated for inclusion in the
Nasdaq National Market. The Representatives have advised the trust that
they presently intend to make a market in the preferred securities after
the commencement of trading on Nasdaq, but no assurances can be made as to
the liquidity of the preferred securities or that an active and liquid
market will develop or, if developed, that the market will continue. The
offering price and distribution rate have been determined by
negotiations among representatives of First Banks and the
underwriters, and the offering price of the preferred securities
may not be indicative of the market price following the offering.
The Representatives will have no obligation to make a market in
the preferred securities, however, and may cease market-making
activities, if commenced, at any time.

In connection with the offering, the underwriters may engage
in transactions that are intended to stabilize, maintain or
otherwise affect the price of the preferred securities during and
after the offering, such as the following:

* the underwriters may over-allot or otherwise create a short
position in the preferred securities for their own account
by selling more preferred securities than have been sold to
them;

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* the underwriters may elect to cover any short position by
purchasing preferred securities in the open market or by
exercising the over-allotment option;

* the underwriters may stabilize or maintain the price of the
preferred securities by bidding;

* the underwriters may engage in passive market making transactions;
and

* the underwriters may impose penalty bids, under which selling
concessions allowed to syndicate members or other broker-
dealers participating in this offering are reclaimed if
preferred securities previously distributed in the offering
are repurchased in connection with stabilization
transactions or otherwise.

The effect of these transactions may be to stabilize or
maintain the market price at a level above that which might
otherwise prevail in the open market. The imposition of a penalty
bid may also affect the price of the preferred securities to the
extent that it discourages resales. No representation is made as
to the magnitude or effect of any such stabilization or other
transactions. Such transactions may be effected in the Nasdaq
National Market or otherwise and, if commenced, may be
discontinued at any time.

Because the National Association of Securities Dealers, Inc.
may view the preferred securities as interests in a direct
participation program, the offer and sale of the preferred
securities is being made in compliance with the provisions of Rule
2810 under the NASD Conduct Rules.

Some of the underwriters have previously performed other
investment banking services for First Banks and its subsidiaries.
Additionally, Dain Rauscher Wessels is providing financial advisory
services to the board of directors of Millenium Bank in connection
with FBA's acquisition of Millennium Bank and will receive customary
fees for its services.

LEGAL MATTERS

Legal matters, including matters relating to federal income
tax considerations, for First Banks and the trust will be passed
upon by Jackson Walker L.L.P., Dallas, Texas, counsel to First
Banks and the trust. Certain legal matters will be passed upon
for the underwriters by Bryan Cave LLP, St. Louis, Missouri.
Jackson Walker L.L.P. and Bryan Cave LLP will rely on the
opinion of Richards, Layton & Finger, Wilmington, Delaware, as to
matters of Delaware law.

WHERE YOU CAN FIND INFORMATION

This prospectus is a part of a Registration Statement on
Form S-2 filed by First Banks and the trust with the SEC under the
Securities Act, with respect to the preferred securities, the
subordinated debentures and the guarantee. This prospectus does
not contain all the information set forth in the registration
statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. For further information
with respect to First Banks and the securities offered by this
prospectus, reference is made to the registration statement,
including the exhibits to the registration statement and documents
incorporated by reference. Statements contained in this
prospectus concerning the provisions of such documents are
necessarily summaries of such documents and each such statement is
qualified in its entirety by reference to the copy of the
applicable document filed with the SEC.

We file periodic reports and other information with the SEC.
Our filings are available to the public over the Internet at the
SEC's web site at http://www.sec.gov. You may also inspect and
copy these materials at the public reference facilities of the SEC
at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, as
well as at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661 and 75 Park Place, Room 1400, New York, New York 10007.
Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information.

105

<PAGE>
<PAGE>
The trust is not currently subject to the information
reporting requirements of the Securities Exchange Act of 1934 and
although the trust will become subject to such requirements upon
the effectiveness of the registration statement, it is not
expected that the trust will be required to file separate reports
under the Securities Exchange Act.

Each holder of the trust securities will receive a copy of
our annual report at the same time as we furnish the annual report
to the holders of our common stock.

EXPERTS

The financial statements of First Banks, Inc. as of December
31, 1999 and 1998, and for each of the years in the three-year
period ended December 31, 1999, have been included herein and in
the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in
accounting and auditing.

DOCUMENTS INCORPORATED BY REFERENCE

We "incorporate by reference" into this prospectus the
information in documents we file with the SEC, which means that we
can disclose important information to you through those documents.
The information incorporated by reference is an important part of
this prospectus. Some information contained in this prospectus
updates the information incorporated by reference and some
information that we file subsequently with the SEC will
automatically update this prospectus. We incorporate by reference
the documents listed below:

(a) our Annual Report on Form 10-K for the year ended
December 31, 1999, filed with the SEC on March 27, 2000;

(b) our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000, filed with the SEC on May 12, 2000;
and

We also incorporate by reference any filings we make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934 after the initial filing of the registration
statement that contains this prospectus and before the time that
all of the securities offered in this prospectus are sold.

You may request, and we will provide, a copy of these
filings at no cost by contacting Frank H. Sanfilippo, our Chief
Financial Officer, at the following address and phone number:

First Banks, Inc.
135 North Meramec
Clayton, Missouri 63105
(314) 995-8700

106

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FIRST BANKS, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS

Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . F-1

Consolidated Balance Sheets as of June 30, 2000 (unaudited) and
December 31, 1999 and 1998 . . . . . . . . . . . . . . . . . . . . . F-2

Consolidated Statements of Income for the six months ended
June 30, 2000 and 1999 (unaudited) and for the years ended
December 31, 1999, 1998 and 1997 . . . . . . . . . . . . . . . . . . F-4

Consolidated Statements of Changes in Stockholders' Equity and
Comprehensive Income for the six months ended June 30, 2000
(unaudited) and for the years ended December 31, 1999, 1998 and 1997 F-5

Consolidated Statements of Cash Flows for the six months ended
June 30, 2000 and 1999 (unaudited) and for the years ended
December 31, 1999, 1998 and 1997 . . . . . . . . . . . . . . . . . . F-6

107

THIS PAGE LEFT BLANK INTENTIONALLY

FIRST BANKS, INC.

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
First Banks, Inc.:

We have audited the accompanying consolidated balance sheets of First
Banks, Inc. and subsidiaries (the Company) as of December 31, 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 December 31, 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 Banks, Inc. and subsidiaries as of December 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the
years in the three-year period ended December 31, 1999, in conformity
with generally accepted accounting principles.

/s/ KPMG LLP

St. Louis, Missouri
March 15, 2000

F-1

<TABLE>
FIRST BANKS, INC.

CONSOLIDATED BALANCE SHEETS
(DOLLARS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)

<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------
2000 1999 1998
------------ ------------ ------------
(UNAUDITED)
ASSETS

<S> <C> <C> <C>
Cash and cash equivalents:
Cash and due from banks . . . . . . . . . . . . . . . . . . . $ 137,265 126,720 174,329
Interest-bearing deposits with other financial
institutions with maturities of three months or less . . . 3,424 1,674 3,733
Federal funds sold. . . . . . . . . . . . . . . . . . . . . . 19,100 42,500 36,700
------------ ------------ ------------
Total cash and cash equivalents . . . . . . . . . . . . 159,789 170,894 214,762
------------ ------------ ------------

Investment securities:
Trading, at fair value. . . . . . . . . . . . . . . . . . . . -- -- 3,425
Available for sale, at fair value . . . . . . . . . . . . . . 414,978 430,093 509,695
Held to maturity, at amortized cost (fair value of
$21,302 at June 30, 2000, and $21,476 and
$22,568 at December 31, 1999 and 1998,
respectively). . . . . . . . . . . . . . . . . . . . . . . 21,342 21,554 21,676
------------ ------------ ------------
Total investment securities . . . . . . . . . . . . . . 436,320 451,647 534,796
------------ ------------ ------------

Loans:
Commercial, financial and agricultural. . . . . . . . . . . . 1,284,606 1,086,919 920,007
Real estate construction and development. . . . . . . . . . . 816,687 795,081 720,910
Real estate mortgage. . . . . . . . . . . . . . . . . . . . . 1,996,265 1,851,569 1,529,177
Consumer and installment. . . . . . . . . . . . . . . . . . . 195,930 233,374 282,549
Loans held for sale . . . . . . . . . . . . . . . . . . . . . 40,067 37,412 135,619
------------ ------------ ------------
Total loans . . . . . . . . . . . . . . . . . . . . . . 4,333,555 4,004,355 3,588,262
Unearned discount . . . . . . . . . . . . . . . . . . . . . . (7,162) (8,031) (8,157)
Allowance for loan losses . . . . . . . . . . . . . . . . . . (77,822) (68,611) (60,970)
------------ ------------ ------------
Net loans . . . . . . . . . . . . . . . . . . . . . . . 4,248,571 3,927,713 3,519,135
------------ ------------ ------------

Bank premises and equipment, net of accumulated
depreciation and amortization . . . . . . . . . . . . . . . . 80,922 75,647 63,848
Intangibles associated with the purchase of subsidiaries . . . . 47,995 46,085 36,534
Mortgage servicing rights, net of amortization . . . . . . . . . 7,647 8,665 9,825
Accrued interest receivable. . . . . . . . . . . . . . . . . . . 37,331 33,491 28,465
Other real estate. . . . . . . . . . . . . . . . . . . . . . . . 1,903 2,129 3,709
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . 63,930 51,972 46,848
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 96,064 99,504 96,888
------------ ------------ ------------
Total assets. . . . . . . . . . . . . . . . . . . . . . $ 5,180,472 4,867,747 4,554,810
============ ============ ============

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

F-2

<TABLE>
FIRST BANKS, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)
(DOLLARS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)

<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------------
2000 1999 1998
------------ ------------ ------------
(UNAUDITED)
LIABILITIES

<S> <C> <C> <C>
Deposits:
Demand:
Non-interest-bearing . . . . . . . . . . . . . . . . . . . $ 649,606 606,064 561,383
Interest-bearing . . . . . . . . . . . . . . . . . . . . . 396,400 415,113 377,435
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,269,595 1,198,314 1,198,567
Time:
Time deposits of $100 or more. . . . . . . . . . . . . . . 353,839 339,214 219,996
Other time deposits. . . . . . . . . . . . . . . . . . . . 1,787,013 1,693,109 1,582,604
------------ ------------ ------------
Total deposits. . . . . . . . . . . . . . . . . . . . . 4,456,453 4,251,814 3,939,985
Short-term borrowings. . . . . . . . . . . . . . . . . . . . . . 150,812 73,554 121,331
Note payable . . . . . . . . . . . . . . . . . . . . . . . . . . 58,500 64,000 50,048
Accrued interest payable . . . . . . . . . . . . . . . . . . . . 13,067 11,607 5,817
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . 10,639 6,582 10,920
Accrued expenses and other liabilities . . . . . . . . . . . . . 29,124 25,616 20,652
Minority interest in subsidiary. . . . . . . . . . . . . . . . . 12,142 12,058 15,251
------------ ------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . 4,730,737 4,445,231 4,164,004
------------ ------------ ------------

Guaranteed preferred beneficial interests in:
First Banks, Inc. subordinated debentures . . . . . . . . . . 83,446 83,394 83,288
First Banks America, Inc. subordinated debentures . . . . . . 44,249 44,217 44,155
------------ ------------ ------------
Total guaranteed preferred beneficial
interests in subordinated debentures . . . . . . . . 127,695 127,611 127,443
------------ ------------ ------------

STOCKHOLDERS' EQUITY

Preferred stock:
$1.00 par value, 5,000,000 shares authorized, no
shares issued and outstanding at June 30, 2000,
December 31, 1999 and 1998 . . . . . . . . . . . . . . . . -- -- --
Class A convertible, adjustable rate, $20.00 par. . . . . . .
value, 750,000 shares authorized, 641,082 shares issued
and outstanding. . . . . . . . . . . . . . . . . . . . . . 12,822 12,822 12,822
Class B adjustable rate, $1.50 par value, 200,000
shares authorized, 160,505 shares issued and outstanding . 241 241 241
Common stock, $250.00 par value, 25,000 shares
authorized, 23,661 shares issued and outstanding. . . . . . . 5,915 5,915 5,915
Capital surplus. . . . . . . . . . . . . . . . . . . . . . . . . 2,989 3,318 780
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . 299,190 270,259 231,867
Accumulated other comprehensive income . . . . . . . . . . . . . 883 2,350 11,738
------------ ------------ ------------
Total stockholders' equity. . . . . . . . . . . . . . . 322,040 294,905 263,363
------------ ------------ ------------
Total liabilities and stockholders' equity. . . . . . . $ 5,180,472 4,867,747 4,554,810
============ ============ ============
</TABLE>

F-3

<TABLE>
FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)

<CAPTION>
SIX MONTHS ENDED JUNE 30, YEARS ENDED DECEMBER 31,
------------------------- -------------------------------------
2000 1999 1999 1998 1997
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED)

<S> <C> <C> <C> <C> <C>
Interest income:
Interest and fees on loans. . . . . . . . . . . . . . . . . . $ 185,826 153,639 323,207 284,177 252,766
Investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . 13,537 13,590 26,206 39,898 35,248
Nontaxable. . . . . . . . . . . . . . . . . . . . . . . . . 482 517 937 985 1,008
Federal funds sold and other. . . . . . . . . . . . . . . . . 2,033 455 2,732 2,800 6,079
----------- ----------- ----------- ----------- -----------
Total interest income . . . . . . . . . . . . . . . . . . 201,878 168,201 353,082 327,860 295,101
----------- ----------- ----------- ----------- -----------
Interest expense:
Deposits:
Interest-bearing demand . . . . . . . . . . . . . . . . . . 2,885 2,296 5,098 5,135 5,648
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . 24,070 22,014 44,101 42,591 27,383
Time deposits of $100 or more . . . . . . . . . . . . . . . 5,855 5,466 11,854 12,024 10,386
Other time deposits . . . . . . . . . . . . . . . . . . . . 50,222 40,961 84,639 92,305 95,244
Interest rate exchange agreements, net. . . . . . . . . . . . -- 2,588 5,397 3,810 6,574
Short-term borrowings . . . . . . . . . . . . . . . . . . . . 2,515 2,259 3,983 2,903 2,103
Note payable. . . . . . . . . . . . . . . . . . . . . . . . . 2,511 1,532 3,629 3,411 1,493
----------- ----------- ----------- ----------- -----------
Total interest expense. . . . . . . . . . . . . . . . . . 88,058 77,116 158,701 162,179 148,831
----------- ----------- ----------- ----------- -----------
Net interest income . . . . . . . . . . . . . . . . . . . 113,820 91,085 194,381 165,681 146,270
Provision for loan losses . . . . . . . . . . . . . . . . . . . 7,202 5,863 13,073 9,000 11,300
----------- ----------- ----------- ----------- -----------
Net interest income after provision for loan losses . . . 106,618 85,222 181,308 156,681 134,970
----------- ----------- ----------- ----------- -----------
Noninterest income:
Service charges on deposit accounts and customer service fees 9,464 8,357 17,676 14,876 12,491
Credit card fees. . . . . . . . . . . . . . . . . . . . . . . 91 327 409 2,999 2,914
Loan servicing fees, net. . . . . . . . . . . . . . . . . . . 231 283 657 1,017 1,628
Gain on mortgage loans sold and held for sale . . . . . . . . 3,268 3,834 6,909 5,563 716
Net gain on sales of available-for-sale securities. . . . . . 379 792 791 1,466 2,335
Net (loss) gain on trading securities . . . . . . . . . . . . -- (303) (303) 607 121
Gain on sales of branches, net of expenses. . . . . . . . . . 1,355 4,406 4,406 -- --
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,247 5,422 11,105 9,969 5,492
----------- ----------- ----------- ----------- -----------
Total noninterest income. . . . . . . . . . . . . . . . . 21,035 23,118 41,650 36,497 25,697
----------- ----------- ----------- ----------- -----------
Noninterest expense:
Salaries and employee benefits. . . . . . . . . . . . . . . . 35,237 30,071 61,524 55,907 43,011
Occupancy, net of rental income . . . . . . . . . . . . . . . 6,655 5,842 12,518 11,037 10,617
Furniture and equipment . . . . . . . . . . . . . . . . . . . 5,673 3,999 8,520 8,122 7,618
Federal Deposit Insurance Corporation premiums. . . . . . . . 460 657 1,310 1,370 804
Postage, printing and supplies. . . . . . . . . . . . . . . . 2,183 2,153 4,244 5,230 4,187
Data processing fees. . . . . . . . . . . . . . . . . . . . . 10,663 9,223 18,567 13,917 8,450
Legal, examination and professional fees. . . . . . . . . . . 2,003 3,242 9,109 5,326 4,587
Credit card . . . . . . . . . . . . . . . . . . . . . . . . . 259 367 667 3,396 3,343
Communications. . . . . . . . . . . . . . . . . . . . . . . . 1,233 1,263 2,488 2,874 2,611
Advertising and business development. . . . . . . . . . . . . 1,661 1,547 3,734 4,668 4,054
(Gain) loss on sales of other real estate, net of expenses. . (224) (14) (622) 81 (331)
Guaranteed preferred debentures . . . . . . . . . . . . . . . 6,012 6,028 12,050 9,842 7,322
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,895 8,357 16,698 16,934 14,014
----------- ----------- ----------- ----------- -----------
Total noninterest expense . . . . . . . . . . . . . . . . 79,710 72,735 150,807 138,704 110,287
----------- ----------- ----------- ----------- -----------
Income before provision for income taxes and minority . .
interest in income of subsidiary. . . . . . . . . . . . 47,943 35,605 72,151 54,474 50,380
Provision for income taxes. . . . . . . . . . . . . . . . . . . 17,741 13,103 26,313 19,693 16,083
----------- ----------- ----------- ----------- -----------
Income before minority interest in income of subsidiary . 30,202 22,502 45,838 34,781 34,297
Minority interest in income of subsidiary . . . . . . . . . . . 943 672 1,660 1,271 1,270
----------- ----------- ----------- ----------- -----------
Net income. . . . . . . . . . . . . . . . . . . . . . . . 29,259 21,830 44,178 33,510 33,027
Preferred stock dividends . . . . . . . . . . . . . . . . . . . 328 328 786 786 5,067
----------- ----------- ----------- ----------- -----------
Net income available to common stockholders . . . . . . . $ 28,931 21,502 43,392 32,724 27,960
=========== =========== =========== =========== ===========
Earnings per common share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,222.71 908.75 1,833.91 1,383.04 1,181.69
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,182.47 877.36 1,775.47 1,337,09 1,134.28
=========== =========== =========== =========== ===========
Weighted average shares of common stock outstanding . . . . . . 23,661 23,661 23,661 23,661 23,661
=========== =========== =========== =========== ===========

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

F-4

<TABLE>
FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
SIX MONTHS ENDED JUNE 30, 2000 AND THREE YEARS ENDED DECEMBER 31, 1999
(DOLLARS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA)

<CAPTION>
CLASS C ADJUSTABLE RATE ACCU-
PREFERRED PREFERRED STOCK MULATED
STOCK, ------------------- OTHER TOTAL
INCREASING CLASS A COMPRE- COMPRE- STOCK-
RATE, CONVERT- COMMON CAPITAL HENSIVE RETAINED HENSIVE HOLDERS'
REDEEMABLE IBLE CLASS B STOCK SURPLUS INCOME EARNINGS INCOME EQUITY
---------- -------- --------- ------ ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Consolidated balances, January 1, 1997 . . . . $ 53,887 12,822 241 5,915 3,289 171,182 4,053 251,389
Year ended December 31, 1997:
Comprehensive income:
Net income. . . . . . . . . . . . . . . . . -- -- -- -- -- $ 33,027 33,027 -- 33,027
Other comprehensive income, net of tax
Unrealized gains on securities, net of
reclassification adjustment<F1> . . . . . -- -- -- -- -- 5,385 -- 5,385 5,385
--------
Comprehensive income. . . . . . . . . . . . $ 38,412
========
Class C preferred stock dividends,
$2.25 per share . . . . . . . . . . . . . . -- -- -- -- -- (4,280) -- (4,280)
Class A preferred stock dividends,
$1.20 per share . . . . . . . . . . . . . . -- -- -- -- -- (769) -- (769)
Class B preferred stock dividends,
$0.11 per share . . . . . . . . . . . . . . -- -- -- -- -- (17) -- (17)
Purchase and retirement of Class C
preferred stock . . . . . . . . . . . . . . (6,774) -- -- -- (161) -- -- (6,935)
Redemption of Class C preferred stock. . . . (47,113) -- -- -- -- -- -- (47,113)
Effect of capital stock transactions of
majority-owned subsidiaries . . . . . . . . -- -- -- -- 850 -- -- 850
-------- ------ --- ----- ------ ------- ------ -------
Consolidated balances, December 31, 1997 . . . -- 12,822 241 5,915 3,978 199,143 9,438 231,537
Year ended December 31, 1998:
Comprehensive income:
Net income. . . . . . . . . . . . . . . . . -- -- -- -- -- 33,510 33,510 -- 33,510
Other comprehensive income, net of tax
Unrealized gains on securities, net of
reclassification adjustment<F1>. . . . . -- -- -- -- -- 2,300 -- 2,300 2,300
--------
Comprehensive income. . . . . . . . . . . . 35,810
========
Class A preferred stock dividends,
$1.20 per share . . . . . . . . . . . . . . -- -- -- -- -- (769) -- (769)
Class B preferred stock dividends,
$0.11 per share . . . . . . . . . . . . . . -- -- -- -- -- (17) -- (17)
Effect of capital stock transactions of
majority-owned subsidiaries . . . . . . . . -- -- -- -- (3,198) -- -- (3,198)
-------- ------ --- ----- ------ ------- ------ -------
Consolidated balances, December 31, 1998 . . . -- 12,822 241 5,915 780 231,867 11,738 263,363
Year ended December 31, 1999:
Comprehensive income:
Net income. . . . . . . . . . . . . . . . . -- -- -- -- -- 44,178 44,178 -- 44,178
Other comprehensive income, net of tax
Unrealized losses on securities, net of
reclassification adjustment<F1> . . . . . -- -- -- -- -- (9,388) -- (9,388) (9,388)
--------
Comprehensive income. . . . . . . . . . . . 34,790
========
Class A preferred stock dividends,
$1.20 per share . . . . . . . . . . . . . . -- -- -- -- -- (769) -- (769)
Class B preferred stock dividends,
$0.11 per share . . . . . . . . . . . . . . -- -- -- -- -- (17) -- (17)
Effect of capital stock transactions of
majority-owned subsidiary . . . . . . . . . -- -- -- -- (3,273) -- -- (3,273)
Reclassification of retained earnings. . . . -- -- -- -- 5,000 (5,000) -- --
Reduction of deferred tax asset
valuation allowance . . . . . . . . . . . . -- -- -- -- 811 -- -- 811
-------- ------ --- ----- ------ ------- ------ -------
Consolidated balances, December 31, 1999 . . . -- 12,822 241 5,915 3,318 270,259 2,350 294,905
Six months ended June 30, 2000 (unaudited):
Comprehensive income:
Net income. . . . . . . . . . . . . . . . . -- -- -- -- -- 29,259 29,259 -- 29,259
Other comprehensive income, net of tax
Unrealized losses on securities, net of
reclassification adjustment<F1> . . . . . -- -- -- -- -- (1,467) -- (1,467) (1,467)
--------
Comprehensive income . . . . . . . . . . . . 27,792
========
Class A preferred stock dividends,
$0.50 per share . . . . . . . . . . . . . . -- -- -- -- -- (321) -- (321)
Class B preferred stock dividends,
$0.04 per share . . . . . . . . . . . . . . -- -- -- -- -- (7) -- (7)
Effect of capital stock transactions of
majority-owned subsidiary . . . . . . . . . -- -- -- -- (329) -- -- (329)
-------- ------ --- ----- ------ ------- ------ -------
Consolidated balances, June 30, 2000
(unaudited) . . . . . . . . . . . . . . . . . $ -- 12,822 241 5,915 2,989 299,190 883 322,040
======== ====== === ===== ====== ======= ====== =======

<FN>
-------------------------------
<F1> Disclosure of reclassification adjustment:

<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
----------------------- -------------------------------------
2000 1999 1999 1998 1997
------- ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
Unrealized (losses) gains arising during
the period . . . . . . . . . . . . . . . . . $(1,221) (4,401) (8,874) 3,253 6,903
Less reclassification adjustment for gains
included in net income . . . . . . . . . . . 246 515 514 953 1,518
------- ------ ------ ----- -----
Unrealized (losses) gains on securities . . . $(1,467) (4,916) (9,388) 2,300 5,385
======= ====== ====== ===== =====

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

F-5

<TABLE>
FIRST BANKS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,259 21,830 44,178 33,510 33,027
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization of bank premises
and equipment. . . . . . . . . . . . . . . . . . . . . . 4,578 3,293 7,609 5,293 5,687
Amortization, net of accretion. . . . . . . . . . . . . . 3,801 6,379 12,632 10,494 9,512
Originations and purchases of loans held for sale . . . . (238,508) (297,565) (452,941) (628,544) (174,330)
Proceeds from the sale of loans held for sale . . . . . . 185,316 352,434 507,077 520,994 148,350
Provision for loan losses . . . . . . . . . . . . . . . . 7,202 5,863 13,073 9,000 11,300
Provision for income taxes. . . . . . . . . . . . . . . . 17,741 13,103 26,313 19,693 16,083
Payments of income taxes. . . . . . . . . . . . . . . . . (5,382) (11,547) (23,904) (16,091) (17,976)
Decrease (increase) in accrued interest receivable. . . . (3,295) (2,462) (3,164) 256 (5,107)
Net decrease (increase) in trading securities . . . . . . -- 3,425 3,425 (315) (3,110)
Interest accrued on liabilities . . . . . . . . . . . . . 88,058 77,116 158,701 162,368 148,831
Payments of interest on liabilities . . . . . . . . . . . (87,088) (73,901) (154,056) (167,090) (149,380)
Other operating activities, net . . . . . . . . . . . . . (13,814) (4,391) (7,201) (5,582) (7,284)
Minority interest in income of subsidiary . . . . . . . . 943 672 1,660 1,271 1,270
--------- -------- -------- -------- --------
Net cash (used in) provided by operating activities. . . (11,189) 94,249 133,402 (54,743) 16,873
--------- -------- -------- -------- --------

Cash flows from investing activities:
Cash (paid) received for acquired entities, net of cash
and cash equivalents received (paid). . . . . . . . . . . . (2,709) (17,245) (15,961) 29,339 84,556
Proceeds from sales of investment securities available
for sale. . . . . . . . . . . . . . . . . . . . . . . . . . 8,148 88,714 63,938 136,042 20,930
Maturities of investment securities available for sale . . . 191,276 85,650 350,940 395,961 447,547
Maturities of investment securities held to maturity . . . . 679 1,503 2,708 2,314 1,804
Purchases of investment securities available for sale. . . . (149,971) (15,029) (288,023) (167,082) (686,474)
Purchases of investment securities held to maturity. . . . . (489) (1,982) (2,627) (4,910) (844)
Net increase in loans. . . . . . . . . . . . . . . . . . . . (254,431) (120,721) (268,238) (443,741) (174,804)
Recoveries of loans previously charged-off . . . . . . . . . 6,180 4,206 9,281 8,444 9,230
Purchases of bank premises and equipment . . . . . . . . . . (10,039) (8,904) (17,099) (14,851) (6,413)
Other investing activities . . . . . . . . . . . . . . . . . 2,183 (3,668) (10) (13,919) (54,681)
--------- -------- -------- -------- --------
Net cash (used in) provided by investing activities. . . (209,173) 12,524 (165,091) (72,403) (359,149)
--------- -------- -------- -------- --------

Cash flows from financing activities:
Decrease (increase) in demand and savings deposits . . . . . 55,340 (83,907) (72,895) 258,757 304,193
Increase (decrease) in time deposits . . . . . . . . . . . . 81,595 26,221 144,499 (171,207) (8,348)
Increase in federal funds purchased. . . . . . . . . . . . . 36,100 -- -- -- --
Decrease (increase) in Federal Home Loan Bank advances . . . -- (50,000) (50,000) 48,485 (37,218)
Increase in securities sold under agreements to repurchase . 41,158 6,524 2,223 18,692 21,390
Increase (decrease) in notes payable . . . . . . . . . . . . (5,500) (2,048) 13,952 (24,637) (21,186)
Purchase and retirement of Class C preferred stock . . . . . -- -- -- -- (54,048)
Proceeds from issuance of guaranteed preferred subordinated
debentures. . . . . . . . . . . . . . . . . . . . . . . . . -- -- -- 44,124 83,086
Sale of branch deposits. . . . . . . . . . . . . . . . . . . 892 (48,979) (49,172) -- --
Payment of preferred stock dividends . . . . . . . . . . . . (328) (328) (786) (786) (5,067)
--------- -------- -------- -------- --------
Net cash provided by (used in) financing activities. . . 209,257 (152,517) (12,179) 173,428 282,802
--------- -------- -------- -------- --------
Net (decrease) increase in cash and cash equivalents . . (11,105) (45,744) (43,868) 46,282 (59,474)
Cash and cash equivalents, beginning of period . . . . . . . . 170,894 214,762 214,762 168,480 227,954
--------- -------- -------- -------- --------
Cash and cash equivalents, end of period . . . . . . . . . . . $ 159,789 169,018 170,894 214,762 168,480
========= ======== ======== ======== ========

Noncash investing and financing activities:
Loans transferred to other real estate . . . . . . . . . . . $ 1,081 1,189 4,039 3,067 4,295
Loans exchanged for and transferred to available-for-sale
investment securities . . . . . . . . . . . . . . . . . . . -- -- -- 65,361 --
Loans held for sale exchanged for and transferred to
available-for-sale investment securities. . . . . . . . . . 7,186 -- 3,985 23,898 --
Loans held for sale transferred to loans . . . . . . . . . . 46,153 9,206 32,982 -- --
========= ======== ======== ======== ========

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

F-6

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying consolidated financial statements of First Banks,
Inc. and subsidiaries (First Banks or the Company) have been prepared in
accordance with generally accepted accounting principles and conform to
practices prevalent among financial institutions. The following is a
summary of the more significant accounting policies followed by First
Banks:

BASIS OF PRESENTATION. The consolidated financial statements of
First Banks have been prepared in accordance with generally accepted
accounting principles and conform to predominant practices within the
banking industry. Management of First Banks has made a number of
estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities to
prepare the consolidated financial statements in conformity with
generally accepted accounting principles. Actual results could differ
from those estimates.

PRINCIPLES OF CONSOLIDATION. The consolidated financial
statements include the accounts of First Banks, Inc. and its
subsidiaries, net of minority interest, as more fully described below.
All significant intercompany accounts and transactions have been
eliminated. Certain reclassifications of 1998 and 1997 amounts have
been made to conform with the 1999 presentation.

First Banks operates through its subsidiary bank holding companies
and financial institutions (collectively referred to as the Subsidiary
Banks) as follows:

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

The Subsidiary Banks are wholly owned by their respective parent
companies except FBA, which was 76.8% owned by First Banks at December
31, 1998. On February 17, 1999, First Banks completed its purchase of
314,848 shares of FBA common stock pursuant to a tender offer to
purchase up to 400,000 shares of FBA common stock. The tender offer
increased First Banks' ownership interest in FBA to 82.3% of the
outstanding voting stock of FBA. First Banks' ownership interest in FBA
at December 31, 1999 was 83.4%.

On February 2, 1998, First Commercial Bancorp, Inc., a majority-
owned subsidiary of First Banks, was acquired by FBA and its subsidiary
bank, First Commercial Bank, was merged into FB California. The
combination of these entities did not have a material impact on the
financial condition or results of operations of First Banks.

CASH AND CASH EQUIVALENTS. Cash, due from banks, federal funds
sold, and interest-bearing deposits with original maturities of three
months or less are considered to be cash and cash equivalents for
purposes of the consolidated statements of cash flows.

The Subsidiary Banks are required to maintain certain daily
reserve balances on hand in accordance with regulatory requirements.
These reserve balances maintained in accordance with such requirements
were $10.8 million and $49.4 million at December 31, 1999 and 1998,
respectively.

F-7

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

INVESTMENT SECURITIES. The classification of investment
securities as trading, available for sale or held to maturity is
determined at the date of purchase. Investment securities designated as
trading, which include any security held for near term sale, are valued
at fair value. Realized and unrealized gains and losses are included in
noninterest income.

Investment securities designated as available for sale, which
include any security that First Banks has no immediate plan to sell but
which may be sold in the future under different circumstances, are
stated at fair value. Realized gains and losses are included in
noninterest income upon commitment to sell, based on the amortized cost
of the individual security sold. Unrealized gains and losses are
recorded, net of related income tax effects, in accumulated other
comprehensive income. All previous fair value adjustments included in
the separate component of accumulated other comprehensive income are
reversed upon sale.

Investment securities designated as held to maturity, which
include any security that First Banks has the positive intent and
ability to hold to maturity, are stated at cost, net of amortization of
premiums and accretion of discounts computed on the level-yield method
taking into consideration the level of current and anticipated
prepayments.

LOANS HELD FOR PORTFOLIO. Loans held for portfolio are carried at
cost, adjusted for amortization of premiums and accretion of discounts
using the interest method. Interest and fees on loans are recognized as
income using the interest method. Loan origination fees are deferred
and accreted over the estimated life of the loans using the interest
method. Loans held for portfolio are stated at cost as First Banks has
the ability and it is management's intention to hold them to maturity.

The accrual of interest on loans is discontinued when it appears
that interest or principal may not be paid in a timely manner in the
normal course of business. Generally, payments received on nonaccrual
and impaired loans are recorded as principal reductions. Interest
income is recognized after all principal has been repaid or an
improvement in the condition of the loan has occurred which would
warrant resumption of interest accruals.

A loan is considered impaired when it is probable that First Banks
will be unable to collect all amounts due, both principal and interest,
according to the contractual terms of the loan agreement. When
measuring impairment, the expected future cash flows of an impaired loan
are discounted at the loan's effective interest rate. Alternatively,
impairment is measured by reference to an observable market price, if
one exists, or the fair value of the collateral for a collateral-
dependent loan. Regardless of the historical measurement method used,
First Banks measures impairment based on the fair value of the
collateral when foreclosure is probable. Additionally, impairment of a
restructured loan is measured by discounting the total expected future
cash flows at the loan's effective rate of interest as stated in the
original loan agreement. First Banks uses its existing nonaccrual
methods for recognizing interest income on impaired loans.

LOANS HELD FOR SALE. Mortgage loans held for sale are carried at
the lower of cost or market value which is determined on an individual
loan basis. Gains or losses on the sale of loans held for sale are
determined on a specific identification method.

LOAN SERVICING INCOME. Loan servicing income represents fees
earned for servicing real estate mortgage loans owned by investors, net
of federal agency guarantee fees, interest shortfall and amortization of
the cost of mortgage servicing rights. Such fees are generally
calculated on the outstanding principal balance of the loans serviced
and are recorded as income when earned.

F-8

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is
maintained at a level considered adequate to provide for probable
losses. The provision for loan losses is based on a periodic analysis
of the loans held for portfolio and held for sale, considering, among
other factors, current economic conditions, loan portfolio composition,
past loan loss experience, independent appraisals, loan collateral and
payment experience. In addition to the allowance for estimated losses
on impaired loans, an overall unallocated allowance is established to
provide for unidentified credit losses which are inherent in the
portfolio. As adjustments become necessary, they are reflected in the
results of operations in the periods in which they become known.

BANK PREMISES AND EQUIPMENT. Bank premises and equipment are
stated at cost less accumulated depreciation and amortization.
Depreciation is computed primarily using the straight-line method over
the estimated useful lives of the related assets. Amortization of
leasehold improvements is calculated using the straight-line method over
the shorter of the useful life of the improvement or term of the lease.
Bank premises and improvements are depreciated over five to 40 years and
equipment over three to seven years.

INTANGIBLES ASSOCIATED WITH THE PURCHASE OF SUBSIDIARIES.
Intangibles associated with the purchase of subsidiaries include excess
of cost over net assets acquired. The excess of cost over net assets
acquired of purchased subsidiaries is amortized using the straight-line
method over the estimated periods to be benefited, which range from
approximately 10 to 15 years. First Banks reviews intangible assets for
impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable over the original estimated life.
As adjustments become necessary, they are reflected in the results of
operations in the periods in which they become known.

MORTGAGE SERVICING RIGHTS. Mortgage servicing rights are
amortized in proportion to the related estimated net servicing income on
a disaggregated, discounted basis over the estimated lives of the
related mortgages considering the level of current and anticipated
repayments, which range from five to 12 years.

OTHER REAL ESTATE. Other real estate, consisting of real estate
acquired through foreclosure or deed in lieu of foreclosure, is stated
at the lower of cost or fair value less applicable selling costs. The
excess of cost over fair value of the property at the date of
acquisition is charged to the allowance for loan losses. Subsequent
reductions in carrying value, to reflect current fair value or costs
incurred in maintaining the properties, are charged to expense as
incurred.

INCOME TAXES. First Banks, Inc. and its eligible subsidiaries
file a consolidated federal income tax return and unitary or
consolidated state income tax returns in California, Illinois and
Missouri. In addition, First Banks is subject to a financial
institutions tax which is based on income.

FINANCIAL INSTRUMENTS. A financial instrument is defined as cash,
evidence of an ownership interest in an entity, or a contract that
conveys or imposes on an entity the contractual right or obligation to
either receive or deliver cash or another financial instrument.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK. First Banks
utilizes financial instruments to reduce the interest rate risk arising
from its financial assets and liabilities. These instruments involve,
in varying degrees, elements of interest rate risk and credit risk in
excess of the amount recognized in the consolidated balance sheets.
"Interest rate risk" is defined as the possibility that interest rates
may move unfavorably from the perspective of First Banks. The risk that
a counterparty to an agreement entered into by First Banks may default
is defined as "credit risk."

F-9

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

First Banks is party to commitments to extend credit and
commercial and standby letters of credit in the normal course of
business to meet the financing needs of its customers. These
commitments involve, in varying degrees, elements of interest rate risk
and credit risk in excess of the amount recognized in the consolidated
balance sheets.

INTEREST RATE SWAP, FLOOR AND CAP AGREEMENTS. Interest rate swap,
floor and cap agreements are accounted for on an accrual basis with the
net interest differential being recognized as an adjustment to interest
income or interest expense of the related asset or liability. Premiums
and fees paid upon the purchase of interest rate swap, floor and cap
agreements are amortized over the life of the agreements using the
interest method. In the event of early termination of these derivative
financial instruments, the net proceeds received or paid are deferred
and amortized over the shorter of the remaining contract life of the
derivative financial instrument or the maturity of the related asset or
liability. If, however, the amount of the underlying hedged asset or
liability is repaid, then the gains or losses on the agreements are
recognized immediately in the consolidated statements of income. The
unamortized premiums, fees paid and deferred losses on early
terminations are included in other assets in the accompanying
consolidated balance sheets.

FORWARD CONTRACTS TO SELL MORTGAGE-BACKED SECURITIES. Gains and
losses on forward contracts to sell mortgage-backed securities, which
qualify as hedges, are deferred. The net unamortized balance of such
deferred gains and losses is applied to the carrying value of the loans
held for sale as part of the lower of cost or market valuation.

EARNINGS PER COMMON SHARE. Basic EPS is computed by dividing the
income available to common stockholders (the numerator) by the weighted
average number of common shares outstanding (the denominator) during the
year. The computation of dilutive EPS is similar except the denominator
is increased to include the number of additional common shares that
would have been outstanding if the dilutive potential shares had been
issued. In addition, in computing the dilutive effect of convertible
securities, the numerator is adjusted to add back: (a) any convertible
preferred dividends and (b) the after-tax amount of interest recognized
in the period associated with any convertible debt.

(2) ACQUISITIONS AND DIVESTITURES

On December 1, 1997, FBA completed its acquisition of Surety Bank,
Vallejo, California, in exchange for 264,622 shares of FBA common stock
and cash of $3.8 million. The cash portion of this transaction, which
was paid to the former shareholders of Surety Bank in January 1998, was
funded by available cash. At the time of the transaction, Surety Bank
had $72.8 million in total assets, $14.9 million in cash and cash
equivalents and investment securities, $54.4 million in total loans, net
of unearned discount, and $67.5 million in total deposits. Surety Bank
was merged into FB California. The excess of the cost over the fair
value of the net assets acquired was $2.8 million and is being amortized
over 15 years.

During 1997, First Banks completed its assumption of the deposits
and purchase of selected assets of three banking locations of Highland
Federal Savings Bank, F.S.B. The transaction resulted in the
acquisition of $82.8 million in deposits. The banking locations operate
as branches of FB&T. The excess of the cost over the fair value of the
net assets acquired was $1.4 million and is being amortized over 10
years.

On February 2, 1998, FBA completed its acquisition of Pacific Bay
Bank, San Pablo, California (Pacific Bay), in exchange for cash of $4.2
million. This transaction was funded from an advance under

F-10

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

First Banks' credit agreement with a group of unaffiliated financial
institutions. At the time of the transaction, Pacific Bay had $38.3
million in total assets, $7.4 million in cash and cash equivalents,
$29.7 million in total loans, net of unearned discount, and $35.2
million in total deposits. The excess of the cost over the fair
value of the net assets acquired was $1.5 million and is being
amortized over 15 years.

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

On September 15, 1998, First Banks completed its acquisition of
Republic Bank in exchange for $19.3 million in cash. The transaction was
funded from available cash of $3.3 million and borrowings of $16.0
million under First Banks' credit agreement with a group of unaffiliated
financial institutions. At the time of the transaction, Republic Bank
had $124.1 million in total assets, $97.9 million in loans, net of
unearned discount, and $117.2 million in deposits. Republic Bank,
previously headquartered in Torrance, California, was merged into and
operates as branch offices of FB&T. The excess of the cost over the fair
value of the net assets acquired was $10.2 million and is being
amortized over 15 years.

On March 4, 1999, FBA completed its acquisition of Redwood Bancorp
(Redwood) and its wholly owned subsidiary, Redwood Bank, in exchange for
$26.0 million in cash. The acquisition was funded from available
proceeds from FBA's sale of 8.50% Guaranteed Preferred Beneficial
Interest in FBA's Subordinated Debentures completed in July 1998.
Redwood Bank is headquartered in San Francisco, California and operates
four banking locations in the San Francisco Bay area. At the time of
the transaction, Redwood Bank had $183.9 million in total assets,
$134.4 million in loans, net of unearned discount, $34.4 million in
investment securities and $162.9 million in deposits. The excess of the
cost over the fair value of the net assets acquired was $9.5 million and
is being amortized over 15 years.

In March and April 1999, First Bank completed its divestiture of
seven branches in the northern and central Illinois market areas,
resulting in a reduction of the deposit base of approximately $54.8
million and a pre-tax gain of $4.4 million recorded in other income.

On August 31, 1999, First Banks completed its acquisition of
Century Bank, Beverly Hills, California, in exchange for $31.5 million
in cash. The transaction was funded from borrowings under First Banks'
credit agreement with a group of unaffiliated financial institutions.
At the time of the transaction, Century Bank had $156.0 million in total
assets, $94.8 million in loans, net of unearned discount, $26.1 million
in investment securities and $132.0 million in total deposits. Century
Bank, previously headquartered in Beverly Hills, California, was merged
into and operates as branch offices of FB&T. The excess of the cost
over the fair value of the net assets acquired was $4.5 million and is
being amortized over 15 years.

On September 17, 1999, FB&T completed its assumption of the
deposits and certain liabilities and the purchase of selected assets of
the Malibu, California branch office of Brentwood Bank of California.
The transaction resulted in the acquisition of approximately $17.3
million of deposits and one branch office that operates as a branch of
FB&T. The excess of the cost over the fair value of the net assets
acquired was $325,000 and is being amortized over 15 years.

The aforementioned acquisition transactions were accounted for
using the purchase method of accounting and, accordingly, the
consolidated financial statements include the financial position and

F-11

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

results of operations for the period subsequent to the respective
acquisition dates, and the assets acquired and liabilities assumed were
recorded at fair value at the acquisition dates. Due to the immaterial
effect on previously reported financial information, pro forma
disclosures have not been prepared for the aforementioned transactions.

On February 29, 2000, FBA completed its acquisition of Lippo Bank,
San Francisco, California, in exchange for $17.2 million in cash. Lippo
Bank operates three banking locations in San Francisco, San Jose and Los
Angeles, California. The acquisition was funded from available cash.
At the time of the transaction, Lippo Bank had $85.3 million in total
assets, $40.9 million in loans, net of unearned discount, $37.4 million
in investment securities and $76.4 million in total deposits. This
transaction was accounted for using the purchase method of accounting.
The excess of the cost over the fair value of the net assets acquired
was approximately $4.0 million and is being amortized over 15 years.
Lippo Bank will be merged into FB California.

On February 29, 2000, First Banks completed its acquisition of
certain assets and liabilities of First Capital Group, Inc.,
Albuquerque, New Mexico (FCG), in exchange for $65.1 million in cash.
FCG is a leasing company that specializes in commercial leasing and
operates a multi-state leasing business. The acquisition was funded
from available cash. At the time of the transaction, FCG had $64.6
million in total assets, consisting almost solely of commercial leases,
net of unearned income, of $64.5 million. The premium paid on the lease
portfolio acquired was $1.5 million and is being amortized as a yield
adjustment over approximately 4 years. FCG is operating as a direct
subsidiary of First Banks, Inc.

F-12

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(3) INVESTMENTS IN DEBT AND EQUITY SECURITIES

SECURITIES AVAILABLE FOR SALE. The amortized cost, contractual
maturity, gross unrealized gains and losses and fair value of investment
securities available for sale at December 31, 1999 and 1998 were as
follows:

<TABLE>
<CAPTION>
MATURITY
---------------------------------------- GROSS
TOTAL UNREALIZED WEIGHTED
1 YEAR OR 1-5 5-10 AFTER 10 AMORTIZED ------------------ FAIR AVERAGE
LESS YEARS YEARS YEARS COST GAINS LOSSES VALUE YIELD
--------- ------- ------ -------- --------- ------- -------- ------- --------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1999:
Carrying value:
U.S. Treasury . . . . . . . . . . $21,036 29,240 -- -- 50,276 58 (45) 50,289 6.10%
U.S. Government agencies
and corporations:
Mortgage-backed . . . . . . . . 12,489 2,274 20,946 98,935 134,644 20 (1,540) 133,124 6.64
Other . . . . . . . . . . . . . 144,185 26,073 13,170 24,256 207,684 4 (3,607) 204,081 6.02
Foreign debt securities . . . . . 2,995 -- -- -- 2,995 286 -- 3,281 9.42
Equity investments in other
financial institutions . . . . . 9,605 -- -- -- 9,605 8,492 (434) 17,663 8.53
Federal Home Loan Bank and
Federal Reserve Bank stock
(no stated maturity) . . . . . . 21,655 -- -- -- 21,655 -- -- 21,655 6.07
-------- ------- ------ ------- ------- ------ ------- -------
Total. . . . . . . . . . . . $211,965 57,587 34,116 123,191 426,859 8,860 (5,626) 430,093 6.26
======== ======= ====== ======= ======= ====== ======= ======= ====

Market value:
Debt securities . . . . . . . . . $177,426 57,448 32,998 119,621
Equity securities . . . . . . . . 42,600 -- -- --
-------- ------- ------ -------
Total. . . . . . . . . . . . $220,026 57,448 32,998 119,621
======== ======= ====== =======

Weighted average yield . . . . . . 6.00% 6.44% 6.26% 6.79%
======== ======= ====== =======

December 31, 1998:
Carrying value:
U.S. Treasury . . . . . . . . . . $54,288 84,990 -- -- 139,278 2,312 -- 141,590 5.98%
U.S. Government agencies
and corporations:
Mortgage-backed . . . . . . . . 11,642 27,334 32,352 113,912 185,240 1,082 (171) 186,151 6.35
Other . . . . . . . . . . . . . 16,893 78,047 35,524 6,980 137,444 1,060 (15) 138,489 6.07
Equity investments in other
financial institutions . . . . . 8,805 -- -- -- 8,805 14,061 -- 22,866 4.75
Federal Home Loan Bank and
Federal Reserve Bank stock
(no stated maturity) . . . . . . 20,599 -- -- -- 20,599 -- -- 20,599 6.36
-------- ------- ------ ------- ------- ------ ------- -------
Total. . . . . . . . . . . . $112,227 190,371 67,876 120,892 491,366 18,515 (186) 509,695 6.14
======== ======= ====== ======= ======= ====== ======= ======= ====

Market value:
Debt securities . . . . . . . . . $ 83,324 193,231 68,135 121,540
Equity securities . . . . . . . . 43,465 -- -- --
-------- ------- ------ -------
Total. . . . . . . . . . . . $126,789 193,231 68,135 121,540
======== ======= ====== =======

Weighted average yield . . . . . . . 5.92% 5.96% 6.36% 6.51%
======== ======= ====== =======
</TABLE>

F-13

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SECURITIES HELD TO MATURITY. The amortized cost, contractual
maturity, gross unrealized gains and losses and fair value of investment
securities held to maturity at December 31, 1999 and 1998 were as
follows:

<TABLE>
<CAPTION>
MATURITY
--------------------------------------- GROSS
TOTAL UNREALIZED WEIGHTED
1 YEAR OR 1-5 5-10 AFTER 10 AMORTIZED ---------------- FAIR AVERAGE
LESS YEARS YEARS YEARS COST GAINS LOSSES VALUE YIELD
--------- ------ ----- -------- --------- ----- ------ ------ --------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1999:
Carrying value:
U.S. Government agencies
and corporations:
Mortgage-backed . . . . . . . . . $ -- -- -- 2,355 2,355 -- (155) 2,200 6.28%
State and political subdivisions. . 506 11,196 5,322 1,965 18,989 275 (198) 19,066 5.05
Other . . . . . . . . . . . . . . . -- 210 -- -- 210 -- -- 210 6.92
----- ------ ----- ----- ------ --- ---- ------
Total. . . . . . . . . . . . . $ 506 11,406 5,322 4,320 21,554 275 (353) 21,476 5.22
===== ====== ===== ===== ====== === ==== ====== ====

Market value:
Debt securities . . . . . . . . . . $ 512 11,505 5,125 4,334
===== ====== ===== =====

Weighted average yield . . . . . . . 5.09% 4.97% 4.55% 6.62%
===== ====== ===== =====

December 31, 1998:
Carrying value:
U.S. Government agencies
and corporations:
Mortgage-backed . . . . . . . . . $ -- -- -- 2,507 2,507 -- (13) 2,494 6.41%
State and political subdivisions. . 776 7,323 8,700 2,085 18,884 897 -- 19,781 5.38
Other . . . . . . . . . . . . . . . 75 210 -- -- 285 8 -- 293 6.68
----- ------ ----- ----- ------ --- ---- ------
Total. . . . . . . . . . . . . $ 851 7,533 8,700 4,592 21,676 905 (13) 22,568 5.51
===== ====== ===== ===== ====== === ==== ====== ====

Market value:
Debt securities . . . . . . . . . . $ 862 7,777 8,986 4,943
===== ====== ===== =====

Weighted average yield . . . . . . . 5.21% 5.43% 4.96% 6.69%
===== ====== ===== =====
</TABLE>

Proceeds from sales of trading investment securities were $2.9
million, $311 million and $215 million for the years ended December 31,
1999, 1998 and 1997, respectively. There were no gross gains realized
on these sales for the year ended December 31, 1999. Gross gains of
$879,000 and $233,000 were realized on these sales for the years ended
December 31, 1998 and 1997, respectively. Gross losses of $303,000,
$234,000 and $122,000 were realized on these sales for the years ended
December 31, 1999, 1998 and 1997, respectively.

Proceeds from sales of available-for-sale investment securities
were $63.9 million, $136.0 million and $20.9 million for the years ended
December 31, 1999, 1998 and 1997, respectively. Gross gains of
$791,000, $1.5 million and $2.3 million were realized on these sales.
There were no losses realized on these sales in 1999, 1998 and 1997.

Proceeds from calls of held-to-maturity investment securities were
$20,000 for the year ended December 31, 1999. Gross losses of $1,200
were realized on these called securities for the year ended December 31,
1999.

F-14

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Certain of the Subsidiary Banks maintain investments in the
Federal Home Loan Bank (FHLB) and/or the Federal Reserve Bank (FRB).
These investments are recorded at cost, which represents redemption
value. The investment in FHLB stock is maintained at a minimum amount
equal to the greater of 1% of the aggregate outstanding balance of the
applicable Subsidiary Bank's loans secured by residential real estate,
or 5% of advances from the FHLB to each Subsidiary Bank. First Bank,
FB&T, FB California and FB Texas are members of the FHLB system. The
investment in FRB stock is maintained at a minimum of 6% of the
applicable Subsidiary Bank's capital stock and capital surplus. First
Bank and FB Texas are members of the FRB system.

Investment securities with a carrying value of approximately
$222.3 million and $263.0 million at December 31, 1999 and 1998,
respectively, were pledged in connection with deposits of public and
trust funds, securities sold under agreements to repurchase and for
other purposes as required by law.

(4) LOANS AND ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses for the years ended
December 31 were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C>
Balance, January 1 . . . . . . . . . . . . . . . . . . $ 60,970 50,509 46,781
Acquired allowances for loan losses. . . . . . . . . . 3,008 3,200 30
-------- ------- -------
63,978 53,709 46,811
-------- ------- -------
Loans charged-off. . . . . . . . . . . . . . . . . . . (17,721) (10,183) (16,832)
Recoveries of loans previously charged-off . . . . . . 9,281 8,444 9,230
-------- ------- -------
Net loans charged-off. . . . . . . . . . . . . . . . . (8,440) (1,739) (7,602)
-------- ------- -------
Provision charged to operations. . . . . . . . . . . . 13,073 9,000 11,300
-------- ------- -------
Balance, December 31 . . . . . . . . . . . . . . . . . $ 68,611 60,970 50,509
======== ======= =======
</TABLE>

At December 31, 1999 and 1998, First Banks had $36.7 million and
$38.3 million, respectively, of loans on nonaccrual status. Interest on
nonaccrual loans, which would have been recorded under the original
terms of the loans, was $5.8 million, $4.5 million and $4.7 million for
the years ended December 31, 1999, 1998 and 1997, respectively. Of
these amounts, $2.7 million, $1.9 million and $2.0 million was actually
recorded as interest income on such loans in 1999, 1998 and 1997,
respectively.

At December 31, 1999 and 1998, First Banks had $39.7 million and
$43.5 million of impaired loans, including $36.7 million and $38.3
million of loans on nonaccrual status, respectively. At December 31,
1999 and 1998, impaired loans also include $3.0 million and $5.2 million
of restructured loans. There were no specific reserves at December 31,
1999 and 1998 relating to impaired loans. The allowance for loan losses
includes $8.2 million and $8.3 million related to impaired loans at
December 31, 1999 and 1998, respectively. The average recorded
investment in impaired loans was $53.7 million, $35.7 million and $28.3
million for the years ended December 31, 1999, 1998 and 1997,
respectively. The amount of interest income recognized using a cash
basis method of accounting during the time these loans were impaired was
$2.8 million, $2.3 million and $2.4 million in 1999, 1998 and 1997,
respectively.

First Banks' primary market areas are the states of Missouri,
Illinois, Texas and California. At December 31, 1999 and 1998,
approximately 90% and 89% of the total loan portfolio and 88% and 91% of
the commercial and financial loan portfolio, respectively, were to
borrowers within these regions.

F-15

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Real estate lending constituted the only other significant
concentration of credit risk. Real estate loans comprised approximately
67% of the loan portfolio at December 31, 1999 and 1998, of which 33%
and 38%, respectively, were consumer related in the form of residential
real estate mortgages and home equity lines of credit.

First Banks is, in general, a secured lender. At December 31,
1999 and 1998, 97% and 96% of the loan portfolio was secured.
Collateral is required in accordance with the normal credit evaluation
process based upon the creditworthiness of the customer and the credit
risk associated with the particular transaction.

(5) MORTGAGE BANKING ACTIVITIES

At December 31, 1999 and 1998, First Banks serviced loans for
others amounting to $957 million and $923 million, respectively.
Borrowers' escrow balances held by First Banks on such loans were $1.0
million and $1.2 million at December 31, 1999 and 1998, respectively.

Changes in mortgage servicing rights, net of amortization, for the
years ended December 31 were as follows:

<TABLE>
<CAPTION>
1999 1998
-------- ------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C>
Balance, January 1 . . . . . . . . . . . . . . . . . $ 9,825 9,046
Originated mortgage servicing rights . . . . . . . . 1,670 2,195
Purchases of mortgage servicing rights . . . . . . . -- 893
Amortization . . . . . . . . . . . . . . . . . . . . (2,830) (2,309)
-------- ------
Balance, December 31 . . . . . . . . . . . . . . . . $ 8,665 9,825
======== ======
</TABLE>

(6) BANK PREMISES AND EQUIPMENT

Bank premises and equipment were comprised of the following at
December 31:

<TABLE>
<CAPTION>
1999 1998
-------- -------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . $ 17,582 15,703
Buildings and improvements . . . . . . . . . . . . . 52,491 49,082
Furniture, fixtures and equipment. . . . . . . . . . 55,344 42,161
Leasehold improvements . . . . . . . . . . . . . . . 11,635 8,657
Construction in progress . . . . . . . . . . . . . . 2,896 3,466
-------- -------
Total . . . . . . . . . . . . . . . . . . . . . 139,948 119,069
Less accumulated depreciation and amortization . . . 64,301 55,221
-------- -------
Bank premises and equipment, net. . . . . . . . $ 75,647 63,848
======== =======
</TABLE>

Depreciation expense for the years ended December 31, 1999, 1998
and 1997 totaled $7.6 million, $5.3 million and $5.7 million,
respectively.

F-16

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

First Banks leases land, office properties and some items of
equipment under operating leases. Certain of the leases contain renewal
options and escalation clauses. Total rent expense was $7.4 million,
$5.3 million and $5.0 million for the years ended December 31, 1999,
1998 and 1997, respectively. Future minimum lease payments under
noncancellable operating leases extend through 2084 as follows:

<TABLE>
<CAPTION>
(DOLLARS EXPRESSED IN THOUSANDS)
Year ending December 31:
<S> <C>
2000 . . . . . . . . . . . . . . . . . . $ 6,242
2001 . . . . . . . . . . . . . . . . . . 4,892
2002 . . . . . . . . . . . . . . . . . . 3,766
2003 . . . . . . . . . . . . . . . . . . 3,460
2004 . . . . . . . . . . . . . . . . . . 2,442
Thereafter . . . . . . . . . . . . . . . 18,939
-------
Total future minimum lease payments $39,741
=======

First Banks leases to unrelated parties a portion of its owned
banking facilities. Total rental income was $2.6 million, $2.5 million
and $2.3 million for the years ended December 31, 1999, 1998 and 1997,
respectively.

(7) SHORT-TERM BORROWINGS

Short-term borrowings were comprised of the following at December 31:

</TABLE>
<TABLE>
<CAPTION>

1999 1998
------- -------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C>
Securities sold under agreements to repurchase . . . . $73,010 70,787
FHLB borrowings. . . . . . . . . . . . . . . . . . . . 544 50,544
------- -------
Short-term borrowings . . . . . . . . . . . . . . $73,554 121,331
======= =======
</TABLE>

The average balance of short-term borrowings was $87.4 million and
$61.2 million, respectively, and the maximum month-end balance of short-
term borrowings was $176.4 million and $113.0 million, respectively, for
the years ended December 31, 1999 and 1998. The average rates paid on
short-term borrowings during the years ended December 31, 1999, 1998 and
1997 were 4.83%, 4.84% and 3.28%, respectively. With the exception of
the securities underlying the FHLB borrowings, which are under the
control of the FHLB, the securities underlying the short-term borrowings
are under First Banks' control.

(8) NOTE PAYABLE

First Banks has a $100.0 million revolving line of credit with a
group of unaffiliated banks (Credit Agreement). The Credit Agreement,
dated August 25, 1999, replaced a similar revolving credit agreement
dated August 26, 1998. Interest under the Credit Agreement is payable
on a monthly basis at the lead bank's corporate base rate or, at the
option of First Banks, is payable at the Eurodollar Rate plus a margin
based upon the outstanding loans and First Banks' profitability. The
interest rate for borrowings under the Credit Agreement was 7.60% at
December 31, 1999, or the applicable Eurodollar Rate plus a

F-17

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

margin of 1.00%. Amounts may be borrowed under the Credit Agreement
until August 24, 2000, at which time the principal and accrued interest
is due and payable.

Loans under the Credit Agreement are secured by all of the stock
of the Subsidiary Banks, which is owned by First Banks. Under the
Credit Agreement, there were outstanding borrowings of $64.0 million at
December 31, 1999. There were outstanding borrowings of $50.0 million
under the previous credit agreement at December 31, 1998.

The Credit Agreement requires maintenance of certain minimum
capital ratios for each of the Subsidiary Banks. In addition, it
prohibits the payment of dividends on First Banks' common stock. At
December 31, 1999 and 1998, First Banks and the Subsidiary Banks were in
compliance with all restrictions and requirements of the respective
credit agreements.

The average balance and maximum month-end balance of the note
payable for the years ended December 31 were as follows:

<TABLE>
<CAPTION>
1999 1998
------- ------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C>
Average balance . . . . . . . . . . . . . . . . . . . $56,376 50,718
Maximum month-end balance . . . . . . . . . . . . . . 75,000 55,096
======= ======
</TABLE>

The average rates paid on the note payable during the years ended
December 31, 1999, 1998 and 1997 were 6.44%, 6.85% and 7.69%,
respectively.

(9) GUARANTEED PREFERRED BENEFICIAL INTERESTS IN FIRST BANKS' AND
FBA'S SUBORDINATED DEBENTURES

On February 4, 1997, First Preferred Capital Trust (FPCT), a newly
formed Delaware business trust subsidiary of First Banks, issued 3.45
million shares of 9.25% cumulative trust preferred securities (FPCT
Preferred Securities) at $25 per share in an underwritten public
offering, and issued 106,702 shares of common securities to First Banks
at $25 per share. First Banks owns all of FPCT's common securities.
The gross proceeds of the offering were used by FPCT to purchase $88.9
million of 9.25% Subordinated Debentures (First Banks Subordinated
Debentures) from First Banks, maturing on March 31, 2027. The maturity
date may be shortened to a date not earlier than March 31, 2002 or
extended to a date not later than March 31, 2046 if certain conditions
are met. The First Banks Subordinated Debentures are the sole asset of
FPCT. In connection with the issuance of the FPCT Preferred Securities,
First Banks made certain guarantees and commitments that, in the
aggregate, constitute a full and unconditional guarantee by First Banks
of the obligations of FPCT under the FPCT Preferred Securities. First
Banks' proceeds from the issuance of the First Banks Subordinated
Debentures to FPCT, net of underwriting fees and offering expenses, were
$83.1 million. Distributions payable on the FPCT Preferred Securities
were $8.0 million, $8.0 million and $7.3 million for the years ended
December 31, 1999, 1998 and 1997, respectively, and are included in
noninterest expense in the consolidated financial statements.

On July 21, 1998, First America Capital Trust (FACT), a newly
formed Delaware business trust subsidiary of FBA, issued 1.84 million
shares of 8.50% cumulative trust preferred securities (FACT Preferred
Securities) at $25 per share in an underwritten public offering, and
issued 56,908 shares of common securities to FBA at $25 per share. FBA
owns all of FACT's common securities. The gross proceeds of the
offering were used by FACT to purchase $47.4 million of 8.50%
Subordinated

F-18

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Debentures (FBA Subordinated Debentures) from FBA, maturing on June 30,
2028. The maturity date may be shortened to a date not earlier than
June 30, 2003 or extended to a date not later than June 30, 2037 if
certain conditions are met. The FBA Subordinated Debentures are the
sole asset of FACT. In connection with the issuance of the FACT
Preferred Securities, FBA made certain guarantees and commitments that,
in the aggregate, constitute a full and unconditional guarantee by FBA
of the obligations of FACT under the FACT Preferred Securities. FBA's
proceeds from the issuance of the FBA Subordinated Debentures to FACT,
net of underwriting fees and offering expenses, were $44.0 million.
Distributions payable on the FACT Preferred Securities were $4.0 million
and $1.8 million for the years ended December 31, 1999 and 1998,
respectively, and are included in noninterest expense in the
consolidated financial statements.

(10) INCOME TAXES

Income tax expense attributable to income from continuing
operations for the years ended December 31 consists of:
<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,
-------------------------------
1999 1998 1997
------- ------ ------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C>
Current income tax expense:
Federal . . . . . . . . . . . . . . . . $19,731 16,801 15,062
State . . . . . . . . . . . . . . . . . 2,247 1,292 169
------- ------ ------
21,978 18,093 15,231
------- ------ ------

Deferred income tax expense:
Federal . . . . . . . . . . . . . . . . 5,056 1,895 2,608
State . . . . . . . . . . . . . . . . . 14 273 24
------- ------ ------
5,070 2,168 2,632
------- ------ ------
Reduction in valuation allowance . . . . . (735) (568) (1,780)
------- ------ ------
Total. . . . . . . . . . . . . . . . . . . $26,313 19,693 16,083
======= ====== ======
</TABLE>

F-19

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The effective rates of federal income taxes for the years ended
December 31 differ from statutory rates of taxation as follows:
<TABLE>
<CAPTION>

YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997
-------------------- -------------------- --------------------
PERCENT PERCENT PERCENT
OF OF OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
------ ------- ------ ------- ------ -------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income before provision for income taxes and
minority interest in income of subsidiary . . . . . . $72,151 $54,474 $50,380
======= ======= =======

Provision for income taxes calculated
at federal statutory income tax rates . . . . . . . . $25,253 35.0% $19,066 35.0% $17,633 35.0%
Effects of differences in tax reporting:
Tax-exempt interest income, net of
tax preference adjustment. . . . . . . . . . . . . (439) (0.6) (461) (0.9) (507) (1.0)
State income taxes. . . . . . . . . . . . . . . . . . 1,470 2.0 1,018 1.9 126 0.3
Amortization of intangibles associated
with the purchase of subsidiaries. . . . . . . . . 1,261 1.8 864 1.6 754 1.5

Change in deferred valuation allowance. . . . . . . . (735) (1.0) (568) (1.0) (1,780) (3.5)

Other, net. . . . . . . . . . . . . . . . . . . . . . (497) (0.7) (226) (0.4) (143) (0.4)
------- ---- ------- ---- ------- ----
Provision for income taxes. . . . . . . . . . . $26,313 36.5% $19,693 36.2% $16,083 31.9%
======= ==== ======= ==== ======= ====

</TABLE>

F-20

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities, including amounts attributable to entities acquired
in purchase transactions, are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1999 1998
---- ----
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C>
Deferred tax assets:
Allowance for loan losses . . . . . . . . . . . . . . . . . . . $ 27,071 22,596
Net operating loss carryforwards. . . . . . . . . . . . . . . . 30,792 31,311
Alternative minimum tax credits . . . . . . . . . . . . . . . . 2,841 2,612
Disallowed losses on investment securities. . . . . . . . . . . 2,443 2,266
Other real estate . . . . . . . . . . . . . . . . . . . . . . . 15 1,228
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,556 4,014
-------- -------
Gross deferred tax assets. . . . . . . . . . . . . . . . . . 66,718 64,027
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . (14,746) (17,179)
-------- -------
Deferred tax assets, net of valuation allowance. . . . . . . 51,972 46,848
-------- -------
Deferred tax liabilities:
Depreciation on bank premises and equipment . . . . . . . . . . 3,332 2,707
Net fair value adjustment for securities available for sale . . 1,132 6,414
FHLB stock dividends. . . . . . . . . . . . . . . . . . . . . . 1,094 1,114
State taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 591 518
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433 167
-------- -------
Deferred tax liabilities . . . . . . . . . . . . . . . . . . 6,582 10,920
-------- -------
Net deferred tax assets . . . . . . . . . . . . . . . . . . $ 45,390 35,928
======== =======
</TABLE>

The realization of First Banks' net deferred tax assets is based
on the availability of carrybacks to prior taxable periods, the
expectation of future taxable income and the utilization of tax
planning strategies. Based on these factors, management believes it is
more likely than not that First Banks will realize the recognized net
deferred tax asset of $45.4 million. The net change in the valuation
allowance, related to deferred tax assets, was a decrease of $2.4
million for the year ended December 31, 1999. The decrease consisted of
a reduction of $600,000 related to the recognition of deferred tax
assets for certain loans and other real estate, and utilization of NOL
carryforwards.

F-21

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Changes to the deferred tax asset valuation allowance for the
years ended December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------ ------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C>
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . $17,179 17,747 19,527
Current year deferred provision. . . . . . . . . . . . . . . . . . (735) (568) (1,780)
Reduction attributable to utilization of deferred tax assets:
Adjustment to capital surplus . . . . . . . . . . . . . . . . . (811) -- --
Adjustment to intangibles associated
with the purchase of subsidiaries. . . . . . . . . . . . . . (887) -- --
------- ------ ------
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . $14,746 17,179 17,747
======= ====== ======
</TABLE>

The valuation allowance for deferred tax assets at December 31,
1998 included $887,000 that was recognized in 1999 and credited to
intangibles associated with the purchase of subsidiaries. The valuation
allowance for deferred tax assets at December 31, 1999 and 1998 includes
$1.3 million and $2.0 million, respectively, which when recognized, will
be credited to intangibles associated with the purchase of subsidiaries.
In addition, the valuation allowance for deferred tax assets at December
31, 1999 and 1998 includes $5.0 million and $6.0 million, respectively,
which when recognized, will be credited to capital surplus under the
terms of the quasi-reorganizations implemented for FBA and FCB as of
December 31, 1994 and 1996, respectively.

At December 31, 1999 and 1998, the accumulation of prior years'
earnings representing tax bad debt deductions of First Bank and FB&T
were approximately $30.8 million. If these tax bad debt reserves were
charged for losses other than bad debt losses, First Bank and FB&T would
be required to recognize taxable income in the amount of the charge. It
is not contemplated that such tax-restricted retained earnings will be
used in a manner that would create federal income tax liabilities.

At December 31, 1999 and 1998, for federal income tax purposes,
First Banks had net operating loss (NOL) carryforwards of approximately
$67.5 million and $59.0 million, respectively, exclusive of the NOL
carryforwards available to FBA as further described below.

The NOL carryforwards for First Banks expire as follows:
<TABLE>
<CAPTION>

(DOLLARS EXPRESSED
IN THOUSANDS)
<S> <C>
Year ending December 31:
2003 . . . . . . . . . . . . . $ 6,781
2004 . . . . . . . . . . . . . 3,015
2005 . . . . . . . . . . . . . 14,802
2006 . . . . . . . . . . . . . 458
2007 . . . . . . . . . . . . . 12,287
2008-2018. . . . . . . . . . . 30,123
-------
Total . . . . . . . . . . . $67,466
=======
</TABLE>

F-22

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At December 31, 1999 and 1998, for federal income tax purposes,
FBA had NOL carryforwards of approximately $20.5 million and $30.5
million, respectively. With the completion of the acquisitions of FBA
and FCB and their subsequent merger, the NOL carryforwards generated
prior to the transactions are subject to an annual limitation in
subsequent tax years. The following schedule reflects the NOL
carryforwards that will be available to offset future taxable income of
FBA and do not affect the taxable income of First Banks. The NOL
carryforwards at December 31, 1999 expire as follows:
<TABLE>
<CAPTION>

(DOLLARS EXPRESSED
IN THOUSANDS)
<S> <C>
Year ending December 31:
2000 . . . . . . . . . . . . . $ 103
2001 . . . . . . . . . . . . . 1,667
2002 . . . . . . . . . . . . . 5,884
2003 . . . . . . . . . . . . . 1,362
2004 . . . . . . . . . . . . . 856
2005-2018. . . . . . . . . . . 10,640
-------
Total . . . . . . . . . . . $20,512
=======
</TABLE>

(11) EARNINGS PER SHARE

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

INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C>
Year ended December 31, 1999:
Basic EPS - income available to common stockholders . . . $43,392 23,661 $1,833.91
=========
Effect of dilutive securities:
Class A convertible preferred stock. . . . . . . . . . 769 1,212
------- ------
Diluted EPS - income available to common stockholders . . $44,161 24,873 $1,775.47
======= ====== =========

Year ended December 31, 1998
Basic EPS - income available to common stockholders . . . $32,724 23,661 $1,383.04
=========
Effect of dilutive securities:
Class A convertible preferred stock. . . . . . . . . . 769 1,389
------- ------
Diluted EPS - income available to common stockholders . . $33,493 25,050 $1,337.09
======= ====== =========

Year ended December 31, 1997:
Basic EPS - income available to common stockholders . . . $27,960 23,661 $1,181.69
=========
Effect of dilutive securities:
Class A convertible preferred stock. . . . . . . . . . 769 1,645
Subsidiary bank stock options. . . . . . . . . . . . . (25) --
------- ------
Diluted EPS - income available to common stockholders . . $28,704 25,306 $1,134.28
======= ====== =========
</TABLE>

F-23

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(12) INTEREST RATE RISK MANAGEMENT / DERIVATIVE FINANCIAL INSTRUMENTS
WITH OFF-BALANCE- SHEET RISK

First Banks utilizes off-balance-sheet derivative financial
instruments to assist in the management of interest rate sensitivity and
to modify the repricing, maturity and option characteristics of on-
balance-sheet assets and liabilities. The use of such derivative
financial instruments is strictly limited to reducing the interest rate
risk exposure of First Banks.

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

DECEMBER 31,
---------------------------------------------
1999 1998
--------------------- ---------------------
NOTIONAL CREDIT NOTIONAL CREDIT
AMOUNT EXPOSURE AMOUNT EXPOSURE
-------- -------- -------- --------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest rate swap agreements - pay
adjustable rate, receive adjustable rate . . . $500,000 -- -- --
Interest rate swap agreements - pay
adjustable rate, receive fixed rate. . . . . . 455,000 3,349 280,000 3,526
Interest rate floor agreements. . . . . . . . . . 35,000 13 70,000 29
Interest rate cap agreements. . . . . . . . . . . 10,000 26 10,000 132
Forward commitments to sell
mortgage-backed securities . . . . . . . . . . 33,000 -- 95,000 237
======== ======== ======== =======
</TABLE>

The notional amounts of derivative financial instruments do not
represent amounts exchanged by the parties and, therefore, are not a
measure of First Banks' credit exposure through its use of derivative
financial instruments. The amounts and the other terms of the
derivatives are determined by reference to the notional amounts and the
other terms of the derivatives. The credit exposure represents the
accounting loss First Banks would incur in the event the counterparties
failed completely to perform according to the terms of the derivative
financial instruments and the collateral was of no value.

Previously, First Banks utilized interest rate swap agreements to
extend the repricing characteristics of certain interest-bearing
liabilities to more closely correspond with its assets, with the
objective of stabilizing cash flow, and accordingly, net interest
income, over time. These swap agreements were terminated in July 1995,
November 1996 and July 1997 due to a change in the composition of First
Banks' balance sheet. The change in the composition of the balance
sheet was primarily driven by the significant decline in interest rates
experienced during 1995, which caused an increase in the principal
prepayments of residential mortgage loans. The net interest expense
associated with these agreements, consisting primarily of amortization
of deferred losses, was $5.7 million, $3.7 million and $6.4 million for
the years ended December 31, 1999, 1998 and 1997, respectively. The
deferred losses on terminated swap agreements were amortized over the
remaining lives of the agreements, unless the underlying liabilities
were repaid, in which case the deferred losses were immediately charged
to operations. There were no remaining unamortized deferred losses on
the terminated swap agreements at December 31, 1999. The unamortized
balance of these losses was $5.7 million and $9.4 million at December
31, 1998 and 1997, respectively, and was included in other assets.

During 1998, First Banks entered into $280.0 million notional
amount of interest rate swap agreements. The swap agreements
effectively lengthen the repricing characteristics of certain interest-

F-24

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

earning assets to correspond more closely with its funding source with
the objective of stabilizing cash flow, and accordingly, net interest
income, over time. The swap agreements provide for First Banks to
receive a fixed rate of interest and pay an adjustable rate equivalent
to the 90-day London Interbank Offering Rate (LIBOR). The terms of the
swap agreements provide for First Banks to pay quarterly and receive
payment semiannually. The amount receivable by First Banks under the
swap agreements was $4.1 million and $4.2 million at December 31, 1999
and 1998, respectively, and the amount payable by First Banks under the
swap agreements was $770,000 and $640,000 at December 31, 1999 and 1998,
respectively.

During May 1999, First Banks entered into $500.0 million notional
amount of interest rate swap agreements with the objective of
stabilizing the net interest margin during the six-month period
surrounding the Year 2000 century date change. The swap agreements
provided for First Banks to receive an adjustable rate of interest
equivalent to the daily weighted average 30-day LIBOR and pay an
adjustable rate of interest equivalent to the daily weighted average
prime lending rate minus 2.665%. The terms of the swap agreements,
which had an effective date of October 1, 1999 and a maturity date of
March 31, 2000, provided for First Banks to pay and receive interest on
a monthly basis. In January 2000, First Banks determined these swap
agreements were no longer necessary based upon the results of the Year
2000 century date change and, as such, First Banks terminated these
agreements resulting in a cost of $150,000.

During September 1999, First Banks entered into $175.0 million
notional amount of interest rate swap agreements to effectively lengthen
the repricing characteristics of certain interest-earning assets to
correspond more closely with its funding source with the objective of
stabilizing cash flow, and accordingly, net interest income, over time.
The swap agreements provide for First Banks to receive a fixed rate of
interest and pay an adjustable rate equivalent to the weighted average
prime lending rate minus 2.70%. The terms of the swap agreements provide
for First Banks to pay and receive interest on a quarterly basis. The
amount receivable by First Banks under the swap agreements was $119,000
at December 31, 1999 and the amount payable by First Banks under the
swap agreements was $141,000 at December 31, 1999.

F-25

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The maturity dates, notional amounts, interest rates paid and
received, and fair values of interest rate swap agreements outstanding
as of December 31, 1999 and 1998 were as follows:

NOTIONAL INTEREST RATE INTEREST RATE FAIR VALUE
MATURITY DATE AMOUNT PAID RECEIVED GAIN (LOSS)
------------- -------- ------------- ------------- -----------
(DOLLARS EXPRESSED IN THOUSANDS)
<S> <C> <C> <C> <C>
December 31, 1999:
March 31, 2000 . . . . . . . . . . . . $350,000 5.84% 6.45% 87
March 31, 2000 . . . . . . . . . . . . 75,000 5.84 6.45 19
March 31, 2000 . . . . . . . . . . . . 50,000 5.84 6.45 12
March 31, 2000 . . . . . . . . . . . . 25,000 5.84 6.45 6
September 27, 2001 . . . . . . . . . . 75,000 5.80 6.14 (685)
September 27, 2001 . . . . . . . . . . 45,000 5.80 6.14 (411)
September 27, 2001 . . . . . . . . . . 40,000 5.80 6.14 (365)
September 27, 2001 . . . . . . . . . . 15,000 5.80 6.14 (137)
June 11, 2002. . . . . . . . . . . . . 15,000 6.12 6.00 (291)
September 16, 2002 . . . . . . . . . . 175,000 6.12 5.36 (6,574)
September 16, 2002 . . . . . . . . . . 20,000 6.12 5.36 (751)
September 18, 2002 . . . . . . . . . . 40,000 6.14 5.33 (1,543)
September 18, 2002 . . . . . . . . . . 30,000 6.14 5.33 (1,157)
-------- --------
$955,000 5.91 6.08 $(11,790)
======== ===== ===== ========
December 31, 1998:
June 11, 2002. . . . . . . . . . . . . $ 15,000 5.24% 6.00% $ 363
September 16, 2002 . . . . . . . . . . 175,000 5.22 5.36 761
September 16, 2002 . . . . . . . . . . 20,000 5.22 5.36 87
September 18, 2002 . . . . . . . . . . 40,000 5.23 5.33 123
September 18, 2002 . . . . . . . . . . 30,000 5.23 5.33 92
-------- --------
$280,000 5.23 5.48 $ 1,426
======== ===== ===== ========
</TABLE>

First Banks also has interest rate cap and floor agreements to
limit the interest expense associated with certain of its interest-
bearing liabilities and the net interest expense of certain interest
rate swap agreements, respectively. At December 31, 1999 and 1998, the
unamortized costs of these agreements were $32,000 and $159,000,
respectively, and were included in other assets.

Derivative financial instruments issued by First Banks consist of
commitments to originate fixed-rate loans. Commitments to originate
fixed-rate loans consist primarily of residential real estate loans.
These loan commitments, net of estimated underwriting fallout, and loans
held for sale were $31.5 million and $103.1 million at December 31, 1999
and 1998, respectively. These net loan commitments and loans held for
sale are hedged with forward contracts to sell mortgage-backed
securities of $33.0 million and $95.0 million at December 31, 1999 and
1998, respectively. Gains and losses from forward contracts are
deferred and included in the cost basis of loans held for sale. At
December 31, 1999, the net unamortized gains were $838,000, in
comparison to net unamortized losses of $237,000 at December 31, 1998.
Such gains and losses were applied to the carrying value of the loans
held for sale as part of the lower of cost or market valuation.

F-26

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(13) CREDIT COMMITMENTS

First Banks is a party to commitments to extend credit and
commercial and standby letters of credit in the normal course of
business to meet the financing needs of its customers. These
instruments involve, to varying degrees, elements of credit risk and
interest rate risk in excess of the amount recognized in the
consolidated balance sheets. The interest rate risk associated with
these credit commitments relates primarily to the commitments to
originate residential fixed-rate loans. As more fully discussed in Note
12 to the accompanying consolidated financial statements, the interest
rate risk of the commitments to originate fixed-rate loans has been
hedged with forward contracts to sell mortgage-backed securities. The
credit risk amounts are equal to the contractual amounts, assuming the
amounts are fully advanced and the collateral or other security is of no
value. First Banks uses the same credit policies in granting
commitments and conditional obligations as it does for on-balance-sheet
items.

Commitments to extend credit at December 31 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1999 1998
---------- ---------
(DOLLARS EXPRESSED
IN THOUSANDS)

<S> <C> <C>
Commitments to extend credit . . . . . . . . . . . . . . . . $1,310,249 1,189,950
Commercial and standby letters of credit . . . . . . . . . . 64,455 62,096
---------- ---------
$1,374,704 1,252,046
========== =========
</TABLE>

Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements. Each customer's creditworthiness is evaluated on a case-
by-case basis. The amount of collateral obtained, if deemed necessary
upon extension of credit, is based on management's credit evaluation of
the counterparty. Collateral held varies but may include accounts
receivable, inventory, property, plant, equipment, income-producing
commercial properties or single family residential properties.
Collateral is generally required except for consumer credit card
commitments.

Commercial and standby letters of credit are conditional
commitments issued to guarantee the performance of a customer to a third
party. The letters of credit are primarily issued to support public and
private borrowing arrangements, including commercial paper, bond
financing and similar transactions. The credit risk involved in issuing
letters of credit is essentially the same as that involved in extending
loan facilities to customers. Upon issuance of the commitments, First
Banks generally holds real property as collateral supporting those
commitments for which collateral is deemed necessary.

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of financial instruments is management's estimate
of the values at which the instruments could be exchanged in a
transaction between willing parties. These estimates are subjective and
may vary significantly from amounts that would be realized in actual
transactions. In addition, other significant assets are not considered
financial assets including the mortgage banking operation, deferred tax
assets, bank premises and equipment and intangibles associated with the
purchase of subsidiaries.

F-27

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Further, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on the
fair value estimates and have not been considered in any of the
estimates.

The estimated fair value of First Banks' financial instruments at
December 31 were as follows:

1999 1998
------------------------- ------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
VALUE FAIR VALUE VALUE FAIR VALUE
---------- ---------- --------- ----------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents . . . . . . . . . . . . . $ 170,894 170,894 214,762 214,762
Investment securities:
Trading. . . . . . . . . . . . . . . . . . . . . -- -- 3,425 3,425
Available for sale . . . . . . . . . . . . . . . 430,093 430,093 509,695 509,695
Held to maturity . . . . . . . . . . . . . . . . 21,554 21,476 21,676 22,568
Net loans . . . . . . . . . . . . . . . . . . . . . 3,927,713 3,908,065 3,519,135 3,532,393
Accrued interest receivable . . . . . . . . . . . . 33,491 33,491 28,465 28,465
========== ========= ========= =========

Financial liabilities:
Deposits:
Demand:
Non-interest-bearing . . . . . . . . . . . . $ 606,064 606,064 561,383 561,383
Interest-bearing. . . . . . . . . . . . . . . 415,113 415,113 377,435 377,435
Savings and money market. . . . . . . . . . . 1,198,314 1,198,314 1,198,567 1,198,567
Time deposits . . . . . . . . . . . . . . . . 2,032,323 2,032,323 1,802,600 1,813,305
Short-term borrowings . . . . . . . . . . . . . . . 73,554 73,554 121,331 121,331
Note payable. . . . . . . . . . . . . . . . . . . . 64,000 64,000 50,048 50,048
Accrued interest payable. . . . . . . . . . . . . . 11,607 11,607 5,817 5,817
Guaranteed preferred beneficial interests . . . . .
in subordinated debentures . . . . . . . . . . . 127,611 127,391 127,443 137,722
========== ========= ========= =========

Off-balance-sheet:
Interest rate swap, cap and floor agreements. . . . $ 3,388 (11,790) 3,687 1,426
Forward contracts to sell mortgage-backed . . . . .
securities . . . . . . . . . . . . . . . . . . . -- 793 -- 506
Credit commitments. . . . . . . . . . . . . . . . . -- -- -- --
========== ========= ========= =========
</TABLE>

The following methods and assumptions were used in estimating the
fair value of financial instruments:

FINANCIAL ASSETS:

CASH AND CASH EQUIVALENTS AND ACCRUED INTEREST RECEIVABLE: The
carrying values reported in the consolidated balance sheets approximate
fair value.

INVESTMENT SECURITIES: The fair value of trading securities and
securities available for sale is the amount reported in the consolidated
balance sheets. The fair value of securities held to maturity is based

F-28

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

on quoted market prices where available. If quoted market prices are
not available, the fair value is based upon quoted market prices of
comparable instruments.

NET LOANS: The fair value of most loans held for portfolio was
estimated utilizing discounted cash flow calculations that applied
interest rates currently being offered for similar loans to borrowers
with similar risk profiles. The fair value of loans held for sale,
which is the amount reported in the consolidated balance sheets, is
based on quoted market prices where available. If quoted market prices
are not available, the fair value is based upon quoted market prices of
comparable instruments. The carrying value of loans is net of the
allowance for loan losses and unearned discount.

FINANCIAL LIABILITIES:

DEPOSITS: The fair value disclosed for deposits generally payable
on demand (i.e., non-interest-bearing and interest-bearing demand,
savings and money market accounts) is considered equal to their
respective carrying amounts as reported in the consolidated balance
sheets. The fair value disclosed for demand deposits does not include
the benefit that results from the low-cost funding provided by deposit
liabilities compared to the cost of borrowing funds in the market. The
fair value disclosed for certificates of deposit was estimated utilizing
a discounted cash flow calculation that applied interest rates currently
being offered on similar certificates to a schedule of aggregated
monthly maturities of time deposits.

FPCT AND FACT PREFERRED SECURITIES: The fair value is based on
quoted market prices.

SHORT-TERM BORROWINGS, NOTE PAYABLE AND ACCRUED INTEREST PAYABLE:
The carrying value reported in the consolidated balance sheets
approximates fair value.

OFF-BALANCE-SHEET:

INTEREST RATE SWAP, CAP AND FLOOR AGREEMENTS: The fair value of
the interest rate swap, cap and floor agreements is estimated by
comparison to market rates quoted on new agreements with similar terms
and creditworthiness.

FORWARD CONTRACTS TO SELL MORTGAGE-BACKED SECURITIES: The fair
value of forward contracts to sell mortgage-backed securities is based
upon quoted market prices. The fair value of these contracts has been
reflected in the consolidated balance sheets in the carrying value of
the loans held for sale portfolio as part of the lower of cost or market
valuation.

CREDIT COMMITMENTS: The majority of the commitments to extend
credit and commercial and standby letters of credit contain variable
interest rates and credit deterioration clauses and, therefore, the
carrying value of these credit commitments reported in the consolidated
balance sheets approximates fair value.

(15) EMPLOYEE BENEFITS

First Banks' profit-sharing plan is a self-administered savings
and incentive plan covering substantially all employees. Under the
plan, employer-matching contributions are determined annually by First
Banks' Board of Directors. Employee contributions are limited to 15% of
the employee's annual compensation, not to exceed $10,000 for 1999.
Total employer contributions under the plan were $863,000, $648,000 and
$506,000 for the years ended December 31, 1999, 1998 and 1997,
respectively. The plan assets are held and managed under a trust
agreement with First Bank's trust department.

F-29

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(16) PREFERRED STOCK

First Banks had two classes of preferred stock outstanding during
the years ended December 31, 1999 and 1998, and three classes of
preferred stock outstanding during the year ended December 31, 1997.

On September 15, 1992, First Banks issued and sold 2.2 million
shares of Class C 9.0% cumulative, increasing rate, redeemable,
preferred stock (Class C Preferred Stock). On December 1, 1997, First
Banks redeemed all of the remaining outstanding Class C Preferred Stock
for $47.1 million. The effect of the redemption was a reduction of
First Banks' total stockholders' equity, and consequently regulatory
capital, by the amount of the redemption. However, the structure of the
FPCT Preferred Securities and the FACT Preferred Securities, as
described in Note 9 to the consolidated financial statements, satisfies
the regulatory requirements to be included in First Banks' capital base
in a manner similar to the Class C Preferred Stock. Dividends on the
Class C Preferred Stock were 9% through November 30, 1997.

The holders of the Class A and Class B preferred stock have full
voting rights. Dividends on the Class A and Class B preferred stock are
adjustable quarterly based on the highest of the Treasury Bill Rate or
the Ten Year Constant Maturity Rate for the two-week period immediately
preceding the beginning of the quarter. This rate shall not be less
than 6.0% nor more than 12.0% on the Class A preferred stock, or less
than 7.0% nor more than 15.0% on the Class B preferred stock.

The Class A preferred stock is convertible into shares of common
stock at a rate based on the ratio of the par value of the preferred
stock to the current market value of the common stock at the date of
conversion, to be determined by independent appraisal at the time of
conversion. Shares of Class A preferred stock may be redeemed by First
Banks at any time at 105.0% of par value. The Class B preferred stock
may not be redeemed or converted. The redemption of any issue of
preferred stock requires the prior approval of the Federal Reserve
Board.

The annual dividend rates on each class of preferred stock for the
years ended December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Class A preferred stock . . . . . . . . 6.0% 6.0% 6.0%
Class B preferred stock . . . . . . . . 7.0 7.0 7.0
Class C preferred stock . . . . . . . . -- -- 9.0
</TABLE>

(17) TRANSACTIONS WITH RELATED PARTIES

Outside of normal customer relationships, no directors or officers
of First Banks, no stockholders holding over 5% of First Banks' voting
securities and no corporations or firms with which such persons or
entities are associated currently maintain or have maintained, since the
beginning of the last full fiscal year, any significant business or
personal relationship with First Banks or its subsidiaries, other than
such as arises by virtue of such position or ownership interest in First
Banks or its subsidiaries, except as described in the following
paragraphs.

During 1999, 1998 and 1997, Tidal Insurance Limited (Tidal), a
corporation owned indirectly by First Banks' Chairman and his children,
received approximately $316,000, $280,000 and $214,000,

F-30

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

respectively, in insurance premiums for accident, health and life
insurance policies purchased by loan customers of First Banks.
The insurance policies are issued by an unaffiliated company and
subsequently ceded to Tidal. First Banks believes the premiums paid
by the loan customers of First Bankshare comparable to those that
such loan customers would have paid if the premiums were subsequently
ceded to an unaffiliated third-party insurer.

During 1999, 1998 and 1997, First Securities America, Inc. (FSA),
a trust established and administered by and for the benefit of First
Banks' Chairman and members of his immediate family, received
approximately $194,000, $265,000 and $206,000, respectively, in
commissions and insurance premiums for policies purchased by First Banks
or customers of the Subsidiary Banks from unaffiliated, third-party
insurors to which First Banc Insurors placed such policies. The
insurance premiums on which the aforementioned commissions were earned
were competitively bid, and First Banks deems the commissions FSA earned
from unaffiliated third-party companies to be comparable to those that
would have been earned by an unaffiliated third-party agent.

First Brokerage America, L.L.C., a limited liability corporation
which is indirectly owned by First Banks' Chairman and members of his
immediate family, received approximately $2.3 million, $1.8 million and
$707,000 for the years ended December 31, 1999, 1998 and 1997,
respectively, in commissions paid by unaffiliated third-party companies.
The commissions received were primarily in connection with the sales of
annuities and securities and other insurance products to individuals,
including customers of the Subsidiary Banks.

First Services, L.P., a limited partnership indirectly owned by
First Banks' Chairman and his children, provides data processing
services and operational support for First Banks, Inc. and its
Subsidiary Banks. Fees paid under agreements with First Services L.P.
were $16.4 million, $12.2 million and $6.4 million for the years ended
December 31, 1999, 1998 and 1997, respectively. During 1999, 1998 and
1997, First Services, L.P. paid First Banks $1.2 million, $799,000 and
$1.1 million, respectively, in rental fees for the use of data
processing and other equipment owned by First Banks. The fees paid by
First Banks for data processing services are at least as favorable as
could have been obtained from unaffiliated third parties.

(18) CAPITAL STOCK OF FIRST BANKS AMERICA, INC.

First Banks owned 2,500,000 shares of FBA's Class B common stock
and 2,210,581 shares of FBA's common stock at December 31, 1999,
representing 83.37% of FBA's outstanding voting stock. In comparison,
First Banks owned 2,500,000 shares of FBA's Class B common stock and
1,895,733 shares of FBA's common stock at December 31, 1998,
representing 76.84% of FBA's outstanding voting stock. The increase for
1999 is attributable to First Banks' purchase, on February 17, 1999, of
314,848 shares of FBA common stock pursuant to a tender offer. This
tender offer increased First Banks' ownership interest in FBA to 82.34%
of FBA's outstanding voting stock. FBA's common stock is publicly
traded on the New York Stock Exchange.

On February 2, 1998, FBA and FCB were merged. Under the terms of
the Agreement and Plan of Merger (Agreement), FCB was merged into FBA,
and First Commercial Bank was merged into FB California. The FCB
shareholders received 0.8888 shares of FBA common stock for each share
of FCB common stock they held. In total, FCB shareholders received
approximately 751,728 shares of FBA common stock, of which 462,176
shares were issued to First Banks. The transaction also provided for
First Banks to receive 804,000 shares of FBA common stock in exchange
for $10.0 million advanced to FBA under a promissory note payable. In
addition, FCB's convertible debentures of $6.5 million, which were

F-31

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

owned by First Banks, were exchanged for a comparable debenture in FBA.
Such debenture was subsequently converted into 629,557 shares of FBA
common stock, effective December 4, 1998. The merger of FBA and FCB
did not have a material impact on the financial condition or results
of operations of First Banks.

(19) REGULATORY CAPITAL

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

Quantitative measures established by regulation to ensure capital
adequacy require First Banks and the Subsidiary Banks to maintain
minimum amounts and ratios of total and Tier I capital (as defined in
the regulations) to risk-weighted assets, and of Tier I capital to
average assets. Management believes, as of December 31, 1999, First
Banks and the Subsidiary Banks were each well capitalized.

As of December 31, 1999, the most recent notification from First
Banks' primary regulator categorized First Banks and the Subsidiary
Banks as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, First Banks
and the Subsidiary Banks must maintain minimum total risk-based, Tier I
risk-based and Tier I leverage ratios as set forth in the table below.

F-32

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At December 31, 1999 and 1998, First Banks' and the Subsidiary
Banks' required and actual capital ratios were as follows:

<TABLE>
<CAPTION>
TO BE WELL
ACTUAL FOR CAPITAL CAPITALIZED UNDER
------------------- ADEQUACY PROMPT CORRECTIVE
1999 1998 PURPOSES ACTION PROVISIONS
---- ---- -------- -----------------
<S> <C> <C> <C> <C>
Total capital (to risk-weighted assets):
First Banks . . . . . . . . . . . . . . 10.05% 10.28% 8.0% 10.0%
First Bank. . . . . . . . . . . . . . . 10.60 10.01 8.0 10.0
FB&T. . . . . . . . . . . . . . . . . . 10.96 10.39 8.0 10.0
FB California . . . . . . . . . . . . . 10.81 10.63 8.0 10.0
FB Texas. . . . . . . . . . . . . . . . 12.42 11.37 8.0 10.0
Redwood Bank<F1>. . . . . . . . . . . . 11.17 -- 8.0 10.0

Tier I capital (to risk-weighted assets):
First Banks . . . . . . . . . . . . . . 8.00% 9.03% 4.0% 6.0%
First Bank. . . . . . . . . . . . . . . 9.35 8.75 4.0 6.0
FB&T. . . . . . . . . . . . . . . . . . 9.70 9.13 4.0 6.0
FB California . . . . . . . . . . . . . 9.56 9.37 4.0 6.0
FB Texas. . . . . . . . . . . . . . . . 11.17 10.11 4.0 6.0
Redwood Bank<F1>. . . . . . . . . . . . 10.15 -- 4.0 6.0

Tier I capital (to average assets):
First Banks . . . . . . . . . . . . . . 7.14% 7.77% 3.0% 5.0%
First Bank. . . . . . . . . . . . . . . 8.10 7.46 3.0 5.0
FB&T. . . . . . . . . . . . . . . . . . 8.57 7.60 3.0 5.0
FB California . . . . . . . . . . . . . 9.95 8.34 3.0 5.0
FB Texas. . . . . . . . . . . . . . . . 10.39 9.15 3.0 5.0
Redwood Bank<F1>. . . . . . . . . . . . 8.48 -- 3.0 5.0

<FN>
_____________________________

<F1> Redwood Bank was acquired by FBA on March 4, 1999.
</TABLE>

(20) DISTRIBUTION OF EARNINGS OF THE SUBSIDIARY BANKS

The Subsidiary Banks are restricted by various state and federal
regulations, as well as by the terms of the Credit Agreement described
in Note 8 to the accompanying consolidated financial statements, as to
the amount of dividends which are available for payment to First Banks,
Inc. Under the most restrictive of these requirements, the future
payment of dividends from the Subsidiary Banks is limited to
approximately $62.4 million at December 31, 1999, unless prior
permission of the regulatory authorities and/or the lending banks is
obtained.

(21) BUSINESS SEGMENT RESULTS

First Banks' business segments are First Bank, FB California,
Redwood Bank, FB Texas and FB&T. The reportable business segments are
consistent with the management structure of First Banks, the Subsidiary
Banks and the internal reporting system that monitors performance.

Through the respective branch networks, First Bank, FB California,
Redwood Bank, FB Texas and FB&T provide similar products and services in
four defined geographic areas. The products and services offered include
a broad range of commercial and personal banking services, including
certificates of deposit, individual retirement and other time deposit
accounts, checking and other demand deposit accounts, interest checking
accounts, savings accounts and money market accounts. Loans include

F-33

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

commercial and financial, commercial and residential real estate, real
estate construction and development and consumer loans. Other financial
services include mortgage banking, debit and credit cards, brokerage
services, credit-related insurance, automatic teller machines, telephone
account access, safe deposit boxes, trust and private banking services
and cash management services.

The revenues generated by each business segment consist primarily
of interest income, generated from the loan and investment security
portfolios, and service charges and fees, generated from the deposit
products and services. The geographic areas include Missouri and
Illinois (First Bank), southern California (FB&T), northern California
(FB California and Redwood Bank) and Houston, Dallas, Irving

FIRST BANK FB CALIFORNIA FB TEXAS
---------------------------------- ---------------------------- ----------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997
---------- --------- --------- ------- ------- ------- ------- ------- -------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION:

Investment securities . . . . . . $ 241,624 264,364 401,450 20,743 53,449 83,165 30,439 59,914 65,016
Loans, net of unearned discount . 2,527,649 2,490,556 2,185,494 379,632 314,977 255,114 213,731 201,426 176,341
Total assets. . . . . . . . . . . 3,028,046 3,024,600 2,843,577 431,838 410,110 370,917 278,988 300,984 267,152
Deposits. . . . . . . . . . . . . 2,689,671 2,659,030 2,559,968 367,563 363,422 325,562 244,248 264,425 231,175
Stockholders' equity. . . . . . . 263,466 243,673 228,422 47,990 42,825 40,176 30,338 30,249 29,761
========== ========= ========= ======= ======= ======= ======= ======= =======

INCOME STATEMENT INFORMATION:

Interest income . . . . . . . . . $ 221,195 219,609 210,710 33,928 32,517 22,416 21,990 21,721 20,099
Interest expense. . . . . . . . . 105,231 111,656 110,799 12,285 13,328 8,729 8,705 8,907 8,379
---------- --------- --------- ------- ------- ------- ------- ------- -------
Net interest income. . . . . . 115,964 107,953 99,911 21,643 19,189 13,687 13,285 12,814 11,720
Provision for loan losses . . . . 8,890 7,250 7,300 110 565 500 90 335 1,500
---------- --------- --------- ------- ------- ------- ------- ------- -------
Net interest income after
provision for loan losses 107,074 100,703 92,611 21,533 18,624 13,187 13,195 12,479 10,220
---------- --------- --------- ------- ------- ------- ------- ------- -------
Noninterest income. . . . . . . . 32,260 29,582 21,149 3,881 2,732 1,847 1,950 1,790 1,901
Noninterest expense . . . . . . . 77,786 79,748 66,570 15,109 15,548 10,356 9,050 8,749 6,960
---------- --------- --------- ------- ------- ------- ------- ------- -------
Income (loss) before provision
(benefit) for income taxes
and minority interest in
income of subsidiary. . . . 61,548 50,537 47,190 10,305 5,808 4,678 6,095 5,520 5,161
Provision (benefit) for income
taxes. . . . . . . . . . . . . 20,811 17,238 15,504 3,972 2,736 2,027 2,090 1,888 1,815
---------- --------- --------- ------- ------- ------- ------- ------- -------
Income (loss) before minority
interest in income of
subsidiary. . . . . . . . . 40,737 33,299 31,686 6,333 3,072 2,651 4,005 3,632 3,346
Minority interest in income of
subsidiary . . . . . . . . . . -- -- -- -- -- -- -- -- --
---------- --------- --------- ------- ------- ------- ------- ------- -------
Net income . . . . . . . . . . $ 40,737 33,299 31,686 6,333 3,072 2,651 4,005 3,632 3,346
========== ========= ========= ======= ======= ======= ======= ======= =======

<FN>
_________________
<F1> Includes $12.1 million, $9.8 million and $7.3 million of
guaranteed preferred debenture expense for the years ended
December 31, 1999, 1998 and 1997, respectively. See Note 9
to the consolidated financial statements.

<F2> Redwood Bank was acquired by FBA on March 4, 1999.

F-34

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

and McKinney Texas (FB Texas). The products and services are offered to
customers primarily within their respective geographic areas, with the
exception of loan participations executed between the Subsidiary Banks.

The business segment results are summarized as follows and are
consistent with First Banks' internal reporting system and, in all
material respects, with generally accepted accounting principles and
practices predominant in the banking and mortgage banking industries.
Such principles and practices are summarized in Note 1 to the
consolidated financial statements. First Banks has no foreign
operations.

<CAPTION>
CORPORATE, OTHER AND
REDWOOD BANK <F2> FIRST BANK & TRUST INTERCOMPANY RECLASSIFICATIONS CONSOLIDATED TOTALS
----------------------- ----------------------------- ---------------------------------- -------------------------------
1999 1998 1997 1999 1998 1997 1999 1998 1997 1999 1998 1997
------- ---- ---- ------- ------- ------- ------- ------- ------- --------- --------- ---------
(DOLLARS EXPRESSED IN THOUSANDS)
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>

37,539 -- -- 103,636 134,203 224,618 17,666 22,866 21,281 451,647 534,796 795,530
138,902 -- -- 736,828 573,562 385,251 (418) (416) -- 3,996,324 3,580,105 3,002,200
199,988 -- -- 944,013 793,217 672,410 (15,126) (25,899) 10,958 4,867,747 4,554,810 4,165,014
173,703 -- -- 804,976 701,406 598,560 (28,347) (48,298) (30,670) 4,251,814 3,939,985 3,684,595
24,275 -- -- 102,014 75,165 54,438 (173,178) (128,549) (121,260) 294,905 263,363 231,537
======= ==== ==== ======= ======= ======= ======= ======= ======= ========= ========= =========

12,724 -- -- 63,765 54,424 42,645 (520) (411) (769) 353,082 327,860 295,101
4,846 -- -- 25,708 26,085 20,404 1,926 2,203 520 158,701 162,179 148,831
------- ---- ---- ------- ------- ------- ------- ------- ------- --------- --------- ---------
7,878 -- -- 38,057 28,339 22,241 (2,446) (2,614) (1,289) 194,381 165,681 146,270
193 -- -- 3,790 850 2,000 -- -- -- 13,073 9,000 11,300
------- ---- ---- ------- ------- ------- ------- ------- ------- --------- --------- ---------
7,685 -- -- 34,267 27,489 20,241 (2,446) (2,614) (1,289) 181,308 156,681 134,970
------- ---- ---- ------- ------- ------- ------- ------- ------- --------- --------- ---------
318 -- -- 4,625 3,800 3,269 (1,384) (1,407) (2,469) 41,650 36,497 25,697
4,860 -- -- 25,973 22,808 15,720 18,029<F1> 11,851<F1> 10,681<F1> 150,807 138,704 110,287
------- ---- ---- ------- ------- ------- ------- ------- ------- --------- --------- ---------

3,143 -- -- 12,919 8,481 7,790 (21,859) (15,872) (14,439) 72,151 54,474 50,380
1,501 -- -- 4,790 3,539 1,111 (6,851) (5,708) (4,374) 26,313 19,693 16,083
------- ---- ---- ------- ------- ------- ------- ------- ------- --------- --------- ---------

1,642 -- -- 8,129 4,942 6,679 (15,008) (10,164) (10,065) 45,838 34,781 34,297
-- -- -- -- -- -- 1,660 1,271 1,270 1,660 1,271 1,270
------- ---- ---- ------- ------- ------- ------- ------- ------- --------- --------- ---------
1,642 -- -- 8,129 4,942 6,679 (16,668) (11,435) (11,335) 44,178 33,510 33,027
======= ==== ==== ======= ======= ======= ======= ======= ======= ========= ========= =========

</TABLE>

F-35

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(22) PARENT COMPANY ONLY FINANCIAL INFORMATION

Following are condensed balance sheets of First Banks, Inc. as of
December 31, 1999 and 1998, and condensed statements of income and
statements of cash flows for the years ended December 31, 1999, 1998 and
1997:

<TABLE>

CONDENSED BALANCE SHEETS
<CAPTION>

DECEMBER 31,
-----------------------
1999 1998
-------- -------
(DOLLARS EXPRESSED
IN THOUSANDS)

ASSETS
<S> <C> <C>
Cash deposited in subsidiary banks . . . . . . . . . . . . . . . . . . . . . $ 4,347 4,775
Investment securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,848 19,317
Investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 429,255 375,018
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,278 12,205
-------- -------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $459,728 411,315
======== =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Note payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 64,000 50,048
Subordinated debentures payable to FPCT. . . . . . . . . . . . . . . . . . . 88,918 88,918
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . 11,905 8,986
-------- -------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164,823 147,952
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 294,905 263,363
-------- -------
Total liabilities and stockholders' equity. . . . . . . . . . . . . . . . $459,728 411,315
======== =======
</TABLE>

F-36

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
CONDENSED STATEMENTS OF INCOME
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1999 1998 1997
------- -------- -------
(DOLLARS EXPRESSED
IN THOUSANDS)
<S> <C> <C> <C>
Income:
Dividends from subsidiaries . . . . . . . . . . . . . . . . . . $25,250 23,000 17,221
Management fees from subsidiaries . . . . . . . . . . . . . . . 12,977 10,154 9,010
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,313 2,796 3,094
------- -------- -------
Total income . . . . . . . . . . . . . . . . . . . . . . . . 39,540 35,950 29,325
------- -------- -------

Expense:
Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,628 3,411 8,815
Salaries and employee benefits. . . . . . . . . . . . . . . . . 8,999 7,307 7,072
Legal, examination and professional fees. . . . . . . . . . . . 7,006 1,988 1,765
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,947 12,639 5,221
------- -------- -------
Total expense. . . . . . . . . . . . . . . . . . . . . . . . 32,580 25,345 22,873
------- -------- -------
Income before benefit for income taxes and
equity in undistributed earnings of
subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 6,960 10,605 6,452
Benefit for income taxes . . . . . . . . . . . . . . . . . . . . . (5,649) (3,999) (2,831)
------- -------- -------
Income before equity in undistributed
earnings of subsidiaries. . . . . . . . . . . . . . . . . 12,609 14,604 9,283
Equity in undistributed earnings of subsidiaries . . . . . . . . . 31,569 18,906 23,744
------- -------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $44,178 33,510 33,027
======= ======== =======

</TABLE>

F-37

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
CONDENSED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31,
-------------------------------------
1999 1998 1997
------- -------- -------
(DOLLARS EXPRESSED IN THOUSANDS)

<S> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,178 33,510 33,027
Adjustments to reconcile net income to net cash
provided by operating activities:
Net income of subsidiaries. . . . . . . . . . . . . . . . (56,676) (42,107) (41,015)
Dividends from subsidiaries . . . . . . . . . . . . . . . 25,250 23,000 17,221
Other, net. . . . . . . . . . . . . . . . . . . . . . . . 1,900 4,963 (2,773)
-------- -------- -------
Net cash provided by operating activities. . . . . . . 14,652 19,366 6,460
-------- -------- -------

Cash flows from investing activities:
(Increase) decrease in investment securities . . . . . . . . (100) 3,000 (3,000)
Investment in common securities of FPCT. . . . . . . . . . . -- -- (2,668)
Acquisitions of subsidiaries . . . . . . . . . . . . . . . . (31,500) (31,586) --
Capital contributions to subsidiaries. . . . . . . . . . . . (3,000) -- (190)
Return of subsidiary capital . . . . . . . . . . . . . . . . 10,000 -- 2,000
Decrease (increase) in advances to subsidiaries. . . . . . . -- 14,900 (121)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . (3,646) (3,350) (6,659)
-------- -------- -------
Net cash used in investing activities. . . . . . . . . (28,246) (17,036) (10,638)
-------- -------- -------

Cash flows from financing activities:
Increase (decrease) in note payable. . . . . . . . . . . . . 13,952 (5,096) (21,186)
Increase in FPCT subordinated debentures . . . . . . . . . . -- -- 88,918
Payment of preferred stock dividends . . . . . . . . . . . . (786) (786) (5,066)
Purchase and retirement of Class C Preferred Stock . . . . . -- -- (54,048)
-------- -------- -------
Net cash provided by (used in) financing activities. . 13,166 (5,882) 8,618
-------- -------- -------
Net (decrease) increase in cash and cash equivalents . (428) (3,552) 4,440
Cash and cash equivalents, beginning of year. . . . . . . . . . 4,775 8,327 3,887
-------- -------- -------
Cash and cash equivalents, end of year. . . . . . . . . . . . . $ 4,347 4,775 8,327
======== ======== =======

Noncash investing activities:
Reduction of deferred tax valuation reserve. . . . . . . . . $ 811 -- --
======== ======== =======
</TABLE>

(23) CONTINGENT LIABILITIES

In the ordinary course of business, there are various legal
proceedings pending against First Banks and/or the Subsidiary Banks.
Management, in consultation with legal counsel, is of the opinion the
ultimate resolution of these proceedings will have no material effect on
the financial condition or results of operations of First Banks or the
Subsidiary Banks.

(24) SUBSEQUENT EVENTS

On February 29, 2000, FBA completed its acquisition of Lippo Bank,
San Francisco, California, in exchange for $17.2 million in cash. Lippo
Bank operates three banking locations in San Francisco, San

F-38

FIRST BANKS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Jose and Los Angeles, California. The acquisition was funded from
available cash. At the time of the transaction, Lippo Bank had
$85.3 million in total assets, $40.9 million in loans, net of
unearned discount, $37.4 million in investment securities and $76.4
million in total deposits. This transaction was accounted for using
the purchase method of accounting. The excess of the cost over the
fair value of the net assets acquired was approximately $4.0 million
and is being amortized over 15 years. Lippo Bank will be merged into
FB California.

(25) BASIS OF PRESENTATION--INTERIM CONSOLIDATED FINANCIAL STATEMENTS

The unaudited interim consolidated financial statements include
the accounts of First Banks and its subsidiaries after elimination of
material intercompany transactions. These unaudited data, in the opinion
of management, include all adjustments necessary for the fair
presentation thereof. All adjustments made were of a normal and
recurring nature.

F-39

<TABLE>
DIRECTORS AND SENIOR MANAGEMENT

<C> <S>
FIRST BANKS, INC.

James F. Dierberg Chairman of the Board and Chief Executive Officer
Allen H. Blake Director, President and Chief Operating Officer
Donald J. Gunn Director, Attorney-At-Law, Gunn and Gunn, Creve Coeur, Missouri
Michael F. Hickey Executive Vice President and Chief Information Officer
George J. Markos Director, President, Profit Management Systems, Richardson, Texas
Michael F. McWhortor Executive Vice President, Banking Support
Frank H. Sanfilippo Executive Vice President and Chief Financial Officer
Mark T. Turkcan Executive Vice President, Consumer Lending and Mortgage Banking
Lisa K. Vansickle Vice President and Controller
Donald W. Williams Executive Vice President and Chief Credit Officer

FIRST BANKS AMERICA, INC.

James F. Dierberg Chairman of the Board, President and Chief Executive Officer
Allen H. Blake Director, Executive Vice President, Chief Operating Officer and Secretary
Charles A. Crocco, Jr. Director, Counsel to the law firm of Jackson & Nash, LLP, New York, New York
Albert M. Lavezzo Director, President and Chief Operating Officer of the law firm of Favaro, Lavezzo,
Gill, Caretti & Heppell, Vallejo, California
Terrance M. McCarthy Executive Vice President
Frank H. Sanfilippo Executive Vice President and Chief Financial Officer
Ellen D. Schepman Director, Retail Marketing Officer, First Banks, Inc., St. Louis, Missouri
Edward T. Story, Jr. Director, President and Chief Executive Officer of SOCO International, plc,
Comfort, Texas
David F. Weaver Executive Vice President
Donald W. Williams Director, Executive Vice President and Chief Credit Officer, First Banks, Inc.,
St. Louis, Missouri

FIRST BANK

Donald W. Williams Chairman of the Board, President and Chief Executive Officer
Douglas R. Distler Director, Senior Vice President and Regional President
Michael F. Hickey Director, Executive Vice President, Chief Information Officer
Frank H. Sanfilippo Director, Executive Vice President, Chief Financial Officer, Secretary and Treasurer
Mark T. Turkcan Director and Executive Vice President

F-40

<CAPTION>
DIRECTORS AND SENIOR MANAGEMENT (CONTINUED)
<C> <S>
FIRST BANK & TRUST

Fred D. Jensen Chairman of the Board, President and Chief Executive Officer
Karkutla "Bala" Balkrishna Director, Senior Vice President-Commercial Banking
Norman O. Broyer Director, Senior Vice President and Chief Credit Officer
Tom LaCroix Director, Senior Vice President-Commercial Banking
Timothy M. Marme Director, Central Coast Regional President
Kathryn L. Perrine Director, Senior Vice President and Chief Financial Officer
Alan G. Rye Director, Senior Vice President-Commercial Real Estate
Donald W. Williams Director

FIRST BANK OF CALIFORNIA

Terrance M. McCarthy Chairman of the Board, President and Chief Executive Officer
James E. Culleton Director and Secretary
Peter A. Goetze Vice President, Retail Banking
Albert M. Lavezzo Director
Kathryn L. Perrine Vice President and Chief Financial Officer
Gary M. Sanders Director and Executive Vice President
Fred K. Sibley Director
Donald W. Williams Director

FIRST BANK TEXAS N.A.

David F. Weaver Chairman of the Board, President and Chief Executive Officer
Alan J. Cott Director and Senior Vice President, Commercial Lending - Houston
Christopher A. Hopkins Director and Senior Vice President, Commercial Lending - Dallas
Joseph Milcoun, Jr. Director and Senior Vice President, Retail Banking
Monica J. Rinehart Director, Controller and Secretary
Donald W. Williams Director

REDWOOD BANK

Donald W. Williams Chairman of the Board
Susan J. Chase Director and Chief Financial Officer
David T. Currie Director and Chief Credit Officer
Patrick S. Day Director
Terrance M. McCarthy Director, President and Chief Executive Officer
Robert A. McKerroll Director
Kerry C. Smith Director
</TABLE>

F-41
<PAGE>
<PAGE>

<TABLE>
INVESTOR INFORMATION

STOCK QUOTATION SYMBOL
NASDAQ NATIONAL MARKET SYSTEM:

FIRST PREFERRED CAPITAL TRUST

FBNKO

<CAPTION>
MARKET PRICE <F1> DIVIDEND
1999 HIGH LOW DECLARED
---- ------ ----- ---------

<S> <C> <C> <C>
First Quarter . . . . . . . . . $27.25 25.13 $ .578125
Second Quarter. . . . . . . . . 27.00 25.25 .578125
Third Quarter . . . . . . . . . 26.63 24.94 .578125
Fourth Quarter. . . . . . . . . 26.00 23.88 .578125
---------
$2.312500
=========
<CAPTION>

MARKET PRICE <F1> DIVIDEND
1998 HIGH LOW DECLARED
---- ------ ----- ---------

<S> <C> <C> <C>
First Quarter . . . . . . . . . $27.88 26.75 $ .578125
Second Quarter. . . . . . . . . 27.25 26.00 .578125
Third Quarter . . . . . . . . . 27.75 25.25 .578125
Fourth Quarter. . . . . . . . . 26.75 25.50 .578125
---------
$2.312500
=========
<FN>
___________________

<F1> Per NASDAQ National Market System.
</TABLE>

Distributions are payable quarterly in arrears on March 31, June
30, September 30 and December 31.

A copy of the First Banks, Inc. Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission, may be obtained
without charge upon written request. Please direct your request to
the following address.

Frank H. Sanfilippo State Street Bank and Trust Company
Executive Vice President and Corporate Trust Department
Chief Financial Officer P. O. Box 778
First Banks, Inc. Boston, Massachusetts 02102-0778
11901 Olive Boulevard Telephone (800) 531-0368
Creve Coeur, Missouri 63141 www.statestreet.com
Telephone (314) 995-8700

F-42

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===================================================================

TABLE OF CONTENTS

PAGE
----
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . 9
Special Note Regarding Forward-
Looking Statements . . . . . . . . . . . . . . . . . . . 16
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 16
Accounting Treatment. . . . . . . . . . . . . . . . . . . . 17
Market For the Preferred Securities . . . . . . . . . . . . 17
Capitalization. . . . . . . . . . . . . . . . . . . . . . . 18
Selected Consolidated and Other
Financial Data . . . . . . . . . . . . . . . . . . . . . 19
Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . 20
Business. . . . . . . . . . . . . . . . . . . . . . . . . . 60
Management. . . . . . . . . . . . . . . . . . . . . . . . . 68
Description of the Trust. . . . . . . . . . . . . . . . . . 70
Description of the Preferred
Securities . . . . . . . . . . . . . . . . . . . . . . . 71
Description of the Subordinated
Debentures . . . . . . . . . . . . . . . . . . . . . . . 83
Book-entry Issuance . . . . . . . . . . . . . . . . . . . . 92
Description of the Guarantee. . . . . . . . . . . . . . . . 94
Relationship Among the Preferred
Securities, the Subordinated
Debentures and the Guarantee . . . . . . . . . . . . . . 96
Federal Income Tax Consequences . . . . . . . . . . . . . . 98
ERISA Considerations. . . . . . . . . . . . . . . . . . . . 102
Underwriting. . . . . . . . . . . . . . . . . . . . . . . . 103
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 105
Where You Can Find Information. . . . . . . . . . . . . . . 105

Experts . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Documents Incorporated by
Reference. . . . . . . . . . . . . . . . . . . . . . . . 106
Index to Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . 107

* YOU SHOULD ONLY RELY ON THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT,
AND OUR UNDERWRITERS HAVE NOT, AUTHORIZED ANY PERSON TO
PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES
YOU WITH DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD
NOT RELY ON IT.

* WE ARE NOT, AND OUR UNDERWRITERS ARE NOT, MAKING AN OFFER TO
SELL THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER OR
SALE IS NOT PERMITTED.

* YOU SHOULD ASSUME THAT THE INFORMATION APPEARING IN THIS
PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF
THIS PROSPECTUS ONLY.

* THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES.

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<PAGE>
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2,000,000 PREFERRED SECURITIES

FIRST PREFERRED CAPITAL TRUST II

10.24% CUMULATIVE TRUST PREFERRED

SECURITIES

(LIQUIDATION AMOUNT $25 PER
PREFERRED SECURITY)

FULLY, IRREVOCABLY AND UNCONDITIONALLY
GUARANTEED ON A SUBORDINATED BASIS, AS
DESCRIBED IN THIS PROSPECTUS, BY

FIRST BANKS, INC.

_______________

[LOGO]

$50,000,000

10.24% SUBORDINATED DEBENTURES

FIRST BANKS, INC.

_________________

PROSPECTUS

OCTOBER 16, 2000

_________________

STIFEL, NICOLAUS & COMPANY
INCORPORATED

DAIN RAUSCHER WESSELS

FAHNESTOCK & CO. INC.

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