NBC CAPITAL CORP, S-4, 1999-03-30

NBC CAPITAL CORP
S-4, 1999-03-30
NATIONAL COMMERCIAL BANKS

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As filed with the Securities and Exchange Commission on March 30, 1999
Registration No. 333-

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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NBC CAPITAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)

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<S> <C> <C>
Mississippi 6021 64-0694775
<CAPTION>
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
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301 East Main Street
Starkville, Mississippi 39760
(601) 323-1341
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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RICHARD T. HASTON
Executive Vice President
NBC Capital Corporation
1108 Highway 82W
Starkville, Mississippi 39759
(Name, address, including zip code, and telephone number,
including area code, of agents for service)

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Copies to:
Virginia Boulet Charles E. Sloane
Phelps Dunbar, L.L.P. Malizia, Spidi, Sloane, & Fisch, P.C.
400 Poydras Street, 30th Floor 1301 K. Street, N.W., Suite 700 East
New Orleans, Louisiana 70130-3245 Washington, D.C. 20005
(504) 584-9286 (202) 434-4678

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [_]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

CALCULATION OF REGISTRATION FEE

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Proposed Maximum
Title Of Each Class Of Proposed Maximum Aggregate
Securities Amount to be Offering Price Offering Amount Of
To Be Registered Registered Per Share(1) Price(1) Registration Fee(1)
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Common Stock, $1.00 par
value 1,400,000 shares $29.31 $41,040,025 $11,410
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(1) Based upon the trading price per share ($25.00) of the securities to be
received by the Registrant or canceled in the exchange or transaction as of
March 10, 1999 pursuant to Rule 457(f)(1) of the Securities Act of 1933, as
amended.
----------------

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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May , 1999

Dear Fellow Stockholders:

We cordially invite you to attend the annual meeting of stockholders of NBC
Capital Corporation to be held at the National Bank of Commerce, Columbus
Banking Center, 803 Main Street, Columbus, Mississippi on June 15, 1999 at 5:00
p.m.

The purposes of the meeting will be to vote on the proposed merger of NBC
with FFBS Bancorp, Inc., the parent company of First Federal Bank for Savings,
which is headquartered in Columbus, Mississippi, and to elect directors of NBC
to serve until the 2000 annual meeting. After the merger, FFBS stockholders
will beneficially own approximately 18.25% of the outstanding stock of NBC.
However, FFBS stockholders may receive additional shares if the average per
share price of NBC common stock for the twenty trading days prior to the merger
is less than $33.50.

The attached proxy statement-prospectus contains additional information
regarding the merger agreement and the proposed merger. We encourage you to
read this entire document carefully.

Approval of the merger requires the affirmative vote of a majority of the
outstanding shares of NBC common stock. The merger must also be approved by
FFBS stockholders and the Federal Reserve Board. If approved, we anticipate the
merger will become effective by June 30, 1999.

We hope that you will be able to attend the meeting. Whether or not you plan
to attend, please complete, sign, and date the enclosed proxy card and return
it promptly in the enclosed envelope. If you do not return your card, the
effect will be a vote against the merger.

On behalf of the Board of Directors of NBC, we urge you to vote FOR approval
of the merger agreement and for each of the nominees for director, and we look
forward to seeing you at the meeting.

Sincerely yours,

Lewis F. Mallory, Jr.,
Chairman of the Board and Chief Executive
Officer

Neither the Securities and Exchange Commission nor any state securities
regulators have approved the NBC common stock to be issued in the merger or
determined if the proxy statement-prospectus is accurate or adequate. Any
representation to the contrary is a criminal offense.
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[Logo of FFBS appears here]

May , 1999

Dear Fellow Stockholders:

We cordially invite you to attend the special meeting of stockholders of
FFBS Bancorp, Inc. to be held at the main office of First Federal Bank for
Savings, 1121 Main Street, Columbus, Mississippi on Monday,June 14, 1999 at
10:00 a.m.

The purpose of the meeting will be to vote on the proposed merger of FFBS
with NBC Capital Corporation, the parent company of National Bank of Commerce,
which is headquartered in Starkville, Mississippi. In the merger you will
receive .7702 shares of NBC common stock for each share of FFBS common stock
that you own. However, this exchange rate may be adjusted upward if the average
per share price of NBC common stock for the twenty trading days prior to the
merger is less than $33.50. In general, you will not recognize federal income
tax gain or loss for the NBC common stock that you receive.

The attached proxy statement-prospectus contains additional information
regarding the merger agreement and the proposed merger. We encourage you to
read this entire document carefully. In particular, you are encouraged to read
the discussion of "Risk Factors" on page 9.

Approval of the merger requires the affirmative vote of a majority of the
outstanding shares of FFBS common stock. The merger must also be approved by a
majority of the outstanding shares of NBC common stock and by the Federal
Reserve Board. If approved, we anticipate the merger will become effective
byJune 30, 1999.

We hope that you will be able to attend the meeting, and the Board of
Directors urges you to vote FOR approval of the merger. Whether or not you plan
to attend, please complete, sign, and date the enclosed proxy card and return
it promptly in the enclosed envelope. If you do not return your proxy card, the
effect will be a vote against the merger.

Sincerely yours,

E. Frank Griffin, III
President and Chief Executive
Officer

Neither the Securities and Exchange Commission nor any state securities
regulators have approved or disapproved of the NBC common stock to be issued in
the merger or determined if this proxy statement-prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
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IMPORTANT NOTICE FOR FFBS STOCKHOLDERS

If you cannot locate your FFBS common stock certificate(s), please contact
Allison Youngblood at First Federal Bank for Savings, 1121 Main Street,
Columbus, Mississippi 39701, telephone number (601) 328-4631. If you have
misplaced your stock certificates or if you hold certificates in names other
than your own and wish to vote in person at the FFBS special meeting, we
encourage you to resolve those matters before the meeting.

FFBS stockholders should not send their stock certificates at this time.

The shares of NBC common stock offered hereby are not savings accounts,
deposits or other obligations of a bank or savings association and are not
insured by the Federal Deposit Insurance Corporation or any other governmental
agency.

HOW TO OBTAIN ADDITIONAL INFORMATION

NBC and FFBS are publicly traded companies and are required to file certain
reports, proxy statements and other information with the SEC. The SEC maintains
a web site on the Internet that contains reports, proxy statements and other
information about public companies, including NBC and FFBS. The address of that
site is http://www.sec.gov. You may also read and copy any materials filed with
the SEC by NBC or FFBS at the SEC's Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.

NBC has filed a registration statement on Form S-4 with the SEC that
registers the NBC common stock to be issued in the merger. This proxy
statement-prospectus does not contain all of the information in the
registration statement. Please refer to the registration statement for further
information about NBC and the NBC common stock to be issued in the merger
exchange. Statements contained in this proxy statement-prospectus concerning
the provisions of certain documents included in the registration statement are
not necessarily complete. A complete copy of each document is filed as an
exhibit to the registration statement. You may obtain copies of all or any part
of the registration statement, including exhibits thereto, upon payment of the
prescribed fees, at the offices of the SEC listed above.

NBC has supplied all of the information contained in this proxy statement-
prospectus relating to NBC and its subsidiary, National Bank of Commerce. FFBS
has supplied all of the information relating to FFBS and its subsidiary, First
Federal Bank for Savings.

This proxy-statement-prospectus incorporates important business and
financial information about NBC that is not included in or delivered with the
proxy statement-prospectus. That information is available without charge upon
your request to:

NBC Capital Corporation
P.O. Box 1187
Starkville, Mississippi 39760
Attention: Mr. Richard T. Haston
Telephone: (601) 324-4258

You should make your request before June 7, 1999 in order to receive the
information prior to the meetings.
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NBC CAPITAL CORPORATION
Starkville, Mississippi

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

June 15, 1999

The annual meeting of stockholders of NBC Capital Corporation will be held
on Tuesday, June 15, 1999 at 5:00 p.m., at the Columbus Banking Center, 803
Main Street, Columbus, Mississippi for the following purposes:

1. To vote whether to approve the Agreement and Plan of Merger dated as
of February 3, 1999, between FFBS Bancorp, Inc. and NBC Capital
Corporation. If the merger is approved, FFBS Bancorp, Inc. will be merged
into NBC Capital Corporation.

2. To elect 22 directors of NBC Capital Corporation to serve until the
2000 annual meeting, or until their successors are duly elected and
qualified.

3. To transact such other business as may properly come before the
annual meeting.

The board of directors has fixed April 26, 1999, as the voting record date
for the annual meeting. Only stockholders of record of NBC Capital Corporation
at the close of business on that date are entitled to receive notice of and to
vote at the annual meeting or any adjournments or postponements of the meeting.

If you do not vote for approval of the merger agreement, you may have the
right to receive the fair value of your NBC Capital Corporation common stock in
cash by exercising dissenter's rights under Mississippi law. Dissenter's rights
are described in the attached proxy statement-prospectus. In order to receive
cash, however, you must comply with all of the procedures required by
Mississippi law.

Your vote is important. Please complete, sign, date and return the enclosed
proxy card promptly whether or not you plan to be present at the meeting.

By Order of the Board of Directors,

_____________________________________
Secretary

May , 1999

The Board of Directors of NBC Capital Corporation unanimously recommends
that stockholders vote FOR approval of the merger agreement and FOR each of the
22 nominees for director.
<PAGE>

FFBS BANCORP, INC.
Columbus, Mississippi

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
June 14, 1999

The special meeting of stockholders of FFBS Bancorp, Inc. will be held on
Monday, June 14, 1999 at 10:00 a.m., at 1121 Main Street, Columbus, Mississippi
for the following purposes:

2. To transact such other business as may properly come before the
special meeting.

The board of directors has fixed April 26, 1999 as the record date for the
special meeting. Only stockholders of record of FFBS Bancorp, Inc. at the close
of business on that date are entitled to receive notice of and to vote at the
special meeting or any adjournments or postponements of the meeting.

If you do not vote for approval of the merger agreement, you may have the
right to receive the fair value of your FFBS Bancorp, Inc. common stock in cash
by exercising rights of appraisal under Delaware law. Rights of appraisal are
described in the attached proxy statement-prospectus. In order to receive cash,
however, you must comply with all of the procedures required by Delaware law.

Your vote is important. Please complete, sign, date and return the enclosed
proxy card promptly whether or not you plan to be present at the meeting.

By Order of the Board of Directors,

_____________________________________
Secretary
May , 1999

The Board of Directors of FFBS Bancorp, Inc. unanimously recommends that
stockholders vote FOR approval of the merger agreement.
<PAGE>

TABLE OF CONTENTS

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Page
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QUESTIONS AND ANSWERS ABOUT THE MERGER.................................... 1
WHO CAN HELP ANSWER YOUR QUESTIONS........................................ 1
SUMMARY................................................................... 2
Information About the Stockholder Meetings.............................. 2
What You Will Receive in the Merger..................................... 2
Outstanding Stock Options of FFBS to be Converted....................... 2
Management and Operations after the Merger.............................. 2
Election of 22 Directors of NBC......................................... 2
The Boards of Directors Recommend Stockholder Approval.................. 3
Basis for the Terms of the Merger....................................... 3
Opinion of NBC Financial Advisor........................................ 3
Opinion of FFBS Financial Advisor....................................... 3
Quorum and Vote Required at the Meetings................................ 3
Conditions to the Merger and Amendment of the Merger Agreement.......... 4
Interests of Certain Persons in the Merger that May be Different from
Yours.................................................................. 4
Employee Benefits of FFBS Employees after the Merger.................... 4
Material Tax Consequences of the Merger................................. 5
Dissenter's Rights (or Rights of Appraisal) You Will Have as a Result of
the Merger............................................................. 5
Differences in Rights of FFBS Stockholders after the Merger............. 5
NBC's Option to Purchase FFBS Stock..................................... 5
Accounting Treatment of the Merger...................................... 5
Selected Financial Information of NBC................................... 6
Selected Financial Information of FFBS.................................. 6
Pro Forma Combined Selected Financial Information (Unaudited)........... 7
Comparative Per Share Information (Unaudited)........................... 8
RISK FACTORS.............................................................. 9
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS........................... 9
THE PARTIES TO THE MERGER................................................. 10
NBC Capital Corporation................................................. 10
FFBS Bancorp, Inc....................................................... 10
MEETING INFORMATION....................................................... 11
Solicitation and Revocation of Proxies.................................. 11
Record Date; Quorum and Vote Required................................... 12
Recommendations of the Boards of Directors of NBC and FFBS.............. 12
PROPOSED MERGER........................................................... 13
General................................................................. 13
Background of the Merger................................................ 13
Reasons for the Merger and Recommendations of the Boards of Directors... 14
Terms of the Merger..................................................... 16
Opinion of Southard Financial to NBC.................................... 17
Opinion of Trident Financial Corporation to FFBS........................ 18
Closing Date and Effective Date of the Merger........................... 26
Employee Benefits of FFBS Employees after the Merger.................... 27
Surrender and Exchange of Stock Certificates............................ 27
Payment of Expenses Relating to the Merger.............................. 28
Representations and Warranties in the Merger Agreement.................. 28
Conditions to the Merger; Waiver of Those Conditions.................... 28
Regulatory and Other Required Approvals................................. 29
Business of FFBS Pending the Merger..................................... 29
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Page
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Termination of the Merger Agreement..................................... 30
Management and Operations After the Merger.............................. 31
Certain Differences in Rights of Stockholders........................... 31
Interests of Certain Persons in the Merger.............................. 32
Material Tax Consequences of the Merger................................. 32
Resale of NBC Common Stock.............................................. 33
Rights of Dissenting Stockholders....................................... 33
Accounting Treatment of the Merger...................................... 38
Stock Option Agreement.................................................. 38
PRO FORMA FINANCIAL INFORMATION........................................... 41
INFORMATION ABOUT FFBS.................................................... 47
Principal Business...................................................... 47
Competition............................................................. 47
Supervision and Regulation.............................................. 47
Seasonality of Business and Customers................................... 47
Employees............................................................... 48
Properties.............................................................. 48
Legal Proceedings....................................................... 48
Stock Prices and Dividends.............................................. 48
Management's Discussion and Analysis of Financial Condition and Results
of Operations.......................................................... 49
Security Ownership of Principal Stockholders and Management of FFBS..... 68
INFORMATION ABOUT NBC..................................................... 69
Incorporation of Certain Documents by Reference......................... 69
Regulatory Considerations............................................... 69
ELECTION OF NBC DIRECTORS................................................. 71
Voting Procedures....................................................... 71
Information about the Board's Nominees.................................. 71
Meetings and Committees of the Board of Directors....................... 73
Compensation of Directors............................................... 74
Stock Ownership of Directors, Officers, and Principal Stockholders...... 74
Executive Officers...................................................... 76
Executive Compensation.................................................. 76
Salary Committee Report on Executive Compensation....................... 79
Salary Committee Interlocks and Insider Participation in Compensation
Decisions.............................................................. 81
CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND INDEBTEDNESS.............. 81
OTHER MATTERS............................................................. 81
INDEPENDENT PUBLIC ACCOUNTANTS............................................ 82
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE................... 83
PROPOSALS OF STOCKHOLDERS................................................. 83
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K................................ 84
VALIDITY OF SHARES AND LEGAL MATTERS...................................... 84
EXPERTS................................................................... 84
FINANCIAL STATEMENTS OF FFBS.............................................. F-1
APPENDIX A
AGREEMENT AND PLAN OF MERGER............................................ A-1
APPENDIX B
OPINION OF SOUTHARD FINANCIAL........................................... B-1
APPENDIX C
OPINION OF TRIDENT FINANCIAL CORPORATION................................ C-1
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APPENDIX D
CERTAIN PROVISIONS OF DELAWARE LAW RELATING TO STOCKHOLDERS'
RIGHTS OF APPRAISAL..................................................... D-1
APPENDIX E
CERTAIN PROVISIONS OF MISSISSIPPI LAW RELATING TO THE RIGHTS OF
DISSENTING STOCKHOLDERS................................................. E-1
APPENDIX F
STOCK OPTION AGREEMENT BETWEEN NBC AND FFBS.............................. F-1
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QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:What am I being asked to vote upon?

A:You are being asked to approve the merger agreement, which provides for the
merger of FFBS into NBC.

Q:What should I do now?

A: Just indicate on your proxy card how you want to vote, and sign and mail the
card in the enclosed envelope as soon as possible, so that your shares will
be represented at your meeting.

NOTE: If you sign and send in your proxy card and do not indicate how you
want to vote, your proxy will be voted in favor of the proposal to approve and
adopt the merger agreement. If you do not sign and send in your proxy card or
attend and vote at your meeting, it will have the effect of voting your shares
against the merger.

Q:If my shares are held in "street name" by my broker, will my broker vote my
shares for me?

A: Your broker will vote your shares of stock on the question of the merger
only if you provide instructions on how to vote. You should instruct your
broker on how to vote your shares, following the directions your broker
provides. If you do not provide instructions to your broker, your shares
will not be voted on the merger, and this will have the effect of voting
against the merger. In the case of NBC shareholders, your broker may vote
your shares on the election of directors, even with no instructions from
you.

Q: Should I send in my FFBS stock certificates now?

A: No. If the merger is completed, we will send all FFBS stockholders written
instructions for exchanging FFBS common stock certificates for NBC common
stock certificates.

WHO CAN HELP ANSWER YOUR QUESTIONS

If you would like additional copies of this document, or if you would like
to ask any questions about the merger, you should contact:

NBC stockholders: Mr. Richard T. Haston, National Bank of Commerce, P.O. Box
1187, Starkville, Mississippi 39760, telephone (601) 324-4258.

FFBS stockholders: Sherry Boyd, First Federal Bank for Savings, 1121 Main
Street, Columbus, Mississippi 39701, telephone (601) 328-4631.

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SUMMARY

We have prepared this summary to assist you, the stockholders of NBC and
FFBS, in your review of this proxy statement-prospectus. It is necessarily
general and abbreviated, and it is not intended to be a complete explanation of
all of the matters covered in this proxy statement-prospectus. To understand
the merger and the issuance of shares of NBC common stock, please see the more
complete and detailed information in the sections that follow this summary, as
well as the appendices and the documents incorporated herein by reference. We
urge you to read all of these documents in their entirety prior to voting at
the annual meeting of NBC and the special meeting of FFBS.

Information About the Stockholder Meetings

A special meeting of the stockholders of FFBS will be held on Monday, June
14, 1999 at 10:00 a.m., and the 1999 annual meeting of stockholders of NBC will
be held on the following day, Tuesday, June 15, 1999 at 5:00 p.m. The FFBS
special meeting will be held at the main office of First Federal Bank for
Savings, 1121 Main Street, Columbus, Mississippi. The NBC annual meeting will
be held at the National Bank of Commerce, Columbus Banking Center, 803 Main
Street, Columbus, Mississippi.

What You Will Receive in the Merger

At the meetings, you, the stockholders of NBC and FFBS, will vote upon the
merger agreement. If you approve the merger agreement and the other conditions
to completing the merger are satisfied, the merger will be consummated on a
date to be chosen by NBC and FFBS. Stockholders of FFBS, other than those who
exercise and perfect rights of appraisal under Delaware law, will receive for
each share of FFBS common stock .7702 shares of NBC common stock, having a
market value of $ on May , 1999. The exchange rate may be increased if the
average per share price of NBC common stock for the twenty trading days prior
to the merger is less than $33.50, so that stockholders of FFBS would receive
NBC common stock having a value of at least $25.80 for each share of FFBS
common stock they own. FFBS stockholders who would otherwise receive a fraction
of a share of NBC common stock will receive cash instead of that fractional
share.

Outstanding Stock Options of FFBS to be Converted

There are currently outstanding options for FFBS directors and officers to
acquire 65,966 additional shares of FFBS common stock. Options that are not
exercised prior to the merger will be converted into options to purchase .7702
shares of NBC common stock, or a greater number of shares of NBC common stock
if there is an adjustment to the merger exchange rate.

Management and Operations after the Merger

.FFBS will cease to exist after the merger.
.The business of FFBS will be conducted through NBC after the merger.
.Two current FFBS directors will be appointed by NBC as directors of
NBC.

Election of 22 Directors of NBC

In addition to voting on the merger, at the NBC annual meeting NBC
stockholders will elect 22 directors to serve until the 2000 annual meeting.
Information regarding the persons who have been nominated by NBC's Board of
Directors is included in this proxy statement-prospectus beginning on page 71.
To date, the two persons currently serving as directors of FFBS who will be
selected to serve as NBC directors following the merger have not been selected.

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The Boards of Directors Recommend Stockholder Approval

The boards of directors of NBC and FFBS have unanimously approved the
merger agreement and each board believes that the merger is in the best
interests of its stockholders. The NBC and FFBS boards recommend that you vote
FOR approval of the merger agreement.

Basis for the Terms of the Merger

NBC and FFBS directors considered a number of factors in approving the
terms of the merger, including:

. the historical growth and value of NBC common stock;

. information concerning the financial condition, results of operations
and prospects of NBC and FFBS;

. professional evaluations by Trident Financial Corporation and Southard
Financial of the economic fairness of the price to the FFBS and NBC
stockholders;

. the anticipated tax-free nature of the merger to FFBS's stockholders
for federal income tax purposes;

. the financial terms of other recent business combinations in the
banking industry;

. possible economic benefits to be derived by the combination; and

. in the case of FFBS, the treatment to be accorded to FFBS employees
under the terms of the merger.

Opinion of NBC Financial Advisor

Southard Financial, a financial valuation consulting firm, has rendered an
opinion to the NBC board of directors that the terms of the merger are fair,
from a financial point of view, to the stockholders of NBC. The opinion is
based on and subject to the procedures, matters and limitations described in
it and other matters that Southard considered relevant. The fairness opinion
is attached to this proxy statement-prospectus as Appendix B. We urge all NBC
stockholders to read the entire opinion, which includes a description of the
procedures followed, matters considered and limitations on the reviews
undertaken by Southard.

Opinion of FFBS Financial Advisor

Trident Financial Corporation, an investment banking and financial advisory
firm, has rendered an opinion to the FFBS board of directors that the terms of
the merger are fair, from a financial point of view, to the stockholders of
FFBS. The opinion is based on and subject to the procedures, matters and
limitations described in it and other matters that Trident considered
relevant. The fairness opinion is attached to this proxy statement-prospectus
as Appendix C. We urge all FFBS stockholders to read the entire opinion, which
includes a description of the procedures followed, matters considered and
limitations on the reviews undertaken by Trident.

Quorum and Vote Required at the Meetings

Stockholders who own NBC and FFBS common stock at the close of business on
April 26, 1999 will be entitled to vote at the meetings. A majority of the
issued and outstanding shares of NBC and FFBS common stock must be present in
person or by proxy at the meetings in order for a quorum to be present. If a
quorum is not present at either meeting, the meeting will be adjourned, and no
vote will be taken until and unless a quorum is present.

The affirmative vote of a majority of both the issued and outstanding
shares of NBC common stock and of the issued and outstanding shares of FFBS
common stock are required to approve the merger.

NBC stockholders have cumulative voting rights in the election of the 22
NBC directors. Cumulative voting entitles an NBC stockholder to give one
particular candidate a number of votes equal to the number of directors to be
elected (22), multiplied by the number of shares held by that stockholder, or
to distribute the

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stockholder's total votes, computed on the same principle, among as many
candidates as the stockholder chooses. For example, an NBC stockholder owning
ten shares may cast 220 votes for one nominee, 22 votes for ten nominees, ten
votes for each of the 22 nominees, or allocate his or her 220 votes among the
several nominees in any manner. The 22 candidates receiving the highest number
of votes cast will be elected. NBC stockholders, however, may not cumulte their
votes when voting on the merger.

As of the record date for the meetings, directors and executive officers of
NBC owned 1,733,733 shares (or 30.6%) of the issued and outstanding NBC common
stock, and directors and executive officers of FFBS owned 310,031 shares (or
19.7%) of the issued and outstanding FFBS common stock. These individuals have
indicated that they will vote the stock over which they have voting power in
favor of approving the merger agreement and, in the case of NBC, in favor of
the Board's nominees for directors.

Conditions to the Merger and Amendment of the Merger Agreement

The following conditions must be met in order for the merger to be
consummated:

. approval of the merger agreement by the required vote of the
stockholders of NBC and FFBS;
. approval of the merger by the Federal Reserve Board, without imposing
conditions to the approval that are unacceptable to either FFBS or
NBC;
. the merger qualify as a pooling of interests; and
. the merger qualify as a tax-free reorganization.

The merger may not be consummated until at least 15 days after approval of
the merger by the Federal Reserve Board. Once the Federal Reserve Board has
approved the merger, it must be completed within 90 days. NBC and FFBS now
contemplate that, if all approvals are received, the merger will be consummated
on June 30, 1999.

Nearly all of the conditions to consummation of the merger may be waived at
any time by the party for whose benefit they were created, except that
shareholder and regulatory approvals may not be waived. Also, the merger
agreement may be amended or supplemented at any time by written agreement of
NBC and FFBS. Any material change to the merger agreement after the date of the
meetings would require, however, a resolicitation of NBC and FFBS stockholders
for the purpose of voting on the changed merger agreement. In addition, the
merger agreement may be terminated, either before or after shareholder
approval, under certain circumstances.

Interests of Certain Persons in the Merger that May be Different from Yours

The executive officers and directors of FFBS have interests in the merger
that are in addition to their interests as stockholders of FFBS. These
interests include, among others:

. a provision in the merger agreement providing that two FFBS directors
will become directors of NBC after the merger;
. the continuation of employee benefits;
. implementation of a supplemental executive retirement plan for the
president of FFBS;
. some FFBS employees will be offered a "pay to stay" retention bonus of
25% of their current annual base salary to continue their employment
until the successful consolidation of the operating and accounting
systems of the FFBS and NBC subsidiaries; and
. provisions in the merger agreement relating to the indemnification of
officers and directors of FFBS for certain liabilities.

Employee Benefits of FFBS Employees after the Merger

NBC has agreed to offer to all former FFBS employees who become NBC
employees the same employee benefits as those offered by NBC to its employees.
NBC will also give FFBS employees full credit for their years of service, for
both eligibility and vesting, with FFBS to the extent permitted under the terms
of the applicable plans.

4
<PAGE>

Material Tax Consequences of the Merger

FFBS stockholders generally will not recognize gain or loss for federal
income tax purposes for shares of NBC common stock they receive in the merger.
T.E. Lott & Company, independent auditors for both NBC and FFBS, has issued an
opinion to this effect. FFBS stockholders will be taxed on cash received
instead of any fractional share. Further, any FFBS stockholder who perfects
rights of appraisal under Delaware law, as described in the next section, will
be taxed on cash received for his or her FFBS common stock.

Tax laws are complex, and the tax consequences of the merger may vary
depending upon your individual circumstances or tax status. For these reasons,
we recommend that you consult your tax advisor concerning the federal and any
applicable state, local or other tax consequences of the merger to you.

Dissenter's Rights (or Rights of Appraisal) You Will Have as a Result of the
Merger

Both NBC and FFBS stockholders are entitled to dissenter's rights or rights
of appraisal. If you perfect your dissenter's rights, or rights of appraisal,
and the merger is completed, you will be entitled to receive the fair value of
your shares of stock in cash as provided under Mississippi law (NBC
stockholders) and Delaware law (FFBS stockholders). Appendices D and E include
the relevant provisions of Mississippi and Delaware law regarding dissenter's
rights, or rights of appraisal.

Differences in Rights of FFBS Stockholders after the Merger

FFBS stockholders who receive shares of NBC common stock in the merger will
become NBC stockholders. Their rights as stockholders then will be governed by
NBC's Articles of Incorporation and Bylaws. The rights of NBC stockholders are
different in certain respects from the rights of FFBS stockholders. Those
differences are described in this proxy statement-prospectus.

NBC's Option to Purchase FFBS Stock

NBC and FFBS entered into an option agreement under which FFBS granted NBC
an option to purchase up to 313,551 shares of FFBS common stock under certain
circumstances if the merger is not consummated and a third party attempts to
take control of FFBS.

Accounting Treatment of the Merger

The parties intend the merger to be treated as a pooling-of-interests for
financial accounting purposes. A number of things could prevent the merger from
qualifying for this accounting treatment. For example, if the cash NBC would be
required to pay in the merger, including cash paid to dissenters, were more
than 10% of the value of the FFBS stock to be exchanged, then the merger would
not qualify as a pooling-of-interests. In such a case, NBC will abandon the
merger.

5
<PAGE>

Selected Financial Information of NBC

The following table sets forth certain consolidated financial information
for NBC. This information is based on the consolidated financial statements and
related notes of NBC contained in its annual report on Form 10-K for the year
ended December 31, 1998, which is incorporated by reference in this proxy
statement- prospectus.

<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
(in thousands, except per share
amounts)
<S> <C> <C> <C> <C> <C>
Income from continuing
operations............... 8,494 9,918 9,420 8,775 8,155
Per common share(1):
Income from continuing
operations(2).......... 1.50 1.75 1.66 1.55 1.44
Cash dividends.......... .69 .63 .58 .57 .49
Book Value.............. 15.59 14.64 13.54 12.63 10.73
SELECTED PERIOD-END
BALANCES:
Debt.................... 16,048 23,068 18,743 13,394 13,256
Total assets............ 777,032 762,531 720,006 673,707 630,980
</TABLE>
- --------
(1) Per share data has been adjusted retroactively for stock splits and to
reflect the acquisition on December 31, 1998 of First National Corporation
of West Point, which was accounted for as a pooling of interests. NBC's
merger-related expenses amounted to $1.8 million (after tax), or $.33 per
share, during the year ended December 31, 1998.
(2) Prior to the restatement of earnings for the acquisition of First National
Corporation, as of December 31, 1998, NBC earned approximately $9.3
million.

Selected Financial Information of FFBS

FFBS has a June 30th fiscal year end. The following selected financial
information of FFBS should be read in conjunction with FFBS's financial
statements, the notes thereto, and FFBS's Management's Discussion and Analysis
of Financial Condition and Results of Operations for the years ended June 30,
1998, 1997 and 1996 and for the six-month periods ended December 31, 1998 and
1997 appearing elsewhere in this proxy statement-prospectus. Information for
the six-month periods ended December 31, 1998 and 1997 is unaudited.

<TABLE>
<CAPTION>
Six Months
Ended December
Year Ended June 30, 31,
--------------------------------------- ---------------
Unaudited 1998 1997 1996 1995 1994 1998 1997
- --------- ------- ------- ------- ------- ------- ------- -------
(in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Net interest income..... $ 4,722 $ 4,691 $ 4,366 $ 4,576 $ 4,454 $ 2,333 $ 2,352
Income from continuing
operations............. 1,580 1,478 1,662 1,766 1,732 794 866
Per common share
Income from continuing
operations:
Basic............... 1.06 1.00 1.12 1.18 1.05 .52 .58
Diluted............. 1.03 .97 1.09 1.14 1.04 .51 .56
Cash dividends........ 2.55 .50 1.45 .40 .35 .30 2.25
Book value............ 15.29 16.97 16.61 16.87 14.87 15.50 15.06
SELECTED PERIOD-END
BALANCES
Debt.................... 10,961 0 0 0 0 9,115 6,570
Total assets............ 150,806 130,762 125,228 118,970 116,601 160,115 138,356
</TABLE>

6
<PAGE>

Pro Forma Combined Selected Financial Information (Unaudited)

The following table sets forth certain unaudited pro forma combined selected
financial information for NBC. The pro forma information, which reflects the
merger, is presented for information purposes only. The results shown are not
necessarily indicative of the actual results that might have occurred if the
merger had been completed at the beginning of the periods presented. Also, this
information is not necessarily indicative of results that might be achieved in
the future if the merger is completed. See "Pro Forma Financial Information"
contained elsewhere in this proxy statement-prospectus.

<TABLE>
<CAPTION>
Twelve Months Ended December 31,
-----------------------------------
1998 1997 1996
---------- ---------- ----------
(in
thousands,
except per
share
amounts)
<S> <C> <C> <C>
Net interest income........................ $ 35,580 $ 35,828 $ 34,112
Income from continuing operations.......... 10,002(1) 11,682 10,817
Per common share
Income from continuing operations:
Basic.................................. 1.47 1.72 1.59
Diluted................................ 1.46 1.70 1.58
Cash dividends........................... .68 1.08 .59
Book Value............................... 14.97 14.34 15.75
SELECTED PERIOD-END BALANCES
Debt....................................... 25,163 29,639 18,743
Total assets............................... 937,963 901,703 847,947
</TABLE>
- --------
(1) This amount includes NBC's merger related expenses in 1998, which were $1.8
million (after tax).

7
<PAGE>

Comparative Per Share Information (Unaudited)

The following table shows certain comparative per share data relating to net
income, cash dividends and book value. The equivalent pro forma information is
based on an exchange ratio of .7702.

We present the pro forma and equivalent pro forma data for your information
only. It does not necessarily indicate the results of operations or combined
financial position that would have resulted had NBC completed the merger at the
times indicated; and it does not necessarily indicate what future results of
operations or combined financial position will be.

You should read the information shown below in conjunction with the
historical consolidated financial statements of NBC and FFBS and the notes
provided with them. See "How to Obtain Additional Information" and "Certain
Information Concerning FFBS--Management's Discussion and Analysis of Financial
Condition and Results of Operations."

<TABLE>
<CAPTION>
Pro
Forma
NBC FFBS Pro
(with Forma
NBC FFBS FFBS) Equivalent
----- ----- ----- ----------
<S> <C> <C> <C> <C>
Net Income Per Share
Basic per share income for the twelve months
ended:
December 31, 1998.............................. $1.50 $1.00 $1.47 $1.13
December 31, 1997.............................. 1.75 1.20 1.72 1.33
December 31, 1996.............................. 1.66 .94 1.59 1.22
Fully diluted per share income for the twelve
months ended:
December 31, 1998.............................. 1.50 .98 1.46 1.13
December 31, 1997.............................. 1.75 1.15 1.70 1.31
December 31, 1996.............................. 1.66 .91 1.58 1.22
Cash dividends per share
For the twelve months ended
December 31, 1998.............................. .69 .60 .68 .53
December 31, 1997.............................. .63 2.50 1.08 .84
December 31, 1996.............................. .58 .50 .59 .46
Book value per share
At December 31, 1998........................... 15.59 14.97 16.11 12.41
</TABLE>

8
<PAGE>

RISK FACTORS

In addition to the other information in this proxy statement-prospectus, the
following factors with respect to NBC should be carefully considered in
connection with the proposed merger. This discussion is intended to illustrate
certain potential risks associated with an investment in NBC common stock and
does not represent NBC's management's expectation of what necessarily will
occur if the merger is completed.

NBC stock is thinly traded, and there can be no assurance that the stock will
be freely tradable in the future.

NBC common stock trades sporadically in the over-the-counter market.
Although NBC's common stock has appreciated approximately 96% in the last three
years, there can be no assurance that a market for the NBC common stock will be
sustained in the future. At present, there are two market makers for the NBC
common stock; however, such market makers are not obligated to continue to make
a market for NBC common stock. If those market makers do not continue to make a
market in NBC common stock, shares received in the merger may be difficult to
sell.

The market price of NBC common stock may be volatile.

The market prices of the NBC common stock may be volatile depending on
various factors, including the amount of shares placed for sale at any
particular time, the general economy, stock market conditions, announcements by
NBC or its competitors and fluctuations in operating results of NBC. There can
be no assurance that NBC common stock will retain the market value it has at
the time of the merger.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement-prospectus includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Although NBC
and FFBS believe, concerning their respective statements, that the expectations
reflected in forward-looking statements are reasonable, the statements are
based on numerous assumptions (some of which may prove to be incorrect) and are
subject to risks and uncertainties that could cause the actual results to
differ materially from NBC's and FFBS's expectations.

NBC and FFBS have made and will make forward-looking statements in their
written documents and oral presentations. Such statements are based on NBC's
and FFBS's managements' beliefs as well as assumptions made by and information
currently available to NBC and FFBS management. When used in NBC's and FFBS's
documents or oral presentations, the words "anticipate," "estimate," "expect,"
"objective," "projection," "forecast," "goal" and similar expressions are
intended to identify forward-looking statements.

In addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements, factors that could cause NBC's
or FFBS's actual results to differ materially from those contemplated in any
forward-looking statements include, among others:

. increased competition,

. regulatory factors,

. economic conditions,

. changing market conditions,

. availability or cost of capital,

. employee workforce factors,

. cost and other effects of legal and administrative proceedings, and

. changes in federal, state or local legislative requirements.

9
<PAGE>

NBC and FFBS undertake no obligation to update or revise any forward-looking
statements, whether as a result of changes in actual results, changes in
assumptions or other factors affecting such statements.

THE PARTIES TO THE MERGER

NBC Capital Corporation

NBC is a Mississippi corporation registered under the Bank Holding Company
Act of 1956, as amended. As of December 31, 1998, NBC had total consolidated
assets of approximately $777 million and stockholders' equity of approximately
$88 million.

NBC's sole banking subsidiary is National Bank of Commerce. National Bank of
Commerce provides retail and commercial banking services through 32 banking
offices located in Mississippi and Alabama.

From time to time, NBC investigates and holds discussions and negotiations
in connection with possible mergers or similar transactions with other
financial institutions. On the date of this proxy statement-prospectus, NBC's
merger agreement with FFBS is the only definitive agreement relating to a
merger to which NBC is a party. NBC expects to pursue other possible
acquisition opportunities in the future. NBC may enter into any such
transactions before or after the merger with FFBS. The terms of any future
transactions cannot be predicted at this time. Future transactions would be
subject to regulatory approval and the approval of stockholders as required by
law.

The principal executive offices of NBC are located at:

NBC Plaza
301 East Main Street
Starkville, Mississippi 39759
telephone: (601) 323-1341

For additional information concerning the business and financial condition
of NBC, please refer to "Incorporation of Certain Documents by Reference."

FFBS Bancorp, Inc.

FFBS is a Delaware corporation and a registered savings and loan holding
company under the Savings and Loan Holding Company Act, which owns all of the
issued and outstanding shares of stock of First Federal Bank for Savings,
Columbus, Mississippi. As of December 31, 1998, FFBS had total consolidated
assets of approximately $160 million and stockholders' equity of approximately
$24 million.

First Federal Bank for Savings is located in Columbus, Mississippi, where it
operates a main office and three branch locations providing thrift and lending
services. As of December 31, 1998, First Federal had total assets of
approximately $157 million.

The principal executive offices of FFBS are located at:

1121 Main Street
Columbus, Mississippi 39701
telephone: (601) 328-4631

Additional information concerning the business and financial condition of
FFBS is included below under the headings "Information Concerning FFBS" and
"Financial Statements of FFBS."

10
<PAGE>

MEETING INFORMATION

You have received this proxy statement-prospectus because the boards of
directors of NBC and FFBS are soliciting your proxy for the FFBS special
meeting and the NBC 1999 annual meeting. Each copy of this proxy statement-
prospectus mailed to holders of NBC and FFBS common stock is accompanied by a
proxy card for use at either the NBC or FFBS meeting and at any adjournment of
the meeting. Only holders of record of NBC common stock and FFBS common stock
on April 26, 1999 are entitled to notice of and to vote at the meetings.

At the meetings, stockholders will consider and vote upon:

. the merger agreement;

. in the case of the NBC annual meeting, the election of 22 directors
to serve until the 2000 annual meeting; and

. any other matters that are properly brought before the meetings or
any adjournments of the meetings.

If you have not already done so, please complete, date and sign the
accompanying proxy card and return it promptly in the enclosed, postage paid
envelope.

Solicitation and Revocation of Proxies

If you have delivered a proxy for the meetings, you may revoke it any time
before it is voted by:

. attending the meeting and voting in person;

. giving written notice revoking your proxy to the corporate secretary
prior to the date of the meeting; or

. submitting a signed proxy card dated later than your initial proxy,
and if it is received before the meeting, the later-dated proxy will
be voted.

The NBC and FFBS boards of directors will vote as directed all proxy cards
received at or prior to the meetings and not subsequently revoked. If you
complete, date and sign your proxy card but do not provide instructions as to
your vote, we will vote your share(s) FOR approval of the merger agreement. If
any other matters are properly presented at the meetings for consideration, the
persons named in the proxy card will have discretionary authority to vote on
those matters. The NBC and FFBS boards are not aware of any matter to be
presented at the meetings other than the proposal to approve the merger
agreement and, in the case of the NBC annual meeting, the election of
directors.

Each company will bear the cost of soliciting proxies from its stockholders,
except that NBC will bear all expenses incurred in printing and mailing this
proxy statement-prospectus. Each company will solicit shareholder votes by
mail, and maybe by telephone or other means of telecommunications. Directors,
officers and employees of the companies may also solicit shareholder votes in
person. If these individuals solicit your vote in person, they will receive no
additional compensation for doing so. NBC's stock transfer agent, SunTrust
Bank, Atlanta, Georgia, will also assist in the solicitation of proxies from
brokers and nominees of stockholders for the NBC annual meeting. NBC estimates
that fees and expenses of SunTrust will not exceed $7,500, plus out-of-pocket
costs and expenses. NBC and FFBS will reimburse brokerage firms and other
persons representing beneficial owners of shares for their reasonable expenses
in forwarding soliciation material to such beneficial owners.

FFBS stockholders should not forward any stock certificates with their proxy
cards. If the merger agreement is approved, FFBS stockholders will receive
instructions regarding the exchange of their stock certificates after the
merger has been consummated.

11
<PAGE>

Record Date; Quorum and Vote Required

The record date for each meeting is April 26, 1999. NBC and FFBS
stockholders of record as of the close of business on that day will receive
notice of the meetings and will be able to vote at the meetings. As of April
26, 1999, there were 5,664,736 shares of NBC common stock outstanding and
entitled to vote at the NBC annual meeting and 1,575,635 shares of FFBS common
stock outstanding and entitled to vote at the FFBS special meeting.

The presence, in person or by proxy, of a majority of the shares of NBC and
FFBS entitled to vote on the merger agreement is necessary to constitute a
quorum at each meeting. Each share of NBC and FFBS common stock outstanding on
April 26, 1999 entitles its holder to one vote as to the approval of the merger
agreement and any other proposal that may properly come before the meeting.

NBC and FFBS will count their respective shares of common stock present in
person at their respective meeting but not voting, and their respective shares
of common stock for which they have received proxies but with respect to which
holders of such shares have abstained, as present at the respective meeting for
purposes of determining the presence or absence of a quorum for the transaction
of business.

Under Mississippi and Delaware law, approval of the merger agreement
requires the affirmative vote of the holders of a majority of all votes
entitled to be cast on the merger agreement at each meeting. Because approval
of the merger agreement requires the affirmative vote of the holders of a
majority of outstanding shares of NBC and FFBS common stock, abstentions and
broker non-votes will have the same effect as negative votes. Accordingly, the
NBC and FFBS Boards urge their respective stockholders to complete, date and
sign the accompanying proxy and return it promptly in the enclosed, postage-
paid envelope.

As of the record date for the meetings, NBC directors and executive officers
beneficially owned a total of 1,733,733 shares, or approximately 30.6%, of the
outstanding shares of NBC common stock, and FFBS directors and executive
officers beneficially owned a total of 310,031 shares, or approximately 19.7%,
of the outstanding shares of FFBS common stock. These individuals have
indicated that they will vote their stock in favor of the merger agreement.
NBC's directors and executive officers have also indicated that they intend to
vote for each of the nominees for director listed in this proxy statement-
prospectus.

Recommendations of the Boards of Directors of NBC and FFBS

The NBC board of directors has unanimously approved the merger agreement and
believes that the merger is in the best interests of NBC and its stockholders.
The NBC board recommends that holders of NBC common stock vote FOR approval of
the merger agreement. The NBC board also recommends that the stockholders vote
for each person listed as a nominee for the position of director in this proxy
statement. In making their recommendation to stockholders, the NBC directors
considered, among other things, the fairness opinion of Southard Financial,
which concludes that the terms of the merger are fair to NBC's stockholders
from a financial point of view. See "Proposed Merger--Background of the Merger"
and "Proposed Merger--Opinion of Southard Financial," below.

The FFBS board of directors has unanimously approved the merger agreement
and believes the merger is in the best interests of FFBS and its stockholders.
The FFBS board recommends that holders of FFBS common stock vote FOR approval
of the merger agreement. In making their recommendation to stockholders, the
FFBS directors considered, among other things, the fairness opinion of Trident
Financial Corporation, which concludes that the terms of the merger are fair to
FFBS's stockholders from a financial point of view. See "Proposed Merger--
Background of the Merger" and "Proposed Merger--Opinion of Trident Financial
Corporation," below.

12
<PAGE>

PROPOSED MERGER

This section of the proxy statement-prospectus describes certain aspects of
the merger. The following description is not intended to include every aspect
of the merger, but rather contains only the significant terms of the merger.
This discussion is qualified in its entirety by reference to the merger
agreement, which is attached as Appendix A to this proxy statement-prospectus
and is incorporated herein by reference. We urge you to read the merger
agreement carefully and in its entirety.

General

If the stockholders of NBC and FFBS approve the merger agreement and the
other conditions to the consummation of the merger are satisfied, FFBS will be
merged with and into NBC. NBC will exchange shares of NBC common stock, plus
cash instead of any fractional share, for each outstanding share of FFBS common
stock as to which rights of appraisal have not been exercised and perfected.
Each share of NBC common stock outstanding immediately prior to the effective
date of the merger will remain outstanding and unchanged as a result of the
merger, unless the holder exercises dissenters' rights.

Background of the Merger

First Federal Bank for Savings, organized in 1892, is a federally-chartered
savings bank headquartered in Columbus, Mississippi, and for most of its
existence has operated as a traditional thrift institution.

Like other thrifts, the core of First Federal's business has consisted of
attracting deposits from the general public and originating loans to finance
the acquisition, construction, or improvement of residential properties located
in the market area served by First Federal. Management has worked over a number
of years to diversify First Federal's activities by expanding commercial and
consumer lending and improving the array of deposit products. While success has
been realized in this diversification, the basic business and identity of First
Federal remains closely tied to its roots as a traditional thrift institution.

In June 1993, First Federal converted from a mutual to a stock form of
organization through the formation of FFBS Bancorp, Inc. and an initial public
offering. FFBS is a unitary savings and loan holding company that was
incorporated in March 1993 under the laws of the State of Delaware for the
purpose of acquiring all of the issued and outstanding common stock of First
Federal.

In September 1994, the Board of Directors and management of FFBS and First
Federal met with their financial advisory firm, Trident Financial Corporation,
to discuss strategies to meet stockholder requirements, including the best use
of FFBS's excess capital and ways to maximize the consolidated return on
equity. At this meeting, Trident advised the board of directors and management
that one method of utilizing excess capital and of improving the return on
equity was to pay special dividends. FFBS adopted a strategy which consisted of
investigating potential acquisitions, repurchases of stock, and the payment of
a special dividend. In August 1995, FFBS paid a $1.00 per share special
dividend. In August 1997, a $2.00 per share special dividend was paid. In July
1997, as a supplement to its original strategy, FFBS adopted a "Capital
Optimization Plan" recommended by a financial services firm. This plan, which
involved leveraged investments in securities recommended by the financial
services firm, was an effort to improve the return on equity by improving
earnings. The goal of the plan was to use "underutilized capital" in order to
move the "capital/assets ratio into the optimal range." Also, during the same
time period, FFBS repurchased approximately 109,000 shares of its stock of
which less than 30,000 were repurchased in the past 24 months. Investigations
into potential acquisitions within the same market area did not identify any
institutions that would justify the investment of the excess capital.

In the fall of 1997, the board of directors became cognizant of changes in
the operating environment, including rising interest rates and shrinking
interest margins which would translate into slower growth in earnings and a
possible decline in the estimated fair value of financial assets compared to
their carrying value,

13
<PAGE>

thereby reducing the value of the FFBS common stock held by FFBS stockholders.
The board of directors decided to hire Trident to informally survey the
interests of prospective acquirors in a possible acquisition.

In March 1998, Trident contacted four prospective acquirors on FFBS's behalf
to gauge their interest in pursuing a combination with FFBS. Trident reviewed
the oral indications of interest from the four prospective acquirors. Based on
the terms of the original proposals, the board of directors of FFBS determined
to allow two companies to conduct preliminary due diligence and resubmit their
proposals. After being advised that their original proposal was not
sufficiently attractive to warrant further discussions, one prospective
acquiror indicated that they could improve their proposal but chose not to
conduct due diligence.

The FFBS board of directors was aware that NBC had a strategic objective of
growth through acquisitions within the geographic area of Mississippi and
Alabama. In the spring of 1998, the board of directors of FFBS asked Trident to
also contact NBC to determine if NBC was interested in a merger with FFBS. From
time to time, NBC holds discussions with other financial institutions which
have been identified as potentially desirable acquisition candidates. FFBS had
been identified as a desirable candidate for providing expansion of NBC's
mortgage lending activities in the Columbus and Lowndes County, Mississippi
markets. NBC's board of directors therefore accepted Trident's invitation and
directed NBC's management to conduct preliminary due diligence. In May 1998,
NBC's board submitted its pricing proposal to FFBS.

In May 1998, after the prospective acquirors conducted due diligence,
Trident reviewed the second round of proposals with FFBS's board of directors.
FFBS's board of directors decided to pursue further discussions with NBC
because NBC offered downside price protection without limiting upside
potential, and NBC's proposal was attractive compared to the valuation range
calculated by Trident.

During the summer and fall of 1998, NBC explored accounting and regulatory
issues. During late fall of 1998, negotiations with NBC halted as NBC was
completing its merger with First National Corporation of West Point. In mid-
December 1998, NBC's board authorized renewed negotiations with FFBS.

During the month of January 1999, senior management of both institutions,
with the assistance of outside counsel and Trident, negotiated a form of
definitive merger agreement. Draft copies of the proposed agreement were
distributed to the board of directors of FFBS for their review. The board of
directors reviewed the proposal and met with Trident and FFBS's counsel to
discuss and review the proposal. Trident presented a detailed analysis of the
proposal to the board of directors and advised the board that in its opinion,
NBC's proposal was fair to FFBS's stockholders from a financial point of view.
Thereafter some additional modifications were made to the proposal. Trident and
FFBS's legal counsel reviewed the changes and the related agreements and
transactions contemplated thereby; and Trident issued a fairness opinion of the
merger consideration to holders of FFBS common stock. Throughout this process,
NBC's board monitored the negotiations through monthly updates from management
and counsel.

After a thorough discussion and consideration of the factors discussed below
under "Reasons for the Merger and Recommendation of the Boards of Directors,"
the FFBS board and the NBC board unanimously approved the merger agreement and
authorized the execution of the merger agreement. The merger agreement was
signed on February 3, 1999.

Reasons for the Merger and Recommendations of the Boards of Directors

Determination of the FFBS Board of Directors

In reaching its conclusion to approve the merger, FFBS's board of directors
considered a number of factors. FFBS's board did not assign any relative or
specific weights to the factors considered. Among other things, the FFBS board
considered:

. the merger consideration in relation to the book value, assets and
earnings of FFBS and NBC;

14
<PAGE>

. information concerning the financial condition, results of operations
and prospects of FFBS, including the return of assets and return on
equity of FFBS;

. the financial terms of other recent business combinations in the
banking industry; and

. the opinion of Trident as to the fairness of the consideration to
FFBS stockholders from a financial point of view.

FFBS's board of directors believes that the terms of the merger agreement,
which are the product of arms-length negotiations between FFBS and NBC, are in
the best interests of FFBS and its stockholders. In the course of reaching its
determination, FFBS's board of directors consulted with legal counsel with
respect to its legal duties, the terms of the merger agreement and the issues
related thereto, with its financial advisor with respect to the financial
aspects and fairness of the transaction and with senior management regarding,
among other things, operational matters.

In reaching its determination to approve the merger agreement, FFBS's board
of directors considered a number of factors, including:

a) the current condition and growth prospects of FFBS and First
Federal, its historical results of operations and its prospective
results of operations were FFBS to remain independent;

b) the current operating environment, including, but not limited to,
the mergers and increasing competition in the banking and financial
services industries, the prospect for further changes in these
industries and the importance of being able to capitalize on
developing opportunities in these industries;

c) the presentation of Trident and the fact that Trident would render
an opinion that the consideration to be received in the merger by
FFBS's stockholders was fair to such stockholders from a financial
point of view;

d) the fact that the merger will be a tax-free exchange to FFBS's
stockholders for federal income tax purposes;

e) the detailed financial analyses and other information with respect
to FFBS and NBC, discussed by Trident, as well as FFBS's board's own
knowledge of FFBS, NBC and their respective businesses. In this
regard, the latest publicly-available financial and other
information for FFBS and NBC were analyzed, including a comparison
to publicly-available financial and other information for other
similar institutions;

f) the value of FFBS common stock continuing as a stand-alone entity
compared to the effect of FFBS combining with NBC in light of the
facts summarized above and the current economic and financial
environment, including, but not limited to, other possible strategic
alternatives, the results of the contacts and discussions between
FFBS and its financial advisor and various third parties and the
belief of the FFBS board and management that the merger offered the
best transaction available to FFBS and its stockholders;

g) the greater financial and management resources and customer product
offerings of NBC, which could increase the competitiveness of the
combined institution in the market area and its ability to serve the
depositors, customers and the communities served by FFBS; and

h) the opportunities for growth and leveraging FFBS's capital.

After deliberating with respect to the merger and the other transactions
contemplated by the merger agreement, considering, among other things, the
matters discussed above and the opinion of Trident referred to above, the FFBS
board of directors approved and adopted the merger agreement and the
transactions contemplated thereby as being in the best interests of FFBS and
its stockholders.

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The FFBS board has unanimously approved the merger and unanimously recommends
that FFBS stockholders vote "FOR" approval of the merger.

Determination of the NBC Board of Directors

In reaching its decision to approve the merger, the NBC board consulted with
its legal counsel regarding the terms of the transaction, with financial
advisors regarding financial aspects and fairness of the transaction and with
senior management relative to operational and other matters. Without assigning
any relative or specific weights, the NBC board considered all of the factors
it deemed material, both from a short-term and long-term prospective, which are
the following:

a) detailed information concerning the business, earnings, asset
quality and financial condition of FFBS, as well as the NBC board's
own knowledge of FFBS and its business;

b) the opportunity for achieving revenue enhancements from the combined
operations and the ability of the FFBS franchise to contribute to
the earnings of NBC;

c) the attractiveness and market position of the FFBS franchise and its
compatibility with NBC, strengthening NBC in its core market area to
capitalize more effectively on developing opportunities in the
financial services industry and creating a combined institution with
a significantly strengthened residential mortgage lending capacity;

d) the treatment of the merger as a tax-free exchange of FFBS common
stock for NBC common stock;

e) the treatment of the merger as a pooling of interests for accounting
purposes; and

f) the compatibility of and continued involvement of the management and
board of FFBS with NBC.

NBC has also received the opinion of Southard Financial that the terms of
the merger are fair to the stockholders of NBC from a financial point of view.
For these reasons, NBC's board believes that the merger will enhance the
business and operations of NBC and is in the best interests of NBC and its
stockholders.

The NBC board has unanimously approved the merger and unanimously recommends
that NBC stockholders vote "FOR" approval of the merger agreement.

Terms of the Merger

If FFBS and NBC stockholders approve the merger agreement and the other
conditions to the consummation of the merger are satisfied, NBC and FFBS expect
the merger will be completed on June 30, 1999. See "Proposed Merger--
Representations and Warranties; Conditions to the Merger; Waiver" for a
discussion of the other conditions to completing the merger.

FFBS stockholders will receive .7702 shares of NBC common stock having a
market value of $ , as of May , 1999, and representing approximately
18.25% of the total NBC outstanding shares after the merger. If, however, the
average market price of NBC common stock for the twenty trading days prior to
the effective date of the merger is less than $33.50, then the exchange rate
will be adjusted so that stockholders of FFBS will receive at least $25.80 in
value of NBC common stock for each share of FFBS common stock exchanged. On the
effective date of the merger, each outstanding share of FFBS common stock,
other than shares held by stockholders who exercise and perfect rights of
appraisal, will automatically convert to shares of NBC common stock as
described above. FFBS stockholders will automatically be entitled to all of the
rights and privileges afforded to NBC stockholders at that time. However, the
actual physical exchange of FFBS common stock certificates for certificates
representing NBC common stock will occur after the merger.

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You should not forward your stock certificates to FFBS or NBC at this time.
If the merger is consummated, you will receive instructions on how to exchange
your FFBS stock certificates for certificates of NBC common stock.

Opinion of Southard Financial to NBC

NBC retained Southard Financial, a Memphis, Tennessee financial valuation
consulting firm, to render its opinion as to the fairness from a financial
point of view to the holders of NBC common stock of the consideration to be
paid in the merger. Southard is a financial valuation consulting firm
specializing in the valuation of closely-held companies and financial
institutions. Since its founding in 1987, Southard has provided approximately
2,000 valuation opinions for clients in 43 states. Further, Southard provides
valuation services for approximately 120 financial institutions annually. For
rendering its opinion to NBC, Southard received a fee of $8,000 plus reasonable
out-of-pocket expenses. Southard has never been engaged by FFBS, but previously
provided a fairness opinion for NBC in 1998 relative to another merger. Neither
Southard nor its principals own an interest in the securities of NBC or FFBS.

Southard evaluated the financial terms of the merger, but was not asked to,
and did not recommend the exchange ratio formula between NBC and FFBS common
stocks and did not assist in the merger negotiations. The ratio of exchange was
determined by NBC and FFBS after arm's length negotiations. NBC did not place
any limitations on the scope of Southard's investigation or review.

Southard provided NBC's board of directors with a fairness opinion letter
dated March 26, 1999 and supporting documentation. The full text of that
fairness opinion letter, which sets forth certain assumptions made, matters
considered and limitations on the review performed, is attached as Appendix B
and is incorporated herein by reference. The summary of Southard's opinion set
forth in this proxy statement-prospectus is qualified in its entirety by
reference to the opinion.

In arriving at its opinion, Southard conducted interviews with officers of
NBC and FFBS and reviewed the documents indicated in the fairness letter.
Southard did not independently verify the accuracy and/or the completeness of
the financial and other information reviewed in rendering its opinion. Southard
did not, and was not requested to, solicit third party indications of interest
in acquiring any or all of the assets of FFBS.

In connection with rendering its opinion, Southard performed a variety of
financial analyses, which are summarized below. Southard believes that its
analyses must be considered as a whole and that considering only selected
factors could create an incomplete view of the analyses and the process
underlying the opinion. In its analyses, Southard made numerous assumptions,
many of which are beyond the control of NBC and FFBS. Any estimates contained
in the analyses prepared by Southard are not necessarily indicative of future
results or values, which may vary significantly from such estimates. Estimates
of value of companies do not purport to be appraisals or necessarily reflect
the prices at which companies or their securities may actually be sold. None of
the analyses performed by Southard was assigned a greater significance than any
other.

The summary of Southard's analyses set forth below is based on an assumed
exchange ratio of NBC common stock for shares of FFBS common stock. Under the
agreement, FFBS stockholders are to receive .7702 shares of NBC common stock.
The analysis below is based upon a price for NBC common stock of $38.00 per
share.

Based upon the merger terms, FFBS stockholders will receive about 204% of
book value at December 31, 1998, 30.5 times reported fiscal 1998 earnings, and
30.0% of assets at December 31, 1998. Based upon the review conducted by
Southard, the pricing multiples for the merger are within the range of
multiples seen in recent bank and thrift acquisitions.

Southard prepared a pro-forma discounted cash flow analysis to determine a
range of present values of FFBS based upon expected economies resulting from
the merger. This range was determined by adding (i) the

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<PAGE>

present value of the estimated future dividend stream that FFBS could generate
over the ten-year period from 2000 through 2009 and (ii) the present value of
the "terminal value" of FFBS common stock at the end of 2009. Using this
analysis, the implied value of FFBS to NBC supported the proposed price.

Southard reviewed the impact of the proposed acquisition on the per share
earnings, dividends and book value of NBC. The analysis indicated that the
acquisition will have a dilutive impact on earnings per share in the first
year, but should be accretive to earnings thereafter. Further, the acquisition
is anti-dilutive to book value per share.

Southard's conclusion was that the terms of the proposed merger pursuant to
the merger agreement are fair, from a financial viewpoint, to the NBC
shareholders.

Opinion of Trident Financial Corporation to FFBS

FFBS retained Trident to act as its financial advisor and to render a
fairness opinion in connection with a possible merger. On January 7, 1998,
Trident met with FFBS's board of directors to update the board on current
market conditions, present a valuation report and to advise the board of
directors with regard to strategic alternatives. Trident had performed these
same functions over a number of years for FFBS. In February 1998, FFBS engaged
Trident to actively find a possible merger partner for FFBS.

On January 14, 1999, Trident met with FFBS's board of directors to review
the proposed terms of the merger agreement. At that time, Trident presented a
due diligence report to FFBS's board of directors summarizing the financial
terms of the merger and providing updated market information with respect to
thrift mergers and acquisitions. Trident also analyzed the advantages and
disadvantages of the merger from a financial point of view. On February 3,
1999, Trident rendered its written opinion to FFBS's board of directors to the
effect that, as of that date, the consideration to be received by FFBS's
stockholders pursuant to the merger agreement was fair to them from a financial
point of view. The financial fairness standard employed by Trident in rendering
its opinion was whether such consideration was within the range of the economic
values of consideration that companies having the characteristics of FFBS and
NBC might negotiate in comparable circumstances; not whether the consideration
proposed in the merger agreement is at or approaching the higher end of such
range.

Trident confirmed and delivered its opinion to FFBS's board of directors as
of the date of this proxy statement-prospectus that the consideration to be
received by the stockholders of FFBS in the merger is fair from a financial
point of view, as of such date. A copy of the opinion, which sets forth certain
assumptions made, matters considered and limitations on the reviews undertaken,
is attached to this proxy statement-prospectus as Appendix C. Trident has
consented to the inclusion of such opinion and summaries of the valuation
report and due diligence report in the proxy statement-prospectus that will be
circulated to FFBS's stockholders.

Trident's opinion is directed to the FFBS board of directors and is directed
only to the fairness, from a financial point of view, of the consideration to
be received by FFBS's stockholders based on conditions as they existed and
could be evaluated as of the date of the opinion. Trident's opinion does not
constitute a recommendation to any FFBS stockholder as to how such stockholder
should vote at the special meeting, nor does Trident's opinion address the
underlying business decision to effect the merger. This summary of Trident's
opinion is qualified in its entirety by reference to the full text of such
opinion, which is attached to this proxy statement-prospectus as Appendix C.
Stockholders are urged to read Trident's opinion in its entirety for a
description of the assumptions made and matters considered and the limits on
the review undertaken in rendering such opinion.

In preparing its opinion, Trident reviewed and analyzed, among other things,
the following:

. the merger agreement;

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<PAGE>

. this proxy statement-prospectus;

. certain publicly available information concerning FFBS, including the
audited financial statements of FFBS for each of the years in the
four-year period ended June 30, 1998 and the unaudited financial
statements of FFBS for the six months ended December 31, 1998;

. certain publicly available information concerning NBC, including the
audited financial statements of NBC for each of the years in the
three-year period ended December 31, 1997 and the unaudited financial
statements of NBC for the year ended December 31, 1998;

. certain other internal information, primarily financial in nature,
concerning the business and operations of FFBS and NBC furnished to
Trident by FFBS and NBC for purposes of Trident's analysis;

. information with respect to the trading market for FFBS common stock
and NBC common stock;

. certain publicly available information with respect to other
companies that Trident believed to be comparable to FFBS and NBC and
the trading markets for such other companies' securities; and

. certain publicly available information concerning the nature and
terms of other transactions that Trident considered relevant to its
inquiry.

Trident also met with certain officers and employees of FFBS and NBC to
discuss the foregoing, as well as other matters which it believed relevant to
its inquiry such as:

. the current business operations, financial condition and future
prospects of FFBS and NBC;

. the results of Trident's due diligence examination of NBC; and

. the cost savings expected to result from the merger.

No limitations were imposed by either FFBS or its board or management with
respect to the investigation made or procedures followed by Trident.

In its review and analysis and in arriving at its opinion, Trident assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to it by FFBS, or that was publicly available, the
accuracy of the representations and warranties of the officers and the
employees of FFBS and NBC with whom Trident held discussions, and the accuracy
of the representations and warranties of FFBS and NBC in the merger agreement,
and did not attempt independently to verify any such information. Trident
further assumed that there are no conditions in the regulatory approvals of the
merger agreement that will have a material adverse effect upon the contemplated
economic benefits of the merger.

The financial information provided to Trident by FFBS was of the type
normally produced by the management of FFBS and reviewed by FFBS's board of
directors at its regular meetings and the board and management of FFBS have
represented to Trident that they have no reason to believe that Trident's
reliance thereon was unreasonable. FFBS's board, however, did not specifically
review the information, assumptions and other information provided by
management to Trident for accuracy and completeness. Trident did not conduct a
physical inspection of the properties or facilities of FFBS, nor did they make
or obtain any independent evaluations or appraisals of any of such properties
or facilities.

In conducting its analyses and arriving at its opinion as expressed herein,
Trident considered such financial and other factors as it deemed appropriate
under the circumstances including, among others, the following:

. the historical and current financial condition and results of
operations of FFBS and NBC, including interest income, interest
expense, net interest income, net interest margin, interest
sensitivity, non-interest expense, earnings, dividends, book value,
return on assets, return on equity, capitalization, the amount and
type of non-performing assets and the reserve for loan losses;

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<PAGE>

. the business prospects of FFBS and NBC;

. the economies in FFBS's and NBC's market areas;

. the historical and current market for FFBS common stock and for NBC's
common stock and for the equity securities of certain other companies
that Trident believed to be comparable to FFBS and NBC; and

. the nature and terms of certain other acquisition transactions that
Trident believed to be relevant.

Trident also took into account its assessment of general economic, market,
financial and regulatory conditions and trends, as well as its knowledge of the
financial institutions industry, its experience in connection with similar
transactions, and its knowledge of securities valuation generally. Trident's
opinion necessarily was based upon conditions in existence and subject to
evaluation on the respective dates of its opinion. Trident's opinion is, in any
event, limited to the fairness, from a financial point of view, of the
consideration to be received by the holders of FFBS common stock in the merger
and does not address FFBS's underlying business decision to effect the merger.

The summaries set forth below reflect all the material analysis, factors and
assumptions considered by Trident and the material valuation methodologies used
by Trident in arriving at its opinion as to fairness described above. The
preparation of a fairness opinion is a complex process and is not necessarily
susceptible to partial or summary description. Trident believes that its
analyses and the summary set forth below must be considered as a whole, and
that selecting portions of its analyses without considering all of the
analyses, or reviewing the summary without considering all factors and
analyses, would create an incomplete view of the processes underlying the
analyses set forth in Trident's reports and its opinion. Therefore, the ranges
of valuations resulting from any single analysis described below should not be
taken to be Trident's view of the actual value of FFBS or the combined company.

In performing its analyses, Trident made numerous assumptions with respect
to industry performance, general business and economic conditions and other
matters, many of which are beyond the control of FFBS or NBC. The results of
the specific analyses performed by Trident may differ from FFBS's or NBC's
actual values or actual future results as a result of changing economic
conditions, changes in company strategy and policies, as well as a number of
other factors. Such individual analyses were prepared to provide valuation
guidance solely as part of Trident's overall valuation analysis and the
determination of the fairness of the consideration to be paid to FFBS's
stockholders. The analyses do not purport to be appraisals or to reflect the
prices at which a company might actually be sold or the prices at which any
securities may trade at the present time or at any time in the future. In
addition, as described above, Trident's opinion and presentations to FFBS's
board of directors were among the many factors taken into consideration by
FFBS's board of directors in making its determination to approve the merger
agreement.

Trident met or engaged in discussions with the board of directors and the
planning committee of FFBS at various times between January 1998 and January
1999 to present analyses contained in a series of reports which serve as the
basis for Trident's opinion. The key reports presented by Trident were the
valuation report dated January 7, 1998 and the due diligence report dated
January 14, 1999. The following is a brief summary of the valuation report
presented by Trident to the board of directors of FFBS on January 7, 1998.

Financial Analysis of FFBS. Trident examined FFBS's financial performance
for the period June 30, 1994 through September 30, 1997 by analyzing the
composition of its balance sheet, adjusting and normalizing its earnings, and
calculating a variety of operating and financial ratios for FFBS. Trident
compared FFBS's deposit market share with other financial institutions
operating in the same markets. Trident studied the trading market for FFBS
common stock and compared the performance of FFBS common stock over the
preceding twelve months to the performance of an index of thrift stocks and the
Standard and Poor's 500 Index.

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<PAGE>

southcentral United States based on regulatory financial information as of June
30, 1997. This analysis compared a number of FFBS's historical financial ratios
to those of the peer groups, including but not limited to:
(i) balance sheet composition;

(ii) asset quality and reserve coverage;

(iii) income and expense ratios for the trailing four quarters;

(iv) asset growth during the trailing four quarters; and

(v) efficiency, measured in assets per employee.

Comparison to Actively-Traded Thrifts. Trident compared FFBS to the
following groups of actively-traded thrifts as of January 2, 1998:

. all U.S. thrifts;

. Southcentral United States thrifts;

. thrifts with total assets between $100 million and $150 million;

. thrifts with a market value between $25 and $50 million;

. thrifts with a return on assets during the trailing four quarters
between 1.25% and 1.50%;

. thrifts with a return on equity during the trailing four quarters
between 7% and 8%;

. thrifts with tangible capital between 15% and 20%; and

. thirteen actively-traded thrifts Trident believed were most similar
to FFBS in terms of size, capital structure, profitability and asset
quality.

Trident compared FFBS to the aforementioned groups of actively-traded
thrifts on the basis of its stock pricing, balance sheet composition, capital
ratios, asset quality and reserve coverage, asset and deposit growth, return on
average assets, return on average equity, and the components of earnings during
the trailing four quarters.

State of the Market. Trident briefly reviewed the current and historical
trading market for thrift and bank equities, and current and historical trends
in the acquisition markets for banks and thrifts. Trident focused on the
acquisition market for thrifts with particular attention to the segments of the
market which it believed to be the most relevant to FFBS, such as thrifts of
similar size and profitability, thrifts with similar capital structures and
asset quality, and thrifts located in the same geographic region.

Control Valuation of FFBS Common Stock. Trident estimated the fair market
value of FFBS common stock in a merger. Trident used the market approach in
valuing FFBS common stock. Using this approach, Trident analyzed certain median
pricing ratios (e.g., price to book value, price to tangible book value, price
to reported earnings, price to assets, and the premium paid over tangible book
value as a percentage of core deposits) resulting from selected completed
thrift merger transactions, as well as recently announced pending transactions.

In applying the market approach, Trident considered the pricing ratios for
the following groups of thrift merger transactions:

. all pending thrift merger transactions (54 transactions);

. all pending thrift mergers announced during the 90 days prior to
January 2, 1998 (the date of the market data) (33 transactions);

. all pending thrift mergers involving thrifts located in the
Southcentral United States region (4 transactions);

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<PAGE>

. all pending thrift transactions to be accounted for as poolings of
interests (25 transactions);

. all pending thrift transactions to be accounted for as purchases (23
transactions);

. all pending thrift mergers in which the target thrift had assets
between $100 million and $200 million (5 transactions);

. all pending thrift mergers in which the aggregate consideration was
between $20 million and $50 million (6 transactions);

. all pending thrift mergers in which the target thrift had a return on
assets of between 1.00% and 1.50% (12 transactions);

. all pending thrift mergers in which the target thrift had a return on
equity of between 6% and 9% (18 transactions); and

. all pending thrift mergers in which the target thrift had a tangible
equity ratio of between 10% and 20% of assets (12 transactions).

Trident also considered the pricing ratios for eight pending or completed
thrift merger transactions in which the target thrift was of similar size and
capital structure to FFBS, and in which the target thrift had similar
profitability and asset quality. Trident then compared a number of financial
ratios for FFBS to those of the target thrift institutions.

Based on FFBS's financial condition and results of operations, as well as
other factors, relative to the groups of thrift mergers noted above, Trident
estimated $22.50 to 27.50 per share control value for FFBS.

Strategic Alternatives. Trident presented a list of the pros and cons of
remaining independent or a merger with a larger financial institution.

Prospective Acquirors. Trident presented FFBS with a list of other financial
institutions with operations in Mississippi, Tennessee, and Alabama that it
believed to be prospective acquirors (a total of 6 companies). These
prospective acquirors were categorized based on Trident's perceived level of
interest from the acquiror and "fit" with FFBS. Trident also presented a list
of 13 other prospective acquirors that Trident felt were also possible
acquirors, but represented less likely merger scenarios than the first group
for various reasons. Trident also presented summary financial statements, stock
price performance, peer group comparisons, a history of mergers and
acquisitions, and other information regarding prospective acquirors.

Trident re-evaluated FFBS's control value and presented the results to the
board as part of the due diligence report, due to:

. changes in market conditions;

. changes in the financial condition of FFBS; and

. the length of time between Trident's initial valuation of FFBS and
the signing of the merger agreement.

The following is a summary of the due diligence report presented to the
board of directors of FFBS on January 14, 1999:

Summary of Proposed Transaction. Trident presented a summary of the
financial terms of the merger. Trident also compared the pricing ratios for the
merger with the median pricing ratios for selected groups of recently announced
thrift mergers and acquisitions. Trident discussed the advantages and
disadvantages of the merger from a financial point of view.

Financial Analysis of FFBS. Trident examined FFBS's financial performance
for the period June 30, 1995 through September 30, 1998 by analyzing the
composition of its balance sheet, adjusting and normalizing its

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<PAGE>

earnings, and calculating a variety of operating and financial ratios for FFBS.
Trident compared FFBS's deposit market share with other financial institutions
operating in the same markets. Trident studied the trading market for FFBS
common stock and compared the performance of FFBS common stock over the
preceding twelve months to the performance of an index of thrift stocks and the
Standard and Poor's 500 Index.

Peer Group Analysis. Trident evaluated FFBS's strengths and weaknesses by
comparing the financial performance of FFBS to that of thrift institutions of
similar size ($100 to $200 million of assets) located in the Southcentral
United States based on regulatory financial information as of June 30, 1998.
This analysis compared a number of FFBS's historical financial ratios to those
of the peer groups, including but not limited to:

. balance sheet composition;

. asset quality and reserve coverage;

. income and expense ratios for the trailing four quarters;

. asset growth during the trailing four quarters; and

. efficiency, measured in assets per employee.

Comparison to Actively-Traded Thrifts. Trident compared FFBS to the
following groups of actively-traded thrifts as of January 8, 1999:

. all U.S. thrifts;

. Mississippi thrifts;

. Southcentral United States thrifts;

. thrifts with total assets between $100 million and $200 million;

. thrifts with a market value between $30 and $60 million;

. thrifts with a return on assets during the trailing four quarters
between 0.95% and 1.15%;

. thrifts with a return on equity during the trailing four quarters
between 6% and 8%;

. thrifts with tangible capital between 12% and 18%; and

. thirteen actively-traded thrifts Trident believed were most similar
to FFBS in terms of size, capital structure, profitability and asset
quality.

State of the Market. Trident briefly reviewed the current and historical
trading market for thrift and bank equities, and current and historical trends
in the acquisition market for banks and thrifts. Trident focused on changes in
the acquisition market for thrifts since the previous valuation. Particular
attention was paid to the market segments which Trident believed to be the most
relevant to FFBS: thrifts of similar size and profitability; thrifts with
similar capital structures and asset quality; and thrifts located in the same
geographic region. Trident emphasized changes in market conditions and FFBS's
financial condition during the previous year.

Control Valuation of FFBS Common Stock. Trident updated the fair market
value of FFBS common stock in a merger. In updating the value of FFBS's common
stock, Trident utilized both the income and market approaches and reconciled
the differences between the two.

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<PAGE>

Trident used an income method in its valuation of FFBS by capitalizing
FFBS's projected earnings contribution in a merger context. In order to
estimate FFBS's earnings contribution, Trident normalized FFBS's reported
earnings for the four quarters ended September 30, 1998 by excluding non-
recurring income and expenses. Prior to capitalizing earnings, Trident took
into account FFBS's excess capital. Trident estimated that FFBS only required
7.00% capital to operate the bank. Therefore Trident isolated the excess
capital (the amount in excess of 7.00%) and adjusted the earnings base for the
income associated with this excess capital at a pre-tax yield of 5.50% (3.58%
after-tax). The base earnings were then annualized and adjusted to exclude non-
recurring income and expenses, plus merger cost saving of 25% to 50% as a
result of an assumed acquisition of FFBS.

The earnings contribution is the sum of the normalized earnings and the
after-tax cost savings. The earnings contribution was then capitalized at rates
between 10% and 7%, to reflect discount rates between 13% and 17% and earnings
growth rates between 5% and 8%. The capitalization rates chosen were estimates
of the required rates of return for holders or prospective holders of shares of
financial institutions similar to FFBS, based on a number of factors, including
prevailing interest rates, the pricing ratios of publicly traded financial
institutions, the financial condition and operating results of FFBS, as well as
Trident's general knowledge of valuation, the securities markets, and
acquisition values in mergers of other financial institutions. Trident adjusted
the resulting values to reflect the cost of terminating certain long-term
contracts and benefit plans, and certain merger-related expenses. Using the
income approach, Trident established a reference range of $17.25 to $22.50 per
share.

In applying the market approach, Trident considered the pricing ratios for
the following groups of thrift merger transactions:

. all recent (announced in the preceding 180 days) thrift merger
transactions (143 transactions);

. thrift merger transactions announced during the 90 days prior to
January 8, 1999 (the date of the market data) (15 transactions);

. all pending thrift mergers (37 transactions);

. all pending thrift mergers involving thrifts located in the
Southcentral United States region (7 transactions);

. all pending thrift transactions in Mississippi (1 transaction);

. all pending thrift mergers in which the target thrift had assets
between $100 million and $200 million (19 transactions);

. all pending thrift mergers in which the aggregate consideration was
between $25 million and $75 million (22 transactions);

. all pending thrift mergers in which the target thrift had a return on
assets of between 0.95% and 1.15% (17 transactions);

. all pending thrift mergers in which the target thrift had a return on
equity of between 5% and 8% (38 transactions); and

. all pending thrift mergers in which the target thrift had a tangible
equity ratio of between 10% and 20% of assets (37 transactions).

Trident also considered the pricing ratios for eleven pending or completed
thrift merger transactions in which the target thrift was of similar size and
capital structure to FFBS, and in which the target thrift had similar
profitability and asset quality. Trident then compared a number of financial
ratios for FFBS to those of the target thrift institutions.

Based on FFBS's financial condition and results of operations, as well as
other factors, relative to the groups of thrift mergers noted above, Trident
chose ranges of pricing ratios to apply to FFBS. Trident chose

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<PAGE>

price to book value ratios of 160% to 180%, resulting in per share values of
$24.00 to $27.00; price to tangible book value ratios of 160% to 180%, also
resulting in per share values of $24.00 to $27.00; price to earnings ratios of
21 to 27 times trailing four quarter earnings, resulting in per share values of
$21.50 to $27.50; price to assets ratios of 23% to 27%, resulting in per share
values of $22.75 to $26.75; and premiums over tangible book value as a
percentage of core deposits of 10% to 18.5%, resulting in per share values of
$21.50 to $26.75. Based on these derived ranges of value, Trident established a
reference range of $23.00 to $27.00 per share using the market approach.

Trident then reviewed the results from the two approaches, and after
consideration of all relevant facts, determined a final range of $20.00 to
$27.00 per share for the acquisition value of FFBS.

Review of Due Diligence Examination of NBC. Trident presented a summary of
its on-site due diligence examination of NBC. NBC's historical and pro forma
(to reflect the merger) balance sheets and income statements were presented,
along with a variety of financial ratios and graphs that analyzed NBC's
financial condition and operating results through September 30, 1998. Trident
discussed NBC's business strategy, strengths and weaknesses, profitability,
growth, net interest margin, non-interest income, operating expenses,
intangible assets, borrowed funds, market area, capital, asset quality and
reserve coverage, concentrations of credit and loan portfolio composition,
interest-rate risk, year 2000 preparations, regulatory exam results, subsidiary
activities, culture, stock pricing, and other issues. Trident also discussed
NBC's pending acquisition of First National Corporation of West Point, West
Point, Mississippi.

Comparison to Actively-Traded Banks. Trident compared NBC to the following
groups of actively-traded banks as of January 8, 1998:

. all U.S. banks;

. Southcentral United States banks;

. Mississippi banks;

. banks with a total assets between $500 million and $750 million;

. banks with a return on assets during the trailing four quarters
between 1.30% and 1.45%;

. banks with a return on equity during the trailing four quarters
between 12% and 13%;

. banks with tangible capital between 10% and 13%; and

. fourteen actively-traded banks Trident believed were most similar to
NBC in terms of size, capital structure, profitability and asset
quality.

Trident compared NBC to the aforementioned groups of actively-traded banks
on the basis of its stock pricing, balance sheet composition, capital ratios,
asset quality and reserve coverage, asset and deposit growth, return on average
assets, return on average equity, and the components of earnings.

Peer Group Analysis. Trident evaluated NBC's strengths and weaknesses by
comparing the financial performance of NBC to that of the following groups of
banks based on regulatory financial information as of June 30, 1998:

. all U.S. banks;

. Mississippi commercial banks;

. Southcentral United States banks;

. U.S. banks of similar size ($500 to $750 million of assets); and

. Southcentral United States banks of similar size.

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This analysis compared a number of NBC's historical financial ratios to
those of the peer groups, including but not limited to:

. balance sheet composition;

. key ratios;

. income and expense ratios for the trailing four quarters, the most
recent quarter, and the most recent calendar year;

. historical return on average assets and return on average equity; and

. asset, loan, deposit and equity growth rates for selected periods.

Trident reported that during its investigation, Trident did not discover any
conditions that would prevent it from rendering its fairness opinion to FFBS's
board of directors. As discussed above, Trident relied, without independent
verification, upon the accuracy and completeness of all of the financial and
other information provided by NBC.

Trident, as part of its investment banking business, is continually engaged
in the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwriting, and valuations for corporate and
other purposes. Trident has extensive experience with the valuation of
financial institutions. FFBS's board of directors selected Trident as its
financial advisor because Trident is a nationally recognized investment banking
firm specializing in financial institutions and because of its substantial
experience in transactions similar to the merger. Trident is not affiliated
with either FFBS or NBC.

For its services as financial advisor, FFBS paid Trident a retainer of
$15,000 and a fee of $50,000 upon signing of the merger agreement. An
additional fee equal to 1.20% of the aggregate merger consideration, less
$65,000, will be payable to Trident upon consummation of the merger (a balance
due of approximately $511,500 based on a $38.00 per share price for NBC). FFBS
has also agreed to reimburse Trident for its reasonable out-of-pocket expenses
and to indemnify Trident against certain liabilities, including certain
liabilities under federal securities laws.

Closing Date and Effective Date of the Merger

The closing date will be on the last business day of the month in which all
conditions to the merger have been satisfied, or any other date chosen by
agreement of the parties. The parties will choose an effective date on which
the merger will be effective. The Secretaries of State of Mississippi and
Delaware will each issue a certificate of merger, which will provide the
effective date of the merger. The parties currently anticipate an effective
date of June 30, 1999.

NBC and FFBS anticipate that all conditions to consummation of the merger
will be satisfied during the second quarter of 1999. However, delays in the
consummation of the merger could occur.

The necessary shareholder and regulatory approvals may not be obtained.
Regulatory approval could be premised on conditions that are unacceptable to
NBC or FFBS. Other conditions precedent to the merger also may not be
satisfied. These conditions are not all within the control of NBC and FFBS, and
the parties cannot assure you that they will be satisfied. However, as of the
date of this proxy statement-prospectus, the parties are not aware of any
condition or approval that cannot or will not be met or obtained.

The board of directors of either NBC or FFBS may terminate the merger
agreement if the merger is not consummated by September 30, 1999, or as
otherwise provided in Section 11.1 of the merger agreement.

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Employee Benefits of FFBS Employees after the Merger

NBC has offered a "pay to stay" retention bonus to certain FFBS employees in
order to compensate those employees for their extraordinary efforts in
completing the merger and ensuring that the operating and accounting systems of
FFBS's and NBC's subsidiaries are consolidated. The benefit provides a payment
of 25% of the employee's current annual base salary to be paid in a lump sum
immediately following the successful consolidation of the operating and
accounting systems, or December 31, 1999, whichever occurs first.

NBC will recognize FFBS employment agreements dated April 14, 1994 with
certain officers of FFBS. Those agreements will terminate without further
extension in April 2001. Upon the closing of the merger, two of the officers
will relinquish their existing employment agreements and enter into new three-
year employment agreements with NBC.

NBC will also offer FFBS officers enhanced severance benefits including up
to twelve weeks' pay if their employment relationship is terminated without
cause within twelve months of the closing of the merger.

All other FFBS employees are covered by a severance plan wherein NBC will
provide one week's base pay for each year or fraction thereof of service, for a
minimum of four weeks pay and a maximum of eight weeks pay, if their employment
relationship is terminated without cause within twelve months of the closing of
the merger.

FFBS employees will also be given accrued vacation (not to exceed three
weeks), and sick leave (not to exceed ninety (90) days), but any such accrued
vacation time must be used entirely by the end of 1999.

Additionally, FFBS employees who become NBC employees will be entitled to
the same employee benefits as those offered NBC employees, including:

. eligibility to participate in NBC's benefit plans on the effective
date of the merger; and

. full credit for their years of service with FFBS for both eligibility
and vesting purposes, to the extent such credit qualifies under the
terms of NBC's plans.

Surrender and Exchange of Stock Certificates

SunTrust Bank, Atlanta, Georgia, will act as exchange agent for the exchange
of FFBS common stock for NBC common stock. Shortly after the effective date of
the merger, all non-dissenting FFBS stockholders will receive a letter of
transmittal that will include instructions for the exchange of FFBS common
stock certificates for certificates of NBC common stock. Each FFBS stock
certificate outstanding immediately prior to the merger will be deemed for all
purposes to evidence ownership of shares of NBC common stock, regardless of
when they are actually exchanged.

FFBS stockholders should not send in their stock certificates until they
receive instructions in the letter of transmittal.

When the exchange agent receives certificates of FFBS common stock, together
with a properly completed letter of transmittal, it will issue and mail to the
FFBS stockholder a certificate representing the number of NBC common shares the
former FFBS stockholder received in the exchange. If the FFBS stockholder is
entitled to receive a fraction of an NBC share, the exchange agent will mail
the FFBS stockholder a check instead of the fractional share.

FFBS stockholders will be able to vote at any meeting of NBC stockholders if
the record date for the NBC meeting is after the effective date of the merger.
In that case, FFBS stockholders would be able to vote the number of shares of
NBC common stock into which their FFBS common stock has been converted
regardless of whether such stockholders have surrendered their FFBS stock
certificates.

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Dividends or other distributions payable to NBC stockholders after the
merger will be distributed to FFBS stockholders only after surrender of the
FFBS stock certificates. When you exchange your FFBS stock certificate(s), the
exchange agent will send you all previously paid but undelivered dividends and
other distributions on your new NBC common stock, if any. You will not receive
interest on those distributions for any period during which NBC holds them
awaiting the exchange of your FFBS common stock. Also, taxes may be deducted
from those distributions.

Payment of Expenses Relating to the Merger

NBC will pay all expenses of printing and distributing this proxy statement-
prospectus. The parties otherwise will pay all of their own expenses related to
negotiating and completing the merger.

Representations and Warranties in the Merger Agreement

FFBS and NBC have made certain representations and warranties to each other
as part of the merger agreement. FFBS's representations and warranties relate
to, among other things:

. its organization and authority to enter into the merger agreement;

. its capitalization, properties, and financial statements;

. pending and threatened litigation against FFBS;

. FFBS's contractual obligations and contingent liabilities; and

. its public reports.

FFBS's representations and warranties are generally contained in Article VI of
the merger agreement.

NBC's representations and warranties relate to, among other things:

. its organization and authority to enter into the merger agreement;

. its capitalization and financial statements;

. its pending and threatened litigation; and

. its public reports.

NBC's representations and warranties are generally contained in Article VII of
the merger agreement.

The representations and warranties of the parties generally will not survive
the effective date of the merger.

Conditions to the Merger; Waiver of Those Conditions

The merger agreement contains a number of conditions that must be satisfied
to complete the merger. The conditions must either be met or waived (if they
are waivable), and include, among other things:

. FFBS's net worth must be at least $22.5 million;

. FFBS's loan and lease loss reserves must be at least $1,035,000.00;

. certain officers of FFBS must have entered into employment contracts
with NBC and still be employed by FFBS at the effective time of the
merger;

. approval of the merger agreement by NBC's and FFBS's stockholders;

. approval by the Federal Reserve Board without imposing any conditions
that are unacceptable to either NBC or FFBS;

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. issuance of a tax opinion that the merger qualifies as a tax-free
reorganization;

. Securities and Exchange Commission approval of the registration
statement under the Securities Act, with no stop order suspending its
effectiveness;

. absence of an order, decree or injunction enjoining or prohibiting
completion of the merger;

. continued accuracy as of the closing date of the merger of the
representations and warranties set forth in the merger agreement;

. qualification of the merger for pooling-of-interests accounting
treatment; and

. issuance of certain legal opinions by counsel.

Most of the conditions to completing the merger may be waived at any time by
the party for whose benefit they were created. Regulatory and stockholder
approvals may not be waived. Also, the merger agreement may be amended or
supplemented at any time by written agreement of the parties. However, any
material change in the terms of the merger agreement after the meetings would
require a resolicitation of votes from NBC's and FFBS's stockholders.

Regulatory and Other Required Approvals

NBC is a registered bank holding company and is regulated by the Federal
Reserve Board. The Federal Reserve Board must approve the merger. FFBS and NBC
must wait at least 15 days after the date of Federal Reserve Board approval
before they may complete the merger. During this 15-day period, the Department
of Justice may object to the merger on antitrust grounds. The merger must be
completed within 90 days of the date of Federal Reserve Board approval.

The NBC stock to be issued in exchange for FFBS stock in the merger has been
registered with the Securities and Exchange Commission. The transaction also
will be registered with various state securities commissions as may be
required.

The approval of the Federal Reserve Board may be obtained or denied prior to
or after the meetings. The vote on the merger agreement at the meetings does
not depend upon and is not conditioned upon receipt of regulatory approval
before the meetings. Even if the merger agreement is approved at the meetings
it will be terminated if the approval of the Federal Reserve Board is not
obtained or if the approval of the Federal Reserve Board is conditioned upon
any actions that NBC or FFBS finds objectionable.

In connection with the conversion by First Federal Bank for Savings in 1993
from the mutual to stock form, a liquidation account was established for the
unlikely event of a liquidation of First Federal Bank for Savings after that
conversion. Under federal law, the liquidation account will be assumed by
National Bank of Commerce after it merges with First Federal Bank for Savings.
The liquidation account is not expected to have a material negative impact on
the operations of National Bank of Commerce.

Business of FFBS Pending the Merger

The merger agreement requires FFBS to continue to operate its business as
usual pending the merger. Among other things, FFBS may not, without NBC's
consent:

. pay any dividends prior to the merger other than the regular semi-
annual dividends of 30 cents per share to its stockholders payable in
January 1999 and July 1999;

. except as set forth in Schedule 8.2(b) of the merger agreement, lend
an amount exceeding $200,000 to an individual or entity or lend an
amount, which when aggregated with other loans to the same individual
or entity or related interest, would exceed $300,000;

. hire new, additional or replacement employees;

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. grant promotions to current employees except for planned promotions
as set forth on Schedule 8.2(d) of the merger agreement;

. except as set forth in Schedule 8.2(e) of the merger agreement, make,
incur, or agree to incur, any single capital expenditure which alone
exceeds $10,000 or enter into any lease agreement with rental
payments exceeding $10,000;

. other than previously agreed upon contracts as set forth in Schedule
8.2(f) of the merger agreement, pay, or agree to pay, any bonus to
any employee, officer or director;

. grant any raise or salary increase to any employee, officer or
director except anticipated raises as set forth in Schedule 8.2(g) to
the merger agreement;

. enter into any contracts, contract renewals or extensions except
contracts that obligate FFBS to pay less than $5,000;

. purchase, lease or sell any assets outside the normal course of
business unless such anticipated transactions are set forth in
Schedule 8.2(i) to the merger agreement;

. purchase or sell investment securities;

. issue any additional common stock or cause to be declared any stock
dividend or stock split; or

. establish any employee benefits or benefit plans in addition to those
in effect on the date of the merger agreement.

FFBS may not solicit bids or other transactions that would result in a
merger of FFBS with an entity other than NBC.

Termination of the Merger Agreement

NBC and FFBS may terminate the merger agreement for various reaons,
including:

. a material breach by the other party of any covenant, representation
or warranty in the merger agreement if such breach has not been cured
within 30 days of receipt of notice of the nature of the breach;

. the required federal or state regulatory approval is denied or
contains conditions to approval that are unacceptable to either
party;

. the parties do not receive the tax opinion of T. E. Lott & Company
described below under the section entitled "Material Tax Consequences
of the Merger;"

. the stockholders of NBC or FFBS fail to approve the merger at either
meeting;

. the merger is not consummated by September 30, 1999, unless extended;

. by FFBS, if a material adverse change occurs in the financial
condition of NBC;

. by NBC, if a material adverse change occurs in the financial
condition of FFBS;

. by NBC, if the merger does not qualify as a pooling-of-interest in
accordance with generally accepted accounting principles; or

. by FFBS, if its independent tax accountants find that the merger does
not qualify as a tax-free reorganization.

Provisions of the merger agreement relating to reimbursement of expenses
survive both the merger and a termination of the merger agreement prior to
completion.

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Management and Operations after the Merger

After the merger, FFBS will cease to exist as a separate company and two of
the current members of FFBS's board of directors will be appointed to the NBC
board of directors.

Certain Differences in Rights of Stockholders

If the merger is completed, all FFBS stockholders, other than those who
exercise and perfect rights of appraisal, will become NBC stockholders. Their
rights as stockholders will then be governed by NBC's articles of incorporation
and bylaws. The following is a list of the significant differences between the
rights of FFBS stockholders and NBC stockholders not described elsewhere in
this proxy statement-prospectus:

Shares of Stock:

NBC has authorized only one class of stock--common stock. FFBS has
authorized two classes of stock--common stock and preferred stock. FFBS does
not have any preferred stock outstanding.

Liquidity of Stock:

The common stock of NBC and FFBS is traded in the over-the-counter market.
Current quotes of the market price of NBC common stock are available from the
firms of Sterne, Agee and Leach, Inc. and J. C. Bradford & Co., which make a
market in NBC's common stock.

Directors' Qualifications:

NBC requires that each NBC director:

. must be a stockholder of NBC;

. must be not under 21 years of age and not over 75 years of age at the
time he or she is elected, and must retire at the next stockholders'
meeting after his or her 75th birthday;

. may not serve as an attorney for any other financial institution, or
bank or savings and loan holding company; and

. may not be a member of the board of directors of any other financial
institution or bank or savings and loan holding company if such
service is prohibited by laws or regulations applicable to depository
institutions.

Removal of Directors:

NBC's directors may be removed only for cause, which is defined as final
conviction of a felony, unsound mind, adjudication of bankruptcy, non-
acceptance of office or conduct prejudicial to the interests of NBC. Removal of
director requires the vote of a majority of the entire board of directors or
the stockholders, if the number of shares that were sufficient to elect the
director are voted for the director's removal.

FFBS's directors may be removed for cause by the holders of a majority of
the shares entitled to vote at an election of directors. An example of cause
would be a breach of a fiduciary duty. FFBS's board of directors may not remove
directors.

Amendment of Articles and Bylaws:

Mississippi law provides that, unless the Mississippi Business Corporation
Act (the "MBCA"), the articles of incorporation or the board of directors
require a greater vote or a vote by voting groups, an amendment must be
approved by a majority vote by each voting group with respect to which the
amendment would create dissenters' rights. NBC's articles of incorporation
provide that the affirmative vote of 75% or

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more of the outstanding voting shares of NBC is required to amend or repeal
Article 6 (issuance of capital stock), Article 7 (any merger or consolidation
of NBC not approved by the board of directors), Article 9 (factors the board is
required to take into account when considering a proposed merger or
consolidation) or Article 12 (number and election of directors).

FFBS's articles of incorporation provide that the affirmative vote of at
least 80% of the votes of all classes of stock of FFBS entitled to vote in the
election of directors, considered as one class, which are not beneficially
owned, directly or indirectly, by any other corporation, person or other entity
which is the beneficial owner, directly or indirectly, of more than 10% of the
outstanding shares of stock of FFBS entitled to vote, is required to amend or
rescind Article 8 (any merger, consolidation, reverse stock split, sale, lease
or exchange of substantially all of NBC's assets).

The bylaws of NBC may be altered, amended or repealed by a majority vote of
the board of directors or by a vote of two-thirds of the outstanding voting
shares of NBC.

FFBS's bylaws may be amended or repealed by either:

. the affirmative vote of a majority of the board of directors of FFBS,
or

. the stockholders of FFBS, by the affirmative vote of the holders of
not less than 80% of the shares of FFBS entitled to vote generally in
the election of directors, after giving effect to the provisions in
the certificate of incorporation that limit the shares of stock that
may be voted by certain holders of shares in excess of the 10% limit
provided in the certificate of incorporation.

Meetings of Stockholders:

Meetings of NBC stockholders may be called by:

. the chairman of the board,

. the president,

. a majority of the board of directors, or

. stockholders holding more than 20% of the outstanding NBC common
stock.

Any meeting of FFBS stockholders may be called only by the board of
directors.

Interests of Certain Persons in the Merger

The merger agreement provides for:

. indemnification of FFBS officers and directors from liability for
actions arising while they served as FFBS officers or directors;

. appointment of two members of FFBS's board of directors to serve on
the NBC board of directors after completion of the merger. The two
directors have not yet been selected by NBC;

. continuation of certain employee benefits for FFBS's employees. See
"Employee Benefits of FFBS Employees after the Merger" and
"Management and Operations after the Merger," above; and

. employment agreement payouts for two officers and replacement
employment agreements for two officers.

Material Tax Consequences of the Merger

The following is a summary description of the material income tax
consequences of the merger. It is not intended to be a complete description of
the federal income tax consequences of the merger. Tax laws are complex, and an
FFBS shareholder's individual circumstances may affect the tax consequences to
him or her.

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In addition, we have not included information about the tax consequences of the
merger under state, local or other tax laws. We urge FFBS stockholders to
consult a tax advisor regarding the tax consequences of the merger to them.

NBC and FFBS must receive the tax opinion in order to complete the merger.
The tax opinion is based upon representations made by NBC and FFBS about the
terms of the merger and certain other matters. The tax opinion concludes that
the merger will constitute a reorganization within the meaning of Section 368
of the Internal Revenue Code. A reorganization within the meaning of Section
368 of the Internal Revenue Code means:

. neither FFBS nor NBC will recognize any gain or loss in the merger;

. FFBS's stockholders will not recognize any gain or loss for federal
income tax purposes to the extent they receive NBC common stock in
exchange for their FFBS common stock;

. the tax basis of the NBC common stock received in the merger will be
the same as the tax basis of the exchanged FFBS common stock;

. the holding period, for federal income tax purposes, for NBC common
stock received in the exchange will include the period during which
the shareholder held the FFBS common stock (as long as the FFBS
common stock was held as a capital asset at the effective date of the
merger); and

. where solely cash is received by a holder of NBC or FFBS common stock
in the merger pursuant to the exercise of dissenter's rights or
rights of appraisal, such cash will be treated as a redemption of the
shareholder's common stock and will be subject to the provisions and
limitations of Section 302 of the Internal Revenue Code .

See "Proposed Merger--Representations and Warranties; Conditions to the
Merger; Waiver of Those Conditions."

Resale of NBC Common Stock

The shares of NBC common stock to be issued in the exchange have been
registered under the Securities Act of 1933. Stockholders who are not
affiliates of FFBS or NBC may freely trade the NBC common stock upon completion
of the merger. The term affiliate generally means each person who was an
executive officer, director or 10% shareholder of FFBS or NBC prior to the
merger.

Those stockholders who are deemed to be affiliates of FFBS may only sell
their NBC common stock as provided by Rule 145 of the Securities Act, or as
otherwise permitted under the Securities Act. Affiliates of FFBS who do not
become affiliates of NBC may publicly resell their NBC common stock if they
register the resale of those shares or they comply with the restrictions of
Rule 145.

If you are or may be an FFBS affiliate, you should carefully consider the
resale restrictions imposed by Rule 145 before you attempt to transfer any
shares of NBC common stock after the merger. Further, shares of NBC common
stock issued to FFBS affiliates in the merger will not be transferable until
financial results that include at least 30 days of post-merger combined
operations of NBC and FFBS have been published. This restriction is necessary
in order to satisfy certain requirements for pooling-of-interests accounting
treatment.

Rights of Dissenting Stockholders

If you object to the merger and desire to perfect your dissenter's rights or
rights of appraisal, you will lose the right to dissent or seek an appraisal
from the merger if you do not take the following steps timely. If you lose your
right to dissent or seek an appraisal, you will have no right to receive cash
for your shares of NBC or FFBS common stock.

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Dissenting Rights of NBC Stockholders

The Mississippi Business Corporation Act provides NBC stockholders with the
right to dissent and obtain cash for their NBC shares if the merger is
consummated. The availability of dissenters' rights is conditioned upon
compliance with the provisions of MBCA Sections 79-4-13.01, et seq.
Accordingly, any NBC stockholder who wishes to dissent from the proposed merger
and receive the cash value of his or her shares should consult with legal
counsel. The following summary of dissenter's rights is qualified in its
entirety by reference to MBCA Sections 79-4-13.01, et seq., a copy of which is
attached as Appendix E to this proxy statement-prospectus.

To assert dissenter's rights, an NBC stockholder must:

. give notice in writing to NBC, prior to the vote on the merger
agreement, that he or she intends to demand payment for his or her
shares if the merger is consummated; and

. not vote his or her shares in favor of the merger agreement.

If the merger agreement is approved at the annual meeting, NBC, no later
than ten (10) days after the date the merger becomes effective, will deliver a
written notice, the dissenter's notice, to each stockholder who satisfied the
requirements in the preceding paragraph. The dissenter's notice will:

. state where the stockholder's payment demand is to be sent and where
and when the stockholder's certificates must be deposited;

. supply a form for the payment demand that includes the date of the
first announcement to the news media or to NBC stockholders of the
terms of the proposed merger and requires the dissenting stockholder
to certify whether or not he or she acquired beneficial ownership of
the shares before that date;

. set a date by which NBC must receive the stockholder's payment
demand, which date may not be fewer than thirty (30) nor more than
sixty (60) days after the date the dissenters' notice is delivered;
and

. be accompanied by a copy of Article 13 of the MBCA.

Upon receipt of the dissenter's notice, any stockholder who wishes to
perfect his or her dissenter's rights must do the following:

. send NBC a payment demand, NBC must receive the payment demand on or
before the date set forth in the dissenter's notice;

. certify whether he or she acquired beneficial ownership of the shares
before the date set forth in the dissenter's notice; and

. deposit his or her NBC stock certificates in accordance with the
terms of the dissenter's notice.

An NBC stockholder who demands payment and properly deposits his or her
shares retains all other rights of an NBC stockholder until those rights are
canceled or modified by the consummation of the merger.

As soon as the merger is consummated or upon receipt of the payment demand,
NBC will pay each dissenting stockholder who has complied with the above
requirements the fair value of the NBC shares, as determined by NBC, plus
accrued interest. This payment will be accompanied by the following:

. NBC's balance sheet as of the end of its most recently completed
fiscal year, an income statement for that year, a statement of
changes in stockholders' equity for that year, and the latest
available interim financial statements;

. a statement of NBC's estimate of the fair value of NBC shares;

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<PAGE>

. an explanation of how the interest was calculated;

. a statement of the dissenter's right to demand payment for his or her
own estimated fair value of his or her NBC shares, and the amount of
interest due, if he or she is dissatisfied with the amount of the
payment; and

. a copy of Article 13 of the MBCA.

A dissenting stockholder may notify NBC in writing of his or her estimate of
the fair value of shares and amount of interest due, and demand payment of his
or her estimate (less any payments previously made) if:

. the dissenting stockholder believes that the amount previously paid
by NBC is less than the fair value of his or her shares or that the
interest paid was incorrectly calculated;

. in the case of a stockholder who was the beneficial owner of the
shares before the date set forth in the dissenter's notice, NBC fails
to make payment within 60 days after the date set for receipt of the
payment demand; or

. NBC, having failed to consummate the merger, does not return the
deposited certificates or release the transfer restrictions imposed
on uncertificated shares within 60 days after the date set for
receipt of the payment demand.

A dissenting stockholder is deemed to waive this right to demand payment
unless he or she notifies NBC of his or her demand in writing within 30 days
after NBC makes or offers payment for his or her shares.

If a demand for payment remains unsettled, NBC will commence a proceeding
within 60 days after receiving the payment demand and petition the Chancery
Court to determine the fair value of the shares and accrued interest. If NBC
does not commence this proceeding within this 60-day period, NBC will pay each
dissenting stockholder whose demand remains unsettled the amount demanded.

NBC will make all dissenting stockholders whose demands remain unsettled
parties to the proceeding and all parties must be served with a copy of the
petition. The Chancery Court may appoint one or more persons as appraisers to
receive evidence and recommend a decision on the question of fair value. The
appraisers have the powers described in the order appointing them, or in any
amendment to it. Dissenting stockholders are entitled to the same discovery
rights as parties in other civil litigation.

Each dissenting stockholder made a party to the proceeding will be entitled
to judgement for:

. the amount, if any, by which the Chancery Court finds the fair value
of his or her shares, plus interest, exceeds the amount paid by NBC,
or

. the fair value, plus accrued interest, of his or her after-acquired
shares for which NBC elected to withhold payment.

The Chancery Court will determine all costs of the proceeding including the
reasonable compensation and expense of appraisers appointed by the Chancery
Court. The Chancery Court will assess these costs against NBC, except that it
may assess costs against all or some of the dissenting stockholders, in amounts
it finds equitable, if it finds the dissenting stockholders acted arbitrarily,
vexatiously or not in good faith in demanding payment.

The Chancery Court may assess the fees and expenses of counsel and experts
for the respective parties, in amounts it finds equitable as follows:

. against NBC and in favor of any and all dissenting stockholders if it
finds that NBC did not substantially comply with its legal
obligations under Article 13 of the MBCA; or

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. against either NBC or a dissenting stockholder, in favor of any other
party, if it finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously or not in good faith with
respect to the rights provided by Article 13 of the MBCA.

You must do all of the things described above in order to preserve your
right to dissent and to receive the fair value of your shares in cash. If you
do not follow each of the steps as described above, you will have no right to
receive cash for your shares. In view of the complexity of these provisions of
Mississippi law, NBC stockholders who are considering dissenting from the
approval of the merger agreement and exercising their rights should consult
their legal advisors.

Appraisal Rights of FFBS Stockholders

The Delaware General Corporate Law provides FFBS stockholders with the right
to seek an appraisal and obtain cash payment for their FFBS shares if the
merger is consummated. The availability of rights of appraisal is conditioned
upon compliance with the provisions of Section 262 of the DGCL. Accordingly,
any FFBS stockholder who wishes to dissent from the proposed merger and receive
the cash value of his or her shares should consult with legal counsel. The
following is only a summary of a stockholder's rights of appraisal or
dissenter's rights under Section 262. The full text of Section 262 is attached
to this proxy statement-prospectus as Appendix D.

FFBS stockholders who follow the procedures set forth in Section 262 may
receive cash for their FFBS common stock instead of exchanging the shares for
NBC common stock. This cash payment will be equal to the fair value of their
FFBS shares. The fair value will be determined by judicial appraisal and could
be more than, the same as, or less than, the value of NBC common stock the FFBS
stockholder will receive in the merger exchange.

In order to exercise your rights of appraisal you MUST comply with the
following requirements of Section 262:

(1) file a written demand with FFBS for appraisal of your shares prior
to the vote on the merger agreement at the FFBS special meeting.
The demand must identify the stockholder and state that the
stockholder intends thereby to demand an appraisal of his or her
shares;

(2) not vote your shares in favor of approval of the merger agreement;
and

(3) have your shares valued in an appraisal proceeding, as described
below.

A proxy or vote against the merger agreement will not satisfy the
requirement of filing a written demand for appraisal. The requirement of a
written demand is separate from, and should not be confused with, the
requirement that you must not vote in favor of the merger agreement.
Additionally, you may abstain from voting your shares and do so without waiving
your right of appraisal; you lose your right of appraisal only if you vote in
favor of the merger agreement.

A proxy signed and left blank will, unless properly revoked, be voted in
favor of the merger agreement. Therefore, if you sign and date your proxy but
leave it blank as to how you wish the proxy to be voted, then you waive your
right of appraisal. Consequently, if you elect to exercise your right of
appraisal, you must:

. not leave your proxy blank, but must either vote against the merger
agreement or abstain from voting altogether;

. continuously hold your shares from the date of making the demand
through the effective date of the merger; and

. fully comply with the other requirements of Section 262 listed above.

You may, however, withdraw your demand for appraisal and exchange your FFBS
stock for NBC stock at any time within 60 days after the effective date of the
merger. NBC may terminate the merger agreement if it

36
<PAGE>

believes that the cash it will be required to pay to dissenters will cause the
total csah to be paid in the merger to exceed 10% of the value of FFBS stock to
be exchanged.

FFBS stockholders of record are entitled to seek appraisal of the fair value
of only the shares registered in their own name. The demand for appraisal must
be executed by or for the stockholder of record, fully and correctly, as such
stockholder's name appears on the FFBS stock certificates. If the stock is of
record in a fiduciary capacity, such as by a trustee, guardian or custodian,
the demand should be made in that capacity, and if the shares are owned of
record by more than one person, as in a joint tenancy or tenancy in common, the
demand should be made by or for all owners of record.

An authorized agent, including one or more joint owners, may execute the
demand for appraisal for a holder of record; however, such agent must identify
the record owner or owners and expressly disclose in such demand that the agent
is acting as agent for the record owner or owners. Beneficial owners who are
not record owners and who intend to exercise rights of appraisal should
instruct the record owner to comply strictly with the statutory requirements
with respect to the exercise of rights of appraisal before the date of the FFBS
special meeting.

A record holder, such as a broker, who holds dissenting shares as nominee
for beneficial owners, some of whom desire to demand appraisal, must exercise
rights of appraisal on the shares held by the dissenting beneficial owners. In
such case, the written demand for appraisal should set forth the number of
dissenting shares for which the demand is being made. Unless a demand for
appraisal specifies a number of dissenting shares, such demand will be presumed
to cover all shares of FFBS common stock held in the name of such record owner.

If the merger agreement is approved by FFBS stockholders, NBC will send a
notice within ten days after the effective date of the merger stating that
rights of appraisal are available to each stockholder who has filed an adequate
written demand for appraisal with FFBS and who has not voted in favor of the
merger agreement.

Within 120 days after the effective date of the merger, NBC or any
stockholder seeking rights of appraisal may file a petition in the Delaware
Court of Chancery demanding a determination of the value of the shares of all
stockholders seeking rights of appraisal. NBC does not intend to file such a
petition. FFBS stockholders seeking to exercise rights of appraisal should
initiate all necessary action with respect to the perfection of their rights of
appraisal within the time periods and in the manner set out in Section 262 and
described above.

Within 120 days after the effective date of the merger, any FFBS stockholder
who has complied with the provisions of Section 262 described above, upon
written request, shall be entitled to receive from NBC a written statement
setting forth the aggregate number of shares not voted in favor of the merger
and with respect to which demands for appraisal have been received and the
aggregate number of holders of such shares. NBC will mail this statement to any
such stockholder within ten days after receipt of the written request for the
statement or within ten days after the vote on the merger agreement at the FFBS
special meeting, whichever is later.

If a petition for appraisal is filed within 120 days after the effective
date of the merger, the Court of Chancery will conduct a hearing on such
petition to determine whether the FFBS stockholders seeking rights of appraisal
have complied with Section 262 and have thereby become entitled to dissenters'
rights. The Court of Chancery will then determine the fair value of the shares
exclusive of any element of value arising from the expectation or consummation
of the merger, but including a fair rate of interest, if any, to be paid on the
amount determined to be the fair value.

FFBS stockholders considering appraisal should bear in mind that the fair
market value of their dissenting shares determined under Section 262 could be
more than, the same as, or less than the value of NBC stock to be received in
the merger exchange. The written fairness opinion of Trident Financial
Corporation set forth as Appendix C hereto is not necessarily an opinion
regarding fair value under Section 262.

37
<PAGE>

The costs of the appraisal proceeding may be assessed against one or more
parties to the proceeding as the Court of Chancery deems equitable. Upon
application by an FFBS stockholder, the Court of Chancery may order all or a
portion of the expenses incurred by an FFBS stockholder in connection with the
appraisal proceedings (including, without limitation, reasonable attorneys'
fees and the fees and expenses of experts) to be charged pro rata against the
value of all of the shares entitled to an appraisal.

To recap, an FFBS stockholder must do the following:

(1) deliver a written demand for appraisal to FFBS prior to the meeting
to vote on the merger agreement; and

(2) vote his or her shares of FFBS common stock against the merger
agreement, or abstain from voting by not returning a signed proxy
card; and

(3) file a petition for appraisal within 120 days after the effective
date of the merger.

If a stockholder chooses to discontinue the effort to seek rights of
appraisal under Delaware law, the stockholder must deliver to NBC both a
written withdrawal of his or her demand for appraisal and an acceptance of the
terms of the merger agreement; except that any attempt to withdraw a demand for
appraisal must be made within 60 days after the effective date of the merger.
Any request to withdraw an appraisal demand 60 days or more after the effective
date of the merger will require the written approval of NBC.

If an appraisal proceeding is properly instituted, such proceeding may not
be dismissed as to any FFBS stockholder who has perfected his or her right of
appraisal without the approval of the Court of Chancery, and any such approval
may be conditioned on such terms as the Court of Chancery deems just.

After the effective date of the merger, dissenting stockholders cannot vote
their shares for any purpose, nor can they receive dividends on, or other
distributions in respect of, the dissenting shares, except dividends or
distributions payable as of a date prior to the effective date of the merger.

All written communications from FFBS stockholders regarding the exercise of
rights of appraisal, prior to the effective date of the merger, should be
mailed to William H. West at the First Federal Bank for Savings, 1121 Main
Street, Columbus, Mississippi 39701. After the effective date of the merger,
all written communications from stockholders with respect to the exercise of
rights of appraisal should be mailed to Richard T. Haston at the National Bank
of Commerce, P.O. Box 1187, Starkville, Mississippi 39760.

You MUST do all of the things described above in order to preserve your
rights of appraisal and to receive the fair value of your shares in cash.
Failure to follow the steps required by the DGCL for perfecting rights of
appraisal may result in the loss of such rights. In view of the complexity of
these provisions of Delaware law, FFBS stockholders who are considering
dissenting from the approval of the merger agreement and exercising their
rights under Section 262 should consult their legal advisors.

Accounting Treatment of the Merger

NBC intends to account for the merger as a pooling of interests. In order
for the merger to qualify for pooling-of-interests accounting treatment, among
other things, the total amount of cash that NBC is required to pay as a result
of the merger cannot exceed 10% of the value of the outstanding FFBS common
stock to be exchanged in the merger. Also, in order for the pooling-of-
interests accounting method to apply, affiliates of FFBS and NBC cannot sell,
transfer, pledge or otherwise alienate or encumber any shares of NBC common
stock (whether received in the merger or otherwise) until the results of at
least 30 days of post-merger combined operations of FFBS and NBC have been
published. NBC is not obligated to consummate the merger if the merger does not
qualify for pooling-of-interests accounting treatment under these
circumstances.

Stock Option Agreement

As an inducement and a condition to NBC entering into the merger agreement,
NBC and FFBS entered into a stock option agreement, under which FFBS granted
NBC an option to purchase up to 313,551 shares of

38
<PAGE>

FFBS common stock, representing 19.9% of the shares issued and outstanding
before giving effect to the exercise of such option. The stock option is
exercisable only under the circumstances described below, at a cash price per
share equal to $27.00, subject to possible adjustment in certain circumstances.
This description of the stock option agreement and the option does not purport
to be complete and is qualified in its entirety by reference to the stock
option agreement, which is included as Appendix F to this proxy statement-
prospectus and incorporated herein by reference.

Subject to applicable law and regulatory restrictions, NBC may exercise the
option, in whole or in part, if, but only if, a purchase event (as defined
below) occurs prior to the option's termination, if NBC, at the time, is not in
material breach of the stock option agreement or the merger agreement. As
defined in the stock option agreement, purchase event means either of the
following events:

(1) without NBC's written consent, FFBS's board authorizes, recommends,
publicly proposes, or publicly announces an intention to authorize,
recommend, propose, or enter into an agreement with any third party
to effect any of the following acquisition transactions:

. a merger, consolidation, or similar transaction involving FFBS or
any of its subsidiaries (other than transactions solely between
FFBS's subsidiaries);

. the disposition, by sale, lease, exchange, or otherwise, of 30% or
more of the consolidated assets of FFBS and its subsidiaries; or

. the issuance, sale or other disposition (including by way of
merger, consolidation, share exchange or any similar transaction)
of securities representing 30% or more of the voting power of FFBS
or any of its subsidiaries; or

(2) any third party acquires beneficial ownership, or the right to
acquire beneficial ownership of, or any group is formed that
beneficially owns or has the right to acquire beneficial ownership
of, 30% or more of the outstanding shares of FFBS common stock.

The option will terminate upon the earliest of the following:

(1) the effective time of the merger;

(2) termination of the merger agreement in accordance with the terms
thereof prior to the occurrence of a purchase event or a
preliminary purchase event (other than a termination of the merger
agreement under certain circumstances involving a breach by NBC);

(3) 12 months after termination of the merger agreement as a result of
certain breaches by NBC; and

(4) 12 months after termination of the merger agreement following the
occurrence of a purchase event or a preliminary purchase event.

As defined in the stock option agreement, a preliminary purchase event
includes either of the following events:

(1) any third party commencing or filing a registration statement under
the Securities Act of 1933 pertaining to, a tender offer or
exchange offer to purchase any shares of FFBS common stock if, upon
consummation of that offer, that party would own or control 20% or
more of the then-outstanding shares of FFBS common stock; or

(2) the stockholders of FFBS failing to approve the merger agreement at
the special meeting, the failure to have the special meeting or the
cancellation of the meeting before the merger agreement is
terminated, or the withdrawal or modification by FFBS's board of
directors in a manner adverse to NBC of the recommendation of the
board of directors with respect to the merger agreement, in each
case after public announcement that a third party has done any of
the following:

. made, or disclosed an intention to make, a proposal to engage in
an acquisition transaction;

39
<PAGE>

. commenced a tender offer or filed a registration statement under
the Securities Act of 1933 with respect to an exchange offer; or

. filed an application or given a notice under certain federal
statutes for approval or consent to engage in an acquisition
transaction.

If FFBS common stock changes by reason of a stock dividend, stock split,
split-up, recapitalization, combination, exchange of shares, or similar
transaction, the type and number of securities subject to the option, then the
purchase price of the option securities would be adjusted appropriately. If
FFBS issues additional shares of common stock (other than pursuant to an event
described in the preceding sentence), the number of shares of FFBS common stock
subject to the option will be adjusted so that, after such issuance, the
option, together with any shares of FFBS common stock previously issued
pursuant to the stock option agreement, equals 19.9% of the number of shares
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the option.

Upon the occurrence of a repurchase event (as defined below) that occurs
prior to the exercise or termination of the option, at the request of NBC, FFBS
will, subject to regulatory restrictions, be obligated to repurchase the option
and any shares of FFBS common stock purchased pursuant to the stock option
agreement at a specified price. NBC must deliver its request that FFBS
repurchase the option within 12 months of the first occurrence of a repurchase
event, or FFBS will not be obligated to comply with the request.

As defined in the stock option agreement, a repurchase event occurs if:

(1) any person (other than NBC or any NBC subsidiary) acquires
beneficial ownership or the right to acquire beneficial ownership
of, or any "group" (as such term is defined under the Securities
Exchange Act of 1934) is formed which beneficially owns, or has the
right to beneficially own, 50% or more of the then-outstanding
shares of FFBS common stock, or

(2) any of the following transactions is consummated:

. FFBS consolidates with or merges into any person, other than NBC
or one of NBC's subsidiaries, and is not the continuing or
surviving corporation of such consolidation or merger;

. FFBS permits any person, other than NBC or one of NBC's
subsidiaries, to merge into FFBS and FFBS is the continuing or
surviving corporation, but, in connection with such merger, the
then-outstanding shares of FFBS common stock are changed into or
exchanged for stock or other securities of FFBS or any other
person or cash or any other property or the outstanding shares of
FFBS common stock immediately prior to such merger shall after
such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or

. FFBS sells or otherwise transfers all or substantially all of its
assets to any person, other than NBC or one of NBC's subsidiaries.

If prior to the exercise or termination of the option, FFBS enters into an
agreement to engage in any of the transactions described in clause (2) of the
definition of repurchase event above, then the agreement governing such
transaction must make proper provision so that NBC will receive for each share
of FFBS common stock subject to the option an amount of consideration that
would be received by a holder of FFBS common stock in such transaction, less
the purchase price of the option securities.

After the occurrence of a purchase event, NBC may assign its rights under
the stock option agreement in whole or in part.

Upon the occurrence of certain events, FFBS has agreed to file with the SEC
and to cause to become effective certain registration statements under the
Securities Act of 1933 with respect to dispositions by NBC and its assigns of
all or part of the option or any shares of FFBS common stock into which the
option is exercisable.

40
<PAGE>

PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma combined balance sheet of NBC for the
twelve-month periods ended December 31, 1998, 1997 and 1996 give effect to the
pending merger with FFBS. The statements also assume that the merger is
accounted for as a pooling of interests. The pro forma combined balance sheet
treats the merger as if it occurred on December 31, 1998; the pro forma
combined income statements treat the merger as if it had occurred on January 1,
1996.

The information for the years ended December 31, 1998, 1997 and 1996, in the
column titled "NBC" is summarized from the consolidated financial statements of
NBC contained in NBC's 1998 annual report on Form 10-K, which has also been
incorporated by reference herein. The information contained in the column
titled "FFBS" is based on the financial statements and related notes, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of FFBS contained elsewhere in this proxy statement-prospectus. We
encourage you to read all of the other financial information about NBC and FFBS
included with or contained in this proxy statement-prospectus.

The Pro Forma Financial Statements are presented for information purposes
only. The results shown in them are not necessarily indicative of the actual
results that might have occurred if the merger had been completed on January 1,
1996. Also, they are not necessarily indicative of results that might be
achieved in the future if the merger is completed.

41
<PAGE>

PRO FORMA COMBINED CONDENSED BALANCE SHEET
(Unaudited)

The following unaudited pro forma combined condensed balance sheet combines
the consolidated historical balance sheets of NBC Capital Corporation and FFBS
Bancorp, Inc., assuming the companies had been combined as of December 31,
1998, on a pooling-of-interests accounting basis.
<TABLE>
<CAPTION>
Pro
Pro Forma Forma
NBC FFBS Adjustments Combined
-------- -------- ----------- --------
(in thousands)
<S> <C> <C> <C> <C>
ASSETS:
Cash and due from banks......... $ 27,873 $ 3,913 (4) $ 551 $ 32,337
Interest-bearing deposits due
from banks..................... 233 30,773 31,006
Federal funds sold and
securities purchased under
agreements to resell........... 26,228 -- 26,228
Securities:
Held-to-maturity.............. 31,156 11,979 43,135
Available-for-sale............ 172,723 10,390 183,113
-------- -------- --------
Total securities.............. 203,879 22,369 226,248
Loans, net of unearned
interest....................... 486,302 100,531 586,833
Allowance for loan losses....... (9,572) (530)(2) (505) (10,607)
-------- -------- --------
Net loans..................... 476,730 100,001 576,226
Premises and equipment, net..... 15,020 1,856 16,876
Intangible assets............... 3,518 -- 3,518
Other........................... 23,551 1,203 (2) 190 25,524
(3) 540
(5) 40
-------- -------- ------- --------
Total assets.................. $777,032 $160,115 $ 816 $937,963
======== ======== ======= ========
LIABILITIES:
Noninterest-bearing deposits.... $ 91,290 $ 6,128 $ 97,418
Interest-bearing deposits....... 559,925 119,613 679,538
-------- -------- --------
Total deposits................ 651,215 125,741 776,956
Federal funds purchased and
securities sold under
agreements to repurchase....... 10,464 -- 10,464
Other borrowed funds............ 16,048 9,115 25,163
Other liabilities............... 11,011 1,684 (3) 1,900 14,595
-------- -------- --------
Total liabilities............. 688,738 136,540 827,178
======== ======== ========
STOCKHOLDERS' EQUITY:
Common stock.................... 5,665 16 (1) 1,198 6,879
Surplus and retained earnings... 81,207 24,264 (1) (1,200) 102,530
(2) (315)
(3) (1,360)
(5) (66)
Unearned compensation........... (106)(5) 106 --
Loan receivable--ESOP........... (551)(4) 551 --
Treasury stock.................. -- (2)(1) 2 --
Accumulated other comprehensive
income (loss).................. 1,422 (46) 1,376
-------- -------- --------
Total stockholders' equity.... 88,294 23,575 110,785
-------- -------- ------- --------
Total liabilities and
stockholders' equity......... $777,032 $160,115 $ 816 $937,963
======== ======== ======= ========
</TABLE>

See accompanying Notes to Pro Forma Combined Condensed Financial Statements.

42
<PAGE>

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Unaudited)

The following pro forma combined condensed statements of consolidated income
present the combined statements of income of NBC Capital Corporation and FFBS
Bancorp, Inc., assuming the companies had been combined for each period
presented on a pooling-of-interests accounting basis. Per share data has been
adjusted retroactively for stock splits and to reflect the acquisition on
December 31, 1998 of First National Corporation of West Point, which was
accounted for as a pooling of interests. NBC's merger-related expenses amounted
to $1.8 million (after tax), or $.33 per share, during the year ended December
31, 1998.

<TABLE>
<CAPTION>
For the Twelve Months Ended
December 31, 1998
-----------------------------
Pro Forma
NBC FFBS Adjustments Combined
------- ------- ----------- ---------
(in thousands, except per share
amounts)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans............. $44,558 $ 8,397 $52,955
Interest and dividends on securities... 11,616 1,800 13,416
Other interest income.................. 1,217 736 1,953
------- ------- --- -------
Total interest income................ 57,391 10,933 68,324
------- ------- --- -------
Interest expense:
Interest on deposits................... 24,692 5,723 30,415
Interest on borrowed funds............. 1,822 507 2,329
------- ------- --- -------
Total interest expense............... 26,514 6,230 32,744
------- ------- --- -------
Net interest income...................... 30,877 4,703 35,580
Provision for loan losses................ 3,187 -- 3,187
------- ------- --- -------
Net interest income after provision for
loan losses........................... 27,690 4,703 32,393
Noninterest income....................... 8,838 752 9,590
Noninterest expense...................... 26,056 3,045 29,101
------- ------- --- -------
Net income before income taxes........... 10,472 2,410 12,882
Income tax expense....................... 1,978 902 2,880
------- ------- --- -------
Net income............................. $ 8,494 $ 1,508 $10,002
======= ======= === =======
Net income per share:
Basic.................................. $ 1.50 $ 1.00 $ 1.47
Diluted................................ 1.50 .98 1.46
Weighted-average common shares
outstanding:
Basic.................................. 5,665 1,509 6,827
Diluted................................ 5,665 1,539 6,850
</TABLE>

See accompanying Notes to Pro Forma Combined Condensed Financial Statements.

43
<PAGE>

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Unaudited)

<TABLE>
<CAPTION>
For the Year Ended
December 31, 1997
----------------------------
Pro Forma
NBC FFBS Adjustments Combined
------- ------ ----------- ---------
(in thousands, except per share
amounts)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans.............. $43,792 $7,891 $51,683
Interest and dividends on securities.... 12,055 1,710 13,765
Other interest income................... 981 276 1,257
------- ------ -------
Total interest income................. 56,828 9,877 66,705
------- ------ -------
Interest expense:
Interest on deposits.................... 23,822 5,060 28,882
Interest on borrowed funds.............. 1,877 118 1,995
------- ------ -------
Total interest expense................ 25,699 5,178 30,877
------- ------ -------
Net interest income....................... 31,129 4,699 35,828
Provision for loan losses................. 1,477 5 1,482
------- ------ -------
Net interest income after provision for
loan losses............................ 29,652 4,694 34,346
Noninterest income........................ 7,777 636 8,413
Noninterest expense....................... 23,768 2,483 26,251
------- ------ -------
Net income before income taxes............ 13,661 2,847 16,508
Income tax expense........................ 3,743 1,083 4,826
------- ------ -------
Net income.............................. $ 9,918 $1,764 $11,682
======= ====== =======
Net income per share:
Basic................................... $ 1.75 $ 1.20 $ 1.72
Diluted................................. 1.75 1.15 1.70
Weighted-average common shares
outstanding:
Basic................................... 5,665 1,481 6,806
Diluted................................. 5,665 1,534 6,846
</TABLE>

See accompanying Notes to Pro Forma Combined Condensed Financial Statements.

44
<PAGE>

PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME
(Unaudited)

<TABLE>
<CAPTION>
For the Year Ended
December 31, 1996
----------------------------
Pro Forma
NBC FFBS Adjustments Combined
------- ------ ----------- ---------
(in thousands, except per share
amounts)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans.............. $39,747 $7,225 $46,972
Interest and dividends on securities.... 12,440 1,636 14,076
Other interest income................... 478 309 787
------- ------ -------
Total interest income................. 52,665 9,170 61,835
------- ------ -------
Interest expense:
Interest on deposits.................... 22,052 4,631 26,683
Interest on borrowed funds.............. 1,040 -- 1,040
------- ------ -------
Total interest expense................ 23,092 4,631 27,723
------- ------ -------
Net interest income....................... 29,573 4,539 34,112
Provision for loan losses................. 1,677 -- 1,677
------- ------ -------
Net interest income after provision for
loan losses............................ 27,896 4,539 32,435
Noninterest income........................ 7,327 635 7,962
Noninterest expense....................... 22,662 3,189 25,851
------- ------ -------
Net income before income taxes............ 12,561 1,985 14,546
Income tax expense........................ 3,141 588 3,729
------- ------ -------
Net income.............................. $ 9,420 $1,397 $10,817
======= ====== =======
Net income per share:
Basic................................... $ 1.66 $ .94 $ 1.59
Diluted................................. 1.66 .91 1.58
Weighted-average common shares
outstanding:
Basic................................... 5,665 1,486 6,810
Diluted................................. 5,665 1,535 6,847
</TABLE>

See accompanying Notes to Pro Forma Combined Condensed Financial Statements.

45
<PAGE>

NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION

The unaudited pro forma combined condensed information presented herein is
not necessarily indicative of the results of operations or the combined
financial position that would have resulted had the merger been consummated at
the beginning of the applicable periods presented, nor is it necessarily
indicative of the results of operations in future periods or the future
financial position of the combined entities. FFBS's fiscal year end is June 30,
while NBC's year end is December 31. For purposes of the pro forma financial
data, FFBS's financial information is presented as though its fiscal year ended
December 31.

1. The merger will be accounted for on a pooling-of-interest accounting
basis. Each share of FFBS common stock issued and outstanding will be
converted into .7702 shares of NBC common stock. At December 31, 1998,
FFBS had outstanding 1,575,635 common shares. Based on the exchange
ratio and the shares outstanding of FFBS, 1,213,554 shares of NBC
common stock will be issued in exchange for the outstanding common
stock of FFBS.

NBC expects to realize revenue enhancements and cost savings from the
acquisition. The pro forma financial information does not reflect any
of the potential revenue enhancements or potential savings from the
consolidation of operations of NBC and FFBS.

2. The merger agreement contains a provision under which NBC may adjust
the allowance for loan losses of FFBS in order to comply with the
methodology used by NBC in determining its allowance for loan losses.
Under the terms of the agreement, NBC may waive or adjust the amount,
as it deems necessary. The Pro Forma Combined Condensed Balance Sheet
as of December 31, 1998 assumes the following adjustments will be made:

<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Estimated additional allowance requirement................ $505
Deferred tax asset........................................ (190)
----
Net adjustment............................................ $315
====
</TABLE>

3. In connection with the merger, NBC and FFBS expect to incur certain
restructuring and merger related costs, including investment banking,
legal, accounting, and other related transaction costs and fees.
Additionally, other restructuring and merger related costs associated
with the integration of the separate financial institutions are
expected to be incurred. Based upon information currently available,
the total amount of restructuring and merger related expenses to be
recognized in connection with the merger is estimated to be $1.36
million, after tax. Since the merger has not yet been consummated, the
restructuring and merger related expenses can only be estimated at this
time, and are subject to revision, as further information becomes
available. The following is a breakdown of the estimated restructuring
and merger related costs:

<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Investment banking........................................ $ 600
Professional fees......................................... 180
Employee related.......................................... 1,050
Restructuring costs....................................... 70
------
Total estimated costs..................................... 1,900
Income tax effect......................................... (540)
------
Total................................................. $1,360
======
</TABLE>

These restructuring and merger related costs will be charged to expense
in the period in which the merger is consummated, or in subsequent
periods when incurred. Because the restructuring and merger related
costs are nonrecurring, these have not been reflected in the pro forma
combined condensed statements of income. Also, the pro forma financial
data does not reflect cost savings, operating synergies and revenue
enhancements which are expected to be realized.

46
<PAGE>

4. First Federal Bank for Savings, the wholly-owned subsidiary of FFBS,
has an Employee Stock Ownership Plan (ESOP) in which substantially all
employees participate. At December 31, 1998, the ESOP had a debt
obligation to FFBS of $551. Prior to the completion of the merger,
First Federal intends to make its normal contribution to the ESOP. This
contribution will be used to retire a portion of the debt due to FFBS.
Remaining unallocated ESOP shares will be sold in the market and the
funds used to retire the remaining balance of the debt obligation.
Shares of FFBS held by the ESOP are included in the issued and
outstanding stock of FFBS. The ESOP will be terminated on or before the
closing date.

5. First Federal has a Recognition and Retention Plan for its directors
which was established in conjunction with First Federal's conversion
from a mutual association to a stock association in 1993. The Plan was
authorized to purchase 4%, or 63,480 shares, of the stock issued in the
conversion. The contribution by First Federal to the plan is being
amortized as the directors become vested in the shares. The RRP
provides that in the event of a change in control, such as the merger,
the shares vest immediately. An adjustment has been made to reflect the
expense associated with the full vesting of shares caused by the
merger.

INFORMATION ABOUT FFBS

Principal Business

FFBS was incorporated under the laws of the State of Delaware in March 1993
to acquire all of the capital stock of First Federal upon its conversion from a
mutual to stock form of ownership. First Federal descended from Columbus
Building and Loan Association, which dated back to 1892. In 1934, First Federal
was organized as a federally chartered mutual savings association headquartered
in Columbus, Mississippi. Its deposits are insured up to the maximum allowable
amount by the Federal Deposit Insurance Corporation. First Federal offers a
variety of financial services to meet the financial service needs of its
community through its main office and three branch offices. First Federal
attracts deposits from the general public and uses such deposits primarily to
originate loans secured by first mortgages on owner-occupied, one-to-four
family residences in its market area.

Competition

FFBS through First Federal currently serves Columbus and Lowndes counties in
Mississippi. Over this same area, FFBS competes directly with seven different
banking institutions, and a number of credit unions, finance companies,
brokerage firms, mortgage companies and insurance companies. The competing
banking institutions range in asset size from approximately $ million to in
excess of $ billion. Several of FFBS's competitors are branches or divisions
of nationwide and regional companies with significantly more resources than
FFBS and First Federal.

Supervision and Regulation

FFBS and First Federal are subject to extensive state and federal thrift
laws and regulations enforced by the Office of Thrift Supervision and the
Federal Deposit Insurance Corporation. These laws and regulations impose
specific requirements and/or restrictions on operations and provide for general
regulatory oversight of virtually all aspects of operations. These laws and
regulations are generally intended to protect depositors, not stockholders.

Seasonality of Business and Customers

There is no material concentration of deposits from any single customer or
group of customers. No significant portion of FFBS's loans is concentrated
within a single industry or group of related industries.

47
<PAGE>

Historically, the business of FFBS has not been seasonal in nature and
management does not anticipate any seasonal trends in the future. FFBS does
not rely on foreign sources of funds or income.

Employees

As of the date of this proxy statement-prospectus, FFBS and its subsidiary
had 32 full time employees.

Properties

The following list describes the location and general character of the
principal properties owned or leased by FFBS and its subsidiaries:

<TABLE>
<CAPTION>
Approximate Office
Space (square
Location Own/Lease Use feet)
- -------- -------------- --------------------- ------------------
<S> <C> <C> <C>
Main Office Owned/leased(1) Main Office of Bank 11,580 sq.ft
1121 Main Street
Columbus, Mississippi
82 East Branch Owned Branch Office of Bank 1,215 sq.ft
420 Alabama Street
Columbus, Mississippi
45 North Branch Owned Branch Office of Bank 1,344 sq.ft.
2024 Highway 45 North
Columbus, Mississippi
New Hope Branch Owned Branch Office of Bank 1,816 sq.ft
58 Center Road
Columbus, Mississippi
</TABLE>
- --------
(1) The main office building is owned by the Bank but is situated on property
that is leased from the Columbus School Board and, pursuant to statute,
the lease has a 99-year term which is renewable forever, subject to an
upward adjustment to the rent paid. This lease is subject to litigation
which may result in an increase in rent paid prior to the expiration date.
Management does not currently believe that any increase will have a
material impact on the Bank's financial condition or results of operation.

In the opinion of FFBS's management, all of FFBS's properties are in
generally good condition and are adequate to meet the needs of the communities
they serve.

Legal Proceedings

FFBS is a party to various ordinary routine legal proceedings incidental to
its business. FFBS's management does not believe that any of these proceedings
will have a material effect on the financial position or results of FFBS's
operations.

Stock Prices and Dividends

FFBS common stock is traded in the over-the-counter market with trades
reflected on the OTC Bulletin Board. The following stock price information is
believed to represent actual purchases and sales and may or may not reflect
inter-dealer prices, retail mark-ups or mark-downs or commissions. FFBS common
stock is infrequently traded. The information for periods prior to November
28, 1997 reflects transactions on the NASDAQ SmallCap Market. Dividend
information is also presented.

48
<PAGE>

Common Stock Data
as of the end of each Fiscal Quarter

<TABLE>
<CAPTION>
Stock Prices
-------------
Cash Dividends
Declared High Low
-------------- ------ ------
<S> <C> <C> <C>
1998:
December 31.................................. $ .30 $26.25 $25.00
September 30................................. $ .00 $26.00 $24.00
June 30...................................... $ .30 $27.00 $22.13
March 31..................................... $ .00 $23.00 $21.00
1997:
December 31.................................. $ .25 $24.88 $18.00
September 30................................. $2.00 $26.00 $21.00
June 30...................................... $ .25 $24.50 $21.50
March 31..................................... $ .00 $23.50 $22.00
1996:
December 31.................................. $ .25 $23.00 $21.50
September 30................................. $ .00 $24.50 $19.75
June 30...................................... $ .25 $23.50 $19.50
March 31..................................... $ .00 $19.00 $16.50
</TABLE>

On the record date for the special meeting, there were holders of FFBS
common stock.

Management's Discussion and Analysis of Financial Condition and Results of
Operations

The following discussion reviews FFBS's financial condition and results of
operations. This discussion should be read in conjunction with the consolidated
financial statements included in this proxy statement-prospectus.

Comparison of Financial Condition as of June 30, 1998 and June 30, 1997

On June 30, 1998, FFBS's total assets amounted to $150.8 million, compared
to $130.8 million at June 30, 1997, representing an increase of $20.0 million,
or 15.3%. Total assets of FFBS have increased $34.2 million, or 29.3%, over the
past five years.

Loans are FFBS's largest and most profitable component of interest-earning
assets. Total loans increased $6.2 million, or 6.6%, to $98.9 million on June
30, 1998, compared to $92.8 million on June 30, 1997. The portfolio mix on June
30, 1998 consisted of 85% real estate loans, 11% consumer loans and 4%
commercial loans. Net charge-offs were $58,000, or .06% of average loans, for
the fiscal year ended June 30, 1998. During the past five fiscal years, FFBS's
total loans have increased $24.9 million, or 33.7%.

The securities portfolio is utilized to provide a quality investment
alternative for available funds as well as a stable source of interest income.
Investment securities, along with mortgage-backed and related securities,
totaled $33.4 million on June 30, 1998, an increase of $7.4 million, or 28.2%,
compared to June 30, 1997. FFBS used advances from the Federal Home Loan Bank
of Dallas to leverage the purchase of mortgage-backed and related securities
during the fiscal year ended June 30, 1998. Advances from the Federal Home Loan
Bank of Dallas amounted to $11.0 million on June 30, 1998. Mortgage-backed and
related securities increased $9.2 million, or 126%, to $16.4 million on June
30, 1998, compared to June 30, 1997.

Deposits are FFBS's primary source of funds to support its earning assets.
Total deposits were $114.5 million on June 30, 1998, an increase of $10.7
million, or 10.3%, over June 30, 1997. The deposit mix has

49
<PAGE>

remained substantially unchanged, with the exception of a slight shift toward
more time deposits. Over the past five fiscal years, deposits have increased
$23.0 million, or 25.1%.

On June 30, 1998, stockholders' equity totaled $23.3 million, or 15.4%, of
assets. This represents a decrease of $1.9 million, or 7.5%, compared to June
30, 1997. FFBS paid a $2.00 per share special dividend in addition to its
regular dividends for the fiscal year ended June 30, 1998. This special
dividend decreased capital $3.1 million. Net income continued to be a strong
contributor to stockholders' equity during fiscal 1998, as FFBS's net income
amounted to $1.6 million.

The book value per share amounted to $15.29 on June 30, 1998, with the
exclusion of 55,138 unallocated shares held by the Employee Stock Ownership
Plan (ESOP) and after the payment of a special dividend of $3.1 million, or
$2.00 per share. On June 30, 1997, the book value per share was $16.97,
excluding 76,176 unallocated shares held by the ESOP. On June 30, 1996, the
book value per share was $16.61, with the exclusion of 88,872 unallocated
shares held by the ESOP.

Comparison of Financial Condition as of June 30, 1997 and June 30, 1996

The consolidated assets of FFBS were $130.8 million on June 30, 1997, an
increase of $5.5 million, or 4.42%, over June 30, 1996.

During fiscal 1997, FFBS experienced a significant increase in loans. Loans
receivable totaled $92.8 million on June 30, 1997. The $9.2 million growth in
FFBS's loans outstanding represented the most significant growth component of
interest-earning assets. This 11.05% gain was indicative of the strong loan
demand that existed in the market for most of fiscal 1997 and FFBS's focused
efforts to add to its loan portfolio. Total loan originations in fiscal 1997
were $59.6 million, an increase of $15.0 million, or 33.6%, over total
originations of $44.6 million for fiscal 1996.

Investment securities, along with mortgage-baked and related securities,
totaled $26.1 million on June 30, 1997, a decrease of $4.2 million, or 13.8%,
compared to June 30, 1996. Securities were reinvested in loans as they matured
in order to partially fund the demand for loans.

Total deposits were $103.8 million on June 30, 1997, an increase $4.7
million, or 4.7% over June 30, 1996.

Stockholders' equity, particularly as it related to assets, has represented
a consistent strength for FFBS throughout the past five years. On June 30,
1997, stockholders' equity amounted to $25.1 million, or 19.2%, of assets.
First Federal is classified as well capitalized under the Federal Deposit
Insurance Corporation Improvement Act of 1991.

The book value per share amounted to $16.97 per share on June 30, 1997, with
the exclusion of 76,176 unallocated shares held by the Employee Stock Ownership
Plan (ESOP). On June 30, 1996, the book value per share amounted to $16.61,
which was after the payment of a $1.00 per share special dividend and excluding
88,872 unallocated shares held by the ESOP.

Comparison of Financial Condition as of June 30, 1998 and December 31, 1998

On December 31, 1998, total assets were $160.1 million, an increase of $9.3
million, or 6.17%, since June 30, 1998. Interest-bearing deposits due from
banks increased $20.4 million to $34.7 million during the six-month period due
to an increase in funds from deposits coupled with the early redemptions of
some investments and mortgage-backed and related securities. Total securities
decreased $12.0 million to $21.5 million during the six-month period. Loans
receivable increased $1.1 million to $100.0 million on December 31, 1998.
Deposits grew to $125.7 million on December 31, 1998, an increase of $11.2
million, or 9.78%, for the six-month period. Advances from the Federal Home
Loan Bank of Dallas totaled $9.1 million on December 31, 1998. The increase of
$320,000 in stockholders' equity since June 30, 1998 was due to net income
after the declaration of dividends. Stockholders' equity totaled $23.6 million
on December 31, 1998 and amounted to 14.72% of assets.

50
<PAGE>

Comparison of Results of Operations for the Fiscal Years Ended June 30, 1998
and June 30, 1997

FFBS had consolidated net earnings of $1.6 million for the fiscal year ended
June 30, 1998, representing a return on average assets of 1.13% and diluted
earnings per share of $1.03. For the fiscal year ended June 30, 1997, FFBS's
net income amounted to $1.5 million, with diluted earnings per share of $.97.
The lower level of earnings in fiscal 1997 was primarily the result of the one-
time assessment by the FDIC to fully capitalize the Savings Association
Insurance Fund, which reduced earnings $376,000 after taxes. FFBS's return on
average assets, a primary measure of earnings strength, has been above 1.1% for
the last five fiscal years.

Net interest income is the largest component of FFBS's net income and
represents the income earned on interest-earning assets less the cost of
interest-bearing liabilities. This major source of income represents the
earnings from FFBS's primary business of gathering funds from deposit sources
and investing those funds in loans and securities. Changes in net interest
income can be broken down into two components, the change in average-earning
assets and the change in net interest spread. FFBS's level of net interest
income stabilized at $4.7 million for fiscal 1998 and 1997. The net interest
margin for fiscal 1998 was 3.66%, a decrease from the 3.93% for fiscal 1997 due
primarily to decreased spreads. FFBS's cost of funds increased at a faster pace
than its yield on average-earning assets. Average-earning assets for fiscal
1998 increased to $133.4 million from $122.5 million for fiscal 1997, an
increase of $10.9 million, or 8.9%. Despite increases in average-earning assets
for fiscal 1998, net interest income remained stable due to the decrease in the
net interest spread.

FFBS maintains its reserve for loan losses at a level that is considered
sufficient to absorb potential losses in the loan portfolio. FFBS's provision
for loan losses is utilized to replenish its reserve for loan losses on its
balance sheet. The reserve for loan losses amounted to $523,000 at June 30,
1998, or .53% of total loans outstanding, which is an amount that management
considers to be sufficient to protect against potential future loan losses.

Non-interest revenues are a growing source of income representing 12.7% of
total net revenues for fiscal 1998, up from 11.9% in fiscal 1997. Total non-
interest revenues increased 7.9% to $685,000 in fiscal 1998, compared to
$634,000 in fiscal 1997. Growth occurred primarily in the other income category
for service release premiums on fixed-rate mortgage loans that were sold. FFBS
sells most of the permanent fixed-rate mortgage loans that it originates to
lower interest rate risk associated with those types of loans.

A key measure used in the banking industry to assess the level of non-
interest expense is the efficiency ratio, which is defined as non-interest
expense divided by the sum of net interest income plus non-interest income. The
efficiency ratio measures the level of expense required to generate one dollar
of revenue. With the exception of fiscal 1997, the efficiency ratio has been
approximately 50% for the last five fiscal years. For fiscal 1997, the
efficiency ratio rose to 57.8%, due to the impact of the FDIC one-time special
assessment.

Non-interest expense decreased $244,000, or 7.9%, to $2.8 million in fiscal
1998 compared to fiscal 1997. Compensation and benefits increased $297,000, or
20.7%, to $1.7 million, due primarily to expenses associated with the valuation
of stock released from the employee stock ownership plan, added employees for
expanded branch operations, and increased participation in benefit plans The
deposit insurance premium decreased $666,000, or 91.0%, due primarily to the
one-time assessment in 1997 of $599,000 by the FDIC to fully capitalize the
Savings Association Insurance Fund. General and administrative expenses were
increased $100,000, or 17.3%, to $676,000, due primarily to more advertising
expenses associated with promotion of checking accounts and the new branch,
contributions, and expenses associated with the operation of the automated
teller machines.

The provisions for income taxes were $986,000 and $768,000 in fiscal 1998
and 1997. The changes in such respective amounts primarily reflect the
fluctuations in levels of income before income taxes of FFBS during those
fiscal years of $2.6 million and $2.2 million, respectively. Nondeductible
expenses related to the excess of fair market value of allocated employee stock
ownership plan shares over cost of $231,000 and $184,000, respectively, also
affected the provision for income taxes. Deferred taxes were higher during
fiscal 1997 primarily due to timing differences associated with stock plans.
See Note J of the Notes to Consolidated Financial Statements of FFBS.

51
<PAGE>

Comparison of the Results of Operations for the Fiscal Years Ended June 30,
1997 and June 30, 1996

FFBS had consolidated net earnings of $1.5 million for the fiscal year ended
June 30, 1997, representing a return on average assets of 1.16% and earnings
per share of $.97. Results for the fiscal year ended June 30, 1997 were reduced
$599,000 (approximately $376,000 after taxes, or $.25 per share) due to the
one-time assessment by the FDIC to fully capitalize the Savings Association
Insurance Fund. Net income would have been approximately $1.9 million for the
year ended June 30, 1997, a $193,000 increase, or 11.6%, over fiscal year 1996,
had First Federal not been charged with this assessment.

During the fiscal year ended June 30, 1997, FFBS's level of net interest
income amounted to $4.7 million, an increase of $325,000, or 7.5%, when
compared to fiscal 1996. This increase can be attributed to FFBS's yield on
earning assets increasing at a faster pace that its cost of funds. The net
interest margin for fiscal 1997 was 3.93%, an increase from the 3.79% for
fiscal 1996 due primarily to increased spreads. Average-earning assets for
fiscal 1997 increased to $122.5 million from $118.2 million for fiscal 1996, an
increase of $4.3 million, or 3.7%. During fiscal 1997, FFBS's level of net
interest income increased 7.5%, or $325,000, compared to fiscal 1996. This
increase can be attributed to a combination of FFBS's yield on average-earning
assets increasing $4.3 million, and FFBS's yield on average-earning assets
increasing at a faster pace than its cost of funds.

The reserve for loan losses amounted to $576,000 at June 30, 1997, or .62%
of total loans outstanding, which is an amount that management considers to be
sufficient to protect against potential future loan losses.

Non-interest income was $634,000 for fiscal 1997, compared to $589,000 for
fiscal 1996, an increase of $45,000, or 7.7%. The significant items increasing
non-interest income between 1996 and 1997 were documentation fees on loans,
which increased $33,000, or 211%, and service charges on deposit accounts,
which increased $16,000, or 5.4%.

Non-interest expenses increased $590,000, or 23.7%, to 3.1 million in fiscal
1997, compared to fiscal 1996. Non-interest expenses included the FDIC one-time
assessment of $599,000.

The provisions for income taxes were $804,000, and $909,000 in fiscal 1997
and 1996, respectively. The changes in such respective amounts primarily
reflect the fluctuations in levels of FFBS's income before income taxes during
those fiscal years of $2.2 million and $2.5 million, respectively.

Comparison of the Results of Operations for the Six-Month Periods Ended
December 31, 1998 and December 31, 1997

Net income of FFBS for the six months ended December 31, 1998 was $794,000,
or $.51 per fully-diluted share, compared to $866,000, or $.56 per fully-
diluted share, for the six months ended December 31, 1997. The decrease of
$71,000 in net income is primarily attributable to an increase in non-interest
expenses.

Interest income increased $483,000, or 9.49%, to 5.6 million for the six
months ended December 31, 1998, due to an increase in average-earning assets of
$20.1 million, which was partially offset by a decrease in the yield on
average-earning assets from 7.87% to 7.46%.

Interest expense increased $502,000, or 18.32%, to $3.2 million for the six
months ended December 31, 1998, due to an increase of $16.9 million in average
deposits and Federal Home Loan Bank of Dallas advances and an increase in cost
of funds to 5.07% from 4.94% for the six months ended December 31, 1997.

Net interest income decreased slightly to $2.3 million for the six months
ended December 31, 1998, a decrease of $14,000, compared to the six months
ended December 31, 1997.

FFBS's reserve for loan losses was considered sufficient to absorb potential
losses during the six months ended December 31, 1998; therefore, no provision
for loan losses was taken for that period. FFBS increased its provision to the
reserve for loan losses by $5,000 during the six months ended December 31,
1997.

52
<PAGE>

Non-interest income increased $67,000, or 20.84%, to $391,000 for the six
months ended December 31, 1998. NOW account fees increased $12,000, or 7.71%,
to $163,000, due primarily to non-sufficient fund charges. Other income was
increased $55,000, or 103.97%, to $108,000, due primarily to increases in
service release premiums on mortgage loans sold.

Non-interest expenses increased $210,000, or 16.45%, to $1.5 million for the
six months ended December 31, 1998, due primarily to an increase in expenses
associated with participation in benefit plans, expenses associated with
operating another branch, and a loss on foreclosed real estate. Non-interest
expenses will be higher during the next several months due to expenses
associated with the merger.

Income tax expenses amounted to $447,000 for the six months ended December
31, 1998, compared to $531,000 for the six months ended December 31, 1997. The
current years' taxes were at a reduced rate due to a reduced amount of taxable
income.

Comparison of Results of Operations for the Three Months Ended December 31,
1998 and December 31, 1997

Net income of FFBS for the three months ended December 31, 1998 was
$395,000, or $.25 per fully-diluted share, compared to $414,000, or $.27 per
fully-diluted share, for the three months ended December 31, 1997. The decrease
of $19,000 in net income is attributable to an decrease in net-interest income
and an increase in non-interest expense.

Interest income increased $208,000, or 8.12%, to $2.8 million for the three
months ended December 31, 1998, due to an increase in average-earning assets of
$20.0 million, which was partially offset by a decrease in the yield on
average-earning assets from 7.86%, for the three months ending December 31,
1997, to 7.44%.

Interest expense increased $236,000, or 16.91%, to $1.6 million for the
three months ended December 31, 1998, due to an increase of $18.0 million in
average deposits and Federal Home Loan Bank advances.

Net interest income decreased to $1.1 million for the three months ended
December 31, 1998, a decrease of $23,000, compared to the three months ended
December 31, 1997.

Non-interest income increased $39,000, or 25.38%, to $194,000 for the three
months ended December 31, 1998. Loan fees and service charges increased
$14,000, or 27.86%, due to more origination fees on mortgage loans. Other
income increased $24,000, or 91.05%, due primarily to increases in service
release premiums on mortgage loans sold.

Non-interest expense increased $68,000, or 10.38%, to $719,000 for the three
months ended December 31, 1998 due primarily to an increase in expenses
associated with participation in benefit plans and expenses associated with
operating another branch. Non-interest expenses will be higher during the next
several months due to expenses associated with the impending merger referenced
in Part II, Item 5.

Income tax expense amounted to $220,000 for the three months ended December
31, 1998 compared to $252,000 for the three months ended December 31, 1997. The
decrease is due primarily to a reduced amount of taxable income.

Liquidity-Asset/Liability Management

A major objective of asset/liability management is to structure FFBS's
assets and liabilities in such a way as to maximize and stabilize the spread
between interest earned and interest paid while maintaining an adequate
liquidity position. During each of the past five fiscal years, FFBS has
maintained a consistent asset/liability management policy, which focuses on
interest rate risk and rate sensitivity. The adherence to such policy has an
obvious material impact on the structure of FFBS's balance sheet and, to a
degree, on its liquidity position.

FFBS is required to maintain minimum levels of liquid assets as defined by
the Office of Thrift Supervision regulations. This requirement, which may be
varied at the direction of the Office of Thrift Supervision depending upon
economic conditions and deposit flow, is based upon a percentage of short-term
deposits and short-term borrowings. First Federal's liquidity ratio was 22.02%
on June 30, 1998 and 53.21 on December 31, 1998.

53
<PAGE>

Positive cash flows of $928,000 were provided by FFBS's operating activities
for the six months ended December 31, 1998, primarily as a result of net
income.

Investing activities of FFBS provided positive cash flow of $10.7 million
for the six months ended December 31, 1998, resulting primarily from principal
repayments on mortgage-backed and related securities and proceeds from calls of
investment securities of $14.9 million, which were partially offset by an
increase in loan originations over loan repayments of $1.1 million and the
purchase of $3.0 million of investment securities.

Financing activities provided positive cash flows of $8.7 million for the
six months ended December 31, 1998, due to an increase in deposits of $11.2
million offset by repayments of borrowings from the Federal Home Loan Bank of
$1.8 million and the declaration of dividends of $473,000.

FFBS is required to maintain minimum levels of liquid assets as defined by
OTS regulations. This requirement, which may be varied at the direction of the
OTS depending upon economic conditions and deposit flows, is based upon a
percentage of deposits and short-term borrowings. The required minimum
liquidity ratio is currently 4.0%. At December 31, 1998, First Federal's
liquidity ratio was 53.21%.

FFBS has experienced no problem meeting liquidity requirements during the
past five fiscal years and foresees no problems meeting liquidity requirements
in the future. An adequate liquidity position enables FFBS to meet cash flow
requirements created by decreases in deposits and/or other sources of funds or
increases in loan demand. FFBS's traditional sources of funds from deposit
increases, maturing loans and investments, and earnings have allowed it to
consistently generate sufficient funds for liquidity needs.

Regulatory Capital

First Federal's capital position is well in excess of the minimum regulatory
requirements. The regulations require institutions to have a minimum regulatory
tangible capital equal to 1.5% of total assets and a minimum 3% leverage (core)
capital ratio (4% as of April 1, 1999). On June 30, 1998, First Federal's
tangible and core capital was 13.4%. Additionally, institutions are required to
meet a risk-based capital requirement equaling 8% of the amount of risk-
weighted assets. On June 30, 1998, First Federal's risk-based capital was
23.6%.

Federal regulations require savings institutions to meet certain standards
to be deemed other than "critically undercapitalized": a 4% leverage (Tier 1)
capital ratio; a 4% Tier 1 risk-based capital ratio; and an 8% total risk-based
capital standard. At December 31, 1998, First Federal's capital position
exceeded minimum regulatory capital requirements as indicated by the following
table (dollars in thousands):

<TABLE>
<CAPTION>
(Tier 1) (Total)
(Tier 1) Risk- Risk-based
Core Capital based Capital Capital
--------------- --------------- ---------------
Amount Percent Amount Percent Amount Percent
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
First Federal................... $20,687 13.15% $20,687 23.99% $21,194 24.58%
Requirements.................... 6,294 4.0% 3,450 4.0% 6,899 8.0%
Excess.......................... $14,393 9.15% $17,237 19.99% $14,295 16.58%
</TABLE>

Federal Reserve System

The Federal Reserve Board regulations require savings institutions to
maintain non-interest earning reserves against their transaction accounts
(primarily NOW and regular checking accounts). The Federal Reserve Board
regulations generally require that reserves of 3% must be maintained against
aggregate transaction accounts of $43.1 million or less (subject to adjustment
by the Federal Reserve Board), plus 10% (subject to adjustment by the Federal
Reserve Board between 8% and 14%) against that portion of total transaction
accounts in excess of $43.1 million. The first $4.7 million of otherwise
reservable balances (subject to adjustments by the Federal Reserve Board) are
exempted from the reserve requirements. First Federal is in compliance with the
foregoing requirements.

54
<PAGE>

The balances maintained to meet the reserve requirements imposed by the
Federal Reserve Board may be used to satisfy liquidity requirements imposed by
the Office of Thrift Supervision. Because required reserves must be maintained
in the form of either vault cash, a non-interest-bearing account at a Federal
Reserve Bank or a pass-through account as defined by the Federal Reserve Board,
the effect of this reserve requirement is to reduce First Federal's interest-
earning assets. Federal Home Loan Bank System members are also authorized to
borrow from the Federal Reserve "discount window," but Federal Reserve Board
regulations require institutions to exhaust all Federal Home Loan Bank sources
before borrowing from a Federal Reserve Bank.

Holding Company Regulation

FFBS is a nondiversified savings and loan holding company within the meaning
of the Home Owners' Loan Act, as amended. As such, FFBS is subject to Office of
Thrift Supervision regulations, examinations, supervision and reporting
requirements. In addition, the Office of Thrift Supervision has enforcement
authority over FFBS and any non-savings institution subsidiaries. Among other
things, this authority permits the OTS to restrict or prohibit activities that
are determined to be a serious risk to the subsidiary savings institution.
First Federal must notify the OTS 30 days before declaring any dividend to
FFBS.

Federal Taxation

The following discussion of tax matters is intended only as a summary and
does not purport to be a comprehensive description of the tax rules applicable
to First Federal.

Historically, for federal income tax purposes, First Federal has reported
its income and expenses on the accrual method of accounting and has filed
consolidated federal income tax returns on this basis. First Federal is subject
to the rules of federal income taxation applicable to corporations. Generally,
the Internal Revenue Code requires that all corporations, including First
Federal, compute taxable income under the accrual method of accounting. For its
taxable year ending 1998, First Federal was subject to a maximum federal income
tax rate of 34%.

Beginning with the fiscal year ending June 30, 1997, First Federal began
determining its tax bad debt reserve based upon the six-year historical average
method as provided in the Internal Revenue Code. Previously, First Federal had
used the "percentage-of-taxable-income" method.

Earnings appropriated for bad debt reserves and deducted for federal income
tax purposes cannot be used by First Federal to pay cash dividends to FFBS
without the payment of income taxes by First Federal at the then current income
tax rate on the amount deemed distributed, which would include the amount of
any federal income taxes attributable to the distribution. Thus, any dividends
to FFBS that would reduce amounts appropriated to First Federal's bad debt
reserves and deducted for federal income tax purposes could create a tax
liability for First Federal. First Federal does not intend to pay dividends
that would result in a recapture of its bad debt reserves.

Year 2000

FFBS is aware of the issues associated with the programming code in existing
computer systems as the Year 2000 approaches. The Year 2000 issue is the result
of computer programs being written to store and process data using two digits
rather than four to define the applicable year. Computer programs that have
time
sensitive coding may recognize a date using "00" as the year 1900 rather than
the year 2000. Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail.

First Federal has conducted a review of its computer systems to identify the
systems that could be affected by the Year 2000 Issue and has developed an
implementation plan to resolve the issue. The majority of First Federal's data
processing is provided by a third party service bureau. The service bureau is
actively involved in resolving Year 2000 issues and has provided First Federal
with frequent updates regarding their progress. The

55
<PAGE>

service bureau has advised First Federal that it has substantially completed
all phases of its Year 2000 Readiness Plan. First Federal presently believes
that, based on the progress of First Federal's service bureau, the Year 2000
problem will not pose significant operational problems for First Federal's
computer system. The total cost of Year 2000 projects are not estimated to be
material to the financial performance of FFBS.

First Federal's principal business has been and continues to be attracting
retail deposits from the general public and investing those deposits, together
with funds generated from operations, primarily in one-to-four-family loans,
commercial business loans, construction loans and consumer loans. In addition,
First Federal invests in mortgage-backed and related securities, U. S.
Government and federal agency securities and other marketable securities. First
Federal's revenues are derived principally from interest on its mortgage loan,
consumer loan, and mortgage-backed securities portfolio and earnings on its
investment securities. First Federal's primary sources of funds are deposits,
borrowings, and principal and interest payments on loans and mortgage-backed
and related securities. At June 30, 1998, First Federal had no brokered
deposits, and its Federal Home Loan Bank advances totalled $11.0 million.

The following table sets forth the composition of First Federal's mortgage
and other loan portfolios and its mortgage-backed and related securities in
dollar amounts and in percentages at the dates indicated.

<TABLE>
<CAPTION>
At June 30,
---------------------------------------------------
1996 1997 1998
---------------- ---------------- -----------------
Percent Percent Percent
Amount Of Total Amount Of Total Amount Of Total
------- -------- ------- -------- ------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
One-to-four family...... $61,077 73.12% $67,198 72.44% $67,562 68.30%
Multi-family............ 1,021 1.22 982 1.06 229 .23
Commercial real estate.. 7,867 9.42 8,706 9.39 10,946 11.06
Construction and land... 4,218 5.05 4,834 5.21 5,865 5.93
------- ------ ------- ------ ------- ------
Total mortgage loans.. 74,183 88.81 81,720 88.10 84,602 85.52
------- ------ ------- ------ ------- ------
Consumer and other loans:
Loans on deposit........ 1,592 1.91 1,090 1.18 1,530 1.55
Home improvement and
education.............. 83 .10 43 .05 5 .01
Auto loans.............. 3,680 4.41 4,271 4.60 4,685 4.74
Commercial--
collateralized......... 974 1.17 1,678 1.81 3,658 3.70
Commercial--unsecured... 479 .57 333 .36 505 .51
Other loans............. 3,230 3.86 4,215 4.54 4,457 4.50
------- ------ ------- ------ ------- ------
Total consumer and
other loans.......... 10,038 12.02 11,630 12.54 14,840 15.01
------- ------ ------- ------ ------- ------
Total loans
receivable........... 84,221 100.83 93,350 100.64 99,442 100.53
Less:
Unearned discounts and
deferred loan fees..... 27 .03 14 .02 1 .00
Allowance for loan
losses................. 666 .80 576 .62 523 .53
------- ------ ------- ------ ------- ------
Loans receivable, net... $83,528 100.00% $92,760 100.00% $98,918 100.00%
======= ====== ======= ====== ======= ======
Mortgage-backed and
related securities:
FHLMC................... 1,469 58.62 5,265 72.44 3,000 18.26
CMOs.................... -- 0.00 -- 0.00 7,757 47.22
FNMA.................... 1,029 41.06 1,993 27.42 1,843 11.22
GNMA.................... -- 0.00 -- 0.00 3,622 22.05
------- ------ ------- ------ ------- ------
Total mortgage-backed and
related securities....... 2,498 99.68 7,258 99.86 16,222 98.75
Net premiums.............. 8 .32 10 .14 241 1.46
Unrealized gains (losses)
on available for sale
securities............... -- -- -- -- (35) (.21)
------- ------ ------- ------ ------- ------
Net mortgage-backed and
related securities....... $ 2,506 100.00% $ 7,268 100.00% $16,428 100.00%
======= ====== ======= ====== ======= ======
</TABLE>

56
<PAGE>

The following table sets forth the composition of First Federal's loan
portfolio by fixed and adjustable rate on the dates indicated:

<TABLE>
<CAPTION>
At June 30,
--------------------------------------------------
1996 1997 1998
---------------- ---------------- ----------------
Percent Percent Percent
Amount Of Total Amount Of Total Amount Of Total
------- -------- ------- -------- ------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Fixed Rate Loans:
Mortgage Loans:
One-to-four family....... $26,574 31.55% $30,583 32.76% $30,627 30.80%
Multi-family............. 915 1.08 879 .94 129 .13
Commercial real estate... 7,391 8.78 8,315 8.91 10,545 10.60
Construction and land.... 3,963 4.71 4,587 4.91 5,865 5.90
------- ------ ------- ------ ------- ------
Total mortgage loans... 38,843 46.12 44,364 47.52 47,166 47.43
Consumer................. 8,585 10.19 8,600 9.21 9,314 9.37
Commercial............... 1,453 1.73 1,815 1.95 3,974 4.00
------- ------ ------- ------ ------- ------
Total fixed rate
loans................. 48,881 58.04 54,779 58.68 60,454 60.80
------- ------ ------- ------ ------- ------
Adjustable Rate Loans:
(ARM):
Mortgage Loans:
One-to-four family....... 34,550 41.02 36,596 39.20 36,935 37.14
Multi-family............. 106 .13 103 .11 100 .10
Commercial real estate... 430 .51 410 .44 401 .40
Construction and land.... 254 .30 247 .27 -- --
------- ------ ------- ------ ------- ------
Total mortgage loans... 35,340 41.96 37,356 40.02 37,436 37.64
Consumer................. -- -- 1,019 1.09 1,363 1.37
Commercial............... -- -- 196 .21 189 .19
------- ------ ------- ------ ------- ------
Total adjustable rate
loans................. 35,340 41.96 38,571 41.32 38,988 39.20
------- ------ ------- ------ ------- ------
Total Loans................ $84,221 100.00% $93,350 100.00% $99,442 100.00%
======= ====== ======= ====== ======= ======
Fixed rate mortgage-backed
and related securities.... $ 2,498 100.00% $ 5,731 78.96% $ 4,427 27.29%
Adjustable rate mortgage-
backed and related
securities................ -- 0.00 1,527 21.04 11,795 72.71
------- ------ ------- ------ ------- ------
Total mortgage-backed and
related securities........ $ 2,498 100.00% $ 7,258 100.00% $16,222 100.00%
======= ====== ======= ====== ======= ======
</TABLE>

The primary focus of First Federal is to originate adjustable rate mortgage
loans; however, they are dependent upon relative customer demand as well as
current and expected future levels of interest rates. First Federal originates
loans that generally meet First Federal's underwriting standards, which are
secured by first mortgages on owner-occupied one-to-four-family residences and
commercial real estate located primarily in northeast Mississippi. First
Federal began a program of originating fixed-rate conforming loans for sale for
customers who desire the fixed-rate loan features.

57
<PAGE>

The following table sets forth First Federal's loan originations and loan
and mortgage-backed and related securities purchases, sales, principal
repayments and amortization of premiums and discounts for the periods
indicated.

<TABLE>
<CAPTION>
At June 30,
-------------------------
1996 1997 1998
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Mortgage loans (gross):
At beginning of period............................ $72,054 $74,183 $81,720
Mortgage loans originated:
One-to-four family................................ 25,617 30,523 33,932
Multi-family and commercial real estate........... 4,549 8,711 6,082
Construction and land............................. 6,741 8,326 8,066
------- ------- -------
Total mortgage loans originated..................... 36,907 47,560 48,080
------- ------- -------
Mortgage loans purchases............................ 117 -- --
Less:
Transfer of mortgage loans to foreclosed real
estate........................................... 755 -- 415
Principal repayments.............................. 28,485 35,367 36,690
Sales of one-to-four-family mortgage loans........ 5,655 4,656 8,093
At end of period................................ $74,183 $81,720 $84,602
------- ------- -------
Consumer and other loans (gross):
At beginning of period............................. $ 9,081 $10,038 $11,630
Consumer and other loans originated............... 7,701 12,045 12,505
Principal repayments.............................. (6,744) (10,453) (9,295)
Transfer to other assets............................ -- -- --
At end of period................................... $10,038 $11,630 $14,840
------- ------- -------
Mortgage-backed and related securities (gross):
At beginning of period............................ $ 2,002 $ 2,506 $ 7,268
Mortgage-backed and related securities purchased.... 985 5,527 13,422
Amortization and repayments......................... (481) (765) (4,227)
Unrealized gains(losses) on AFS..................... -- -- (35)
------- ------- -------
At end of period................................ $ 2,506 $ 7,268 $16,428
======= ======= =======
</TABLE>

First Federal provides valuation reserves for anticipated losses on loans at
a level considered adequate by First Federal's management. Management performs
quarterly reviews of First Federal's loan portfolio to evaluate the adequacy of
the allowance with any adjustments being made through provisions for loan
losses. These reviews take into consideration First Federal's past due and
nonperforming loans, prior years' loss experience, economic conditions,
underlying collateral and the distribution of loans in the portfolio by risk
class. Amounts of the allowance are assigned to specific loans and loan
categories based upon these factors. Although First Federal's management
believes that it uses the best information available to make such
determinations, future adjustments to reserves may be necessary, and net income
could be significantly affected, if circumstances differ substantially from the
assumptions used in making the initial determinations.

First Federal's primary source of funds are deposits for lending and other
investment purposes. In addition to deposits, First Federal derives funds from
loan principal repayments, which are a relatively stable source of funds, while
deposit inflows and outflows are significantly influenced by general interest
rates and money market conditions. Borrowings may be used on a short-term basis
to compensate for reductions in the availability of funds from other sources.
They may also be used on a longer term basis to fund longer term investments
and loan programs.

First Federal offers a variety of deposit accounts having a range of
interest rates and terms. First Federal's deposits principally consist of
fixed-term certificates, regular passbook accounts, money market accounts,
IRAs, NOW accounts and commercial checking and demand (non-interest-bearing)
accounts. The flow of deposits is influenced significantly by general economic
conditions, changes in money market rates and other prevailing

58
<PAGE>

interest rates and competition. First Federal relies primarily on customer
service and long-standing relationships with customers to attract and retain
these deposits. First Federal has no brokered deposits.

First Federal seeks to maintain a high level of stable core deposits by
advertising, providing reduced fees on checking accounts for senior citizens
and generally promoting checking accounts. When pricing deposits, consideration
is given to local competition, First Federal's gap position, U. S. Treasury 90-
day and six-month rates and the need for funds. Management's strategy is to
price at or just above the median competition, contingent upon the need for
funds, and to stratify the pricing system to attract deposits and maintain a
controlled gap position.

There are no concentrations of deposits which are dependent on a specific
industry, governmental entity, etc., which if withdrawn would significantly
impact First Federal's financial condition.

Supplemental Statistical Information

Distribution of Assets, Liabilities, and Stockholders' Equity

The following table sets forth the average balance sheets and an analysis of
net interest earnings of First Federal for the fiscal years ended June 30, 1998
and 1997:

<TABLE>
<CAPTION>
Year Ended June 30
---------------------------------------------------------
1997 1998
---------------------------- ----------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
-------- -------- ---------- -------- -------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning
assets:
Mortgage loans,
net(1)............... $ 78,026 $6,507 8.34% $ 86,358 $7,222 8.36%
Other loans(1)........ 9,771 959 9.81% 10,926 1,035 9.47%
Mortgage-backed and
related
securities(1)........ 4,991 309 6.19% 11,969 753 6.29%
Interest-bearing
deposits(1).......... 5,735 310 5.41% 6,900 380 5.51%
Investment
securities(1)........ 23,171 1,324 5.71% 17,280 1,011 5.85%
FHLB stock(6)......... 776 45 5.80% 819 49 5.98%
-------- ------ -------- ------
Total interest-earning
assets................. 122,470 9,454 7.72% 134,252 10,450 7.78%
Non-interest-earning
assets................. 4,623 6,167
-------- --------
Total Assets(6)..... $127,093 $140,419
======== ========
Liabilities and Retained
Earnings:
Interest-bearing
liabilities:
Deposits:
Passbook
accounts(2)......... 6,192 175 2.83% 6,148 171 2.78%
NOW accounts(1)...... 12,055 194 1.61% 12,986 199 1.53%
Money market
accounts(1)......... 5,758 198 3.44% 5,425 205 3.78%
Certificate
accounts(1)......... 76,200 4,196 5.51% 83,281 4,794 5.76%
Borrowed funds....... 0 0 0.00% 6,536 359 5.49%
-------- ------ ---- -------- ------ ----
Total interest-
bearing
liabilities........ 100,205 4,763 4.75% 114,376 5,728 5.01%
Other liabilities...... 2,022 3,101
-------- --------
Total liabilities(6).... 102,227 117,477
Retained earnings(6).... 24,866 22,942
-------- --------
Total liabilities
and retained
earnings(6)........ $121,093 $140,419
======== ========
Net interest
income/interest rate
spread(3).............. $4,691 2.97% $4,722 2.77%
====== ======
Net earning assets/net
interest margin(4)..... $ 22,265 3.83% $ 19,876 3.52%
======== ========
Interest-earning assets
to interest-bearing
liabilities............ 122.22% 117.38%
</TABLE>

59
<PAGE>

- --------
(1) Based upon or derived from daily balances.
(2) Based upon quarterly balances.
(3) Interest rate spread represents the difference between the average rate on
interest-earning assets and the average cost of interest-bearing
liabilities.
(4) Net interest margin represents net interest income before the provision for
loan losses divided by average interest-earning assets.
(5) For purposes of these computations, nonaccruing loans are included in the
average loan balances outstanding.
(6) Based upon or derived from monthly balances.

Rate/Volume Analysis. The following table describes the extent to which
changes in interest rates and changes in the volume of interest-related assets
and liabilities have affected First Federal's interest income and expense
during the periods indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in average
balance multiplied by prior average interest rate), (ii) changes attributable
to changes in rate (changes in average interest rate multiplied by prior
average balance), and (iii) the net change. The changes attributable to the
combined impact of volume and rate have been allocated proportionately to the
changes due to volume and the changes due to rate.

<TABLE>
<CAPTION>
Year Ended June
30,
Year Ended June 1997 Compared to
30, 1996 Compared Year
to Year Ended Ended June 30,
June 30, 1997 1998
------------------- --------------------
Increase Increase
(Decrease) (Decrease)
in Net in Net
Interest Interest
Income Due Income Due
to to
------------- -------------
Volume Rate Net Volume Rate Net
------ ----- ---- ------ ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans, net................. $ 402 $(111) $291 $ 699 $ 16 $ 715
Consumer and other loans............ (8) 109 101 110 (34) 76
Mortgage-backed and related
securities......................... 166 3 169 439 5 444
Interest-bearing deposits........... (7) 5 (2) 64 6 70
Investment securities............... (162) 129 (33) (343) 30 (313)
FHLB stock.......................... 3 (3) 0 2 2 4
----- ----- ---- ----- ----- -----
Total............................. 394 132 526 971 25 996
----- ----- ---- ----- ----- -----
Interest-bearing liabilities:
Passbook accounts................... $ 3 $ 4 $ 7 $ (1) $ (3) $ (4)
NOW accounts........................ 11 (20) (9) 15 (10) 5
Money market accounts............... (23) (6) (29) (18) 25 7
Certificate accounts................ 238 (7) 231 401 197 598
Borrowings.......................... -- -- -- 359 -- 359
----- ----- ---- ----- ----- -----
Total............................. 229 (29) 200 756 209 965
----- ----- ---- ----- ----- -----
Net change in interest income......... $ 165 $ 161 $326 $ 215 $(184) $ 31
===== ===== ==== ===== ===== =====
</TABLE>

60
<PAGE>

Investment Portfolio and Mortgage-Backed and Related Securities

The following table sets forth the carrying amount of investment securities
at the dates indicated:

<TABLE>
<CAPTION>
June 30,
---------------
1997 1998
------- -------
(In Thousands)
<S> <C> <C>
Held-to-Maturity:(1)
U.S. Treasury and other U.S. Government agencies............. $15,586 $12,691
States and political subdivisions............................ 2,006 1,000
Mortgage-backed and related securities....................... 7,268 5,856
Marketable equity securities................................. -- --
------- -------
$24,860 $19,547
======= =======
Available-for-Sale:(2)
U.S. Treasury and other U.S. Government agencies............. $ -- $ 1,515
Mortgage-backed and related securities....................... -- 10,572
Marketable equity securities................................. 1,222 1,814
------- -------
$ 1,222 $13,901
======= =======
</TABLE>

The following table sets forth the securities of debt investment securities
at June 30, 1998, and the weighted average yields of such securities:

<TABLE>
<CAPTION>
Maturing
--------------------------------------------------------
After One But After Five
Within One Within Five But Within After Ten
Year Years Ten Years Years
------------ ------------- ------------ -------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------- ----- ------ ----- ------- -----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Held-to-Maturity:(1)
U.S. Treasury and
other U.S. Government
agencies............. $4,695 5.59% $ 7,996 6.12% $ -- --% $ -- --%
State and political
subdivisions......... -- --% -- --% -- --% 1,000 5.00%
Mortgage Backed and
related securities... -- --% 1,684 6.10% 1,515 6.60% 2,657 6.66%
------ ---- ------- ---- ------ ---- ------- ----
$4,695 5.59% $ 9,680 6.12% $1,515 6.60% $ 3,657 6.21%
------ ---- ------- ---- ------ ---- ------- ----
Available-for-Sale:(2)
U.S. Treasury and
other U.S. Government
agencies............. -- --% 1,515 6.66% -- --% -- --%
Mortgage-backed and
related securities... -- --% -- --% -- --% 10,572 6.19%
Marketable equity
securities........... 1,814 5.63% -- --% -- --% -- --%
------ ---- ------- ---- ------ ---- ------- ----
1,814 5.63% 1,515 6.66% -- --% $10,572 6.19%
------ ---- ------- ---- ------ ---- ------- ----
Total Securities..... $6,509 5.60% $11,195 6.19% $1,515 6.60% $14,229 6.20%
====== ==== ======= ==== ====== ==== ======= ====
</TABLE>
- --------
(1) The carrying value is the amortized cost of the security at each reporting
date.
(2) The carrying value is the approximate fair value of the security at each
reporting date.

Tax equivalent adjustments have not been made in calculating yields on
obligations of states and political subdivisions.

61
<PAGE>

Loan Portfolio

Maturities and sensitivities of loans to changes in interest rates. The
following table shows the maturity of First Federal's loan portfolio at June
30, 1998. Loans that have adjustable rates are shown as amortizing to final
maturity rather than in the period during which the interest rates are next
subject to change. The table does not include prepayments but does reflect
scheduled principal amortization.

<TABLE>
<CAPTION>
June 30, 1998
--------------------------------
Maturing
--------------------------------
Within 1-5 Over 5
Type One Year Years Years Total
---- -------- ------- ------- -------
(In Thousands)
<S> <C> <C> <C> <C>
One-to-Four Family...................... $ 8,946 $ 8,015 $50,601 $67,562
Other Mortgage Loans.................... 1,665 3,046 12,329 17,040
Consumer and Other Loans................ 6,136 7,847 857 14,840
------- ------- ------- -------
$16,747 $18,908 $63,787 $99,442
======= ======= ======= =======
Loans with:
Predetermined interest rates.......... $15,403 $18,180 $26,871 $60,454
Adjustable interest rates............. 1,344 728 36,916 38,988
------- ------- ------- -------
$16,747 $18,908 $63,787 $99,442
======= ======= ======= =======
</TABLE>

Non-performing Loans

The following table sets forth information regarding non-accrual loans,
loans which are 90 days or more delinquent and still accruing, and foreclosed
properties at the dates indicated. At June 30, 1998, there are no potential
problem loans except as included in the table below.

<TABLE>
<CAPTION>
At June 30,
------------
1997 1998
---- ------
(In
Thousands)
<S> <C> <C>
Non-accrual mortgage loans................................ $ 0 $ 0
Non-accrual other loans................................... 0 1
---- ------
Total non-accrual loans................................... 0 1
Loans 90 days or more delinquent, and still accruing...... 446 1,382
---- ------
Total non-performing loans................................ 446 1,383
Total foreclosed real estate, net of related allowance for
losses................................................... 0 0
---- ------
Total non-performing assets............................... $446 $1,383
==== ======
Troubled debt restructured................................ $ 39 $ 31
==== ======
Non-performing loans to total loans....................... .48% 1.40%
Total non-performing assets to total assets............... .34% .92%
</TABLE>

At June 30, 1998, FFBS had no loan concentrations in excess of 10% of total
loans and no outstanding foreign loans.

Loans classified for regulatory purposes or for internal credit review
purposes that have not been disclosed in the above table do not represent or
result from trends or uncertainties that management expects will materially
impact the financial condition of FFBS or First Federal, or their future
operating results, liquidity, or capital resources.

First Federal's management stringently monitors assets that are classified
as non-performing. Non-performing assets include nonaccrual loans, loans 90
days or more past due, and foreclosed properties. Management places loans on a
nonaccrual status when it is determined that the borrower is unable to meet his

62
<PAGE>

contractual obligations or when interest or principal is 90 days or more past
due, unless the loan is adequately secured by way of collateralization,
guarantees, or other security. If all nonaccrual loans have been current
throughout their terms, interest income for 1998 and 1997 would have been
increased/(decreased) by approximately $0 and $6, respectively.

At June 30, 1998, management was not aware of any potential problem loans
not previously disclosed, and there were no other interest-bearing non-
performing assets at June 30, 1998.

Summary of Loan Loss Experience

Allowance for Loan Losses. The allowance for loan losses is established
through a provision for loan losses based on management's periodic evaluation
of the adequacy of the allowance for loan losses. Such evaluation, which
includes a review of all loans on which full collectibility may not be
reasonably assured, considers among other matters known and inherent risks in
the portfolio, prevailing market conditions, management's judgment as to
collectibility, the estimated net realizable value of the underlying
collateral, historical loan loss experience and other factors that warrant
recognition in providing for an adequate loan loss allowance.

<TABLE>
<CAPTION>
For the Year
Ended June
30,
-------------
1997 1998
------ -----
(In
Thousands)
<S> <C> <C>
Balance at beginning of period................................. $ 666 $ 576
Provision (benefits) for loan losses........................... 0 5
Charge-offs:
Mortgage loans............................................... 46 0
Other loans.................................................. 51 63
Recoveries:
Mortgage loans............................................... 3 1
Other loans.................................................. 4 4
------ -----
Balance at end of period....................................... $ 576 $ 523
====== =====
Ratio of net charge-offs during the period to average loans
outstanding during the period................................. 0.11% 0.06%
Ratio of allowance for loan losses to non-performing loans at
the end of the period......................................... 129.15% 37.82%
Ratio of allowance for loan losses to net loans receivable at
the end of the period......................................... 0.62% 0.53%
Ratio of allowance for loan losses and foreclosed real estate
to total non-performing assets at the end of the period....... 129.15% 37.82%
</TABLE>

Allocation of the Allowance for Loan Losses. The following table shows the
allocation of the loan loss allowance among First Federal's various types of
loans at June 30, 1997 and 1998:

<TABLE>
<CAPTION>
At June 30, 1997 At June 30, 1998
----------------- -----------------
Percent Of Percent Of
Loans to Loans to
Total Total
Amount Loans Amount Loans
------ ---------- ------ ----------
<S> <C> <C> <C> <C>
At end of period allocated to:
One-to-four family........................ $305 71.99% $300 67.94%
Multi-family and commercial real estate... 197 10.38% 143 11.24%
Construction and land..................... 0 5.18% 0 5.90%
Consumer and other loans.................. 74 12.45% 80 14.92%
---- ------ ---- ------
Total allowance......................... $576 100.00% $523 100.00%
==== ====== ==== ======
</TABLE>

63
<PAGE>

Deposits

Distribution of Deposit Accounts. The following table sets forth the
distribution of First Federal's deposit accounts at the dates indicated and the
weighted average interest rates on each category of deposits presented. First
Federal does not have a significant amount of deposits from out-of-state.
Management does not believe that the use of year end balances instead of
average balances resulted in any material difference in the information
presented.

<TABLE>
<CAPTION>
At June 30,
-------------------------------------------------------------------------------
1996 1997 1998
------------------------- -------------------------- --------------------------
Weighted Weighted Weighted
Percent Average Percent Average Percent Average
Of Total Nominal Of Total Nominal Of Total Nominal
Amount Deposits Rate Amount Deposits Rate Amount Deposits Rate
------- -------- -------- -------- -------- -------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Transaction accounts:
Interest-bearing
checking accounts..... $10,383 10.47% 2.26% $ 9,350 9.00% 2.07% $ 9,979 8.71% 1.94%
Money market accounts.. 6,057 6.11% 3.46% 5,626 5.42% 3.57% 4,970 4.33% 3.85%
Non-interest-bearing
checking accounts..... 2,851 2.88% 0.00% 3,557 3.43% 0.00% 4,817 4.21% 0.00%
------- ------ ---- -------- ------ ---- -------- ------ ----
Total transaction
accounts............... 19,291 19.46% 2.30% 18,533 17.85% 2.13% 19,766 17.25% 1.95%
Regular passbook
accounts............... 6,330 6.38% 2.76% 6,186 5.96% 2.84% 6,787 5.93% 2.83%
------- ------ ---- -------- ------ ---- -------- ------ ----
Total transaction and
passbook accounts...... 25,621 25.84% 2.42% 24,719 23.81% 2.31% 26,553 23.18% 2.17%
------- ------ ---- -------- ------ ---- -------- ------ ----
Certificate accounts:
One-year certificates
and under............. 45,931 46.33% 5.21% 44,192 42.58% 5.45% 47,969 41.88% 5.59%
Over one-year thru
three-year
certificates.......... 22,512 22.70% 5.80% 29,132 28.07% 5.81% 33,433 29.19% 5.95%
Greater than three-year
certificates.......... 5,084 5.13% 6.00% 5,743 5.54% 6.29% 6,583 5.75% 6.50%
------- ------ ---- -------- ------ ---- -------- ------ ----
Total certificate
accounts.............. 73,527 74.16% 5.44% 79,079 76.19% 5.64% 87,985 76.82% 5.79%
------- ------ ---- -------- ------ ---- -------- ------ ----
Total Deposits.......... $99,148 100.00% 4.66% $103,798 100.00% 4.85% $114,538 100.00% 4.95%
======= ====== ==== ======== ====== ==== ======== ====== ====
</TABLE>

The following table sets forth FFBS's time certificates of deposit of
$100,000 or more and maturities at June 30, 1998:

<TABLE>
<CAPTION>
3 Months 3 Through 6 Through Over
Total Or Less 6 Months 12 Months 12 Months
------- -------- --------- ---------- ---------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Time certificates of deposit
of $100,000 or more.......... $19,795 $2,836 $4,335 $9,929 $2,695
======= ====== ====== ====== ======
</TABLE>

Return on Equity and Assets

The following financial ratios are presented for analytical purposes:

<TABLE>
<CAPTION>
June 30,
-------------
1997 1998
----- ------
<S> <C> <C>
Return on assets (net income divided by total average assets).. 1.16% 1.13%
Return on equity (net income divided by average equity)........ 5.95% 6.89%
Dividend payout ratio (dividends per share divided by net
income per share)............................................. 51.55% 247.57%
Equity to asset ratio (average equity divided by average total
assets)....................................................... 19.57% 16.34%
</TABLE>

64
<PAGE>

Short-Term Borrowings

The Company may obtain advances from the Federal Home Loan Bank of Dallas
upon the security of its Federal Home Loan Bank stock and certain of First
Federal's residential mortgage loans, provided certain standards related to
creditworthiness have been met. Such advances are made pursuant to several
credit programs, each of which has its own interest rate and range of
maturities. Such advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending and investing.

The Company had $11.0 million in Federal Home Loan Bank advances outstanding
at June 30, 1998. The following table sets forth the maximum month-end balance
and average balance of First Federal's Federal Home Loan Bank advances during
the periods indicated.

<TABLE>
<CAPTION>
Year Ended
June 30,
-------------
1998 1997
------- ----
(In
Thousands)
<S> <C> <C>
Maximum balance............................................. $13,402 $ 0
Average balance............................................. 6,536 0
Weighted average interest rate of FHLB advances............. 5.49% 0%
</TABLE>

The following table sets forth certain information as to First Federal's
long-term (terms to maturity in excess of 90 days) and short-term (terms to
maturity of 90 days or less) Federal Home Loan Bank advances at the dates
indicated:

<TABLE>
<CAPTION>
Year Ended
June 30,
------------
1998 1997
------ ----
(In
Thousands)
<S> <C> <C>
FHLB long-term advances............................................ $8,350 $ 0
Weighted average interest rate..................................... 5.16% 0%
FHLB short-term advances........................................... 2,611 0
Weighted average interest rate..................................... 5.57% 0%
</TABLE>

Capital Adequacy Data of First Federal

The following table sets forth, at June 30, 1998, First Federal's tangible,
core and risk-based capital:

<TABLE>
<CAPTION>
At June 30, 1998
-----------------------------------------------
Tangible Risk-Based
Capital Core Capital Capital
--------------- --------------- ---------------
Amount Percent Amount Percent Amount Percent
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
First Federal................... $19,931 13.40% $19,931 13.40% $20,454 23.60%
Requirement..................... 2,232 1.50% 4,466 3.00% 6,919 8.00%
------- ----- ------- ----- ------- -----
Excess........................ $17,699 11.90% $15,465 10.40% $13,535 15.60%
======= ===== ======= ===== ======= =====
</TABLE>

Federal regulations require savings institutions to maintain three capital
standards: a 1.5% tangible capital standard; a 3% leverage (core capital)
ratio; and an 8% risk-based capital standard. Core capital is defined as common
stockholders' equity (including retained earnings), noncumulative perpetual
stock and related surplus, minority interest in equity accounts of consolidated
subsidiaries less intangibles other than certain qualifying supervisory
intangible assets and certain purchased mortgage servicing rights. Federal
regulations also require that, in meeting the leverage ratio, tangible and
risk-based capital standards institutions must deduct investments in and loans
to subsidiaries engaged in activities not permissible for a national bank.
First Federal currently has no subsidiaries engaged in such activities. At June
30, 1997 and 1998, First Federal exceeded each of its capital requirements.

65
<PAGE>

Interest Rate Sensitivity Analysis

The matching of assets and liabilities may be analyzed by the extent to
which such assets and liabilities are "interest rate sensitive" and by
monitoring an institution's interest rate sensitivity "gap." An asset or
liability is said to be interest rate sensitive within a specific time period
if it will mature or reprice within that time period. The interest rate
sensitivity gap is defined as the difference between the amount of interest-
earning assets anticipated, based upon certain assumptions, to mature or
reprice within a specific time period and the amount of interest-bearing
liabilities anticipated, based upon certain assumptions, to mature or reprice
within that time period. A gap is considered positive when the amount of
interest rate sensitive assets exceeds the amount of interest rate sensitive
liabilities. A gap is considered negative when the amount of interest rate
sensitive liabilities exceeds the amount of interest rate sensitive assets.
Generally, during a period of rising interest rates, a negative gap would
adversely affect net interest income while a positive gap would result in an
increase in net interest income, while conversely during a period of falling
interest rates, a negative gap would result in an increase in net interest
income and a positive gap would negatively affect net interest income.

Over the years First Federal has taken steps to reduce or control its gap by
emphasizing adjustable-rate loans, originating conforming fixed-rate loans for
sale, and maintaining investments with shorter terms to maturity. At June 30,
1998, total interest-earning assets maturing or repricing within one year
exceeded total interest-bearing liabilities maturing or repricing in the same
time period by $1.7 million representing a positive cumulative one-year gap
ratio of (1.15%). Thus, during periods of falling interest rates, it is
expected that the cost of First Federal's interest-bearing liabilities would
fall more quickly than the yield on its interest-earning assets, which would
positively affect net interest income. In periods of rising interest rates, the
opposite effect on net interest income is expected. In periods of substantial
interest rate declines, First Federal could experience increased prepayments of
its mortgage loans that may result in the reinvestment of such proceeds at
market rates that are lower than current rates. During 1997, the market
dictated that adjustable rate mortgages carry a shorter initial time period
before the loan can reprice, which resulted in these assets repricing faster
than the year before, thus decreasing the 1 year negative interest sensitivity
gap. During 1998, interest-earning assets repricing within 1 year increased
substantially due to the purchase of adjustable-rate mortgage-backed and
related securities that were funded with short-term advances from the Federal
Home Loan Bank of Dallas, which also increased interest-bearing liabilities
repricing within 1 year.

First Federal's management believes that, given the level of its capital and
the excess of interest-earning assets over interest-bearing liabilities, the
increased net income resulting from a mismatch in the maturity of its asset and
liability portfolios provides sufficient returns during periods of declining or
stable interest rates to justify the increased vulnerability to sudden and
unexpected increases in interest rates.

The following table sets forth the amounts of interest-earning assets and
interest-bearing liabilities outstanding at June 30, 1998, which are
anticipated by First Federal, based upon certain assumptions, to reprice or
mature in each of the future time periods shown. Except as stated below, the
amount of assets and liabilities shown which reprice or mature during a
particular period were determined in accordance with the contractual terms of
the assets or liability. Loans that have adjustable interest rates are shown as
being due in the period during which the interest rates are next subject to
change.

Decay rates for deposits are assumed to indicate the annual rate at which an
interest-bearing liability will be withdrawn in favor of an account or other
investment with a more favorable return. Decay rates have been assumed for
regular passbook, NOW and other checking accounts, and money market accounts.
The decay rates assumed in this evaluation are as follows:

<TABLE>
<CAPTION>
Annual Decay Rate
----------------------------------------
5 to
Less Than 1 to 3 3 to 5 10 More Than
1 Year Years Years Years 10 Years
--------- ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C>
Regular Passbook................ 17.00% 17.00% 16.00% 14.00% 14.00%
NOW and Other Checking.......... 37.00% 32.00% 17.00% 17.00% 17.00%
Money Market.................... 79.00% 31.00% 31.00% 31.00% 31.00%
</TABLE>

66
<PAGE>

The above prepayment and decay rates are those national assumptions
published by the Office of Thrift Supervision as of December 31, 1992. The
assumptions used at the dates indicated, although standardized, may not be
indicative of actual prepayments and withdrawals experienced by First Federal.

Certain shortcomings are inherent in the method of analysis presented in the
foregoing table. For example, although certain assets and liabilities may have
similar maturities or periods to repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types may lag behind changes in
market rates.

Additionally, certain assets, such as adjustable rate mortgage loans, have
features that restrict changes in interest rates on a short-term basis and over
the life of the asset. Further, in the event of a change in interest rates,
prepayment and early withdrawal levels would likely deviate significantly from
those assumed in calculating the table. Finally, the ability of many borrowers
to service their debt may decrease in the event of an interest rate increase.

<TABLE>
<CAPTION>
At June 30, 1998
--------------------------------------------
More
More Than 5
Than 1 Years More
Within Year to to 10 Than 10
1 Year 5 Years Years Years Total
------- ------- ------- ------- -------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Mortgage loans................. $44,166 $15,172 $11,041 $14,223 $84,602
Other loans.................... 6,159 8,019 411 251 14,840
Interest-bearing deposits...... 9,705 0 0 0 9,705
Mortgage-backed and related
securities.................... 11,835 1,684 1,515 1,394 16,428
Investment securities.......... 13,507 2,513 0 1,000 17,020
FHLB stock..................... 0 0 0 851 851
------- ------- ------- ------- -------
Total interest-earning assets.... 85,372 27,388 12,967 17,719 143,446
------- ------- ------- ------- -------
Less:
Unearned discount and deferred
fees.......................... (1) 0 0 0 (1)
------- ------- ------- ------- -------
Net interest-earning assets...... 85,371 27,388 12,967 17,719 143,445
------- ------- ------- ------- -------
Interest-bearing liabilities:
Passbook accounts.............. 1,154 2,895 1,451 1,287 6,787
NOW accounts................... 3,692 4,284 1,215 788 9,979
Money market accounts.......... 3,926 807 200 37 4,970
Certificate accounts........... 65,253 22,732 0 0 87,985
Borrowings..................... 9,611 1,350 0 0 10,961
------- ------- ------- ------- -------
Total interest-bearing
liabilities..................... 83,636 32,068 2,866 2,112 120,682
------- ------- ------- ------- -------
Interest sensitivity gap......... $ 1,735 $(4,680) $10,101 $15,607 $22,763
======= ======= ======= ======= =======
Cumulative interest sensitivity
gap............................. $ 1,735 $(2,945) $ 7,156 $22,763
======= ======= ======= =======
Cumulative interest sensitivity
gap as a percentage of total
assets.......................... 1.15% (1.95)% 4.75% 15.09%
Cumulative net interest-earning
assets as a percentage of
cumulative interest-sensitive
liabilities..................... 102.07% 97.45% 106.04% 118.86%
</TABLE>

67
<PAGE>

Security Ownership of Principal Stockholders and Management of FFBS

The following table sets forth as of the record date for the FFBS special
meeting certain information about beneficial ownership, as defined in Rule 13d-
3 of the Exchange Act, of each person who is an officer, director or beneficial
owner of more than five percent of FFBS common stock, and for all of the
directors and executive officers of FFBS as a group. Except as otherwise
indicated, all shares indicated as beneficially owned are held with sole voting
and investment power.

<TABLE>
<CAPTION>
Amount and Nature of Percent
Name Beneficial Ownership of Class
- ---- -------------------- --------
<S> <C> <C>
First Federal Bank for Savings Employee Stock
Ownership Plan................................. 126,614 shares(1) 8.0%
E. Frank Griffin, III, President and Chief
Executive Officer of FFBS and First Federal.... 35,510 shares(2) 2.2%
</TABLE>
- --------
(1) Includes 55,138 unallocated shares for which the plan holds sole voting and
dispositive power and 71,476 allocated shares over which the plan shares
voting and dispositive power.
(2) Includes 10,580 shares which may be acquired through the exercise of stock
options under the FFBS Bancorp, Inc. Incentive Stock Option Plan and 9,419
shares awarded under the First Federal Bank for Savings Employee Stock
Ownership Plan.

All directors and executive officers as a group (9 persons) own 310,031
shares, or 18.9%, of the outstanding shares of FFBS common stock. Included are
39,516 shares subject to options which may be acquired under the FFBS Bancorp,
Inc. Stock Option Plan for Outside Directors. Also included are 26,450 shares
subject to options which may be acquired under the FFBS Bancorp, Inc. Incentive
Stock Option Plan.

68
<PAGE>

INFORMATION ABOUT NBC

Incorporation of Certain Documents by Reference

The following documents filed by NBC with the SEC are incorporated by
reference in this proxy statement-prospectus:

. its Annual Report on Form 10-K for the year ended December 31, 1998
(the "1998 Annual Report");

. All documents filed by NBC with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this proxy
statement-prospectus and prior to the effective date of the merger
will be deemed to be incorporated by reference in this proxy
statement-prospectus from the date they are filed. Any statement
contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded
for purposes of this proxy statement-prospectus to the extent that
a statement contained herein or in any other subsequently filed
document which is also or is deemed to be incorporated by reference
herein modifies or supersedes such statement.

If you are a beneficial owner of FFBS common stock or NBC common stock and
would like a copy of any of the information incorporated by reference in this
proxy statement-prospectus other than exhibits to such information (unless such
exhibits are specifically incorporated by reference into such information), NBC
will provide it to you without charge.

If you would like to receive any of that information, please call or write
to:

NBC Capital Corporation
P. O. Box 1187
Starkville, Mississippi 39760
Attention: Mr. Richard T. Haston
Telephone: (601) 324-4258

You should make your request before June 7, 1999 in order to receive the
information prior to the meetings.

Regulatory Considerations

General

NBC is regulated and supervised by the Federal Reserve Board. Under federal
law, bank holding companies may not directly or indirectly acquire the
ownership or control of more than 5% of the voting shares or substantially all
of the assets of any company, including a savings and loan, without the prior
approval of the Federal Reserve Board. Bank holding companies also generally
are prohibited from engaging in nonbanking activities.

NBC's national banking subsidiary, National Bank of Commerce, is regulated,
supervised and examined by the Office of the Comptroller of the Currency.
National Bank of Commerce is also subject to various requirements and
restrictions under federal and state law, including:

. requirements to maintain reserves against deposits;

. restrictions on the types and amounts of loans that may be made;

. restrictions on the interest that may be charged on loans; and

. limitations on the types of investments that may be made and the
types of services that may be offered.

69
<PAGE>

Various consumer laws and regulations also affect the operations of NBC and
National Bank of Commerce. Commercial banks such as National Bank of Commerce
are also affected by the Federal Reserve Board's attempts to control the money
supply and credit availability in order to influence the economy.

Payment of Dividends

NBC derives substantially all of its income from the payment of dividends by
National Bank of Commerce. National Bank of Commerce's ability to pay dividends
affects NBC's ability to pay dividends to its stockholders. Various statutory
restrictions apply to National Bank of Commerce's ability to pay dividends to
NBC. As of December 31, 1998, National Bank of Commerce had approximately $17
million available to pay dividends to NBC.

A national bank is generally prohibited from engaging in an unsafe or
unsound practice such as payment of dividends if the payment of the dividend
would deplete a bank's capital to an inadequate level. National Bank of
Commerce's ability to pay dividends in the future is influenced by bank
regulatory policies or agreements and by capital guidelines. The level of this
influence could increase in the future. Additional information on this topic is
available in NBC's 1998 Annual Report on Form 10-K, which has been incorporated
by reference herein.

The Federal Reserve Board maintains a policy that requires bank holding
companies to serve as a source of strength for their subsidiary banks. In
furtherance of this policy, the Federal Reserve Board has stated that a bank
holding company generally should not maintain a rate of cash dividends unless
its net income available to common stockholders has been sufficient to fully
fund the dividends, and the prospective rate of earnings retention appears to
be consistent with the holding company's capital needs, asset quality and
overall financial condition.

Restrictions on Extensions of Credit

Federal law restricts National Bank of Commerce's ability to:

. extend credit to affiliates (including NBC);

. purchase assets of affiliates;

. issue a guarantee, acceptance or letter of credit on behalf of
affiliates (including an endorsement or standby letter of credit);
or

. purchase or invest in the stock or securities of an affiliate or
take that stock or securities as collateral for loans to any
borrower.

Extensions of credit and issuances to affiliates generally must be secured
by eligible collateral. In addition, all such transactions with a single
affiliate are generally limited to 10% of National Bank of Commerce's capital
and surplus and all such transactions with affiliates may not exceed 20% of
National Bank of Commerce's capital and surplus.

National Bank of Commerce is also limited in the aggregate amount that may
be loaned to a single borrower or a group of borrowers that are deemed to be
affiliated with each other for purposes of these rules. These loans are limited
to 15% of National Bank of Commerce's capital and surplus.

70
<PAGE>

ELECTION OF NBC DIRECTORS

In addition to voting on the proposed merger, at the NBC annual meeting the
stockholders will elect 22 directors to serve until the 2000 annual meeting.
The NBC Board has nominated the 22 persons listed on the proxy card, each of
whom is currently an NBC director.

Voting procedures

NBC stockholders have cumulative voting rights in the election of directors.
Cumulative voting entitles a stockholder to give one candidate a number of
votes equal to the number of directors to be elected, multiplied by the number
of shares held by that shareholder, or to distribute the total votes, computed
on the same principle, among as many candidates a the stockholder chooses.
Since the number of directors to be elected is 22, a shareholder owning ten
shares may cast 220 votes for one nominee, 22 votes for ten nominees or
allocate the 220 votes among the several nominees in any manner. The 22
candidates receiving the highest number of votes cast will be elected.

If a shareholder returns a properly signed and dated proxy card, but does
not allocate votes or mark out the name of any nominee on the card, the proxy
holders will vote all shares represented by proxy in favor of each of the 22
nominees, while reserving the right, however, to cumulate their votes and
distribute them among the nominees, at their discretion. Otherwise, the signed
proxy card will be voted as indicated on the card. If, for any reason, one or
more of the nominees should not be available as a candidate for director, an
event that the NBC board does not anticipate, the proxy holders will vote for
such other candidate or candidates as may be nominated by the board of
directors, and discretionary authority to do so is included in the proxy card.
If stockholders attending the NBC meeting cumulate their votes such that all of
the nominees cannot be elected, then the proxy holders will cumulate votes to
elect as many of the nominees as possible.

Information About the Board's Nominees

The following table provides certain information about the 22 nominees for
director of NBC. Information about each nominee has been furnished to NBC by
the nominee.

The Board of Directors recommends a vote "FOR" the election of all the
nominees.

<TABLE>
<CAPTION>
Director
Name and Address Age Since Principal Occupation
---------------- --- -------- --------------------
<S> <C> <C> <C>
Mark A. Abernathy(1)........ 42 1994 President and Chief Operating Officer, NBC
2007 Woodlake Drive and National Bank of Commerce
Starkville, MS 39759
David Byars(2).............. 46 1998 President, Byars Furniture
319 Byrd Avenue Philadelphia, MS
Philadelphia, Mississippi
39350
Robert L. Calvert, III(3)... 59 1999 President, Calvert Spradling Engineers, Inc.,
931 East Main Street Robert L. Calvert Consulting Engineers, Inc., and
West Point, Mississippi
39773 C & H Properties, Inc., West Point, MS
Robert A. Cunningham(1)(2).. 53 1990 Planter, Brooksville, MS
340 Deerbrook Road
Brooksville, MS 39739
</TABLE>

71
<PAGE>

<TABLE>
<CAPTION>
Director
Name and Address Age Since Principal Occupation
---------------- --- -------- --------------------
<S> <C> <C> <C>
J. Nutie Dowdle............. 55 1990 President, Dowdle Butane Gas Co., Inc. and Wholesale
521 Huckleberry Hills LP Gas Co., Columbus, MS
Columbus, MS 39701

Clifton B. Fowler........... 50 1991 President, National Bank of Commerce, Starkville Banking
1306 South Montgomery Center and Vice President, NBC
Starkville, MS 39759

James C. Galloway, Jr.(2)... 46 1997 President, Galloway-Chandler-McKinney Insurance
551 Timber Creek Drive Agency, Inc. and Magnolia Financial Services
Columbus, MS 39702 Corporation, Columbus, MS

Hunter M. Gholson(1)........ 66 1974 Attorney at Law, Gholson, Hicks & Nichols, Columbus,
1100 6th Street North MS
Columbus, MS 39701

Bobby L. Harper(1).......... 57 1977 Executive Vice President, Banking Center
1524 Briarwood Circle Administration, National Bank of Commerce and
Columbus, MS 39701 Chairman of Executive Committee, NBC

Robert S. Jones(1).......... 67 1973 President, Fletcher-Jones, Inc., Columbus, MS
803 19th Avenue North
Columbus, MS 39701

Lewis F. Mallory, Jr.(1).... 56 1969 Chairman of the Board and Chief Executive Officer,
513 Greensboro Street National Bank of Commerce and NBC
Starkville, MS 39759

Robert D. Miller(1)(2)...... 69 1975 Certified Public Accountant, R.D. Miller & Co., C.P.A.,
Treas Lake Road Aberdeen, MS
Aberdeen, MS 39730

Edith D. Millsaps(2)........ 74 1977 Chairman of the Board and Secretary-Treasurer, Millsaps
Mayhew Road Chevrolet-Pontiac-Buick-GMC Truck, Inc.,
Starkville, MS 39759 Starkville, MS

Ralph E. Pogue(2)........... 69 1979 Attorney at Law, Pogue and Faulks, Aberdeen, MS
701 Lakewood Drive
Aberdeen, MS 39730

Thomas J. Prince, Jr........ 57 1990 Executive Vice President, Division Manager of Consumer
117 Dover Court Financial Services, National Bank of Commerce and Vice
Starkville, MS 39759 President, NBC

James R. Prude(1)(4)........ 45 1994 Independent Bank Consultant and Vice President, Scribner
6154 Park Lane Equipment Company, Inc., Amory, MS
Dallas, TX 75225

Sarah Scribner Prude(1)(4).. 72 1987 Secretary-Treasurer, Scribner Equipment Company, Inc.,
Highway 25 South Amory, MS
Amory, MS 38821

Allen B. Puckett, III(1).... 48 1987 President, Columbus Brick Company, Columbus, MS
Jolly Road
Columbus, MS 39705
</TABLE>

72
<PAGE>

<TABLE>
<CAPTION>
Director
Name and Address Age Since Principal Occupation
---------------- --- -------- --------------------
<S> <C> <C> <C>
Dr. James C. Ratcliff....... 67 1978 Brooksville Medical Association, Brooksville, MS
East Depot Street
Brooksville, MS 39739
Sammy J. Smith(2)(5)........ 59 1977 Owner, Smith & Byars Men's Clothing, Starkville, MS
20 Tally Ho Drive
Starkville, MS 39759
H. Stokes Smith(3)(5)....... 62 1999 President, Smith & Byars Clothiers, Columbus, MS
708 East Main Street
West Point, Mississippi
39773
Henry S. Weiss(1)(2)........ 68 1988 President, Industrial Fabricators, Inc., and Columbus
455 Waring Road Scrap Material Co., Inc., Columbus, MS
Columbus, MS 39701
</TABLE>
- --------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Director added to the board of directors as a result of the December 31,
1998 acquisition of First National Corporation, and received committee
appointments as of January 1999.
(4) Mr. Prude is the son of Ms. Sarah Scribner Prude.
(5) Mr. Sammy J. Smith and Mr. H. Stokes Smith are brothers.

Meetings and Committees of the Board of Directors

The board meets on the second Wednesday of each month with the exception of
April, in which the annual meeting is generally held. During the fiscal year
ended December 31, 1998, the board met 11 times. Each such meeting was a
regular meeting. Each director attended at least 75% of the aggregate of all
meetings held by the board and the committees on which he or she served, with
the exception of Dr. James C. Ratcliff.

The board has established various standing committees, including the
executive committee, the audit committee, the corporate responsibility
committee, the salary committee, and the trust investment committee. These
committees generally meet either monthly or quarterly and at call. The reports
and minutes of the committees are received and considered by the board at its
regular meetings. The board does not have a standing nominating committee.

The audit committee supervises NBC's internal audit function and general
auditor, directs an examination of NBC's affairs at least annually and reviews
regulatory examination reports on NBC and its subsidiaries, internal audit and
loan review reports and audit reports issued by NBC's independent auditors. The
audit committee held four meetings during 1998.

The salary committee reviews and recommends salaries, bonuses and other
compensation of certain officers of NBC and its subsidiaries, reviews and
approves certain compensation plans and policies for employees of NBC and its
subsidiaries and administers NBC's executive compensation plans. The salary
committee also supervises compliance by NBC and its subsidiaries with laws and
regulations relating to hiring, promotion and welfare and benefits of employees
of NBC and its subsidiaries and assists executive management with management
development and succession plans for NBC and its subsidiaries. The salary
committee held two meetings during 1998.

The executive committee has broad power and authority to consider issues and
make decisions on behalf of the board of directors. It does not have the power
to appoint directors between annual meetings or to declare dividends.
Additionally, the executive committee would have no authority over matters
delegated to another committee by the board. The executive committee held
thirteen meetings during 1998.

73
<PAGE>

Compensation of Directors

During 1998, each non-employee director of NBC received an $8,100 retainer,
and $525 for attendance at each meeting of a committee of the board of
directors of which he or she was a member. The secretary of the board received
an additional retainer of $24,300 and each member of the executive committee
received an additional retainer of $7,800. Directors who are employees of NBC
are not compensated for serving on the board of directors or any of its
constituent committees.

Stock Ownership of Directors, Officers and Principal Stockholders

The following table shows, as of March 10, 1999, the number of shares of
NBC's common stock beneficially owned by (i) each person known by NBC to be the
beneficial owner of more than five percent of the outstanding shares of NBC
common stock, (ii) all directors and nominees, (iii) all executive officers
named in the Summary Compensation Table, and (iv) all directors and executive
officers as a group. Unless otherwise noted, the named persons have sole voting
and investment power with respect to the shares indicated (subject to any
applicable community property laws).
<TABLE>
<CAPTION>
Number of Shares
Beneficially Percentage
Name Owned(A) Ownership(B)
---- ---------------- ------------
<S> <C> <C>
Estate of J. R. Scribner, Deceased.............. 776,268 13.7%
P.O. Box 840
Armory, MS 38821
National Bank of Commerce Employee Stock
Ownership Plan................................. 341,550 6.0
c/o National Bank of Commerce
P.O. Box 631
Columbus, MS 39703-0631
Mark A. Abernathy(1)............................ 9,041 *
David Byars(2).................................. 4,237 *
Robert L. Calvert, III(3)....................... 85,964 1.5
Robert A. Cunningham(4)......................... 81,804 1.4
J. Nutie Dowdle................................. 73,224 1.3
Clifton B. Fowler(5)............................ 6,640 *
James C. Galloway, Jr........................... 10,404 *
Hunter M. Gholson(6)............................ 65,336 1.2
Bobby L. Harper(7).............................. 23,835 *
Robert S. Jones................................. 22,388 *
Lewis F. Mallory, Jr.(8)........................ 74,282 1.3
Robert D. Miller................................ 27,161 *
Edith D. Millsaps............................... 10,388 *
Ralph E. Pogue.................................. 15,584 *
Thomas J. Prince, Jr.(9)........................ 10,803 *
James R. Prude(10)(11)(12)...................... 968,832 17.1
Sarah Scribner Prude(10)(12).................... 846,440 14.9
Allen B. Puckett, III(13)....................... 141,392 2.5
Dr. James C. Ratcliff(14)....................... 5,748 *
H. Stokes Smith(15)............................. 23,616 *
Sammy J. Smith.................................. 4,476 *
Henry S. Weiss.................................. 38,000 *
Richard T. Haston(16)........................... 1,019 *
Joel C. Clements(17)............................ 4,936 *
Directors and executive officers as a group (27
persons)(18)................................... 1,733,733 30.6%
</TABLE>
- --------
* Less than one percent.

74
<PAGE>

(A) Includes shares as to which such person, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise, has
or shares voting power and/or investment power as these terms are defined
in Rule 13d-3(a) under the Securities Exchange Act of 1934.
(B) Based upon 5,664,736 shares of common stock outstanding.
(1) Includes 176 shares held by an employee stock ownership plan with respect
to which Mr. Abernathy has voting power. Also, includes 1,306 shares owned
by Mr. Abernathy's wife, as to which he disclaims beneficial ownership.
(2) Includes 1,200 shares owned by Mr. Byars' wife, 1,000 shares over which Mr.
Byars serves as custodian for his children, and 1,000 shares held through a
profit sharing plan, as to all of which Mr. Byars exercises investment and
voting control. Also includes 1,037 shares held in a family trust over
which Mr. Byars is trustee and exercises investment and voting control.
(3) Includes 13,436 shares held by a company over which Mr. Calvert has sole
investment and voting control, and 1,171 shares owned by Mr. Calvert's
wife, as to which he disclaims beneficial ownership.
(4) Includes 16,372 shares held in a trust with respect to which Mr. Cunningham
has shared voting and investment power and 54,548 shares owned by
partnership as to which Mr. Cunningham has sole voting and investment
power.
(5) Includes 892 shares held by NBC's employee stock ownership plan with
respect to which Mr. Fowler has voting power, and 160 shares as to which
Mr. Fowler is a custodian for his child.
(6) Includes 12,500 shares held in trust and 8,348 shares held by Mr. Gholson's
wife, as to which he disclaims beneficial ownership. Also, includes 3,736
shares in trust over which Mr. Gholson has sole voting and investment
power.
(7) Includes 23,835 shares held by NBC's employee stock ownership plan with
respect to which Mr. Harper has voting power.
(8) Includes 32,961 shares held by NBC's employee stock ownership plan with
respect to which Mr. Mallory has voting power.
(9) Includes 5,659 shares held by NBC's employee stock ownership plan with
respect to which Mr. Prince has voting power.
(10) Includes 776,268 shares held by Estate of J. R. Scribner with respect to
which Mr. Prude and Ms. Prude share voting power.
(11) Includes 59,432 shares held by trust with respect to which director is a
trustee and as to which he has sole voting power.
(12) Includes 2,432 shares held in trust and 47,568 shares held in a
partnership as to which Mr. Prude and Ms. Prude share investment and
voting power.
(13) Includes 29,688 shares held in a trust as to which Mr. Puckett has shared
voting and investment power, 2,168 shares owned by a corporation as to
which Mr. Puckett has sole voting and investment power, and 5,816 shares
as to which Mr. Puckett serves as custodian for his children.
(14) Includes 1,288 shares owned by Dr. Ratcliff's wife as to which he
disclaims beneficial ownership, and 200 shares to which Dr. Ratcliff
serves as custodian for his grandchild and over which he has sole voting
and investment power.
(15) Includes 9,368 shares owned by Mr. Smith's wife as to which he disclaims
beneficial ownership.
(16) Includes 19 shares held by NBC's employee stock ownership plan with
respect to which Mr. Haston has voting power.
(17) Includes 4,272 shares held by NBC's employee stock ownership plan with
respect to which Mr. Clements has voting power, and 164 shares owned by
Mr. Clements' wife as to which he disclaims beneficial ownership.
(18) Where shares of common stock are deemed to be beneficially owned by more
than one director and/or executive officer, they are included only once in
the total number of shares beneficially owned by all directors and
executive officers as a group.

75
<PAGE>

Executive Officers

The following table sets forth information with respect to the executive
officers of NBC on December 31, 1998. Unless otherwise indicated, the
information under the caption "Position and Business Experience" describes the
officer's business experience for the past five years.

<TABLE>
<CAPTION>
Officer
Name Since Age Position and Business Experience
---- ------- --- --------------------------------
<C> <C> <C> <S>
Lewis F. Mallory, Jr........ 1965 56 Chairman and Chief Executive
Officer, NBC and National Bank of
Commerce
Mark A. Abernathy........... 1994 42 President and Chief Operating
Officer, NBC and National Bank of
Commerce since December 1997,
Executive Vice President and Chief
Operating Officer of NBC and
National Bank of Commerce from
August 1994 through December 1997
Donald J. Bugea, Jr......... 1991 45 Executive Vice President and
Investment Officer, National Bank
of Commerce and Vice President of
NBC
Joel C. Clements............ 1984 52 Executive Vice President of NBC and
National Bank of Commerce
John R. Davis............... 1986 43 Senior Vice President and Trust
Officer, National Bank of Commerce
and Vice President of NBC
Clifton B. Fowler........... 1990 50 President, Starkville Banking Center
National Bank of Commerce and Vice
President of NBC
Bobby L. Harper............. 1966 57 Executive Vice President, Banking
Center Administration, National
Bank of Commerce and Chairman of
the Executive Committee of NBC
Richard T. Haston........... 1996 52 Executive Vice President and Chief
Financial Officer, National Bank of
Commerce and Executive Vice
President and Chief Financial
Officer and Treasurer of NBC from
January 1997 through present,
Senior Vice President--Finance, NBC
and National Bank of Commerce from
September 1996 through December
1996, Executive Vice President and
Chief Financial Officer of Legacy
Securities from April 1996 through
September 1996, and President and
Chief Financial Officer of Calibre
Financial Group from June 1993
through May 1996
Thomas J. Prince, Jr........ 1979 57 Executive Vice President, Division
Manager of Consumer Financial
Services, National Bank of Commerce
and Vice President of NBC since
April 1998, President of Aberdeen
Banking Center, National Bank of
Commerce and Vice President of NBC
from January 1985 through April
1998
Tommy M. Tomlinson.......... 1983 45 Executive Vice President, Credit
Administration, National Bank of
Commerce and Vice President of NBC
</TABLE>

Executive Compensation

No executive officer ceased to serve as an officer at any time during the
fiscal year ended December 31, 1998. The following table sets forth the
compensation for services in all capacities to NBC for the fiscal years ending
December 31, 1998, 1997 and 1996, of the Chief Executive Officer of NBC and
each of the four most highly compensated executive officers of NBC other than
the Chief Executive Officer:

76
<PAGE>

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
All Other
Name and Principal Position Year Salary Bonus Compensation(2)
--------------------------- ---- -------- -------- ---------------
<S> <C> <C> <C> <C>
Lewis F. Mallory, Jr................ 1998 $253,000 $ 88,550 $8,789
Chairman of the Board and Chief
Executive Officer, National 1997 253,000 88,550 5,515
Bank of Commerce and NBC 1996 248,000 101,340 5,743
Mark A. Abernathy................... 1998 153,000 50,490 5,235
President and Chief Operating
Officer, National Bank of 1997 153,000 50,490 5,105
Commerce and NBC 1996 150,000 43,500 5,747
Richard T. Haston................... 1998 115,000 34,500 4,963
Executive Vice President and Chief
Financial Officer, National 1997 108,000 32,400 N/A
Bank of Commerce and Executive Vice
President, Chief 1996 27,415(1) 6,580 N/A
Financial Officer and Treasurer of
NBC
Joel C. Clements.................... 1998 107,202 33,769 4,983
Executive Vice President, National
Bank of Commerce and 1997 107,202 33,769 3,787
Vice President of NBC 1996 105,100 25,224 4,231
Bobby L. Harper..................... 1998 110,841 24,939 5,361
Executive Vice President, Banking
Center Administration, 1997 106,124 32,767 3,575
National Bank of Commerce and
Chairman of the Executive 1996 96,200 23,088 3,880
Committee of NBC
</TABLE>
- --------
(1) Mr. Haston joined NBC on September 30, 1996.
(2) These amounts include, for 1998, NBC's contributions to the NBC 401-K
Thrift Plan of $7,193 for Mr. Mallory, $3,639 for Mr. Abernathy, $3,500 for
Mr. Haston, $2,039 for Mr. Clements and $3,900 for Mr. Harper and NBC's
contributions to the Employee Stock Ownership Plan of $1,596 for Mr.
Mallory, $1,596 for Mr. Abernathy, $1,463 for Mr. Haston, $1,383 for Mr.
Clements and $1,461 for Mr. Harper.

Employment Agreements

NBC is a party to an executive employment agreement with its chief executive
officer, Mr. Lewis F. Mallory, Jr. The agreement, which expires on December 31,
2003, provides Mr. Mallory with continued employment for a period of five years
from the date of a material change of ownership of NBC and ensures that during
this period of employment, his salary, bonuses and benefits are at least equal
to those currently paid by NBC. In the event of a change in control of NBC
(defined as sale, transfer or exchange of 80% or more of the capital stock),
NBC is required to pay Mr. Mallory a termination benefit equal to three times
the average of the aggregate annual compensation paid during the five calendar
years preceding such change in control. If Mr. Mallory were terminated today,
he would receive a lump sum payment of $999,474 under the agreements. In the
absence of a material change in ownership or change in control, Mr. Mallory's
employment may be terminated by NBC at the discretion of the board of
directors, without any payment being made.

Benefit Plans

Defined Benefit Plan

NBC maintains a retirement plan for employees who are 21 years or older who
have completed at least one year of service. The following table specifies the
estimated benefits payable upon retirement at age 65 under the plan to persons
in the following remuneration and years of service classifications. The
benefits are computed based upon a "life and 10 years certain" basis.

77
<PAGE>

<TABLE>
<CAPTION>
Years of Service
--------------------------------------
5 Year Average Annual Earnings 10 20 30 40 45
------------------------------ ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 50,000................................ $7,194 $14,387 $21,581 $25,208 $25,833
75,000................................ 11,569 23,137 34,706 40,458 41,396
100,000................................ 15,944 31,887 47,831 55,708 56,958
125,000................................ 20,319 40,637 60,956 70,958 72,521
154,000*............................... 25,394 50,787 76,181 88,648 90,573
</TABLE>
- --------
* Based on annual compensation limits of $150,000 for 1994-1996 and $160,000
for 1997-1998.

Benefits payable under the retirement plan are based on a formula that takes
into account the individual's average compensation using the five highest
earnings years and the number of years of credited service. Average
compensation includes the salaries of executive officers set forth in the
Summary Compensation Table but excludes bonuses and contributions by NBC to
employee benefits plans.

Benefits under the retirement plan are fully vested upon completion of a
stated period of service. Benefits are not subject to any deduction for Social
Security benefits or other offset amounts and are payable at age 65.

Credited years of service for those officers whose compensation is disclosed
in the Summary Compensation Table follows:

<TABLE>
<CAPTION>
Credited Years
of Service as
of Year Individual
Name January 1, 1999 Reaches Age 65
---- --------------- ---------------
<S> <C> <C>
Lewis F. Mallory, Jr..................... 33 2008
Mark A. Abernathy........................ 4 2022
Joel C. Clements......................... 15 2012
Richard T. Haston........................ 2 2011
Bobby L. Harper.......................... 32 2006
</TABLE>

Long Term Incentive Awards

NBC provides a phantom stock benefit plan whereby the value of shares of
NBC's common stock has been assigned for the benefit of Messrs. Mallory and
Abernathy, respectively, payable upon the earlier of their disability, death or
normal retirement at age 65. Under the terms of the plan, retirement payments
will be equal to the fair market value of the stock plus any cash or stock
dividends paid since the adoption of the plan. The December 31, 1998, values of
Messrs. Mallory's and Abernathy's interests in the plan are reflected below:

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-ENDOPTION/SAR VALUES

<TABLE>
<CAPTION>
Number Of Securities
Shares Underlying Unexercised Value Of Unexercised
Acquired Value Options/SARs At Fiscal In-The-Money Options/SARs
On Exercise Realized Year-End (#) At Fiscal Year-End ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Lewis F. Mallory, Jr. .. 0 0 0[E] 0[E]
6,434.4[U] $268,959[U]
Mark A. Abernathy....... 0 0 0[E] 0[E]
2,000.0[U] $ 83,205[U]
</TABLE>

78
<PAGE>

Salary Committee Report on Executive Compensation

The salary committee of the board of directors of NBC is responsible for
approving the salaries of the executive officers who are also directors of NBC,
as well as reviewing the compensation of the other executive officers. For
1998, members of this committee, which reports its recommendations to the full
board, were Robert S. Jones (chairman), J. Nutie Dowdle, Hunter M. Gholson,
Robert D. Miller, James R. Prude, Sarah Scribner Prude, Allen B. Puckett, III
and Henry S. Weiss. All members of the committee are non-employee directors.

The committee develops its recommendations after reviewing information
compiled by The Wyatt Company, an actuarial and consulting company with offices
in principal cities around the world. The Wyatt Company annually provides
recommended salary adjustments on all of NBC's salaried positions. The Wyatt
Company was retained in 1985 to design and implement a Salary Administration
Program which would provide a basis for paying fair and competitive salaries
throughout NBC, while including a pay for performance philosophy as an
underlying principle.

It is the policy of NBC to pay fair and equitable salaries based on the
relative value of each position to NBC, giving due consideration to
compensation paid for comparable work by peer companies of similar size and
financial performance in its geographical area. NBC's policy is intended to
foster the following goals:

(1) attract and retain highly qualified individuals by paying salaries
which are competitive in the market place;

(2) provide maximum motivation to employees by paying salaries within
the latitude of established salary grade ranges, based on
individual job performance; and

(3) promote a progressive work force through which NBC can attain its
objectives.

To support NBC in these goals, The Wyatt Company annually surveys the market
to determine the value of each salaried position. This survey data, the
individual's level of responsibility, the length of experience at this level,
job performance (reviewed annually using a formal management performance
appraisal process), and NBC's financial performance become components of a
written salary recommendation provided by The Wyatt Company. The salary
committee evaluates The Wyatt Company's recommendations, gives additional
consideration to recommendations of the CEO for subordinate executive officers,
and makes adjustments as necessary to maintain internal equity in keeping with
budgetary considerations. The committee's action is subject to approval by the
full board of directors, excluding those directors who also serve as officers.
The board of directors did not modify or reject in any material way any action
or recommendation of the salary committee for 1998.

Based upon the salary committee's recommendation, the board of directors has
established a discretionary bonus policy which distributes to all staff
(excluding certain executive officers) a portion of earnings exceeding a
specific annual income goal. For general staff, participation in such bonus
pool, if any, is determined by the pro rata share to total participating
salaries of all staff participating in the bonus pool.

The chief executive officer and certain other executive officers of NBC,
including those executives whose compensation is disclosed in the Summary
Compensation Table, participate in a separate bonus plan based upon the
attainment of certain pre-determined goals. Their plans were developed to
optimize the profitability and growth of NBC and motivate certain executive
personnel of NBC through the award of compensation based on the attainment of
stated performance objectives. The chief executive, chief operating and the
chief financial officers' bonuses are based upon the attainment of the
consolidated corporate income goal, as well as a specific annual return on
average asset goal. The other executive officers participate in a plan that is
based upon the attainment of the consolidated corporate income goal and certain
performance goals for their respective areas of responsibility. All individual
goals are intended to support the achievement of the overall corporate goals.

79
<PAGE>

Incentive compensation awards for 1998 were predicated upon NBC reaching a
minimum threshold of performance. The minimum performance threshold was
exceeded and actual performance, as provided for by the plan, was utilized to
calculate the incentive awards payable to participants. The committee was
responsible for the approval of all awards under the plan, which include a
total of $232,248 awarded to Messrs. Mallory, Abernathy, Clements, Haston and
Harper as participants during 1998. Of this amount, $88,550 was awarded to Mr.
Mallory, which represents an amount equal to 35% of his salary.

Respectfully submitted,
The Salary Committee of the Board of
Directors,

<TABLE>
<S> <C> <C>
Robert S. Jones, Chairman Robert D. Miller Allen B. Puckett, III
J. Nutie Dowdle James R. Prude Henry S. Weiss
Hunter M. Gholson Sarah Scribner Prude
</TABLE>

Market Comparisons

The Securities and Exchange Commission requires that NBC include in its
proxy statement a line graph presentation comparing cumulative, five-year
stockholder returns on an indexed basis with a performance indicator of the
overall stock market and either a nationally recognized industry standard or an
index of peer companies selected by NBC. The broad market index used in the
graph is the NASDAQ Market Index. NBC has chosen to use Media General Financial
Services Industry Group 045-EAST SOUTH CENTRAL BANKS as its peer group index. A
list of the companies included in that index follows the graph presentation.

The graph presentation assumes that $100 was invested in shares of relevant
issuers on January 1, 1994, and the dividends were immediately invested in
additional shares. The value of the initial $100 investment is shown at one-
year intervals for a five-year period ending December 31, 1998. For purposes of
constructing this data, the returns of each component issuer have been weighted
according to that issuer's market capitalization.

[GRAPH APPEARS HERE]

80
<PAGE>

MG INDUSTRY GROUP 045-EAST SOUTH CENTRAL BANKS:

<TABLE>
<S> <C> <C>
ACADIANA BANCSHARES INC COMPASS BANCSHARES INC MIDSOUTH BANCORP
ADMIRALTY BANCORP CL B EASTERN VIRGINIA BNKSHRS NATIONAL COMMERCE BANCP
ALABAMA NATIONAL BANCORP EUFAULA BANCCORP INC PEOPLES BANCTRUST CO

AMSOUTH BANCORPORATION FARMERS CAPITAL BANK CP PEOPLES HOLDING CO
AREA BANCSHARES CORP FIRST AMERICAN CORP TN PREMIER FINANCIAL BANCP
AUBURN NATIONAL BANC INC FIRST COMMERCIAL CORP REGIONS FINANCIAL CORP
BANC CORPORATION FIRST M & F CORPORATION REPUBLIC BANKING CORP
BANCORPSOUTH INC FIRST TENNESSEE NATL CP S.Y. BANCORP INC
BANK OF THE OZARKS INC FIRST UNITED BANCSHARES SIMMONS FIRST NATL CORP
BANKFIRST CORPORATION FLORIDA BANKS INC SOUTH ALABAMA BANCORP
BRITTON & KOONTZ CAP CP FNB CORP SOUTHTRUST CORP
CARDINAL FINANCIAL CORP HANCOCK HOLDING CO TRUSTMARK CORP
CBT CORP HIBERNIA CORP A UNION PLANTERS CORP
COLONIAL BANCGROUP CL A ISB FINANCIAL CORP UNITED FINANCIAL HOLDING
COMMUNITY FINANCIAL GRP LAMAR CAPITAL CORP WHITNEY HOLDING CORP
COMMUNITY TRUST BNCP INC MID-AMERICA BANCORP
</TABLE>

Salary Committee Interlocks and Insider Participation in Compensation Decisions

All members of the salary committee are non-officer directors. Member Hunter
M. Gholson is a partner in a law firm which was retained by NBC during 1998 and
which is anticipated to be retained during 1999. During 1998, no executive
officer of NBC or any of its subsidiaries served as a member of the salary
committee (or other board or committee performing similar functions) or the
board of directors of another entity, one or more of whose executive officers
served on the executive committee or the NBC board of directors.

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND INDEBTEDNESS

During the calendar year 1998, the law firm of Gholson, Hicks and Nichols
rendered legal services to NBC and its subsidiary and billed for those
services, for which it was compensated. Director Gholson is associated with
Gholson, Hicks and Nichols, a professional association. Gholson, Hicks, and
Nichols received a total of $90,193 in legal fees from NBC during the calendar
year 1998.

Certain directors and officers of NBC, businesses with which they are
associated, and members of their immediate families are customers of NBC and
had transactions with NBC in the ordinary course of its business during the
years ended December 31, 1998, and 1997. As of December 31, 1998, the aggregate
principal amount of indebtedness (including unfunded commitments) owed to NBC
by NBC management and these related parties was $8,666,000. This indebtedness
comprised approximately 1.78% of the total currently outstanding loans, net of
unearned interest, as of December 31, 1998. In the opinion of the board of
directors, such transactions were made in the ordinary course of business, were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons,
and do not involve more than the normal risk of collectibility or present other
unfavorable features.

OTHER MATTERS

NBC's management is not aware of any other matters to be brought before the
NBC annual meeting. However, if any other matters are properly brought before
the annual meeting, the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect to such matters in
accordance with their judgment.

81
<PAGE>

INDEPENDENT PUBLIC ACCOUNTANTS

NBC's consolidated financial statements for the year ended December 31,
1998, were audited by the firm of T. E. Lott & Company. T. E. Lott & Company
has also been appointed to prepare NBC's financial statements for 1999. A
representative of T. E. Lott & Company is expected to be present at the annual
meeting, with the opportunity to make any statement he or she desires at that
time, and will be available to respond to appropriate questions.

82
<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires NBC's directors, executive
officers, and any person beneficially owning more than ten percent of NBC's
Common stock to file reports of securities ownership and changes in that
ownership with the Commission. Officers, directors and greater than ten percent
stockholders also are required by rules promulgated by the Commission to
furnish NBC with copies of all Section 16(a) forms they file.

Based solely upon a review of the copies of such forms filed during 1998,
NBC believes that during the fiscal year ended December 31, 1998, its officers,
directors and greater than ten percent beneficial owners complied with all
applicable Section 16(a) filing requirements, except for the following
individuals: James R. Prude and Sarah S. Prude each filed late a Form 4 for the
sale of 24,000 shares that they sold on October 20, 1998 and 24,000 shares that
they sold on October 30, 1998; Mark A. Abernathy filed late a Form 4 for the
sale of 2,000 shares that he sold on March 25, 1998; Edith O. Millsaps filed
late a Form 4 for the sale of 1,572 shares that she sold on November 23, 1998;
Hunter M. Gholson filed late a Form 4 for the sale of 25,000 shares that he
sold on December 31, 1998; and David Byars filed late a Form 4 for the sale of
84 shares that he sold on October 15, 1998.

PROPOSALS OF STOCKHOLDERS

At the annual meeting each year, the board of directors submits to
stockholders its nominees for election as directors. The board of directors may
also submit other matters to the stockholders for action at the annual meeting.
Stockholders of NBC may also submit proposals for inclusion in the proxy
materials. Proposals of stockholders intended to be presented at the 2000
annual meeting of stockholders must be received by Lewis F. Mallory, Jr.,
Chairman of the Board and Chief Executive Officer of NBC at 301 East Main
Street, Starkville, Mississippi 39759, no later than Tuesday, February 15, 2000
in order for such proposals to be considered for inclusion in the proxy
statement and form of proxy relating to the 2000 annual meeting.

The FFBS Board of Directors is not aware of any business to come before the
special meeting other than considerations of the merger agreement. However, if
any other matters should properly come before the special meeting, it is
intended that the proxies solicited by FFBS will be voted in accordance with
the judgment of the persons named on those proxies for FFBS. If FFBS did not
have notice of a matter by the date of this proxy material, it is expected that
the persons named in those proxies of FFBS will exercise discretionary
authority when voting on that matter.

In order to be eligible for inclusion in the FFBS proxy material for next
year's annual meeting of stockholders, if a meeting is held, any stockholder
proposal to take action at that meeting must be received at the executive
offices of FFBS no later than May 17, 1999.

In the event FFBS receives notice of a stockholder proposal to take action
at next year's annual meeting of stockholders, if a meeting is held, that is
not submitted for inclusion but is properly excluded from the proxy material,
or it is submitted for inclusion but is properly excluded from the proxy
material, the persons named in the proxy sent by FFBS to its stockholders may
exercise their discretion to vote on the stockholder proposal in accordance
with their best judgment if notice of the proposal is not received at the
executive offices of FFBS within 10 days after notice of net year's annual
meeting is mailed. For example, proxy material for the 1998 annual meeting was
mailed on September 14, 1998 and if the FFBS proxy material is mailed on
September 14, 1999, an FFBS stockholder would have until the close of business
on September 24, 1999 to submit a proposal.

83
<PAGE>

AVAILABILITY OF ANNUAL REPORT ON FORM 10-K

The annual report to stockholders containing financial statements for NBC's
1998 fiscal year is incorporated by reference into this proxy statement-
prospectus.

Upon the written request of any record holder or beneficial owner of the
shares entitled to vote at the annual meeting, NBC, without charge, will
provide a copy of its annual report on Form 10-K for the year ended December
31, 1998, which was filed with the Securities and Exchange Commission on March
30, 1999. Requests should be mailed to Richard T. Haston, Executive Vice
President and Chief Financial Officer, at P.O. Box 1187, Starkville,
Mississippi, 39760.

VALIDITY OF SHARES AND LEGAL MATTERS

Gholson, Hicks & Nichols, A Professional Association, provided an opinion of
the validity of the shares to be issued by NBC in the merger. As of the date of
this proxy statement-prospectus, members of the firm of Gholson, Hicks &
Nichols beneficially owned 67,366 shares of NBC common stock. In addition, Mr.
Hunter Gholson, a partner in the firm, serves as a director and secretary of
NBC.

Legal matters in connection with the merger will be passed upon for FFBS by
the law firm of Malizia, Spidi, Sloane, & Fisch, P.C., Washington, D.C. and for
NBC by the law firm of Phelps Dunbar, L.L.P., New Orleans, Louisiana.

EXPERTS

The audited consolidated financial statements of NBC included in NBC's 1998
Annual Report have been audited by T. E. Lott & Company, independent auditors,
as set forth in their report that is incorporated herein by reference. These
consolidated financial statements are incorporated herein by reference in
reliance upon T. E. Lott & Company's report given the authority of the firm as
experts in accounting and auditing.

T. E. Lott & Company, independent certified public accountants, has audited
the consolidated financial statements of FFBS for the years ended June 30,
1998, 1997 and 1996. Those financial statements are included in the proxy
statement-prospectus, and have been included in reliance upon the report of T.
E. Lott & Company appearing elsewhere herein, and upon the authority of the
firm as experts in accounting and auditing.

84
<PAGE>

INDEX TO FINANCIAL STATEMENTS OF FFBS

<TABLE>
<CAPTION>
Page
Document No.
- -------- ----
<S> <C>
Index to Financial Statements............................................ F-1
Financial Statements for the Three-Year Period Ended June 30, 1998:
Report of T. E. Lott & Company......................................... F-2
Consolidated Statements of Financial Condition......................... F-3
Consolidated Statements of Operations.................................. F-4
Consolidated Statements of Changes in Stockholders' Equity............. F-5
Consolidated Statements of Cash Flows.................................. F-6
Notes to Consolidated Financial Statements............................. F-7
Financial Statements for the Six-Month Periods Ended December 31, 1998
and 1997:
Unaudited Consolidated Statement of Financial Condition................ F-26
Unaudited Consolidated Statements of Operations........................ F-27
Unaudited Consolidated Statements of Changes in Stockholders' Equity... F-28
Unaudited Consolidated Statement of Cash Flows......................... F-29
Notes to Unaudited Consolidated Financial Statements................... F-30
</TABLE>

F-1
<PAGE>

REPORT OF

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
FFBS Bancorp, Inc.
Columbus, Mississippi

We have audited the accompanying consolidated statements of financial
condition of FFBS Bancorp, Inc., and Subsidiary as of June 30, 1998 and 1997,
and the related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the years in the three-year period ended June
30, 1998. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
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 audits 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of FFBS Bancorp,
Inc., and Subsidiary as of June 30, 1998 and 1997, and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 30, 1998, in conformity with generally accepted accounting
principles.

/s/ T. E. Lott & Company

Columbus, Mississippi
July 22, 1998 (Except for Note U,
as to which the date is February 3, 1999)

F-2
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
June 30,
---------------------------
ASSETS 1998 1997
------ ------------- ------------
<S> <C> <C>
Cash.............................................. $ 4,616,045 $ 3,347,511
Interest-bearing deposits due from banks.......... 9,705,397 5,058,945
------------- ------------
Total cash and cash equivalents................. 14,321,442 8,406,456
Available-for-sale securities (Note B)............ 13,901,495 1,221,505
Held-to-maturity securities (Note B).............. 19,547,537 24,860,516
Federal Home Loan Bank stock, at cost (Note E).... 851,000 801,900
Loans receivable, net (Note C).................... 98,917,846 92,760,267
Properties and equipment (Note D)................. 1,906,215 1,354,677
Accrued interest receivable (Note F).............. 1,279,518 1,064,535
Other assets (Note G)............................. 81,279 292,445
------------- ------------
$ 150,806,332 $130,762,301
============= ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
Liabilities:
Deposits (Note H)............................... $ 114,537,907 $103,798,255
Advances from borrowers for taxes and
insurance...................................... 286,311 277,749
Accrued interest payable on deposits............ 891,954 763,339
Borrowed funds (Note I)......................... 10,961,000 --
Accrued expenses and other liabilities.......... 875,032 781,370
------------- ------------
Total liabilities............................. 127,552,204 105,620,713
Commitments and contingencies (Notes N and S)
Stockholders' equity (Notes K, L, M and R):
Cumulative preferred stock, $.01 par value,
500,000 shares authorized; shares issued and
outstanding--none.............................. -- --
Common stock, $.01 par value, 2,000,000 shares
authorized; 1,575,735 and 1,565,595 shares
issued at June 30, 1998 and 1997,
respectively................................... 15,757 15,656
Additional paid in capital...................... 15,457,458 15,371,923
Retained earnings............................... 8,485,228 10,692,318
Unrealized gain (loss) on available-for-sale
securities..................................... (18,457) 4,789
Unearned compensation........................... (132,250) --
Loan receivable from ESOP ...................... (551,380) (761,760)
Treasury stock, at cost (100 shares and 8,150
shares, respectively).......................... (2,228) (181,338)
------------- ------------
Total stockholders' equity.................... 23,254,128 25,141,588
------------- ------------
$ 150,806,332 $130,762,301
============= ============
</TABLE>

The accompanying notes are an integral part of these statements.

F-3
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Years Ended June 30,
---------------------------------
1998 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans................ $ 8,257,279 $7,466,019 $7,074,289
Interest on mortgage-backed and related
securities............................... 752,792 308,935 139,858
Interest on investment securities......... 1,010,587 1,323,621 1,356,933
FHLB stock dividends...................... 49,246 45,492 45,137
Interest on federal funds sold............ -- 10,624 60,051
Interest on deposits due from banks....... 380,187 298,983 252,412
----------- ---------- ----------
10,450,091 9,453,674 8,928,680
INTEREST EXPENSE
Interest on deposits...................... 5,369,174 4,762,604 4,562,988
Interest on borrowed funds................ 359,125 -- --
----------- ---------- ----------
Net interest income......................... 4,721,792 4,691,070 4,365,692
Provision for losses on loans (Note C)...... 5,000 -- --
----------- ---------- ----------
Net interest income after provision for
losses on loans............................ 4,716,792 4,691,070 4,365,692

NON-INTEREST INCOME
Loan fees and service charges............. 243,104 238,099 191,696
NOW account fees.......................... 304,677 301,361 285,826
Other..................................... 137,045 94,928 111,383
----------- ---------- ----------
684,826 634,388 588,905
NON-INTEREST EXPENSE
Compensation and benefits................. 1,731,289 1,433,945 1,415,254
Occupancy and equipment................... 190,716 189,155 172,615
Deposit insurance premium (Note L)........ 65,561 731,485 214,967
Data processing........................... 171,968 148,428 155,404
Other..................................... 675,845 575,978 531,003
----------- ---------- ----------
2,835,379 3,078,991 2,489,243
----------- ---------- ----------
Income before income taxes.................. 2,566,239 2,246,467 2,465,354
Income tax expense (Note J):
Current................................... 968,699 618,199 733,257
Deferred.................................. 17,346 149,980 70,500
----------- ---------- ----------
986,045 768,179 803,757
----------- ---------- ----------
Net Income.................................. $ 1,580,194 $1,478,288 $1,661,597
=========== ========== ==========
Net Income Per Share:
Basic..................................... $ 1.06 $ 1.00 $ 1.12
Diluted................................... 1.03 .97 1.09
</TABLE>

The accompanying notes are an integral part of these statements.

F-4
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

Years Ended June 30, 1998, 1997 and 1996

<TABLE>
<CAPTION>
Unrealized
Gain (loss)
Additional On Available- Loan
Common Paid In Retained Unearned For-Sale Receivable Treasury
Stock Capital Earnings Compensation Securities From ESOP Stock Total
------- ----------- ----------- ------------ ------------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1995... $15,922 $15,285,124 $10,858,415 $(158,700) $ -- $(1,015,680) $ -- $24,985,081
Net income.............. -- -- 1,661,597 -- -- -- -- 1,661,597
Purchase and retirement
of stock............... (200) (199,700) (150,776) -- -- -- -- (350,676)
Cash dividends, $1.45
per share.............. -- -- (2,265,091) -- -- -- -- (2,265,091)
Amortization of unearned
compensation........... -- -- -- 158,700 -- -- -- 158,700
Reduction of ESOP loan.. -- -- -- -- -- 126,960 -- 126,960
Adjustment to unrealized
gain (loss) on
available-for-sale
securities............. -- -- -- -- (2,333) -- -- (2,333)
Excess of fair market
value of allocated ESOP
shares over cost....... -- 168,222 -- -- -- -- -- 168,222
------- ----------- ----------- --------- -------- ----------- -------- -----------
Balance, June 30, 1996.. 15,722 15,253,646 10,104,145 -- (2,333) (888,720) -- 24,482,460
Net income.............. -- -- 1,478,288 -- -- -- -- 1,478,288
Purchase and retirement
of stock............... (106) (105,444) (117,292) -- -- -- -- (222,842)
Purchase of treasury
stock.................. -- -- -- -- -- -- (181,338) (181,338)
Cash dividends, $.50 per
share.................. -- -- (772,823) -- -- -- -- (772,823)
Reduction of ESOP loan.. -- -- -- -- -- 126,960 -- 126,960
Adjustment to unrealized
gain (loss) on
available-for-sale
securities............. -- -- -- -- 7,122 -- -- 7,122
Stock option shares
exercised.............. 40 39,630 -- -- -- -- -- 39,670
Excess of fair market
value of allocated ESOP
shares over cost....... -- 184,091 -- -- -- -- -- 184,091
------- ----------- ----------- --------- -------- ----------- -------- -----------
Balance, June 30, 1997.. 15,656 15,371,923 10,692,318 -- 4,789 (761,760) (181,338) 25,141,588
Net income.............. -- -- 1,580,194 -- -- -- -- 1,580,194
Purchase of treasury
stock.................. -- -- -- -- -- -- (270,332) (270,332)
Cash dividends, $2.55
per share.............. -- -- (3,787,284) -- -- -- -- (3,787,284)
Reduction of ESOP loan.. -- -- -- -- -- 210,380 -- 210,380
Adjustment to unrealized
gain (loss) on
available-for-sale
securities............. -- -- -- -- (23,246) -- -- (23,246)
Stock awards............ -- -- -- (158,700) -- -- -- (158,700)
Amortization of unearned
compensation........... -- -- -- 26,450 -- -- -- 26,450
Stock option shares
exercised.............. 101 (145,883) -- -- -- -- 449,442 303,660
Excess of fair market
value of allocated ESOP
shares over cost....... -- 231,418 -- -- -- -- -- 231,418
------- ----------- ----------- --------- -------- ----------- -------- -----------
Balance, June 30, 1998.. $15,757 $15,457,458 $ 8,485,228 $(132,250) $(18,457) $ (551,380) $ (2,228) $23,254,128
======= =========== =========== ========= ======== =========== ======== ===========
</TABLE>

The accompanying notes are an integral part of these statements.

F-5
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income......................... $ 1,580,194 $ 1,478,288 $ 1,661,597
Adjustments to reconcile net income
to net cash:
Depreciation of properties and
equipment....................... 106,550 83,880 93,497
Amortization of unearned
compensation ................... 26,450 -- 158,700
Accretion of discount on loans... (12,270) (12,218) (10,965)
Deferred income taxes............ 17,346 149,980 70,500
FHLB stock dividends............. (49,100) (45,400) (44,900)
Provision for losses on loans.... 5,000 -- --
Provision for losses on
foreclosed real estate.......... -- -- 10,452
Sale of loans.................... 8,093,000 4,656,000 5,655,000
Loans originated for sale........ (8,093,000) (4,656,000) (5,655,000)
(Increase) decrease in accrued
interest receivable............. (214,983) 61,456 (105,876)
(Increase) decrease in other
assets.......................... 45,699 164,082 (717,263)
Increase in accrued interest
payable on deposits............. 128,615 68,232 97,098
Increase (decrease) in accrued
expenses and other liabilities.. 5,292 (8,506) (40,049)
Excess of fair market value of
allocated ESOP shares over
cost............................ 231,418 184,091 168,222
------------ ------------ ------------
Net cash provided by operating
activities........................ 1,870,211 2,123,885 1,341,013
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in other interest-bearing
deposits due from banks........... -- -- 100,000
Loan originations.................. (52,492,000) (54,949,000) (38,953,000)
Purchase of loans.................. -- -- (117,000)
Purchase of mortgage-backed and
related securities................ (13,422,203) (5,522,800) (984,900)
Purchase of investment securities.. (10,807,786) (5,566,627) (20,771,985)
Principal repayment of loans....... 45,957,691 45,729,102 35,943,815
Principal repayments of mortgage-
backed and related securities..... 4,179,436 761,533 484,290
Proceeds from calls and maturities
of investment securities.......... 12,650,000 14,500,000 19,744,348
Sale of foreclosed real estate..... 384,000 457,539 190,501
Purchase of properties and
equipment......................... (651,321) (343,134) (59,708)
Repayment of ESOP loan............. 210,380 126,960 126,960
------------ ------------ ------------
Net cash used in investing
activities........................ (13,991,803) (4,806,427) (4,296,679)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits............... $ 10,739,652 $ 4,650,147 $ 6,571,941
Increase (decrease) in advances
from borrowers for taxes and
insurance ........................ 8,562 18,647 (9,597)
Increase in borrowed funds......... 10,961,000 -- --
Acquisition of stock............... (270,332) (404,180) (350,676)
Cash dividends paid................ (3,705,964) (776,508) (2,190,480)
Exercise of stock options.......... 303,660 39,670 --
------------ ------------ ------------
Net cash provided by financing
activities.......................... 18,036,578 3,527,776 4,021,188
------------ ------------ ------------
Net increase in cash and cash
equivalents......................... 5,914,986 845,234 1,065,522
Cash and cash equivalents at
beginning of period................. 8,406,456 7,561,222 6,495,700
------------ ------------ ------------
Cash and cash equivalents at end of
period.............................. $ 14,321,442 $ 8,406,456 $ 7,561,222
============ ============ ============
Cash paid during the period for:
Interest........................... $ 5,599,684 $ 4,694,372 $ 4,465,890
Income taxes....................... 932,500 642,000 721,692
Supplemental disclosure of noncash
activities:
Acquisition of real estate in
settlement of loans............... 415,385 -- 755,468
</TABLE>

The accompanying notes are an integral part of these statements.

F-6
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--SUMMARY OF ACCOUNTING POLICIES

FFBS Bancorp, Inc., (the Company), and its wholly-owned subsidiary, First
Federal Bank for Savings (the Bank), follow generally accepted accounting
principles, including, where applicable, general practices within the thrift
industry.

A summary of the significant accounting policies consistently applied in
the preparation of the accompanying consolidated financial statements follows.

1. Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and the Bank. Significant intercompany accounts and transactions have been
eliminated in consolidation.

2. Nature of Operations

The Company is a holding company which was formed for the purpose of
acquiring all of the capital stock of the Bank as part of the Bank's conversion
from a mutual to a federally chartered stock savings bank on June 30, 1993. Its
most significant asset is its investment in the capital stock of the Bank.

The Bank's principal business activity is to provide deposit account
services to the general public and investing those deposits, together with
funds from operations, primarily in family residential mortgage loans and, to a
lesser extent, consumer loans, securities, and other assets.

3. Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and that affect the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

4. Securities

Investments in securities are classified in accordance with Financial
Accounting Standards Board (FASB) Statement No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Statement No. 115 requires that
securities be classified as either trading, available-for-sale, or held-to-
maturity. Management determines the appropriate classification at the time of
purchase.

Trading securities are held for resale for profit and are accounted for at
their fair values. Realized and unrealized gains and losses are reported in
earnings. At June 30, 1998 and 1997, the Company and the Bank had no securities
classified as trading.

Securities available-for-sale are carried at their fair values. Any
unrealized difference between the amortized cost and the fair value is reported
as a component of stockholders' equity, net of deferred income taxes.

Securities classified as held-to-maturity are carried at amortized cost
and includes those securities which management has the positive intent and the
Company and the Bank have the ability to hold until maturity.

Amortization of premiums and accretion of discounts are determined using
the level yield method. The adjusted cost of the specific security sold is used
to compute any gain or loss on securities sold.

F-7
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The yield on, and recoverability of, the carrying value of mortgage-backed
and related securities may be affected by changes in interest rates and
prepayments. Management periodically evaluates the effects of matters such as
rate changes and prepayments and adjusts yields as necessary.

5. Loans Receivable, Net

Loans receivable, net are stated at unpaid principal balances, less the
allowance for loan losses.

Discounts on first mortgage loans are amortized to income using the
interest method over the remaining period to contractual maturity, adjusted for
anticipated prepayments. Discounts on consumer loans are recognized over the
lives of the loans using methods that approximate the interest method.

The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). The allowance for loan losses is
maintained at a level considered adequate by management. Management performs
quarterly reviews of the Bank's loan portfolio to evaluate the adequacy of the
allowance with any adjustments being made through provisions for loan losses.
These reviews take into consideration the Bank's past due and nonperforming
loans, prior years' loss experience, economic conditions, underlying loan
collateral and the distribution of loans in the portfolio by risk class.
Amounts of the allowance are assigned to specific loans and loan categories
based upon these factors. Allowances for any impaired loans are generally
determined based on collateral values. Although management believes the
allowance for loan losses to be adequate, ultimate losses may vary from
estimates used in management's evaluation.

Interest on loans that are contractually past due 90 or more days is
generally charged off, or an allowance is established based on management's
periodic evaluation unless the obligation is well secured and in the process of
collection. The allowance is established by a charge to interest income equal
to all interest previously accrued. Additionally, an allowance is established
for interest on loans delinquent less than 90 days, but which in management's
opinion may become uncollectible in part or in full.

Mortgage loans originated and intended for sale in the secondary market
are carried at the lower of cost or estimated market value in the aggregate.
Mortgage loans held for sale at June 30, 1998 and 1997, were immaterial.

Direct loan costs and any related loan origination fees are recognized
currently as period costs and income, respectively, and do not vary materially
from the results that would be recorded using the deferral method prescribed by
FASB Statement No. 91, Accounting for Nonrefundable Fees and Costs Associated
with Originating or Acquiring Loans and Initial Direct Costs of Leases.

6. Foreclosed Real Estate

Real estate acquired in settlement of loans is reported in accordance with
AICPA Statement of Position 92-3 ("SOP 92-3") Accounting for Foreclosed Assets.
SOP 92-3 requires that other real estate be carried at the lower of (i) fair
value minus estimated cost to sell or (ii) cost (the recorded investment in the
related loan or loans plus acquisition costs). An allowance for losses is
maintained to reflect declines, if any, in net fair values below the recorded
amounts. Additions to the allowance are charged to operations. Costs of holding
real estate acquired in settlement of loans are reflected as expense currently.
Subsequent gains or losses on foreclosed real estate are reported in other
operating income or expenses.

7. Properties and Equipment

Properties and equipment are stated at cost less accumulated depreciation.
Depreciation is computed primarily on a straight-line basis over the estimated
useful life of each type of asset. Expenditures for

F-8
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

maintenance and repairs which do not materially prolong the useful life of the
assets are charged to operating expenses as incurred, and improvements are
capitalized. Gains and losses on sale of assets are reflected in current
operations.

8. Deferred Income Taxes

Deferred income taxes are accounted for in accordance with FASB Statement
No. 109, Accounting for Income Taxes. Statement No. 109 requires the asset-and-
liability method of accounting for income taxes. Under the asset-and-liability
method, deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates applicable to
future years to differences between the financial statement carrying amounts
and the tax bases of existing assets and liabilities. Under Statement No. 109,
the effect on deferred taxes of a change in tax rates is recognized in income
in the period that includes the enactment date.

9. Stock-Based Compensation

The Company and the Bank have elected not to adopt the recognition
provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation
which requires a fair-value based method of accounting for stock options and
similar equity awards. The Company and the Bank elected to continue applying
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees and related interpretations in accounting for its stock compensation
plans and, accordingly, do not recognize compensation cost.

10. Statement of Cash Flows

For purposes of the consolidated statement of cash flows, all highly
liquid debt instruments with an original maturity of three months or less are
considered to be cash equivalents. Cash equivalents consist of balances due
from banks and federal funds sold.

11. Off-Balance Sheet Financial Instruments

In the ordinary course of business the Bank enters into off-balance sheet
financial instruments consisting of commitments to extend credit, commercial
letters of credit and commitments to purchase securities. Such financial
instruments are recorded in the financial statements when they are exercised.

12. Accounting Pronouncements

In June, 1997, the FASB issued Statement No. 130, Reporting Comprehensive
Income which establishes standards for reporting and display of comprehensive
income and its components in a full set of financial statements. Comprehensive
income is defined as the change in equity during a period for non-owner
transactions and is divided into net income and other comprehensive income.
Other comprehensive income includes revenues, expenses, gains, and losses that
are excluded from earnings under current accounting standards. This statement
does not change or modify the reporting or display in the income statement.
Statement No. 130 is effective for interim and annual periods beginning after
December 31, 1997. Comparative financial statements provided for earlier
periods are required to be classified to reflect the application of this
statement.

In February, 1998, the FASB issued Statement No. 132, Employers
Disclosures About Pensions and Other Postretirement Benefits. This statement
standardizes the disclosure requirements of pensions and other postretirement
benefits. This statement does not change any measurement or recognition
provisions, and thus will not materially impact the Company. This statement is
effective for fiscal years beginning after December 15, 1997.

F-9
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

In June, 1998, the FASB issued Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities. This statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in its financial statements and that those instruments be
measured at fair value. Implementation is required for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company has not determined the
impact the adoption of this statement may have on its consolidated financial
statements.

13. Net Income Per Share

The Company adopted FASB Statement No. 128, Earnings Per Share as of
December 31, 1997. Statement No. 128 superseded Accounting Principles Board
Opinion No. 15, Earnings Per Share (APB No. 15) which the Company had followed
until the adoption of Statement No. 128. This statement requires that two
earnings per share amounts be disclosed: Basic Earnings Per Share and Diluted
Earnings Per Share. Basic Earnings Per Share is calculated by dividing net
income available to common stockholders by the weighted average number of
common stock shares outstanding during the period. The Basic Earnings Per Share
computation for the Company is the same method the Company previously used to
calculate and report earnings per share under APB No. 15. Diluted Earnings Per
Share is computed by assuming the issuance of common shares for all dilutive
potential common shares outstanding during the reporting period. Currently, the
Company's only dilutive potential common stock issuances relate to options that
have been issued under the Company's stock option and recognition and retention
plans. In computing Diluted Earnings Per Share, it is assumed that all such
dilutive stock is exercised during the reporting period at their respective
exercise prices, with the proceeds from the exercises used by the Company to
buy back stock in the open market at the average market price in effect during
the reporting period. The difference between the number of shares assumed to be
exercised and the number of shares bought back is added to the number of
weighted average common shares outstanding during the period. The sum is used
as the denominator to calculate Diluted Earnings Per Share for the Company. As
required by Statement No. 128, all prior year earnings per share amounts have
been restated and computed under the provisions of the new standard.

The following is a reconciliation of the numerators and denominators used
in computing basic and diluted net income per share:

<TABLE>
<CAPTION>
1998 1997 1996
-------------------------------- -------------------------------- --------------------------------
Per Per Per
Income Shares Share Income Shares Share Income Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------ ----------- ------------- ------
(In Thousands, Except per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available
to common
shareholders....... $1,580 1,494 $1.06 $1,478 1,475 $1.00 $1,662 1,478 $1.12
===== ===== =====
Effect of dilutive
stock options...... -- 37 -- 43 -- 51
------ ----- ------ ----- ------ -----
Diluted EPS
Income available
to common
shareholders
plus assumed
exercise........... $1,580 1,531 $1.03 $1,478 1,518 $ .97 $1,662 1,529 $1.09
====== ===== ===== ====== ===== ===== ====== ===== =====
</TABLE>

14. Financial Statement Reclassification

The financial statements for prior years have been reclassified in order
to conform with the 1998 financial statement presentation. The reclassification
did not change total assets or net income.

F-10
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE B--SECURITIES

The amortized cost, gross unrealized gains, gross unrealized losses, and
estimated market values of investment securities and mortgage-backed and
related securities are as follows:

<TABLE>
<CAPTION>
June 30, 1998
----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Description Cost Gains Losses Value
----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
Held-to-Maturity:
Securities of other U.S.
Government agencies.......... $ 12,690,869 $ 7,541 $10,702 $12,687,708
Obligations of states and
political subdivisions....... 1,000,310 -- 310 1,000,000
Mortgage-backed securities.... 4,839,571 49,897 -- 4,889,468
REMICS........................ 1,016,787 -- 13,656 1,003,131
------------ ------- ------- -----------
$ 19,547,537 $57,438 $24,668 $19,580,307
============ ======= ======= ===========
Available-for-Sale:
Securities of other U. S.
Government agencies.......... $ 1,507,429 $ 7,573 $ -- $ 1,515,002
Mortgage-backed securities.... 3,721,703 4,850 8,247 3,718,306
REMICS........................ 6,885,437 5,965 37,732 6,853,670
Marketable equity securities.. 1,814,517 -- -- 1,814,517
------------ ------- ------- -----------
$ 13,929,086 $18,388 $45,979 $13,901,495
============ ======= ======= ===========
</TABLE>

<TABLE>
<CAPTION>
June 30, 1997
----------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Description Cost Gains Losses Value
----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
Held-to-Maturity:
Securities of other U.S.
Government obligations....... $ 15,586,350 $ 2,024 $51,905 $15,536,469
Obligations of states and
political subdivisions....... 2,006,540 249 6,540 2,000,249
Mortgage-backed and related
securities................... 7,267,626 15,847 26,651 7,256,822
------------ ------- ------- -----------
$ 24,860,516 $18,120 $85,096 $24,793,540
============ ======= ======= ===========
Available-for-Sale:
Marketable equity securities.. $ 1,221,505 $ -- $ -- $ 1,221,505
============ ======= ======= ===========
</TABLE>

The carrying values and estimated market values of investment debt
securities by contractual maturities as of June 30, 1998, are shown below. The
equity securities have been excluded from the maturity table because they do
not have contractual maturities associated with debt securities. Expected
maturities will differ from contractual maturities because issuers may have the
right to call or prepay obligations with or without call or prepayment
penalties.

<TABLE>
<CAPTION>
June 30, 1998
------------------------------------------------
Held-to-Maturity Available-For-Sale
------------------------ -----------------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Due in one year or less...... $ 11,693,160 $11,690,208 $ -- $ --
Due after one year through
five years.................. 997,709 997,500 1,507,429 1,515,002
Due after ten years.......... 1,000,310 1,000,000 -- --
Mortgage-backed securities
and REMICS.................. 5,856,358 5,892,599 12,421,657 12,386,493
------------ ----------- ----------- -----------
$ 19,547,537 $19,580,307 $13,929,086 $13,901,495
============ =========== =========== ===========
</TABLE>

F-11
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Investment securities with a carrying value of $930,000 and $925,000 at
June 30, 1998 and 1997, respectively, were pledged for various purposes as
required by law. Also, at June 30, 1998, securities with a carrying value of
$2,637,388 had been pledged as collateral on advances from the Federal Home
Loan Bank.

Mortgage-backed securities were issued or are guaranteed by an agency of
the U. S. Government. REMICS consist of securities backed by securities of U.
S. Government agencies. Although mortgage-backed and related securities and
REMICS are initially issued with a stated maturity date, the underlying
mortgage collateral may be prepaid by the mortgagee and, therefore, such
securities may not reach their maturity date. At June 30, 1998 and 1997, there
were no material concentrations of credit risk.

There were no sales of securities during the years ended June 30, 1998,
1997 and 1996.

NOTE C--LOANS RECEIVABLE, NET

Loans receivable, net are summarized as follows:

<TABLE>
<CAPTION>
June 30,
---------------
1998 1997
------- -------
(In Thousands)
<S> <C> <C>
Mortgage Loans
Principal balances:
One-to-four family residential ............................ $67,562 $67,198
Multi-family............................................... 229 982
Commercial real estate..................................... 10,946 8,706
Construction and land...................................... 5,865 4,834
------- -------
Total mortgage loans..................................... 84,602 81,720
------- -------
Consumer and Other Loans
Principal balances:
Loans on deposit accounts.................................. 1,530 1,090
Home improvement and education............................. 5 43
Automobile ................................................ 4,685 4,271
Commercial--collateralized................................. 3,658 1,678
Commercial--unsecured...................................... 505 333
Other...................................................... 4,457 4,215
------- -------
Total consumer and other loans........................... 14,840 11,630
------- -------
Total loans receivable......................................... 99,442 93,350
Less unearned discount......................................... 1 14
Less allowance for loan losses................................. 523 576
------- -------
Loans receivable, net.......................................... $98,918 $92,760
======= =======
</TABLE>

F-12
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Activity in the allowance for loan losses is as follows:

<TABLE>
<CAPTION>
Years Ended
June 30,
--------------
1998 1997 1996
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Balance at beginning of period.................................. $576 $666 $705
Additions:
Provision for losses on loans................................. 5 -- --
Recoveries.................................................... 7 7 5
---- ---- ----
588 673 710
Deductions:
Loans charged off............................................. 65 97 44
---- ---- ----
Balance at end of period........................................ $523 $576 $666
==== ==== ====
</TABLE>

The Bank adopted FASB Statement No. 114, Accounting by Creditors for
Impairment of a Loan and Statement No. 118, Accounting by Creditors for
Impairment of a Loan--Income Recognition and Disclosures as of July 1, 1995.
These Statements require that loans determined to be impaired be measured based
on the present value of expected future cash flows or, as a practical
expedient, on the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. If the measurement of the
impaired loan is less than the recorded investment in the loan, a valuation
allowance is recorded. The Bank had previously determined its allowance for
loan losses using methods similar to those prescribed in the statements. The
Bank's loan portfolio consists principally of family residential mortgage loans
and consumer installment loans, which are exempt from the requirements of the
Statements if evaluated collectively, as is done by the Bank. At June 30, 1998
and 1997, any loans designated as impaired were not significant.

Loans receivable delinquent are as follows:

<TABLE>
<CAPTION>
June 30,
--------------
1998 1997
------- ------
(In Thousands)
<S> <C> <C>
Past due 30-89 days and still accruing.......................... $ 6,727 $6,511
Past due 90 days or more and still accruing..................... 1,382 446
------- ------
8,109 6,957
Nonaccrual loans................................................ 1 --
------- ------
$ 8,110 $6,957
======= ======
</TABLE>

NOTE D--PROPERTIES AND EQUIPMENT

Properties and equipment consist of the following:

<TABLE>
<CAPTION>
June 30,
----------------------
1998 1997
----------- ----------
<S> <C> <C>
Land.................................................... $ 536,775 $ 518,789
Buildings............................................... 1,696,486 1,139,652
Furniture and equipment................................. 634,136 571,195
----------- ----------
2,867,397 2,229,636
Less accumulated depreciation........................... 961,182 874,959
----------- ----------
$ 1,906,215 $1,354,677
=========== ==========
</TABLE>

F-13
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Depreciation expense totaled $106,550, $83,880, and $93,497 for the years
ended 1998, 1997 and 1996, respectively.

NOTE E--FEDERAL HOME LOAN BANK STOCK

The Bank is a member of the Federal Home Loan Bank system. Investment in
stock of a Federal Home Loan Bank is required by law of every federally
chartered savings bank. No ready market exists for the stock, and it has no
quoted market value; therefore, the stock is assumed to have a market value
which is equal to its cost.

NOTE F--ACCRUED INTEREST RECEIVABLE

Accrued interest receivable consisted of interest accrued on the
following:

<TABLE>
<CAPTION>
June 30,
----------------------
1998 1997
----------- ----------
<S> <C> <C>
Loans................................................... $ 998,295 $ 821,643
Mortgage-backed and related securities.................. 68,200 37,512
Investment securities................................... 213,023 205,380
----------- ----------
$ 1,279,518 $1,064,535
=========== ==========
</TABLE>

NOTE G--OTHER ASSETS

Other assets consist of the following:

<TABLE>
<CAPTION>
June 30,
-----------------
1998 1997
-------- --------
<S> <C> <C>
Organization costs........................................... $ -- $ 6,767
Prepaid income taxes......................................... 7,500 45,724
Prepaid expenses and other assets............................ 73,779 239,954
-------- --------
$ 81,279 $292,445
======== ========
</TABLE>

F-14
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE H--DEPOSITS

Approximate deposit balances by interest rates are summarized as follows:

<TABLE>
<CAPTION>
June 30,
-----------------------------------------------------
1998 1997
-------------------------- --------------------------
Weighted Weighted
Percent Average Percent Average
Of Total Nominal Of Total Nominal
Amount Deposits Rate Amount Deposits Rate
-------- -------- -------- -------- -------- --------
($ In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Demand accounts:
Checking................ $ 4,817 4.21% 0.00% $ 3,557 3.43% 0.00%
NOW..................... 9,979 8.71% 1.94% 9,350 9.00% 2.07%
Savings................. 6,787 5.93% 2.83% 6,186 5.96% 2.84%
Money market............ 4,970 4.33% 3.85% 5,626 5.42% 3.57%
-------- ------ ---- -------- ------ ----
26,553 23.18% 2.17% 24,719 23.81% 2.31%
-------- ------ ---- -------- ------ ----
Certificate accounts:
Maturing 0--3 months.... 16,204 14.15% 5.56% 17,486 16.85% 5.33%
Maturing 3--6 months.... 18,826 16.44% 5.69% 16,288 15.69% 5.53%
Maturing 6--12 months... 30,223 26.39% 5.74% 27,621 26.61% 5.59%
Maturing 1--2 years..... 16,407 14.32% 5.99% 12,374 11.92% 6.01%
Maturing 2--3 years..... 3,507 3.06% 6.37% 2,886 2.78% 6.27%
Maturing 3--4 years..... 2,321 2.03% 6.28% 1,948 1.88% 6.37%
Maturing over 4 years... 497 .43% 6.93% 476 .46% 6.70%
-------- ------ ---- -------- ------ ----
87,985 76.82% 5.79% 79,079 76.19% 5.64%
-------- ------ ---- -------- ------ ----
Total deposits............ $114,538 100.00% 4.95% $103,798 100.00% 4.85%
======== ====== ==== ======== ====== ====
</TABLE>

A summary of certificate accounts by interest rate follows:

<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
-------------------------- --------------------------
Average Average
Interest Rate Number Balance Balance Number Balance Balance
- ------------- ------ ----------- ------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
Less than 3.00%........... 7 $ 65,000 $ 9,234 11 $ 338,000 $30,727
4.01%--5.00%.............. 388 6,329,000 16,311 1,054 14,654,000 13,903
5.01%--6.00%.............. 2,423 59,588,000 24,593 1,787 49,926,000 27,938
6.01%--7.00%.............. 422 20,857,000 49,424 283 13,383,000 47,290
7.01%--8.00%.............. 12 1,146,000 95,483 11 778,000 70,727
----- ----------- ------- ----- ----------- -------
3,252 $87,985,000 $27,056 3,146 $79,079,000 $25,136
===== =========== ======= ===== =========== =======
</TABLE>

The aggregate amount of certificates of deposit with a minimum
denomination of $100,000 was approximately $19,043,000 and $17,086,000 at June
30, 1998 and 1997, respectively.

F-15
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Interest expense on deposits is summarized as follows:

<TABLE>
<CAPTION>
Years Ended June 30,
---------------------
1998 1997 1996
------- ------ ------
(In Thousands)
<S> <C> <C> <C>
NOW accounts.............................................. $ 199 $ 194 $ 203
Savings .................................................. 171 175 168
Money market.............................................. 205 198 227
Certificate accounts...................................... 4,794 4,196 3,965
------- ------ ------
$ 5,369 $4,763 $4,563
======= ====== ======
</TABLE>

NOTE I--BORROWED FUNDS

Borrowed funds consist solely of FHLB advances. Fixed-rate advances
(bearing interest rates from 5.00% to 5.973%) consist of the following at June
30, 1998, by scheduled maturity:

<TABLE>
<CAPTION>
Year Due Amount
-------- ------------
<S> <C>
1998......................................................... $ 2,611,000
1999......................................................... 450,000
2000......................................................... 900,000
2008......................................................... 7,000,000
------------
$ 10,961,000
============
</TABLE>

The $7,000,000 advance is a short option advance and has a first call
option date of March, 1999, and quarterly call option dates until the maturity
date of March, 2008.

The FHLB advances are secured by FHLB stock, a blanket pledge of
residential mortgage loans and certain U. S. Government agency securities.

NOTE J--INCOME TAXES

The provision for federal income taxes differs from that computed at the
statutory 34 percent federal corporate tax rate as follows:

<TABLE>
<CAPTION>
Years Ended
June 30,
------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Federal income tax rates..................................... 34 % 34 % 34%
Change in taxes resulting from:
Nontaxable income.......................................... (2)% (5)% (3)%
State income tax, net...................................... 1 % 1 % 2 %
Excess of fair market value of allocated ESOP shares over
cost...................................................... 3 % 3 % 2 %
Other...................................................... 2 % 1 % (2)%
--- --- ---
38 % 34 % 33 %
=== === ===
</TABLE>

F-16
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The sources of timing differences and the resulting deferred income tax
expense (benefit) follow:

<TABLE>
<CAPTION>
Years Ended
June 30,
---------------
1998 1997 1996
---- ---- ----
(In Thousands)
<S> <C> <C> <C>
Provision for losses on loans and foreclosed real estate ..... 20 $ 59 $ 51
Discount accretion............................................ (24) 5 (10)
Stock option plans............................................ (10) 59 --
Depreciation.................................................. 13 8 15
FHLB stock.................................................... 18 17 17
Other, net.................................................... -- 2 (2)
---- ---- ----
$ 17 $150 $ 71
==== ==== ====
</TABLE>

Significant components of the net deferred income tax liability included
in other liabilities at June 30, 1998 and 1997, are as follows:

<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Deferred income tax assets:
Stock options.......................................... $ 9,866 $ --
Unrealized gain (loss) on available-for-sale
securities............................................ 10,725 --
--------- ---------
Total deferred income tax assets..................... 20,591 --
--------- ---------
Deferred income tax liabilities:
Premises and equipment................................. 42,795 30,235
Allowance for loan losses.............................. 160,597 140,920
Securities............................................. 13,624 8,030
Loans ................................................. -- 28,504
FHLB stock............................................. 142,374 124,060
--------- ---------
Total deferred income tax liabilities................ 359,390 331,749
--------- ---------
Net deferred income tax liability........................ $(338,799) $(331,749)
========= =========
</TABLE>

In October, 1996, Congress passed the Small Business Job Protection Act
("the Act") which included a provision repealing the tax bad debt reserve
method that had been available to thrift institutions in determining income
subject to income tax. Because of the repeal, institutions must recapture the
post-1987 tax bad debt reserve into taxable income over a six-year period. The
recapture can be deferred for a two year period if the institution meets a
residential loan portfolio test. The Bank satisfies the residential loan
portfolio requirements and is expected to recapture the tax bad debt reserve of
approximately $954,000 over a six-year period beginning in the year ended June
30, 1999. The recapture will not have an effect on net income since the related
tax expense has been accrued. The pre-1988 tax bad debt reserve that is not
recaptureable under the Act is subject to recapture at a later date only if
certain events occur. These events include, but are not limited to, a
conversion to a type of institution that is not a commercial bank. Management
does not anticipate engaging in any transactions that would require recapture
of its pre-1988 tax bad debt reserve of approximately $1,600,000.

NOTE K--TREASURY STOCK

In February, 1994, the Company's Board of Directors authorized the
purchase of Company common stock under a Stock Repurchase Program. Shares
repurchased are retired or held in treasury and reserved for reissuance to
satisfy the exercise of stock options.

F-17
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

During the years ended June 30, 1998, 1997, and 1996, the Company
repurchased 12,176, 18,705, and 19,990 shares, respectively. These shares were
repurchased at an average cost of $22.20, $21.85, and $17.54 per share,
respectively.

During the year ended June 30, 1998, the Company reissued 20,226 shares of
common stock from treasury stock with a cost basis of $449,442. These shares
were issued upon the exercise of stock options by employees or directors.
During the years ended June 30, 1997 and 1996, the Company retired 10,555 and
19,990 treasury shares, respectively.

NOTE L--REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements
administered by federal 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 the consolidated financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off-balance sheet items
as calculated under regulatory accounting practices. The Bank's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weighing, and other factors.

To ensure capital adequacy, quantitative measures have been established by
the Bank's primary regulator, the Office of Thrift Supervision (OTS). Current
OTS standards require that the Bank maintain tangible capital (as defined)
equal to at least 1.5% of tangible assets, core capital (as defined) equal to
at least 3% of adjusted total assets, and risk-based capital (as defined) equal
to at least 8% of risk-weighted assets. Management believes, as of June 30,
1998, that the Company and the Bank exceed all capital adequacy requirements.

At June 30, 1998, the Bank was categorized by regulators as well-
capitalized under the regulatory framework for prompt corrective action. A
financial institution is deemed to be well-capitalized if it has total risk-
based capital of 10% or more, has a Tier 1 risk-based capital ratio of 6% or
more, and has a Tier 1 leverage capital ratio of 5% or more. At June 30, 1998,
the Bank's capital exceeded all of the capital standards of a well-capitalized
institution. There are no conditions or anticipated events that, in the opinion
of management, would change the category.

The Bank's actual capital amounts and ratios at June 30, 1998 and 1997,
are presented in the following table. No amount was deducted from capital for
interest-rate risk exposure.

<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
------------- -------------
Amount Ratio Amount Ratio
------- ----- ------- -----
($ In Thousands)
<S> <C> <C> <C> <C>
Tangible capital.................................. $19,931 13.4% $20,548 16.2%
Core/leverage capital............................. 19,931 13.4% 20,548 16.2%
Tier 1 risk-based capital......................... 19,931 23.0% 20,548 29.1%
Total risk-based capital.......................... 20,454 23.6% 21,114 29.9%
</TABLE>

The minimum amounts of capital and ratios as established by regulations
for capital adequacy purposes at June 30, 1998 and 1997, were as follows:

<TABLE>
<CAPTION>
June 30, June 30,
1998 1997
------------ ------------
Amount Ratio Amount Ratio
------ ----- ------ -----
($ In Thousands)
<S> <C> <C> <C> <C>
Tangible capital...................................... $2,232 1.5% $1,904 1.5%
Core/leverage capital................................. 4,466 3.0% 3,808 3.0%
Total risk-based capital.............................. 6,919 8.0% 5,655 8.0%
</TABLE>

F-18
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Regulations also include restrictions on loans to one borrower, on certain
types of investments and loans, on loans to officers, directors, and principal
shareholders, on brokered deposits and on transactions with affiliates.

To qualify under the Qualified Thrift Lender (QTL) test, approximately 65%
of assets must be maintained in housing related finance and other specified
areas. If the QTL test is not met, limits are placed on growth, branching, new
investments, FHLB advances, and dividends or the Bank must convert to a
commercial bank charter.

In September, 1996, banking legislation was enacted requiring that all
institutions with SAIF (Savings Association Insurance Fund) deposits pay a one-
time special assessment. This assessment was $598,653 and is included in
deposit insurance premiums in the statement of income for the year ended June
30, 1997.

NOTE M--EMPLOYEE BENEFITS AND STOCK OPTIONS

The Bank participates in a multiemployer, noncontributory defined benefit
pension plan for substantially all of its full-time employees by being a member
of the Financial Institutions Retirement Fund, a non-profit, tax-exempt pension
trust which is administered by a Board of Directors comprised of presidents of
FHLB and officers of various participating associations. The Fund invests the
contributions made to it and, under its Comprehensive Retirement Program, it
pays out retirement, disability and death benefits. The multiemployer plan's
assets exceed the actuarially computed value of vested benefits at June 30,
1997, the most recent valuation date. There is no unfunded liability for past
service. Plan benefits are fully vested after five years of service and are
based on an employee's years of service and a percentage of the employee's
average salary, using the five highest consecutive years preceding retirement.
The Bank's funding policy is to make contributions to the plan equal to the
amount accrued as pension expense. The plan was fully funded for 1998, 1997 and
1996, and, accordingly, no contributions were made.

The Bank also provides a profit sharing plan with a (401-K) provision
which allows eligible employees to defer up to 15% of their compensation, as
defined, by making a contribution to the plan. The plan allows the Bank to make
a matching contribution equal to the deferred compensation of the participants,
but not in excess of 50% of each participant's contribution and also provides
for an "Excess Contribution" which can be made at the discretion of the Board
of Directors. The expense for the plan included in the accompanying financial
statements was $36,062, $23,940, and $11,205 for the years ended June 30, 1998,
1997 and 1996, respectively.

The Bank has an Employee Stock Ownership Plan (ESOP) for eligible
employees. Upon formation, the ESOP borrowed $1,269,600 from the Company to
purchase 126,960 shares of Company common stock. The ESOP shares were pledged
as collateral for the debt. The loan obligation is considered unearned employee
benefit expense and, as such, is recorded as a reduction of the Company's
stockholders' equity. Both the loan obligation and the unearned benefit expense
are reduced by the amount of any loan repayments made by the ESOP. Cash
contributions to the ESOP are determined based on its total debt service less
any dividends paid on ESOP shares. The Bank has adopted Statement of Position
93-6 (SOP 93-6), Employers' Accounting for Employee Stock Ownership Plans. As
the debt is repaid, shares are released from collateral and allocated to
qualified employees, based on the proportion of debt service paid for the year.
As shares are released from collateral, an expense is recorded equal to the
fair market value of the shares, and the shares become outstanding for earnings
per share computations. Dividends on allocated ESOP shares are recorded as a
reduction of retained earnings, while dividends on unallocated shares are
recorded as a reduction of debt. The tax benefit of tax-deductible dividends
are reported as a reduction of income tax expense. ESOP expense for

F-19
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

the years ended June 30, 1998, 1997 and 1996, totaled $425,032, $311,052, and
$295,180, respectively. The ESOP shares as of June 30, 1998 and 1997, were as
follows:

<TABLE>
<CAPTION>
June 30,
---------------------
1998 1997
---------- ----------
<S> <C> <C>
Allocated shares......................................... 50,784 38,088
Shares released for allocation........................... 21,038 12,696
Unreleased shares........................................ 55,138 76,176
---------- ----------
Total ESOP shares........................................ 126,960 126,960
========== ==========
Fair value of unreleased shares at June 30............... $1,323,310 $1,866,312
========== ==========
</TABLE>

The Bank has established Recognition and Retention Plans as a method of
providing directors of the Bank with a proprietary interest in the Company in a
manner designed to encourage such persons to remain with the Bank. The terms of
each Plan are identical, only the participants vary. Awards to directors are
fixed and are granted in the form of shares of Common Stock to be held in
trust. Awards are nontransferable and nonassignable. When shares become vested
and are actually distributed in accordance with the Plans, the participants
also receive amounts equal to any accrued dividends with respect thereto. Upon
establishment of the plans in 1993, 63,480 shares of Company common stock were
made available, of which 47,610 shares were awarded and have vested. During the
year ended June 30, 1998, the remaining 15,870 shares were awarded. These
shares vest in equal amounts over a three-year period. The cost of the shares
purchased by the plan is considered to be unearned compensation at the time of
the award and compensation is earned ratably over the vesting term. Expense for
these plans was $26,450 in 1998, $ -0- in 1997, and $158,700 in 1996.

The Company has various stock option plans covering specified employees
and outside directors of the Company and the Bank. Under the 1993 Incentive
Stock Option Plan (the "Option Plan"), 79,350 of authorized but unissued shares
of common stock have been reserved for issuance to specified employees of the
Company and its subsidiary bank. The Option Plan is administered by a committee
of outside directors. The Option Plan authorizes the grant of (i) options to
purchase Company Common Stock intended to qualify as incentive stock options,
(ii) options that do not so qualify ("non-statutory options") and (iii) limited
rights which are exercisable only upon a change in control of the Company. The
exercise price is at least 100% of the fair market value at the time of the
grant of the underlying common stock. Options become exercisable in whole or in
part at such times (no later than 10 years from the date of grant) as the
committee determines. In 1993, options to purchase 47,608 shares were granted,
and during the year ended June 30, 1998 and 1997, 17,193 and 3,967,
respectively, were exercised at the option price of $10 per share. Unexercised
options totaled 26,448 shares at June 30, 1998.

The 1993 Stock Option Plan for Outside Directors (the "Directors' Option
Plan") of the Company and its subsidiary provides for the granting of 79,350
shares of Common stock shares. Authorized but unissued shares or treasury
shares may be used to satisfy an exercise of an option, resulting in an
increase in the number of shares outstanding. The exercise price per share of
each option is equal to the fair market value of the shares of Common Stock on
the date the option is granted. All options granted expire upon the earlier of
10 years following the date of grant or one year following the date the
optionee ceases to be a director. In 1993, 52,688 shares were granted, and
during the year ended June 30, 1998, 13,172 were exercised at the option price
of $10 per share. Unexercised options totaled 39,516 shares at June 30, 1998.

F-20
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

FASB Statement No. 123, Accounting for Stock Based Compensation requires a
fair value method of accounting for stock-based compensation arrangements.
However, the adoption of the fair value method was not required, and if
Statement No. 123 had been adopted for the years ended June 30, 1998, 1997, and
1996, there would have been no significant impact on pro forma net income or
net income per share.

NOTE N--FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The Bank is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit and standby
letters of credit. These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
statements of financial condition.

The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual notational amount
of these instruments. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for balance sheet
instruments.

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. Standby letters of credit and financial
guarantees written are conditional commitments issued by the Bank to guarantee
the performance of a customer to a third party. The credit risk involved in
issuing letters of credit is essentially the same as that involved in extending
loans to customers.

Approximate contract or notational amounts of financial instruments whose
contract amounts represent credit risk at June 30, 1998, are (in thousands):

<TABLE>
<S> <C>
Unused lines of credit.................................................. $1,182
Mortgage construction loans............................................. 2,665
Commitments to extend credit secured by mortgages on dwelling units:
Adjustable rate....................................................... 1,033
Fixed rate............................................................ 910
</TABLE>

The commitments to originate fixed rate mortgage loans represent amounts
the Bank plans to fund within a period of 60 to 120 days. These commitments
were made with interest rates ranging from 6.75% to 7.50%.

NOTE O--CONCENTRATION OF CREDIT RISK

Over ninety-five percent of the Bank's loans and commitments have been
granted to customers in the Bank's market area. Generally, such customers are
also depositors of the Bank. The concentrations of credit by type of loan are
set forth in Note C. The distribution of commitments to extend credit
approximates the distribution of loans outstanding.

At June 30, 1998, the Company and the Bank had deposits with financial
institutions in excess of federally insured limits by approximately
$12,700,000. Of this amount, approximately $10,200,000 was on deposit at The
Federal Home Loan Bank of Dallas, an instrumentality of the U. S. Government.

F-21
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE P--RELATED PARTY TRANSACTIONS

In the normal course of business, the Bank makes loans to its directors
and executive officers and to companies in which they have a significant
ownership interest. These loans, totaling $1,896,327 at June 30, 1998, and
$869,067 at June 30, 1997, are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons.

NOTE Q--FINANCIAL INSTRUMENTS

The Company and its subsidiary adopted FASB Statement No. 107, Disclosures
About Fair Value of Financial Instruments. The Statement requires disclosure of
fair value information about financial instruments, whether or not recognized
in the financial statement. In cases where quoted market prices are not
available, fair values are based on estimates using present value or other
valuation techniques. Those techniques are significantly affected by the
assumptions used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be realized
in immediate settlement of the instruments. Statement No. 107 excludes certain
financial instruments and all nonfinancial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented do not
represent the underlying value of the Company and its subsidiary. The carrying
amounts presented are the amounts at which the financial instruments are
reported in the consolidated financial statements.

The following methods and assumptions were used in estimating fair value
disclosures for financial instruments:

Cash and cash equivalents: The carrying amounts reported in the
statement of financial condition for cash and cash equivalents approximate
those assets' fair value.

Investment securities (including mortgage-backed securities): Fair
values for investment securities are based on quoted market prices, where
available. If quoted market prices are not available, fair values are based
on quoted market prices of comparable instruments.

Loans: For variable-rate loans that reprice frequently and with no
significant change in credit risk, fair values are based on carrying
amounts. The fair values for other loans (for example, fixed rate
commercial real estate and rental property mortgage loans and commercial
and industrial loans) are estimated using discounted cash flow analysis,
based on interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality. Loan fair value estimates
include judgments regarding future expected loss experience and risk
characteristics.

Deposits: The fair values of demand deposit accounts (i.e., interest-
bearing and noninterest-bearing checking accounts and money market and
regular savings accounts) are equal to the face amount. The fair value of
fixed-rate time deposits is estimated using a discounted cash flow
calculation that applies interest rates offered by the Corporation as of
the measurement date to a schedule of aggregate contractual maturities of
such deposits as of the same dates.

Borrowed Funds: The fair value of borrowings is based on the
discounted value of contractual cash flows using as discount rates the
rates that were available to the Bank at June 30, 1998, for similar
borrowings.

Off-Balance Sheet Financial Instruments: Off-balance sheet instruments
consist of any commitments to extend credit, letters of credit, etc.
Generally, these commitments have a term of 30 to 120 days. Management is
of the opinion the estimated fair value is not significantly different than
the contractual or notational amounts.

F-22
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

The estimated fair values of the financial instruments at June 30, 1998
and 1997, are as follows (in thousands):

<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Financial assets:
Cash and cash equivalents............... $ 14,321 $ 14,321 $ 8,406 $ 8,406
Investment securities................... 33,449 33,482 26,082 26,015
Federal Home Loan Bank stock............ 851 851 802 802
Loans, net of allowance................. 98,918 100,238 92,760 93,168

Financial liabilities:
Deposits................................ 114,538 114,866 103,798 103,403

Borrowed funds............................ 10,961 10,555 -- --
Financial instruments..................... 5,790 5,790 2,841 2,841
</TABLE>

NOTE R--CONVERSION TO STOCK FORM OF OWNERSHIP

On June 30, 1993, the Bank converted from a federally-chartered mutual
institution to a federally-chartered stock savings bank with 100% of the stock
of the Bank issued to the Company which was formed in connection with the
conversion. Sources of cash flow to the Company are dependent upon earnings
from investment of net proceeds retained by it in the conversion and any
dividends received from the Bank.

At conversion, the Bank established a liquidation account in an amount
equal to the total net worth of the Bank as of the date of the latest balance
sheet contained in the final offering circular. Each eligible account holder
will be entitled to a proportionate share of this account in the event of a
complete liquidation of the Bank, and only in such event. This share will be
reduced if the account holders' deposit falls below the amount on the dates of
record and will cease to exist if the account is closed. The liquidation
account is not increased despite any increase after conversion in the related
deposit balance of an eligible account holder.

The Bank may not declare or pay cash dividends on any of its stock if the
effect thereof would cause the Bank's net worth to be reduced below the amount
required for federal regulatory capital requirements. The Company, as a
Delaware Corporation, is subject to Delaware law which limits dividends to an
amount equal to the excess of the Company's net assets over its statutory
capital or, if there is no excess, to its net profits for the current and/or
immediately preceding fiscal year.

NOTE S--LEGAL PROCEEDINGS

The Bank is a defendant in a pending case in which the plaintiff is
seeking damages growing out of an alleged breach of a lease associated with
foreclosed properties. In a related case, the Bank is a defendant in which the
plaintiff is seeking recovery of attorney fees. The cases are being vigorously
contested and management believes, based on the advice of legal counsel, that
the final resolution of these proceedings will not have a material impact on
the Company's consolidated financial position or results of operations.

F-23
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

NOTE T--CONDENSED PARENT COMPANY STATEMENTS

Balance sheets as of June 30, 1998 and 1997, and statements of income and
cash flows for the years then ended, of FFBS Bancorp, Inc. (parent company
only) are presented below.

<TABLE>
<CAPTION>
June 30,
-----------------------
Balance Sheets 1998 1997
- -------------- ----------- -----------
<S> <C> <C>
Assets:
Cash................................................. $ 257,168 $ 396,399
Interest-bearing deposit due from banks.............. 1,119,998 2,275,485
Investment securities................................ 1,747,357 1,500,000
Investment in First Federal Bank for Savings......... 19,697,019 20,553,810
Other assets......................................... 905,306 805,255
----------- -----------
$23,726,848 $25,530,949
=========== ===========
Liabilities and Stockholders' Equity:
Dividend payable..................................... $ 472,720 389,361
Stockholders' equity................................. 23,254,128 25,141,588
----------- -----------
$23,726,848 $25,530,949
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
Years Ended June 30,
-----------------------
Statements of Income 1998 1997
- -------------------- ----------- ----------
<S> <C> <C>
Income:
Dividends from subsidiary bank...................... $ 2,500,000 $ --
Interest on investment securities................... 109,051 153,816
Other............................................... 114,308 137,634
----------- ----------
2,723,359 291,450
Expense............................................... 60,001 51,458
----------- ----------
Income before income taxes and equity in undistributed
earnings of subsidiary............................... 2,663,358 239,992
Income taxes expense (benefit)........................ (8,250) 67,250
----------- ----------
Income before equity in undistributed earnings of
subsidiary........................................... 2,671,608 172,742
Equity in undistributed earnings of subsidiary........ (1,091,414) 1,305,546
----------- ----------
Net Income............................................ $ 1,580,194 $1,478,288
=========== ==========
</TABLE>

F-24
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
Years Ended June 30,
------------------------
Statements of Cash Flows 1998 1997
- ------------------------ ----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income........................................ $ 1,580,194 $ 1,478,288
Equity in earnings of subsidiary.................. 1,091,414 (1,305,546)
Other, net........................................ (256,713) 45,741
----------- -----------
Net cash provided by operating activities........... 2,414,895 218,483
Cash flows from investing activities:
Repayment on ESOP loan............................ $ 210,380 $ 126,960
Purchase of securities............................ (1,747,357) (1,491,126)
Proceeds from maturities of securities............ 1,500,000 4,000,000
----------- -----------
Net cash provided by (used in) investing
activities......................................... (36,977) 2,635,834
Cash flows from financing activities:
Exercise of stock options......................... 303,660 39,670
Treasury stock acquisition........................ (270,332) (404,180)
Cash dividends paid............................... (3,705,964) (784,445)
----------- -----------
Net cash used in financing activities............... (3,672,636) (1,148,955)
----------- -----------
Net increase (decrease) in cash and cash
equivalents........................................ (1,294,718) 1,705,362
Cash and cash equivalents at beginning of period.... 2,671,884 966,522
----------- -----------
Cash and cash equivalents at end of period.......... $ 1,377,166 $ 2,671,884
=========== ===========
</TABLE>

NOTE U MERGER

On February 3, 1999, the Company entered into an Agreement and Plan of
Merger ("Plan") with NBC Capital Corporation ("NBC"). Under the terms of the
Plan, the Company will be merged into NBC through the exchange of company
common stock for NBC common stock. Each share of Company common stock will be
exchanged for .7702 shares of NBC common stock. The merger which is dependent
upon receiving regulatory and stockholder approval, is expected to be a tax-
free transaction accounted for as a pooling of interests.

F-25
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

DECEMBER 31, 1998

(Dollars in Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Cash................................................................. $ 3,913
Interest-bearing deposits due from banks............................. 30,773
--------
Total cash and cash equivalents.................................... 34,686
Available-for-sale securities........................................ 10,390
Held-to-maturity securities.......................................... 11,103
Federal Home Loan Bank stock......................................... 876
Loans receivable, net................................................ 100,001
Properties and equipment............................................. 1,856
Accrued interest receivable.......................................... 1,123
Other assets......................................................... 80
--------
$160,115
========

<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C>
Liabilities:
Deposits........................................................... $125,741
Advances from borrowers for taxes and insurance.................... 115
Accrued interest payable on deposits............................... 601
Borrowed funds..................................................... 9,115
Accrued expenses and other liabilities............................. 969
--------
Total liabilities.................................................. 136,541

Stockholders' Equity:
Cumulative preferred stock--$.01 par value, 500,000 shares
authorized, shares issued and outstanding--none................... --
Common Stock--par value $.01 per share, 2,000,000 shares
authorized; 1,575,735 issued...................................... 16
Additional paid-in capital......................................... 15,457
Retained earnings.................................................. 8,806
Unearned compensation.............................................. (106)
Accumulated other comprehensive income............................. (46)
Loan receivable from ESOP.......................................... (551)
Treasury stock, at cost (100 shares)............................... (2)
--------
Total stockholders' equity......................................... 23,574
--------
$160,115
========
</TABLE>

The accompanying notes are an integral part of this statement.

F-26
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997

(Dollars in Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans..................................... $4,221 $4,081
Interest on mortgage-backed and related securities............. 391 298
Interest on investment securities.............................. 463 569
FHLB stock dividends........................................... 25 25
Interest on deposits due from banks............................ 474 118
------ ------
5,574 5,091
INTEREST EXPENSE
Interest on deposits........................................... 2,976 2,621
Interest on borrowed funds..................................... 265 118
------ ------
3,241 2,739
------ ------
Net interest income.............................................. 2,333 2,352
Provision for losses on loans.................................... -- 5
------ ------
Net interest income after provision for losses on loans.......... 2,333 2,347

NON-INTEREST INCOME
Loan fees and service charges.................................. 120 119
NOW account fees............................................... 163 151
Other.......................................................... 108 53
------ ------
391 323
NON-INTEREST EXPENSE
Compensation and benefits...................................... 863 746
Occupancy and equipment........................................ 114 90
Deposit insurance premium...................................... 33 32
Data processing................................................ 97 80
Other.......................................................... 376 325
------ ------
1,483 1,273
------ ------
Income before income taxes....................................... 1,241 1,397
Income tax expense............................................... 447 531
------ ------
Net Income....................................................... $ 794 $ 866
====== ======
Net Income Per Share:
Basic.......................................................... $ .52 $ .58
Diluted........................................................ .51 .56
</TABLE>

The accompanying notes are an integral part of these statements.

F-27
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

SIX MONTHS ENDED DECEMBER 31, 1998

(Dollars in Thousands, Except Per Share Amounts)

<TABLE>
<CAPTION>
Accumulated
Additional Other Loan
Comprehensive Common Paid-in Retained Unearned Comprehensive Receivable Treasury
Income Stock Capital Earnings Compensation Income From ESOP Stock Total
------------- ------ ---------- -------- ------------ ------------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at July 1,
1998.................. $16 $15,487 $8,485 $(132) $(19) (551) $(2) $23,254

Comprehensive income:
Net income for the
six months ended
December 31, 1998.... $794 -- -- 794 -- -- -- -- 794
Net change in
unrealized gain
(loss) on available-
for-sale securities,
net of tax........... (27) -- -- -- -- (27) -- -- (27)
----
Total comprehensive
income............. $767
====
Cash dividends, $.30
per share............. -- -- (473) -- -- -- -- (473)
Amortization of
unearned
compensation.......... -- -- -- 26 -- -- -- 26
--- ------- ------ ----- ----- ------ ---- -------
Balance at December 31,
1998.................. $16 $15,457 $8,806 $(106) $(46) $(551) $(2) $23,574
=== ======= ====== ===== ===== ====== ==== =======
</TABLE>

The accompanying notes are an integral part of this statement.

F-28
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997

(Dollars in Thousands)

<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income............... $ 794 $ 866
Adjustments to reconcile
net income to net cash:
Depreciation of
properties and
equipment.............. 56 42
Amortization and
accretion, net......... 63 4
Provision for loan
losses................. -- 5
FHLB stock dividends.... (25) (24)
Deferred income taxes
(benefit).............. (13) 29
(Increase) decrease in
accrued interest
receivable............. 157 (38)
(Increase) decrease in
other assets........... 44 (3)
Decrease in accrued
interest payable on
deposits............... (291) (266)
Increase in accrued
expenses and other
penalties.............. 117 155
Amortization of unearned
compensation........... 26 --
------- -------
Net cash provided by
operating activities.... 928 770
CASH FLOWS FROM INVESTING
ACTIVITIES
Loan originations........ (32,090) (26,508)
Purchases of investment
securities.............. (3,046) (4,809)
Proceeds from maturities
and calls of investment
securities.............. 9,700 6,650
Foreclosure of real
estate.................. (94) (119)
Sale of foreclosed real
estate properties....... 52 --
Additions of properties
and equipment........... (6) (266)
Principal repayment of
loans................... 31,006 21,796
Principal repayments of
MBS and related
securities.............. 5,202 2,060
Purchase of MBS and
related securities...... -- (8,140)
------- -------
Net cash provided by
(used in) investing
activities.............. 10,724 (9,336)

CASH FLOWS FROM FINANCING
ACTIVITIES
Exercise of stock
options................. -- 172
Increase in deposits..... 11,203 4,014
Net increase (decrease)
in FHLB borrowings...... (1,846) 6,570
Payment of dividends on
common stock............ (473) (3,511)
Decrease in advances from
borrowers for taxes and
insurance............... (171) (167)
Acquisition of stock..... -- (268)
------- -------
Net cash provided by
(used in) financing
activities.............. 8,713 6,810
------- -------
Net increase (decrease) in
cash and cash
equivalents.............. 20,365 (1,756)
Cash and cash equivalents
at beginning of period... 14,321 8,406
------- -------
Cash and cash equivalents
at end of period......... $34,686 $ 6,650
======= =======

Supplemental Disclosure of
Cash Flow Information:
Cash paid during the year
for:
Interest on customer
deposits............... $ 3,267 $ 2,888
Interest on FHLB
advances............... 265 117
Income taxes............ 467 446
</TABLE>

The accompanying notes are an integral part of these statements.

F-29
<PAGE>

FFBS BANCORP, INC.

AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. The statements
should be read in conjunction with the summary of accounting policies and notes
to financial statements included in the Company's consolidated financial
statements for the year ended June 30, 1998. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been omitted in accordance
with the rules of the Securities and Exchange Commission.

NOTE B--ACCOUNTING POLICIES

The Company adopted Financial Accounting Standards Board Statement No.
130, "Reporting Comprehensive Income" as of July 1, 1998. Comprehensive income
is defined as the change in equity from transactions or other events and
circumstances from non-owner sources and includes net income. For the six-month
period ended December 31, 1998, the Company had no transactions or events other
than its net income and the unrealized gain (loss) on available-for-sale
securities which resulted in comprehensive income.

Reference is also made to the accounting policies of the Company described
in the notes to the consolidated financial statements for the year ended June
30, 1998. The Company has consistently followed those policies in preparing
this report.

NOTE C--PROPOSED MERGER

On February 3, 1999, the Company executed an Agreement and Plan of Merger
with NBC Capital Corporation. Consummation of the merger is dependent upon the
approval of the shareholders and various regulatory agencies.

F-30
<PAGE>

APPENDIX A
<PAGE>

AGREEMENT AND PLAN OF MERGER

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

BY AND BETWEEN

NBC CAPITAL CORPORATION

AND

FFBS BANCORP, INC.

DATED AS OF FEBRUARY 3rd, 1999

A-1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<C> <S> <C>
PARTIES................................................................... A-5

RECITALS.................................................................. A-5

ARTICLE I THE PARENT MERGER: EFFECTIVE TIME............................... A-5

1.1 The Merger....................................................... A-5
1.2 Effects of Parent Merger......................................... A-5
1.3 Effective Time................................................... A-6
1.4 Basic Terms...................................................... A-6
1.5 Exchange Procedures.............................................. A-6
1.6 No Fractional Shares............................................. A-7
1.7 Pooling of Interests............................................. A-7
1.8 Agreement........................................................ A-7
1.9 Subsequent Actions............................................... A-8
1.10 Anti-Dilution Adjustments........................................ A-8
1.11 Treatment of Stock Options....................................... A-8
1.12 Reservation of Right to Revise Transaction....................... A-8

ARTICLE II ARTICLES OF INCORPORATION AND BY-LAWS OF THE SURVIVING
CORPORATION.................................................... A-9
2.1 Articles of Incorporation........................................ A-9
2.2 By-Laws.......................................................... A-9

ARTICLE III THE BANK MERGER............................................... A-9
3.1 The Bank Merger.................................................. A-9
3.2 Liquidation Account.............................................. A-9

ARTICLE IV OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION............ A-9
4.1 Directors........................................................ A-9
4.2 Officers......................................................... A-10

ARTICLE V DISSENTING SHAREHOLDERS......................................... A-10

ARTICLE VI REPRESENTATION AND WARRANTIES OF FFBS.......................... A-10
6.1 Organization, Corporate Power and Qualification.................. A-10
6.2 Financial Statements............................................. A-10
6.3 Legal Proceedings................................................ A-10
6.4 Capitalization................................................... A-11
6.5 Authority; No Violation.......................................... A-11
6.6 Consents and Approvals........................................... A-11
6.7 Ownership of Subsidiary.......................................... A-11
6.8 Financial Statements and Reports................................. A-12
6.9 No Broker's or Finder's Fees..................................... A-12
6.10 Compliance with Law.............................................. A-12
6.11 Employee Benefits................................................ A-12
6.12 Information Furnished: Registration Statement.................... A-13
6.13 Agreements and Instruments....................................... A-13
6.14 Material Contract Defaults....................................... A-14
6.15 Tax Matters...................................................... A-14
6.16 Environmental Matters............................................ A-14
6.17 Insurance........................................................ A-14
6.18 Accounting and Tax Treatment..................................... A-15
6.19 Undisclosed Liabilities.......................................... A-15
6.20 Loans............................................................ A-15
6.21 Year 2000 Readiness.............................................. A-15
</TABLE>

A-2
<PAGE>

<TABLE>
<C> <S> <C>
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF NBC........................ A-15
7.1 Organization, Corporate Power and Qualification................. A-15
7.2 Authority; No Violation......................................... A-15
7.3 Consents and Approvals.......................................... A-16
7.4 Legal Proceedings............................................... A-16
7.5 SEC Documents................................................... A-16
7.6 Capitalization.................................................. A-16
7.7 Financial Statements and Reports................................ A-16
7.8 No Broker's or Finder's Fees.................................... A-17
7.9 Compliance with Law............................................. A-17
7.10 Employee Benefits............................................... A-17
7.11 Information Furnished; Registration Statement................... A-18
7.12 Material Contract Defaults...................................... A-18
7.13 Tax Matters..................................................... A-18
7.14 Environmental Matters........................................... A-19
7.15 Insurance....................................................... A-19
7.16 Accounting and Tax Treatment.................................... A-19
7.17 Undisclosed Liabilities......................................... A-19
7.18 Loans........................................................... A-19
7.19 Year 2000 Readiness............................................. A-19

ARTICLE VIII COVENANTS OF THE PARTIES.................................... A-20
8.1 Exclusive Dealings.............................................. A-20
8.2 Conduct of Business............................................. A-20
8.3 Current Information............................................. A-21
8.4 Access to Properties and Records; Confidentiality............... A-21
8.5 Interim Financial Statements.................................... A-21
8.6 Approval of Shareholders........................................ A-21
8.7 Cooperation..................................................... A-22
8.8 Unusual Events.................................................. A-22
8.9 FFBS Employees.................................................. A-22
8.10 Employee Benefit Plans.......................................... A-22
8.11 Directors....................................................... A-22
8.12 Registration Statement and Regulatory Filings................... A-23
8.13 Registration of Stock Options................................... A-23
8.14 Pooling-of-Interests and Tax-Free Treatment..................... A-23
8.15 Agreements of Affiliates........................................ A-23

ARTICLE IX CLOSING CONDITIONS............................................ A-23
9.1 Conditions to Each Party's Obligations Under this Agreement..... A-23
9.2 Conditions Precedent to the Obligations of NBC.................. A-24
9.3 Conditions Precedent to the Obligations of FFBS................. A-25

ARTICLE X CLOSING........................................................ A-25
10.1 Time and Place.................................................. A-25
10.2 Deliveries at Closing........................................... A-25

ARTICLE XI TERMINATION, AMENDMENT AND WAIVER............................. A-25
11.1 Termination..................................................... A-25
11.2 Effect of Termination........................................... A-26
11.3 Amendments and Waivers.......................................... A-26

</TABLE>

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<PAGE>

<TABLE>
<C> <S> <C>
ARTICLE XII MISCELLANEOUS................................................. A-26
12.1 Expenses........................................................ A-26
12.2 Indemnification................................................. A-26
12.3 Breach/Specific Performance..................................... A-27
12.4 Disclosures..................................................... A-27
12.5 Parties in Interest............................................. A-27
12.6 Survival of Representations..................................... A-27
12.7 Waiver.......................................................... A-27
12.8 Counterparts.................................................... A-27
12.9 Notices......................................................... A-28
12.10 Section Headings................................................ A-28
12.11 Governing Law................................................... A-28
12.12 Entire Agreement................................................ A-28
</TABLE>

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<PAGE>

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger ("Agreement") is executed this 3rd day
of February, 1999, by and between NBC CAPITAL CORPORATION ("NBC" or "Surviving
Corporation"), a Mississippi Corporation and FFBS BANCORP, INC. ("FFBS"), a
Delaware Corporation, these companies being herein sometimes collectively
referred to as the "Constituent Corporations."

RECITALS

WHEREAS, the respective Boards of Directors of the Constituent
Corporations deem the merger of FFBS with and into NBC with NBC surviving, as
provided herein ("the Parent Merger") advisable and in the best interest of
their respective corporations and shareholders; and

WHEREAS, the Constituent Corporations are either bank or savings and loan
holding companies which have subsidiary banks, NBC's subsidiary bank being
National Bank of Commerce, a national banking corporation wholly owned by NBC
(the "Bank"), and FFBS's bank subsidiary being First Federal Bank for Savings,
Columbus, Mississippi, a federally chartered savings bank regulated by the
Office of Thrift Supervision ("OTS") of the Department of the Treasury of the
United States (the "Thrift"); and

WHEREAS, it is deemed by the parties to this Agreement to be appropriate
and necessary that Thrift be merged into and become a part of the Bank as a
part of the merger activity to be implemented pursuant to this Agreement;

WHEREAS, the respective Boards of Directors of NBC and FFBS have duly
adopted resolutions approving this Agreement and have directed that it be
submitted for required shareholder approval; and

WHEREAS, the Constituent Corporations parties desire and intend that the
Parent Merger qualify for federal income tax purposes as a tax-free
reorganization under Section 368 (a) of the Internal Revenue Code of 1986, as
Amended ("Code") and the regulations thereunder; and

WHEREAS, NBC and FFBS respectively desire to have certain representations,
warranties and covenants made with respect to the Parent Merger.

NOW, THEREFORE, in order to prescribe (a) the terms and conditions of the
Parent Merger, (b) the mode of carrying the same into effect, (c) the manner
and basis for converting and exchanging the common shares of FFBS into the
right to receive common shares of capital stock of NBC or cash to holders of
FFBS who validly demand dissenter's rights pursuant to applicable provisions of
law who do not vote in favor of the Parent Merger, and (d) such other
provisions as are deemed necessary, these parties hereby agree as follows:

ARTICLE I

The Parent Merger: Effective Time

1.1 The Mergers. Subject to the terms and conditions of this Agreement, at
the Effective Time (as defined in Section 1.3 hereof), FFBS shall be merged
with and into NBC and the separate corporate existence of FFBS shall then
cease. NBC shall be the surviving corporation in the Parent Merger and shall
continue to be governed by the laws of the State of Mississippi, and the
corporate existence of NBC shall continue with the effects specified by the
Mississippi Business Corporation Act ("MBCA"). Thrift will be merged into Bank
as soon as regulatory approval will permit and all compliance and operating
requirements are met after which Thrift shall cease to exist.

1.2 Effects of Parent Merger. On the closing, the corporate name and
existence of FFBS shall cease and all of its purposes, powers and objects, and
all of its rights, assets, liabilities and obligations, shall pass to and vest
in NBC as the Surviving Corporation without any conveyance or transfer, and NBC
as the Surviving

A-5
<PAGE>

Corporation shall continue to be governed by the laws of the State of
Mississippi and shall also succeed to all rights, assets, liabilities and
obligations of FFBS in accordance with the MBCA. Upon the closing of the Parent
Merger, the separate existence and corporate organization of FFBS shall cease.

1.3 Effective Time. The Effective Time of the Parent Merger shall be the
time and date set forth in the certificate of merger issued by the Secretary of
State of the State of Mississippi pursuant to the MBCA and the related
certificate issued by the appropriate authorities of the State of Delaware
under the requirements of the Delaware General Corporate Law (the "DGCL").

1.4 Basic Terms. Each share of FFBS Common Stock issued and outstanding at
the Effective Time shall be converted into .7702 of a share of NBC Common Stock
(the "Exchange Ratio"); provided, however, that in the event the average per
share closing price of NBC Common Stock ("NBC Average Price"), as quoted by the
Over-the-Counter Bulletin Board, for the 20 trading day period ending one day
prior to the Effective Time is below $33.50, then the Exchange Ratio will be
adjusted upward such that the Exchange Ratio shall equal the quotient of
$25.802 divided by the NBC Average Price, rounded to four decimal places.

Each option for the purchase of FFBS Common Stock ("FFBS Stock Option")
will be converted into an option for the purchase of NBC Common Stock as set
forth in Section 1.11.

FFBS represents that, as of the date herein, 1,575,635 shares of FFBS
Common Stock and 65,966 FFBS Stock Options (with a weighted average exercise
price of $10.00) are outstanding.

Payment will be made in cash in lieu of issuance of fractional shares
based on the Exchange Ratio as herein established and determined at the
Effective Time.

1.5. Exchange Procedures. (a) At or prior to the Effective Time, NBC shall
deposit, or shall cause to be deposited, with SunTrust Bank, Atlanta (the
"Exchange Agent"), for the benefit of the holders of certificates of FFBS
Common Stock for exchange in accordance with this Article I, certificates
representing the shares of NBC Common Stock and an estimated amount of cash to
be paid in lieu of fractional shares to be paid pursuant to this Article I in
exchange for outstanding shares of FFBS Common Stock.

(b) Holders of record of certificates which immediately prior to the
Effective Time represented outstanding shares of FFBS Common Stock (the
"Certificates") shall be instructed to tender such Certificates to the Exchange
Agent pursuant to a letter of transmittal that NBC shall deliver or cause to be
delivered to such holders as promptly as practicable following the Effective
Time. Such letter of transmittal shall specify that risk of loss and title to
Certificates shall pass only upon delivery of such Certificates to the Exchange
Agent.

(c) Subject to Section 1.6, after the Effective Time, each holder of a
Certificate(s) that surrenders such Certificate(s) to the Exchange Agent, will,
upon acceptance thereof by the Exchange Agent, be entitled to (x) a certificate
or certificates representing the number of whole shares of NBC Common Stock
into which the shares represented by the Certificate(s) so surrendered
(aggregating all Certificates surrendered by such holder) shall have been
converted pursuant to this Agreement and (y) a check representing the amount of
any cash in lieu of fractional shares, if any, and dividends and distributions,
if any, which such holder has the right to receive hereunder with respect to
the Certificate(s) so surrendered, in each case after giving effect to any
required withholding tax.

(d) The Exchange Agent shall accept Certificates upon compliance with such
reasonable terms and conditions as NBC or the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with customary exchange
practices. Certificates shall be appropriately endorsed or accompanied by such
instruments of transfer as the Exchange Agent may reasonably require.

(e) All shares of NBC Common Stock issued upon surrender of Certificates
in accordance with the terms hereof (including any cash paid pursuant to this
Article I) shall be deemed to have been in full satisfaction of all rights
pertaining to such shares of FFBS Common Stock represented thereby. After the

A-6
<PAGE>

Effective Time, holders of Certificates shall cease to have rights with respect
to the shares previously represented by such Certificates, and their sole
rights shall be to exchange such Certificates for the consideration provided
for in this Agreement.

(f) After the Effective Time, there shall be no further transfer on the
records of FFBS of Certificates, and if such Certificates are presented to FFBS
for transfer, they shall be canceled against delivery of the consideration
provided therefor in this Agreement. NBC shall not be obligated to deliver the
consideration to which any former holder of FFBS Common Stock is entitled as a
result of the Parent Merger until such holder surrenders the Certificates as
provided herein. Certificates surrendered for exchange by any person
constituting an "affiliate" of FFBS for purposes of Rule 145 of the Securities
Act, shall not be exchanged for certificates representing NBC Common Stock
until NBC has received a written agreement from such person in the form
attached hereto as Exhibit 1.5(f). Neither the Exchange Agent nor any party to
this Agreement nor any Affiliate thereof shall be liable to any holder of stock
represented by any Certificate for any consideration paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. NBC and the
Exchange Agent shall be entitled to rely upon the stock transfer books of FFBS
to establish the identity of those persons entitled to receive consideration
specified in this Agreement, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, NBC and the Exchange Agent shall be entitled to
deposit any consideration represented thereby in escrow with an independent
third party and thereafter be relieved with respect to any claims thereto.

(g) Notwithstanding any other provisions of this Agreement, no dividends
or other distributions declared or made after the Effective Time with respect
to NBC Common Stock having a record date after the Effective Time shall be paid
to the holder of any unsurrendered Certificate, and no cash payment in lieu of
fractional shares shall be paid to any such holder, until the holder shall
surrender such Certificate as provided in this Section 1.5. Subject to the
effect of applicable laws, following surrender of any such Certificate, there
shall be paid to the holder of the certificates representing whole shares of
NBC Common Stock issued in exchange therefor, without interest, (i) at the time
of such surrender, the amount of dividends or other distributions with a record
date on or after the Effective Time theretofore payable with respect to such
whole shares of NBC Common Stock and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date subsequent to surrender, the amount of dividends or other
distributions with a record date on or after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of NBC Common Stock, less the amount of any withholding taxes
which may be required thereon.

1.6. No Fractional Shares. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of NBC Common
Stock shall be issued in the Parent Merger. Each holder who otherwise would
have been entitled to a fraction of a share of NBC Common Stock shall receive
in lieu thereof cash (without interest) in an amount determined by multiplying
the fractional share interest to which such holder would otherwise be entitled
by the average of the closing prices per share of NBC Common Stock for the 20
trading day period immediately preceding the Closing Date as reported on the
National Quotation Bureau pink sheets. No such holder shall be entitled to
dividends, voting rights or any other rights in respect of any fractional
share.

1.7 Pooling of Interests. The combination of such stock delivered to FFBS
shareholders and cash paid to satisfy dissenting shareholders and fractional
shareholders, and other requirements, shall be in accordance with the
requirements necessary for this transaction to be treated as a pooling of
interests transaction for accounting purposes, applying generally accepted
accounting principles.

1.8 Agreement. The parties shall diligently pursue, and as expeditiously
as possible, execute Articles of Merger consistent with the provisions of this
Agreement and shall use this Agreement and any amendments as provided for
herein as the required Plan of Merger and satisfy the filing requirements of
the State of Mississippi and other applicable law and regulations. Both parties
shall agree to and take such action as may be necessary to qualify this
transaction as a tax-free reorganization under Section 368 of the Internal
Revenue Code and the regulations thereunder. Appropriate filings shall be made
with regulatory agencies as required,

A-7
<PAGE>

including the filing of an Interagency Application in the form set forth in OCC
Manual of April 1998, and/or such other forms and requirements as may be
directed by applicable regulatory authority.

1.9 Subsequent Actions. If, at any time after the Effective Time, NBC
shall deem that any documents or other actions are appropriate to confirm title
or rights with respect to any property of FFBS in connection with this Merger,
the Officers and Directors of NBC are authorized to execute and deliver such
documents in the name of NBC and/or FFBS and take all such other actions
considered appropriate to consummate this Agreement.

1.10. Anti-Dilution Adjustments. In the event that prior to the Effective
Time NBC shall (or shall establish a record date prior to the Effective Time
for the following) declare a stock dividend or other distribution payable in
NBC Common Stock or securities convertible into NBC Common Stock or a
distribution otherwise previously disclosed, or effect a stock split,
reclassification, combination or other change with respect to NBC Common Stock,
the Exchange Rate shall be appropriately adjusted to reflect such dividend,
distribution, stock split, reclassification, combination or other change, such
that the shareholders of FFBS shall be entitled to same as if the Effective
Time had occurred prior thereto.

1.11. Treatment of Stock Options. (a) At the Effective Time, each
outstanding option to purchase shares of FFBS Common Stock under the FFBS stock
option plans (each, an "FFBS Stock Option"), whether vested or unvested, shall
be converted into an option to acquire, on the same terms and conditions as
were applicable under such FFBS Stock Option, the number of shares of NBC
Common Stock equal to (a) the number of shares of FFBS Common Stock subject to
the FFBS Stock Option, multiplied by (b) the Exchange Rate (such product
rounded to the nearest whole number) (a "Replacement Option"), at the exercise
price per share (rounded down to the nearest whole cent) equal to (y) the per
share exercise price pursuant to such FFBS Stock Option divided by (z) the
Exchange Rate. For example, each FFBS Stock Option with an exercise price of
$10.00 shall be converted into an option to purchase .7702 shares of NBC Common
Stock with an exercise price of $12.98. Notwithstanding the foregoing, each
FFBS Stock Option which is intended to be an "incentive stock option" (as
defined in Section 422 of the Code) shall be adjusted in accordance with the
requirements of Section 424 of the Code. Accordingly, with respect to
"incentive stock options," fractional shares will be rounded down to the
nearest whole number of shares and where necessary the per share exercise price
shall be rounded up to the nearest cent. At or prior to the Effective Time,
FFBS shall use its best efforts, including its reasonable best efforts to
obtain any necessary consents from optionees, with respect to the FFBS stock
option plans to permit the replacement of the outstanding FFBS Stock Options by
NBC pursuant to this Section and to permit NBC to assume the FFBS stock option
plans. FFBS shall further take all action necessary to amend the FFBS stock
option plans to eliminate automatic grants or awards thereunder following the
Effective Time. At the Effective Time, NBC shall assume the FFBS stock option
plans; provided, that such assumption shall be only in respect of the
Replacement Options and that NBC shall have no obligation with respect to any
awards under the FFBS stock option plans other than the Replacement Options and
shall have no obligation to make any additional grants or awards under such
assumed FFBS stock option plans. As used herein, Exchange Rate shall mean the
Exchange Rate as it may be adjusted pursuant to Section 1.4 of this Agreement.

(b) At all time after the Effective Time, NBC shall reserve for issuance
such number of shares of NBC Common Stock as necessary so as to permit the
exercise of options granted under the FFBS stock option plans in the manner
contemplated by this Agreement and the instruments pursuant to which such
options were granted. NBC shall file with the SEC a registration statement on
an appropriate form under the Securities Act with respect to the shares of NBC
Common Stock subject to the options to acquire NBC Common Stock issued pursuant
to Section 1.11(a) hereof, and shall use its reasonable best efforts to
maintain the current status of the prospectus contained therein, as well as
comply with any applicable state securities or "blue sky" laws, for so long as
such options remain outstanding.

1.12 Reservation of Right to Revise Transaction. NBC may at any time
change the method of effecting the acquisition of FFBS or Thrift by NBC, and
FFBS shall cooperate in such efforts, if and to the extent NBC deems such
change to be desirable and subject to FFBS's approval (which approval shall not
be unreasonably withheld); provided, however, that no such change shall (A)
alter or change the amount or kind of

A-8
<PAGE>

consideration to be issued to holders of FFBS Common Stock as provided for in
this Agreement (the "Merger Consideration"), (B) adversely affect the tax
treatment to FFBS's shareholders as a result of receiving the Merger
Consideration, (C) adversely affect the qualification of the Parent Merger as a
pooling of interests for accounting and financial reporting purposes or (D)
materially delay the consummation of the transactions contemplated by this
Agreement.

ARTICLE II

Articles of Incorporation and By-Laws of the Surviving Corporation

2.1 Articles of Incorporation. The Articles of Incorporation of NBC, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation, unless and until duly amended in
accordance with the terms thereof and MBCA.

2.2 By-Laws. The By-Laws of NBC, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation unless and
until duly amended in accordance with the terms thereof and the MBCA.

2.3 No amendments to the Articles or By-Laws are contemplated at the
present time.

ARTICLE III

The Bank Merger

3.1. The Bank Merger. As may be determined by NBC to be practicable
following the Effective Time, Thrift shall be merged with and into the Bank
("Bank Merger") pursuant to the terms and conditions set forth herein and in
the Plan of Reorganization and Merger attached hereto as Exhibit 3.1 (the "Bank
Agreement") and pursuant to 12 U.S.C. Sections 215c, 1815(d)(3) and 1828(c),
the separate existence of Thrift shall thereupon cease, the Bank shall be the
surviving institution in the Merger, all of the Bank's rights, privileges,
powers, immunities, purposes and franchises shall continue unaffected by the
Bank Merger, except to the extent impacted by the assumptions of all
obligations, rights, assets and liabilities of Thrift, and the Bank shall
continue at the effective time of the Bank Merger to be regulated by the Office
of the Comptroller of the Currency of the Department of the Treasury of the
United States ("OCC").

3.2. Liquidation Account. The liquidation account established by Thrift
pursuant to the plan of conversion adopted in connection with its conversion
from mutual to stock form shall, to the extent required by applicable law,
continue to be maintained by the Bank after the Effective Time for the benefit
of those persons and entities who were savings account holders of Thrift on the
eligibility and supplemental eligibility record dates for such conversion and
who continue from time to time to have rights therein. If required by the rules
and regulations of the OTS, the Bank shall amend its charter to specifically
provide for the continuation of the liquidation account previously established
by Thrift.

ARTICLE IV

Officers and Directors of the Surviving Corporation

4.1 Directors. The Directors of NBC, immediately prior to the Effective
Time shall be, from and after the Effective Time, the Directors of the
Surviving Corporation until their respective successors have been duly elected
or appointed and qualified or until their earlier death, resignation or
removal. Two presently serving directors of FFBS, shall be appointed by NBC and
become directors of NBC at the Effective Time in accordance with applicable
provisions of NBC By-Laws. The NBC Board of Directors agrees to nominate and
support such appointees for re-election to the NBC Board at its next annual
election of Directors provided such appointees are then serving on said Board
in good stead.

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<PAGE>

4.2 Officers. The Officers of NBC, immediately prior to the Effective Time
shall become the Officers of the Surviving Corporation together with such
present officers of FFBS who may be duly appointed as additional officers of
the Surviving Corporation.

ARTICLE V

Dissenting Shareholders

5.1 Each FFBS shareholder who votes against the Parent Merger and demands
Dissenter's Rights or rights of appraisal pursuant to Delaware General
Corporate Law ("DGCL"), Section 262, ("Dissenting Shareholder") and who shall
not withdraw or lose such rights of appraisal shall not have such shares
exchanged for NBC Common Stock as provided for hereinabove, but shall be
treated as a Dissenting Shareholder.

5.2 Each Dissenting Shareholder shall be entitled only to those rights
granted by DGCL Section 262 or other applicable law. FFBS shall give NBC prompt
written notice upon receipt by FFBS of any written demands for Dissenter's
Rights, and withdrawal of demands for Dissenter's Rights. FFBS shall not,
except with prior written consent of NBC, make any payment with respect to, or
settle or offer to settle, any such demands. Each Dissenting Shareholder who
becomes entitled to payment for FFBS Dissenting Shares, shall receive payment
of the estimated fair value of each share of FFBS Common Stock from NBC and
such shares of FFBS Common Stock shall be canceled.

5.3 If any FFBS shareholder who demands Dissenter's Rights shall
effectively withdraw or lose such Dissenter's Right, each such FFBS share shall
be converted to shares of NBC at the conversion rate set out in Section 1.4
hereof.

ARTICLE VI

Representation and Warranties of FFBS

FFBS hereby makes the following representations and warranties to NBC
except as previously disclosed or set forth in a schedule hereto:

6.1 Organization, Corporate Power and Qualification. FFBS and its
subsidiary are validly existing and in good standing with all applicable
authorities and are duly qualified to do business as a foreign corporation in
each jurisdiction in which such corporation conducts business and in which
qualification is necessary under applicable law, except to the extent that any
failure to do so would not, in the aggregate, have a material adverse effect on
the business, financial condition or result of operations of FFBS and its
subsidiary taken as a whole. FFBS has the requisite power and authority to
enter into and carry out the transactions contemplated by this Agreement,
subject to obtaining shareholder and regulatory approval as provided herein.

6.2 Financial Statements. At the request of NBC, FFBS has previously
delivered to NBC copies of the consolidated balance sheet of FFBS as of June
30, 1998, and each year for the previous two fiscal years, and the related
consolidated statements of income, changes in shareholders equity, and changes
in financial position, for the periods then ended, in each case accompanied by
the audit report of T. E. Lott & Company, independent certified public
accountants. These financial documents fairly represent the consolidated
financial position of FFBS and its subsidiary as of the date thereof, and
fairly present the results of the consolidated operations and changes in
shareholder equity and the consolidated financial position of FFBS and its
subsidiary for the respective fiscal periods or as of the respective dates
therein set forth. Each of the financial statements above is true and correct
in all material respects, and has been prepared in accordance with GAAP applied
on a basis consistent with other periods, except as otherwise noted.

6.3 Legal Proceedings. Except as set forth in Schedule 6.3 to this
Agreement: (i) neither FFBS nor its subsidiary is a party to any, and there are
no pending or, to the best of FFBS's knowledge, threatened material

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<PAGE>

legal, administrative, arbitration or other proceedings, claims or actions or
governmental investigations of any nature challenging the validity or propriety
of the transaction contemplated in this Agreement, and to the best of FFBS's
knowledge, there is no reasonable basis for any such objection; and (ii)
neither FFBS, nor its subsidiary is a party to any order, judgment or decree
which will, or might reasonably be expected to, materially adversely affect
their business, operations, properties, assets or financial condition or their
ability to acquire any property or conduct business in any area in which they
presently do business.

6.4 Capitalization. The authorized capital stock of FFBS consists of
2,000,000 shares of common stock and 500,000 shares of preferred stock (none of
which are issued and outstanding). At the close of business on August 31, 1998,
there were 1,575,635 shares of such stock issued and outstanding (excluding 100
shares of treasury stock issued but not outstanding) and there were outstanding
FFBS director and incentive stock options for individuals to acquire 65,966
additional shares of FFBS common stock. There are existing Recognition and
Retention Plans with stock rights calling for the issuance of 10,580 shares of
FFBS common stock which number is included in the 1,575,635 shares shown above
to be outstanding. All issued and outstanding shares of FFBS common stock have
been duly authorized and validly issued and are fully paid, non-assessable and
free of preemptive rights with no personal liability attached to the ownership
thereof. Except as set forth in Schedule 6.4 hereto, FFBS has not issued any
shares of FFBS stock in excess of the shares set forth above, and does not have
and is not bound by any outstanding subscription, option, warrant, cause,
commitment or other agreements of any character calling for the purchase or
issuance of any shares of FFBS stock or any security representing the right to
purchase or otherwise receive any FFBS stock except as set forth in this
paragraph.

6.5 Authority; No Violation.

(a) FFBS has full corporate power and authority to execute and deliver
this Agreement, and subject to obtaining approval of its shareholders as
provided herein, to consummate the transactions contemplated hereby. These
actions have been duly and validly approved by the Board of Directors of FFBS.
The Board has directed that this Agreement and the transaction contemplated
hereby be submitted to the FFBS shareholders for approval at a meeting to be
duly convened, and, except for such shareholder approval, no other corporate
proceedings on the part of FFBS are necessary to consummate the transaction so
contemplated.

(b) Neither the execution and delivery of this Agreement by FFBS nor the
consummation by FFBS of the transaction contemplated hereby, nor compliance by
FFBS with any provision hereof, will (i) violate any provision of the
Certificate of Incorporation or By-Laws of FFBS or (ii) violate any statute,
code, ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to FFBS of its subsidiary or affecting their respective properties
or assets, or (iii) violate, conflict with, result in a breach of any provision
of, constitute a default under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any such asset of FFBS or its
subsidiary, except to the extent that such collectively are not material and
adverse.

6.6 Consent and Approvals. Except as set forth in Schedule 6.6 hereto, to
the best of the knowledge of the FFBS officers and board, no permit, consent,
approval or authorization of, or declaration, filing or registration with, any
public body or authority, or to the knowledge of FFBS is necessary in
connection with this Agreement, its consummation, the transfer of FFBS assets
to NBC and the conduct by NBC of all business now conducted by FFBS and its
subsidiary.

6.7 Ownership of Subsidiary. All the outstanding shares of the capital
stock or other ownership interests in Thrift are validly issued, fully paid,
nonassessable and owned beneficially and of record by FFBS or Thrift free and
clear of any Encumbrance. There are no outstanding rights to purchase or
acquire any capital stock of any FFBS subsidiary and no oral or written
agreement, contract, arrangement, understanding, plan or instrument of any kind
to which any of FFBS or any of its affiliates is subject with respect to the
issuance, voting or sale of issued or unissued shares of the capital stock of
Thrift. Except as disclosed in Schedule 6.7 hereto, neither FFBS nor Thrift
owns any of the capital stock or other equity securities (including any rights
with respect to such securities) of or profit participation in any person or
"company" (as defined in Section 10(a)(1)(C) of the HOLA) other than the
Federal Home Loan Bank of Dallas and Thrift.

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<PAGE>

6.8 Financial Statements and Reports. For the past three years, FFBS and
the Thrift have timely filed all regulatory documents required to be filed by
them, except to the extent that all failures to so file, in the aggregate,
would not have a material adverse effect on FFBS; and all such documents, as
finally amended, complied in all material respects with applicable requirements
of applicable law and, as of their respective date or the date as amended, did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Except to the extent stated therein, all financial statements and schedules
included in the documents referred to in the preceding sentences (i) are in
accordance with FFBS's books and records and those of Thrift, which books and
records are complete and accurate in all material respects and have been
maintained in all material respects in accordance with applicable law, and (ii)
present fairly the consolidated financial position and the consolidated results
of operations and cash flows of FFBS as of the dates and for the periods
indicated in accordance with GAAP consistently applied during the periods
involved (except for the omission of notes to unaudited statements, year-end
adjustments to interim results normal in nature and amount and changes in GAAP
and except where regulatory reporting requirements provide otherwise). The
audited consolidated financial statements of FFBS as of June 30, 1998 and for
the two years then ended last filed by FFBS as part of a publicly available
regulatory document disclose all liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due and
regardless of when asserted), as of their respective dates, of FFBS and Thrift
required to be reflected in such financial statements according to GAAP, other
than liabilities which are not, in the aggregate, material to FFBS and Thrift,
taken as a whole, and contain in the opinion of management, adequate reserves
for losses on loans and properties acquired in settlement of loans, taxes and
all other material accrued liabilities and for all reasonably anticipated
material losses in accordance with GAAP, if any, as of such date. Except for
(i) those liabilities that are fully reflected or reserved against on FFBS's
audited consolidated balance sheet last filed by FFBS as part of a publicly
available regulatory document and (ii) liabilities incurred in the ordinary
course of business since the date of such audited consolidated balance sheet
and which would not have, individually or in the aggregate, a material adverse
effect on FFBS, FFBS has no liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise and whether due or to become due,
which are or would be required by GAAP to be shown on its consolidated balance
sheet.

6.9 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf or under authority of FFBS or Thrift is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee directly or indirectly in connection with the Parent Merger or any other
transaction contemplated hereby, except FFBS has engaged Trident Financial
Corporation, an investment banking firm, to provide financial advisory
services.

6.10 Compliance with Law. FFBS and Thrift have been in compliance in all
respects with all applicable laws, except where such non-compliance would not
have, in the aggregate, a material adverse effect on FFBS, and neither FFBS nor
Thrift has received notice from any governmental authority of any material
violation of, and does not know of any material violations of, any applicable
law.

6.11 Employee Benefits. (a) Except as disclosed on Schedule 6.11 hereto,
neither FFBS nor Thrift maintains, contributes to or sponsors any funded
deferred compensation plans (including profit sharing, pension, savings or
stock bonus plans), unfunded deferred compensation arrangements or employee
benefit plans as defined in Section 3(3) of ERISA ("FFBS Employee Benefit
Plans") (true and correct copies of which have been delivered to NBC). Except
as disclosed on Schedule 6.11 hereto, neither FFBS nor Thrift (i) provides
health, medical, death or survivor benefits to any former employee or
beneficiary thereof, or (ii) maintains any form of current (exclusive of base
salary and base wages) or deferred compensation, bonus, stock option, stock
appreciation right, severance pay, retirement, incentive, group or individual
health insurance, welfare or similar plan or arrangement for the benefit of any
single or class of directors, officers or employees, whether active or retired
(collectively "Benefit Arrangements").

(b) Except as previously disclosed, all FFBS Employee Benefit Plans and
Benefit Arrangements were in effect for substantially all of calendar year 1998
and, there has been no material amendment thereof (other

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than amendments required to comply with applicable law) and, except as
disclosed in publicly available regulatory documents filed by FFBS prior to the
date of this Agreement, there will be no material increase in the cost thereof
or benefits payable thereunder on or after January 1, 1999.

(c) To the knowledge of FFBS, with respect to all FFBS Employee Benefit
Plans and Benefit Arrangements, FFBS and Thrift are in substantial compliance
with the requirements prescribed by any and all Applicable Laws currently in
effect, including but not limited to ERISA and the Code, applicable to such
FFBS Employee Benefit Plans or Benefit Arrangements. None of the FFBS Employee
Benefit Plans which are defined benefit pension plans have incurred any
"accumulated funding deficiency" (whether or not waived) as that term is
defined in Section 412 of the Code and the fair market value of the assets of
each such plan equals or exceeds the accrued liabilities of such plan. To the
best knowledge of FFBS and Thrift, there are not now nor have there been any
non-exempt "prohibited transactions," as such term is defined in Section 4975
of the Code or Section 406 of ERISA, involving the FFBS Employee Benefit Plans
which could subject FFBS or Thrift to the penalty or Tax imposed under Section
502(i) of ERISA or Section 4975 of the Code. No FFBS Employee Benefit Plan
which is subject to Title IV of ERISA has been completely or partially
terminated; no proceedings to completely or partially terminate any FFBS
Employee Benefit Plan have been instituted within the meaning of Subtitle C of
said Title IV of ERISA; and no reportable event, within the meaning of Section
4043(c) of said Subtitle C for which the 30-day notice requirement of ERISA has
not been waived, has occurred with respect to any FFBS Employee Benefit Plan.
Neither FFBS nor Thrift has engaged in any transaction described in Section
4069 of ERISA within the last five years. Neither FFBS nor Thrift has failed to
make any contribution or pay any amount due and owing as required by the terms
of any FFBS Employee Benefit Plan or Benefit Arrangement. Neither FFBS nor
Thrift has incurred or reasonably expects to incur any liability to the Pension
Benefit Guaranty Corporation except for required premium payments which, to the
extent due and payable, have been paid. To the knowledge of FFBS, the FFBS
Employee Benefit Plans intended to be qualified under Section 401(a) of the
Code are so qualified, and FFBS is not aware of any fact which would adversely
affect the qualified status of such plans.

6.12 Information Furnished: Registration Statement. (a) To the best
knowledge of FFBS, no statement contained in any schedule, certificate or other
document furnished or to be furnished in writing by or on behalf of FFBS or any
of its affiliates to NBC pursuant to this Agreement (whether prior to or
subsequent to the date of this Agreement) contains or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(b) None of the information provided by FFBS or Thrift for inclusion in
the registration statement on Form S-4 to be filed with the SEC by NBC under
the Securities Act of 1933, as amended ("Securities Act") relating to shares of
NBC Common Stock to be issued in the Parent Merger, including the prospectus
(the "Prospectus") relating to such issuance and the joint proxy statement and
forms of proxy relating to the vote of NBC shareholders and FFBS shareholders
with respect to the Parent Merger (as amended, supplemented or modified, the
"Proxy Statement") contained therein (such registration statement as amended,
supplemented or modified, the "Registration Statement"), at the time the
Registration Statement becomes effective or, in the case of the Proxy
Statement, at the date of mailing, will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

6.13 Agreements and Instruments. Except as previously disclosed, neither
FFBS nor Thrift is a party to (a) any material contract, (b) any contract
relating to the borrowing of money by FFBS or Thrift or the guarantee by FFBS
or Thrift of any such obligation (other than Federal Home Loan Bank advances),
(c) any contract to make loans or for the provision, purchase or sale of goods,
services or property between FFBS or Thrift and any director or officer of FFBS
or Thrift, or any member of the immediate family or affiliate of any of the
foregoing (other than loans or deposits made on an arm's-length basis in the
ordinary course of business), (d) any contract with or concerning any labor or
employee organization, (e) any contract between FFBS or Thrift and any
affiliate thereof (other than contracts solely between FFBS and Thrift, (f) any

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agreements, directives, orders, or similar arrangements between or involving
FFBS or Thrift and any governmental authority, (g) any contract with respect to
the employment, retention or severance of any directors, officers, employees or
consultants, (h) any contract which materially restricts the conduct of any
line of business by FFBS or any current or future affiliates thereof or (i) any
contract pursuant to which FFBS or is or may become obligated to invest in or
contribute capital to Thrift.

6.14 Material Contract Defaults. Neither FFBS nor Thrift nor, to the
knowledge of FFBS and Thrift, the other party thereto is in default in any
respect under any contract to which any of FFBS or Thrift is a party or by
which its respective assets, business, or operations may be bound or affected
or under which it or its respective assets, business, or operations receives
benefits, other than any such default or defaults which would not have, in the
aggregate, a material adverse effect on FFBS, and there has not occurred any
event that, with the lapse of time or the giving of notice or both, would
constitute such a default. All material contracts to which FFBS or Thrift is a
party are valid, binding and in full force and effect.

6.15 Tax Matters. (a) FFBS, Thrift and any affiliated group (within the
meaning of Section 1504(a) of the Code) of which FFBS or Thrift is a member
have duly and properly filed all federal, state, local and other tax returns
required to be filed by them and have made timely payments of all taxes due and
payable, whether disputed or not; such tax returns are true, correct and
complete in all material respects; the current status of audits of such tax
returns by the IRS and other applicable agencies has been previously disclosed;
and there is no agreement by FFBS or Thrift for the waiver or extension of time
for the assessment or payment of any taxes payable. Neither the IRS nor any
other taxing authority is now asserting or, to the best knowledge of FFBS and
Thrift, threatening to assert any deficiency or claim for additional taxes, nor
to the knowledge of FFBS or Thrift is there any basis for any such assertion or
claim. FFBS and Thrift has complied in all material respects with applicable
IRS backup withholding requirements and have filed all appropriate information
reporting returns for all tax years for which the statute of limitations has
not closed. FFBS and FFBS subsidiary have complied with all applicable state
law sales and use tax collection and reporting requirements.

(b) Adequate provision for any federal, state or local taxes due or to
become due for FFBS or Thrift for any period or periods through and including
September 30, 1998, has been made and is reflected on the September 30, 1998,
consolidated financial statements last filed by FFBS as part of a publicly
available regulatory document and has been or will be made with respect to
periods ending after September 30, 1998.

6.16 Environmental Matters. To the knowledge of FFBS, neither FFBS nor
Thrift owns or leases any properties affected by toxic waste. Neither FFBS nor
Thrift has knowledge of, nor has FFBS or Thrift received written notice from
any governmental authority of, any conditions, activities, practices or
incidents which are reasonably likely to interfere with or prevent compliance
or continued compliance by FFBS or Thrift with hazardous substance laws or any
regulation, order, decree, judgment or injunction, issued, entered, promulgated
or approved thereunder, or which may give rise to any common law or legal
liability on the part of FFBS or Thrift, or otherwise form the basis of any
claim, action, suit, proceeding, hearing or investigation against or of FFBS or
Thrift, based on or related to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling, or the emission,
discharge, release or threatened release into the environment, of any
pollutant, contaminant or chemical, or industrial, toxic or hazardous substance
or waste. There is no civil, criminal or administrative claim, action, suit,
proceeding, hearing or investigation pending or, to the best knowledge of FFBS
and Thrift, threatened against FFBS or Thrift relating in any way to such
hazardous substance laws or any regulation, order, decree, judgment or
injunction issued, entered, promulgated or approved thereunder. To the
knowledge of FFBS and Thrift, neither FFBS nor Thrift has made or participated
in any loan to any Person who is subject to any civil, criminal or
administrative claim, action, suit, proceeding, hearing or investigation
relating in any way to such hazardous substance laws or any regulation, order,
decree, judgment or injunction issued, entered, promulgated or approved
thereunder and relating to the property secured by such loan.

6.17 Insurance. FFBS and Thrift have in effect insurance coverage with
reputable insurers which, in respect of amounts, types and risks insured, is
reasonably adequate for the business in which FFBS and Thrift are engaged. A
schedule of all insurance policies in effect as to FFBS and Thrift (the
"Insurance Policies") has

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been previously disclosed (other than policies pertaining to secured loans made
in the ordinary course of business). All insurance policies are in full force
and effect, all premiums with respect thereto covering all periods up to and
including the date of this Agreement have been paid, such premiums covering all
periods from the date hereof up to and including the Effective Date shall have
been paid on or before the Effective Date, to the extent then due and payable
(other than retrospective premiums which may be payable with respect to
worker's compensation insurance policies, adequate reserves for which are
reflected in FFBS's financial statements last filed by FFBS as part of a
publicly available regulatory document). The Insurance Policies are valid,
outstanding and enforceable in accordance with their respective terms and will
not in any way be affected by, or terminated or lapsed solely by reason of, the
transactions contemplated by this Agreement. To the knowledge of FFBS, neither
FFBS nor Thrift has been refused any insurance with respect to any material
properties, assets or operations, nor has any coverage been limited or
terminated by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last three (3)
years.

6.18 Accounting and Tax Treatment. Neither FFBS nor any of its affiliates
has taken or agreed to take any action that or has failed to take any action
the result of which would (but without giving effect to any actions taken or
agreed to be taken by NBC or any of its Affiliates) (i) prevent NBC from
accounting for the Parent Merger as a pooling of interests for accounting and
financial reporting purposes or (ii) prevent the Merger from qualifying as a
"reorganization" under Section 368(a) of the Code.

6.19 Undisclosed Liabilities. Except as set forth in Schedule 6.19,
neither FFBS nor Thrift has any material liabilities other than those
liabilities disclosed on or provided for in the balance sheet as of June 30,
1998, and liabilities incurred since such date in the ordinary course of
business consistent with past practices.

6.20 Loans. All of the loans on the books of FFBS and Thrift are valid and
properly documented and were made in the ordinary course of business.

6.21 Year 2000 Readiness. FFBS and the FFBS subsidiary have taken all
reasonable steps necessary to address the computer software, accounting and
record keeping issues raised in order for the data processing systems used in
the business conducted by them to be substantially Year 2000 compliant on or
before the end of 1999 and, except as set forth in the Schedule 6.21, FFBS does
not expect the future cost of addressing such issues to be material.

ARTICLE VII

Representations and Warranties of NBC

NBC represents and warrants to FFBS as follows:

7.1 Organization, Corporate Power and Qualification. NBC and its
subsidiaries are validly existing and in good standing with all applicable
authorities and are duly qualified to do business in each jurisdiction in which
such corporation and its subsidiaries conduct business. NBC has the corporate
power and authority and has received all appropriate regulatory authorizations
to own or lease all of its properties and to carry on its businesses as they
are now being conducted.

7.2 Authority; No Violation. (a) NBC has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby upon valid approval of its shareholders and
receipt of regulatory approvals. The Board of Directors of NBC has duly and
validly approved and adopted this Agreement and approved the transaction
contemplated hereby, and has authorized execution and delivery of this
Agreement, which (subject to appropriate shareholder approval) constitutes a
valid and binding obligation of NBC, enforceable in accordance with its terms.

(b) Neither the execution and delivery of this Agreement by NBC nor the
consummation by NBC of the transaction contemplated hereby, nor compliance by
NBC with any provision hereof, will (i) violate any provision of the Articles
of Incorporation or By-Laws of NBC or (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to NBC or any of its subsidiaries or any of

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their respective properties or assets, or (iii) violate, conflict with, result
in a breach of any provisions of, constitute a default under, result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any
of the respective properties or assets of NBC, or any of its subsidiaries
except to the extent that such collectively are not material and adverse.

7.3 Consents and Approvals. Consents, approvals, filings, or registrations
with the following governmental entities or third parties are necessary in
connection with the consummation of the Merger contemplated hereby:

(a) the filing by NBC of an Application with the Board of Governors of
the Federal Reserve under The Bank Holding Company Act and approval or such
application, or the obtaining of an appropriate waiver thereof.

(b) the filing with the Securities and Exchange Commission ("SEC") of
the Proxy Statement/Prospectus in definitive form relating to the meeting
of FFBS shareholders to be held in connection with this Agreement and the
transaction contemplated hereby, together with registration statements on
SEC Form S-4 and other required SEC compliance.

(c) the filing of the Articles of Merger with the Secretary of State
of the State of Mississippi under the MBCA and the Certificate of Merger
with the Secretary of State of Delaware.

(d) such filings and approvals as are required under the Securities or
"Blue Sky" laws of various states in connection with the issuance of shares
of NBC common stock pursuant to this Agreement, and

(e) such other filings, approvals, or consents as may be required by
applicable federal and state law and regulations promulgated thereunder;
including appropriate filings with the OCC and the OTS.

7.4 Legal Proceedings. Except as set forth in Schedule 7.4 to this
Agreement: (i) neither NBC or any subsidiary is a party to any, and there are
no pending or, to the best of NBC's knowledge, threatened material legal,
administrative, arbitration or other proceedings, claims or actions or
governmental investigations of any nature challenging the validity or propriety
of the transaction contemplated in this Agreement, and to the best of NBC's
knowledge, there is no reasonable basis for any such objection; and (ii)
neither NBC, nor any subsidiary is a party to any order, judgment or decree
which will, or might reasonably be expected to, materially adversely affect
their business, operations, properties, assets or financial condition or their
ability to acquire any property or conduct business in any area in which they
presently do business.

7.5 SEC Documents. NBC will make available to FFBS a true and complete
copy of each report, schedule, registration statement, and proxy statement and
amendment filed by NBC with the SEC since December 31, 1994. These constitute
all such documents that NBC was required to file with the SEC and they complied
in all material respects with the requirements of all applicable law and
regulations. They were prepared in accordance with GAAP, were true, complete
and correct and they fairly present the financial position of NBC and its
subsidiaries as of their respective dates.

7.6 Capitalization. The authorized capital stock of NBC consists of
10,000,000 shares of common stock. At the close of business on January 28,
1998, there were 5,664,736 shares of such stock issued and outstanding. All
issued and outstanding shares of NBC common stock have been duly authorized and
validly issued and are fully paid, non-assessable and free of preemptive rights
with no personal liability attached to the ownership thereof. NBC has not
issued any shares of NBC stock in excess of the shares set forth above, and
does not have and is not bound by any outstanding subscription, option,
warrant, cause, commitment or other agreements of any character calling for the
purchase or issuance of any shares of NBC stock or any security representing
the right to purchase or otherwise receive any NBC stock except as set forth in
this paragraph.

7.7 Financial Statements and Reports. For the past three years, NBC and
the NBC subsidiaries have timely filed all regulatory documents required to be
filed by them, except to the extent that all failures to so file, in the
aggregate, would not have a material adverse effect on NBC; and all such
documents, as finally amended, complied in all material respects with
applicable requirements of applicable law and, as of their

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respective date or the date as amended, did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Except to the extent stated
therein, all financial statements and schedules included in the documents
referred to in the preceding sentences (i) are in accordance with NBC's books
and records and those of the NBC subsidiaries, which books and records are
complete and accurate in all material respects and have been maintained in all
material respects in accordance with applicable law, and (ii) present fairly
the consolidated financial position and the consolidated results of operations
and cash flows of NBC as of the dates and for the periods indicated in
accordance with GAAP consistently applied during the periods involved (except
for the omission of notes to unaudited statements, year-end adjustments to
interim results normal in nature and amount and changes in GAAP and except
where regulatory reporting requirements provide otherwise). The audited
consolidated financial statements of NBC as of December 31, 1997, and for the
two years then ended last filed by NBC as part of a publicly available
regulatory document disclose all liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due and
regardless of when asserted), as of their respective dates, of NBC and the NBC
subsidiaries required to be reflected in such financial statements according to
GAAP, other than liabilities which are not, in the aggregate, material to NBC
and the NBC subsidiaries, taken as a whole, and contain in the opinion of
management, adequate reserves for losses on loans and properties acquired in
settlement of loans, taxes and all other material accrued liabilities and for
all reasonably anticipated material losses in accordance with GAAP, if any, as
of such date. Except for (i) those liabilities that are fully reflected or
reserved against on NBC's audited consolidated balance sheet last filed by NBC
as part of a publicly available regulatory document and (ii) liabilities
incurred in the ordinary course of business since the date of such audited
consolidated balance sheet and which would not have, individually or in the
aggregate, a material adverse effect on NBC, NBC has no liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise
and whether due or to become due, which are or would be required by GAAP to be
shown on its consolidated balance sheet.

7.8 No Broker's or Finder's Fees. No agent, broker, investment banker,
person or firm acting on behalf or under authority of NBC or the NBC
subsidiaries is or will be entitled to any broker's or finder's fee or any
other commission or similar fee directly or indirectly in connection with the
Parent Merger or any other transaction contemplated hereby.

7.9 Compliance with Law. NBC and the NBC subsidiaries have been in
compliance in all respects with all applicable laws, except where such non-
compliance would not have, in the aggregate, a material adverse effect on NBC,
and neither NBC nor any NBC subsidiary has received notice from any
governmental authority of any material violation of, and does not know of any
material violations of, any applicable law.

7.10 Employee Benefits. To the knowledge of NBC, with respect to all NBC
Employee Benefit Plans and NBC Benefit Arrangements, NBC and the NBC
subsidiaries are in substantial compliance with the requirements prescribed by
any and all Applicable Laws currently in effect, including but not limited to
ERISA and the Code, applicable to such NBC Employee Benefit Plans or NBC
Benefit Arrangements. None of the NBC Employee Benefit Plans which are defined
benefit pension plans have incurred any "accumulated funding deficiency"
(whether or not waived) as that term is defined in Section 412 of the Code and
the fair market value of the assets of each such plan equals or exceeds the
accrued liabilities of such plan. To the best knowledge of NBC and Bank, there
are not now nor have there been any non-exempt "prohibited transactions," as
such term is defined in Section 4975 of the Code or Section 406 of ERISA,
involving the NBC Employee Benefit Plans which could subject NBC or the NBC
subsidiaries to the penalty or Tax imposed under Section 502(i) of ERISA or
Section 4975 of the Code. No NBC Employee Benefit Plan which is subject to
Title IV of ERISA has been completely or partially terminated; no proceedings
to completely or partially terminate any NBC Employee Benefit Plan have been
instituted within the meaning of Subtitle C of said Title IV of ERISA; and no
reportable event, within the meaning of Section 4043(c) of said Subtitle C for
which the 30-day notice requirement of ERISA has not been waived, has occurred
with respect to any NBC Employee Benefit Plan. No NBC Employee Benefit Plan or
NBC Benefit Arrangement is a "multi-employer plan" within the meaning of
Section 4001(a)(3) of ERISA or a plan that has two or more contributing
sponsors at least two of whom are not under common control, within the meaning
of Section 4063 of ERISA. Neither NBC nor any

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NBC subsidiary has engaged in any transaction described in Section 4069 of
ERISA within the last five years. Neither NBC nor any NBC subsidiary has failed
to make any contribution or pay any amount due and owing as required by the
terms of any NBC Employee Benefit Plan or NBC Benefit Arrangement. Neither NBC
nor any NBC subsidiary has incurred or reasonably expects to incur any
liability to the Pension Benefit Guaranty Corporation except for required
premium payments which, to the extent due and payable, have been paid. To the
knowledge of NBC, the NBC Employee Benefit Plans intended to be qualified under
Section 401(a) of the Code are so qualified, and FFBS is not aware of any fact
which would adversely affect the qualified status of such plans.

7.11 Information Furnished; Registration Statement. (a) To the best
knowledge of NBC, no statement contained in any schedule, certificate or other
document furnished or to be furnished in writing by or on behalf of NBC or any
of its affiliates to FFBS pursuant to this Agreement (whether prior to or
subsequent to the date of this Agreement) contains or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

(b) None of the information provided by NBC or any NBC subsidiary for
inclusion in the registration statement on Form S-4 to be filed with the SEC by
NBC under the Securities Act of 1933, as amended ("Securities Act") relating to
shares of NBC Common Stock to be issued in the Parent Merger, including the
prospectus (the "Prospectus") relating to such issuance and the joint proxy
statement and forms of proxy relating to the vote of NBC shareholders with
respect to the Parent Merger (as amended, supplemented or modified, the "Proxy
Statement") contained therein (such registration statement as amended,
supplemented or modified, the "Registration Statement"), at the time the
Registration Statement becomes effective or, in the case of the Proxy
Statement, at the date of mailing, will contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.

7.12 Material Contract Defaults. Neither NBC nor any NBC subsidiary nor,
to the knowledge of NBC and Bank, the other party thereto is in default in any
respect under any contract to which any of NBC or any NBC subsidiary is a party
or by which its respective assets, business, or operations may be bound or
affected or under which it or its respective assets, business, or operations
receives benefits, other than any such default or defaults which would not
have, in the aggregate, a material adverse effect on NBC, and there has not
occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default. All material contracts to which NBC and
the NBC subsidiaries are parties are valid, binding and in full force and
effect.

7.13 Tax Matters. (a) NBC, the NBC subsidiaries and any affiliated group
(within the meaning of Section 1504(a) of the Code) of which NBC or any NBC
subsidiary is a member have duly and properly filed all federal, state, local
and other tax returns required to be filed by them and have made timely
payments of all taxes due and payable, whether disputed or not; such tax
returns are true, correct and complete in all material respects; the current
status of audits of such tax returns by the IRS and other applicable agencies
has been previously disclosed; and there is no agreement by NBC or the NBC
subsidiaries for the waiver or extension of time for the assessment or payment
of any taxes payable. Neither the IRS nor any other taxing authority is now
asserting or, to the best knowledge of NBC and Bank, threatening to assert any
deficiency or claim for additional taxes, nor to the knowledge of NBC or Bank
is there any basis for any such assertion or claim. NBC and the NBC
subsidiaries have complied in all material respects with applicable IRS backup
withholding requirements and have filed all appropriate information reporting
returns for all tax years for which the statute of limitations has not closed.
NBC and NBC subsidiaries have complied with all applicable state law sales and
use tax collection and reporting requirements.

(b) Adequate provision for any federal, state or local taxes due or to
become due for NBC or the NBC subsidiaries for any period or periods through
and including December 31, 1997, has been made and is reflected on the December
31, 1997, consolidated financial statements last filed by NBC as part of a
publicly available regulatory document and has been or will be made with
respect to periods ending after December 31, 1997.

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7.14 Environmental Matters. To the knowledge of NBC, neither NBC nor any
NBC subsidiary owns or leases any properties affected by toxic waste. Neither
NBC nor any NBC subsidiary has knowledge of, nor has NBC or any NBC subsidiary
received written notice from any governmental authority of, any conditions,
activities, practices or incidents which are reasonably likely to interfere
with or prevent compliance or continued compliance by NBC or any NBC subsidiary
with hazardous substance laws or any regulation, order, decree, judgment or
injunction, issued, entered, promulgated or approved thereunder, or which may
give rise to any common law or legal liability on the part of NBC or any NBC
subsidiary, or otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation against or of NBC or any NBC subsidiary, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant or
chemical, or industrial, toxic or hazardous substance or waste. There is no
civil, criminal or administrative claim, action, suit, proceeding, hearing or
investigation pending or, to the best knowledge of NBC and Bank, threatened
against NBC or any NBC subsidiary relating in any way to such hazardous
substance laws or any regulation, order, decree, judgment or injunction issued,
entered, promulgated or approved thereunder. To the knowledge of NBC and Bank,
neither NBC nor any NBC subsidiary has made or participated in any loan to any
person who is subject to any civil, criminal or administrative claim, action,
suit, proceeding, hearing or investigation relating in any way to such
hazardous substance laws or any regulation, order, decree, judgment or
injunction issued, entered, promulgated or approved thereunder and relating to
the property secured by such loan.

7.15 Insurance. NBC and the NBC subsidiaries have in effect insurance
coverage with reputable insurers which, in respect of amounts, types and risks
insured, is reasonably adequate for the business in which NBC and the NBC
subsidiaries are engaged. A schedule of all insurance policies in effect as to
NBC and the NBC subsidiaries (the "Insurance Policies") has been previously
disclosed (other than policies pertaining to secured loans made in the ordinary
course of business). All insurance policies are in full force and effect, all
premiums with respect thereto covering all periods up to and including the date
of this Agreement have been paid, such premiums covering all periods from the
date hereof up to and including the Effective Date shall have been paid on or
before the Effective Date, to the extent then due and payable (other than
retrospective premiums which may be payable with respect to worker's
compensation insurance policies, adequate reserves for which are reflected in
NBC's financial statements last filed by NBC as part of a publicly available
regulatory document). The Insurance Policies are valid, outstanding and
enforceable in accordance with their respective terms and will not in any way
be affected by, or terminated or lapsed solely by reason of, the transactions
contemplated by this Agreement. To the knowledge of NBC, neither NBC nor the
NBC subsidiaries have been refused any insurance with respect to any material
properties, assets or operations, nor has any coverage been limited or
terminated by any insurance carrier to which it has applied for any such
insurance or with which it has carried insurance during the last three (3)
years.

7.16 Accounting and Tax Treatment. Neither NBC nor any of its affiliates
has taken or agreed to take any action that or has failed to take any action
the result of which would (i) prevent NBC from accounting for the Parent Merger
as a pooling of interests for accounting and financial reporting purposes or
(ii) prevent the Merger from qualifying as a "reorganization" under Section
368(a) of the Code.

7.17 Undisclosed Liabilities. Neither NBC nor the NBC subsidiaries have
any material liabilities other than those liabilities disclosed on or provided
for in the balance sheet as of June 30, 1998, and liabilities incurred since
such date in the ordinary course of business consistent with past practices.

7.18 Loans. All of the loans on the books of NBC and the NBC subsidiaries
are valid and properly documented and were made in the ordinary course of
business.

7.19 Year 2000 Readiness. NBC and the NBC subsidiaries have instituted and
are conducting a program to assess and correct Year 2000 issues and, to the
best of knowledge of NBC and NBC subsidiaries, NBC and NBC subsidiaries have
met all targeted goals to be substantially Year 2000 compliant.

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ARTICLE VIII

Covenants of the Parties

8.1 Exclusive Dealings. FFBS shall not authorize or permit any of its
officers, directors, employees or agents to directly or indirectly solicit,
initiate, facilitate or encourage any inquiries relating to, or the making of
any proposal which constitutes a tender or exchange offer, proposal for merger,
consolidation or any other business combination involving FFBS or any of its
subsidiaries, or any proposal or offer to inquire in any manner a substantial
equity interest in, or a substantial portion of the assets of FFBS other than
the transaction contemplated or permitted by this Agreement, or participate in
any discussions or negotiations, or provide third parties with any non-public
information, relating to any inquiry or proposal or otherwise facilitate any
effort or attempt to make a takeover proposal, unless FFBS is advised by legal
counsel that such communication is required under applicable law or that the
failure to do so would cause the members of the Board of Directors to be in
breach of their fiduciary duties under applicable laws. FFBS will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations previously conducted with any parties other than NBC with respect
to any of the foregoing.

8.2 Conduct of Business. During the period from the date of this Agreement
to the Effective Time, FFBS, and its subsidiary, will conduct their business
and engage in transactions only in the ordinary course and consistent with
prudent banking practices. FFBS and its subsidiary will operate their business
in substantially the same manner as before this Agreement, and will maintain
and keep their property in good repair and properly insured. FFBS will not,
without the prior express consent of NBC (which will not be unreasonably
withheld):

(a) Pay any dividends prior to the Effective Time other than regular
anticipated semi-annual dividends of 30 cents per share to its shareholders
payable in January 1999 and July 1999;

(b) Except as set forth in Schedule 8.2(b), lend an amount exceeding
$200,000.00 to an individual or entity or lend an amount, which when
aggregated with other loans to the same individual or entity or related
interests, would exceed $300,000.00;

(d) Grant promotions to current employees except for planned
promotions as set forth on Schedule 8.2(d) to this Agreement;

(e) Except as set forth in Schedule 8.2(e), make, incur, or agree to
incur, any single capital expenditure which alone exceeds $10,000.00 or
enter into any lease agreement with total rental payments exceeding
$10,000.00;

(f) Pay, or agree to pay, any bonus to any employee, officer or
director, other than payments of scheduled bonuses as set forth in Schedule
8.2(f) to this Agreement;

(g) Grant any raise or salary increase to any employee, officer, or
director except anticipated raises as set forth in Schedule 8.2(g) to this
Agreement;

(h) Enter into any contracts, contract renewals or extensions except
such contracts which will not obligate FFBS to pay more than $5,000.00;

(i) Purchase, lease or sell any assets outside the normal course of
business unless such anticipated transactions are set forth in Schedule
8.2(i) to this Agreement;

(j) Purchase or sell investment securities;

(k) Issue any additional capital stock or declare any stock dividend
or stock split;

(l) Establish any employee benefits in addition to those in effect on
the date of this Agreement, as disclosed heretofore to NBC; and

(m) Grant additional options to purchase shares of FFBS Common Stock
other than as may be issued pursuant to the Stock Option Agreement between
NBC and FFBS of even date herewith.

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8.3 Current Information. During the period from the date of this Agreement
to the Effective Time, FFBS will cause designated representatives to confer on
a regular and frequent basis with representatives of NBC to report the general
status of its ongoing operations. FFBS will promptly notify NBC of any material
change in the normal course of its business or in the operation of its
properties and of any governmental complaints, investigations or hearings or
any indication that such may be contemplated, or the institution or threat of
litigation, and will keep NBC fully informed with respect to all such events.

8.4 Access to Properties and Records; Confidentiality. (a) For purposes of
allowing NBC and its counsel to prepare regulatory submissions, FFBS shall
permit NBC reasonable access to its property, and shall disclose and make
available to NBC all documents relating to the assets, stock ownership,
operations, obligations and liabilities of FFBS and its subsidiary including
all books of accounts, ledgers, tax records, minutes, corporate documents,
contracts, regulatory filings, litigation files, compensation plans and any
other materials pertaining to matters in which NBC may have a reasonable
interest in light of the proposed Parent Merger. No disclosure will be required
which would violate any law, legal ruling or attorney-client privilege, nor
will disclosure be required of any materials prepared by Trident Financial
Corporation and/or Trident Securities for FFBS in connection with negotiations
which were consummated by this Agreement, nor with respect to such materials or
communications prepared for or received from third parties concerning a
possible merger acquisition or affiliation with FFBS, nor with respect to
references in FFBS minutes to such possible transactions;

(b) NBC shall afford to FFBS and its authorized agents and representatives
reasonable access, upon reasonable notice to an executive officer of NBC and
during normal business hours, to all contracts, documents and information of or
relating to the assets, liabilities, business, operations, personnel and other
aspects of relevance, in the reasonable judgment of NBC, to the transactions
contemplated hereby. NBC shall cause its personnel, attorneys and accountants
to provide assistance to FFBS in FFBS's investigation of matters relating to
the Parent Merger, including allowing FFBS and its authorized agents and
representatives access to its operating sites and facilities; provided,
however, that FFBS's investigation shall be conducted in a manner which does
not unreasonably interfere with NBC's normal operations, customers, and
employee relations; provided further, however, that, in providing the foregoing
access, NBC shall not be required to jeopardize its attorney-client privilege
(NBC hereby agreeing to use all reasonable efforts to make appropriate
alternative disclosure arrangements in such circumstances).

(c) All information furnished by a party to another pursuant hereto shall
be treated as the sole property of the party furnishing such information until
consummation of the proposed Parent Merger and, if such Parent Merger shall not
occur, the party receiving such information shall return all materials relating
to such information, and shall use its best efforts to keep all such
information confidential, and shall not directly or indirectly use such
information for any competitive or commercial purpose. The obligation to keep
such information confidential shall continue if this Parent Merger is abandoned
and shall apply only to such information not available to the party from any
other source; nor shall it apply to information which must be disclosed in
accordance with a valid court order.

8.5 Interim Financial Statements. When interim quarterly financial
statements are completed by each party, each party will deliver to the other a
copy of such interim financial statements.

8.6 Approval of Shareholders. The respective Boards of Directors of FFBS
and NBC will take all steps necessary to duly call, give notice of, convene and
hold a special meeting of its shareholders as soon as practicable for the
purpose of approving and adopting this Agreement and the transaction
contemplated hereby and for such other purposes as may be needed. The Boards of
Directors of FFBS and NBC will recommend approval of all such actions to their
respective shareholders, cooperate fully in securing regulatory approval and
consummating the Parent Merger and use their best efforts to obtain all
necessary approvals of this transaction; provided, that the Board of Directors
of FFBS may withdraw or refuse to make such recommendation only if the Board of
Directors shall determine in good faith that such recommendation should not be
made in view of its fiduciary duty to FFBS's shareholders following (i) the
consideration of advice of legal counsel that making such recommendation or the
failure to withdraw or modify such recommendation would, more likely than not,

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constitute a breach of the fiduciary duties of such Board to shareholders of
FFBS, or (ii) the withdrawal by FFBS's financial advisor of its opinion
referred to in Section 9.3(e) or the delivery to the FFBS Board of Directors of
advice from its financial advisor that the Merger Consideration is not fair or
is inadequate to the shareholders of FFBS from a financial point of view.

8.7 Cooperation. These parties shall cooperate in joint efforts to obtain
unconditional regulatory approval of the Parent Merger, and the obligation of
each party to consummate the Parent Merger is contingent upon the receipt of
all regulatory and U. S. Department of Justice approvals without conditions
which are unacceptable to either party. FFBS shall use its best efforts to
cause its officers, directors and employees to support the actions and
objectives contemplated by this Agreement.

8.8 Unusual Events. Until the Effective Time, FFBS and NBC shall
supplement or amend all relevant schedules with respect to any matter arising
or discovered, which if existing or known at this date would have been required
to be disclosed; provided, however, that subsequent disclosure shall not
necessarily be deemed to have cured any misrepresentation or breach by
concealment thereof.

8.9 FFBS Employees. All FFBS employees will continue to serve at the
discretion of NBC. The FFBS employees set forth in Schedule 8.9 will be offered
a "pay to stay" benefit of 25% of their current annual base salary to continue
to serve from the date of this Agreement through the actual consolidation of
operating and accounting systems of Thrift and Bank, to be paid in a lump sum
immediately following successful consolidation of the two systems or December
31, 1999, whichever occurs first. NBC will pay severance benefits of one week's
base pay for each year or fraction thereof of service for a minimum of four
weeks pay and up to a total of eight weeks pay for each non-officer employee
and up to twelve weeks pay for each officer in the event of termination within
twelve months of closing, except terminations for cause. NBC recognizes FFBS
Employment Agreements dated April 14, 1994, with officers listed on Schedule
8.9 with three year terms which have been renewed annually and now extend
through April 2001. These will not be further extended and will terminate in
April 2001, unless a covered officer waives rights, claims or payments due
under such agreements or enters into a replacement agreement with NBC, whether
prior to or subsequent to the execution of this Agreement. Until such time each
such covered officer will be entitled to the protection of the Section 5
provisions thereof, and any change in control payments required by such
agreements, as set forth in Schedule 8.9, will be made by NBC as required.

8.10 Employee Benefit Plans. The FFBS ESOP will be terminated on or before
closing, in which case the loan will be paid in full and the shares will be
fully allocated among FFBS participants. FFBS plans other than the ESOP will be
discontinued and the participants enrolled in NBC plans as permitted by ERISA.
The FFBS employees will be offered dental and health insurance now available to
NBC employees on the same terms and conditions as then available to NBC
employees. Accrued vacation (not exceeding three weeks)and sick leave (not
exceeding 90 days) for FFBS employees will be transferred and honored by NBC,
but any such accrued vacation time must be used entirely by the end of the
calendar year in which the merger is consummated. On or before the Effective
Time, FFBS and E. Frank Griffin, III shall enter into a supplemental executive
retirement plan providing benefits as set forth in Schedule 8.10. The present
FFBS pension plan shall be terminated, and such plan benefits may be amended
provided that the amendments shall not increase any plan funding requirements
in excess of plan assets, net of termination expenses, determined on a
termination basis, and FFBS employees shall participate in the NBC pension plan
to the same extent as similarly situated NBC employees. Upon entry into the NBC
plans, FFBS employees shall be credited with the number of years of service as
credited under the FFBS plans for vesting, and such service shall also apply
for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any pre-existing condition or limitations
as permitted by the respective NBC plans or providers. Funding for FFBS
employees will commence upon entry into NBC plans with no funding for prior
participation.

8.11 Directors. Two present directors of FFBS shall become directors of
NBC in accordance with Section 4.1 of this Agreement.

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8.12 Registration Statement and Regulatory Filings. (a) NBC shall file
with the SEC as soon as reasonably practical after the execution of this
Agreement, a Registration Statement complying with all SEC and other regulatory
requirements and will amend and supplement the same as may be required or
appropriate. The Proxy Statement/Prospectus (to be delivered to shareholders of
each party) in connection therewith must be reasonably acceptable to FFBS and
will be used in connection with the meetings of the shareholders of FFBS and
NBC. NBC will also prepare and file all documents appropriate to comply with
securities laws of the State of Mississippi and the State of Delaware and other
applicable laws and regulations. In advance of the filing of such Registration
Statement and other documents, NBC will furnish copies thereof to FFBS and its
counsel and subsequent to the filings shall promptly advise them of any
material communication received from SEC or any state securities commission
relating thereto. No information contained in any such documents shall be false
or misleading with respect to any material fact or shall omit to state any
material fact. FFBS will provide to NBC any information with respect to FFBS
requested by NBC to be included in the Registration Statement.

(b) NBC will use its best reasonable efforts to obtain the regulatory
approvals described herein and FFBS will cooperate fully in the process of
obtaining such approvals. The obligation to take all reasonable actions in this
regard shall not be construed as including an obligation to accept any terms or
conditions to a consent or approval that are not acceptable either to NBC or to
FFBS, provided that such unacceptable conditions would cause material adverse
economic results or would require NBC to change its present business practices
or that of any subsidiary. NBC shall provide FFBS with copies of all
applications filed and all responses when received.

8.13 Registration of Stock Options. NBC will register the issuance of all
shares of NBC Common Stock to be issued upon exercise of the exchange stock
options, and will take such action as may be necessary to cause such shares of
NBC Common Stock not to be "restricted securities" within the meaning of Rule
144 under the Securities Act of 1993, as amended.

8.14 Pooling-of-Interests and Tax-Free Treatment. Each of the parties
hereto shall use its reasonable best efforts (i) to cause the Parent Merger to
qualify for pooling-of-interests accounting treatment and (ii) to cause the
Parent Merger to constitute a "reorganization" under Section 368(a) of the
Code.

8.15 Agreements of Affiliates. FFBS shall use its best efforts to cause
each person who may be at the Effective Time or was on the date hereof an
"affiliate" of FFBS for purposes of Rule 145 under the Securities Act or of
determining the qualification of the Parent Merger as a pooling of interests
for accounting and financial reporting purposes, to execute and deliver to NBC,
no less than 45 days prior to the date of the meeting of FFBS shareholders to
approve the Parent Merger, the written undertakings in the form attached hereto
as Exhibit 1.5(f). On or prior to such delivery date, FFBS shall provide NBC
with a letter specifying, to the best of its knowledge, all of the persons who
may be deemed to be "affiliates" of FFBS under the preceding sentence.

ARTICLE IX

Closing Conditions

9.1 Conditions to Each Party's Obligations Under this Agreement. The
respective obligations of each party under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:

(a) This Agreement and the transaction contemplated hereby shall have
been approved and adopted by the affirmative vote of the holders of the
outstanding shares of FFBS and NBC at the meetings of the shareholders of
FFBS and NBC pursuant to Section 8.6 hereof, in accordance with the
respective Certificate of Incorporation of FFBS, the Articles of
Incorporation of NBC, and the respective By-Laws of each and the laws of
the states of Delaware and Mississippi.

(b) Neither party hereto shall be subject to any order, decree, or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Parent Merger.

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(c) NBC and FFBS shall have received an opinion of special tax
advisor, T. E. Lott & Company, to the effect that the transaction will be
treated, and will qualify, as a tax-free reorganization within the meaning
of Section 368 of the Code; that NBC and FFBS will each be a "party to the
reorganization" within the meaning of Section 368(b); that no gain or loss
will be recognized by FFBS on account of the conversion of its stock into
NBC stock; and that the combination of such stock delivered to FFBS
shareholders and cash paid to satisfy requirements described herein shall
be in accordance with the requirements necessary for this transaction to be
treated and qualify as a Pooling of Interests Transaction for accounting
purposes applying GAAP.

(d) The SEC shall have declared the Registration Statement effective;
and on the Closing Date and at the Effective time, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been initiated or then
threatened by the SEC.

(e) All permits, consents, waivers, clearances, approvals, and
authorizations of all third parties and federal and state governmental
bodies shall have been obtained in a form which is unconditional or which
provides no conditions which would be unacceptable to either party, and all
statutory waiting periods shall have expired.

9.2 Conditions Precedent to the Obligations of NBC. The obligations of NBC
under this Agreement shall be further subject to the satisfaction, at or prior
to the Effective Time of the following conditions, any one or more of which may
be waived by NBC:

(a) Each of the obligations of FFBS required to be performed by it at
or prior to the closing pursuant to the terms of this Agreement shall have
been duly performed and complied with and the representations and
warranties of FFBS contained in this Agreement shall be true and correct in
all material respects as of the Effective Time as though made at the
Effective Time (except as otherwise contemplated herein) AND NBC shall have
received a Certificate to that effect signed by the President and Secretary
of FFBS.

(b) All action required to be taken by, or on the part of, FFBS and
its shareholders to authorize the execution, delivery, and performance of
this Agreement by FFBS and the consummation of the transaction contemplated
hereby shall have been duly and validly taken by the Board of Directors of
FFBS and its shareholders and NBC shall have received certified copies of
the resolutions evidencing such authorization.

(c) NBC shall have received an opinion from counsel to FFBS, dated as
of the Effective Time, and in form an substance satisfactory to counsel for
NBC. In rendering such opinion, counsel may rely as to matters of fact,
upon such FFBS officers or governmental officials as counsel deems
appropriate.

(d) The net worth of FFBS at the time of closing shall be no less than
$22,500,000 as determined under GAAP excluding the effect of any actions
taken pursuant to subparagraph (e) below.

(e) The loan and lease loss reserves of FFBS at the Effective Time
shall be an amount not less than one per cent (1%) of gross loans
outstanding immediately prior to the Effective Time after any charge-offs
taken by FFBS in the ordinary course of its business after the date of this
Agreement and prior to the Effective Time and after any additional charge
offs directed by NBC as a result of additional loan portfolio due diligence
done by it after this date, or $1,035,000 whichever is greater. FFBS will
not adjust its loan loss reserves until after receipt of all regulatory and
stockholder approvals, and just prior to the Effective Time.

(f) The officers listed on Schedule 9.2(f) shall have entered into
Employment Agreements with NBC in the form set forth in Schedule 9.2(f)
hereto, and none of such officers shall have terminated employment with
FFBS prior to the Effective Time unless such termination is because of
death or disability.

FFBS shall furnish NBC such certificates sufficient to evidence
fulfillment of the conditions set forth in this Section 9.2 as NBC may
reasonably request.

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9.3 Conditions Precedent to the Obligations of FFBS under this Agreement.
The obligations, conditions, covenants and agreements of FFBS under this
Agreement shall be further subject to the satisfactions, at or prior to the
Effective Time, of the following conditions, any one or more of which may be
waived by FFBS:

(a) Each of the obligations of NBC required to be performed by it at
or prior to the closing, pursuant to the terms of this Agreement shall have
been duly performed and complied with and the representations and
warranties of NBC contained in this Agreement shall be true and correct in
all material respects as of the date of the Agreement and as of the
Effective Time as though made at the Effective Time (except as otherwise
contemplated herein) and FFBS shall have received a certificate to that
effect signed by the Chief Executive Officer and Chief Financial Officer of
NBC.

(b) All action required to be taken by, or on behalf of NBC to
authorize the execution, delivery, and performance of this Agreement of NBC
and consummation of the transaction contemplated hereby shall have been
duly and validly taken by the Board of Directors and shareholders of NBC
and FFBS and NBC and FFBS shall have received certified copies of the
resolutions evidencing such authorization. In order to complete such a due
diligence review of NBC, FFBS shall have access to all appropriate NBC
books, records and other documents.

(c) All permits, consents, waivers, clearances, approvals and
authorizations of all third parties and governmental bodies shall have been
obtained by NBC which are necessary in connection with the consummation of
the Parent Merger and the transaction contemplated hereby and which by the
terms herein are to be obtained by NBC.

(d) FFBS shall have completed a due diligence review of NBC, and its
subsidiaries, to its sole satisfaction, and prior to the closing, nothing
shall have come to the attention of FFBS with respect to the operations,
assets, financial conditions or business of NBC, or any of its
subsidiaries, which has or may have a material adverse effect on the
condition of NBC as determined by FFBS.

(e) FFBS has received from a financial advisor a fairness opinion in a
form and substance satisfactory to it to the effect that the Parent Merger
is fair from a financial point of view to the shareholders of FFBS, and
such fairness opinion shall be satisfactorily updated at the date of the
mailing of the prospectus/proxy statement and again at closing.

(f) FFBS shall have received an opinion from counsel to NBC, dated as
of the Effective Time, and in form and substance satisfactory to counsel
for FFBS. In rendering such opinion, counsel may rely as to matters of
fact, upon such NBC officers or governmental officials as counsel deems
appropriate.

ARTICLE X

Closing

10.1 Time and Place. Subject to the provisions of Articles VIII and X
hereof, the closing of the transaction contemplated hereby shall take place at
the offices of NBC. 301 East Main Street, Starkville, Mississippi 39759, at
9:00 a.m. local time, on the last business day of the month in which all
conditions precedent to closing are met or at such other date as NBC and FFBS
may agree.

10.2 Deliveries at Closing. Subject to the provisions of Article VIII and
X hereof, at the closing there shall be delivered to NBC and FFBS the opinions,
certificates, and other documents required under the provisions of this
agreement.

ARTICLE XI

Termination, Amendment and Waiver

11.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, under the following conditions:

(a) The mutual consent of NBC and FFBS;

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(b) By either party upon denial of shareholder or regulatory approval
in a form which provides conditions which would be unacceptable to either
party as provided for herein;

(c) By NBC in the event that prior to the Effective Time the proposed
Merger is determined by applicable regulatory authority to be disqualified
as a pooling of interest in accordance with GAAP;

(d) By FFBS in the event that prior to the Effective Time it is
determined that the Parent Merger will not qualify as a tax-free
reorganization and exchange under Section 368(a) of the Internal Revenue
Code as determined by special tax counsel;

(e) By either party, if at the time of such determination there shall
be a material adverse change in the financial condition of the other party
from that set forth in the financial statements for the period ending June
30, 1998;

(f) By either party if the Parent Merger shall not have been completed
by September 30, 1999, unless that date is extended by mutual consent of
both parties;

(g) By the non-breaching party in the event of a material breach in
the provisions of this Agreement, and said breach has not been cured within
30 days of written notice by the non-breaching party to the other party
setting out in specific detail the nature of the claimed material breach.

(h) By FFBS if NBC fails to increase the Exchange Rate as required by
Section 1.4 hereof.

11.2 Effect of Termination. In the event of termination of this Agreement
as provided herein, this Agreement shall forthwith become void and except as
provided in Section 12.3 hereof there shall be no further liability on the part
of NBC or FFBS, or their respective officers or directors, other than liability
for any default or breach hereunder occurring prior to such termination, to the
extent permitted by applicable law.

11.3 Amendments and Waivers. Subject to applicable law, at any time prior
to the consummation of the Parent Merger, whether before or after approval by
the respective shareholders of the parties, by action taken by the respective
Boards of Directors, the parties may (a) amend this Agreement, (b) extend the
time of the performance of any of the obligations or other acts of the other
parties hereto, (c) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto, or
(d) waive compliance with any of the agreements and conditions contained in
Articles VIII and IX. Provided, however, after approval hereto by the
respective shareholders, there may not be, without further approval of such
shareholders, any amendment, extension or waiver which changes the amount or
form of the consideration to be delivered to FFBS and its shareholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.

ARTICLE XII

Miscellaneous

12.1 Expenses. NBC shall pay all reasonable expenses subsequent to the
Effective Time of the Parent Merger, including reasonable counsel fees for
present counsel to FFBS in consultation with NBC, in connection with this
Agreement and the transactions hereunder, to the extent NBC deems such services
appropriate. All expenses, including, but not limited to, investment advisor
fees, brokers' fee, commission, finder's fees, and legal fees incurred in
connection with the merger and up to the Effective Time shall be paid by the
party incurring such costs; provided, however, NBC shall pay the cost of
printing and mailing the Prospectus/Proxy Statement to FFBS shareholders.

12.2 Indemnification. After the Effective Time, NBC shall indemnify,
defend and hold harmless the directors, officers, employees, and agents of FFBS
and its subsidiary (each a "FFBS indemnified party") against all liabilities,
including reasonable attorney fees, expenses, judgments, fines and amounts paid
in settlement, arising out of actions or omissions occurring at or prior to the
Effective Time, including the Parent Merger and transactions contemplated by
this Agreement, to the full extent permitted by Delaware law and as would have
been permitted by the Certificate of Incorporation and By-Laws of FFBS prior to
the Parent

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Merger. FFBS and the indemnified parties may retain counsel reasonably
satisfactory to such party after consultation with NBC; provided, however,
that:

(1) NBC shall have the right to assume the defense thereof and upon
such assumption, NBC shall not be liable to any FFBS indemnified party for
any legal expenses subsequently incurred except that if NBC elects not to
assume such defense or if counsel for the FFBS indemnified party reasonably
advises that there are issues which raise conflicts of interest between NBC
and the FFBS indemnified party, such party may retain separate counsel
after consultation with NBC, in which case NBC shall bear reasonable
expenses thereof.

(2) An FFBS indemnified party shall consult and obtain the approval of
NBC prior to affecting any settlement, which said approval shall not be
unreasonably withheld; and

(3) NBC shall have no obligation hereunder to any indemnified party
when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that indemnification of
such FFBS indemnified party in the manner contemplated hereby is prohibited
by applicable law.

Prior to the Effective Time, NBC and FFBS shall cooperate in obtaining
extensions of directors' and officers' liability coverage maintained by FFBS
for a period of five (5) years from the Effective Time, or at its option, NBC
may substitute similar coverage with another insurance carrier therefor. NBC
shall pay premiums for such insurance coverage provided for herein.

12.3 Breach/Specific Performance. (a) In the event either party breaches
any of the terms and conditions of this Agreement, and the other party is
required to employ legal counsel, or institute legal action, in order to
enforce its rights under the terms and conditions of this agreement, the
successful party shall be entitled to recover from the breaching party all
expenses, attorney fees, court costs and other expenses incidental to said
action.

(b) In the event either party fails or refuses to carry out the terms and
conditions of this Agreement in any respect, or to complete the transactions
contemplated hereunder, the other party shall have the right, in addition to
the recovery of all damages, incidental or consequential, as a result of said
breach or failure, to obtain an order of specific performance of this Agreement
in any court of competent jurisdiction.

12.4 Disclosures. Upon the execution of this Agreement, the Parent Merger
shall be announced by these parties in a mutually agreed upon manner, with such
other disclosures to the shareholders and public as may be required or agreed
upon.

12.5 Parties in Interest. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that neither this Agreement nor any rights or
obligations hereunder may be assigned by either party without prior written
consent of the other.

12.6 Survival of Representations. None of the representations, warranties,
covenants and agreements contained in this Agreement shall survive the
Effective Time or termination of this Agreement, except for those contained
herein which by their terms apply in whole or in part after the Effective Time
or termination of this Agreement. Representations, warranties covenants and
agreements contained herein with respect to exchange procedures, rights of
former FFBS shareholders, Dissenting Shareholders, subsequent actions required
after the Effective Time, confidentiality, expenses, indemnification, exchange
of stock options, officer positions, board seats, and employee benefits shall
all survive the Effective Time and termination of this Agreement.

12.7 Waiver. No delay or omission on the part of any party hereto in
exercising any right hereunder shall operate as a waiver of such right or any
other right under this Agreement.

12.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall comprise one and the same instrument.

A-27
<PAGE>

12.9 Notices. All notices and other communications between the parties
shall be in writing and shall be deemed to have been duly given if delivered in
person or by certified or registered mail, or by prepaid overnight delivery
service:

To NBC:Lewis F. Mallory, Jr.
National Bank of Commerce
P. O. Box 1187
Starkville, MS 39760

To FFBS:E. Frank Griffin III
First Federal Bank for Savings
1121 Main Street
Columbus, MS 39701

or such other address as either party may designate by notice to the other.

12.10 Section Headings. The section headings are for reference only and
shall not limit or control the mean of any provision of this agreement.

12.11 Governing Law. This Agreement shall be governed by the laws of the
State of Mississippi and where necessary with respect to the incorporation of
FFBS in Delaware by the corporate laws of Delaware to the extent that federal
law does not apply.

12.12 Entire Agreement. This Agreement, with any schedules and exhibits
hereto, constitutes the entire agreement between these parties and is executed
on behalf of and at the direction of the Boards of Directors of the respective
parties. It is intended that this agreement constitute a binding agreement
between the parties notwithstanding that there may be other matters unresolved
and subject to negotiation at the time of its execution and the fact that its
final consummation is conditioned and contingent upon the approvals set forth
herein. Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto, and their respective successors,
any rights, remedies, obligations or liabilities, except for rights of
directors, officers and employees of FFBS and Thrift to enforce rights set
forth herein applicable to them.

IN WITNESS WHEREOF, the Boards of Directors of NBC Capital Corporation and
FFBS Bancorp, respectively, have each executed this Agreement and directed the
authorized signature of the undersigned duly authorized officers as of this 3rd
day of February, 1999.

NBC CAPITAL CORPORATION

BY: /s/ LEWIS F. MALLORY
-------------------------------------
LEWIS F. MALLORY, Chairman of the
Board
and Chief Executive Officer

ATTEST:

/s/
- -------------------------------
SECRETARY

FFBS BANCORP, INC.

BY: /s/ E. FRANK GRIFFIN, III
-------------------------------------
E. FRANK GRIFFIN, III, President and
Chief Executive Officer

ATTEST:

/s/
- -------------------------------
SECRETARY

A-28
<PAGE>

PLAN OF REORGANIZATION AND MERGER
By and Between
NATIONAL BANK OF COMMERCE
AND
FIRST FEDERAL BANK FOR SAVINGS

THIS PLAN OF REORGANIZATION AND MERGER (the "Bank Merger Agreement"),
dated as of the 3rd day of February, 1999, by and between NATIONAL BANK OF
COMMERCE, a wholly owned national banking subsidiary of NBC CAPITAL
CORPORATION, and FIRST FEDERAL BANK FOR SAVINGS, a wholly owned federally
chartered savings bank subsidiary of FFBS BANCORP, INC., organized under the
laws of the United States.

RECITALS

WHEREAS, on the 3rd day of February, 1999, NBC Capital Corporation, a
Mississippi corporation ("NBC"), and FFBS Bancorp, Inc., a Delaware corporation
("FFBS"), executed an Agreement and Plan of Merger (the "Merger Agreement"),
through which FFBS will be merged with and into NBC (the "Parent Merger"); and

WHEREAS, First Federal Bank for Savings ("Thrift") is a wholly owned
subsidiary of FFBS, and National Bank of Commerce ("Bank") is a wholly owned
subsidiary of NBC; and

WHEREAS, the respective Boards of Directors deem the merger of Thrift with
and into Bank as provided herein (the "Bank Merger") advisable and in the best
interest of their respective corporations and shareholders; and

WHEREAS, the respective Boards of Directors of Bank and Thrift, by
resolutions duly adopted, have approved this Merger Agreement and the
contemplated Bank Merger; and

WHEREAS, Bank and Thrift respectively desire to have certain
representations made with respect to the Bank Merger.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree that Thrift shall be merged with and into
Bank, and that the terms and conditions of the Bank Merger and the method of
carrying the Bank Merger into effect and certain other provisions relating
thereto shall be as hereinafter set forth.

ARTICLE I

1.1 The Bank Merger. In accordance with the provisions of this Bank Merger
Agreement and the laws of the United States, and after the Effective Time of
the Parent Merger (as defined in the Parent Merger Agreement) (the "Effective
Time"), Thrift shall be merged with and into Bank under the charter of Bank.
The Bank Merger shall be consummated (i) upon notice to the Office of Thrift
Supervision of the Department of the Treasury of The United States ("OTS")
pursuant to 12 C.F.R. 563.22(b); (ii) at the time specified in the Certificate
Approving Bank Merger issued by the Office of the Comptroller of the Currency
("OCC"); and (iii) shall occur after the Parent Merger pursuant to 12 U.S.C.
Section 215c, 1815(d)(3) and 1828(c).

1.2 Surviving Bank. Bank shall continue to exist under the laws of the
United States as a wholly owned subsidiary of NBC. At the Effective Time, the
separate existence and organization of Thrift shall cease. Bank will continue
to operate as a national banking association titled National Bank of Commerce
with its principal office located at 301 East Main Street, Starkville,
Mississippi, 39759, and at the legally established branches of Bank and Thrift.

1.3 Capital Structure. Upon consummation of the Bank Merger, each share of
common stock of Thrift shall be canceled, and no cash, securities or other
property shall be issued in the Bank Merger in respect thereof.

A-29
<PAGE>

As of the time of the Bank Merger, the amount of capital stock of Bank
shall be $1,200,000 divided into 1,200,000 shares of common stock, each of
$1.00 par value, and shall have a surplus determined as of June 30, 1998 of
$33,000,000 and undivided profits, including capital reserves of $27,809,000,
adjusted, however, for normal earnings and expenses between June 30, 1998 and
the date of the Bank Merger.

1.4 Effect of the Bank Merger; Tax Consequences. All assets of Thrift as
they exist at the Effective Time, shall pass to and vest in the Bank without
any conveyance or other transfer; and Bank shall be responsible for all of the
liabilities of Bank and Thrift of every kind and description. For federal
income tax purposes, the Bank Merger shall constitute a tax-free reorganization
pursuant to Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Bank Merger shall constitute a "Plan of Reorganization" for
purposes of the Rules and Regulations governing Code Section 368.

1.5 Directors and Officers. After the Bank Merger, the present officers of
Bank together with such present officers of Thrift who may be duly appointed as
additional officers shall serve as the officers of the Bank, and shall serve in
such capacities until the next annual meeting or until such time as their
successors have been elected and have been qualified. The directors of Bank,
immediately prior to the Effective Time shall be, from and after the Effective
Time, the directors of the Surviving Corporation, and two presently serving
directors of FFBS shall be appointed and become directors of Bank.

1.6 Articles of Association; Bylaws. After the Bank Merger, the Articles
of Association of Bank shall be the Articles of Association of the Bank. The
Bylaws of Bank, as in effect immediately prior to the Bank Merger, shall be the
Bylaws of the Surviving Bank until amended as therein provided.

1.7 Dividends and Conduct of Business. To the extent permitted by the
Merger Agreement, Bank and Thrift may each continue to declare and pay
dividends to their respective shareholders and may dispose of any assets in any
manner in the normal course of business and for adequate value.

1.8 Liquidation Account. The liquidation account established by the Thrift
pursuant to the plan of conversion adopted in connection with its conversion
from mutual to stock form shall, to the extent required by applicable law,
continue to be maintained by the Bank after the Effective Time for the benefit
of those persons and entities who were savings account holders of the Thrift on
the eligibility and supplemental eligibility record dates for such conversion
and who continue from time to time to have rights therein. If required by the
rules and regulations of the OTS, the Bank shall amend its charter to
specifically provide for the continuation of the liquidation account previously
established by Thrift.

ARTICLE II

Representations and Warranties of Bank and Thrift

2.1 Corporate Organization. Bank and Thrift are validly existing and in
good standing under the laws of the United States and have the power and
authority to own or lease all of their properties and assets and to carry on
their business as it is now being conducted.

2.2 Authority; No Violation. Bank and Thrift have the full corporate power
and authority to execute and deliver this Merger Agreement and to consummate
the transactions contemplated thereby. The execution and delivery of this Bank
Merger Agreement and the consummation of the transactions contemplated will
have been duly and validly approved by the Boards of Directors of the Bank and
Thrift and by the Boards of Directors of NBC and FFBS as the sole shareholders
of Bank and Thrift.

2.3 Consents and Approvals. The parties hereto will cooperate in the
preparation and filing of all documents necessary to obtain the consent and
approval of the OCC and such other filings, approvals or consents as may be
required by applicable federal and state laws or regulations.

2.4 Parent Merger. The Bank Merger and all provisions of this Bank Merger
Agreement are contingent upon appropriate shareholder and regulatory approval
of the Merger Agreement, and all necessary consents or permits from all
applicable regulatory authorities shall have been obtained prior to
consummation

A-30
<PAGE>

of the Bank Merger. This Bank Merger and the transactions contemplated hereby
shall have been approved by the OCC and all other applicable federal and state
authorities in a form acceptable to Bank and Thrift.

ARTICLE III

Closing

3.1 Closing. Subject to the provisions contained herein and all
appropriate provisions of the Merger Agreement, the Closing of the Bank Merger
shall take place following the closing of the Parent Merger.

3.2 Termination. This Agreement shall automatically terminate upon the
termination of the Merger Agreement or on September 30, 1999, unless extended
in writing and upon the same terms and conditions as provided for in the Merger
Agreement.

3.3 Conditions. The consummation of the transactions contemplated herein
is expressly conditioned upon (a) the ratification and confirmation of the
contemplated transactions by the affirmative vote of the shareholders, (b) the
procurement of consents and approvals, including but not limited to the
approval of the OCC, and the satisfaction of all other requirements prescribed
by applicable law that are necessary for the consummation of the transactions
contemplated herein, and (c) no litigation or proceeding initiated by any
governmental authority shall be pending before any court or agency which
presents a claim to restrain, prohibit, or invalidate the transactions
contemplated herein and no order of any court or agency shall restrain or
prohibit the transactions contemplated herein.

ARTICLE IV

4.1 Incorporation by Reference. The Merger Agreement is hereby
incorporated by reference, and the parties hereto acknowledge that all
provisions of that document applicable to representations, warranties,
covenants, conditions, conduct of business, disclosures, termination and
closing contained in said Merger Agreement shall be binding upon and inure to
the benefit of the parties hereto.

IN WITNESS WHEREOF, the Boards of Directors of Bank and Thrift have
approved this Merger Agreement and directed the authorized signatures and seal
of each respective corporation to be set hereunto by its Chairman of the Board
and attested to by a duly authorized officer, and the Boards of Directors of
Bank and Thrift have caused this Merger Agreement to be executed by their duly
authorized officers, all as of the day and year first above written.

FIRST FEDERAL BANK FOR SAVINGS
(S E A L)

BY: /s/ E. FRANK GRIFFIN, III
-------------------------------------
ATTEST:

- -------------------------------
SECRETARY

NATIONAL BANK OF COMMERCE
(S E A L)

BY: /s/ LEWIS F. MALLORY, JR.
-------------------------------------
ATTEST:

- -------------------------------
SECRETARY

A-31
<PAGE>

APPENDIX B
<PAGE>

FAIRNESS OPINION

ACQUISITION OF
FFBS BANCORP, INC.
BY
NBC CAPITAL CORPORATION

Report Dated
March 26, 1999

B-1
<PAGE>

March 26, 1999

Board of Directors
NBC Capital Corporation
Starkville, Mississippi

RE: Fairness Opinion Relative to Proposed Acquisition of FFBS Bancorp,
Inc., Columbus, Mississippi, by NBC Capital Corporation, Starkville,
Mississippi

Directors:

The Board of Directors of NBC Capital Corporation ("NBC") retained Southard
Financial, in its capacity as a financial valuation and consulting firm, to
render its opinion of the fairness to NBC shareholders, from a financial
viewpoint, of the acquisition of FFBS Bancorp, Inc. ("FFBS") by NBC. Southard
Financial and its principals have no past, present, or future contemplated
financial, equity, or other interest in either FFBS or NBC. This opinion is
issued based upon financial data as of December 31, 1998.

Approach to Assignment

The approach to this assignment was to consider the following factors:

A review of the financial performance and position of FFBS and the
value of its common stock;

A review of the financial performance and position of NBC and the value
of its common stock;

A review of recent bank and thrift merger transactions in the United
States, Mississippi, and nearby states;

A review of the current and historical market prices of bank and thrift
holding companies in the United States, Mississippi, and nearby states;

A review of the investment characteristics of the common stock of FFBS
and NBC;

An evaluation of the impact of the Merger on the expected return to the
current shareholders of NBC; and,

An evaluation of other factors as was considered necessary to render
this opinion.

B-2
<PAGE>

Board of Directors
NBC Capital Corproation
Page 2
DUE DILIGENCE REVIEW PROCESS

In performing this assignment, Southard Financial reviewed the documents
specifically noted in Exhibit 1 pertaining to FFBS and in Exhibit 2 pertaining
to NBC.

Review of FFBS Bancorp, Inc.

Southard Financial visited with the management of FFBS. Discussions included
questions regarding the current and historical financial position and
performance of FFBS, its outlook for the future, and other pertinent factors.
Details pertaining to FFBS are contained in Southard Financial's file.

Review of NBC Capital Corporation

Southard Financial visited with the management of NBC. Discussions included
questions regarding the current and historical financial position and
performance of NBC, its outlook for the future, and other pertinent factors.
Details pertaining to NBC are contained in Southard Financial's file.

Acquisition Documentation

Southard Financial reviewed the proposed acquisition terms with the
management of NBC and reviewed the Agreement and Plan of Merger dated February
3, 1999 (the "Agreement"). The analysis in this opinion reflects the proposed
terms as outlined in Exhibit 3, Terms of the Agreement.

Southard Financial did not independently verify the information reviewed,
but relied on such information as being complete and accurate in all material
respects. Southard Financial did not make any independent evaluation of the
assets of NBC or FFBS but reviewed data supplied by the management of both
institutions.

MAJOR CONSIDERATIONS

Numerous factors were considered in the overall review of the proposed
Merger. The review process included considerations regarding FFBS, NBC, and the
proposed Merger. The major considerations are:

FFBS Bancorp, Inc.

Historical earnings;
Historical dividend payments;
Outlook for future performance, earnings, and dividends;
Economic conditions and outlook in FFBS's market;
The competitive environment in FFBS's market;
Comparisons with peer banks;
Potential risks in the loan and securities portfolios;
Recent minority stock transactions in FFBS's common stock; and,
Other such factors as were deemed appropriate in rendering this opinion.

NBC Capital Corporation

Historical earnings;
Historical dividend payments;

B-3
<PAGE>

Board of Directors
NBC Capital Corproation
Page 3
Outlook for future performance, earnings, and dividends;
Economic conditions and outlook in NBC's market;
The competitive environment in NBC's market;
Comparisons with peer banks;
Potential risks in the loan and securities portfolios;
Recent minority stock transactions in NBC's common stock; and,
Other such factors as were deemed appropriate in rendering this opinion.

Common Factors

Historical and current bank and thrift merger pricing in the United States,
Mississippi, and nearby states; and,

Current market prices for minority blocks of common stocks of regional bank
holding companies in the United States, Mississippi, and nearby states.

The Proposed Transaction

The terms of the Agreement as described herein;
The specific pricing of the acquisition;
The method of financing expected to be employed by NBC to fund the proposed
acquisition;
The amount of debt and goodwill on the balance sheet of NBC and the impact of
the acquisition of FFBS on NBC's capital and liquidity positions;
The historical dividend payments of NBC and the likely impact of the proposed
acquisition on the dividends per share to NBC shareholders;
Pro-forma combined income statements for NBC adjusted for the acquisition and
the expected impact on the earnings per share to NBC shareholders; and,
Other such factors as deemed appropriate.

OVERVIEW OF FAIRNESS ANALYSIS

In connection with rendering its opinion, Southard Financial performed a
variety of financial analyses, which are summarized below. Southard Financial
believes that its analyses must be considered as a whole and that considering
only selected factors could create an incomplete view of the analyses and the
process underlying the opinion. The preparation of a fairness opinion is a
complex process involving subjective judgments and is not susceptible to
partial analyses. In its analyses, Southard Financial made numerous
assumptions, many of which are beyond the control of FFBS and NBC. Any
estimates contained in the analyses prepared by Southard Financial are not
necessarily indicative of future results or values, which may vary
significantly from such estimates. Estimates of value of companies do not
purport to be appraisals or necessarily reflect the prices at which companies
or their securities may actually be sold. None of the analyses performed by
Southard Financial was assigned a greater significance than any other.

Fairness of the Acquisition Price

Analysis of Market Transactions

Based upon the Agreement terms and the current market price of NBC common
stock, NBC will pay approximately $48.0 million for FFBS, or 203.8% of FFBS
book value at December 31, 1998, 30.5 times

B-4
<PAGE>

Board of Directors
NBC Capital Corproation
Page 4
reported 1998 FFBS earnings, and 30.0% of FFBS assets at December 31, 1998.
Based upon the review conducted by Southard Financial, the pricing for the FFBS
acquisition is within the range of multiples seen in recent bank and thrift
acquisitions (see Exhibit 4).

Discounted Cash Flow Analysis

Southard Financial prepared a pro-forma discounted cash flow analysis to
determine a range of present values of FFBS. This range was determined by
adding (i) the present value of the estimated future dividend stream that FFBS
could generate over the ten year period from 2000 through 2009 and (ii) the
present value of the "terminal value" of FFBS common stock at the end of 2009.

To determine a projected dividend stream, Southard Financial used the
general level of FFBS earnings over the June 30, 1997-99 period and assumed
annual earnings growth in the range of 6%-10% over the 2000-2009 period.
Further, Southard Financial used management-s estimates of the anticipated
economies from the Merger over the 2000-2004 period and assumed 6%-10% growth
thereafter (the same range used for ongoing earnings).

FFBS is over capitalized relative to NBC and relative to regulatory levels.
For purposes of the discounted cash flow analysis, Southard Financial assumed
that FFBS capital would immediately be distributed down to the 8.0% level. The
projected earnings stream was then adjusted to reflect foregone earnings on the
distributed capital at 3%-5% rates. Dividends were then paid in the analysis
such that capital was maintained at 8.0%.

The "terminal value" of FFBS Common Stock at the end of the ten-year period
was determined by applying price-to-earnings multiples (18x to 25x) to
projected net income for FFBS in 2009 and by applying price-to-book value
multiples (2.00x to 2.50x) to projected book value for FFBS at year-end 2009.
The dividend stream and terminal value were discounted to the present using
discount rates in the range of 10%-13%, which Southard Financial viewed as the
appropriate discount rate range for a company with FFBS's risk characteristics
(estimated weighted average cost of capital). The implied value of FFBS to NBC
supported the proposed price.

Impact of Acquisition on NBC's Performance and Financial Position

Southard Financial reviewed the impact of the proposed acquisition on per
share earnings, dividends, and book value of NBC (see Exhibit 5). The analysis
indicated that the acquisition will have a dilutive impact on earnings and
dividends per share in 1999. However, the acquisition should be accretive to
earnings in 2000 and beyond. Further, the adverse impact on earnings in 1999 is
at least partially due to Merger related expenses. Finally, the Merger will be
anti-dilutive to book value per share.

Summary of Analyses

The summary set forth does not purport to be a complete description of the
analyses performed by Southard Financial. The analyses performed by Southard
Financial are not necessarily indicative of actual values, which may differ
significantly from those suggested by such analyses. Southard Financial did not
appraise any individual assets or liabilities of FFBS or NBC.

Throughout the due diligence process, Southard Financial relied upon all
information provided by FFBS, NBC, and third party sources without independent
verification.

Based upon the analyses discussed above and other analyses performed by
Southard Financial, the impact of the Merger on the shareholders of NBC is
expected to be favorable.

B-5
<PAGE>

Board of Directors
NBC Capital Corproation
Page 5

FAIRNESS OPINION

Based upon the analyses of the foregoing and such matters as were considered
relevant, it is the opinion of Southard Financial that the terms of the offer
for the acquisition of FFBS Bancorp, Inc. by NBC Capital Corporation pursuant
to the Agreement and Plan of Merger are fair, from a financial viewpoint, to
the shareholders of NBC Capital Corporation.

Thank you for this opportunity to be of service to the shareholders of NBC
Capital Corporation.

Sincerely yours,
SOUTHARD FINANCIAL
/s/ Southard Financial

Attachments:

Exhibit 1: FFBS Bancorp, Inc., Document Review List
Exhibit 2: NBC Capital Corporation, Document Review List
Exhibit 3: Terms of the Agreement and Plan of Merger
Exhibit 4: Comparison of the Acquisition Pricing to Public Market Transactions
Exhibit 5: Overview of the Expected Impact on NBC Shareholders
Exhibit 6: Qualifications of Southard Financial

B-6
<PAGE>

EXHIBIT 1

FFBS BANCORP, INC.

DOCUMENT REVIEW LIST

1. SEC Form 10-KSB of FFBS Bancorp, Inc. for the fiscal year ended June 30,
1998.

Annual Reports of FFBS Bancorp, Inc. for the fiscal years ended June 30, 1994-
98, including audited consolidated financial statements.

SEC Form 10-QSB of FFBS Bancorp, Inc. for the quarters ended September 30, 1998
and December 31, 1998.

Uniform Thrift Performance Report of First Federal Bank for Savings for the
period ended September 30, 1998.

Additional pertinent information deemed necessary to render this opinion.

EXHIBIT 2

NBC CAPITAL CORPORATION

DOCUMENT REVIEW LIST

1. SEC Form 10-K of NBC Capital Corporation for the years ended December 31,
1996-97.

Annual Reports of NBC Capital Corporation for the years ended December 31,
1995-98, including audited consolidated financial statements.

SEC Form 10-Q of NBC Capital Corporation for the quarters ended June 30 and
September 30, 1998.

Bank Holding Company Performance Report of NBC Capital Corporation for the
period ended September 30, 1998.

Additional pertinent information deemed necessary to render this opinion.

B-7
<PAGE>

EXHIBIT 3

TERMS OF THE AGREEMENT

AND PLAN OF MERGER

The discussion below is based upon a review of the Agreement and Plan of
Merger dated February 3, 1999, by and between NBC Capital Corporation and FFBS
Bancorp, Inc. (the "Agreement").

Under the Agreement, all of FFBS's issued and outstanding common stock
(1,575,635 shares) will be exchanged for shares of NBC common stock. Further,
all options to purchase 65,966 shares of FFBS stock will be converted into
options to purchase NBC common stock. The conversion rate for both outstanding
shares and option shares will be 0.7702 shares of NBC stock for each share of
FFBS stock (the "Exchange Ratio"). However, if the average closing price of NBC
stock for the 20-trading day period preceding the Effective Time is below
$33.50 per share, then the Exchange Ratio will be calculated by dividing the
NBC Average Price into $25.802.

The parties intend for the Merger to qualify as a "reorganization" under the
Internal Revenue Code. Thus, the exchange of FFBS stock for NBC stock is
expected to qualify as a tax-free exchange for Federal income tax purposes.
Further, the parties intend for the Merger to be treated as a "pooling of
interest" transaction for accounting purposes, applying generally accepted
accounting principles (GAAP).

No fractional shares will be issued by NBC. Instead, each former shareholder
of FFBS will receive an amount in cash determined by multiplying the conversion
rate by the fraction of a share of NBC that such shareholder would otherwise be
entitled to receive.

The Agreement may be terminated:

upon the mutual consent of each institution;

by either party if the acquisition is not consummated on or before
September 30, 1999 or such later date as the parties may agree upon;

by NBC upon failure of the Merger to qualify to be accounted for as a
pooling of interest;

by FFBS upon failure of the Merger to qualify as a tax-free
reorganization;

by either party if there is a material adverse change in the financial
condition of the other party from June 30, 1998;

by either party in the event of a material breach of the Agreement by
the other party, if such breach is not cured within 30 days of written
notice of the breach;

by FFBS if NBC does not increase the Exchange Ratio if called for by
the Agreement; and,

by either party upon the final disapproval by shareholders or by any
regulatory authority whose approval is acquired.

B-8
<PAGE>

EXHIBIT 4

COMPARISON OF THE ACQUISITION PRICING

TO PUBLIC MARKET TRANSACTIONS

Southard Financial compared the pricing terms of the Agreement to the
pricing of recent acquisitions of banks, thrifts, and bank/thrift holding
companies across the United States, and to the minority interest prices of
publicly traded banks, thrifts, and bank/thrift holding companies in
Mississippi and the Southeast.

Pricing data for recent acquisitions of banks, thrifts, and bank/thrift
holding companies (nationwide and in Mississippi) is summarized as follows.

<TABLE>
<CAPTION>
Acquiree
Number Price Price Price ----------------
of Earnings Book Assets Eq/As ROAA ROAE
1998 Thrifts/1/ Thrifts (x) (x) (%) (%) (%) (%)
- --------------- ------- -------- ----- ------ ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
All Transactions................. 54 28.4 2.022 23.01 12.06 0.96 8.93
Mississippi Thrifts.............. 1 33.1 2.252 26.38 11.70 0.88 7.52
Assets of $101-300MM............. 11 28.3 2.082 20.36 9.72 0.76 8.00
Equity of 12.0-16.0%............. 10 22.9 1.901 26.73 13.58 1.46 10.81
ROAA of 1.00-1.50%............... 10 25.6 1.969 29.63 17.31 1.21 9.21
<CAPTION>
Acquiree
Number Price Price Price ----------------
of Earnings Book Assets Eq/As ROAA ROAE
1998 Thrifts/1/ Banks (x) (x) (%) (%) (%) (%)
- --------------- ------- -------- ----- ------ ----- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C>
All Transactions................. 190 24.2 2.733 26.48 10.34 1.24 12.89
Mississippi Banks................ 2 32.1 2.981 24.83 8.09 0.99 12.11
Assets of $101-300MM............. 76 24.5 2.955 27.96 9.62 1.28 13.80
Equity of over 12.0%............. 38 25.9 2.023 31.83 16.52 1.32 8.95
ROAA of 1.00-1.50%............... 91 23.2 2.863 27.01 10.30 1.23 13.15
FFBS/2/.......................... 30.5x 2.038 30.01 14.72 1.02 6.78
</TABLE>
- --------
/1/Through December 31; includes transactions for institutions with assets
under $1 billion for which sufficient data was available
/2/Based upon the Merger price of $29.27 per share (0.7702 NBC shares at the
most recent price of $38.00 per share), FFBS estimated 1999 earnings of $096
per share, FFBS book value of $14.36 per share at December 31, 1998, and FFBS
assets of $97.54 per share at December 31, 1998.

Based upon the assumptions noted in the table above, the acquisition of FFBS
by NBC will take place at 30.5 times FFBS earnings, 203.8% of FFBS book value
at December 31, 1998, and 30.0% of FFBS assets at December 31, 1998. The
price/earnings ratio, price/book value ratio, and price/assets ratio are all
within the range of recent market multiples.

B-9
<PAGE>

EXHIBIT 4

COMPARISON OF THE ACQUISITION PRICING

TO PUBLIC MARKET TRANSACTIONS

(continued)

In determining the attractiveness of owning NBC, it is important to examine
NBC's recent pricing in comparison with recent pricing multiples for publicly
traded banks and bank holding companies. This pricing data is presented below
as of December 31, 1998, the most recent quarter-end for the banking industry.

<TABLE>
<CAPTION>
Price/ Price/ Current Current
Publicly Traded Banks/1/ Earnings Book Val ROAE Yield
- ------------------------ -------- -------- ------- -------
<S> <C> <C> <C> <C>
All Banks (206)............................. 16.55x 214.7% 12.04% 2.05%
Banks Under $100MM Mkt Cap (72)............. 15.58 182.0 11.00 1.71
South Central (37).......................... 17.18 212.5 11.53 2.07
NBC Capital Corporation ($38.00)/2/......... 25.33 243.7 9.62 1.82
Pro Forma NBC Capital Corporation
($38.00)/3/................................ 18.72 217.4 11.61 1.87
</TABLE>
- --------
/1/ As of December 31, 1998; subject to certain screens performed by Southard
Financial

/2/ Based upon 1998 NBC earnings of $1.50 per share, book value of $15.59 per
share, and dividends of $0.69 per share

/3/ Based upon pro forma projected 1999 NBC earnings of $2.03 per share, pro
forma projected NBC year-end 1999 book value of $17.48 per share, and pro
forma projected 1999 NBC dividends of $0.71 per share

Based upon an analysis of the data provided above, NBC's price/earnings
multiple, price/book value multiple, ROAE, and dividend yield are all within
the range of publicly traded banks.

B-10
<PAGE>

EXHIBIT 5

OVERVIEW OF THE EXPECTED IMPACT

ON NBC SHAREHOLDERS

The following is a summary of the various analyses undertaken in conjunction
with this fairness opinion. This summary is not intended to represent all
analyses performed by Southard Financial, but is presented here for the
convenience of NBC and its shareholders.

According to the Agreement, NBC will issue a total of 1,213,554 shares of
its stock to former FFBS shareholders and will convert the options to purchase
FFBS stock into options to purchase 50,807 shares of NBC stock. The analysis
presented below is based in part upon restated (pro forma) financial statements
of NBC taking effect of the Merger with FFBS in a pooling of interests. The pro
forma analysis, which was prepared for NBC by its CPA firm, assumes the price
of NBC stock at $36.50 per share (recent average) and assumes that 95% of the
purchase will be in NBC stock and 5% in cash (estimated for dissenters and
fractional shares).

Earnings: NBC reported earnings of $1.50 per share in 1998, while pro forma
combined earnings in 1998 would have been $1.47 per share had the Merger been
consummated prior to year-end 1997. This represents a 2.0% dilution in NBC's
earnings per share.

Despite the expected dilution in earnings per share in 1999 the pro forma
analysis suggests no dilution in 2000 and indicates that the shareholders of
NBC should see accretion in their earnings per share in subsequent years.
Further, return on average assets (ROAA) is expected to increase in each year
after the Merger. Return on average equity (ROAE) is expected to decline due to
the retention of earnings and the resulting growth in equity. Finally, return
on investment (ROI) is expected to exceed 8% after the fifth year from the
acquisition, which is the standard benchmark set by NBC management.

Three factors must be noted when reviewing the impact on earnings. First,
NBC will benefit from a higher market share in the Columbus area and from the
continued growth of NBC's presence in the "Golden Triangle" area of East
Central Mississippi. Second, NBC expects to achieve substantial economies
(savings) in the Columbus market through the elimination of duplicated
facilities and administrative expenses. Third, the analysis above does not
consider any fee enhancement at FFBS through its affiliation with NBC.

Dividends: The pro forma analysis indicates increasing dividends per share
in years subsequent to the Merger. The shareholders of NBC can reasonably
expect that the Merger will not adversely impact the ability of NBC to pay cash
dividends.

Book Value: Reported book value of NBC was $15.59 per share at December 31,
1998. Giving effect to the Merger, pro forma book value of NBC would have been
$16.11 per share at year-end 1998, or 3.3% above book value without the Merger.
The pro forma results indicate that the Merger will be anti-dilutive to book
value.

Fundamental Analysis: Southard Financial reviewed the financial
characteristics of FFBS and NBC with respect to profitability, capital ratios,
liquidity, asset quality, and other factors. Southard Financial compared FFBS
and NBC to a universe of publicly traded banks and bank holding companies and
to peer groups prepared by the Federal Financial Institutions Examination
Council (FFIEC).

The Merger will result in the shareholders of NBC owning stock in a company
with a wider array of operations, a more diversified loan portfolio, and a
commanding share of the Columbus market. Typically, diversification results in
a lower risk investment. Finally, in Southard Financial's opinion, the growth
outlook for NBC is improved through the acquisition of FFBS.

B-11
<PAGE>

EXHIBIT 6

QUALIFICATIONS OF SOUTHARD FINANCIAL

BACKGROUND . Founded in 1987.
. Principals have combined business valuation experience of
nearly thirty years.
. Clients served throughout the United States, with
concentration in the Southeast.
. Broad industry experience.
. Services provided for public and closely-held companies.
. Annual valuation services provided for over 100 ESOPs,
making Southard Financial one of the largest ESOP appraisers
in the United States.

PROFESSIONAL CREDENTIALS
. David A. Harris is a senior member of the American Society
of Appraisers (ASA).
. Both principals of Southard Financial are Chartered
Financial Analysts (CFA).
. Both principals are former officers of the West Tennessee
Chapter of the ASA.

EDUCATIONAL CREDENTIALS
. Douglas K. Southard holds Doctor of Business Administration
and Master of Business Administration degrees from Indiana
University, with concentrations in finance, economics, and
quantitative analysis.
. David A. Harris holds the Master of Business Administration
degree from Memphis State University, with a concentration
in finance and business investments.

BUSINESS ETHICS
. Southard Financial and its principals adhere to the ethical
standards of the Institute of Chartered Financial Analysts
and the American Society of Appraisers.
. All reports conform to the Uniform Standards of Professional
Appraisal Practice.
. Southard Financial is committed to providing unbiased
opinions to be used for decision making.
. Fees for valuation services are not contingent upon the
conclusion of value or the completion of a transaction.

B-12
<PAGE>

APPENDIX C
<PAGE>

[TRIDENT FINANCIAL CORPORATION LETTERHEAD]

March 30, 1999

Board of Directors
FFBS BanCorp, Inc.
1121 Main Street
Columbus, Mississippi

Members of the Board:

You have requested our opinion as to the fairness, from a financial point of
view, to the holders of shares of common shares (the "FFBS Common Stock"), of
FFBS BanCorp, Inc. ("FFBS") of the consideration to be received by such holders
in a merger (the "Merger") of FFBS with NBC Capital Corporation, ("NBC")
pursuant to the Agreement and Plan of Merger (the "Agreement") dated as of
February 3, 1999. Unless otherwise noted, all terms used herein shall have the
same meaning as defined in the Agreement.

As more specifically set forth in the Agreement, and subject to a number of
conditions and procedures described in the Agreement; in the Merger, each share
of FFBS Common Stock issued and outstanding at the Effective Time shall be
converted into .7702 of a share of NBC Common Stock (the "Exchange Ratio");
provided however, that in the event the average per share closing price of NBC
Common Stock ("NBC Average Price"), as quoted by the Over-the-Counter Bulletin
Board, for the 20 trading day period ending one day prior to the Effective Time
is below $33.50, then the Exchange Ratio will be adjusted upward such that the
Exchange Ratio shall equal the quotient of $28.80 and the NBC Average Price,
rounded four decimal places. Each option for the purchase of FFBS Common Stock
will be converted into an option for the purchase of NBC Common Stock. The
number of stock options and the exercise price for those options will be
adjusted in accordance with the exchange ratio.

Trident Financial Corporation ("Trident") is a financial consulting and
investment banking firm experienced in the valuation of business enterprises
with considerable experience in the valuation of thrift institutions. In the
ordinary course of our business we may actively trade the securities of FFBS
and NBC for our own account and for the accounts of our customers and,
accordingly, may at any one time hold a long or short position in such
securities. Trident is not affiliated with FFBS or NBC.

In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) the Agreement; (ii) certain publicly
available information concerning FFBS, including the audited financial
statements for each of the years in the four year period ended June 30, 1998
and the unaudited statements for the six months ended December 31,1998; (iii)
certain publicly available information concerning NBC, including the audited
financial statements for each of the years in the four year period ended
December 31, 1998 ; (iv) certain other internal information, primarily
financial in nature, concerning the business and operations of FFBS and NBC
furnished to us by FFBS and NBC for purposes of our analysis; (v) certain
publicly available information with respect to other companies that we believe
to be comparable to FFBS and NBC; and (vi) certain publicly available
information concerning the nature and terms of other transactions that we
consider relevant. We have also spoken with certain officers and employees of
FFBS and NBC, to discuss the foregoing as well as other matters we believe
relevant to our inquiry.

In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and have not attempted
independently to verify any such information. We did not perform a review of
the loan portfolios of FFBS or NBC, and we did not assess the adequacy of FFBS'
or NBC's loan loss reserves. We have not conducted a physical inspection of the
properties or facilities of FFBS or NBC, nor have we made or obtained any
independent evaluations or appraisals of any of such properties or facilities.

C-1
<PAGE>

Board of Directors
FFBS BanCorp, Inc.
March 30, 1999
Page 2

In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors as we have deemed
appropriate under the circumstances including, among others, the following: (i)
the historical and current financial condition and results of operations of
FFBS and NBC, including interest income, interest expense, net interest income,
net interest margin, interest sensitivity, non-interest income and expense,
earnings, dividends, book value, return on assets, return on equity,
capitalization, the amount and type of non-performing assets and the reserve
for loan losses; (ii) the business prospects of FFBS and NBC; (iii) the economy
of FFBS' and NBC's market areas, and (iv) the nature and terms of certain other
merger transactions that we believe to be relevant. We have also taken into
account our assessment of general economic, market, financial and regulatory
conditions and trends, as well as our knowledge of the financial services
industry, our experience in connection with similar transactions, and our
knowledge of securities valuation generally. Our opinion necessarily is based
upon conditions as they exist and can be evaluated on the date hereof. Our
opinion is, in any event, limited to the fairness, from a financial point of
view, of the consideration to be received by FFBS in the Merger and does not
address FFBS underlying business decision to effect the Merger.

Based upon and subject to the foregoing, we are of the opinion that the
consideration to be received by FFBS in the Merger is fair, as of the date
hereof, from a financial point of view, to the shareholders of FFBS.

This opinion is being delivered to the Board of Directors of FFBS for its
use and is not to be reproduced, disseminated or delivered to any third party
without the express written consent of Trident, except as required by law. We
consent to the reproduction of this opinion in the special meeting proxy
materials to be mailed to the holders of FFBS Common Stock. Our opinion is as
of the date set forth above, and events or circumstances occurring after this
date may adversely impact the validity of the basis of our opinion and/or such
opinion.

Very truly yours,

TRIDENT FINANCIAL CORPORATION
/s/ Trident Financial Corporation

C-2
<PAGE>

APPENDIX D
<PAGE>

CERTAIN PROVISIONS OF DELAWARE LAW RELATING TO
STOCKHOLDERS' RIGHTS OF APPRAISAL

Merger or Consolidation

(S) 262. Appraisal Rights.

(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to the provisions of
subsection (d) of this Section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with the provisions of subsection (d) of this
Section and who has neither voted in favor of the merger or consolidation nor
consented thereto in writing pursuant to (S)228 of this Chapter shall be
entitled to an appraisal by the Court of Chancery of the fair value of his
shares of stock under the circumstances described in subsections (b) and (c) of
this Section. As used in this Section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a non
stock corporation; the words "stock" and "share" mean and include what is
ordinarily meant by those words and also membership or membership interest of a
member of a non stock corporation; and the words "depository receipt" mean a
receipt or other instrument issued by a depository representing an interest in
one or more shares, or fractions thereof, solely of stock of a corporation,
which stock is deposited with the depository.

(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Sections 251 (other than a merger effected pursuant to
subsection (g) of (S)251), 252, 254, 257, 258, 263 or 264 of this Chapter;

(1) provided, however, that no appraisal rights under this Section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this Chapter.

(2) Notwithstanding the provisions of subsection (b)(1) of this
Section, appraisal rights under this Section shall be available for the
shares of any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and 264 of
this Chapter to accept for such stock anything except (i) shares of stock
of the corporation surviving or resulting from such merger or consolidation
or depository receipts in respect thereof; (ii) shares of stock of any
other corporation or depository receipts in respect thereof, which shares
of stock or depository receipts at the effective date of the merger or
consolidation will be either listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders; (iii) cash in lieu of fractional shares
or fractional depository receipts described in the foregoing clauses (i)
and (ii); or (iv) any combination of the shares of stock, depository
receipts and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing clauses (i), (ii) and (iii) of this
subsection.

(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this Chapter is not owned
by the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this Section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains

D-1
<PAGE>

such a provision, the procedures of this Section, including those set forth in
subsections (d) and (e), shall apply as nearly as is practicable.

(d) Appraisal rights shall be perfected as follows:

(1) If a proposed merger or consolidation for which appraisal rights
are provided under this Section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) and (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
Section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with the
provisions of this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation
has become effective; or

(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this Section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within twenty days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given; provided that,
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.

(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with the provisions of subsections (a) and (d) hereof and who

D-2
<PAGE>

is otherwise entitled to appraisal rights, may file a petition in the Court of
Chancery demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days after
the effective date of the merger or consolidation, any stockholder shall have
the right to withdraw his demand for appraisal and to accept the terms offered
upon the merger or consolidation. Within 120 days after the effective date of
the merger or consolidation, any stockholder who has complied with the
requirements of subsections (a) and (d) hereof, upon written request, shall be
entitled to receive from the corporation surviving the merger or resulting from
the consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after his written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.

(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by one or more
publications at least one week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.

(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with the provisions of this Section and who have
become entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.

(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair
rate of interest, the Court may consider all relevant factors, including the
rate of interest which the surviving or resulting corporation would have had to
pay to borrow money during the pendency of the proceeding. Upon application by
the surviving or resulting corporation or by any stockholder entitled to
participate in the appraisal proceeding, the Court may, in its discretion,
permit discovery or other pretrial proceedings and may proceed to trial upon
the appraisal prior to the final determination of the stockholder entitled to
an appraisal. Any stockholder whose name appears on the list filed by the
surviving or resulting corporation pursuant to subsection (f) of this Section
and who has submitted his certificates of stock to the Register in Chancery, if
such is required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this Section.

(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and in the case of holders
of shares represented by certificates upon the surrender to the corporation of
the certificates representing such stock. The Court's decree may be enforced as
other

D-3
<PAGE>

decrees in the Court of Chancery may be enforced, whether such surviving or
resulting corporation be a corporation of this State or of any other state.

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, to be charged pro rata against the value of all
of the shares entitled to an appraisal.

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this Section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this Section, or if such stockholder shall
deliver to the surviving or resulting corporation a written withdrawal of his
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this Section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.

(l) The shares of the surviving or resulting corporation into which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (8 Del. C. (S)262
(1983); 56 Del. Laws ch. 50 (1967); 56 Del. Laws ch. 186, (S)24 (1968); 57 Del.
Laws ch. 148, (S)(S)27-29 (1969); 59 Del. Laws ch. 106, (S)12 (1973); 60 Del.
Laws ch. 371, (S)(S)3-12 (1976); 63 Del. Laws ch. 25, (S)14 (1981); 63 Del.
Laws ch. 152, (S)(S)1,2 (1981); 64 Del. Laws ch. 112, (S)(S)46-54 (1983); 66
Del. Laws ch. 136, (S)(S)30-32 (1987); 66 Del. Laws ch. 352, (S)9 (1988); 67
Del. Laws ch. 376, (S)(S)19-20 (1990); 68 Del. Laws ch. 337, (S)(S)3-4 (1992);
69 Del. Laws ch. 61, (S)10 (1993); 69 Del. Laws ch. 262, (S)(S)1-10 (1994); 70
Del. Laws ch. 79, (S)16 (1995); 70 Del. Laws ch. 299, (S)(S)2-3 (1996); 70 Del.
Laws ch. 349, (S)22 (1996).

COMMENT TO SECTION 262

(S)262.1 Limited nature of the appraisal remedy.
(S)262.2 The scope of the appraisal remedy.

D-4
<PAGE>

APPENDIX E
<PAGE>

CERTAIN PROVISIONS OF MISSISSIPPI LAW RELATING TO
THE RIGHTS OF DISSENTING STOCKHOLDERS

Section 79-4-13.01. Definitions.

In this article:

(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.

(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 79-4-13.02 and who exercises that right when and
in the manner required by Sections 79-4-13.20 through 79-4-13.28.

(3) "Fair value," with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action unless exclusion would be inequitable.

(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all the circumstances.

(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation.

(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.

(7) "Shareholder" means the record shareholder or the beneficial
shareholder.

Section 79-4-13.02. Right to dissent.

(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:

(1) Consummation of a plan of merger to which the corporation is a
party (i) if shareholder approval is required for the merger by Section 79-
4-11.03 or the articles of incorporation and the shareholder is entitled to
vote on the merger, or (ii) if the corporation is a subsidiary that is
merged with its parent under Section 79-4-11.04;

(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;

(3) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the stockholders within one (1) year after the date of sale;

(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:

(i) Alters or abolishes a preferential right of the shares;

(ii) Creates, alters or abolishes a right in respect of
redemption, including a provision respecting a sinking fund for the
redemption or repurchase, of the shares;

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(iii) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;

(iv) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or

(v) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fraction share so created is to be acquired
for cash under Section 79-4-6.04; or

(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws or a resolution of the board
of directors provides that voting or nonvoting stockholders are entitled to
dissent and obtain payment for their shares.

(b) othing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result of an
amendment of the articles of incorporation exclusively for the purpose of
either (i) making such corporation subject to application of the Mississippi
Control Share Act, or (ii) making such act inapplicable to a control share
acquisition of such corporation.

(c) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.

Section 79-4-13.03. Dissent by nominees and beneficial owners.

(a) A record shareholder may assert dissenters' rights as to fewer than
all the shares registered in his name only if he dissents with respect to all
shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.

(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:

(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and

(2) He does so with respect to all shares of which he is the
beneficial shareholder or over which he has power to direct the vote.

Section 79-4-13.20. Notice of dissenters' rights.

(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a stockholders's meeting, the meeting
notice must state that stockholders are or may be entitled to assert
dissenters' rights under this article and be accompanied by a copy of this
article.

(b) If corporate action creating dissenters' rights under Section 79-4-
13.02 is taken without a vote of stockholders, the corporation shall notify in
writing all stockholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in Section 79-4-13.22.

Section 79-4-13.21. Notice of intent to demand payment.

(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is submitted to a vote at a stockholders' meeting, a shareholder who
wishes to assert dissenters' rights (1) must deliver to the corporation before
the vote is taken written notice of his intent to demand payment for his shares
the proposed action is effectuated, and (2) must not vote his shares in favor
of the proposed action.

(b) A shareholder who does not satisfy the requirement of subsection (a)
is not entitled to payment for his shares under this article.

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Section 79-4-13.22 Dissenters' notice.

(a) If proposed corporate action creating dissenters' rights under Section
79-4-13.02 is authorized at a stockholders' meeting, the corporation shall
deliver a written dissenters' notice to all stockholders who satisfied the
requirements of Section 79-4-13.21.

(b) The dissenters' notice must be sent no later than ten (10) days after
the corporate action was taken, and must:

(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;

(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;

(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to stockholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;

(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than thirty (30) nor more than sixty
(60) days after the date the subsection (a) notice is delivered; and

(5) Be accompanied by a copy of this article.

Section 79-4-13.23. Duty to demand payment.

(a) A shareholder sent a dissenters' notice described in Section 79-4-
13.22 must demand payment, certify whether he acquired beneficial ownership of
the shares before the date required to be set forth in the dissenters' notice
pursuant to Section 79-4-13.22(b)(3), and deposit his certificates in
accordance with the terms of the notice.

(b) The shareholder who demands payment and deposits his shares under
subsection (a) retains all other rights of a shareholder until these rights are
cancelled or modified by the taking of the proposed corporate action.

(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.

Section 79-4-13.24. Share restrictions.

(a) The corporation may restrict the transfer of uncertificated shares
from the date the demand for their payment is received until the proposed
corporate action is taken or the restrictions released under Section 79-4-
13.26.

(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate
action.

Section 79-4-13.25. Payment.

(a) Except as provided in Section 79-4-13.27, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the corporation
shall pay each dissenter who complied with Section 79-4-13.23 the amount the
corporation estimates to be the fair value of his shares, plus accrued
interest.

(b) The payment must be accompanied by:

(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in stockholders'
equity for that year, and the latest available interim financial
statements, if any;

(2) A statement of the corporation's estimate of the fair value of the
shares;

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(3) An explanation of how the interest was calculated;

(4) A statement of the dissenters' right to demand payment under
Section 79-4-13.28; and

(5) A copy of this article.

Section 79-4-13.26. Failure to take action.

(a) If the corporation does not take the proposed action within sixty (60)
days after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.

(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Section 79-4-13.22 and repeat the payment demand
procedure.

Section 79-4-13.27. After-acquired shares.

(a) A corporation may elect to withhold payment required by Section 79-4-
13.25 from a dissenter unless he was the beneficial owner of the shares before
the date set forth in the dissenters' notice as the date of the first
announcement to news media or to stockholders of the terms of the proposed
corporate action.

(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated and
a statement of the dissenter's right to demand payment under Section 79-4-
13.28.

Section 79-4-13.28. Procedure if shareholder dissatisfied with payment or
offer.

(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate (less any payment under Section 79-4-13.25), or reject the
corporation's offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:

(1) The dissenter believes that the amount paid under Section 79-4-
13.25 or offered under Section 79-4-13.27 is less than the fair value of
his shares or that the interest due is incorrectly calculated;

(2) The corporation fails to make payment under Section 79-4-13.25
within sixty (60) days after the date set for demanding payment; or

(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty (60) days after the date set
for demanding payment.

(b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection
(a) within thirty (30) days after the corporation made or offered payment for
his shares.

Section 79-4-13.30. Court action.

(a) If a demand for payment under Section 79-4-13.28 remains unsettled,
the corporation shall commence a proceeding within sixty (60) days after
receiving the payment demand and petition the court to determine the fair value
of the shares and accrued interest. If the corporation does not commence the
proceeding within the 60-day period, it shall pay each dissenter whose demand
remains unsettled the amount demanded.

(b) The corporation shall commence the proceeding in the chancery court of
the county where a corporation's principal office (or, if none in this state,
its registered office) is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in

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this state where the registered office of the domestic corporation merged with
or whose shares were acquired by the foreign corporation was located.

(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.

(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.

(e) Each dissenter made a party to the proceeding is entitled to judgment
(1) for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the corporation, or (2) for
the fair value, plus accrued interest, of his after-acquired shares for which
the corporation elected to withhold payment under Section 79-4-13.27.

Section 79-4-13.31. Court costs and counsel fees.

(a) The court in an appraisal proceeding commenced under Section 79-4-
13.30 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess
costs against all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment under Section 79-4-13.28.

(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:

(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Sections 79-4-13.20 through 79-4-13.28; or

(2) Against either the corporation of a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith
with respect to the rights provided by this article.

(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.

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APPENDIX F
<PAGE>

STOCK OPTION AGREEMENT

This STOCK OPTION AGREEMENT, dated as of the 3rd day of February, 1999
(the "Agreement"), is by and between FFBS BANCORP, INC., a Delaware corporation
("Issuer"), and NBC CAPITAL CORPORATION, a Mississippi corporation ("Grantee").

WHEREAS, Issuer and Grantee have entered into an Agreement and Plan of
Merger, (the "Merger Agreement"), which agreement has been executed by the
parties hereto immediately prior to this Stock Option Agreement (the
"Agreement"); and

WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, and intending to be legally bound hereby, Issuer and
Grantee agree as follows:

1. Defined Terms. Capitalized terms which are used but not defined herein
shall have the meanings ascribed to such terms in the Merger Agreement.

2. Grant of Option. Subject to the terms and conditions set forth herein,
Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 313,551 shares (the "Option Shares") of Common Stock of Issuer,
par value $.01 per share ("Issuer Common Stock"), at a purchase price per
Option Share (the "Purchase Price") equal to $27.00; provided, however, that in
no event shall the number of shares of Issuer Common Stock for which this
Option is exercisable exceed 19.9% of the Issuer's issued and outstanding
shares of Common Stock. The number of shares of Issuer Common Stock that may be
received upon the exercise of the Option and the Purchase Price are subject to
adjustment as herein set forth.

3. Exercise of Option.

(a) Provided that (i) Grantee shall not be in material breach of the
agreements or covenants contained in this Agreement or the Merger Agreement, or
(ii) no preliminary or permanent injunction or other order against the delivery
of the Option Shares issued by any court of competent jurisdiction in the
United States shall be in effect, Grantee may exercise the Option, in whole or
in part, at any time and from time to time, but only following the occurrence
of a Purchase Event (as defined below); provided that the Option shall
terminate and be of no further force or effect upon the earlier to occur of (A)
the Effective Time of the Merger, (B) the termination of the Merger Agreement
in accordance with the terms thereof before the occurrence of a Purchase Event
or a Preliminary Purchase Event (other than a termination of the Merger
Agreement by Grantee pursuant to Section 11.1(g) of the Merger Agreement (an
"Issuer Default Termination"); (C) the close of business on the 365th day after
the occurrence of a termination of the Merger Agreement by an Issuer Default
Termination; and (D) the close of business on the 365th day after termination
of the Merger Agreement following the occurrence of a Purchase Event or a
Preliminary Purchase Event (hereinafter sometimes referred to as the
"Termination Date"); provided that any purchase of Option Shares upon the
exercise of the Option shall be subject to compliance with applicable law,
including, without limitation, the Bank Holding Company Act of 1956 (the
"BHCA"), and any required consent of any regulatory authority. The rights set
forth in Section 8 of this Agreement shall terminate when the right to exercise
the Option terminates (other than as a result of a complete exercise of the
Option) as set forth herein.

(b) As used herein, a "Purchase Event" means any of the following events:

(i) without Grantee's prior written consent, Issuer shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an agreement
with any person (other than Grantee or any subsidiary of Grantee) to effect
an Acquisition Transaction (as defined below). As used herein, the term
"Acquisition Transaction" shall mean (A) a

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merger, consolidation or similar transaction involving Issuer or any of its
subsidiaries (other than transactions solely between Issuer's
subsidiaries), (B) the disposition, by sale, lease, exchange or otherwise,
of assets of Issuer or any of its subsidiaries representing in either case
30% or more of the consolidated assets of Issuer and its subsidiaries or
(C) the issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 30% or more of the voting power of Issuer or any of its
significant subsidiaries; or

(ii) any person (other than Grantee or any subsidiary of Grantee)
shall have acquired beneficial ownership (as such term is defined in Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) of, or the right to acquire beneficial ownership of,
or any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, 30% or more (or, if such person or group is the beneficial
owner of 30% of more on the date hereof, such person or group acquires an
additional 5% or more) of the voting power of Issuer or any of its
significant subsidiaries.

(i) any person (other than Grantee or any subsidiary of Grantee) shall
have commenced (as such term is defined in Rule 14d-2 under the Exchange
Act) or shall have filed a registration statement under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to a tender offer
or exchange offer to purchase any shares of Issuer Common Stock such that,
upon consummation of such offer, such person would own or control 20% or
more of the then outstanding shares of Issuer Common Stock (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or

(ii) the holders of Issuer Common Stock shall not have approved the
Merger Agreement at the meeting of such shareholders held for the purpose
of voting on the Merger Agreement, such meeting shall not have been held or
shall have been canceled prior to termination of the Merger Agreement or
Issuer's Board of Directors shall have withdrawn or modified in a manner
adverse to Grantee the recommendation of Issuer's Board of Directors with
respect to the Merger Agreement, in each case, after it shall have been
publicly announced that any person (other than Grantee or any subsidiary of
Grantee) shall have (A) made, or disclosed an intention to make, a proposal
to engage in an Acquisition Transaction, (B) commenced a Tender Offer or
filed a registration statement under the Securities Act with respect to an
Exchange Offer or (C) filed an application (or given a notice), whether in
draft or final form, under banking or corporate law or any other applicable
law seeking, including, without limitation, the BHCA, approval to engage in
an Acquisition Transaction.

As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.

(d) Notwithstanding the foregoing, the obligation of Issuer to issue
Option Shares upon exercise of the Option shall be deferred (but shall not be
terminated): (i) until the receipt of all required governmental or regulatory
approvals or consents necessary for Issuer to issue the Option Shares or Holder
to exercise the Option, or until the expiration or termination of any waiting
period required by law, or (ii) so long as any injunction or other order,
decree or ruling issued by any federal or state court of competent jurisdiction
is in effect which prohibits the sale or delivery of the Option Shares.

(e) Issuer shall notify Grantee promptly in writing of the occurrence of
any Preliminary Purchase Event or Purchase Event, it being understood that the
giving of such notice by Issuer shall not be a condition to the right of
Grantee to exercise the Option.

(f) In the event Grantee wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise and (ii) subject to the next sentence, a
place and date not earlier than three (3) business days nor later than fifteen
(15) business days after the Notice Date for the closing (the "Closing") of
such purchase (the "Closing Date"). If prior notification to or consent of any
regulatory

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<PAGE>

authority is required in connection with such purchase, then, notwithstanding
the prior occurrence of the Termination Date, the Closing Date shall be
extended for such period as shall be necessary to enable such prior
notification or consent to occur or to be obtained (and the expiration of any
mandatory waiting period). Issuer shall cooperate with Grantee in the filing of
any applications or documents necessary to obtain any required consent or in
connection with any required prior notification and the Closing shall occur not
earlier than three (3) business days nor later than fifteen (15) business days
following receipt of such consent (or the filing of any such prior notification
and the expiration of any mandatory waiting periods).

4. Payment and Delivery of Certificates.

(a) On each Closing Date, Grantee shall (i) pay to Issuer, in immediately
available funds by wire transfer to a bank account designated by Issuer, an
amount equal to the Purchase Price multiplied by the number of Option Shares to
be purchased on such Closing Date, and (ii) present and surrender this
Agreement to the Issuer at the address of the Issuer specified herein.

(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a)
above, (i) Issuer shall deliver to Grantee (A) a certificate or certificates
representing the Option Shares to be purchased at such Closing, which Option
Shares shall be free and clear of all liens, claims, charges and encumbrances
of any kind whatsoever and subject to no pre-emptive rights, and (B) if the
Option is exercised in part only, a new Stock Option Agreement, executed by
Issuer, with the same terms as this Agreement evidencing the right to purchase
the balance of the shares of Issuer Common Stock purchasable hereunder, and
(ii) Grantee shall deliver to Issuer a letter agreeing that Grantee shall not
offer to sell or otherwise dispose of such Option Shares in violation of
applicable federal and state law or of the provisions of this Agreement.

(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:

THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 3, 1999. A COPY
OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.

It is understood and agreed that (i) the references to the trade
restrictions of the Securities Act in the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Grantee shall have
delivered to Issuer an opinion of counsel in form and substance reasonably
satisfactory to Issuer and its counsel, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the references to the
provisions of this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.

(d) Upon the giving by Grantee to Issuer of the written notice of exercise
of the Option provided for under Section 3(e) of this Agreement, the tender of
the applicable Purchase Price in immediately available funds and the tender of
this Agreement to Issuer, Grantee shall be deemed to be the holder of record of
the shares of Issuer Common Stock issuable upon such exercise, notwithstanding
that the stock transfer books of Issuer shall then be closed or that
certificates representing such shares of Issuer Common Stock shall not then be
actually delivered to Grantee. Issuer shall pay all expenses, and any and all
United States federal, state, and local taxes and other charges that may be
payable in connection with the preparation, issuance and delivery of stock
certificates under this Section in the name of Grantee or its assignee,
transferee, or designee.

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<PAGE>

(e) Issuer agrees (i) that it shall at all times maintain, free from pre-
emptive rights, sufficient authorized but unissued or treasury shares of Issuer
Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Issuer Common
Stock, (ii) that it will not, by amendment to its Articles of Incorporation or
Bylaws or through reorganization, consolidation, merger, dissolution or sale of
assets, or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be observed
or performed hereunder by Issuer, (iii) promptly to take all action as may from
time to time be required (including (A) complying (if applicable) with all
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. (S) 18a and regulations promulgated thereunder and (B) in the event
under any federal or state law, prior notice to consent of any regulatory
authority is necessary before the Option may be exercised, cooperating fully
with Grantee in preparing any required application or notice and providing such
information to such regulatory authority as such regulatory authority may
require) in order to permit Grantee to exercise the Option and Issuer duly and
effectively to issue shares of Issuer Common Stock pursuant hereto, and (iv)
promptly to take all action provided herein to protect the rights of Grantee
against dilution.

5. Representations and Warranties of Issuer. Issuer hereby represents and
warrants to Grantee as follows:

(a) Due Authorization. Issuer has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals referred
to herein, to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Issuer. This Agreement has been duly executed and delivered by
Issuer.

(b) Authorized Stock. Issuer has taken all necessary corporate and other
action to authorize and reserve and to permit it to issue, and, at all times
from the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common Stock necessary
for Grantee to exercise the Option, and Issuer will take all necessary
corporate action to authorize and reserve for issuance all additional shares of
Issuer Common Stock or other securities which may be issued pursuant to Section
7 of this Agreement upon exercise of the Option. The shares of Issuer Common
Stock to be issued upon due exercise of the Option, including all additional
shares of Issuer Common Stock or other securities which may be issuable
pursuant to Section 7 of this Agreement, upon issuance pursuant hereto, shall
be duly and validly issued, fully paid and nonassessable, and shall be
delivered free and clear of all liens, claims, charges and encumbrances of any
kind or nature whatsoever, including any pre-emptive right of any shareholder
of Issuer, but subject to the voting restrictions contained in the Certificate
of Incorporation of Issuer.

(c) No Violation. Except as disclosed pursuant to the Merger Agreement,
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation pursuant to any provisions of the Certificate of Incorporation,
Charter or Bylaws of Issuer or any subsidiary of Issuer or, subject to
obtaining any approvals or consents contemplated hereby, result in any
violation of any loan or credit agreement, note, mortgage, indenture, lease,
plan or other agreement, obligation, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Issuer or any subsidiary of Issuer or their respective properties
or assets which violation would have a material adverse effect on the condition
of Issuer on a consolidated basis.

6. Representations and Warrants of Grantee. Grantee hereby represents and
warrants to Issuer that:

(a) Due Authorization. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee. This Agreement has been duly executed
and delivered by Grantee.

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<PAGE>

(b) Purchase Not for Distribution. This Option is not being, and any
Option Shares or other securities acquired by Grantee upon exercise of the
Option will not be, acquired with a view to the public distribution thereof and
will not be transferred or otherwise disposed of except in a transaction
registered or exempt from registration under the Securities Act.

7. Adjustment Upon Changes in Capitalization, Etc.

(a) In the event of any change in Issuer Common Stock by reason of a stock
dividend stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Grantee shall receive, upon exercise of the Option,
the number and class of shares or other securities or property that Grantee
would have received in respect of Issuer Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common Stock are issued after
the date of this Agreement (other than pursuant to an event described in the
first sentence of this Section 7(a)), the number of shares of Issuer Common
Stock subject to the Option shall be adjusted so that, after such issuance, the
Option, together with any shares of Issuer Common Stock previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common Stock
then issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option.

(b) In the event that, prior to the Termination Date, Issuer shall enter
into an agreement: (i) to consolidate with or merge into any person, other than
Grantee or one of its subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
person, other than Grantee or one of its subsidiaries, to merge into Issuer
where Issuer shall be the continuing or surviving corporation, but, in
connection with such merger, the then outstanding shares of Issuer Common Stock
shall be changed into or exchanged for stock or other securities of Issuer or
any other person or cash or any other property or the outstanding shares of
Issuer Common Stock immediately prior to such merger shall after such merger
represent less than 50% of the outstanding shares and share equivalents of the
merged company, or (iii) to sell or otherwise transfer all or substantially all
of its assets to any person, other than Grantee or one of its subsidiaries,
then, and in each such case, the agreement governing such transaction shall
make proper provisions so that, upon the consummation of any such transaction
and upon the terms and conditions set forth herein, the Option, notwithstanding
the fact that as of the date of consummation of such transaction the
Termination Date shall have occurred, shall be converted into, or exchanged
for, an option (the "Substitute Option"), at the election of Grantee, of either
(x) the Acquiring Corporation (as defined below), (y) any person that controls
the Acquiring Corporation, or (z) in the case of a merger described in clause
(ii), the Issuer (in each case, such entity being referred to as the
"Substitute Option Issuer").

(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, because of the
applicability of any law or regulation, have the exact terms as the Option,
such terms shall be as similar as possible and in no event less advantageous to
Grantee. The Substitute Option Issuer shall also enter into an agreement with
the then-holder or holders of the Substitute Option in substantially the same
form as this Agreement, which shall be applicable to the Substitute Option.

(d) The Substitute Option shall be exercisable for such number of shares
of the Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
the Issuer Common Stock for which the Option was theretofore exercisable,
divided by the Average Price (as hereinafter defined). The exercise price of
each share of Substitute Common Stock subject to the Substitute Option (the
"Substitute Purchase Price") shall be equal to the Purchase Price multiplied by
a fraction in which the numerator is the number of shares of the Issuer Common
Stock for which the Option was theretofore exercisable and the denominator is
the number of shares for which the Substitute Option is exercisable.

(e) The following terms have the meanings indicated:

(i) "Acquiring Corporation" shall mean (x) the continuing or surviving
corporation of a consolidation or merger with (if other than Issuer), (y)
the Issuer in a consolidation or merger or in which

F-5
<PAGE>

the Issuer is the continuing or surviving corporation, and (z) the
transferee of all or any substantial part of the Issuer's assets (or the
assets of its subsidiaries).

(ii) "Assigned Value" shall mean the highest of (x) the price per
share of the Issuer Common Stock at which a Tender Offer or Exchange Offer
therefor has been made by any person (other than Grantee), (y) the price
per share of the Issuer Common Stock to be paid by any person (other than
the Grantee) pursuant to an agreement with Issuer, and (z) the highest last
sales price per share of Issuer Common Stock quoted on any national
securities exchange (including the NASDAQ--National Market System) (or if
Issuer Common Stock is not quoted on any such national securities exchange,
the highest bid price per share on any day as quoted on the principal
trading market or securities exchange on which such shares are traded as
reported by a recognized source chosen by Grantee) within the six-month
period immediately preceding the agreement described in Section 7(b) above;
provided, however, that in the event of a sale of less than all of Issuer's
assets, the Assigned Value shall be the sum of the price paid in such sale
for such assets and the current market value of the remaining assets of
Issuer as determined by a nationally recognized investment banking firm
selected by Grantee, divided by the number of shares of the Issuer Common
Stock outstanding at the time of such sale. In the event a Tender Offer or
Exchange Offer is made for the Issuer Common Stock or an agreement is
entered into for a merger or consolidation involving consideration other
than cash, the value of the securities or other property issuable or
deliverable in exchange for the Issuer Common Stock shall be determined by
a nationally recognized investment banking firm mutually selected by
Grantee and Issuer (or if applicable, Acquiring Corporation), provided that
if a mutual selection cannot be made as to such investment banking firm, it
shall be selected by Grantee.

(iii) "Average Price" shall mean the average last sales price of a
share of the Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, as quoted on any national
securities exchange (including the NASDAQ National Market System), and if
the Substitute Common Stock is not quoted on any such national securities
exchange, the average of the bid price for the one year period described
above, as quoted on the principal trading market or securities exchange on
which such Substitute Common Stock is traded, as reported by a recognized
source, as chosen by Grantee, but in no event higher than the last sales
price or closing price or the bid price of the shares of the Substitute
Common Stock on the day preceding such consolidation, merger, or sale;
provided that if Issuer is the issuer of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls or
is controlled by such person, as Grantee may elect.

(iv) "Substitute Common Stock" shall mean the common stock issued by
the Substitute Option Issuer upon the exercise of the Substitute Option.

(f) In no event pursuant to any of the foregoing paragraphs shall the
Substitute Option be exercisable for more than 19.9% of the aggregate of the
shares of the Substitute Common Stock outstanding prior to exercise of the
Substitute Option. In the event that the Substitute Option would be exercisable
for more than 19.9% of the aggregate of the shares of the Substitute Common
Stock but for this clause (f), the Substitute Option Issuer shall make a cash
payment to Grantee equal to the amount of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) in excess of
(ii) the value of the Substitute Option after giving effect to the limitation
in this clause (f). This difference in value shall be determined by a
nationally recognized investment banking firm selected by Grantee.

(g) Issuer shall not enter into any transaction described in subsection
(b) of this Section 7 unless the Acquiring Corporation and any person that
controls the Acquiring Corporation assumes in writing all of the obligations of
Issuer hereunder and takes all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the shares of
Substitute Common Stock are in no way distinguished from or have lesser
economic value (other than any diminution resulting from the fact that the
Substitute Common Stock is "restricted securities" within the meaning of Rule
144 under the Securities Act) than other shares of common stock issued by the
Substitute Option Issuer).

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<PAGE>

(h) The provisions of Sections 8, 9 and 10 shall apply, with appropriate
adjustments, to any securities for which the Option becomes exercisable
pursuant to this Section 7 and, as applicable, references in such sections to
"Issuer," "Option," "Purchase Price," and "Issuer Common Stock" shall be deemed
to be references to "Substitute Option Issuer," "Substitute Option,"
"Substitute Purchase Price," and "Substitute Common Stock," respectively.

8. Repurchase at the Option of Grantee.

(a) Subject to the last sentence of Section 3(a) of this Agreement, at the
request of Grantee at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending at the close of
business 365 days thereafter, Issuer shall repurchase from Grantee the Option
and all shares of Issuer Common Stock purchased by Grantee pursuant hereto with
respect to which Grantee then has beneficial ownership. The date on which
Grantee exercises its rights under this Section 8 is referred to as the
"Request Date." Such repurchase shall be at an aggregate price (the "Section 8
Repurchase Consideration") equal to the sum of:

(i) the aggregate Purchase Price paid by Grantee for any shares of
Issuer Common Stock acquired pursuant to complete or partial exercise of
the Option with respect to which Grantee then has beneficial ownership;

(ii) the excess, if any, of (x) the Applicable Price (as defined
below) for each share of Issuer Common Stock over (y) the Purchase Price
(subject to adjustment pursuant to Section 7), multiplied by the number of
shares of Issuer Common Stock with respect to which the Option has not been
exercised; and

(iii) the excess, if any, of the Applicable Price over the Purchase
Price (subject to adjustment pursuant to Section 7) paid (or, in the case
of Option Shares with respect to which the Option has been exercised but
the Closing Date has not occurred, payable) by Grantee for each share of
Issuer Common Stock with respect to which the Option has been exercised and
with respect to which Grantee then has beneficial ownership, multiplied by
the number of such shares.

(b) If Grantee exercises its rights under this Section 8, Issuer shall,
within ten (10) business days after the Request Date, pay the Section 8
Repurchase Consideration to Grantee in immediately available funds, and
contemporaneously with such payment Grantee shall surrender to Issuer the
Option and the certificates evidencing the shares of Issuer Common Stock
purchased thereunder with respect to which Grantee then has beneficial
ownership, and Grantee shall warrant that it has sole record and beneficial
ownership of such shares and that the same are then free and clear of all
liens, claims, charges and encumbrances of any kind whatsoever. Notwithstanding
the foregoing, to the extent that prior notification to or Consent of any
Regulatory Authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, or Issuer is prohibited
under applicable law or regulation, or as a consequence of administrative
policy, from repurchasing the Option and/or the Option Shares in full, Issuer
shall immediately so notify Grantee and thereafter deliver from time to time,
and as permitted by applicable law or regulation, that portion of the Section 8
Repurchase Consideration that it is not then so prohibited from paying within
five business days after the date on which Issuer is no longer prohibited;
provided, however, that if Issuer at any time is prohibited under applicable
law or regulation, or as a consequence of administrative policy, from
delivering to the Grantee the Section 8 Repurchase Consideration, in full (and
Issuer hereby undertakes to use its best efforts to obtain all required
consents of regulatory authorities and to file any required notices as promptly
as practicable in order to accomplish such repurchase), the Grantee may, at its
option, revoke its request that Issuer repurchase the Option or the Option
Shares either in whole or to the extent of the prohibition, whereupon, in the
latter case, Issuer shall promptly (i) deliver to the Grantee that portion of
the Section 8 Repurchase Consideration that Issuer is not prohibited from
delivering; and (ii) deliver, to the Grantee either (A) a new Stock Option
Agreement evidencing the right of Issuer to purchase that number of shares of
Common Stock obtained by multiplying the number of shares of Common Stock for
which the surrendered Stock Option Agreement was exercisable at the time of
delivery of the notice of repurchase by a fraction, the numerator of which is
the Section 8 Repurchase Consideration less the portion thereof theretofore
delivered to

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<PAGE>

the Grantee and the denominator of which is the Section 8 Repurchase
Consideration, or (B) a certificate for the Option Shares it is then prohibited
from repurchasing.

Notwithstanding anything herein to the contrary, all of Grantee's rights
under this Section 8 shall terminate on the Termination Date of this Option
pursuant to Section 3(a) of this Agreement.

(c) For purposes of this Agreement, the "Applicable Price" means the
highest of: (i) the highest price per share of Issuer Common Stock paid for any
such share by the person or groups described in Section 8(d)(i) below; (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) above; or (iii) the highest
last sales price per share of Issuer Common Stock quoted on any national
securities exchange (including the NASDAQ--National Market System) (or if
Issuer Common Stock is not quoted on any such national securities exchange, the
highest bid price per share as quoted on the principal trading market or
securities exchange on which such shares are traded as reported by a recognized
source chosen by Grantee) during the sixty (60) business days preceding the
Request Date; provided, however, that in the event of a sale of less than all
of Issuer's assets, the Applicable Price shall be the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Issuer as determined by a nationally recognized investment banking firm
selected by Grantee, divided by the number of shares of the Issuer Common Stock
outstanding at the time of such sale. If the consideration to be offered, paid
or received pursuant to either of the foregoing clauses (i) or (ii) shall be
other than in cash, the value of such consideration shall be determined in good
faith by an independent nationally recognized investment banking firm selected
by Grantee and reasonably acceptable to Issuer and reasonably acceptable to
Issuer, which determination shall be conclusive for all purposes of this
Agreement.

(d) As used herein, a "Repurchase Event" shall occur if (i) any person
(other than Grantee or any subsidiary of Grantee) shall have acquired
beneficial ownership of (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of, or
any "group" (as such term is defined under the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial ownership
of, 50% or more of the then outstanding shares of Issuer Common Stock, or (ii)
any of the transactions described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii) of
this Agreement shall be consummated.

9. Registration Rights.

(a) Demand Registration Rights. Issuer shall, subject to the conditions of
subparagraph (c) below, if requested by Grantee, as expeditiously as possible
prepare and file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Grantee upon exercise of the Option in
accordance with the intended method of sale or other disposition stated by
Grantee in such request, including without limitation a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and Issuer shall use its best efforts to qualify such shares or other
securities for sale under any applicable state securities laws.

(b) Additional Registration Rights. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to Grantee
(any permitted transferee) of its intention to do so and, upon the written
request of Grantee (or any such permitted transferee of Grantee) given within
30 days after receipt of any such notice (which request shall specify the
number of shares of Issuer Common Stock intended to be included in such
underwritten public offering by Grantee (or such permitted transferee)), Issuer
will cause all such shares, the holders of which shall have requested
participation in such registration, to be so registered and included in such
underwritten public offering; provided, that the Issuer may elect not to cause
all of the shares for which the Grantee has requested participation in such
registration to be registered and included in such underwritten public offering
(i) if the

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<PAGE>

underwriters, for good business reasons and in good faith, object to such
inclusion or (ii) in the case of a registration solely to implement a dividend
reinvestment or similar plan, an employee benefit plan or a registration filed
on Form S-4 or any successor form, or a registration filed on a form which
does not permit registration of resales; provided further, that such election
pursuant to clause (i) may be made only one time. If some but not all the
shares of Issuer Common Stock, with respect to which Issuer shall have
received requests for registration pursuant to this subparagraph (b), shall be
excluded from such registration, Issuer shall make appropriate allocation of
shares to be registered among selling holders of Option Shares and any other
person (other than Issuer or any person exercising demand registration rights
in connection with such registration) who or which is permitted to register
their shares of Issuer Common Stock in connection with such registration pro
rata in the proportion that the number of shares requested to be registered by
each selling holder of Option Shares bears to the total number of shares
requested to be registered by all persons then desiring to have Issuer Common
Stock registered for sale.

(c) Conditions to Required Registration. Issuer shall use all reasonable
efforts to cause each registration statement referred to in subparagraph (a)
above to become effective and to obtain all consents or waivers of other
parties which are required therefor and to keep such registration statement
effective, provided, however, that Issuer may delay any registration of Option
Shares required pursuant to subparagraph (a) above for a period not exceeding
90 days in the event that Issuer shall in good faith determine that any such
registration would adversely affect an offering or contemplated offering of
other securities by Issuer, and Issuer shall not be required to register
Option Shares under the Securities Act pursuant to subparagraph (a) above:

(i) prior to the earliest of (a) termination of the Merger Agreement,
and (b) a Purchase Event;

(ii) on more than two occasions;

(iii) more than once during any calendar year; and

(iv) within 90 days after the effective date of a registration
referred to in subparagraph (b) above pursuant to which the holder or
holders of the Option Shares concerned were afforded the opportunity to
register such shares under the Securities Act and such shares were
registered as requested.

(v) unless a request therefor is made to Issuer by selling holders of
Option Shares holding at least 25% or more of the aggregate number of
Option Shares then outstanding.

In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of 180
days from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, that Issuer shall
not be required to consent to general jurisdiction or qualify to do business
in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.

(d) Expenses. Except where applicable state law prohibits such payments,
Issuer will pay all of its expenses (including, without limitation,
registration fees, qualification fees, blue sky fees and expenses, legal
expenses, printing expenses and the costs of special audits or "cold comfort"
letters, expenses of underwriters, excluding discounts and commissions but
including liability insurance if Issuer so desires or the underwriters so
require, and the reasonable fees and expenses of any necessary special
experts) in connection with each registration pursuant to subparagraph (a) or
(b) above (including the related offerings and sales by holders of Option
Shares) and all other qualifications, notifications or exemptions pursuant to
subparagraph (a) or (b) above; provided, however, that fees and expenses of
counsel to the selling holders of Option Shares and any other expenses
(including underwriting discounts and commissions relating to the sale of
Option Shares) incurred by the selling holders of Option Shares in connection
with such registration shall be borne by the selling holders of Option Shares.

(e) Indemnification. In connection with any registration under
subparagraph (a) or (b) above Issuer hereby indemnifies the holder of the
Option Shares, and each underwriter thereof, including each person, if any,

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<PAGE>

who controls such holder or underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement of a material fact contained
in any registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission, or alleged omission, to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such expenses, losses, claims,
damages or liabilities of such indemnified party are caused by any untrue
statement or alleged untrue statement that was included by Issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon and in
conformity with, information furnished in writing to Issuer by such indemnified
party expressly for use therein, and Issuer and each officer, director and
controlling person of Issuer shall be indemnified by such holder of the Option
Shares, or by such underwriter, as the case may be, for all such expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged
untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.

Promptly upon receipt by a party indemnified under this subparagraph (e)
of notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be sought against any
indemnifying party under this subparagraph (e), such indemnified party shall
notify the indemnifying party in writing of the commencement of such action,
but the failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
subparagraph (e) provided such failure does not prejudice Issuer. In case
notice of commencement of any such action shall be given to the indemnifying
party as above provided, the indemnifying party shall be entitled to
participate in and, to the extent it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense of such action at
its own expense, with counsel chosen by it and satisfactory to such indemnified
party. The indemnified party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel (other than reasonable costs of investigation) shall
be paid by the indemnified party unless (i) the indemnifying party either
agrees to pay the same, (ii) the indemnifying party fails to assume the defense
of such action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal defenses
may be available to the indemnifying party that may be contrary to the interest
of the indemnified party, in which case the indemnifying party shall be
entitled to assume the defense of such action notwithstanding its obligation to
bear fees and expenses of such counsel. No indemnifying party shall be liable
for any settlement entered into without its consent, which consent may not be
unreasonably withheld.

If the indemnification provided for in this subparagraph (e) is
unavailable to a party otherwise entitled to be indemnified in respect of any
expenses, losses, claims, damages or liabilities referred to herein, then the
indemnifying party, in lieu of indemnifying such party otherwise entitled to be
indemnified, shall contribute to the amount paid or payable by such party to be
indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, the selling shareholders and the underwriters from
the offering of the securities and also the relative fault of Issuer, the
selling shareholders and the underwriters in connection with the statements or
omissions which resulted in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, however, that in no
case shall the holders of the Option Shares be responsible, in the aggregate,
for any amount in excess of the net offering proceeds attributable to its
Option Shares included in the offering. No person guilty of fraudulent
misrepresentation (with the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Any obligation by any holder to indemnify shall
be several and not joint with other holders.

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<PAGE>

In connection with any registration pursuant to subparagraph (a) or (b)
above, Issuer and each holder of any Option Shares (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (e).

(f) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit
the expeditious sale at any time of any Option Shares by the holder thereof in
accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time. Issuer shall at its expense provide
the holder of any Option Shares with any information necessary in connection
with the completion and filing of any reports or forms required to be filed by
them under the Securities Act or the Exchange Act, or required pursuant to any
state securities laws or the rules of any stock exchange.

10. Quotation; Listing. If Issuer Common Stock or any other securities to
be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the NASDAQ National Market or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer will promptly file an application, if required, to
authorize for quotation or trading or listing the shares of Issuer Common Stock
or other securities to be acquired upon exercise of the Option on the NASDAQ
National Market or any other securities exchange or any automated quotations
system maintained by a self-regulatory organization and will use its best
efforts to obtain approval, if required, of such quotation or listing as soon
as practicable.

11. Division of Option. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Grantee, upon presentation and
surrender of this Agreement at the principal office of Issuer for other
Agreements providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Issuer
Common Stock purchasable hereunder. The terms "Agreement" and "Option" as used
herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.

12. Miscellaneous.

(a) Expenses. Except as otherwise provided in Section 9 of this Agreement,
each of the parties hereto shall bear and pay all costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial consultants,
investment bankers, accountants and counsel.

(b) Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits of such provision if
such waiver is in writing. This Agreement may not be modified, amended, altered
or supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.

(c) Entire Agreement; No Third-Party Beneficiary; Severability. This
Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h)) any rights or
remedies hereunder. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or a

F-11
<PAGE>

federal or state regulatory agency to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. If for any reason such court or regulatory
agency determines that the Option does not permit Grantee to acquire, or does
not require Issuer to repurchase, the full number of shares of Issuer Common
Stock as provided in Sections 3 and 8 (as adjusted pursuant to Section 7), it
is the express intention of Issuer to allow Grantee to acquire or to require
Issuer to repurchase such lesser number of shares as may be permissible without
any amendment or modification hereof.

(d) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law rules.

(e) Descriptive Headings. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning
or interpretation of this Agreement, except to the extent that federal law may
apply.

(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

If to Issuer to:E. Frank Griffin, III
First Federal Bank for Savings
Post Office Box 152
Columbus MS 39703-0152

With a copy to:Charles E. Sloane
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K. Street, N.W.
Suite 700 East
Washington, DC 20005

If to Grantee to:Lewis F. Mallory
National Bank of Commerce
Post Office Box 1187
Starkville MS 39760

With a copy to:Hunter M. Gholson
Gholson, Hicks & Nichols
Post Office Box 1111
Columbus MS 39703-1111

(g) Counterparts. This Agreement and any amendments hereto may be executed
in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed,
it being understood that both parties need not sign the same counterpart.

(h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event;
provided, however, that until the Federal Reserve has approved an application
by Grantee to acquire the shares of Issuer Common Stock subject to the Option,
Grantee may not assign its rights under the Option except in (i) a widely
dispersed public distribution, (ii) a private placement in which no one party
acquires the right to purchase in excess of 2% of the voting shares of Issuer,
(iii) an assignment to a

F-12
<PAGE>

single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf or (iv)
any other manner approved by the Federal Reserve. Any such assignment shall be
in compliance with all applicable laws. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

(i) Further Assurances. In the event of any exercise of the Option by
Grantee, Issuer and Grantee shall execute and deliver all other documents and
instruments and take all other action that may be reasonably necessary in order
to consummate the transactions provided for by such exercise.

(j) Specific Performance. The parties hereto agree that this Agreement may
be enforced by either party through specific performance, injunctive relief and
other equitable relief. Both parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.

IN WITNESS WHEREOF, Issuer and Grantee have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
day and year first written above.

FFBS BANCORP, INC., a Delaware
corporation

BY: /s/ E. Frank Griffin, III
-------------------------------------

NBC CAPITAL CORPORATION, a
Mississippi
corporation

BY: /s/ Lewis F. Mallory, Jr.
-------------------------------------

F-13
<PAGE>

PART II. INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.

The Mississippi Business Corporation Act ("MBCA") contains provisions that
directly affect the liability of officers and directors of Mississippi
corporations to the corporations and stockholders whom they serve. The MBCA
permits Mississippi corporations to indemnify officers and directors, as well
as certain other individuals who act on behalf of such corporations, and it
sets forth the standards of conduct required for directors and officers who
seek indemnification.

Section 79-4-8.30 of the MBCA provides that directors of Mississippi
corporations are required to discharge the duties of their positions in good
faith, with the care that an ordinarily prudent person would exercise under
similar circumstances in like positions and in a manner reasonably believed to
be in the best interests of the corporation. This section specifically provides
that in considering the best interests of the corporation, the director must
consider the interests of the corporation's stockholders. A director is allowed
to rely in good faith on information provided to him by the corporation's
officers, legal counsel, accountants, other experts and board committees on
which he is not a member. Section 79-4-8.42 imposes the same standards of
conduct on officers of Mississippi corporations, except there is no specific
provision regarding the interests of the stockholders. Officers are allowed to
rely in good faith on information provided to them by other officers, legal
counsel, accountants and other experts. If directors and officers perform their
duties in compliance with these sections, they will not be liable for any
action, or failure to take action, taken in the performance of their duties.

Section 79-4-8.33 imposes personal liability of directors to the corporation
and its stockholders for distributions made in excess of standards established
by Mississippi law or in the corporation's articles of incorporation. The MBCA
also provides that a director cannot be indemnified, as allowed by the
provisions of the MBCA discussed below, in circumstances where, in his
performance as a director, he has received a financial benefit to which he is
not entitled, he intentionally inflicts harm on the corporation or its
stockholders or he intentionally violates any criminal law. The corporation may
include an obligatory indemnification provision for directors in its articles
of incorporation for all acts other than those outlined above.

Article 11 of NBC's articles of incorporation eliminates the personal
liability of a director of NBC to NBC or its stockholders unless he breaches
his duty of loyalty to the corporation or its stockholders, commits acts or
omissions not in good faith, or which involve intentional misconduct or knowing
violation of law, permits unlawful distributions or receives an improper
personal benefit from any transaction. Article 11 further permits NBC to
advance all expenses for defense of a director in any lawsuit brought against a
director in his capacity as a director. The MBCA specifically provides that
such advances are allowed by Mississippi law. Such advances may be made under
the MBCA only after a determination that the director has met all relevant
standards of conduct.

The MBCA permits a Mississippi corporation to indemnify any officer to the
same extent as to a director. Article VI of NBC's bylaws provides that any
person who is or was a party or is threatened to be made a party to any action,
suit or proceeding by reason of the fact that he or she was a director,
officer, employee or agent of the corporation, or was serving at the request of
the corporation in one of those capacities for another business, may be
indemnified to the fullest extent allowed law against all expense, liability
and loss (including attorneys' fees, judgments, fines and amounts paid in
settlement) reasonably incurred by such persons.

Indemnification of officers and directors against reasonable expenses is
mandatory under the MBCA to the extent the officer or director is successful on
the merits or otherwise in the defense of any action or suit against him giving
rise to a claim of indemnification.

The MBCA permits a Mississippi corporation to purchase and maintain
insurance on behalf of its officers and directors, against liability asserted
against or incurred by them in their capacities as officers or directors,

II-1
<PAGE>

whether or not the corporation would have the power to indemnify such officers
or directors or advance funds for the same liability. Article VI, Section 4 of
NBC's by-laws permits NBC to obtain such insurance.

The MBCA treats suits by or in the right of the corporation, or derivative
suits, differently from other legal actions. Indemnification is not permitted
in a derivative action, except for reasonable expenses incurred in connection
with the proceeding if the officer or director has met the relevant standards
of conduct.

Item 21. Exhibits and Financial Statement Schedules.

(a) EXHIBIT DESCRIPTION

<TABLE>
<C> <S>
2(a) Agreement and Plan of Merger by and between NBC Capital Corporation and
FFBS Bancorp, Inc. dated as of February 3, 1999 (included as Appendix A
to the proxy statement-prospectus)
2(b) Stock Option Agreement by and between NBC Capital Corporation and FFBS
Bancorp, Inc. dated as of February 3, 1999 (included as Appendix F to
the proxy statement-prospectus)
3(a) Articles of Incorporation of NBC Capital Corporation (incorporated by
reference to Exhibit B to NBC Capital Corporation's Definitive Proxy
Statement dated as of March 20, 1998, filed with the Securities and
Exchange Commission on March 18, 1998, SEC file number 000-12885)
3(b) Bylaws of NBC Capital Corporation (incorporated by reference to Exhibit
3(b) of NBC Capital Corporation's Form S-4A, filed with the Securities
and Exchange Commission on November 4, 1998, SEC file number 333-65545)
5 Opinion of Gholson, Hicks & Nichols regarding legality
8 Opinion of T. E. Lott & Company regarding tax matters
10.1 Employment Agreement dated January 3, 1991 between National Bank of
Commerce of Mississippi and L. F. Mallory, Jr. (incorporated by
reference to Exhibit 10.1 of NBC Capital Corporation's Form
S-4, filed with the Securities and Exchange Commission on October 9,
1998, SEC file number
333-65545)
13 Annual Report to Stockholders of NBC Capital Corporation for the year
ended December 31, 1998
21 Subsidiaries of NBC Capital Corporation
23(a) Consent of Gholson, Hicks & Nichols (included in Exhibit 5)
23(b) Consent of T. E. Lott & Company as to NBC Capital Corporation
23(c) Consent of T. E. Lott & Company as to FFBS Bancorp, Inc.
23(d) Consent of Southard Financial
23(e) Consent of Trident Financial Corporation
24 Form of Power of Attorney
99(a) Form of proxy of NBC Capital Corporation
99(b) Form of proxy of FFBS Bancorp, Inc.
</TABLE>

(b) FINANCIAL STATEMENT SCHEDULES

N/A

Item 22. Undertakings.

The undersigned registrant hereby undertakes:

(i) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(a) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;

(b) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information

II-2
<PAGE>

set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement.

(c) to include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;

(ii) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.

(iii) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.

(iv) insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of successful defense
of any action, suit or proceeding) is asserted by such director,
officer or unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by its is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

(v) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof;

(vi) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this
registration statement, by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters,
in addition to information called for by the other items of the
applicable form;

(vii) that every prospectus: (A) that is filed pursuant to paragraph
(ii) immediately preceding, or (B) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415,
will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time will be deemed to be the initial
bona fide offering thereof;

II-3
<PAGE>

(viii) to deliver or cause to be delivered with the prospectus, to
each person to whom the prospectus is sent or given, the latest
annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial
information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or cause to
be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such
interim financial information;

(ix) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or
13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of
the registration statement through the date of responding to the
request; and

(x) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the
registration statement when it became effective.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement on Form S-4 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Starkville, State of Mississippi, on March 23, 1999.

NBC CAPITAL CORPORATION

Lewis F. Mallory, Jr.
/s/
By:__________________________________
Lewis F. Mallory, Jr.
Chairman of the Board and Chief
Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<S> <C> <C>
Signature Title Date

/s/ Lewis F. Mallory, Jr. Chairman of the Board March 22, 1999
and Chief Executive
- ----------------------------------- Officer/Director
Lewis F. Mallory, Jr.

/s/ Mark A. Abernathy President and Chief March 23, 1999
Operating
- ----------------------------------- Officer/Director
Mark A. Abernathy

/s/ Richard T. Haston Chief Financial Officer March 22, 1999
- -----------------------------------
Richard T. Haston

/s/ Aubrey Adair Chief Accounting March 22, 1999
Officer
- -----------------------------------
Aubrey Adair

/s/ David Byars Director March 23, 1999
- -----------------------------------
David Byars

/s/Robert L. Calvert, III Director March 23, 1999
- -----------------------------------
Robert L. Calvert, III

/s/ Robert A. Cunningham Director March 23, 1999
- -----------------------------------
Robert A. Cunningham

/s/ J. Nutie Dowdle Director March 23, 1999
- -----------------------------------
J. Nutie Dowdle

/s/ Clifton B. Fowler Director March 23, 1999
- -----------------------------------
Clifton B. Fowler

/s/James C. Galloway, Jr. Director March 23, 1999
- -----------------------------------
James C. Galloway, Jr.

/s/ Hunter M. Gholson Director March 29, 1999
- -----------------------------------
Hunter M. Gholson
</TABLE>

S-1
<PAGE>

<TABLE>
<S> <C> <C>
Signature Title Date

/s/ Bobby L. Harper Director March 23, 1999
- -----------------------------------
Bobby L. Harper

/s/ Robert S. Jones Director March 23, 1999
- -----------------------------------
Robert S. Jones

/s/ Robert D. Miller Director March 23, 1999
- -----------------------------------
Robert D. Miller

/s/ Edith D. Millsaps Director March 23, 1999
- -----------------------------------
Edith D. Millsaps

/s/ Ralph E. Pogue Director March 23, 1999
- -----------------------------------
Ralph E. Pogue

/s/ Thomas J. Prince, Jr. Director March 23, 1999
- -----------------------------------
Thomas J. Prince, Jr.

/s/ James R. Prude Director March 23, 1999
- -----------------------------------
James R. Prude

/s/ Sarah Scribner Prude Director March 23, 1999
- -----------------------------------
Sarah Scribner Prude

/s/ Allen B. Puckett, III Director March 25, 1999
- -----------------------------------
Allen B. Puckett, III

/s/ Dr. James C. Ratcliff Director March 25, 1999
- -----------------------------------
Dr. James C. Ratcliff

/s/ Sammy J. Smith Director March 23, 1999
- -----------------------------------
Sammy J. Smith

/s/ H. Stokes Smith Director March 23, 1999
- -----------------------------------
H. Stokes Smith

/s/ Henry S. Weiss Director March 23, 1999
- -----------------------------------
Henry S. Weiss
</TABLE>

S-2
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
Sequential
Exhibit Page Number
------- -----------
<C> <S> <C>
2(a) Agreement and Plan of Merger by and between NBC Capital
Corporation and FFBS Bancorp, Inc. dated as of February
3, 1999 (included as Appendix A to the proxy statement-
prospectus)
2(b) Stock Option Agreement by and between NBC Capital
Corporation and FFBS Bancorp, Inc. dated as of February
3, 1999 (included as Appendix F to the proxy statement-
prospectus)
3(a) Articles of Incorporation of NBC Capital Corporation
(incorporated by reference to Exhibit B to NBC Capital
Corporation's Definitive Proxy Statement dated as of
March 20, 1998, filed with the Securities and Exchange
Commission on March 18, 1998, SEC file number 000-12885)
3(b) Bylaws of NBC Capital Corporation (incorporated by
reference to Exhibit 3(b) of NBC Capital Corporation's
Form S-4A, filed with the Securities and Exchange
Commission on November 4, 1998, SEC file number 333-
65545)
5 Opinion of Gholson, Hicks & Nichols regarding legality
8 Opinion of T. E. Lott & Company regarding tax matters*
10.1 Employment Agreement dated January 3, 1991 between
National Bank of Commerce of Mississippi and L. F.
Mallory, Jr. (incorporated by reference to Exhibit 10.1
of NBC Capital Corporation's Form S-4, filed with the
Securities and Exchange Commission on October 9, 1998,
SEC file number 333-65545)
13 Annual Report to Stockholders of NBC Capital Corporation
for the year ended December 31, 1998
21 Subsidiaries of NBC Capital Corporation
23(a) Consent of Gholson, Hicks & Nichols (included in Exhibit
5)
23(b) Consent of T. E. Lott & Company as to NBC Capital
Corporation
23(c) Consent of T. E. Lott & Company as to FFBS Bancorp, Inc.
23(d) Consent of Southard Financial
23(e) Consent of Trident Financial Corporation
24 Form of Power of Attorney
99(a) Form of proxy of NBC Capital Corporation
99(b) Form of proxy of FFBS Bancorp, Inc.
</TABLE>
- --------
* To be filed by amendment

<PAGE>

EXHIBIT 5
<PAGE>

[GHOLSON, HICKS & NICHOLS LETTERHEAD]

March 30, 1999

NBC Capital Corporation
P. O. Box 1187
Starkville MS 39760

Ladies & Gentlemen:

In our capacity as counsel for NBC Capital Corporation, a Mississippi
corporation ("NBC"), we have represented NBC in the negotiation of the proposed
Merger (the "Merger") of FFBS Bancorp, Inc., a Delaware corporation ("FFBS"),
with and into NBC, and the issuance of shares of common stock, par value $1.00
per share, of NBC in connection with the merger. Pursuant to the merger, the
holders of shares of common stock of FFBS will receive up to 1,400,000 shares
of NBC common stock (the "Shares").

In furnishing this opinion, we have examined such documents and have made
such investigation of matters of fact and law as we have deemed necessary or
appropriate to provide a basis for the opinions set forth herein. In such
examination and investigation, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted as originals, and the conformity to original documents of
all documents submitted as certified or photostatic copies.

In rendering this opinion, we do not express any opinion concerning any law
other than the law of the State of Mississippi and the federal law of the
United States, and we do not express any opinion, either implicitly or
otherwise, on any issue not expressly addressed below.

Based upon and limited by the foregoing, and based upon legal considerations
which we deem relevant and upon laws or regulations in effect as the date
hereof, we are of the opinion that:

1. The Company has been duly incorporated and is validly existing and in
good standing under the laws of the State of Mississippi.

2. The Shares have been duly authorized and either are, or, upon issuance
thereof pursuant to the terms of the Merger agreement, will be, validly
issued, fully paid and nonassessable.

We hereby expressly consent to the filing of this opinion with the
Securities & Exchange Commission as an exhibit to the registration statement
and to the reference to this opinion therein.

This opinion is being furnished to you pursuant to the filing of the
registration statement and may not be relied upon by any other person or used
for any other purpose, except as provided for in the preceding paragraph.

Very truly yours,

GHOLSON, HICKS & NICHOLS,
A Professional Association

/s/ WILLIAM F. GILLIS
BY:
William F. Gillis

WFG/rh

<PAGE>

EXHIBIT 13
<PAGE>

Values

NBC CAPITAL CORPORATION
1998 ANNUAL REPORT
<PAGE>

Certain words seem to carry more weight than

others. Words like trust, commitment and honesty.

They remind us of the values we grew up on. And as

old fashioned as they sometimes seem, these words

still hold an important place in today's society.

Yesterday's values help us build tomorrow's dreams.

And in between there's a place called Today's Bank.
<PAGE>

trust

THERE'S A PLACE BETWEEN YESTERDAY'S VALUES
<PAGE>

I am proud to be traditional.

I am someone you can trust.

My father taught me to, above all,
be loyal.

I am hopeful that I will have
my own family one day.

I am going to pass my values
on to my kids.

I am waiting for that day to come.

trust

AND TOMORROW'S DREAMS
<PAGE>

TABLE OF CONTENTS

Values

To Our Shareholders

Financial Review

Directors And Officers
<PAGE>

I am proud to be a Daddy.

I am honored to call you Son.

I am one hundred percent
positive I will be able to care
for you.

I am planning for your future
right now.

I am going to be ready when
tomorrow gets here.

I am all these things, because...

I am Today's Bank.

IT'S CALLED TODAY'S BANK
<PAGE>

commitment

THERE'S A PLACE BETWEEN YESTERDAY'S VALUES
<PAGE>

We are best friends.

We are believers in forever.

We are proof that love is lasting.

We are parents first.

We are a school teacher and
an engineer secondly.

We are looking forward to
retirement.

commitment

AND TOMORROW'S DREAMS
<PAGE>

We are free to do as we please.

We are travelers.

We are experiencing everything.

It's our wish to die young,
as late in life as possible.

We are happier than we've
ever been.

We are able to do all these
things, because......

We are Today's Bank.

IT'S CALLED TODAY'S BANK
<PAGE>

honesty

THERE'S A PLACE BETWEEN YESTERDAY'S VALUES
<PAGE>

I am focused on the future.

I am a believer that honest,
hard work pays off.

I am going to learn all I can
about this business.

Then, one day, I will run a
company of my own.

I am going to be successful.

honesty

AND TOMORROW'S DREAMS.
<PAGE>

I am the man whose name
is on the door.

I am grateful to the people who
helped me get here.

I am a boss and a friend.

I am hoping my daughter will
take over one day.

I am all this, because.....

I am Today's Bank.
<PAGE>

WHO IS TODAY'S BANK?

Today's Bank is the waitress that needs an answer on her loan today, so she
can move into her dream home tomorrow. It's the businessman who seeks
financial advice today, so he can expand his business tomorrow. And it's the
father of three who opened an auto repair shop today, so he can send his kids
to college tomorrow.

Today's Bank is made up of people who believe in the values of yesterday. And
dream about what they will accomplish tomorrow. They want a bank they can
trust - where they feel important and understood. After all, this is where
they will turn when preparing for the many stages of life. And that's why
people choose Today's Bank.

Because life can't wait. Tomorrow should never be put on hold. And
fortunately, with Today's Bank, it doesn't have to.

WHAT IS TODAY'S BANK?

NBC is Today's Bank, but it's built on the kind of values that have been
important to us for centuries. Old fashioned ideals, like integrity and
service, are alive and well at NBC. We recognize that without customers we would
have no purpose. So, here, we put customers first every day. As a result, our
customers view us as partners who can help protect their investments today, and
reach their financial goals for the future.

The world is changing, and, as we approach a new century, our banking
services will meet the challenges of a new era. Our customers tell us that
convenience will be key and that easier access means finding a bank with the
fastest access. In 1999 and beyond we will make the necessary improvements to
our delivery systems to take our customers and us into the new millennium.

WHERE IS TODAY'S BANK?

Where is NBC? We are at an historical place in our company's history. Our
year-end merger with First National Corporation of West Point brought a
long-awaited and much anticipated goal to fruition. We are now fully
servicing the entire greater Golden Triangle area of Mississippi, along with
additional locations in East Mississippi and Tuscaloosa, Alabama. And, with
the planned merger with First Federal Bank for Savings, our eye is
set firmly on more growth in the future.

As we broaden our banking base, we must also look at expanding our array of
retail consumer products and services. With the West Point acquisition we
entered the consumer finance business, and beginning in 1999 we will broaden the
alternative retail investment services available to our customers. In addition,
we will aggressively look at other areas of opportunity, like insurance, staying
competitive in the consumer marketplace and providing the bank with additional
revenue sources.

By the first quarter of 1999, retail investment management services will be
available at NBC for our customers. And with the launch of a major marketing
effort in early 1999, including heavy broadcast and print advertising, we
expect to significantly grow our retail base.

In 1998 a special task force was empowered to streamline systems with the hope
of making doing business easier for NBC employees and customers. In 1999 we will
build on the improvements made in 1998, and have already set an efficiency ratio
goal of 50%. With a current ratio of 56%, NBC is well ahead of the industry
average, which is 63%.

We take our promise of being Today's Bank very seriously. Through concerted
efforts and with strong devotion, we are poised to live up to the promises we
have made. Every day, customers share their dreams with us. They reveal
problems. Tell us goals. And we feel privileged to be the bank they have chosen
to let into their world. We don't just open accounts and make loan decisions. We
open opportunities and make dreams happen. We are Today's Bank. We are NBC.
<PAGE>

TO OUR SHAREHOLDERS

To Our Shareholders, Our Customers, The Business Community and Our Staff:

This Annual Report carries a theme that enhances the Company's recent media
message highlighting values: "A place between yesterday's values and tomorrow's
dreams...Today's Bank." We have strived to create that unique institution that
represents these qualities... one our shareholders, customers, and communities
can depend on today to provide the financial services that will serve them into
their tomorrows. As our industry continues to evolve in an era of complex and
rapid change, we are pleased with the Company's steady performance and progress.

Earnings for 1998 totaled $8.5 million or $1.50 per share compared to $9.9
million or $1.75 per share for 1997. The combined net income for 1998 includes
$.33 per share non-reoccurring charges related to the First National Corporation
of West Point (FNC) merger which was concluded effective December 31, 1998. In
accordance with Generally Accepted Accounting Principles, earnings for all
periods presented have been restated to reflect the combined operating results
of the two companies as if the transaction had occurred at the beginning of the
earliest period presented. Earnings per share for each year is based on
5,664,736 shares, the total issued and outstanding following the merger.

Prior to the combination with FNC, the Company earned $9.3 million in 1998
compared to $8.8 million in 1997. These earnings represent $1.93 per share in
1998 compared to $1.82 in 1997 based on 4,800,000 shares then outstanding.

Earnings for the past year were positively impacted by a 4.9% gain in average
earning assets and a 13.6% increase in non-interest income. The Company's net
interest margin declined 0.26% as interest rates fell during the year and
extremely competitive loan pricing continued in most of the Company's markets.
Non-interest expenses grew by 9.6%. Approximately 80% of these expenses not
pertaining to salaries were related to merger expenses associated with the
acquisition of FNC.

The Company's balance sheet showed modest growth in accordance with Management's
plan. Assets totaled $777.0 million, up from $762.5 million the prior year.
Loans increased 2.6% to $486.3 million. As previously noted, competitive loan
pricing helped slow the growth in loans outstanding during the year. The quality
of the loan portfolio remained excellent with classified loans totaling 20.6% of
capital following the FNC merger. Deposits grew 4.0% to $651.2 million, and
shareholders' equity stood at 11.4% of assets at year-end, again placing NBC in
a strong equity position relative to its peers. Cash dividends were increased
9.5%, the 23rd consecutive annual increase in dividends paid to shareholders.
Dividends shown in this report reflect the combined cash dividends declared by
NBC and FNC based on 5,664,736 shares outstanding after the merger. (Pre-merger
NBC shareholders actually received $.73 per share, paid $.11 on June 30, 1998
and $.62 on January 4, 1999, an increase of 10.6% from the prior year
distribution.)

We were delighted to conclude the merger with FNC at year-end. We continue to
believe it is strategically important for the Company and will serve it well
in the future. Former FNC directors Robert Calvert and Stokes Smith joined
the Company's Board in January 1999. We look forward to their long service to
NBC.

Lloyd Wood of Tuscaloosa, Alabama left the Company's Board in June 1998.
Business commitments in the Nashville area had made Mr. Wood's participation in
the Board's business increasingly difficult in recent years. We are appreciative
of his service. David Byars of Philadelphia, Mississippi joined the Board in
August of last year. Mr. Byars has successful business interests throughout the
Philadelphia area. His family enjoyed a long tradition with the former Bank of
Philadelphia, NBC's predecessor in that market.

We were greatly saddened by the October death of long-time director, J.R.
Scribner, Jr. of Amory. Mr. Scribner was a member of the original NBC Board of
Directors and subsequently the Board of its parent company, NBC Capital
Corporation. He was keenly interested in the Company's success. His presence and
counsel are missed by all of us who worked with him.

During the fourth quarter of 1998, the Company concluded arrangements with
J.C. Bradford and Company and Sterne, Agee, and Leach, Inc. to serve as
Market Makers
<PAGE>

for NBC Capital Corporation stock. It was felt that the strong interest in the
Company's shares warranted this important step. We are pleased with the positive
response this decision has received. Additionally, the Company discontinued its
practice of serving as its own stock transfer agent. The volume of activity and
the potential liability of continuing to accommodate this function in-house
caused your Board to contract with SunTrust Bank in Atlanta to handle this
important process.

Since November of 1997, the Company has been working on plans to adequately
address the Year 2000 issue. Specific tests have been successfully completed on
our systems, interfaces, and hardware. As an added measure of caution,
contingency plans are under development and will be ready should external forces
beyond our control affect our systems. It is important that we continue to
proactively communicate our readiness to our customers and shareholders. Our aim
is to maintain all of our constituents' confidence throughout the remainder of
1999 through brochures, seminars, and periodic written updates. The Board of
Directors is briefed monthly on the status of Y2K and have charged management
with the responsibility of a smooth transition into the new millennium.

In February 1999, the Company announced it had entered into an agreement to
acquire FFBS Bancorp, Inc. (FFBS) and its subsidiary, First Federal Bank for
Savings, in Columbus, Mississippi. FFBS is a $160 million company whose roots go
back to 1892 in the Columbus and Lowndes County area. This proposed transaction
is now in the regulatory process phase. We anticipate a shareholder meeting in
early June. Given the market location of FFBS and its strong role in the
residential mortgage market, the Company's Board feels the proposed merger can
be extremely attractive to NBC.

We will continue our corporate focus in six key areas: sales and service,
acquisitions, growing our retail base, developing alternative sources of
revenue, improving technology, and enhancing efficiency. Despite having our
technology timetable slowed by our Y2K planning, efforts are on going in each of
these areas. Your Management and Board feel that wise planning and choices among
these priorities will allow NBC to continue its long record of positive
performance. Plans are already in place to offer retail investment products
throughout the bank during the first half of 1999. The Company is also
positioned to implement an insurance subsidiary if certain legislative and
regulatory actions are forthcoming. Such efforts should help expand the
Company's retail base as well as provide additional revenue sources.

We must look to the future with a healthy mixture of imagination, common
sense, and sound banking principles. Our business is changing. A clear vision
of what we want to be, coupled with sound, consistently applied plans will
assure that Today's Bank will enjoy tomorrow's successes.

We remain grateful for your strong support and confidence.

Sincerely yours,

/s/ BOBBY HARPER /s/ MARK A. ABERNATHY /s/ L.F. MALLORY, JR.

BOBBY HARPER MARK A. ABERNATHY L.F. MALLORY, JR.
Chairman of the President and Chief Chairman and Chief
Executive Committee Operating Officer Executive Officer
<PAGE>

FINANCIAL REVIEW

CONTENTS

5 Financial Highlights

6 Consolidated Balance Sheets

7 Consolidated Statements of Income

8 Consolidated Statements of Changes in Stockholders' Equity

9 Consolidated Statements of Cash Flows

10 Notes to Consolidated Financial Statements

21 Report of T.E. Lott & Company

22 Management's Discussion and Analysis of
Financial Condition and Results of Operations

26 Selected 5-Year Financial Data

27 Directors and Officers
<PAGE>

FINANCIAL HIGHLIGHTS

AT YEAR END 1998 1997

Total assets $777,032,491 $762,531,227
Total deposits and
securities sold under
repurchase agreements $661,678,420 $646,316,389
Total loans (net) $476,730,469 $466,115,033
Investment securities $203,878,816 $209,347,268
Total shareholders' equity $ 88,293,867 $ 82,904,140

FOR THE YEAR

Interest income $ 57,390,808 $ 56,828,145
Interest expense $ 26,513,182 $ 25,698,623
Net interest income $ 30,877,626 $ 31,129,522
Other operating income $ 8,837,726 $ 7,777,147
Non-interest expense $ 26,055,674 $ 23,768,323
Net income $ 8,493,710 $ 9,918,300

PER SHARE

Net income $ 1.50 $ 1.75
Dividends paid $ 0.69 $ 0.63
Book value $ 15.59 $ 14.64

RETURNS

On average shareholders' equity 9.7% 12.3%
On average assets 1.1% 1.3%

Note: in accordance with Generally Accepted Accounting Principles, the 1997
amounts have been restated to reflect the 1998 merger with First National
Corporation of West Point.
<PAGE>

CONSOLIDATED BALANCE SHEETS

December 31, 1998 1997
ASSETS (NOTE B)
------------ ------------
Cash and due from banks
(Note L) $ 27,872,990 $ 28,386,410
Interest bearing deposits with banks 232,974 398,518
Federal funds sold 26,227,547 21,747,814
------------ ------------
Total cash and cash equivalents 54,333,511 50,532,742
Securities available-for-sale (Note D) 172,723,122 177,989,430
Securities held-to-maturity
(Note D)
(estimated fair value of $34,444,212
in 1998 and $34,405,023 in 1997) 31,155,694 31,357,838
------------ ------------
Total securities 203,878,816 209,347,268
Loans (Note E) 486,302,137 474,094,821
Less allowance for loan losses 9,571,668 7,979,788
------------ ------------
Net loans 476,730,469 466,115,033
Interest receivable 8,122,914 7,561,269
Premises and equipment (Note F) 15,020,558 15,954,364
Intangible assets 3,517,734 3,849,408
Other assets 15,428,489 9,171,143
------------ ------------
TOTAL ASSETS $777,032,491 $762,531,227
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Non-interest bearing
deposits $ 91,289,898 $ 82,898,313
Interest bearing deposits,
$100,000 or more 69,649,206 81,714,919
Other interest bearing deposits 490,275,483 461,681,948
------------ ------------
TOTAL DEPOSITS 651,214,587 626,295,180
Interest payable 2,673,902 3,121,466
Federal funds purchased
and securities sold
under repurchase agreements (Note G) 10,463,833 20,021,209
Other borrowed funds (Note G) 16,048,387 23,068,701
Other liabilities 8,337,915 7,120,531
------------ ------------
TOTAL LIABILITIES 688,738,624 679,627,087
------------ ------------
Commitments and contingent
liabilities (Note M)
Stockholders' equity (Notes B, C and L):
Common stock - $1 par value,
authorized 10,000,000 shares in
1998 and 1997; issued and outstanding
5,664,736 shares in 1998 and 1997 5,664,736 5,664,736
Surplus 38,461,098 38,466,864
Undivided profits 42,745,876 38,159,408
Accumulated other comprehensive
income (Note H) 1,422,157 613,132
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 88,293,867 82,904,140
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $777,032,491 $762,531,227
============ ============

The accompanying notes are an integral part of these statements.

EARNINGS
(in millions of dollars)

'94--8.2
'95--8.8
'96--9.4
'97--9.9
'98--8.5

BOOK VALUE PER SHARE
(in dollars)

'94--10.73
'95--12.63
'96--13.54
'97--14.64
'98--15.59

All financial data has been restated to reflect the 1998 merger. Per share and
common stock data has been adjusted retroactively for stock splits.
<PAGE>

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
- ------------------------------------------------------------------------------------------------------------------------------------
Years ended December 31, 1998 1997 1996
(NOTE B) (NOTE B)
------------------------------------------------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $44,557,755 $43,791,813 $39,747,322
Interest and dividends on securities:
Taxable interest and dividends 5,995,992 7,933,494 8,179,238
Tax-exempt interest 5,619,586 4,121,852 4,260,685
Other 1,217,475 980,986 477,850
------------------------------------------------
TOTAL INTEREST INCOME 57,390,808 56,828,145 52,665,095
------------------------------------------------
INTEREST EXPENSE
Interest on time deposits of $100,000 or more 4,428,717 4,535,668 4,295,731
Interest on other deposits 20,262,776 19,286,281 17,756,427
Interest on borrowed funds 1,821,689 1,876,674 1,040,405
------------------------------------------------
TOTAL INTEREST EXPENSE 26,513,182 25,698,623 23,092,563
------------------------------------------------
Net interest income 30,877,626 31,129,522 29,572,532

Provision for loan losses (Note E) 3,187,261 1,477,466 1,676,801
------------------------------------------------
Net interest income after provision for loan
losses 27,690,365 29,652,056 27,895,731
------------------------------------------------
OTHER INCOME
Service charges on deposit accounts 4,403,245 4,355,118 4,146,179
Other service charges and fees 2,085,599 1,790,657 1,921,276
Trust Department income 1,251,412 1,061,554 937,619
Securities (losses) gains, net 109,940 (51,051) 71,023
Other 987,530 620,869 251,117
------------------------------------------------
TOTAL OTHER INCOME 8,837,726 7,777,147 7,327,214
------------------------------------------------
OTHER EXPENSE
Salaries 11,967,829 11,002,759 10,506,214
Employee benefits (Note J) 2,209,014 2,158,844 2,165,249
Net occupancy expense 1,829,694 1,782,436 1,699,585
Furniture and equipment expense 1,732,813 1,594,354 1,271,797
Other 8,316,324 7,229,930 7,018,543
------------------------------------------------
TOTAL INTEREST INCOME 26,055,674 23,768,323 22,661,388
------------------------------------------------
Income before income taxes 10,472,417 13,660,880 12,561,557
Income taxes (Note I) 1,978,707 3,742,580 3,141,273
------------------------------------------------
Net income $ 8,493,710 $ 9,918,300 $ 9,420,284
================================================
Basic and diluted income per share $1.50 $ 1.75 $1.66

The accompanying notes are an integral part of
these statements.
</TABLE>

'94 '95 '96 '97 '98
--- --- --- --- ---
0.49 0.57 0.58 0.63 0.69

[GRAPH APPEARS HERE]

- --------------------------
DIVIDENDS PER COMMON SHARE
(in dollars)

'94 '95 '96 '97 '98
--- --- --- --- ---
631.0 673.7 720.0 762.5 777.0

[GRAPH APPEARS HERE]

- -----------------------
ASSET GROWTH
(in millions of dollars)

All financial data has been restated to reflect the 1998
merger. Per share and common stock data has been adjusted retroactively for
stock splits.

<PAGE>

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
Accumulated
Other
Years ended December 31, Comprehensive Common Undivided Comprehensive
1998, 1997 and 1996 Income Stock Surplus Profits Income Total
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1995,
as previously reported $1,200,000 $33,002,133 $ 25,163,899 $ 906,236 $ 60,272,268
Stock split in 1997 effected
in the form of a stock dividend 3,600,000 - (3,600,000) - -
Equity from acquisition
accounted for as a pooling
of interests (Note B) 864,736 5,464,731 4,123,186 372,194 10,824,847
-----------------------------------------------------------------------
Balance, December 31, 1995, as restated 5,664,736 38,466,864 25,687,085 1,278,430 71,097,115
Comprehensive income:
Net income for 1996 $ 9,420,284 - - 9,420,284 - 9,420,284
Net change in unrealized
gains (losses) on securities
available-for-sale, net of tax (922,935) - - - (922,935) (922,935)
-----------
Comprehensive income $ 8,497,349
===========
Cash dividends declared,
$.58 per share - - (3,310,669) - (3,310,669)
-----------------------------------------------------------------------
Balance, December 31, 1996 5,664,736 38,466,864 31,796,700 355,495 76,283,795
Comprehensive income:
Net income for 1997 $ 9,918,300 - - 9,918,300 - 9,918,300
Net change in unrealized
gains (losses) on securities
available-for-sale, net of tax 257,637 - - - 257,637 257,637
-----------
Comprehensive income $10,175,937
===========
Cash dividends declared,
$.63 per share - - (3,555,592) - (3,555,592)
-----------------------------------------------------------------------
Balance, December 31, 1997 5,664,736 38,466,864 38,159,408 613,132 82,904,140
Comprehensive income:
Net income for 1998 $ 8,493,710 - - 8,493,710 - 8,493,710
Net change in unrealized
gains (losses) on securities
available-for-sale, net of tax 809,025 - - - 809,025 809,025
-----------
Comprehensive income $ 9,302,735
===========
Purchase of fractional shares - (5,766) - - (5,766)
Cash dividends declared,
$.69 per share - - (3,907,242) - (3,907,242)
-----------------------------------------------------------------------
Balance, December 31, 1998 $ 5,664,736 $38,461,098 $42,745,876 $1,422,157 $88,293,867
=======================================================================
</TABLE>
The accompanying notes are an integral part of these statements.

'94 '95 '96 '97 '98
--- --- --- --- ---
1.44 1.55 1.66 1.75 1.50

[GRAPH APPEARS HERE]

- -------------------
EARNINGS PER SHARE
(in dollars)

'94 '95 '96 '97 '98
--- --- --- --- ---
60.8 71.5 76.7 82.9 88.3

[GRAPH APPEARS HERE]

- -----------------------
TOTAL EQUITY CAPITAL
(in millions of dollars)

All financial data has been restated to reflect the 1998 merger. Per share and
common stock data has been adjusted retroactively for stock splits.
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Years ended December 31, 1998 1997 1996
(NOTE B) (NOTE B)
-----------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,493,710 $ 9,918,300 $ 9,420,284

Adjustments to reconcile net income to net cash:
Depreciation and amortization 2,206,421 2,022,903 1,768,321
Deferred income taxes (credits) (1,304,053) (228,159) (98,365)
Provision for loan losses 3,187,261 1,477,466 1,676,801
FHLB stock dividend (123,900) (138,800) (125,700)
Losses (gains) on sale of securities (109,940) 51,051 (71,023)
Deferred credits (80,193) (122,650) (109,119)
Increase in interest receivable (561,645) (607,491) (135,586)
Increase in other assets (5,522,168) (1,349,092) (1,426,410)
Increase (decrease) in interest payable (447,564) 326,897 (120,831)
Increase (decrease) in other liabilities 887,208 46,340 (224,556)
-----------------------------------------------------------
Net cash provided by operating activities 6,625,137 11,396,765 10,553,816
-----------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available-for-sale (85,173,809) (63,705,612) (33,526,468)
Proceeds from sales of securities available-for-sale 29,199,636 9,843,386 8,722,708
Proceeds from maturities and calls of securities
available-for-sale 62,702,758 38,543,233 41,190,756
Proceeds from maturities and calls of securities
held-to-maturity 202,144 315,458 399,869
Increase in loans (13,722,504) (18,228,177) (52,345,274)
Additions to premises and equipment (765,037) (1,928,019) (2,226,619)
-----------------------------------------------------------
Net cash used in investing activities (7,556,812) (35,159,731) (37,785,028)
-----------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits 24,919,407 20,518,084 26,854,459
Dividends paid on common stock (3,609,273) (3,164,186) (3,274,669)
Net increase (decrease) in borrowed funds (16,577,690) 15,045,603 14,569,123
Other - (425,230) -
-----------------------------------------------------------
Net cash provided by financing activities 4,732,444 31,974,271 38,148,913
-----------------------------------------------------------
Net increase in cash and cash equivalents 3,800,769 8,211,305 10,917,701
Cash and cash equivalents at beginning of year 50,532,742 42,321,437 31,403,736
-----------------------------------------------------------
Cash and cash equivalents at end of year $ 54,333,511 $ 50,532,742 $ 42,321,437
===========================================================
</TABLE>
The accompanying notes are an integral part of these statements.

'94 '95 '96 '97 '98
--- --- --- --- ---
351.8 399.2 449.2 466.1 476.7

[GRAPH APPEARS HERE]

- -----------------------
NET LOANS
(in millions of dollars)

'94 '95 '96 '97 '98
--- --- --- --- ---
528.5 578.9 605.8 626.3 651.2

[GRAPH APPEARS HERE]

- -----------------------
DEPOSITS
(in millions of dollars)

All financial data has been restated to reflect the 1998 merger. Per share and
common stock data has been adjusted retroactively for stock splits.
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, DECEMBER 31, 1998 AND 1997

NBC Capital Corporation (the "Corporation"), and its subsidiaries, follow
generally accepted accounting principles, including, where applicable, general
practices within the banking industry.

1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the
Corporation and

National Bank of Commerce (NBC), a wholly-owned subsidiary of
the Corporation,

First National Finance Company, a wholly-owned subsidiary of the
Corporation,

NBC Service Corporation, a wholly-owned subsidiary of NBC, and

Commerce National Insurance Company, a 79%-owned subsidiary of NBC
Service Corporation.

Significant intercompany accounts and transactions have been eliminated.

2. NATURE OF OPERATIONS

The Corporation is a bank holding company. Its primary asset is its
investment in its subsidiary bank. NBC provides full banking services,
including trust services. The bank operates under a national bank charter and
is subject to regulation of the Office of the Comptroller of the Currency.
The area served by NBC is the North Central region of Mississippi with
locations in ten communities and the Tuscaloosa, Alabama area. The primary
asset of NBC Service Corporation is its investment in Commerce National
Insurance Company, a life insurance company. First National Finance Company
is a finance company located in West Point, Mississippi.

3. ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

4. SECURITIES

Investments in securities are classified into three categories and are
accounted for as follows:

SECURITIES AVAILABLE-FOR-SALE Securities classified as available-for-sale are
those securities that are intended to be held for an indefinite period of
time, but not necessarily to maturity. Any decision to sell a security
classified as available-for-sale would be based on various factors, including
movements in interest rates, liquidity needs, security risk assessments,
changes in the mix of assets and liabilities and other similar factors. These
securities are carried at their estimated fair value, and the net unrealized
gain or loss is reported as accumulated other comprehensive income, net of
tax, until realized. Premiums and discounts are recognized in interest income
using the interest method.

Gains and losses on the sale of securities available-for-sale are determined
using the adjusted cost of the specific security sold.

SECURITIES HELD-TO-MATURITY Securities classified as held-to-maturity are
those securities for which there is a positive intent and ability to hold to
maturity. These securities are carried at cost adjusted for amortization of
premium and accretion of discount, computed by the interest method.

TRADING ACCOUNT SECURITIES Trading account securities are those securities
which are held for the purpose of selling them at a profit. There were no
trading account securities on hand at December 31, 1998 and 1997.

5. LOANS

Loans are carried at the principal amount outstanding. Interest income on
loans is recognized based on the principal balance outstanding and the stated
rate of the loan.

Loans are generally placed on a nonaccrual status when principal or interest
is past due ninety days, or when specifically determined to be impaired. When
a loan is placed on nonaccrual status, interest accrued but not received is
generally reversed against interest income. If collectibility is in doubt,
cash receipts on nonaccrual loans are used to reduce principal rather than
recorded as interest income.

Loan origination fees and certain direct origination costs are capitalized
and recognized as an adjustment of the yield on the related loan.

6. ALLOWANCE FOR LOAN LOSSES

For financial reporting purposes, the provision for loan losses charged to
operations is based upon Management's estimations of the amount necessary to
maintain the allowance at an adequate level, considering past loan loss
experience, current economic conditions, the value of any underlying
collateral, credit reviews of the loan portfolio,
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

changes in the size and character of the loan portfolio and other factors
warranting consideration. Allowances for any impaired loans are generally
determined based on collateral values. Loans are charged against the
allowance for loan losses when management believes that the collectibility
of the principal is unlikely. The allowance is maintained at a level
believed adequate by management to absorb potential loan losses.

7. PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation and
amortization. Depreciation and amortization are determined using the
straight-line method at rates calculated to depreciate or amortize the cost
of assets over their estimated useful lives.

Maintenance and repairs of property and equipment are charged to operations,
and major improvements are capitalized. Upon retirement, sale, or other
disposition of property and equipment, the cost and accumulated depreciation
are eliminated from the accounts, and any gains or losses are included in
operations.

8. OTHER REAL ESTATE

Other real estate consists of properties acquired through foreclosure and is
recorded at the lower of cost or current appraisal less estimated costs to
sell. Any write-down from the cost to fair value required at the time of
foreclosure is charged to the allowance for loan losses. Subsequent gains or
losses on other real estate are reported in other operating income or
expenses.

9. INTANGIBLE ASSETS

Intangible assets, consisting principally of goodwill associated with
acquisitions, are being amortized to expense using the straight-line method
over a fifteen-year period. Amortization expense was $331,673 for 1998,
$310,148 for 1997, and $309,545 for 1996.

10. INCOME TAXES

Income taxes are provided for the tax effects of the transactions reported
in the consolidated financial statements and consist of taxes currently
payable, plus deferred taxes related primarily to differences between the
basis of securities, allowance for loan losses, premises and equipment,
other real estate and prepaid or accrued employee benefits for financial and
income tax reporting. The deferred tax assets and liabilities represent the
future tax consequences of those differences, which will either be taxable
or deductible when the assets and liabilities are recovered or settled.

The Corporation and its subsidiaries (except for Commerce National Insurance
Company) file consolidated income tax returns. The subsidiaries provide for
income taxes on a separate return basis and remit to the Corporation amounts
determined to be payable.

11. TRUST ASSETS

Assets of the Trust Department, other than cash on deposit, are not included
in the accompanying balance sheets, since such items are not assets of the
banks.

12. EMPLOYEE BENEFITS

NBC maintains a noncontributory defined benefit pension plan covering
substantially all employees. The plan calls for benefits to be paid to
eligible employees at retirement based primarily upon years of service and
compensation. Contributions to the plan reflect benefits attributed to
employees' services to date, as well as services expected to be earned in
the future. The annual pension cost charged to expense is actuarially
determined in accordance with the provisions of Financial Accounting
Standards Board (FASB) Statement No. 87, "Employers' Accounting for
Pensions."

NBC provides a deferred compensation arrangement (401(k) plan) whereby
employees contribute a percentage of their compensation. For employee
contributions of five percent or less, NBC contributes matching
contributions of twenty-five percent of the employee's contribution to the
plan. Beginning in 1998, NBC made matching contributions of fifty percent of
employee contributions of six percent or less for employees with twenty
years or less of service. For employees with service in excess of twenty
years, the matching contribution is seventy-five percent of employee
contributions of six percent or less.

Employees of NBC participate in a nonleveraged Employee Stock Ownership Plan
(ESOP) through which common stock of the Corporation is purchased at its
market price for the benefit of employees. Contributions are made at the
discretion of the Board of Directors and are expensed in the applicable
year. The ESOP is accounted for in accordance with Statement of Position 93-
6, "Employers' Accounting for Employee Stock Ownership Plans."

The Corporation and its subsidiary bank have various deferred income and
supplemental retirement plans for certain directors and key executive and
senior officers. Life insurance contracts have been purchased which may be
used to fund payments under the plans. The estimated present value of the
projected payments under the plans is being accrued to expense over the
remaining expected term of each participant's active employment.
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - EMPLOYEE BENEFITS continued

The Corporation provides an employee stock benefit plan whereby 8,434 shares
(adjusted for stock split) of the Corporation's stock have been assigned for
the benefit of certain key employees. Under the terms of the plan,
retirement or similar payments will be equal to the fair market value of the
stock plus all cash dividends paid since the adoption of the agreement.
Compensation expense was recorded at the establishment date based on the
market value of the stock. The difference between any increase or decrease
in the value of the stock is recorded as an adjustment to salaries.

13. CASH FLOWS

For purposes of reporting cash flows, cash and cash equivalents include cash
on hand and amounts due from banks, interest-bearing deposits with banks,
and federal funds sold. Generally, federal funds are sold for one to seven
day periods.

14. COMMON STOCK AND PER SHARE DATA

The computation of per share data is based on 5,664,736 shares outstanding
during each year. In February, 1997, the FASB issued Statement No. 128,
"Earnings Per Share." Under Statement No. 128, two earnings per share (EPS)
amounts are to be considered and presented. Basic EPS is calculated based on
income available to common shareholders by the weighted-average number of
common shares outstanding during the reporting period. Diluted EPS includes
any additional dilution from potential common stock outstanding, such as
exercise of stock options. The Corporation has no arrangements resulting in
dilutive common stock outstanding.

Common stock and per share data has been adjusted for all periods presented
for the 1997 four-for-one stock split effected in the form of a 300% stock
dividend.

15. OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

In the ordinary course of business, NBC enters into off-balance sheet
financial instruments consisting of commitments to extend credit, credit
card lines, commercial and similar letters of credit and commitments to
purchase securities. Such financial instruments are recorded in the
financial statements when they are exercised.

16. ACCOUNTING PRONOUNCEMENTS

In June, 1997, the FASB issued Statement No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Among other things,
Statement No. 131 requires public companies to report (i) certain financial
and descriptive information about their reportable operating segments (as
defined), and (ii) certain enterprise-wide financial information about
products and services, geographic areas and major customers. The required
segment financial disclosures include a measure of profit or loss, certain
specific revenue and expense items, and total assets in annual and interim
financial statements. Management believes that the Corporation and its
subsidiary operate under one segment, commercial banking, and additional
disclosure is not required.

In February, 1998, the FASB issued Statement No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits." Statement No.
132 standardizes disclosure requirements for pensions and other
postretirement benefits. The Corporation adopted Statement No. 132 in 1998
and applied its requirements retroactively. Statement No. 132 does not
change the recognition or measurement of pensions and other postretirement
benefits and, therefore, its adoption had no effect on the Corporation's
consolidated condition or consolidated results of operations.

In June, 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and for Hedging Activities." Statement No. 133 requires all
derivatives to be recorded on the balance sheet at fair value. Statement No.
133 is effective for fiscal periods beginning after June 15, 1999, and is
not expected to have a material effect on the Corporation's consolidated
financial statements.

NOTE B - ACQUISITION AND REORGANIZATION

On December 31, 1998, the Corporation acquired all of the outstanding common
stock of First National Corporation of West Point ("First National") in
exchange for 864,736 shares of the Corporation's common stock and a nominal
amount of cash in lieu of fractional shares. Immediately following the
merger, First National's wholly-owned subsidiaries, First National Bank of
West Point and National Bank of the South were merged into NBC of
Mississippi and NBC of Tuscaloosa, respectively. Concurrently, the
Corporation's subsidiary, NBC of Tuscaloosa, was merged into NBC of
Mississippi. NBC of Mississippi was the surviving institution and its name
changed to NBC. First National Finance Company, a wholly-owned finance
company subsidiary of First National became a wholly-owned subsidiary of the
Corporation. The acquisition of First National, and its subsidiaries has
been accounted for as a pooling of interests and, accordingly, all prior
financial statements have been restated to include the consolidated accounts
and consolidated operations of First National and its subsidiaries. The
effect of the pooling of interests on reported operations follows:
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
First National
NBC Capital Corporation Currently
Corporation of West Point Reported
-------------------------------------------
<S> <C> <C> <C>
1998:
Net interest income $25,474,495 $5,403,131 $30,877,626
Provision for loan losses 1,040,000 2,147,261 3,187,261
Other income 8,294,897 542,829 8,837,726
Other expense 20,827,115 5,228,559 26,055,674
Net income (loss) 9,256,680 (762,970) 8,493,710

1997:
Net interest income $25,703,891 $5,425,631 $31,129,522
Provision for loan losses 1,100,000 377,466 1,477,466
Other income 7,157,498 619,649 7,777,147
Other expense 19,720,708 4,047,615 23,768,323
Net income 8,751,241 1,167,059 9,918,300

1996:
Net interest income $24,536,796 $5,035,736 $29,572,532
Provision for loan losses 1,314,000 362,801 1,676,801
Other income 6,640,738 686,476 7,327,214
Other expense 18,970,936 3,690,452 22,661,388
Net income 8,184,880 1,235,404 9,420,284

</TABLE>

Merger-related expenses associated with the First National acquisition of
$2,930,054 ($1,844,677 after tax) are included in the consolidated statement
of income for the year ended December 31, 1998.

NOTE C - STOCK SPLIT

At a meeting of the shareholders on October 14, 1997, the authorized shares of
common stock of the Corporation were increased from 3,000,000 to 10,000,000 in
connection with the 1997 four-for-one common stock split effected in the form
of a 300% stock dividend. Accordingly, outstanding shares of common stock were
increased by 3,600,000. A transfer of $3,600,000, representing the par value
of additional shares issued, was made from undivided profits to the common
stock account. References in the consolidated financial statements and notes
thereto with regard to common stock, per share, and related data have been
retroactively adjusted to give effect to the transaction.

NOTE D - SECURITIES

A summary of amortized cost and estimated fair value of securities available-
for-sale and securities held-to-maturity at December 31, 1998 and 1997,
follows:

<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
December 31, 1998 Cost Gains Losses Value
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities available-for-sale:
U. S. Treasury securities $ 15,813,389 $ 173,281 $ - $ 15,986,670
Obligations of other U. S.
Government agencies 31,130,595 281,025 15,982 31,395,638
Obligations of states and
municipal subdivisions 82,130,001 1,547,933 48,102 83,629,832
Mortgage-backed securities 34,704,828 327,464 86,833 34,945,459
Equity securities 4,239,600 - - 4,239,600
Other securities 2,547,597 37,279 58,953 2,525,923
-------------------------------------------------------------
$170,566,010 $2,366,982 $209,870 $172,723,122
=============================================================
Securities held-to-maturity:
Obligations of states and
municipal subdivisions $ 31,155,694 $3,288,518 $ - $ 34,444,212
=============================================================
December 31, 1997
Securities available-for-sale:
U. S. Treasury securities $ 32,803,200 $ 106,764 $ 96,905 $ 32,813,059
Obligations of other U. S.
Government agencies 36,679,877 173,207 77,218 36,775,866
Obligations of states and
municipal subdivisions 57,176,019 655,030 35,499 57,795,550
Mortgage-backed securities 43,389,084 308,136 51,332 43,645,888
Equity securities 4,669,400 - - 4,669,400
Other securities 2,343,175 18,115 71,623 2,289,667
-------------------------------------------------------------
$177,060,755 $1,261,252 $332,577 $177,989,430
=============================================================
Securities held-to-maturity:
Obligations of states and
municipal subdivisions $ 31,357,838 $3,049,045 $ 1,860 $ 34,405,023
=============================================================
</TABLE>

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D - SECURITIES continued

The scheduled maturities of securities available-for-sale and securities
held-to-maturity at December 31, 1998, are as follows:

<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
---------------------------- ------------------------
Amortized Estimated Fair Amortized Estimated Fair
Cost Value Cost Value
---------------------------- -------------------------
<S> <C> <C> <C> <C>
Due in one year or less $ 21,786,044 $ 21,886,444 $ 250,000 $ 253,498
Due after one year through
five years 55,132,757 56,020,899 5,125,507 5,402,058
Due after five years through
ten years 51,164,941 52,052,043 17,034,509 18,959,221
Due after ten years 3,211,054 3,307,849 8,745,678 9,829,435
Mortgage-backed securities
and other securities 39,271,214 39,455,887 - -
---------------------------- -------------------------
$170,566,010 $172,723,122 $31,155,694 $34,444,212
============================ =========================
</TABLE>

Equity securities consist of stock in the Federal Reserve Bank and the
Federal Home Loan Bank (FHLB). The transferability of this stock is
restricted.

Gross gains of $131,332, $21,899, and $77,944, and gross losses of $21,392,
$72,950, and $6,921, were realized on securities available-for-sale in 1998,
1997, and 1996, respectively.

Securities with a carrying value of $124,301,601 and $124,199,619 at
December 31, 1998 and 1997, respectively, were pledged to secure public and
trust deposits and for other purposes as required or permitted by law.

NOTE E - LOANS

Loans outstanding include the following types:

(in thousands)
-------------------
December 31, 1998 1997
-------------------
Commercial, financial and agricultural $ 76,389 $ 76,542
Real estate - construction 24,284 25,341
Real estate - mortgage 284,566 269,462
Installment loans to individuals 93,537 95,595
Other 7,526 7,155
-------------------
486,302 474,095
Allowance for loan losses (9,572) (7,980)
-------------------
$476,730 $466,115
===================

Transactions in the allowance for loan losses are summarized as follows:

Years Ended December 31, 1998 1997 1996
-----------------------------------
<S> <C> <C> <C>
Balance at beginning of year $ 7,979,788 $7,525,267 $7,116,760
Additions:
Provision for loan losses charged
to operating expense 3,187,261 1,477,466 1,676,801
Recoveries of loans previously charged off 359,788 581,882 381,758
-----------------------------------
11,526,837 9,584,615 9,175,319
Deductions:
Loans charged off 1,955,169 1,479,241 1,650,052
Allowance applicable to loans sold
of finance company - 125,586 -
-----------------------------------
Balance at end of year $ 9,571,668 $7,979,788 $7,525,267
===================================
</TABLE>

At December 31, 1998 and 1997, the recorded investment in loans considered
to be impaired totaled approximately $1,850,000 and $2,500,000,
respectively. The allowance for loan losses related to these loans
approximated $1,280,000 and $825,000 at December 31, 1998 and 1997,
respectively. The average recorded investment in impaired loans during the
year ended December 31, 1998, was approximately $1,155,000. For the years
ended December 31, 1998 and 1997, the amount of income recognized on
impaired loans was immaterial.

NOTE F - PREMISES AND EQUIPMENT

Premises and equipment are stated at cost, less accumulated depreciation and
amortization as follows:

December 31,
Estimated Useful Lives ----------------------------------
In Years 1998 1997
------------------------------------------------------------------------
<S> <C> <C> <C>
Premises:
Land - $ 2,847,117 $ 2,901,617
Buildings, construction
and improvements 10 - 50 14,846,717 14,792,239
----------------------------------
17,693,834 17,693,856
Equipment 3 - 10 10,926,358 10,321,807
----------------------------------
28,620,192 28,015,663
Less accumulated depreciation
and amortization 13,599,634 12,061,299
----------------------------------
$15,020,558 $15,954,364
==================================
</TABLE>

The amount charged to operating expenses for depreciation was $1,698,843 for
1998, $1,651,403 for 1997, and $1,364,569 for 1996.
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE G - BORROWED FUNDS

Federal funds purchased and securities sold under repurchase agreements
consisted of the following at December 31, 1998 and 1997:

1998 1997
-------------------------
Federal funds purchased $ - $ -
Securities sold under agreement to
repurchase 10,463,833 20,021,209
-------------------------
$10,463,833 $20,021,209
=========================

Federal funds purchased and securities sold under agreements to repurchase
generally mature one to seven days from the transaction date. Information
concerning securities sold under agreement to repurchase is summarized as
follows:

1998 1997
-------------------------
Average balance during the year $12,936,484 $11,685,255
Average interest rate during the year 4.31% 4.51%
Maximum month-end balance during the year $15,188,036 $20,021,209

Securities underlying the repurchase agreements remain under the control of
NBC.

Other borrowed funds consisted of the following at December 31, 1998 and
1997:

1998 1997
------------------------ --------------------------
Average Average
Rate Amount Rate Amount
------------------------ --------------------------
<S> <C> <C> <C> <C>
FHLB advances maturing in:
1998 - $ - 4.78% $ 278,226
1999 6.23% 3,428,699 5.86% 1,540,000
2000 5.78% 3,456,036 6.07% 7,186,311
2001 5.91% 3,312,652 5.90% 4,256,915
2002 6.08% 3,258,285 6.08% 4,057,781
2004 6.63% 1,020,362 6.63% 1,169,186
2005 6.22% 980,534 6.22% 1,019,304
Notes payable to a
correspondent bank - - 7.87% 1,150,000
Treasury tax and loan note Adjustable 591,819 Adjustable 2,410,978
----------- -----------
$16,048,387 $23,068,701
=========== ===========
</TABLE>
The advances due to the FHLB are collateralized by first mortgage loans, FHLB
capital stock, and amounts on deposit with the FHLB. The treasury tax and
loan note generally matures within one to sixty days from the transaction
date. Interest is paid at an adjustable rate as set by the U. S. Government.

Annual principal repayment requirements on borrowings with initial or remaining
terms of one year or more at December 31, 1998, are as follows:

Year Amount
--------------------------
1999 $ 6,988,910
2000 4,125,541
2001 2,436,282
2002 790,592
2003 259,917
Thereafter 855,326
-----------
$15,456,568
===========

NOTE H - COMPREHENSIVE INCOME

As of January 1, 1998, the Corporation and its subsidiaries adopted FASB
Statement No. 130, "Reporting Comprehensive Income." This statement
establishes standards for the reporting and display of comprehensive income
and its components in the financial statements. Unrealized gains and losses
on securities available-for-sale, which prior to adoption were reported
separately in stockholders' equity, are required to be included in other
comprehensive income. Prior year financial statements have been reclassified
to conform to the requirements of Statement No. 130. The adoption of this
statement had no impact on net income or stockholders' equity.

In the calculation of comprehensive income, certain reclassification
adjustments are made to avoid double counting amounts that are displayed as
part of net income for a period that also had been displayed as part of
other comprehensive income. The disclosure of the reclassification amounts
are as follows:

Years Ended December 31, 1998 1997 1996
----------------------------------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-
for-sale, net of tax, arising during year $877,765 $225,998 $(876,360)
Less reclassification adjustment for (gains)
losses included in net income, net of tax (68,740) 31,639 (46,575)
----------------------------------
Net change in unrealized gains (losses) on
securities available-for-sale, net of tax $809,025 $257,637 $(922,935)
==================================
</TABLE>
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE I - INCOME TAXES

The provision for income taxes including the tax effects of securities
transactions [1998 - $41,200; 1997 - ($19,412); 1996 - $24,448] is as
follows:
<TABLE>
<CAPTION>

Years Ended December 31, 1998 1997 1996
--------------------------------------------------
<S> <C> <C> <C>
Current tax expense $ 3,282,760 $3,970,739 $3,239,638
Deferred tax benefit (1,304,053) (228,159) (98,365)
--------------------------------------------------
$ 1,978,707 $3,742,580 $3,141,273
==================================================
</TABLE>
Deferred tax provisions are applicable to the following items:
<TABLE>
<CAPTION>

Years Ended December 31, 1998 1997 1996
--------------------------------------------------
<S> <C> <C> <C>
Depreciation $ (18,047) $ 3,291 $ 67,118
Loans and allowance for loan losses (608,081) (534,162) (321,920)
Securities (83,628) 90,437 86,250
Employee benefits (361,238) 125,920 121,543
Deferred loan fees/costs 12,705 37,465 41,680
Other, net (245,764) 48,890 (93,036)
--------------------------------------------------
$(1,304,053) $(228,159) $ (98,365)
==================================================
</TABLE>

The difference between the total expected tax expense at the federal tax
rate of 34% and the reported income tax expense is as follows:

<TABLE>
<CAPTION>
Years Ended December 31, 1998 1997 1996
-----------------------------------------------
<S> <C> <C> <C>
Tax on income before income taxes $ 3,560,622 $ 4,644,700 $ 4,270,931
Increase (decrease) resulting from:
Tax-exempt income (2,030,076) (1,421,755) (1,520,945)
Nondeductible expenses 317,456 263,337 285,256
State income taxes, net of federal benefit 320,292 293,310 218,460
Other, net (189,587) (37,012) (112,429)
-----------------------------------------------
$ 1,978,707 $ 3,742,580 $ 3,141,273
===============================================
</TABLE>

The components of the net deferred tax asset included in other assets as of
December 31, 1998 and 1997, are as follows:

<TABLE>
<CAPTION>
1998 1997
---------------------------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses $ 3,518,221 $ 2,910,140
Employee benefits 385,878 24,640
Other 378,545 132,781
---------------------------
Total deferred tax assets 4,282,644 3,067,561
---------------------------
Deferred tax liabilities:
Premises and equipment (1,029,125) (1,047,172)
Deferred loan fees/costs (204,180) (191,475)
Securities (398,700) (482,328)
Unrealized gain on securities available-
for-sale (725,727) (313,649)
---------------------------
Total deferred tax liabilities (2,357,732) (2,034,624)
---------------------------
Net deferred tax asset $ 1,924,912 $ 1,032,937
===========================

</TABLE>

NOTE J - EMPLOYEE BENEFITS

The following table sets forth the defined benefit plan's funded status and
amounts recognized in the Corporation's consolidated financial statements at
December 31, 1998 and 1997:
<TABLE>
<CAPTION>

1998 1997
---------------------------
Change in benefit obligation:
<S> <C> <C>
Benefit obligation at beginning of year $ 8,726,460 $ 7,462,565
Service cost 410,062 488,832
Interest cost 560,420 591,719
Actuarial loss 490,758 699,894
Amendments (995,687) -
Benefits paid (824,727) (516,550)
---------------------------
Benefit obligation at end of year 8,367,286 8,726,460
---------------------------
</TABLE>
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
1998 1997
--------------------------
<S> <C> <C>
Change in plan assets:
Fair value of plan assets at beginning of year $ 9,387,721 $ 7,657,982
Expected return on plan assets 842,600 1,390,601
Employer contributions - 872,316
Benefits paid (824,727) (516,550)
Asset gains deferred for later recognition 582,888 (16,628)
--------------------------
Fair value of plan assets at end of year 9,988,482 9,387,721
--------------------------
Funded status 1,621,196 661,261
Unrecognized net asset at adoption of Statement No. 87
being recognized over employees' remaining service life (65,138) (97,709)
Unrecognized net actuarial loss 790,009 902,881
Unrecognized prior service cost (868,080) 57,153
--------------------------
Prepaid benefit cost $ 1,477,987 $ 1,523,586
==========================
Weighted average assumptions:
Discount rate 7.00% 7.50%
Expected return on plan assets 9.50% 9.50%
Rate of compensation increase 5.00% 5.00%

Components of net periodic benefit cost:
Service cost $ 410,062 $ 488,832
Interest cost 560,420 591,719
Expected return on plan assets (842,600) (706,228)
Amortization of prior service costs (70,454) 6,137
Amortization of transition obligation (32,571) (32,571)
Recognized net actuarial gain 20,742 23,307
--------------------------
$ 45,599 $ 371,196
==========================
</TABLE>

Contributions to the ESOP amounted to $80,000 in 1998, $150,000 in 1997, and
$200,000 in 1996. At December 31, 1998, the plan held 332,497 shares of the
Corporation's common stock. Contributions to the 401(k) plan amounted to
$264,866 in 1998, $133,899 in 1997, and $116,935 in 1996.

Expenses under the deferred income and supplemental retirement plans, net of
increases in the cash surrender value of life insurance contracts, were not
material for 1998, 1997, and 1996.

NOTE K - RELATED PARTY TRANSACTIONS

In the normal course of business, loans are made to directors and executive
officers and to companies in which they have a significant ownership interest.
In the opinion of Management, these loans are made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other parties, and are consistent with
sound banking practices and are within applicable regulatory and lending
limitations. The activity in loans to directors, executive officers, and their
affiliates during 1998 is summarized as follows:

Loans outstanding at January 1, 1998 $ 8,399,005
New loans 8,360,730
Repayments (8,364,925)
------------
Loans outstanding at December 31, 1998 $ 8,394,810
============

Also, in the normal course of business, the Corporation and NBC enter into
transactions for services with companies and firms whose principals are
directors and stockholders.

NOTE L - REGULATORY MATTERS

Any dividends paid by the Corporation are provided from dividends received
from its subsidiary bank. Under regulations controlling national banks, the
payment of any dividends by a bank without prior approval of the Comptroller
of the Currency is limited to the current year's net profits (as defined by
the Comptroller of the Currency) and retained net profits of the two preceding
years.

The Corporation and its subsidiary bank are subject to regulatory capital
requirements administered by federal 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 the Corporation's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Corporation and its subsidiary bank 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
judgment by regulators about components, risk weightings, and other related
factors.

To ensure capital adequacy, quantitative measures have been established by
regulators and these require the Corporation and its bank subsidiary to
maintain minimum amounts and ratios (set forth in the table below) of total
and Tier I capital (as defined) to risk-weighted assets (as defined), and of
Tier I capital to adjusted average total assets
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE L - REGULATORY MATTERS continued

(leverage). Management believes, as of December 31, 1998, that the Corporation
and its subsidiary bank exceed all capital adequacy requirements.

At December 31, 1998, NBC was categorized by regulators as well-capitalized
under the regulatory framework for prompt corrective action. A financial
institution is considered to be well-capitalized if it has total risk-based
capital of 10% or more, has a Tier I risk-based ratio of 6% or more, and has a
Tier I leverage capital ratio of 5% or more. There are no conditions or
anticipated events that, in the opinion of Management, would change the
categorization.

The actual capital amounts and ratios at December 31, 1998 and 1997, are
presented in the following table. No amount was deducted from capital for
interest-rate risk exposure:
<TABLE>
<CAPTION>

NBC Capital Corporation
(Consolidated) NBC
------------------------ -------------------------
($ In Thousands) Amount Ratio Amount Ratio
------------------------ -------------------------
<S> <C> <C> <C> <C>
December 31, 1998:
Total risk-based $ 91,053 17.9% $ 90,878 17.9%
Tier I risk-based 84,674 16.6% 84,487 16.6%
Tier I leverage 84,674 11.0% 84,487 10.9%

December 31, 1997:
Total risk-based $ 86,808 17.5% $ 85,590 17.2%
Tier I risk-based 80,580 16.3% 79,423 16.0%
Tier I leverage 80,580 10.8% 79,423 10.6%
</TABLE>

The minimum amounts of capital and ratios as established by banking
regulators at December 31, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>

NBC Capital Corporation
(Consolidated) NBC
------------------------ -------------------------
($ In Thousands) Amount Ratio Amount Ratio
------------------------ -------------------------
<S> <C> <C> <C> <C>
December 31, 1998:
Total risk-based $ 40,826 8.0% $ 40,654 8.0%
Tier I risk-based 20,412 4.0% 20,327 4.0%
Tier I leverage 23,310 3.0% 23,296 3.0%

December 31, 1997:
Total risk-based $ 39,718 8.0% $ 39,606 8.0%
Tier I risk-based 19,858 4.0% 19,803 4.0%
Tier I leverage 22,350 3.0% 22,260 3.0%
</TABLE>

NBC is required to maintain average reserve balances with the Federal Reserve
Bank. The reserve balance varies depending upon the types and amounts of
deposits. At December 31, 1998, the required reserve balance with the Federal
Reserve Bank was approximately $3,550,000.

NOTE M - COMMITMENTS AND CONTINGENT LIABILITIES

The consolidated financial statements do not reflect various commitments
and contingent liabilities which arise in the normal course of banking
business and which involve elements of credit risk, interest rate risk, and
liquidity risk. The commitments and contingent liabilities are commitments to
extend credit, credit card lines, and commercial and similar letters of
credit. A summary of commitments and contingent liabilities at December 31,
1998 and 1997, is as follows:

Contractual Amount
-----------------------
($ In Thousands) 1998 1997
-----------------------
Commitments to extend credit $ 51,644 $ 63,725
Credit card lines 1,932 3,019
Commercial and similar letters of credit 3,523 4,788

Commitments to extend credit, credit card lines, and commercial and similar
letters of credit include some exposure to credit loss in the event of
nonperformance of the customer. The credit policies and procedures for such
commitments are the same as those used for lending activities. Because these
instruments have fixed maturity dates and because a number expire without
being drawn upon, they generally do not present any significant liquidity
risk. No significant losses on commitments were incurred in 1998 or 1997, nor
are any significant losses as a result of these transactions anticipated.

NBC is defendant in various pending and threatened legal actions arising in
the normal course of business. In the opinion of Management, based upon the
advice of legal counsel, the ultimate disposition of these matters will not
have a material effect on the Corporation's consolidated financial
statements.

NOTE N - CONCENTRATIONS OF CREDIT

Most of the loans, commitments and letters of credit of NBC have been granted
to customers in its market areas. Generally, such customers are also
depositors. Investments in state and municipal securities also involve
governmental entities within the bank's market areas. The concentrations of
credit by type of loan are set forth in Note E. The distribution of
commitments to extend credit approximates the distribution of loans
outstanding. Letters of credit were granted primarily to commercial
borrowers.
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE O - SUPPLEMENTAL CASH FLOW INFORMATION

Years Ended December 31, 1998 1997 1996
---------------------------------------------
Cash paid during the year for:
Interest $ 26,950,746 $ 25,352,192 $ 23,213,348
Income taxes 3,529,736 3,710,556 3,318,717

NOTE P - DISCLOSURE ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The following disclosure of the estimated fair value of financial instruments
is made in accordance with FASB Statement No. 107, "Disclosures About Fair
Value of Financial Instruments." The estimated fair value amounts have been
determined using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required to
interpret market data to develop the estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the amounts that
could be realized in a current market exchange. The use of different market
assumptions and/or estimation methodologies may have a material effect on the
estimated fair value amounts.

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:

CASH AND CASH EQUIVALENTS For such short-term instruments, the carrying
amount is a reasonable estimate of fair value.

SECURITIES For securities held as investments, fair value equals market price,
if available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.

LOANS The fair value of loans is estimated by discounting the future cash
flows using the current rates at which similar loans would be made to
borrowers with similar credit ratings and for the same remaining maturities.

DEPOSITS The fair values of demand deposits are, as required by Statement
No. 107, equal to the carrying value of such deposits. Demand deposits include
non-interest bearing demand deposits, savings accounts, NOW accounts, and
money market demand accounts. The fair value of variable rate term deposits,
those repricing within six months or less, approximates the carrying value of
these deposits. Discounted cash flows have been used to value fixed rate term
deposits and variable rate term deposits repricing after six months. The
discount rate used is based on interest rates currently being offered on
comparable deposits as to amount and term.

SHORT-TERM BORROWINGS The carrying value of federal funds purchased,
securities sold under agreements to repurchase and other short-term borrowings
approximates their carrying values.

FHLB AND OTHER BORROWINGS The fair value of the fixed rate borrowings are
estimated using discounted cash flows, based on current incremental borrowing
rates for similar types of borrowing arrangements. The carrying amount of
variable rate borrowings approximates their fair values.

OFF-BALANCE SHEET INSTRUMENTS Generally, commitments to extend credit and
letters of credit are for a term of thirty days to ninety days. Management is
of the opinion the estimated fair value is not significantly different from
the contractual or notational amounts.

<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
---------------------------- ----------------------------
Carrying Estimated Carrying Estimated
(In Thousands) Amount Fair Value Amount Fair Value
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Financial Instruments:
Assets:
Cash and cash equivalents $ 54,334 $ 54,334 $ 50,533 $ 50,533
Investment securities
available-for-sale 172,723 172,723 177,989 177,989
Investment securities
held-to-maturity 31,156 34,444 31,358 34,405
Loans 476,730 476,350 466,115 472,778

Liabilities:
Non-interest bearing
deposits 91,290 91,290 82,898 82,898
Interest bearing deposits 559,925 560,316 543,397 544,036
Federal funds purchased
and securities sold under
agreements to repurchase 10,464 10,464 20,021 20,021
FHLB and other borrowings 16,048 15,986 23,069 22,638
Off-balance sheet instruments 57,099 57,099 71,622 71,622
</TABLE>
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE Q - CONDENSED PARENT COMPANY STATEMENTS

Balance sheets as of December 31, 1998 and 1997, and statements of income and
cash flows for the years ended December 31, 1998, 1997 and 1996, of NBC
Capital Corporation (parent company only) are presented below:
<TABLE>
<CAPTION>

BALANCE SHEETS
1998 1997
--------------------------------
<S> <C> <C> <C>
ASSETS
Cash $ 45,100 $ 566,115
Investment in subsidiaries 88,962,574 83,469,294
Other assets 3,857,071 3,192,115
--------------------------------
$ 92,864,745 $ 87,227,524
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Dividends payable and other liabilities $ 4,570,878 $ 4,323,384
Stockholders' equity 88,293,867 82,904,140
--------------------------------
$ 92,864,745 $ 87,227,524
================================

STATEMENTS OF INCOME

Years Ended December 31, 1998 1997 1996
----------------------------------------------------
INCOME
Dividends from subsidiaries $ 4,373,376 $ 4,378,000 $ 4,122,483
Other 16,587 51,115 86,717
----------------------------------------------------
4,389,963 4,429,115 4,209,200

EXPENSE 852,832 245,357 156,370
----------------------------------------------------
Income before income taxes and equity in
undistributed earnings of subsidiaries 3,537,131 4,183,758 4,052,830
Income tax benefit 287,629 76,014 26,455
----------------------------------------------------
Income before equity in undistributed
earnings of subsidiaries 3,824,760 4,259,772 4,079,285
Equity in undistributed earnings
of subsidiaries 4,668,950 5,658,528 5,340,999
----------------------------------------------------
Net income $ 8,493,710 $ 9,918,300 $ 9,420,284
====================================================

STATEMENTS OF CASH FLOWS

Years Ended December 31, 1998 1997 1996
----------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 8,493,710 $ 9,918,300 $ 9,420,284

Equity in subsidiaries' earnings
in excess of dividends (4,668,950) (5,658,528) (5,340,999)

Other, net (586,502) (191,045) (50,563)
----------------------------------------------------
Net cash provided by operating activities 3,238,258 4,068,727 4,028,722
----------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES - (38,320) (534,179)
----------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid on common stock (3,609,273) (3,164,186) (3,274,669)

Other (150,000) (625,230) (450,000)
----------------------------------------------------
Net cash used in financing activities (3,759,273) (3,789,416) (3,724,669)
----------------------------------------------------
Net increase (decrease) in cash and cash
equivalents (521,015) 240,991 (230,126)

Cash and cash equivalents
at beginning of year 566,115 325,124 555,250
----------------------------------------------------
Cash and cash equivalents at end of year $ 45,100 $ 566,115 $ 325,124
====================================================
</TABLE>

NOTE R - SUBSEQUENT EVENT

On February 3, 1999, the Corporation entered into an Agreement and Plan of
Merger ("Plan") with FFBS Bancorp, Inc. ("FFBS"). Under the terms of the
Plan, FFBS will be merged into the Corporation through the exchange of FFBS
common stock for common stock of the Corporation. Each share of FFBS common
stock will be exchanged for .7702 shares of the Corporation's common stock.
The wholly-owned subsidiary of FFBS, First Federal Bank for Savings, will be
merged into NBC. The merger is subject to stockholder and regulatory
approval.

<PAGE>

REPORT OF T. E. LOTT & COMPANY

To the Board of Directors and Stockholders
NBC Capital Corporation

We have audited the accompanying consolidated balance sheets of NBC Capital
Corporation and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these 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 audits 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 our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly, in
all material respects, the consolidated financial position of NBC Capital
Corporation and subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.

/s/ T. E. Lott & Company

Columbus, Mississippi
January 27, 1999

(Except for Note R, as to which the date is February 3, 1999)
<PAGE>

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

The following provides a narrative discussion and analysis of significant
changes in the Corporation's results of operations and financial condition.
This discussion should be read in conjunction with the consolidated financial
statements and the supplemental financial data included elsewhere in this
report, including the five-year summary of Selected Financial Data and
Management's letter to shareholders at the beginning of this Annual Report.

Certain information included in this discussion contains forward-looking
statements and information that are based on Management's conclusions, drawn
from certain assumptions and information currently available to Management. The
Private Securities Litigation Act of 1995 encourages the disclosure of forward-
looking information by Management by providing safe harbor for such
information. Specifically, this discussion contains forward-looking statements
with respect to the adequacy of the Allowance for Loan Losses, Year 2000
compliance issues and market and credit risk disclosures. Although Management
believes that the expectations reflected in such forward-looking statements are
reasonable and based on Management's best judgements, it can give no assurance
that such expectations will prove to be correct. Such forward-looking
statements are subject to certain risk that assumptions will change and
uncertainties will materialize. Should this happen, then underlying assumptions
may prove to be significantly different and actual results may vary materially
from those anticipated or projected.

BUSINESS COMBINATIONS

On December 31, 1998, the Company ("NBC") acquired all the outstanding common
stock of First National Corporation of West Point ("FNC") in exchange for
864,736 shares of NBC's common stock. The acquisition was accounted for as a
pooling of interest and accordingly, all prior financial statements have been
restated to include the consolidated accounts and consolidated operations of
FNC and its subsidiaries from the beginning of the earliest period reported.
See Note B to the Consolidated Financial Statements for additional information.

Merger related expenses associated with the FNC acquisition of $2,930,054
($1,844,677 after tax) are included in the consolidated statement of income for
the year ended December 31, 1998. This impacted 1998 earnings per share by
approximately $.33 per share.

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Since 1994, the total assets of the Company have increased 23.1%. Loans have
increased 35.5% between 1994 and 1998. Loan growth has continued in each of the
years noted in the Summary of Selected Financial Data; however, it has slowed
during the last two years because of the increased competition for good quality
credits. The quality of the portfolio remains excellent. Net charge-offs for
1997 and 1998, were .19% and .33% of net loans outstanding, respectively.

Deposits have grown 23.2% over the period 1994-1998. During 1994, Management
had felt that it could improve profits by allowing loans to grow faster than
deposits. This practice was modified somewhat during 1995, 1996 and 1997, as
loans reached more optimum levels relative to outstanding deposits. In 1998,
Management felt that slowing deposit growth and funding loan growth by
reallocating lower yielding assets could enhance profitability. However, with
the slow down in loan growth resulting from the increased competition for good
quality credits, deposits actually grew more than loans.

Stockholders' equity has represented a consistent strength of the Company
throughout the years noted in the summary of Selected Financial Data.
Stockholders' equity has increased 45.3% since 1994. Stockholders' equity
reflected an Accumulated Other Comprehensive Income composed of unrealized gain
on "Available-for-Sale Securities" of $613,132 and $1,422,157 in 1997 and 1998,
respectively, as required to be reported under FASB 115.

Net income increased each year from 1994 through 1997. In 1998, consolidated
net income declined by $1,424,590. However, as mentioned previously in this
discussion, 1998 contains $1,844,677 of merger related expenses (net of taxes)
associated with the acquisition of FNC. Return on average assets (ROA), a
primary measure of earning strength, was 1.3% and 1.1% in 1997 and 1998,
respectively. Earnings per share have also grown from $1.44 in 1994 to $1.75 in
1997. In 1998, earnings per share was $1.50, after being impacted by
approximately $.33 for the above mentioned merger expenses. All earnings per
share amounts have been restated to reflect the 1997 stock split and the 1998
merger with FNC.

Regular cash dividends have increased in each of the years outlined in the
Summary of Selected Financial Data. Also, a special cash dividend of
approximately $.15 per share was paid in 1995 in recognition of the Company's
strong earnings and equity positions. As stated in the preceding paragraph, all
per share amounts have been restated to reflect the 1997 stock split and the
1998 merger with FNC.

Net interest income ("NII"), the primary source of earnings for the Company,
represents income generated from earning assets less the interest expense of
funding those assets. NII increased 7.0% in 1995, 6.7% in 1996 and 5.3% in
1997. In 1998,
<PAGE>

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

NII declined by 0.9%. Changes in NII may be divided into two components; first,
the change in average earning assets (volume component) and second, the change
in the net interest margin (rate component). Net interest margin represents the
difference between yields on earning assets and rates paid on interest bearing
liabilities. Net interest margin for 1998 decreased to 4.19% from 4.45% in
1997. The primary reason for this decline was a decrease in loan yields that
resulted from an overall decline in interest rates in 1998 and increased
competition for good quality loans. Also, deposit cost did not decrease by a
corresponding amount because of the competition in the market from other banks
and from the investment community. These factors were partially offset by the
growth in average earning assets of $33.2 million or 4.9% during 1998.

The Company has also maintained a consistent and disciplined asset/liability
management policy during each of the years noted in the summary. This policy
focuses on interest rate risk and rate sensitivity. The primary objective of
rate sensitivity management is to maintain interest income growth while
reducing exposure to adverse fluctuations in rates. The Company utilizes an
Asset/Liability Management Committee that evaluates and analyzes the Company's
pricing, asset/liability maturities and growth, and balance sheet mix
strategies in an effort to make informed decisions that will increase income
and limit interest rate risk. The committee uses simulation modeling as a guide
for its decision making. Modeling techniques are also utilized to forecast
changes in net income and the economic value of equity under assumed
fluctuations in interest rate levels.

Due to the potential volatility of interest rates, NBC's goal is to stabilize
the net interest margin by maintaining a neutral rate sensitive position. At
year-end 1998, the Company's balance sheet reflected approximately $12.7
million more in rate sensitive liabilities than assets that were scheduled to
reprice within one year. This represents 2.2% of total assets and would be
considered an essentially neutral rate sensitive position. It is felt that the
Company's position places it in a low interest rate risk posture. Management
has adopted a basically neutral position regarding interest rates in 1999 with
a slight bias toward higher rates during the second half of the year.
Management has never felt that speculating on changes in interest rate levels
warranted moving the Company from a neutral position in its rate sensitive
asset/liability relationships. Although earnings could be enhanced if
predictions were correct, they could also be put at significant risk if a
neutral position is deliberately avoided and interest rates move against
predictions.

The Company's Provision for Loan Losses is utilized to replenish its Reserve
for Loan Losses on its balance sheet. The reserve is maintained at a level
deemed adequate by the Board of Directors after its evaluation of the risk
exposure contained in the Company's loan portfolio. The reserve amount
maintained at the end of 1998 was deemed entirely adequate to cover exposure
within the Company's loan portfolio. The reserve has increased 34.5% since 1995
and stood at 2.0% of net loans at the end of 1998.

Non-interest income includes various service charges, fees, and commissions
collected by the Company. During 1998, non-interest income increased by 13.6%.
This increase was due to an increase in Trust Department Income of 17.9%
resulting from an overall growth in trust-related activities and a 99.2%
increase in mortgage loan fee income. This increase resulted from a very
favorable interest rate environment that increased both the number of new home
purchases and the refinancing of existing mortgages. During 1997, the non-
interest income was increased by profit realized from the sale of the assets of
Philadelphia Finance Company, a wholly owned subsidiary of the National Bank of
Commerce. The sale included the loan portfolio, as well as the fixtures and
equipment. The company remains an inactive, wholly owned subsidiary of the
Bank. Additionally, the Company settled a difference with the IRS during 1997
that affected tax years 1993 through 1996. These two items had a positive net
impact on earnings per share in 1997, of approximately $.01 per share.

Non-interest expense represents ordinary overhead expenses, including salaries,
bonuses and benefits. The Company maintains a formal salary administration
program that considers extensive comparative salary data and other indexes
supplied by a leading outside consulting firm. This data is utilized to assure
that salaries are in line and competitive to comparable jobs in the
marketplace. Incentive bonuses were expensed in each of the years noted and
were paid to employees based on the attainment of predetermined profit goals.
Overall non-interest expense increased in 1998 by approximately 9.6%. Of this
increase, salaries accounted for approximately 4.1% and other expenses
accounted for approximately 4.6%. The increase in salaries resulted from normal
raises, positions added to accommodate the Company's growth and from salaries
and bonuses paid that related to the merger with FNC. Of the total increase in
other expenses, approximately 80% were related to merger expenses incurred in
connection with the acquisition of FNC.

Changes in the Company's income tax expense have generally paralleled income
gains. The Company's effective tax rate was 25.0% in 1996, 27.4% in 1997 and
18.9% in 1998. The large decline in the effective rate in 1998 was the result
of a management decision to add high quality, tax-free municipal bonds to the
portfolio in an effort to minimize tax liabilities. The Company's ability to
further reduce income tax expense through this investment choice is limited by
the Alternative Minimum Tax Provision and the Company's normal liquidity and
balance sheet structure requirements.
<PAGE>

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY, ASSET/LIABILITY MANAGEMENT

Liquidity may be defined as the ability of the Company to meet cash flow
requirements created by decreases in deposits and/or other sources of funds or
increases in loan demand. The Company has experienced no problem with liquidity
over any of the years noted and anticipates that all liquidity requirements
will be met comfortably in the future. The Company's traditional sources of
funds from deposit increases, maturing loans and investments and earnings have
generally allowed it to consistently generate sufficient funds for liquidity
needs. The Company's loan/deposit ratio has remained steady during the last two
years, closing 1997 at 75.7% and 1998 at 74.7%. The Consolidated Statements of
Cash Flows clearly indicated that the Company has consistently generated
sufficient liquidity from traditional sources to take care of its needs and
actually increase cash and cash equivalents from $42 million at the end of 1996
to $54 million at the end of 1998. The Company has utilized the Federal Home
Loan Bank as a source of funding for fixed rate, term loan commitments. At the
end of 1998, the Company had $14.6 million outstanding to the Federal Home Loan
Bank that is scheduled to mature over the next five years. The Company expects
normal earnings and other cash flows to allow it to retire these funding lines
with no adverse effect on liquidity. The Company also offers repurchase
agreements to accommodate excess funds of some of its larger depositors.
Management believes that it is important to stabilize these traditional deposit
sources as opposed to risking the potential loss of these funds to alternative
investment arrangements. The Company had repurchase agreements amounting to
$10.5 million and $20 million at December 31, 1998, and 1997, respectively. The
level of repurchase agreement activity is limited by the availability of
investment portfolio securities to be pledged against the accounts. Management
believes that the normal sources of liquidity are sufficient to redeem the
agreement, if necessary.

The Company does not have plans at this time for any discretionary spending
that would have a material impact on liquidity. Additionally, the company has
no plans for the refinancing or redemption of any liabilities other than normal
maturities and payments relating to the borrowings from the Federal Home Loan
Bank.

As mentioned previously, the Company maintains a strict asset/liability
management policy. As part of this policy, the Company does not engage in
currency or interest rate swaps, nor does it purchase and hold any derivative
securities.

CAPITAL

Retained earnings have served as the Company's exclusive source of capital
growth over the five years noted in the summary of Selected Financial Data.
Shareholders' equity as stated previously, has grown consistently over this
period and relates quite favorably to the company's assets.

Current regulatory requirements call for a basic leverage ratio of 5.0% for a
bank to be considered as "well-capitalized." At the end of 1998, NBC maintained
an 11.0% leverage ratio that obviously allowed it to significantly exceed the
ratio required for a "well-capitalized" institution.

Regulatory authorities also evaluate a financial institution's capital under
certain risk-weighted formulas (high-risk assets would require a higher capital
allotment, lower risk assets a lower capital allotment). In this context, a
"well-capitalized" bank is required to have a Tier 1 risk-based capital ratio
(excludes reserve for loan losses) of 6.0% and a total risk-based capital ratio
(includes reserve for loan losses) of 10.0%. At the end of 1998, the Company
had a Tier 1 ratio of 16.6% and a total risk-based capital ratio of 17.9%, once
again placing the Company well above the level required for a "well-
capitalized" institution.

The Company's capital position obviously exceeds regulatory requirements, even
for "well-capitalized" institutions. Capital has increased 45.3% since 1994 to
total 11.4% of assets at the end of 1998. Management considers this level of
capital to be entirely sufficient to support the needs of the Company. There
are no material commitments for the use of capital resources that can not be
funded from normal liquidity.

YEAR 2000 COMPLIANCE

During 1998, the Company has continued its efforts to prepare for January 1,
2000. All levels of the Company's management and its Board of Directors are
aware of the seriousness of this issue and the effects it may have on the
Company and its customers. The Company has a Year 2000 Steering Committee under
the leadership of the President and Chief Operating Officer to guide it through
its action plan for compliance. The committee has been organized into three
major areas, with a senior officer directly responsible for each of the
respective areas. The committee reports monthly to the Board of Directors.

The first major area of risk relates to the Company's internal hardware and
software programs. The Company does not write its source programming code and
therefore is dependent upon external vendors and service providers. The Company
developed
<PAGE>

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

a plan for testing all these systems and began the testing process during 1998.
As of December 31,1998, the testing phase was approximately 95% completed.
Management considers the testing to have been successful. Where problems have
been found, steps have been taken to make the appropriate corrections. At this
time, the testing of two mission critical systems have not been completed.
These tests were delayed past the initial deadline because of scheduling issues
with the respective vendors. These tests are scheduled to be completed by April
30, 1999.

The second major area relates to external factors involving customers, vendors
and outside service providers. The risks associated with this issue go beyond
the Company's own ability to solve Year 2000 problems. Should significant
commercial customers fail to address these issues effectively, their ability to
meet debt service requirement could be impaired resulting in increased credit
risk and increased loan charge-offs. Should suppliers of critical services fail
in their efforts to become Year 2000 compliant, or if significant third party
interfaces fail to be compatible with the Company or fail to be Year 2000
compliant, it could have significant adverse affects on the operations and
financial results of the Company. The Company has identified its major
commercial customers and developed plans for educating and monitoring, on an
individual account basis, the adequacy of the customers actions to address the
Year 2000 issues. The assessment of these customers was risk rated and is being
used as a factor in analyzing the allowance for loan losses. This assessment
has also become a part of the overall credit underwriting process. Currently,
Management believes that the reserve for loan losses is adequate to cover the
identified risk in the loan portfolio related specifically to this issue.
However, this will be an on-going evaluation and this situation could change as
the Company moves through 1999.

As vendors of critical services and products were reviewed, management
attempted to prioritize these product and services and to determine the worst
case scenarios, assuming that these parties are unable to provide normal
services. Management is currently in process of preparing contingency plans to
cover these scenarios. These plans will be tested, if possible, during 1999.
All contingency plans and procedures are due to be completed in March 31, 1999.

Both internal and external resources are being utilized to address the Year
2000 problem. A budget of $1.8 million has been completed and approved by the
Board of Directors. Approximately 60% of this total will be from the allocation
of the salary and benefits of current employees assigned to work on this
project. Another 4% will be spent on items that will be capitalized and
amortized or depreciated over future periods. During 1998, the Company incurred
approximately $276,000 in both allocated and direct expenses relating to Year
2000. The remaining portion of the budget is expected to be spent during 1999
and has been incorporated into the overall company budget. This expenditure is
not expected to have a material impact on the financial performance of the
Company.

Year 2000 cost and the date on which the Year 2000 modifications are expected
to be completed are based on Management's estimates, which were derived
utilizing numerous assumptions of future events including the availability of
certain resources, third party modifications and other factors. Although
Management believes that the desired results will be attained, there are no
guarantees that these estimates will be achieved and actual results could
differ materially from planned results.

MARKET INFORMATION

Historically, the Company's common stock has traded primarily in Monroe,
Lowndes, Clay, Oktibbeha, Neshoba and Noxubee Counties in Mississippi and
Tuscaloosa County in Alabama. Market prices were the estimates of management
based on the transactions of which they had knowledge. Effective October 1,
1998, the Company outsourced its stock transfer activity to SunTrust Bank,
Atlanta. Also, as of that date, the Company designated two brokerage firms as
Market Makers for its common stock. Currently, the stock is traded in the
NASDAQ Inter-Dealer Market under the symbol NBCA. Quarterly high and low sales
prices are not available, except for the fourth quarter of 1998 when the price
ranged from a low of $37 per share to a high of $39.75 per share. On an annual
basis, the stock traded in a range between $23.75 and $32.00 during 1997, and
$32.00 and $39.75 during 1998. Dividends were declared semi-annually in June
and December of each of the years reported.
<PAGE>

SELECTED FINANCIAL DATA

Years ended December 31, 1998 1997 1996 1995 1994
----------------------------------------------------------------------------
INCOME DATA
<S> <C> <C> <C> <C> <C>
Interest and fees on loans $ 44,557,755 $ 43,791,813 $ 39,747,322 $ 35,675,640 $ 28,138,802
Interest and dividends on investment securities 11,615,578 12,055,346 12,439,923 13,551,509 12,949,135
Other interest income 1,217,475 980,986 477,850 616,142 379,203
----------------------------------------------------------------------------
Total interest income 57,390,808 56,828,145 52,665,095 49,843,291 41,467,140
Interest expense 26,513,182 25,698,623 23,092,563 22,120,922 15,567,725
----------------------------------------------------------------------------
Net interest income 30,877,626 31,129,522 29,572,532 27,722,369 25,899,415
Provision for loan losses 3,187,261 1,477,466 1,676,801 1,288,450 1,274,024
----------------------------------------------------------------------------
Net interest income after provision for loan losses 27,690,365 29,652,056 27,895,731 26,433,919 24,625,391
Service charges on deposit accounts 4,403,245 4,355,118 4,146,179 3,778,455 3,748,161
Other income 4,434,481 3,422,029 3,181,035 2,679,356 2,526,380
----------------------------------------------------------------------------
Total non-interest income 8,837,726 7,777,147 7,327,214 6,457,811 6,274,541
----------------------------------------------------------------------------
Salaries and employee benefits 14,176,843 13,161,603 12,671,463 11,953,088 11,004,917
Occupancy and equipment expense 3,562,507 3,376,790 2,971,382 2,914,659 2,598,590
Other expenses 8,316,324 7,229,930 7,018,543 6,556,831 6,529,188
----------------------------------------------------------------------------
Total non-interest expense 26,055,674 23,768,323 22,661,388 21,424,578 20,132,695
----------------------------------------------------------------------------
Income before income taxes 10,472,417 13,660,880 12,561,557 11,467,152 10,767,237
Income taxes 1,978,707 3,742,580 3,141,273 2,691,980 2,611,885
----------------------------------------------------------------------------
Net income $ 8,493,710 $ 9,918,300 $ 9,420,284 $ 8,775,172 $ 8,155,352
============================================================================

PER SHARE DATA
Net income $ 1.50 $ 1.75 $ 1.66 $ 1.55 $ 1.44
Dividends .69 .63 .58 .57 .49

FINANCIAL DATA
Shares outstanding 5,664,736 5,664,736 5,664,736 5,664,736 5,664,736
Total assets $ 777,032,491 $ 762,531,227 $ 720,006,137 $ 673,706,870 $ 630,979,544
Net loans $ 476,730,469 $ 466,115,033 $ 449,241,672 $ 399,161,270 $ 351,826,645
Total deposits $ 651,214,587 $ 626,295,180 $ 605,777,096 $ 578,922,637 $ 528,481,117
Total stockholders' equity $ 88,293,867 $ 82,904,140 $ 76,709,025 $ 71,522,345 $ 60,775,788
</TABLE>

(1) All financial data has been restated to reflect the 1998 merger.
(2) Per share and common stock data has been adjusted retroactively for stock
splits.
(3) Merger-related expenses amounted to $1,844,677 after tax in 1998.
<PAGE>

DIRECTORS AND OFFICERS

<S> <C> <C> <C>
NBC CAPITAL CORPORATION THOMAS J. PRINCE, JR. Hamilton Albert Pitts, Jr.
JAMES R. PRUDE Henry V. Adams Clyde W. Price
OFFICERS SARAH S. PRUDE Sam W. Crawford, Jr. William J. Strickland
ALLEN B. PUCKETT, III Webb Coward Thomas J. Tarleton
L.F. MALLORY, JR. JAMES C. RATCLIFF, M.D. Lem Pope Holman E. Lloyd Wood
Chairman and H. STOKES SMITH Sidney Sanders Cordell Wynn
Chief Executive Officer SAMMY J. SMITH Dennis Self
HENRY WEISS Donald L. Tucker West Point
MARK A. ABERNATHY T.N. Braddock, Jr., M.D.
President and ADVISORY BOARDS OF DIRECTORS Maben Kyle Chandler, III
Chief Operating Officer Walter Diaz, D.D.S. M.G. Hazard, D.V.M.
Aberdeen Waymon Fondren Mark G. Hazard, III
BOBBY HARPER Thomas E. Allmond Clifton L. Golden, Jr. P.T. Hodo, Jr.
Chairman of the Mike Cayson Cecil Hamilton Peter T. Hodo, III
Executive Committee Jimmy R. Comer Leon Hester John C. Jameson, III
L.J. Goodgame, D.D.S. Leotis Pate James W. Pryor
HUNTER M. GHOLSON Wiley J. Maier Hubert Scrivener Milton O. Sundbeck, Jr.
Secretary Greg D. Miller Duane Thomas E.H. Tumlinson
R. Dale Pierce, C.P.A. James L. Wise Ralph H. Weems, Jr.
RICHARD T. HASTON J. Fred Robinson
Executive Vice President, Roger A. Wright, D.D.S. Philadelphia OFFICERS
Chief Financial Officer, Kenneth Breland
and Treasurer Amory Olen L. Burrage, Jr. L.F. Mallory, Jr.
Jimmie Camp Harold G. Lewis Chairman and
DONALD J. BUGEA, JR. Jack Francis Kenneth A. Madison Chief Executive Officer
Vice President Edward E. Holden Charles A. McClain, Sr.
Linda P. Holden Stanley P. Salter Mark A. Abernathy
JOHN DAVIS Brent Jones David Vowell President and
Vice President Jimmy Kirkpatrick Chief Operating Officer
William T. (Skip) Miles, Jr. Starkville
CLIFTON B. FOWLER Russell L. Miller Jean Amos ADMINISTRATION, FINANCE
Vice President Warren Pickle Harry Bell AND OPERATIONS
R.S. Stanford Kathryn M. Brown
THOMAS J. PRINCE, JR. Scott Wiygul Rex Buffington Richard T. Haston
Vice President H.G. Wright W.L. McDaniel, Jr. Executive Vice President and
John T. McReynolds Chief Financial Officer
TOMMY M. TOMLINSON Brooksville L.L. (Sonny) Mullins, Jr.
Vice President H.E. Bollar William L. Polk Accounting
William Halliburton Roy H. Ruby
JOHN H. MITCHELL, JR. Billy Wayne Perry George Sherman J. Aubrey Adair
Vice Chairman Emeritus Ralph Spurgeon, Jr. Richard E. Smith, Jr. Vice President and Controller
W.G. Thompson James E. Spivey
NATIONAL BANK OF COMMERCE Jimmy Stevens Administration
Columbus Garnett J. Thomas
BOARD OF DIRECTORS Atwell Andrews James D. Wallace Thomas L. Green
Spencer Barnes, M.D. Senior Vice President
MARK A. ABERNATHY H.E. Bollar Tuscaloosa
DAVID C. BYARS W.H. Cade Jim Bambarger Leon Manning
ROBERT L. CALVERT, III Kimble Crossley A.H. Bean Vice President
ROBERT A. CUNNINGHAM Mrs. Robert Ivy W. Wayne Guy
J. NUTIE DOWDLE Mrs. Frances Jutman Thomas P. Hester Audit
CLIFTON B. FOWLER Mrs. Terrell Landrum T. Allen Henry
JAMES C. GALLOWAY Robert L. Maddox Robert F. Kilgore William L. Gullett, III
HUNTER M. GHOLSON Munford Rhett Juanita C. McCollum Senior Vice President
BOBBY HARPER John Rice, Jr. Deloris McMullen
ROBERT S. JONES P.E. Townsend Ernest McNealey, Ph.D. Deborah T. Ray
L.F. MALLORY, JR. Assistant Vice President
ROBERT D. MILLER
EDITH MILLSAPS Kathy Montgomery
RALPH E. POGUE Assistant Vice President

Robert Parrish
Assistant Auditor

Human Resources

Phillip D. Sprayberry
Senior Vice President

Information Systems

F. Terry Jones
Senior Vice President

G. Edward Elliott
Vice President

Danny L. Taylor
Vice President

Will Megehee
Network Systems Officer

Kevin Taylor
Information Systems Officer

Ferrish Williams
Data Processing Officer

Loan Operations

Mary Sanders
Vice President

Katherine Hackett
Loan Operations Officer

Marilyn Reaves
Loan Documentation Officer

Linda C. Smith
Loan Processing Officer

Operations

James L. Leftwich
Senior Vice President

Mary Lynn Hardy
Vice President

Lorie May
Operations Officer

Martha McMinn
Account Services Officer

Wilma Peterson
Electronic Banking Officer

CONSUMER FINANCIAL SERVICES

Thomas J. Prince, Jr.
Executive Vice President
</TABLE>

<PAGE>

FINANCIAL HIGHLIGHTS

Mortgage Lending Robert Shelton Columbus Banking Center
Assistant Vice President
Sallie Thames Whiteside Robert L. Maddox
Vice President Student Loans President

Julie Gray Shelby Burkhardt Howard Cornelius
Assistant Vice President Assistant Vice President Senior Vice President

Preasha Smith INVESTMENTS AND FUNDS MANAGEMENT Marcus E. Mallory
Assistant Vice President Senior Vice President
Donald J. Bugea, Jr.
Jane Perkins Executive Vice President Jim McAlexander
Mortgage Loan Officer Senior Vice President
MARKETING AND TRAINING
Trust And Financial Management Doug Robertson
Wanda Hartman Bunch Senior Vice President
John Davis Senior Vice President
Senior Vice President Michael D. Walker
Mary C. Howard Senior Vice President
James D. Ferguson Vice President
Vice President Elizabeth Clark
Peggy R. Rose Vice President
Kirk D. Hardy Training Officer
Vice President Wanda Langford
BANKING CENTER ADMINISTRATION Vice President
Keith W. Mooney
Vice President Bobby Harper Linda West
Executive Vice President and Vice President
Janet Price Chairman of the Executive Committee
Financial Counselor Karl Williams
Aberdeen Banking Center Vice President
Jerry L. Toney
Financial Counselor Mike Cayson Tom Epps
President Loan Officer
CREDIT ADMINISTRATION
Roger Mitchell Mickie Simons
Tommy M. Tomlinson Senior Vice President Loan Officer
Executive Vice President
Martha Cole Hamilton Banking Center
Clay McWilliams Vice President
Senior Vice President Henry V. Adams
Nona Herndon President
Compliance Assistant Vice President
Maben Banking Center
Janet P. Robinson Amory Banking Center
Vice President Clifton L. Golden, Jr.
Brent Jones President
Penny Benoist President
Compliance Officer Iris Farley
Scott Wiygul Vice President
Loan Review Vice President
Philadelphia Banking Center
Don Senter Artesia Banking Center
Senior Vice President Stanley P. Salter
Barbara Bell President
K. Jill Sellers, CPA Branch Manager
Vice President Jackie B. Long
Brooksville Banking Center Senior Vice President
Jeanette Tolon
Loan Review Officer William Halliburton Mike Chandler
President Vice President
Recoveries
Wallace Cade Joe Mulholland
Harold Phillips Assistant Vice President Vice President
Vice President

Roma H. Winstead Jim L. Jayne
Vice President Vice President

Scott Hines Terry Hochwarter
Assistant Vice President Assistant Vice President

Johnny Stuart Edgar R. Sherwood
Assistant Vice President Assistant Vice President

Jane C. Hodgins Joyce Terry
Teller Operations Officer Assistant Vice President

Starkville Banking Center Kevin Vann
Assistant Vice President
Clifton B. Fowler
President David Wray
Assistant Vice President
Stan Acy
Senior Vice President Stephanie Echols
Banking Officer
Victor C. Evans
Senior Vice President Martha Lord
University Branch Manager
Loren R. Zimmerman
Senior Vice President West Point Banking Center

Janie Covin Pete T. Hodo, III
Vice President Chief Executive Officer

Thomas E. Prentice, Jr. Mark Hazard
Vice President President

James G. Rester, III Dorothy Johnson
Assistant Vice President Vice President

Thomas A. Williams Sally Bell
Assistant Vice President Assistant Vice President

Tuscaloosa Banking Center Mary Ann Briggs
Assistant Vice President
Thomas P. Hester
President and Diann Edwards
Chief Executive Officer Assistant Vice President

John Cade Cole Knighten
Former Chairman and Assistant Vice President
Chief Executive Officer,
National Bank of the South Monty Yates
Assistant Vice President
Owen Skinner, Jr.
Executive Vice President Glenda Taggart
Loan Officer
Virginia R. Baugh
Senior Vice President SUBSIDIARY
West Point Finance Company
Cecil Etheridge
Senior Vice President Amanda Craig
Manager
Caroline Fulmer
Senior Vice President

Walter Thatcher
Senior Vice President

</TABLE>

<PAGE>

EXHIBIT 21
<PAGE>

EXHIBIT 21

SUBSIDIARIES OF NBC CAPITAL CORPORATION

<TABLE>
<CAPTION>
Jurisdiction
of
Name of Subsidiary Incorporation
------------------ -------------
<S> <C>
National Bank of Commerce National Bank
First National Finance Corporation Mississippi
</TABLE>

<PAGE>

EXHIBIT 23(b)
<PAGE>

[T. E. LOTT LETTERHEAD]

March 26, 1999

To the Board of Directors
NBC Capital Corporation

We consent to the reference to our firm under the caption "Experts" in this
Registration Statement (Form S-4) and related Proxy Statement-Prospectus of NBC
Capital Corporation for the registration of shares of its common stock to be
issued pursuant to its proposed merger with FFBS Bancorp, Inc., and to the
incorporation by reference therein of our report dated January 27, 1999, with
respect to the consolidated financial statements of NBC Capital Corporation as
incorporated by reference to its Annual Report (Form 10-K) for the year ended
December 31, 1998, filed with the Securities and Exchange Commission.

/s/ T. E. LOTT & COMPANY

Columbus, Mississippi
March 26, 1999

<PAGE>

EXHIBIT 23(c)
<PAGE>

[T.E. LOTT LETTERHEAD]

March 26, 1999

To the Board of Directors
FFBS Bancorp, Inc.

We consent to the use of our report dated July 22, 1998, accompanying the
consolidated financial statements of FFBS Bancorp, Inc., included herein and to
the reference to our firm under the heading "Experts" in the Proxy Statement-
Prospectus relating to the merger of FFBS Bancorp, Inc., and NBC Capital
Corporation.

/s/ T. E. LOTT & COMPANY

Columbus, Mississippi
March 26, 1999

<PAGE>

EXHIBIT 23(d)
<PAGE>

[SOUTHARD FINANCIAL LETTERHEAD]

To The Board of Directors
NBC Capital Corporation

We hereby consent to the inclusion of our opinion as an exhibit to NBC
Capital Corporation's Registration Statement on Form S-4, originally filed
March 30, 1999 with respect to the merger of NBC Capital Corporation and FFBS
Bancorp, Inc. We also consent to all references to our firm in the Registration
Statement.

SOUTHARD FINANCIAL

/s/ Southard Financial
-------------------------------------

Memphis, Tennessee
March 25, 1999

<PAGE>

EXHIBIT 23(e)
<PAGE>

[TRIDENT FINANCIAL CORPORATION LETTERHEAD]

March 26, 1999

Board of Directors
FFBS Bancorp, Inc.

Gentlemen:

We hereby consent to the inclusion of our opinion in NBC Capital
Corporation's Registration Statement on Form S-4, dated March 30, 1999 with
respect to the merger of NBC Capital Corporation and FFBS Bancorp, Inc. and to
all references to our firm in the Registration Statement.

TRIDENT FINANCIAL CORPORATION

/s/ William J. Wagner
-------------------------------------
William J. Wagner
Senior Vice President

<PAGE>

EXHIBIT 24
<PAGE>

EXHIBIT 24

FORM OF POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned,
of NBC Capital Corporation, a Mississippi corporation (the "Corporation"), does
hereby name, constitute and appoint Lewis F. Mallory, Jr. and Richard T.
Haston, or either of them (with full power to each of them to act alone), his
true and lawful agents and attorneys-in-fact, for him and on his behalf and in
his name, place and stead, in any and all capacities, to sign, execute,
acknowledge, deliver, and file (a) with the Securities and Exchange Commission
(or any other governmental or regulatory authority), a Registration Statement
on Form S-4 (or other appropriate form) and any and all amendments (including
post-effective amendments) thereto, with any and all exhibits and any and all
other documents required to be filed with respect thereto or in connection
therewith, relating to the registration under the Securities Act of 1933 of
Common Stock of the Corporation to be issued in the merger between the
Corporation and FFBS Bancorp, Inc. ("FFBS") in connection with which the
Corporation has agreed to exchange shares of its common stock for all of the
outstanding shares of common stock of FFBS and merge FFBS into the Corporation,
authorized by resolutions adopted by the Board of Directors on January 20,
1999, and (b) with the securities agencies or officials of various
jurisdictions, all applications, qualifications, registrations or exemptions
relating to such offering under the laws of any such jurisdiction, including
any amendments thereto or other documents required to be filed with respect
thereto or in connection therewith, granting unto said agents and attorneys-in-
fact, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises in order to effectuate the same as fully to all intents and purposes
as the undersigned might or could do if personally present, and the undersigned
hereby ratifies and confirms all that said agents and attorneys-in-fact, or
either of them, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of the
day of March 1999.

-------------------------------------
[Name]

<PAGE>

EXHIBIT 99(a)
<PAGE>

NBC CAPITAL CORPORATION
Starkville, Mississippi

PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 15, 1999

The undersigned stockholder(s) hereby appoint(s) Lewis F. Mallory, Jr. and
Richard T. Haston, or either one of them (with full power to act alone),
proxies for the undersigned to attend the annual meeting of the stockholders
of NBC Capital Corporation to be held on Tuesday, June 15, 1999, at 5:00 p.m.
at 803 Main Street, Columbus, Mississippi, and any and all adjournments,
thereof, with full power to both of them to appoint and to revoke the
appointment of a substitute for himself at such meeting or at any and all
adjournments thereof, and to vote as many shares of the capital stock of NBC
Capital Corporation as the undersigned would be entitled to vote if personally
present.

This proxy will be voted as directed below on the proposals set forth in
the proxy statement for the meeting:

1. Approval and adoption of the Agreement and Plan of Merger dated as of
February 3, 1999, between FFBS Bancorp, Inc. and NBC Capital Corporation,
providing for the merger of FFBS Bancorp, Inc. into NBC Capital
Corporation.

The Board of Directors recommends a vote "FOR" approval of the merger
agreement.

<TABLE>
<S> <C> <C>
[_] FOR [_] AGAINST [_] ABSTAIN
</TABLE>

2. To elect twenty-two directors of NBC Capital Corporation to serve until
the 2000 annual meeting, or until their successors are duly elected and
qualified.

The Board of Directors recommends a vote "FOR" all nominees listed below.

[_] FOR all nominees listed below (except as marked to the contrary
below)
[_] WITHHOLD AUTHORITY to vote for all nominees listed below

(INSTRUCTION: To withhold authority to vote for any individual nominee
check the box above to vote "FOR" all nominees and strike a line through
the nominee's name in the list below. Holders of common stock may cumulate
their votes for one or more directors. To cumulate votes, place the number
of votes for a director on the line next to such director's name)

<TABLE>
<CAPTION>
<S> <C> <C> <C>
__ Lewis F. Mallory, Jr. __ Mark A. Abernathy __ Davis Byars __ Robert L. Calvert, III

__ Robert A. Cunningham __ J. Nutie Dowdle __ Clifton B. Fowler __ James C. Galloway, Jr.

__ Hunter M. Gholson __ Bobby L. Harper __ Robert S. Jones __ Robert D. Miller

__ Edith D. Millsaps __ Ralph E. Pogue __ Thomas J. Prince, Jr. __ James R. Prude

__ Sarah Scribner Prude __ Allen B. Puckett, III __ Dr. James C. Ratcliff __ Sammy J. Smith

__ H. Stokes Smith __ Henry S. Weiss
</TABLE>
<PAGE>

3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournment
thereof.

________________________________________ Date: ________________________________
Signature of Stockholder

________________________________________ Date: ________________________________
Signature if held jointly

Please sign exactly as the name appears on the certificate or certificates
representing shares to be voted by this proxy. When signing as executor,
administrator, attorney, trustee or guardian please give full title as such. If
a corporation, please sign full corporation name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person(s).

Please mail in the accompanying postpaid envelope.

<PAGE>

EXHIBIT 99(b)
<PAGE>

FFBS BANCORP, INC.
Columbus, Mississippi

PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 14, 1999

The undersigned stockholder(s) hereby appoint(s) James E. Evans, Robert S.
Caldwell, Jr., W. H. Jolly, Jr., James D. Graham, E. Frank Griffin, III, and
William H. McIntyre, any one or all of them (with full power to act alone),
proxies for the undersigned to attend the special meeting of the stockholders
of FFBS Bancorp, Inc. to be held on Monday, June 14, 1999, at 10:00 a.m. at
1121 Main Street, Columbus, Mississippi, and any and all adjournments, thereof,
with full power to any one of them to appoint and to revoke the appointment of
a substitute for himself at such meeting or at any and all adjournments
thereof, and to vote as many shares of the capital stock of FFBS Bancorp, Inc.
as the undersigned would be entitled to vote if personally present.

This proxy will be voted as directed below on the proposals set forth in the
proxy statement for the meeting:

The Board of Directors recommends a vote "FOR" the approval of the merger
agreement.

[_] FOR[_] AGAINST[_] ABSTAIN

2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the special meeting or any adjournment
thereof.

________________________________________ Date: _______________________________
Signature of Stockholder

________________________________________ Date: _______________________________
Signature if held jointly

Please complete, sign, date and mail in accompanying postpaid envelope.