FORM 10-Q


                    SECURITIES AND EXCHANGE COMMISSION

                           Washington, DC 20549

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                  of the Securities Exchange Act of 1934


For Quarter Ended March 31, 1996          Commission File Number 33-33940



                        FINANCIAL BANCSHARES, INC.
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)


                 Missouri                           43-1251071
      -------------------------------       -------------------------
      (State or other Jurisdiction of          (I.R.S. Employer
       incorporation or organization)        identification number)


           3805 South Broadway, St. Louis, Missouri 63118-4607
       ------------------------------------------------------------
        (Address of principal executive office including Zip Code)



     Registrant's telephone number, including area code 314-664-6250




          Indicate by check mark whether the registrant (1) has filed all
     reports required to be filed by Section 13 or 15(d) of the Securities
     Exchange Act of 1934 during the preceding 12 months (or for such
     shorter period that the registrant was required to file such reports),
     and (2) has been subject to such filing requirements for the past 90
     days.

                     YES    X             NO

          Indicate the number of shares outstanding of each of the issuer's
     classes of common stock - as of March 31, 1996    684,377    shares of
     common stock par value $  .01   per share.


This document constitutes part of a prospectus covering securities that have
          been registered under the Securities Act of 1933.

Part I. Financial Information
Item 1. Financial Statements

                         FINANCIAL BANCSHARES, INC.
                Interim Condensed Consolidated Balance Sheets
                                 (Unaudited)
         (In thousands of dollars, except share and per share data)
                                      
                                                    March 31,  December 31,
                    ASSETS                            1996         1995

Cash and due from banks:
  Non-interest-bearing                              $  9,525       13,329
  Interest-bearing                                     1,618        1,394
Funds sold                                            10,295        9,365
Investment in debt securities
  available-for-sale at estimated market value       106,143      102,565
Loans, net of unearned discount                      185,934      187,064
  Less: Reserve for possible loan losses               4,287        4,160
     Net loans                                       181,647      182,904
Premises and equipment, net                            9,585        9,290
Accrued interest receivable                            3,557        4,197
Other assets                                           3,033        2,879
               Total Assets                         $325,403      325,923

          LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
  Non-interest-bearing demand                         37,508       42,735
  Interest-bearing                                   256,406      251,715
               Total Deposits                        293,914      294,450
Short-term borrowings                                    644        1,250
Other liabilities                                      2,924        2,541
Note payable                                           4,019        4,019
               Total liabilities                     301,501      302,260
Stockholders' equity:
  Common Stock, $.01 value; 3,000,000 shares
     authorized, 693,531 shares issued and
     684,377 shares outstanding                            7            7
  Additional paid-in capital                           9,925        9,925
  Retained earnings                                   14,198       13,599
  Treasury stock; 9,154 shares                          (261)        (261)
  Unrealized gains (losses)on
     securities available-for-sale, net                   33          393
               Total stockholders' equity             23,902       23,663
         Total liabilities and stockholders' equity $325,403      325,923
Book value per share - based on common shares
  outstanding at period end                         $  34.93        34.58

See accompanying note to interim condensed cosolidated financial statements.
                         FINANCIAL BANCSHARES, INC.
             Interim Condensed Consolidated Statement of Income
                                 (Unaudited)
         (In thousands of dollars, except share and per share data)
                                      
                                                    Three Months Ended
                                                        March 31,

                                                    1996           1995

Interest income:
  Loans                                           $ 4,149          3,888
  Investment securities:
    Taxable                                         1,427          1,198
    Exempt from federal income taxes                  156            169
  Interest-bearing due from banks                      23             25
  Funds sold                                          201            139
          Total interest income                     5,956          5,419
Interest expense:
  Deposits                                          2,830          2,251
  Short-term borrowings                                13             13
  Notes payable                                        90            101
          Total interest expense                    2,933          2,365
          Net interest income                       3,023          3,054
Provision for possible loan losses                    183            177
          Net interest income after provision
             for possible loan losses               2,840          2,877
Noninterest income:
  Service charges on deposit accounts                 267            257
  Securities gains (losses), net                        2              2
  Other noninterest income                            111            138
          Total noninterest income                    380            397
Noninterest expense:
  Salaries and employee benefits                    1,260          1,207
  Occupancy                                           186            166
  Equipment                                           208            188
  FDIC and state assessment                            26            184
  Legal and professional                               96            117
  Other                                               491            573
          Total noninterest expense                 2,267          2,435

          Income before applicable income taxes       953            839
Income tax expense                                    354            227
          Net income                              $   599        $   612

Net income per share (based) on average
     shares outstanding of 684,377)               $  0.88        $  0.89

See accompanying note to interim condensed consolidate financial statements.
                         FINANCIAL BANCSHARES, INC.
           Interim Condensed Consolidated Statement of Cash Flows
                                 (Unaudited)
         (In thousands of dollars, except share and per share data)
                                      
                                                        Three Months Ended
                                                             March 31,
                                                        1996            1995

Cash flows from operating activities:
  Net income                                         $    599             612
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization                       452             229
      Provision for possible loan losses                  183             177
      Decrease in accrued interest receivable             640             501
      Other, net                                          330             461
          Net cash provided by operating
             activities                                 2,204           1,980
Cash flows from investing activities:
  Net increase in interest-bearing due from banks        (224)           ---
  Maturity and calls of available-for-sale securities   9,226           3,957
  Maturity and calls of held-to-maturity securities      ---            1,314
  Sales of available-for-sale debt securities           2,767           2,209
  Purchase of available-for-sale debt securities      (16,214)         (8,879)
  Purchase of held-to-maturity securities                ---             (240)
  Net decrease in loans                                 1,061           5,147
  Purchases of premises, furniture and equipment         (623)           (323)
  Sale of other real estate and repossessed property       71             181
          Net cash provided by (used in)
            investment activities                      (3,936)          3,366
Cash flows from financing activities:
  Net increase (decrease) in deposits                    (536)          4,410
  Net decrease in short-term borrowings                  (606)         (2,674)
          Net cash provided by (used in)
            financing activities                       (1,142)          1,736

Net increase (decrease) in cash and cash equivalents   (2,874)          7,082
Cash and cash equivalents at beginning of period       22,694          15,912
Cash and cash equivalents at end of period           $ 19,820          22,994

Supplemental information:
  Interest paid                                      $  2,870           2,218
  Income taxes paid (refunded)                            368            (350)
  Noncash transactions:
    Transfer to other real estate in
      settlement of loans                                  29               4

See accompanying note to interim condensed consolidated financial
statements.
FINANCIAL BANCSHARES, INC. AND SUBSIDIARIES

       Note to Interim Condensed Consolidated Financial Statements

                         March 31, 1996 and 1995
                               (Unaudited)


(1)  Basis of Presentation

     The interim condensed consolidated financial statements as of March 31,
1996 and for the three month periods ended March 31, 1996 and 1995 reflect
all adjustments consisting of normal recurring accruals and elimination of
significant intercompany transactions, which in the opinion of management,
are necessary for the fair presentation of the results of operations for the
interim periods presented.  Such condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X of the Securities and Exchange Commission.  For
further information refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
Part I.  Financial Information (continued)

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis is intended to provide a review
of significant factors affecting the financial condition and results of
operations of Financial Bancshares, Inc. and its subsidiaries (the Company
or FBI) for the three months ended March 31, 1996 and 1995.  This discussion
should be read in conjunction with the Company's condensed consolidated
financial statements and the note thereto.

Assets and Capital Commitments

     Total assets decreased $520,000 (less than 1%) to $325,403,000 as of
March 31, 1996, since December 31, 1995.  Total deposits decreased $536,000
(less than 1%) between the same dates due mainly to a decrease in
noninterest-bearing deposits of $5,227,000 (12%). The net growth in total
earning assets of $3,602,000 (1%) resulted from an increase in all
categories except loans.  The category with the most significant increase
was the $3,578,000 increase in investment IN debt securities, caused mainly
by the need to obtain a yield above that being paid for the increase in
interest-bearing time deposits.   The loan decrease is mainly reflective of
seasonal movement.  Most agricultural borrowers reduce or payoff their
balances in the first quarter after waiting to sell their crops after year-
end.   Further balance sheet changes are discussed below under "Capital
Resources and Liquidity."
     The management of the Company, except as noted below, knows of no
trend, event, or uncertainty that will have or that is reasonably likely to
have a material effect on the Company's liquidity, capital resources, or
operations.  The Company's banking subsidiary, First Financial Bank of
Southeast Missouri, in Sikeston, Missouri has begun the construction of a
new and larger main banking office.  Normal liquidity will provide the funds
for construction and there will be no material effect on the consolidated
financial position or earnings.

     Capital Resources and Liquidity

     At March 31, 1996, The Company's ratio of consolidated regulatory
equity (total stockholders' equity without the effect of the net unrealized
gains (losses) on securities) to adjusted consolidated assets (without the
effect of the unrealized gains (losses) on securities) was 7.3%.  This is
down from the level at March 31, 1995 of 7.5%, and an increase from the 7.2%
level at December 31, 1995.  FBI management believes its capital position is
comfortably above the regulatory minimum and continues to have more than
adequate regulatory required tangible equity capital and risk-based capital
on both a consolidated and individual subsidiary level.  As of March 31,
1996, the Company's consolidated regulatory capital ratios compared to "Well
Capitalized" minimums were as follows:

                                Total       Tier I
                              Risk-based  Risk-based  Leverage
                                Ratio       Ratio       Ratio

Consolidated, March 31, 1996    11.8%       10.5%       7.1%

Well Capitalized Minimums       10.0%        6.0%       5.0%

FBI management continues a policy of attempting to maintain a level of
capital it deems adequate in light of current conditions.  The Company's
dividend policy, in management's opinion, should as its major feature help
maintain an adequate level of capital.  This is evidenced by the
declaration, in April 1996, of a dividend which was exactly the amount per
share declared at the same date in the prior year.
     At March 31, 1996, there are no significant changes from December 31,
1995, in the amount of available additional dividends from the Company's
banking subsidiaries.
     The $536,000 (less than 1%) net decrease in deposits during the period
is made up of a $5,227,000 decrease in noninterest-bearing deposits and a
$4,691,000 (2%) increase in interest bearing accounts.  The increase in
interest-bearing deposits is mainly in certificates of deposit.  Management
feels that the decrease in noninterest-bearing deposits is reflective of the
seasonal reduction in demand deposit customer balances, which experience
seasonal increases in their balances during the final month of the fourth
quarter, mainly in public fund accounts.  Management is satisfied that
noninterest-bearing deposits are stable.  The increase in interest-bearing
deposits is the result of continued normal growth in the areas in which the
subsidiary banks operate and attracting customers from other area financial
institutions.  A portion of the changes in interest-bearing and noninterest-
bearing deposits is due to internal shifts by existing customers as they
seek higher rates of return.
     The parent Company's short-term borrowings have not changed since
December 31, 1995.  The balance at March 31, 1996 is zero.  This short-term
borrowing is a line of credit from an unaffiliated bank set up for general
corporate operating needs.
     As indicated in the Company's interim condensed consolidated statement
of cash flows for the three months ended March 31, 1996, the cash flows from
all sources was not enough to cover all of the cash outlays for the period.
The main reason for the decrease in cash and cash equivalents is the net
increase in debt securities (see discussion above under "Assets and Capital
Commitments").  The Company expects future deposit growth and maturing
investments to continue to provide adequate long-term liquidity in
subsequent periods.  Additionally, short-term liquidity could be satisfied,
if necessary, by the sale of certain debt securities maintained as available
for sale.  The ratio of market value to amortized cost of investment debt
securities is above 100% at March 31, 1996.
     At March 31, 1996, on a consolidated basis, there was no significant
change in the balance between rate-sensitive assets and rate-sensitive
liabilities from the balance of the same assets and liabilities at December
31, 1995.  As previously stated, the liquidity needs of the Company's
subsidiary banks continue to be accomplished primarily through the maturity
of assets and acquisition of additional deposits.

     Net Income

     Net income for the three months ended March 31, 1996 of $599,000 ($0.88
per share) is an decrease of $13,000 (2%) or $0.01 per share over the
$612,000 for the same period in 1995. The reason for the decrease in net
income is the increase ($127,000 or $0.19 per share) in applicable income
taxes  between the two periods. The main reason for the increase in
applicable income taxes is that the fist quarter of 1995 included a non-
recurring state income tax benefit of $57,000 ($0.08 per share).  Partially
offsetting the unfavorable increase in applicable income taxes between the
two periods, was an increase in income before applicable income taxes of
$114,000.  The make-up of the net increase in income before income taxes, is
a decrease in net interest income ($31,000), an increase in the provision
for possible loan losses ($6,000), a decrease in noninterest income
($17,000), and a decrease in noninterest expense ($168,000).
     Company management continues to believe that the amount being provided
for possible loan losses reflects prudent banking practice and that the
resulting reserve is adequate given the inherent and potential risk of the
loan portfolio.  As of March 31, 1996, the consolidated amount of
nonperforming loans was $1,197,000 compared to $1,316,000 at December 31,
1995.  At present, management believes it has adequately provided for any
anticipated loss from these nonperforming loans.  They feel the reserve for
possible loan losses coverage (358%), with a level of $4,287,000 at March
31, 1996, should be adequate to absorb any losses for nonperforming loans.
As of March 31, 1996, the total amount of loans for agricultural production
approximated 15% of total loans.  These loans are to a variety of farming
operations.  There is not a concentration of loans to any one borrower or
group of borrowers. The Company does not consider this to be a concentration
in the normal sense because of the variety of operations and locations of
the farming operations.  The loan portfolio does not have any other
concentrations of loans to any one borrower, geographic area or industry.
Specifically, there are no concentrations of loans in highly leveraged
buyouts, commercial real estate or energy.
     Net interest income the first quarter of 1996 decreased one percent
from the amount for the same period in 1995.  This result is due to the
interest expense increase of $568,000 being more than the $537,000 increase
in interest income between the two periods.  The increase in interest
expense reflects both an increase in volume and rates paid on deposits,
especially on time certificates of deposits (see discussion above in
"Capital Sources and Liquidity" for reasons on the increase in volume of
interest-bearing deposits).  Interest income also reflects increased volume
and rates.  The most significant increases in volume of earning assets was
in investment debt securities (see above in "Assets and Capital
Commitments") and in commercial and agricultural productions loans.
     Noninterest income decreased mainly because of a $25,000 nonrecurring
gain from the sale of an asset in the first quarter of 1995.  Service
charges on deposit accounts of $267,000 for the first quarter of 1996 were
up 10% over the amount for the same period in 1995.
     Noninterest expense decreased 7% ($168,000) between the two periods.
The main reason for the decrease is the $158,000 decrease in FDIC and state
assessment.  The major change in the premium charged by the FDIC being
experienced by all of the banking industry is the reason for the decrease in
this expense item.  The remaining net decrease of $10,000 is reflective of
increases in personnel, occupancy and equipment expense which were normal or
expected and decreases in legal and other expense which were mainly the
result of the improvement of asset quality at the Company's St. Louis
subsidiary bank.
     Income taxes increased $127,000 to $354,000 for the three months ended
March 31, 1996 when compared to the same period in 1995.  This increase was
due to the recognition of nonrecurring state tax credits during the three
months ended March 31, 1995.

     Effects of Inflation

     Balance sheets of financial institutions such as the Company typically
reflect a net positive monetary position whereby monetary assets exceed
monetary liabilities.  Monetary assets and liabilities are those which can
be converted to a fixed number of dollars, and include cash assets,
investments, loans, money market instruments, deposits, and short-term
borrowings
     During periods of inflation,  a net positive monetary position may
result in an overall decline in purchasing power of an institution.  There
is no clear evidence establishing a relationship between the purchasing
power of an institution's net positive monetary position and its future
earnings.  Moreover, the Company's ability to preserve the purchasing power
of its net positive monetary position will be reflected partially in the
effectiveness of its asset/liability management programs.  The Company's
management does not believe that the effect of inflation of its nonmonetary
assets (primarily bank premises and equipment) is material.
Part II.  Other Information

Items 1,2,3,4, and 5

These items have been omitted because their subject matter is not applicable
or the answer thereto is in the negative.


Item 6.   Reports on Form 8-K

No reports on Form 8-K have been filed for the quarter ended March 31, 1996



                              FINANCIAL BANCSHARES, INC.

Date:     May 14, 1996         /s/ Arthur E. S. Schmid
                              Arthur E. S. Schmid,
                              Chairman and
                              Chief Executive Officer


                              FINANCIAL BANCSHARES, INC.

Date:     May 14, 1996         /s/ Edward J. Vega
                              Edward J. Vega,
                              Senior Vice President and
                              Chief Financial Officer
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FORM 10-Q

                    SECURITIES AND EXCHANGE COMMISSION

                           Washington, DC 20549

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                  of the Securities Exchange Act of 1934

For Quarter Ended March 31, 1996          Commission File Number 33-33940

                        FINANCIAL BANCSHARES, INC.
          ------------------------------------------------------
          (Exact name of registrant as specified in its charter)

                 Missouri                           43-1251071
      -------------------------------       -------------------------
      (State or other Jurisdiction of          (I.R.S. Employer
       incorporation or organization)        identification number)

           3805 South Broadway, St. Louis, Missouri 63118-4607
       ------------------------------------------------------------
        (Address of principal executive office including Zip Code)

     Registrant's telephone number, including area code 314-664-6250

          Indicate by check mark whether the registrant (1) has filed all
     reports required to be filed by Section 13 or 15(d) of the Securities
     Exchange Act of 1934 during the preceding 12 months (or for such
     shorter period that the registrant was required to file such reports),
     and (2) has been subject to such filing requirements for the past 90
     days.

                     YES    X             NO

          Indicate the number of shares outstanding of each of the issuer's
     classes of common stock - as of March 31, 1996    684,377    shares of
     common stock par value $  .01   per share.

This document constitutes part of a prospectus covering securities that have
          been registered under the Securities Act of 1933.

Part I. Financial Information
Item 1. Financial Statements

                         FINANCIAL BANCSHARES, INC.
                Interim Condensed Consolidated Balance Sheets
                                 (Unaudited)
         (In thousands of dollars, except share and per share data)
                                      
                                                    March 31,  December 31,
                    ASSETS                            1996         1995

Cash and due from banks:
  Non-interest-bearing                              $  9,525       13,329
  Interest-bearing                                     1,618        1,394
Funds sold                                            10,295        9,365
Investment in debt securities
  available-for-sale at estimated market value       106,143      102,565
Loans, net of unearned discount                      185,934      187,064
  Less: Reserve for possible loan losses               4,287        4,160
     Net loans                                       181,647      182,904
Premises and equipment, net                            9,585        9,290
Accrued interest receivable                            3,557        4,197
Other assets                                           3,033        2,879
               Total Assets                         $325,403      325,923

          LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
  Non-interest-bearing demand                         37,508       42,735
  Interest-bearing                                   256,406      251,715
               Total Deposits                        293,914      294,450
Short-term borrowings                                    644        1,250
Other liabilities                                      2,924        2,541
Note payable                                           4,019        4,019
               Total liabilities                     301,501      302,260
Stockholders' equity:
  Common Stock, $.01 value; 3,000,000 shares
     authorized, 693,531 shares issued and
     684,377 shares outstanding                            7            7
  Additional paid-in capital                           9,925        9,925
  Retained earnings                                   14,198       13,599
  Treasury stock; 9,154 shares                          (261)        (261)
  Unrealized gains (losses)on
     securities available-for-sale, net                   33          393
               Total stockholders' equity             23,902       23,663
         Total liabilities and stockholders' equity $325,403      325,923
Book value per share - based on common shares
  outstanding at period end                         $  34.93        34.58

See accompanying note to interim condensed cosolidated financial statements.
                         FINANCIAL BANCSHARES, INC.
             Interim Condensed Consolidated Statement of Income
                                 (Unaudited)
         (In thousands of dollars, except share and per share data)
                                      
                                                    Three Months Ended
                                                        March 31,

                                                    1996           1995

Interest income:
  Loans                                           $ 4,149          3,888
  Investment securities:
    Taxable                                         1,427          1,198
    Exempt from federal income taxes                  156            169
  Interest-bearing due from banks                      23             25
  Funds sold                                          201            139
          Total interest income                     5,956          5,419
Interest expense:
  Deposits                                          2,830          2,251
  Short-term borrowings                                13             13
  Notes payable                                        90            101
          Total interest expense                    2,933          2,365
          Net interest income                       3,023          3,054
Provision for possible loan losses                    183            177
          Net interest income after provision
             for possible loan losses               2,840          2,877
Noninterest income:
  Service charges on deposit accounts                 267            257
  Securities gains (losses), net                        2              2
  Other noninterest income                            111            138
          Total noninterest income                    380            397
Noninterest expense:
  Salaries and employee benefits                    1,260          1,207
  Occupancy                                           186            166
  Equipment                                           208            188
  FDIC and state assessment                            26            184
  Legal and professional                               96            117
  Other                                               491            573
          Total noninterest expense                 2,267          2,435

          Income before applicable income taxes       953            839
Income tax expense                                    354            227
          Net income                              $   599        $   612

Net income per share (based) on average
     shares outstanding of 684,377)               $  0.88        $  0.89

See accompanying note to interim condensed consolidate financial statements.
                         FINANCIAL BANCSHARES, INC.
           Interim Condensed Consolidated Statement of Cash Flows
                                 (Unaudited)
         (In thousands of dollars, except share and per share data)
                                      
                                                        Three Months Ended
                                                             March 31,
                                                        1996            1995

Cash flows from operating activities:
  Net income                                         $    599             612
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depreciation and amortization                       452             229
      Provision for possible loan losses                  183             177
      Decrease in accrued interest receivable             640             501
      Other, net                                          330             461
          Net cash provided by operating
             activities                                 2,204           1,980
Cash flows from investing activities:
  Net increase in interest-bearing due from banks        (224)           ---
  Maturity and calls of available-for-sale securities   9,226           3,957
  Maturity and calls of held-to-maturity securities      ---            1,314
  Sales of available-for-sale debt securities           2,767           2,209
  Purchase of available-for-sale debt securities      (16,214)         (8,879)
  Purchase of held-to-maturity securities                ---             (240)
  Net decrease in loans                                 1,061           5,147
  Purchases of premises, furniture and equipment         (623)           (323)
  Sale of other real estate and repossessed property       71             181
          Net cash provided by (used in)
            investment activities                      (3,936)          3,366
Cash flows from financing activities:
  Net increase (decrease) in deposits                    (536)          4,410
  Net decrease in short-term borrowings                  (606)         (2,674)
          Net cash provided by (used in)
            financing activities                       (1,142)          1,736

Net increase (decrease) in cash and cash equivalents   (2,874)          7,082
Cash and cash equivalents at beginning of period       22,694          15,912
Cash and cash equivalents at end of period           $ 19,820          22,994

Supplemental information:
  Interest paid                                      $  2,870           2,218
  Income taxes paid (refunded)                            368            (350)
  Noncash transactions:
    Transfer to other real estate in
      settlement of loans                                  29               4

See accompanying note to interim condensed consolidated financial
statements.
FINANCIAL BANCSHARES, INC. AND SUBSIDIARIES

       Note to Interim Condensed Consolidated Financial Statements

                         March 31, 1996 and 1995
                               (Unaudited)

(1)  Basis of Presentation

     The interim condensed consolidated financial statements as of March 31,
1996 and for the three month periods ended March 31, 1996 and 1995 reflect
all adjustments consisting of normal recurring accruals and elimination of
significant intercompany transactions, which in the opinion of management,
are necessary for the fair presentation of the results of operations for the
interim periods presented.  Such condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X of the Securities and Exchange Commission.  For
further information refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995.
Part I.  Financial Information (continued)

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis is intended to provide a review
of significant factors affecting the financial condition and results of
operations of Financial Bancshares, Inc. and its subsidiaries (the Company
or FBI) for the three months ended March 31, 1996 and 1995.  This discussion
should be read in conjunction with the Company's condensed consolidated
financial statements and the note thereto.

Assets and Capital Commitments

     Total assets decreased $520,000 (less than 1%) to $325,403,000 as of
March 31, 1996, since December 31, 1995.  Total deposits decreased $536,000
(less than 1%) between the same dates due mainly to a decrease in
noninterest-bearing deposits of $5,227,000 (12%). The net growth in total
earning assets of $3,602,000 (1%) resulted from an increase in all
categories except loans.  The category with the most significant increase
was the $3,578,000 increase in investment IN debt securities, caused mainly
by the need to obtain a yield above that being paid for the increase in
interest-bearing time deposits.   The loan decrease is mainly reflective of
seasonal movement.  Most agricultural borrowers reduce or payoff their
balances in the first quarter after waiting to sell their crops after year-
end.   Further balance sheet changes are discussed below under "Capital
Resources and Liquidity."
     The management of the Company, except as noted below, knows of no
trend, event, or uncertainty that will have or that is reasonably likely to
have a material effect on the Company's liquidity, capital resources, or
operations.  The Company's banking subsidiary, First Financial Bank of
Southeast Missouri, in Sikeston, Missouri has begun the construction of a
new and larger main banking office.  Normal liquidity will provide the funds
for construction and there will be no material effect on the consolidated
financial position or earnings.

     Capital Resources and Liquidity

     At March 31, 1996, The Company's ratio of consolidated regulatory
equity (total stockholders' equity without the effect of the net unrealized
gains (losses) on securities) to adjusted consolidated assets (without the
effect of the unrealized gains (losses) on securities) was 7.3%.  This is
down from the level at March 31, 1995 of 7.5%, and an increase from the 7.2%
level at December 31, 1995.  FBI management believes its capital position is
comfortably above the regulatory minimum and continues to have more than
adequate regulatory required tangible equity capital and risk-based capital
on both a consolidated and individual subsidiary level.  As of March 31,
1996, the Company's consolidated regulatory capital ratios compared to "Well
Capitalized" minimums were as follows:

                                Total       Tier I
                              Risk-based  Risk-based  Leverage
                                Ratio       Ratio       Ratio

Consolidated, March 31, 1996    11.8%       10.5%       7.1%

Well Capitalized Minimums       10.0%        6.0%       5.0%

FBI management continues a policy of attempting to maintain a level of
capital it deems adequate in light of current conditions.  The Company's
dividend policy, in management's opinion, should as its major feature help
maintain an adequate level of capital.  This is evidenced by the
declaration, in April 1996, of a dividend which was exactly the amount per
share declared at the same date in the prior year.
     At March 31, 1996, there are no significant changes from December 31,
1995, in the amount of available additional dividends from the Company's
banking subsidiaries.
     The $536,000 (less than 1%) net decrease in deposits during the period
is made up of a $5,227,000 decrease in noninterest-bearing deposits and a
$4,691,000 (2%) increase in interest bearing accounts.  The increase in
interest-bearing deposits is mainly in certificates of deposit.  Management
feels that the decrease in noninterest-bearing deposits is reflective of the
seasonal reduction in demand deposit customer balances, which experience
seasonal increases in their balances during the final month of the fourth
quarter, mainly in public fund accounts.  Management is satisfied that
noninterest-bearing deposits are stable.  The increase in interest-bearing
deposits is the result of continued normal growth in the areas in which the
subsidiary banks operate and attracting customers from other area financial
institutions.  A portion of the changes in interest-bearing and noninterest-
bearing deposits is due to internal shifts by existing customers as they
seek higher rates of return.
     The parent Company's short-term borrowings have not changed since
December 31, 1995.  The balance at March 31, 1996 is zero.  This short-term
borrowing is a line of credit from an unaffiliated bank set up for general
corporate operating needs.
     As indicated in the Company's interim condensed consolidated statement
of cash flows for the three months ended March 31, 1996, the cash flows from
all sources was not enough to cover all of the cash outlays for the period.
The main reason for the decrease in cash and cash equivalents is the net
increase in debt securities (see discussion above under "Assets and Capital
Commitments").  The Company expects future deposit growth and maturing
investments to continue to provide adequate long-term liquidity in
subsequent periods.  Additionally, short-term liquidity could be satisfied,
if necessary, by the sale of certain debt securities maintained as available
for sale.  The ratio of market value to amortized cost of investment debt
securities is above 100% at March 31, 1996.
     At March 31, 1996, on a consolidated basis, there was no significant
change in the balance between rate-sensitive assets and rate-sensitive
liabilities from the balance of the same assets and liabilities at December
31, 1995.  As previously stated, the liquidity needs of the Company's
subsidiary banks continue to be accomplished primarily through the maturity
of assets and acquisition of additional deposits.

     Net Income

     Net income for the three months ended March 31, 1996 of $599,000 ($0.88
per share) is an decrease of $13,000 (2%) or $0.01 per share over the
$612,000 for the same period in 1995. The reason for the decrease in net
income is the increase ($127,000 or $0.19 per share) in applicable income
taxes  between the two periods. The main reason for the increase in
applicable income taxes is that the fist quarter of 1995 included a non-
recurring state income tax benefit of $57,000 ($0.08 per share).  Partially
offsetting the unfavorable increase in applicable income taxes between the
two periods, was an increase in income before applicable income taxes of
$114,000.  The make-up of the net increase in income before income taxes, is
a decrease in net interest income ($31,000), an increase in the provision
for possible loan losses ($6,000), a decrease in noninterest income
($17,000), and a decrease in noninterest expense ($168,000).
     Company management continues to believe that the amount being provided
for possible loan losses reflects prudent banking practice and that the
resulting reserve is adequate given the inherent and potential risk of the
loan portfolio.  As of March 31, 1996, the consolidated amount of
nonperforming loans was $1,197,000 compared to $1,316,000 at December 31,
1995.  At present, management believes it has adequately provided for any
anticipated loss from these nonperforming loans.  They feel the reserve for
possible loan losses coverage (358%), with a level of $4,287,000 at March
31, 1996, should be adequate to absorb any losses for nonperforming loans.
As of March 31, 1996, the total amount of loans for agricultural production
approximated 15% of total loans.  These loans are to a variety of farming
operations.  There is not a concentration of loans to any one borrower or
group of borrowers. The Company does not consider this to be a concentration
in the normal sense because of the variety of operations and locations of
the farming operations.  The loan portfolio does not have any other
concentrations of loans to any one borrower, geographic area or industry.
Specifically, there are no concentrations of loans in highly leveraged
buyouts, commercial real estate or energy.
     Net interest income the first quarter of 1996 decreased one percent
from the amount for the same period in 1995.  This result is due to the
interest expense increase of $568,000 being more than the $537,000 increase
in interest income between the two periods.  The increase in interest
expense reflects both an increase in volume and rates paid on deposits,
especially on time certificates of deposits (see discussion above in
"Capital Sources and Liquidity" for reasons on the increase in volume of
interest-bearing deposits).  Interest income also reflects increased volume
and rates.  The most significant increases in volume of earning assets was
in investment debt securities (see above in "Assets and Capital
Commitments") and in commercial and agricultural productions loans.
     Noninterest income decreased mainly because of a $25,000 nonrecurring
gain from the sale of an asset in the first quarter of 1995.  Service
charges on deposit accounts of $267,000 for the first quarter of 1996 were
up 10% over the amount for the same period in 1995.
     Noninterest expense decreased 7% ($168,000) between the two periods.
The main reason for the decrease is the $158,000 decrease in FDIC and state
assessment.  The major change in the premium charged by the FDIC being
experienced by all of the banking industry is the reason for the decrease in
this expense item.  The remaining net decrease of $10,000 is reflective of
increases in personnel, occupancy and equipment expense which were normal or
expected and decreases in legal and other expense which were mainly the
result of the improvement of asset quality at the Company's St. Louis
subsidiary bank.
     Income taxes increased $127,000 to $354,000 for the three months ended
March 31, 1996 when compared to the same period in 1995.  This increase was
due to the recognition of nonrecurring state tax credits during the three
months ended March 31, 1995.

     Effects of Inflation

     Balance sheets of financial institutions such as the Company typically
reflect a net positive monetary position whereby monetary assets exceed
monetary liabilities.  Monetary assets and liabilities are those which can
be converted to a fixed number of dollars, and include cash assets,
investments, loans, money market instruments, deposits, and short-term
borrowings
     During periods of inflation,  a net positive monetary position may
result in an overall decline in purchasing power of an institution.  There
is no clear evidence establishing a relationship between the purchasing
power of an institution's net positive monetary position and its future
earnings.  Moreover, the Company's ability to preserve the purchasing power
of its net positive monetary position will be reflected partially in the
effectiveness of its asset/liability management programs.  The Company's
management does not believe that the effect of inflation of its nonmonetary
assets (primarily bank premises and equipment) is material.
Part II.  Other Information

Items 1,2,3,4, and 5

These items have been omitted because their subject matter is not applicable
or the answer thereto is in the negative.

Item 6.   Reports on Form 8-K

No reports on Form 8-K have been filed for the quarter ended March 31, 1996

                              FINANCIAL BANCSHARES, INC.

Date:     May 14, 1996         /s/ Arthur E. S. Schmid
                              Arthur E. S. Schmid,
                              Chairman and
                              Chief Executive Officer

                              FINANCIAL BANCSHARES, INC.

Date:     May 14, 1996         /s/ Edward J. Vega
                              Edward J. Vega,
                              Senior Vice President and
                              Chief Financial Officer