Edgar Filing: FIRST NATIONAL OF NEBRASKA INC

FORM ARS

To Stockholders

Two thousand was a great year for First National of Nebraska.

Asset growth was the strongest in First National's history. Year-end managed assets totaled $10.7 billion. This was an increase of $1.5 billion over the $9.2 billion at year-end 1999.

Gross revenue increased 18.2% to $1.3 billion compared to the $1.1 billion recorded in 1999.

Net income reached a new high of $105.5 million. This is an increase of 14.2% over the $92.4 million achieved in 1999.

Return on average stockholders' equity was 15.4%, making 2000 the twenty-eighth consecutive year that return on average stockholders' equity has been 15% or greater.

Expansion

During 2000, the Company achieved strong growth in revenue and managed assets. This growth came mostly from internally generated assets, but also included several acquisitions and expansions into new locations.

The Company's banking business is primarily focused in three areas:

Community Banking

The Company's ten independently operated community banks headquartered in Nebraska, Colorado, Kansas, and South Dakota expanded their facilities in an effort to better serve our customers and to achieve greater future growth.

First National Bank of Omaha opened a new branch at 175^th and West Center Road. This is our western most branch in Omaha. We also acquired a bank charter in Texas and converted it to a branch of Omaha. The new location will be known as First National Bank Frisco Office. Frisco is a rapidly growing suburb north of Dallas.

First National Bank of Kansas opened its seventh office in Johnson County. This one is located in Shawnee at 6301 Pflumm Road.

First National Bank South Dakota opened a check processing center in Sioux Falls. This is designed to more efficiently serve the four communities where the bank's offices are located: Yankton, Mitchell, Huron, and Woonsocket.

First National Bank of Colorado (the new name for The Bank in Boulder) opened a new facility at the Flat Iron Crossing Shopping Center on Highway 36 and will open another in early 2001 in the Qwest Tower on 17^th Street, in downtown Denver. This bank continues to show strong growth with total assets up 43.3% over 1999.

In February 2000, we acquired Cornerstone Mortgage Company. Cornerstone, with headquarters in Houston, has offices throughout Texas and during 2000 expanded its operations into Arizona and Colorado. This mortgage banking operation will bring additional expertise to the real estate lending part of our business.

MAP DEPICTING:

Nebraska	South Dakota	Kansas	Colorado

Omaha(1)	Yankton(1)	Fairway(1)	Fort Collins(2)
North Platte(1)	Mitchell(1)	Overland Park(1)	Greeley(1)
Columbus(1)	Huron(1)	Olathe(1)	Loveland(2)
Kearney(1)	Woonsocket(1)	Shawnee(1)	Windsor(1)
Fremont(1)			Boulder(2)
Beatrice(1)			Longmont(1)
David City(1)			Louisville(1)
Chadron(1)			Broomfield(1)
Alliance(1)			Brighton(1)
Scottsbluff(1)			Johnstown(1)
Gering(1)			Denver(2)
Norfolk(1)
Lincoln(1)


Texas	Texas (cont.)	Arizona

Frisco(1)	North Houston(3)	Scottsdale(3)
Plano(3)	Houston(3)	Tucson(3)
Dallas(3)	Sugar Land(3)	Sierra Vista(3)
Hurst(3)	San Antonio(3)
Waco(3)	The Woodlands(3)
Temple(3)	Beaumont(3)
Bryan(3)	Austin(3)

(1) Banking Locations
(2) Banking Locations and Cornerstone Mortgage Company
(3) Cornerstone Mortgage Company

During 2000, the strong economy and our continuing increase in market share resulted in substantial loan growth. Our community banks' non-credit card loan portfolios grew $846.9 million, or 21.9%.

First National of Nebraska ranks among the ten largest banking companies headquartered west of the Mississippi River.

Credit Card Issuing

This extremely competitive business continues to consolidate as bank mergers decrease the number of participants and others exit the industry.

During 2000, we acquired 14 credit card portfolios with total loans outstanding of $154 million. We also joined forces with Inficorp Holdings, Inc., whose headquarters are in Atlanta, Georgia. Inficorp is a sophisticated credit card marketing and management organization with strong expertise in the credit card issuing industry. We believe Inficorp will help us grow both fee income and new consumer account relationships.

After three years of hard work to improve the quality of our portfolio and a year (1999) of declining outstandings, the year 2000 was very satisfying. Total managed credit card loans outstanding grew $526.6 million, or 17%. This was the second best dollar growth year in our history. At year end, managed credit card loans totaled $3.6 billion. Equally as important, credit quality continued to improve with year-end delinquencies on reported credit card loans of 4.7% compared to December 31, 1999 delinquencies of 5.1%, and December 31, 1998 delinquencies of 5.9%.

Today, First National is the 15^th largest issuer of bank credit cards and the 9^th largest commercial bank issuer of Visa and Master Cards.

Processing

First National Bank of Omaha has an historic commitment to the in-house processing of its own items and to the customized processing of work for others. The bank is recognized nationally as a leader in several areas. It is the 11^th largest merchant credit card processor, the 19^th retail lockbox processor and ranks among the top 20 in processing automated clearing house transactions.

In addition to processing both paper and electronic transactions, First National Information Solutions converts paper to images. In 2000, Mountain States Imaging of Denver became an important part of this operation.

Since 1993, merchant credit card processing has been divided between two organizations: First of Omaha Merchant Processing, and Retriever Payment Systems in Houston. From a strategic standpoint we decided to sell Retriever to a management led group which will operate independently of First of Omaha Merchant Processing. First National has retained a 19.87% interest in Retriever and a five-year contract to continue processing its merchant transactions.

During 2000, John R. Lauritzen passed away. John's career at First National Bank of Omaha spanned half a century (1943-1994). He will long be remembered for his ability to see the big picture, his thirst for new products, his willingness to teach and mentor others, and his entrepreneurial spirit. His most lasting legacy for our Company was his creation of First Bankcard Center and his untiring promotion of the bank credit card business.

Looking ahead, although this was a good year for First National of Nebraska, I do have some concerns about the future. Our economy has weakened which could adversely impact our borrowers' ability to service their debts. In spite of good growth in our managed credit card portfolio, managed credit card loans continue to decline as a percentage of our total managed loans, which results in a reduced net interest margin for the Company. Our industry will continue to experience consolidations, while at the same time the number of competitors from the non-banking sector will continue to grow. The combination of these factors cause increased pressure on industry profitability and particularly, the net interest margin of the Company.

The major commitments we are making in people, software, equipment, facilities, and marketing are investments in the future. They may have an adverse impact on our earnings over the next few years. However, we believe that these commitments will help us to fulfill our vision.

The First National vision is to be a significant regional banking company, which has the ability to compete nationally with certain niche products. I believe this can be accomplished by providing our customers with quality products and especially with superior service.

Two thousand was a fine year. I want to thank our associates and customers who made this year a success, and who, with our shareholders, look forward to creating a strong long term future for First National of Nebraska.

Bruce R. Lauritzen

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First National of Nebraska and Subsidiaries
Performance Trends

(in millions)

BAR GRAPHS DEPICTING:

Managed Assets* 2000: $10,695		Earnings 2000: $105.5		Capital & Loan Loss Allowance 2000: $856
YEAR		YEAR		YEAR

1972	298	1972	1.959	1972	20
1973	366	1973	2.213	1973	22
1974	360	1974	2.405	1974	20
1975	351	1975	2.597	1975	18
1976	372	1976	3.155	1976	20
1977	439	1977	3.614	1977	23
1978	503	1978	3.976	1978	27
1979	583	1979	4.473	1979	31
1980	625	1980	5.075	1980	35
1981	666	1981	5.743	1981	41
1982	715	1982	6.575	1982	46
1983	844	1983	7.000	1983	49
1984	873	1984	8.700	1984	59
1985	1,081	1985	10.076	1985	69
1986	1,118	1986	11.637	1986	80
1987	1,314	1987	15.133	1987	95
1988	1,726	1988	23.253	1988	121
1989	2,076	1989	28.123	1989	147
1990	2,548	1990	33.217	1990	186
1991	3,033	1991	40.017	1991	225
1992	3,574	1992	52.126	1992	272
1993	4,272	1993	70.082	1993	345
1994	5,262	1994	77.133	1994	415
1995	6,311	1995	82.241	1995	498
1996	7,112	1996	70.232	1996	593
1997	8,282	1997	75.187	1997	639
1998	8,841	1998	86.492	1998	706
1999	9,211	1999	92.361	1999	757
2000	10,695	2000	105.477	2000	856

Managed Loans* 2000: $8,318		Deposits 2000: $7,848		Return On Average Equity 2000: 15.4%
YEAR		YEAR		YEAR	%

1972	152	1972	251	1972	13.5
1973	183	1973	296	1973	16.5
1974	172	1974	299	1974	17.4
1975	175	1975	280	1975	18.5
1976	202	1976	302	1976	19.5
1977	215	1977	336	1977	19.2
1978	268	1978	369	1978	18.2
1979	318	1979	411	1979	17.9
1980	289	1980	428	1980	17.7
1981	370	1981	411	1981	17.4
1982	411	1982	432	1982	17.1
1983	515	1983	557	1983	16.3
1984	634	1984	608	1984	18.6
1985	729	1985	741	1985	18.0
1986	806	1986	799	1986	18.0
1987	979	1987	970	1987	19.8
1988	1,312	1988	1,308	1988	25.7
1989	1,570	1989	1,642	1989	24.3
1990	1,878	1990	2,097	1990	23.2
1991	2,212	1991	2,575	1991	23.3
1992	2,591	1992	3,070	1992	24.7
1993	3,173	1993	3,652	1993	26.8
1994	3,934	1994	4,383	1994	24.1
1995	4,639	1995	5,090	1995	20.8
1996	5,296	1996	5,836	1996	15.4
1997	5,948	1997	6,401	1997	15.2
1998	6,386	1998	6,868	1998	15.7
1999	6,949	1999	7,009	1999	15.1
2000	8,318	2000	7,848	2000	15.4

*Reported assets or loans plus securitized credit card loans

First National of Nebraska and Subsidiaries
Financial Highlights


	Years ended December 31,
	2000		1999				1998			1997			1996

(in thousands except per share data)

Total managed assets (1)	$	10,695,352		$	9,211,488		$	8,840,837		$	8,282,021		$	7,112,057
Total reported assets	$	9,283,314		$	8,560,444		$	8,187,815		$	7,332,021		$	6,912,057
Net income	$	105,477		$	92,361		$	86,492		$	75,187		$	70,232
Stockholders' equity	$	750,203		$	650,474		$	584,303		$	510,057		$	487,966
Allowance for loan losses	$	105,304		$	106,484		$	121,877		$	128,990		$	104,812

(1) Reported assets plus securitized credit card loans

Per share data:
Net income	$	315.33		$	276.02		$	258.19		$	220.68		$	202.53
Dividends	$	46.47		$	38.72		$	35.00		$	33.76		$	37.22
Stockholders' equity	$	2,242.76		$	1,943.91		$	1,744.19		$	1,522.56		$	1,407.19

Profit ratios:
Return on average
equity		15.4	%		15.1	%		15.7	%		15.2	%		15.4	%
Return on average
assets		1.2	%		1.2	%		1.2	%		1.1	%		1.1	%

A picture of the new headquarters for First National Bank of Kansas in Overland Park

First National of Nebraska and Subsidiaries
Consolidated Statements of Financial Condition


	December 31,
	2000			1999

(in thousands except share and per share data)

Assets

Cash and due from banks	$	430,091		$	407,584
Federal funds sold and other short-term investments		385,360			247,148

Total cash and cash equivalents		815,451			654,732

Investment securities:
Available-for-sale (amortized cost $814,458 and $987,943)		813,398			971,449
Held-to-maturity (fair value $203,127 and $178,188)		201,253			179,406
Federal Home Loan Bank stock and other securities, at cost		24,843			42,215

Total investment securities		1,039,494			1,193,070
Loans		6,926,199			6,313,732
Less: Allowance for loan losses		105,304			106,484
Unearned income		20,591			15,429

Net loans		6,800,304			6,191,819

Premises and equipment, net		164,410			149,803
Other assets		463,655			371,020

Total assets	$	9,283,314		$	8,560,444


Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$	954,665		$	858,895
Interest-bearing		6,893,284			6,149,817

Total deposits		7,847,949			7,008,712
Federal funds purchased and securities sold under repurchase agreements		156,805			341,485
Federal Home Loan Bank advances		189,325			372,077
Other borrowings		91,098			3,758
Other liabilities		154,340			89,549
Capital notes		93,594			94,389

Total liabilities		8,533,111			7,909,970
Contingencies and commitments
Stockholders' equity:
Common stock, $5 par value, 346,767 shares authorized
334,500 shares issued and outstanding		1,673			1,673
Additional paid-in capital		2,511			2,511
Retained earnings		746,718			656,786
Accumulated other comprehensive income (loss)		(699	)		(10,496	)

Total stockholders' equity		750,203			650,474

Total liabilities and stockholders' equity	$	9,283,314		$	8,560,444

See Notes to Consolidated Financial Statements

First National of Nebraska and Subsidiaries
Consolidated Statements of Income


		For the years ended December 31,
		2000			1999			1998

(in thousands except share and per share data)
Interest income:
Interest and fees on loans and lease financing	$	811,867		$	749,376		$	755,803
Interest on securities:
Taxable interest income		63,890			65,504			65,598
Nontaxable interest income		1,912			1,191			835
Interest on federal funds sold
and other short-term investments		16,361			9,557			13,320

Total interest income		894,030			825,628			835,556

Interest expense:
Interest on deposits		351,315			284,482			305,127
Interest on federal funds purchased and
securities sold under repurchase agreements		9,847			8,394			8,310
Interest on Federal Home Loan Bank advances		10,482			7,162			1,003
Interest on other borrowings		5,069			391			1,435
Interest on capital notes		7,168			7,104			7,187

Total interest expense		383,881			307,533			323,062

Net interest income		510,149			518,095			512,494
Provision for loan losses		131,073			144,573			173,311

Net interest income after provision for loan losses		379,076			373,522			339,183
Noninterest income:
Processing services		107,968			83,359			87,987
Credit card securitization income		96,615			64,384			60,980
Gain on sale of subsidiary		59,414			--			--
Deposit services		32,584			27,865			24,948
Trust and investment services		22,165			22,980			22,979
Miscellaneous		62,679			50,029			61,869

Total noninterest income		381,425			248,617			258,763

Noninterest expense:
Salaries and employee benefits		264,449			216,263			182,848
Communications and supplies		76,426			58,529			58,046
Equipment rentals, depreciation and maintenance		55,375			50,637			45,839
Net occupancy expense of premises		43,290			30,554			30,045
Processing expense		35,269			27,661			28,784
Professional services		33,346			25,543			44,177
Loan servicing expense		29,728			29,917			26,065
Goodwill and other intangibles amortization		26,898			21,460			18,620
Miscellaneous		30,756			19,264			21,322

Total noninterest expense		595,537			479,828			455,746

Income before income taxes		164,964			142,311			142,200
Income tax expense (benefit):
Current		70,324			50,059			57,165
Deferred		(10,837	)		(109	)		(1,457	)

Total income tax expense		59,487			49,950			55,708

Net income	$	105,477		$	92,361		$	86,492

Average number of common shares outstanding		334,500			334,622			335,000

Net income per common share	$	315.33		$	276.02		$	258.19

Cash dividends declared per common share	$	46.47		$	38.72		$	35.00

See Notes to Consolidated Financial Statements

First National of Nebraska and Subsidiaries
Consolidated Statements of Comprehensive Income


	For the years ended December 31,
		2000		1999		1998

(in thousands)
Net Income		$105,477		$92,361		$86,492
Other comprehensive income (loss), before tax:
Net unrealized holding gains (losses) on available-for-sale securities		17,419	(17,415		)	495
Less: Reclassification adjustment for net gains realized in net income		2,070		888		1,307

Other comprehensive income (loss), before tax		15,349	(18,303		)	(812	)
Less: Income tax expense (benefit) for other comprehensive income		5,552		(6,645	)	(291	)

Other comprehensive income (loss), net of tax		9,797	(11,658		)	(521	)

Comprehensive income		$115,274		$80,703		$85,971

	Common Stock ($5 par value)		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Employee Stock Trust		Total Stockholders’ Equity
Consolidated Statements of Stockholders' Equity

For the years ended December 31, 2000, 1999 and 1998


(in thousands except per share data)
Balance, January 1, 1998	$1,675		$2,515		$504,184		$1,683		$ --		$510,057
Net Income	--		--		86,492		--		--		86,492
Net unrealized depreciation on securities available-for-sale, net of tax	--		--		--		(521	)	--		(521	)
Cash dividends - $35.00 per share	--		--		(11,725	)	--		--		(11,725	)

Balance, December 31, 1998	1,675		2,515		578,951		1,162		--		584,303
Net Income	--		--		92,361		--		--		92,361
Repurchase of common stock	(2	)	(4	)	(1,568	)	--		--		(1,574	)
Net unrealized depreciation on securities available-for-sale, net of tax	--		--		--		(11,658	)	--		(11,658	)
Cash dividends - $38.72 per share	--		--		(12,958	)	--		--		(12,958	)

Balance, December 31, 1999	1,673		2,511		656,786		(10,496	)	--		650,474
Net Income	--		--		105,477		--		--		105,477
Net unrealized appreciation on securities available-for-sale, net of tax	--		--		--		9,797		--		9,797
Purchase shares for employee stock trust	--		--		--		--		4,901		4,901
Employee stock trust obligation	--		--		--		--		(4,901	)	(4,901	)
Cash dividends - $46.47 per share	--		--		(15,545	)	--		--		(15,545	)

Balance, December 31, 2000	$1,673		$2,511		$746,718		$(699	)	$ --		$750,203

See Notes to Consolidated Financial Statements

First National of Nebraska and Subsidiaries Consolidated Statements of Cash Flows

		For the years ended December 31,
		2000			1999			1998

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	105,477		$	92,361		$	86,492
Adjustments to reconcile net income to net cash
flows from operating activities:
Provision for loan losses		131,073			144,573			173,311
Depreciation and amortization		70,581			55,381			44,412
Provision for deferred taxes		(10,837	)		(109	)		(1,457	)
Origination of mortgage loans for resale		(673,813	)		(132,466	)		(146,816	)
Proceeds from the sale of mortgage loans for resale		654,769			142,921			131,847
Gain on sale of subsidiary		(59,414	)		--			--
Other asset and liability activity, net		148			(168,713	)		8,537

Net cash flows from operating activities		217,984			133,948			296,326

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash received (1)		(32,907	)		(20,539	)		(855	)
Net cash received from sale of subsidiary		57,810			--			--
Maturities of securities available-for-sale		182,744			202,169			45,587
Sales of securities available-for-sale		20,418			200,035			303,076
Purchases of securities available-for-sale		(32,920	)		(518,571	)		(659,504	)
Maturities of securities held-to-maturity		70,989			266,526			625,871
Purchases of securities held-to-maturity		(91,643	)		(7,343	)		(174,065	)
Redemptions of FHLB stock and other securities		17,636			163			525
Purchases of FHLB stock and other securities		(264	)		(24,475	)		(6,413	)
Net change in loans	(1,286,639		)		(567,210	)	(230,115		)
Credit card securitization activities		775,995			(1,978	)		(296,978	)
Purchases of loan portfolios		(165,688	)		(48,586	)		(402,331	)
Purchases of premises and equipment		(55,471	)		(41,372	)		(41,987	)
Other, net		2,927			3,178			2,277

Net cash flows from investing activities		(537,013	)		(558,003	)		(834,912	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits		804,462			(84,414	)		466,836
Assumption of deposits, net		--			39,712			--
Net change in federal funds purchased and
securities sold under repurchase agreements		(184,680	)		(17,490	)		141,084
Issuance of FHLB advances		420,316			452,267			72,063
Principal repayments on FHLB advances		(603,068	)		(111,725	)		(47,484	)
Issuance of other borrowings		661,994			10,286			14,000
Principal repayments on other borrowings		(602,936	)		(11,032	)		(34,333	)
Principal repayments on capital notes		(795	)		(794	)		(1,188	)
Repurchase of common stock		--			(1,574	)		--
Cash dividends paid		(15,545	)		(12,958	)		(11,725	)

Net cash flows from financing activities		479,748			262,278			599,253

Net change in cash and cash equivalents		160,719			(161,777	)		60,667
Cash and cash equivalents at beginning of year		654,732			816,509			755,842

Cash and cash equivalents at end of year	$	815,451		$	654,732		$	816,509

Cash paid during the year for:
Interest	$	368,455		$	310,471		$	324,766
Income taxes	$	50,933		$	52,632		$	53,387
Non-cash investing and financing activities:
Consideration for business acquisitions	$	5,000		$	2,319		$	--

See Notes to Consolidated Financial Statements
(1) In acquisitions during 2000, the Company acquired non-cash assets of $103.8 million and assumed liabilities of $65.9 million. In acquisitions during 1999, the Company acquired non-cash assets of $214 million and assumed liabilities of $191.2 million.

First National of Nebraska and Subsidiaries
Notes to Consolidated Financial Statements
Years Ended December 31, 2000, 1999 and 1998

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Consolidation - The consolidated financial statements of First National of Nebraska, Inc. and subsidiaries (the Company) include the accounts of the parent company; its 99.67% owned subsidiary, First National Bank of Omaha and subsidiaries (the Bank); its wholly-owned other banking subsidiaries; and its nonbanking subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Nature of Business - The Company is a Nebraska-based interstate financial holding company whose primary assets are its banking subsidiaries. The banking subsidiaries are principally engaged in consumer, commercial, real estate and agricultural lending and retail deposit activities. The Company also has subsidiaries which provide merchant credit card processing and other services.

These operating activities involve similar types of customers, products and services and distribution methods. Financial information is maintained and analyzed on a total entity basis for decision making and performance assessment. The Company's operations are also regulated by common regulatory authorities. Therefore, in accordance with Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information," the Company has determined that it is a single reportable entity.

Use of Estimates - In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents - For the purpose of the consolidated statements of cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and other short-term investments with original maturities of three months or less.

Securities - Debt securities for which the Company has the positive intent and ability to hold to maturity are classified as “held-to-maturity” and reported at amortized cost. Securities not classified as held-to-maturity or trading, including equity securities with readily determinable fair values, are classified as “available-for-sale” and recorded at fair value, with unrealized gains and losses on a net-of-tax basis excluded from earnings and reported in other comprehensive income. Federal Home Loan Bank stock and other securities are not actively traded and do not have readily determinable fair values, therefore, these securities are reported at cost.

Purchase premiums and discounts are recognized in interest income using the level yield method over the period to maturity. Gains and losses on the sale of securities are determined using the specific-identification method.

Loans - Loans are reported at their outstanding principal balance adjusted for charge-offs, the allowance for loan losses and any deferred fees or costs on originated loans. Loan fees and certain direct loan origination costs are deferred and recognized as an adjustment of the yield of the related loan over the estimated average life of the loan.

Accrual of interest is discontinued on a loan when management believes collection of interest is doubtful after considering economic and business conditions, collection efforts, and the financial condition of the borrower. All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income.

Loans Held for Sale - Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Leases - Equipment acquired with no outside financing is leased to customers under direct financing lease arrangements. The net investment in direct financing leases is the sum of all minimum lease payments and estimated residual values, less unearned income. Unearned income is recognized as interest income over the terms of the leases by methods that approximate the level yield method.

Allowance for Loan Losses - The allowance for loan losses represents management’s estimate of probable losses inherent in the loan portfolio. Additions to the allowance are made through increases in the provision for loan losses. Charge-offs are deducted from the allowance, and subsequent recoveries are added. Methods for measuring the appropriate level of the allowance for non-credit card loans include the application of estimated loss factors to outstanding loans and certain unused commitments based on internal risk classifications of such loans and commitments. For credit card loans, management projects future losses based on a model which tracks historical loss experience on delinquent accounts and charge-offs, net of estimated recoveries, due to bankruptcies, deceased cardholders and account settlements. In addition to these methods of measurement,

management also considers other factors such as general economic and business conditions affecting key lending areas, credit concentrations, credit quality trends, collateral values and the seasoning of the loan portfolio. Since the evaluation of the inherent loss with respect to these factors is subject to a higher degree of uncertainty, the measurement of the overall allowance is subject to estimation risk, and the amount of actual losses can vary significantly from the estimated amounts. The Company’s measurement methods incorporate comparisons between recent experience and historical rates to reduce differences between estimated and actual losses. The allowance for loan losses is allocated to different parts of the loan portfolio based on the Company’s measurement processes for internal analytical purposes only. The entire allowance is available to absorb probable credit losses in the Company’s total loan portfolio.

Premises and Equipment - Premises, furniture and equipment, and leasehold improvements are carried at cost, less accumulated depreciation and amortization computed using the straight-line method over the estimated useful lives of the assets or the terms of the leases. Land is carried at cost.

Credit Card Securitizations - The Company sells receivables in securitizations of credit card loans on a revolving basis. In conjunction with these sales, the Company retains an interest in residual cash flows, known as interest-only strips, and servicing rights. A servicing asset or liability is not generally recognized in a credit card securitization since the Company receives adequate compensation relative to current market servicing rates. Gain or loss on the sale of credit card loans depends in part on the previous carrying amount of the financial assets involved in the transfer, allocated between the assets sold and the retained interests based on their relative fair value at the date of transfer. To obtain fair values, quoted market prices are used if available. However, quotes are generally not available for retained interests, so the Company generally uses its best estimates for fair value based on the present value of future expected cash flows using assumptions for credit losses, prepayment speeds and discount rates commensurate with the risks involved.

Securities Sold Under Repurchase Agreements - Securities sold under agreements to repurchase, which are classified as secured borrowings, generally mature within one day from the transaction date. Securities sold under agreements to repurchase are reflected at the amount of cash received in connection with the transaction. The Company may be required to provide additional collateral based on the fair value of the underlying securities.

Income Taxes - The Company files consolidated federal and state tax returns. Taxes of the subsidiaries, computed on a separate return basis, are remitted to the parent company. Under the liability method used to calculate income taxes, the Company provides deferred taxes for differences between the financial statement carrying amounts and tax bases of existing assets and liabilities by applying currently enacted statutory tax rates which are applicable to future periods.

Intangible Assets - Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets associated with merger and acquisition transactions. Goodwill is amortized on a straight-line basis over periods ranging up to 25 years. Core deposit intangibles represent the intangible value of depositor relationships resulting from deposit liabilities assumed in acquisitions and are amortized over periods not exceeding 10 years using straight-line and accelerated methods, as appropriate. Purchased credit card relationships represent the intangible value of acquired credit card relationships and are amortized over 15 years using an accelerated method.

The Company periodically assesses the recoverability of intangible assets by reviewing such assets whenever events or changes in circumstances indicate that the book value may not be recoverable. An impairment is recognized when undiscounted cash flows of assets are estimated to be insufficient to recover their related carrying value.

Fair Values of Financial Instruments - Fair values of financial instruments that are not actively traded are based on market prices of similar instruments and/or valuation techniques using market assumptions. Although management uses its best judgment in estimating the fair value of these financial instruments, there are inherent limitations in any estimation technique. The Company assumes that the carrying amount of cash and short-term financial instruments approximates their fair value.

Trust Assets - Property (other than cash deposits) held by banking subsidiaries in fiduciary or agency capacities for their customers is not included in the accompanying consolidated statements of financial condition since such items are not assets of the Company.

Net Income Per Share - Net income per share of common stock has been computed on the basis of the weighted average number of shares of common stock outstanding. The Company has no common stock equivalents.

Other - Certain reclassifications were made to prior years' financial statements to conform them to the improved classifications used in 2000. These reclassifications had no effect on net income or total assets.

B. INVESTMENT SECURITIES

Debt and equity securities have been classified in the consolidated statements of financial condition according to management's intent.

Available-for-sale

The amortized cost of available-for-sale securities and their approximate fair values at December 31 were as follows:

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value

(in thousands)
2000
U.S. Government obligations	$766,885	$1,401	$ (2,183)	$766,103
Obligations of states and political subdivisions	3,500	--	--	3,500
Mortgage-backed securities	42,052	177	(324)	41,905
Other securities	2,021	2	(133)	1,890

Total securities available-for-sale	$814,458	$1,580	$ (2,640)	$813,398

1999
U.S. Government obligations	$924,897	$ 89	$(15,366)	$909,620
Obligations of states and political subdivisions	3,500	--	--	3,500
Mortgage-backed securities	52,530	14	(1,197)	51,347
Other securities	7,016	2	(36)	6,982

Total securities available-for-sale	$987,943	$ 105	$(16,599)	$971,449

1998
U.S. Government obligations	$812,156	$3,340	$ (1,325)	$814,171
Obligations of states and political subdivisions	30	--	--	30
Mortgage-backed securities	22,285	--	(206)	22,079
Other securities	--	--	--	--

Total securities available-for-sale	$834,471	$3,340	$ (1,531)	$836,280

The following table presents the amortized cost and fair value by the contractual maturity of available-for-sale debt securities held on December 31, 2000 as well as the weighted average yield for each range (stated on a taxable equivalent basis assuming a 35% marginal tax rate). Yield information does not give effect to changes in fair value that are reflected as a component of stockholders' equity.

					Weighted
	Amortized		Fair		Average
	Cost		Value		Yield

(in thousands)
U.S. Government obligations
Due in one year or less		$320,449		$320,126	5.33	%
Due after one year through five years	444,983			444,479	5.53	%
Due after five years through ten years		1,453		1,498	7.42	%
Due after ten years		--		--	--

Total		$766,885		$766,103	5.45	%

Obligations of states and political subdivisions
Due in one year or less		$ --		$ --	--
Due after one year through five years		525		525	10.72	%
Due after five years through ten years		1,090		1,090	11.12	%
Due after ten years		1,885		1,885	11.81	%

Total		$ 3,500		$ 3,500	11.43	%

Other securities
Due in one year or less		$ 1,031		$ 1,031	7.02	%
Due after one year through five years		988		857	7.40	%
Due after five years through ten years		--		--	--
Due after ten years		2		2	--

Total		$ 2,021		$ 1,890	7.20	%

Gross realized gains on sales of available-for-sale securities were $2.1 million in 2000, $888,000 in 1999 and $1.3 million in 1998. The proceeds from sales of available-for-sale securities were $20 million, $200 million and $303.1 million for 2000, 1999 and 1998, respectively.

Held-to-maturity
The amortized cost of held-to-maturity securities and their approximate fair values at December 31 were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value

(in thousands)
2000
U.S. Government obligations		$117,816		$ 628		$ (11	)		$118,433
Obligations of states and political subdivisions		32,086		232		(39	)		32,279
Mortgage-backed securities		50,894		1,102		(38	)		51,958
Other securities		457		--		--			457

Total securities held-to-maturity		$201,253		$1,962		$ (88	)		$203,127

1999
U.S. Government obligations		$124,731		$ 7		$ (732	)		$124,006
Obligations of states and political subdivisions		34,945		66		(292	)		34,719
Mortgage-backed securities		19,280		7		(274	)		19,013
Other securities		450		--		--			450

Total securities held-to-maturity		$179,406		$ 80		$(1,298	)		$178,188

1998
U.S. Government obligations		$ 374,009		$2,109		$ --			$376,118
Obligations of states and political subdivisions		16,671		210		--			16,881
Mortgage-backed securities		29,788		325		(8	)		30,105
Other securities		450		--		--			450

Total securities held-to-maturity		$420,918		$ 2,644		$ (8	)		$423,554

The following table presents the amortized cost and fair value by the contractual maturity of held-to-maturity debt securities held on December 31, 2000 as well as the weighted average yield for each range (stated on a taxable equivalent basis assuming a 35% marginal tax rate).

					Weighted
	Amortized		Fair		Average
	Cost		Value		Yield

(in thousands)
U.S. Government obligations
Due in one year or less		$ 73,451		$73,540	6.12	%
Due after one year through five years		44,365		44,893	6.32	%
Due after five years through ten years		--		--	--
Due after ten years		--		--	--

Total		$117,816		$118,433	6.20	%

Obligations of states and political subdivisions
Due in one year or less		$ 5,620		$ 5,628	10.27	%
Due after one year through five years		19,486		19,598	10.71	%
Due after five years through ten years		3,012		3,073	10.94	%
Due after ten years		3,968		3,980	10.22	%

Total		$ 32,086		$ 32,279	10.60	%

Other securities
Due in one year or less		$ --		$ --	--
Due after one year through five years		450		450	6.64	%
Due after five years through ten years		--		--	--
Due after ten years		7		7	--

Total		$ 457		$ 457	6.54	%

Available-for-sale and held-to-maturity securities totaling $677.9 million and $675.1 million, at December 31, 2000 and 1999, respectively, were pledged to secure public deposits, repurchase agreements and for other purposes as required or permitted by law.

C. LOANS AND ALLOWANCE FOR LOAN LOSSES

The Company grants individual consumer, commercial, agricultural, and real estate loans to its customers. The commercial loan portfolio is diversified, consisting of numerous industries located or headquartered primarily in the Company's operating region which includes Nebraska, Colorado, Kansas, South Dakota, and Iowa. The majority of individual consumer loans are to customers located in the central part of the United States and are primarily credit card loans.

The table below reflects reported loans at December 31, and does not include securitized credit card loans:

	2000	1999

(in thousands)

Individual consumer	$2,806,528	$3,016,705
Real estate - mortgage	1,516,400	1,176,024
Commercial and financial	1,273,926	1,171,786
Agricultural	663,422	534,004
Real estate - construction	546,405	303,836
Lease financing	101,988	80,196
Other	17,530	31,181

Gross loans	6,926,199	6,313,732
Less:
Allowance for loan losses	105,304	106,484
Unearned income	20,591	15,429

Net loans	$6,800,304	$6,191,819

Lease financing at December 31 was comprised of the following:

	2000	1999

(in thousands)

Direct financing leases:
Lease payments receivable	$85,829	$67,945
Estimated residual value of equipment	16,159	12,251

	101,988	80,196
Less unearned income	14,172	10,166

Net leases	$87,816	$70,030

At December 31, 2000, minimum lease financing payments receivable for each of the five succeeding years are approximately: $25.1 million for 2001; $21.7 million for 2002; $16.1 million for 2003; $11.9 million for 2004; and $5.9 million for 2005.

In addition to loans owned by the Company, credit card loans securitized and serviced for others totaled $1.4 billion and $651 million at December 31, 2000 and 1999, respectively. Mortgage loans serviced for others totaled $604.5 million and $490.9 million, respectively, at December 31, 2000 and 1999. Loan participations sold to banks owned by shareholders of the Company were $100.5 million and $93 million, respectively, at December 31, 2000 and 1999. Loan participations of $50.8 million and $24.9 million were also purchased from companies owned by shareholders at December 31, 2000 and 1999, respectively. Loans to subsidiary bank directors and their associates were approximately $47.9 million and $27 million at December 31, 2000 and 1999, respectively. Loans held for sale at December 31, 2000 and 1999 were $65.1 million and $11.8 million, respectively.

Changes in the allowance for loan losses for the years ended December 31 are as follows:

		2000			1999			1998

(in thousands)

Balance beginning of year	$	106,484		$	121,877		$	128,990
Provision for loan losses		131,073			144,573			173,311
Addition due to acquisitions of loans		3,518			3,054			13,035
Reduction due to sales of loans		(12,210	)		—			(8,990	)

Loans charged off	(146,306		)		(191,257	)	(213,325		)
Loans recovered		22,745			28,237			28,856

Total net charge-offs	(123,561		)		(163,020	)	(184,469		)

Balance end of year	$	105,304		$	106,484		$	121,877

Individual consumer loans are predominately unsecured, and the allowance for potential losses associated with these loans has been established accordingly. The majority of the non-consumer loan categories are generally secured by real estate, operating assets, or financial instruments. The amount of collateral obtained is based upon management’s evaluation of the borrower.

Impaired loans of the Company include larger-balance commercial, financial, agricultural, construction and commercial real estate loans where it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. A portion of the Company’s allowance for loan losses is allocated to these impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. As of December 31, 2000, 1999 and 1998 and for each of the three years then ended, the Company's recorded investment in impaired loans and associated interest income was immaterial.

D. CREDIT CARD ACTIVITIES

The Company sells credit card loans which are converted into securities and sold to investors, a process referred to as securitization. In credit card securitizations, designated pools of credit card receivables, including related allowances for credit losses, are removed from the balance sheet and a security is sold to investors. In all of these transactions, the Company retains servicing responsibilities. The Company receives annual servicing fees approximating two percent of the outstanding balances of the credit card loans and retains rights to future cash flows arising after investors in the securitization trust have received the return for which they are entitled to receive. These retained interests are subordinate to investor's interests. The value of the retained interests is subject to credit, prepayment and interest rate risks on the transferred financial assets. The investors and the securitization trusts have no recourse to the Company's assets for failure of debtors to pay. However, as contractually required, the Company may designate certain accounts, known as spread accounts, to be used as collateral for the benefit of investors.

As of December 31, 2000, managed credit card loan balances (those held by the Company in its portfolio and those sold to investors through securitizations) were $3.6 billion. The following table reflects the balance sheet impact of the Company's credit card securitizations and the delinquencies and the net charge-offs for the managed credit card loan portfolio. An account is considered contractually delinquent if the minimum payment is not received by the specified due date.

		2000

(in thousands)

Credit card loans
Credit card loan portfolio included on the balance sheet	$	2,214,474
Securitized credit card loans sold to investors and removed from the balance sheet		1,412,038

Total managed credit card loan portfolio at December 31	$	3,626,512
Delinquent loans in the managed credit card loan portfolio at December 31
30-89 days	$	91,796
90 days or more and still accruing	$	61,700
Total net charge-offs on the managed credit card loan portfolio for the
year ended December 31	$	160,751
Annual average credit card loans
Reported credit card loans	$	2,253,450
Securitized credit card loans		913,006

Total annual average managed credit card loan portfolio	$	3,166,456
Total net charge-offs as a percentage of annual average managed loans		5.08	%

At the time the Company enters into a securitization, an interest-only strip asset is recognized and the resulting gain on sale is recorded in noninterest income as a component of credit card securitization income. Credit card securitization income includes servicing income, income on interest-only strips and gains on securitizations. The interest-only strip represents the present value of the future cash flows related to the securitizations and is classified in other assets. During the revolving period of a credit card securitization, an additional gain is recognized over the life of the transactions as additional receivables are sold. The interest-only strip is amortized as the receivables sold to investors are repaid or as securitizations expire. In 2000, the Company recognized pretax gains of $43.4 million on securitizations of credit card receivables.

Certain estimates are used in determining the fair value of interest-only strips, including net revenues, prepayment speeds, weighted-average receivable lives and the discount rate. The components of net revenues, which are estimated, include finance charge and fee revenue (excluding interchange income) generated by the securitized loans in excess of interest paid to investors, related net credit losses and the cost of servicing. The resulting expected cash flows are discounted over the estimated lives of the receivables to determine the fair value. Such estimates and assumptions are subject to change and, accordingly, the Company may not recover all of the recorded investment of interest-only strips. The receivables in each trust have unique attributes; thus, the interest-only strips related to each trust are evaluated separately. The following assumptions were used to estimate the fair value of the interest-only strips related to credit card securitizations completed during 2000 (rates per annum):

	Prepayment speeds	11.8% - 16.7%
	Weighted-average receivable lives (in years)	.5 - .7
	Expected credit losses	2.7% - 5.9%
	Discount rate	15%

The fair value of interest-only strips was $18.2 million at December 31, 2000. At December 31, 2000, the Company calculated the sensitivity of the assumptions used in calculating the fair values of interest-only strips to immediate 10 percent and 20 percent adverse changes in the assumptions.

		Impact on Fair Value with
	Actual	an Adverse Change of

(in thousands and rates per annum)		10%		20%

As of December 31, 2000
Weighted average receivable lives (in years)	.5 - .7		--		--
Prepayment speeds	11.8% - 16.7%	$	1,710	$	3,442
Expected credit losses	2.7% - 5.6%	$	2,461	$	4,930
Discount rate	15%	$	102	$	204

This sensitivity analysis is hypothetical and is as of a specific point in time. As a result, these scenarios should be used with caution. As the table indicates, changes in fair value based on a 10 percent variation in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair values of interest-only strips are calculated without changing any other assumption; in reality, changes in one factor may result in changes in another which might magnify or counteract the sensitivities.

A summary of certain cash flows received from and paid to securitization trusts during 2000 are as follows:


(in thousands)

Received from (paid to) the securitization trusts
Proceeds from new securitizations	$1,199,000
Purchases of previously securitized receivables	(423,005	)

Change in securitization	775,995

Collections used by the trusts to purchase new
balances in revolving credit card securitizations	1,235,021
Servicing fees received	19,845
Cash flows received on interest-only strips	58,335

Credit enhancements associated with credit card securitizations, such as spread accounts, totaled $8.5 million at December 31, 2000, and are classified on the balance sheet in other assets. Transaction costs in the transaction are typically deferred and amortized over the life of the security and are reported in noninterest expense.

E. PREMISES AND EQUIPMENT

Premises and equipment were comprised of the following:

	December 31,
	2000	1999

(in thousands)

Land	$ 18,536	$ 18,091
Buildings	103,278	84,568
Leasehold improvements	30,516	27,281
Equipment	219,096	192,960

	371,426	322,900
Less accumulated depreciation	207,016	173,097

Net premises and equipment	$164,410	$149,803

See footnote L for discussion of leased premises and equipment.

F. DEPOSITS

At December 31, 2000, the scheduled maturities of total certificates of deposit were as follows:


(in thousands)

2001			$3,285,187
2002			810,686
2003			114,315
2004			56,185
2005 and thereafter			86,924

Total certificates of deposit			$4,353,297

The aggregate amount of certificates of deposit, each with a minimum denomination of $100,000, was approximately $971.8 million and $762 million at December 31, 2000 and 1999, respectively.

G. FEDERAL HOME LOAN BANK ADVANCES

The Company had advances from the Federal Home Loan Bank as follows:

	December 31, 2000			December 31, 1999

	Weighted			Weighted
	Average			Average
	Rate		Amount	Rate		Amount

(in thousands)

Scheduled maturities due on regular advances:
Due in one year or less	6.50	%	$58,048	5.66	%	$123,001
Due after one year through two years	6.43	%	1,464	6.18	%	915
Due after two years through three years	6.50	%	12,366	6.30	%	1,336
Due after three years through four years	5.67	%	29,974	5.25	%	21,238
Due after four years through five years	6.49	%	1,887	5.57	%	30,846
Due after five years	5.67	%	85,586	5.67	%	59,741

Total regular advances	5.99	%	$189,325	5.62	%	$237,077
Total line of credit advances	--		--	5.00	%	$135,000

Total Federal Home Loan Bank advances	5.99	%	$189,325	5.39	%	$372,077

These Federal Home Loan Bank advances carried interest rates ranging from 4.98% to 7.82% as of December 31, 2000. Fixed-rate advances totaling $164.5 million at December 31, 2000 are convertible into adjustable-rate advances at the option of the Federal Home Loan Bank with call dates ranging from January 2001 to September 2006. These convertible advances include $45 million with scheduled maturities due in one year or less, $11 million with scheduled maturities due after two years through three years, $29 million with maturities due after three years through four years and $79.5 million with maturities due after five years. At December 31, 2000 and 1999, outstanding advances were collateralized by real estate loans totaling $375.4 million and $443.5 million, respectively, mortgage-backed securities totaling $89.8 million and $48.1 million, respectively, and investment securities totaling $0 and $15 million, respectively, in compliance with Federal Home Loan Bank requirements. Additionally, the Company held Federal Home Loan Bank stock totaling $15.4 million at December 31, 2000 and $33 million at December 31, 1999 which is also held as collateral.

H. OTHER BORROWINGS

The parent company has a $125 million syndicated revolving credit facility available for acquisitions or other corporate purposes which bears a variable rate of interest tied to publicly announced debt ratings of the Bank. At December 31, 2000 and 1999, the balance outstanding under this credit facility was $23 million and $0, respectively. The credit facility will mature on December 4, 2003, at which time, any outstanding balance will be due. Among other restrictions, the loan agreement requires that the Company maintain certain financial covenants.

Cornerstone Mortgage Company, a subsidiary of the Bank, acquired in February 2000, has a warehousing credit and security agreement providing for a $75 million credit line used to fund mortgage loan originations for resale. At December 31, 2000, the balance outstanding on this credit line was $45.9 million. This line bears a variable rate

of interest tied to LIBOR and the types of mortgage loans funded. The credit line is collateralized by the mortgage loans which the line is used to fund. Repayment periods for draws on the warehousing credit line range from 90-450 days based on the type of mortgage loan funded by the line. The warehousing credit and security agreement expires September 12, 2001. Among other restrictions, the warehousing credit and security agreement requires that Cornerstone Mortgage Company maintain certain financial covenants. As part of this agreement, the Bank issued a $2.9 million letter of credit.

InfiCorp Holdings, Inc., a subsidiary acquired in July 2000 by the parent company, entered into an agreement in November 2000 providing for a $9.5 million unsecured revolving credit line for operating purposes which bears a variable rate of interest tied to LIBOR. The balance outstanding under this credit line was $8.8 million at December 31, 2000. The credit line will mature on November 8, 2001, at which time, any outstanding balance will be due. Among other restrictions, the loan agreement requires that InfiCorp Holdings, Inc. maintain certain financial covenants. The parent company has guaranteed payment of this credit line.

In April 2000, a subsidiary of the parent company, Whitetail Finance Company, entered into an agreement providing for a $10 million unsecured revolving credit line for operating purposes which bears a variable rate of interest tied to LIBOR. At December 31, 2000, the balance outstanding under this credit line was $5.8 million. The credit line will mature on April 25, 2001, at which time, any outstanding balance will be due. Among other restrictions, the loan agreement requires that the Company maintain certain financial covenants. The parent company has guaranteed payment of this note.

In July 2000, the parent company issued $1.5 million and $3.5 million in notes which mature on or before July 6, 2003 and July 6, 2010, respectively, and pay interest semi-annually at a fixed rate of 9.1% and 9.4%, respectively. These notes may be prepaid at the option of the parent company prior to maturity without penalty.

At December 31, 2000 and 1999, the existing 22-story headquarters building located in Omaha, Nebraska, was subject to a mortgage which requires annual payments of $1.3 million including interest at 7.75%, through the year 2003. The Bank may prepay the mortgage with a prepayment premium. The mortgage balance was $2.4 million and $3.4 million at December 31, 2000 and 1999, respectively.

I. CAPITAL NOTES

The Bank has $75 million in subordinated capital notes which are due to mature on December 1, 2010. The subordinated capital notes pay interest semi-annually on June 1 and December 1 at a fixed rate of 7.32%. The subordinated capital notes are unsecured and subordinated to the claims of depositors and general creditors of the Bank. No sinking fund has been provided, and the subordinated capital notes may not be redeemed, in whole or in part, prior to maturity.

The parent company has unsecured capital notes which require principal payments through 2005. At December 31, 2000 and 1999, $16.3 million and $17.1 million, respectively, were outstanding on these notes. The capital notes are noncallable and carry interest rates ranging from 9% to 12.5%. Principal amounts due on capital notes in each of the succeeding five years and thereafter are approximately: $700,000 in 2001; $7.5 million in 2002; $1.9 million in 2003 and 2004; and $4.3 million in 2005.

A subsidiary bank of the parent company, First National Bank South Dakota, issued $2.3 million in capital notes which require principal payments beginning in 2006 through 2009. The capital notes pay interest quarterly beginning February 5, 2000 at a fixed rate of 7.5%. The capital notes are unsecured and subordinated to the claims of depositors and general creditors of the subsidiary.

J. INCOME TAXES

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31 were as follows:
	2000	1999

(in thousands)

Deferred tax assets:
Allowance for loan losses	$40,194	$36,927
Employee benefits	12,148	10,246
Purchased credit card relationships	8,634	6,113
Gain on sale of subsidiary	5,186	--
Net operating loss carryforwards from acquired company (1)	5,467	--
Depreciation and amortization	4,538	1,903
Market adjustment on available-for-sale securities	364	6,090
Other	4,889	3,442

Total deferred tax assets	81,420	64,721

Deferred tax liabilities:
Lease financing	2,891	2,469
Change in accrual method recognized over future periods for tax purposes	1,678	4,550
Retained interests recorded for securitization	10,627	3,755
Other	2,052	2,255

Total deferred tax liabilities	17,248	13,029

Net deferred tax assets	$64,172	$51,692

(1) Expires in 2020.

The following is a comparative analysis of the provision for federal and state taxes:

		For the years ended December 31,
		2000		1999		1998

(in thousands)

Current federal		$65,567		$45,073		$51,680
Current state		4,757		4,986		5,485

Total current taxes		70,324		50,059		57,165

Deferred federal	(10,926		)	(30	)	(1,497	)
Deferred state		89		(79	)	40

Total deferred taxes	(10,837		)	(109	)	(1,457	)

Total provision for income taxes		$59,487		$49,950		$55,708

The effective rates of total tax expense for the years ended December 31, 2000, 1999 and 1998 were different than the statutory federal tax rate. The reasons for the differences were as follows:

	For the years ended December 31,
	2000		1999		1998

(percent of pretax income)


Statutory federal tax rate	35.0	%	35.0	%	35.0	%
Additions (reductions) in taxes resulting from:
Tax-exempt interest income	(0.8)	%	(0.7)	%	(0.6)	%
State taxes	1.9	%	2.2	%	2.0	%
Change in tax estimate	(0.2)	%	(2.7)	%	1.5	%
Goodwill amortization	1.7	%	1.2	%	1.2	%
Other items, net	(1.5)	%	0.1	%	0.1	%

Effective tax rate	36.1	%	35.1	%	39.2	%

K. EMPLOYEE BENEFIT PLANS

The Company provides a noncontributory defined benefit pension plan to employees. The pension plan covers substantially all employees with one or more years of service. Pension benefits are based on years of service and the employee's highest average compensation using 60 consecutive months out of the last 120 months of employment. The pension benefits are funded under a self-administered pension trust with the Bank's trust department acting as trustee. The Company's policy is to fund the pension plan with sufficient assets necessary to meet benefit obligations as determined on an actuarial basis (normally up to the amount deductible under existing tax regulations).

In addition to providing pension benefits, the Company also provides postretirement medical and death benefits to retired employees meeting certain eligibility requirements. The medical plan is contributory, whereby the retired employee pays a portion of the health insurance premium, and contains other cost-sharing features such as deductibles and coinsurance.

The following tables provide a reconciliation of the benefit obligations, plan assets and funded status of the pension and postretirement benefit plans.

	Pension Benefits				Postretirement Benefits

	2000		1999		2000		1999

(in thousands)

Change in benefit obligation:
Benefit obligation at January 1	$58,382		$58,753		$6,922		$6,567
Service cost	5,529		4,940		689		614
Interest cost	4,374		3,524		536		443
Retiree contributions	--		--		64		65
Actuarial loss (gain)	572		(7,501	)	386		(549	)
Benefits paid	(1,420	)	(1,334	)	(220	)	(218	)

Benefit obligation at December 31	$67,437		$58,382		$8,377		$6,922


	Pension Benefits				Postretirement Benefits

	2000		1999		2000		1999

(in thousands)

Change in plan assets:
Fair value of plan assets at January 1	$64,950		$78,519		--		--
Actual return on plan assets	1,514		(12,235	)	--		--
Benefits paid	(1,420	)	(1,334	)	--		--

Balance at December 31	$65,044		$64,950		--		--



	Pension Benefits				Postretirement Benefits

	2000		1999		2000		1999

(in thousands)

Funded status	$(2,393	)	$6,568		$(8,377	)	$(6,922	)
Unrecognized net actuarial gain	(351	)	(4,554	)	(1,577	)	(2,010	)
Unrecognized prior service cost	359		422		--		--
Unrecognized net assets at transition	--		(333	)	--		--
Unrecognized transition obligation	--		--		2,617		2,834

Prepaid (accrued) benefit cost	$(2,385	)	$2,103		$(7,337	)	$(6,098	)

	Pension Benefits				Postretirement Benefits

	2000		1999		2000		1999

Assumptions as of December 31:
(weighted averages)
Discount rate	7.50	%	7.50	%	7.50	%	7.50	%
Expected return on plan assets	8.00	%	8.00	%	--		--
Rate of compensation increase	5.00	%	5.00	%	--		--

Pension plan assets consist primarily of equity securities, corporate bonds and government and agency securities. The pension plan owned parent company common stock with an original cost of $270,000 and a fair value of $23.3 million and $26.6 million at December 31, 2000 and 1999, respectively.

Net periodic benefit cost (income) included the following components:

	Pension Benefits							Postretirement Benefits

	2000		1999		1998		2000			1999			1998

(in thousands)

Service cost	$5,529		$4,940		$4,605			$ 689			$ 614			$ 526
Interest cost	4,374		3,524		3,329			536			443			382
Amortization of prior service costs	63		63		63			--			--			--
Expected return on plan assets	(5,145	)	(6,231	)	(6,262	)		--			--			--
Recognized net actuarial gain	--		(991	)	(1,427	)		(46	)		(36	)		(72	)
Amortization of transition amounts	(333	)	(394	)	(394	)		217			217			217

Net periodic benefit cost (income)	$4,488		$ 911		$ (86	)		$1,396			$1,238			$1,053

The assumed healthcare cost trend rate used to measure the expected cost of benefits covered by the postretirement benefit plan was 5%. The healthcare cost trend rate assumption could have a significant effect on the amounts reported. A one percentage point change in the assumed healthcare cost trend rates would have the following effects:

	One Percentage Point Increase	One Percentage Point Decrease


(in thousands)
Effect on total of service and interest cost components
of net periodic postretirement healthcare cost	$ 68	$ (65)
Effect on postretirement benefit obligation	314	(300)

In addition to the pension and postretirement benefit plans, the Company also has 401(k) savings plans which cover substantially all employees. Total cost for these plans, included within noninterest expense, for the years ended December 31, 2000, 1999 and 1998 was $3.8 million, $3.1 million and $1.7 million, respectively.

In December 2000, the Company established and funded two executive deferred compensation plans, replacing an existing executive deferred compensation plan. For the years ended December 31, 2000, 1999 and 1998, expense attributable to these plans was $1.1 million, $1.1 million and $1.3 million, respectively.

Also in December 2000, the Company established and funded an employee stock trust. The employee stock trust was established to provide funding for obligations of employee benefit plans. The employee stock trust is a non-qualified grantor trust and is consolidated with the Company’s financial statements. Shares held by the employee stock trust are treated for accounting purposes like treasury stock, as a reduction of stockholders’ equity. The obligation under this employee stock trust is also classified as a component of equity. As of December 31, 2000, the employee stock trust held 1,531 shares of parent company stock. None of these shares were committed to fund employee benefit obligations at December 31, 2000.

L. CONTINGENCIES AND COMMITMENTS

In the normal course of business, there are various outstanding commitments to extend credit in the form of unused loan commitments and standby letters of credit that are not reflected in the consolidated financial statements. Since commitments may expire without being exercised, these amounts do not necessarily represent future funding requirements. The Company uses the same credit and collateral policies in making commitments as those described in Note C.

At December 31, 2000 and 1999, the Company had unused loan commitments, excluding consumer credit card lines, of $2.2 billion and $1.9 billion, respectively. Additionally, standby letters of credit of $105.4 million and $138 million had been issued at December 31, 2000 and 1999, respectively. The majority of these commitments are collateralized by various assets. No material losses are anticipated as a result of these transactions.

The Company had unused consumer credit card lines of $24.9 billion and $21.5 billion at December 31, 2000 and 1999, respectively. The Company has the contractual right to change the conditions of the credit card members' benefits or terminate the unused line at any time without prior notice. Since many unused credit card lines are never actually drawn upon, the unfunded amounts do not necessarily represent future funding requirements.

The Company has operating leases for office space with terms ranging from one to ten years, which may include renewal options. Certain leases also include residual value guarantees up to $130.5 million, or alternatively, the Company may elect to exercise purchase options totaling $150.8 million. Operating leases on equipment and office space require future minimum annual rental payments as follows: 2001-$23.2 million; 2002-$21.2 million; 2003-$12.2 million; 2004-$9.4 million; 2005-$6.6 million; and $19.6 million thereafter through the year 2026. Net rental expense on leases for the years ending December 31, 2000, 1999 and 1998 was approximately $25.9 million, $18.6 million and $17.5 million, respectively.

The Company also has a commitment to lease a 40-story tower in Omaha, Nebraska that is currently under construction. Future annual lease payments are estimated to be $16 million and are expected to begin when the tower is completed in 2002. This lease is expected to include estimated residual value guarantees up to $165.8 million, or alternatively, the Company may elect to exercise a purchase option for approximately $195 million. The Company has short-term leases for other locations in Omaha which it has the ability to terminate upon completion of the tower’s construction.

M. REGULATORY MATTERS

The Company is governed by various regulatory agencies. Financial holding companies and their nonbanking subsidiaries are regulated by the Federal Reserve Board. National banks are primarily regulated by the Office of the Comptroller of the Currency (OCC). All federally-insured banks are also regulated by the Federal Deposit Insurance Corporation (FDIC). The Company's banking subsidiaries include eight national banks, two state-chartered banks, all of which are insured by the FDIC. The state-chartered banks are also regulated by state banking authorities. The Company also owns two trust companies that are primarily regulated by the OCC.

Various requirements and restrictions under federal and state laws regulate the operations of the Company. These laws, among other things, require the maintenance of reserves against deposits, impose certain restrictions on the nature and terms of loans, restrict investments and other activities, and regulate mergers and the establishment of branches and related operations. The ability of the parent company to pay cash dividends to its shareholders and service debt may be dependent upon cash dividends from its subsidiary banks. Subsidiary banks are subject to limitations under federal law in the amount of dividends they may declare. At December 31, 2000, approximately $124 million of subsidiary banks' retained earnings was available for dividend declaration without prior regulatory approval.

On April 6, 2000, the parent company became a “financial holding company” under the Gramm-Leach-Bliley Act. As a financial holding company, the Company is permitted to engage in and to acquire companies engaged in “financial in nature” activities. These activities could include, among other things, securities and insurance activities and investment banking (through appropriate entities). Engaging in these activities could subject the parent company and its subsidiaries to regulation by additional functional regulators. The parent company is required to satisfy certain conditions in order to retain its rights as a financial holding company. One such condition is that all of the depository institutions controlled by the Company must be and remain well capitalized and well managed. Failure to satisfy this condition could result in regulatory action against the Company, including forced divestiture of its depository institution subsidiaries.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and its banking subsidiaries must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. These quantitative measures require the Company and its banking subsidiaries to maintain minimum amounts and ratios (set forth in the following table) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). The Company and its banking subsidiaries' capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

As of December 31, 2000, the most recent notification from the bank regulators categorized the Company's banking subsidiaries as well capitalized under the regulatory framework for prompt corrective action. There are no

conditions or events since that notification that management believes have changed these categories. To be categorized as well capitalized, the Company's banking subsidiaries must maintain minimum total risk-based capital of 10%, Tier I risk-based capital of 6%, and Tier I leverage capital of 5%.

The Company's and First National Bank of Omaha's actual capital amounts and ratios are presented in the following table.

									To Be Well Capitalized Under Prompt Corrective Action Provisions

					For Minimum Capital Adequacy Purposes
		Actual			For Minimum Capital Adequacy Purposes

(in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio


As of December 31, 2000
Total Capital to Risk Weighted Assets
Consolidated	$	828,406	10.4	%	$	639,999	8.0	%		N/A
First National Bank of Omaha	$	436,651	10.5	%	$	332,436	8.0	%	$	415,545	10.0	%
Tier I Capital to Risk Weighted Assets
Consolidated	$	643,431	8.0	%	$	319,999	4.0	%		N/A
First National Bank of Omaha	$	312,868	7.5	%	$	166,218	4.0	%	$	249,327	6.0	%
Tier I Capital to Average Assets
Consolidated	$	643,431	7.2	%	$	357,993	4.0	%		N/A
First National Bank of Omaha	$	312,868	6.9	%	$	180,863	4.0	%	$	226,078	5.0	%

As of December 31, 1999
Total Capital to Risk Weighted Assets
Consolidated	$	751,810	10.8	%	$	554,935	8.0	%		N/A
First National Bank of Omaha	$	363,314	10.5	%	$	276,853	8.0	%	$	346,066	10.0	%
Tier I Capital to Risk Weighted Assets
Consolidated	$	577,331	8.3	%	$	277,467	4.0	%		N/A
First National Bank of Omaha	$	245,578	7.1	%	$	138,426	4.0	%	$	207,640	6.0	%
Tier I Capital to Average Assets
Consolidated	$	577,331	7.1	%	$	323,176	4.0	%		N/A
First National Bank of Omaha	$	245,578	6.0	%	$	163,710	4.0	%	$	204,637	5.0	%

The banking industry is also affected by the monetary and fiscal policies of regulatory authorities, including the Federal Reserve Board. Through open market securities transactions, variations in the discount rate, the establishment of reserve requirements and the regulation of certain interest rates payable by member banks, the Federal Reserve Board exerts considerable influence over the cost and availability of funds obtained for lending and investing. Changes in interest rates, deposit levels and loan demand are influenced by the changing conditions in the national economy and in the money markets, as well as the effect of actions by monetary and fiscal authorities. Pursuant to Federal Reserve Bank reserve requirements, the Company's banking subsidiaries were required to maintain certain cash reserve balances with the Federal Reserve system of approximately $32.2 million and $21.7 million at December 31, 2000 and 1999, respectively.

N. FAIR VALUES OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument is the current amount that would be exchanged between willing parties. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company's various financial instruments. 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. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Statement No. 107, "Disclosures About Fair Value of Financial Instruments," excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company
.

The following table presents the carrying amounts and fair values of the specified assets and liabilities held by the Company at December 31, 2000 and 1999. The information presented is based on pertinent information available to management as of December 31, 2000 and 1999. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, such amounts have not been comprehensively revalued since that time, and the current estimated fair value of these financial instruments may have changed since that point in time.

December 31, 2000

December 31, 1999

Carrying
Amount

Estimated
Fair
Value

Carrying
Amount

Estimated
Fair
Value

(in thousands)

Financial assets:

Cash and cash equivalents

$ 815,451

$ 654,732

Investment securities

1,039,494

1,041,368

1,193,070

1,191,852

Net loans and lease financing

6,800,304

6,920,819

6,191,819

6,393,141

Accrued interest receivable

94,906

77,063

Financial liabilities:

Deposits

$ 7,847,949

$ 7,889,612

$ 7,008,712

$ 6,996,408

Federal funds purchased and securities

sold under repurchase agreements

156,805

341,485

Federal Home Loan Bank advances

189,325

192,077

372,077

370,963

Other borrowings

91,098

3,758

Accrued interest payable

50,626

34,025

Capital notes

93,594

97,372

94,389

89,159

The following methods and assumptions were used in estimating fair value disclosures for the Company's financial instruments:

Cash and Cash Equivalents - The carrying amounts of cash and due from banks, federal funds sold and other short-term investments approximate the fair values.

Investment Securities - The fair values of the Company's securities, excluding Federal Home Loan Bank stock and other securities, are based on the quoted market prices at December 31, 2000 and 1999. Available-for-sale securities are carried at their aggregate fair values. The carrying value of the Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank.

Net Loans and Lease Financing - The fair values of the Company's loans and lease financing have been estimated using two methods: 1) the carrying amounts of short-term and variable rate loans approximate fair values excluding certain credit card loans which are tied to an index floor; and 2) for all other loans, discounting of projected future cash flows. When using the discounting method, loans are pooled in homogeneous groups with similar terms and conditions and discounted at a target rate at which similar loans would be made to borrowers at year end. In addition, when computing the estimated fair values for all loans, the allowance for loan losses is subtracted from the calculated fair values for consideration of credit issues.

Accrued Interest Receivable - The carrying amount of accrued interest receivable approximates the fair value.

Deposits - The methodologies used to estimate the fair values of deposits are similar to the two methods used to estimate the fair values of loans. Deposits are pooled in homogeneous groups and the future cash flows of these groups are discounted using current market rates offered for similar products at year end.

Federal Funds Purchased and Securities Sold Under Repurchase Agreements - The carrying amounts of federal funds purchased and securities sold under repurchase agreements approximate the fair values.

Federal Home Loan Bank Advances - The fair values of Federal Home Loan Bank advances are estimated by discounting future cash flows using current market rates for similar types of borrowing arrangements.

Other Borrowings - The carrying amounts for other borrowings approximates fair value since these borrowings are primarily variable rate instruments.

Accrued Interest Payable - The carrying amount of accrued interest payable approximates the fair value.

Capital Notes - The fair values of capital notes are estimated by discounting future cash flows using current market rates for similar types of borrowing arrangements.

Off-Balance Sheet Financial Instruments - The estimated fair value of loan commitments and standby letters of credit approximate carrying value because the fees currently charged for these arrangements and the underlying interest rates approximate market.

O. ACQUISITIONS

In February 2000, the Bank acquired Cornerstone Mortgage Company in a transaction accounted for as a purchase. Cornerstone Mortgage Company is a full service mortgage banking company headquartered in Houston, Texas with assets of approximately $20 million at acquisition.

In July 2000, the parent company acquired InfiCorp Holdings, Inc., parent of InfiStar Corporation, InfiLink Corporation and InfiBank, a limited purpose state chartered credit card bank, in a transaction accounted for as a purchase. InfiCorp Holdings, Inc., located in Atlanta, Georgia, provides comprehensive credit card portfolio management services and had consolidated assets of approximately $49 million at the time of acquisition.

In November 1999, a subsidiary of the parent company, First National Bank South Dakota, acquired Commercial Banshares, Inc., parent of Commercial Trust and Savings Bank, in a transaction accounted for as a purchase. Commercial Banshares, Inc. had consolidated assets of approximately $161 million. At acquisition, Commercial Trust and Savings Bank was renamed to Commercial Bank, a division of First National Bank South Dakota. Commercial Bank has branches in Mitchell, Huron and Woonsocket, South Dakota.

A second acquisition occurred in November 1999 and it was also accounted for as a purchase. A bank holding company subsidiary acquired FNBJ Company, a parent of First National Bank of Johnstown, Colorado. FNBJ Company, the holding company of First National Bank of Johnstown, had consolidated assets of approximately $30 million. At acquisition, First National Bank of Johnstown merged into Union Colony Bank and was renamed Union Colony - Johnstown Branch.

P. RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.” Statement No. 133 establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivative instrument’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Statement No. 133, as amended, is effective for fiscal years beginning after June 15, 2000. The Company adopted Statement No. 133 as of January 1, 2001. The adoption of Statement No. 133 will not have a material impact on the financial position or results of operations of the Company.

In September 2000, the FASB issued Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” This new Statement replaces Statement No. 125, issued in June 1996. Statement No. 140 resolves certain implementation and other issues that have arisen since the initial adoption of Statement No. 125, but it carries over most of Statement No. 125’s provisions without change. Statement No. 140 is effective for transfers occurring after March 31, 2001 and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. Management does not expect the full adoption of Statement No. 140 to have a significant impact on the financial position or results of operations of the Company.

Q. CONDENSED FINANCIAL INFORMATION OF FIRST NATIONAL OF NEBRASKA

First National of Nebraska (parent company only)
Condensed Statements of Financial Condition


		December 31,
		2000			1999

(in thousands)

Assets

Cash and due from banks	$	315		$	411
Other short-term investments		4,100			6,100

Total cash and cash equivalents		4,415			6,511

Other securities		406			406
Loans to subsidiaries		23,783			8,294

Investment in subsidiaries:
First National Bank of Omaha		312,659			239,979
Other banking subsidiaries		428,033			403,412
Nonbanking subsidiaries		28,393			11,401

Total investment in subsidiaries		769,085			654,792

Other assets		7,526			4,976

Total assets	$	805,215		$	674,979



Liabilities and Stockholders' Equity

Other liabilities	$	6,777		$	2,873
Deferred gain on sale of buildings		3,960			4,562
Other borrowings		28,000			--
Capital notes		16,275			17,070

Total liabilities		55,012			24,505

Stockholders' equity:
Common stock		1,673			1,673
Additional paid-in capital		2,511			2,511
Retained earnings		746,718			656,786
Accumulated other comprehensive income (loss)		(699	)		(10,496	)

Total stockholders' equity		750,203			650,474

Total liabilities and stockholders' equity	$	805,215		$	674,979

First National of Nebraska (parent company only)
Condensed Statements of Operations


	For the years ended December 31,
		2000			1999			1998

(in thousands except share and per share data)
Revenues:
Income from subsidiaries:
Dividends from First National Bank of Omaha	$	39,752		$	27,066		$	14,988
Dividends from other banking subsidiaries		35,000			31,000			23,575
Interest income on short-term investments		453			38			159
Recognized gain on sale of buildings		602			602			602
Investment interest and other income		4,026			1,599			462

Total revenues		79,833			60,305			39,786

Expenses:
Interest		3,750			1,656			2,749
Other		10,825			6,094			3,358

Total expenses		14,575			7,750			6,107

Income before income taxes and equity in undistributed
earnings of subsidiaries		65,258			52,555			33,679
Income tax expense (benefit)		(1,028	)		(5,507	)		641

Total income before equity in undistributed
earnings of subsidiaries		66,286			58,062			33,038

Equity in undistributed earnings (losses)
of subsidiaries:
First National Bank of Omaha		27,703			13,589			30,688
Other banking subsidiaries		13,685			18,473			22,530
Nonbanking subsidiaries		(2,197	)		2,237			236

Total equity in undistributed earnings of subsidiaries		39,191			34,299			53,454

Net income	$	105,477		$	92,361		$	86,492

Average number of shares outstanding		334,500		334,622			335,000

Net income per share	$	315.33		$	276.02		$	258.19

First National of Nebraska (parent company only)
Condensed Statements of Cash Flows


	For the years ended December 31,
		2000		1999			1998

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		$105,477			$ 92,361		$ 86,492
Adjustments to reconcile net income to net cash
flows from operating activities:
Equity in undistributed earnings of subsidiaries		(39,191	)		(34,299	)	(53,454	)
Recognized gain on sale of buildings		(602	)		(602	)	(602	)
Gain on sale of investment securities		(2,039	)		--		--
Other, net		2,992			(2,678	)	2,913

Net cash flows from operating activities		66,637			54,782		35,349

CASH FLOWS FROM INVESTING ACTIVITIES
Sales of securities available-for-sale		17,957			--		--
Purchases of securities available-for-sale		(15,918	)		--		--
Change in investment in subsidiaries and other assets		(77,376	)		(36,168	)	(2,090	)

Net cash flows from investing activities		(75,337	)		(36,168	)	(2,090	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of other borrowings		112,000			10,000		14,000
Principal repayments of other borrowings		(89,056	)		(10,056	)	(33,070	)
Principal repayments of capital notes		(795	)		(794	)	(1,188	)
Repurchase of common stock		--			(1,574	)	--
Cash dividends paid		(15,545	)		(12,958	)	(11,725	)

Net cash flows from financing activities		6,604			(15,382	)	(31,983	)


Net change in cash and cash equivalents		(2,096	)		3,232		1,276

Cash and cash equivalents at beginning of year		6,511			3,279		2,003

Cash and cash equivalents at end of year		$ 4,415			$ 6,511		$ 3,279

Cash paid during the year for:
Interest		$ 3,296			$ 1,701		$ 2,833
Income taxes		$ 50,933			$52,632		$53,387

Cash received from affiliates for income taxes		$ 45,129			$49,271		$51,895
Noncash investing and financing activities:
Noncash consideration for business acquisition		$ 5,000			$ --		$ --

Independent Auditors' Report

Board of Directors and Stockholders
First National of Nebraska, Inc.
Omaha, Nebraska

We have audited the accompanying consolidated statements of financial condition of First National of Nebraska, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These 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 auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of First National of Nebraska, Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Omaha, Nebraska
January 31, 2001

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

The Company

The Company consists of the parent company, which is a Nebraska-based interstate financial holding company, and its consolidated subsidiaries which trace their origins back to 1857. Its principal subsidiaries include First National Bank of Omaha and its subsidiaries; First National Bank and Trust Company of Columbus; First National Bank, North Platte; Platte Valley State Bank and Trust Company, Kearney; The Fremont National Bank and Trust Company and its wholly-owned subsidiary: Nebraska Trust Company, N.A.; First National Bank of Kansas, Overland Park, Kansas; First National Bank South Dakota, Yankton, South Dakota; and First National of Colorado, Inc., and its wholly-owned Colorado subsidiaries which primarily include: First National Bank, Fort Collins; Union Colony Bank, Greeley; First National Bank of Colorado, Boulder; and FNC Trust Group, N.A. The Company also has nonbanking subsidiaries, which in the aggregate are not material. The Company had 6,433 employees as of December 31, 2000.

The Company is governed by various regulatory agencies. Financial holding companies and their nonbanking subsidiaries are regulated by the Federal Reserve Board. National banks are primarily regulated by the OCC. All federally-insured banks are also regulated by the FDIC. The Company's banking subsidiaries include eight national banks and two state-chartered banks, all of which are insured by the FDIC. The state-chartered banks are also regulated by state banking authorities. The Company also owns two trust companies that are primarily regulated by the OCC.

The Company has 48 years of experience providing credit card services and was one of the originators of the bank credit card industry. Through a banking subsidiary, the Company conducts a significant consumer credit card service under license arrangements with VISA USA and MasterCard International, Inc. The Company's credit card customers are located throughout the United States, but primarily in the central part of the country. In 2000, the Company was ranked the ninth largest bank issuer of credit cards and the fifteenth largest overall issuer based on the amount of managed credit card loans outstanding. The Company performs credit card servicing activities on behalf of its affiliate banks including data processing, payment processing, statement rendering, marketing, customer service, credit administration and card embossing. The Company primarily funds its credit card loans through the core deposits of its affiliate banks.

The Company continues to make substantial investments in data processing technology for its own data processing needs and to provide various data processing services for unaffiliated parties. The services provided include automated clearinghouse transactions, merchant credit card processing and check processing. In 2000, the Company was ranked the eleventh largest merchant credit card processor in the United States with over $24.4 billion in transactions processed in 2000 and $20.5 billion in transactions processed in 1999. It was also ranked among the top twenty largest automated clearinghouse processors in the country and one of the largest check processors in its market area. The Company provides data processing services to 42 non-affiliated banks located in nine states. The Company continues to closely monitor the risks and competitive conditions as they relate to pricing and technological issues associated with these processing services.

Competitors of the Company include commercial banks, savings and loan associations, consumer and commercial finance companies, credit unions and other financial services companies. The Company's credit card operation competes with other issuers of credit cards ranging from other national issuers of bank cards to local retailers which provide their own credit cards. As a result of this intense nation-wide competition, a number of companies are exiting the credit card industry.

Management’s discussion and analysis contains forward-looking statements which reflect management’s current views and estimates of future economic circumstances, industry conditions, company performance and the financial results. The statements are based on many assumptions and factors, including general economic conditions, consumer behavior, competitive environment and related market conditions, operating efficiencies and actions of governments. Any changes in such assumptions or factors could produce different results.

Results of Operations

Overview

The Company earned a record net income for 2000 of $105.5 million, an increase of $13.1 million, or 14.2%, from 1999. In 1999, net income was $92.4 million, an increase of $5.9 million, or 6.8%, from 1998. Net income for 2000 includes a gain before taxes of $59.4 million recognized on the sale of an 80.13% interest in a subsidiary, Retriever Payment Systems (Retriever), which is primarily involved in merchant processing sales. Net income for 1998 reflects proceeds received by the Company related to the settlement of litigation. In 2000, net income per share was $315.33 compared to $276.02 and $258.19, respectively, for 1999 and 1998. Return on average stockholders' equity for 2000 was 15.4% compared to 15.1% for 1999 and 15.7% for 1998. Return on average assets was 1.2% for 2000, 1999 and 1998, respectively.

Net interest income has remained relatively flat over the last three years. Increased pressure on deposit generation and a shift in the mix of loans in the Company's portfolio to lower-yielding non-credit card loans have contributed to the tightening of net interest income. In spite of significant overall loan growth, the Company's reported credit card loans, which are higher-yielding, have declined. Reported credit card loans comprised 32.1%, 38.9% and 48.5% of the total loan portfolio in 2000, 1999 and 1998, respectively. Although managed credit card loans increased $526.6 million, or 17%, in 2000, the Company also increased the volume of credit card loans securitized in 2000 resulting in lower reported credit card loans. This increased securitization volume has caused a shift in net revenues recognized from net interest income to credit card securitization income which is included in noninterest income.

The Company has experienced improvements in the asset quality of its credit card portfolio, and as a result, the provision for loan losses has declined over the past three years. Declining delinquency and charge-off rates for credit card loans and reduced outstanding balances for reported credit card loans have contributed to the reductions in the provision for loan losses.

Excluding the $59.4 million gain on the sale of Retriever, noninterest income increased $73.4 million, or 29.5%, in 2000 compared to 1999, while noninterest expense increased $115.7 million, or 24.1%, in 2000 compared to 1999. These increases are primarily due to the Company's growth initiatives which have resulted in expansion into new markets, acquisitions and new product sales. Additionally, the average credit card securitization volume increased 39.9% in 2000 resulting in a $32.2 million, or 50.1%, increase in credit card securitization income.

The Company intends to increase its internal sales force to replace merchant processing sales attributable to Retriever. The Company's merchant processing volumes and related revenues may experience fluctuations over the next few years as the volume from new customers builds to replace those volumes associated with Retriever.

Net interest income

The Company's primary source of income is net interest income which is defined as the difference between interest income and fees derived from earning assets and interest expense on interest-bearing liabilities. Interest income and expense are affected by changes in the volume and mix of interest-earning assets and interest-bearing liabilities, in addition to changes in interest rates. The following table presents a summary of net interest income on a tax-equivalent basis, related average earning assets and net interest margin:

		2000			1999			1998

(in thousands)

Net interest income on a tax equivalent basis	$	511,179		$	518,734		$	512,944
Average earning assets		7,918,068			7,117,622			6,801,408
Net interest margin		6.46	%		7.29	%		7.54	%

The decreases in net interest margins relate to changes in the asset mix of the Company resulting from a reduction in higher yielding credit card balances and increases in lower yielding non-credit card balances. Net interest margin decreases also relate to an increase in the cost of interest-bearing liabilities which is primarily the result of rising market interest rates and competitive pressures.

Provision for loan losses

On a monthly basis, the Company evaluates its allowance for loan losses based upon a review of collateral values, delinquencies, nonaccruals, payment histories and various other analytical and subjective measures relating to the various loan portfolios within the Company. The provision for loan losses decreased $13.5 million, or 9.3%, to $131.1 million for 2000 compared to $144.6 million for 1999. In 1999, the provision for loan losses decreased $28.7 million, or 16.6%, to $144.6 million compared to $173.3 million for 1998. The reductions in the provision for loan losses for 2000 and 1999 are primarily due to improved delinquency and charge-off rates and reductions in the outstanding balances of higher risk credit card loans relative to the entire portfolio. These improvements in delinquency and charge-off rates and reduced credit card balances also contributed to the decreased level in the allowance for loan losses as of December 31, 2000 compared to December 31, 1999.

Noninterest income

Total noninterest income was $381.4 million in 2000, an increase of $132.8 million, or 53.4%, from 1999. In 1999, noninterest income was $248.6 million, a decrease of $10.1 million, or 3.9%, from 1998. A significant portion of the 2000 increase in noninterest income compared to 1999 was due to a gain of $59.4 million recognized on the sale of Retriever which was sold for strategic reasons. The 1999 decrease in noninterest income compared to 1998 is mainly attributable to miscellaneous income recognized in the first quarter of 1998 from proceeds received in the settlement of litigation.

Processing services income increased $24.6 million, or 29.5%, in 2000 compared to 1999 due to increased credit card and merchant processing volumes for new and existing customers. In 2000, credit card securitization income increased $32.2 million, or 50.1%, to $96.6 million when compared to $64.4 million for 1999. The increase in credit card securitization income for 2000 when compared to 1999 resulted from a $1.5 million, or 2.9%, increase in net servicing income to $53.2

million from $51.7 million and a $30.7 million, or 241.7%, increase in securitization gains to $43.4 million from $12.7 million. In 1999, credit card securitization income increased $3.4 million, or 5.6%, to $64.4 million when compared to $61 million for 1998. The increase in credit card securitization income for 1999 when compared to 1998 resulted from the net impact of a $3.9 million, or 8.2%, increase in net servicing income to $51.7 million from $47.8 million net of a $500,000, or 3.8%, decrease in securitization gains to $12.7 million from $13.2 million. Deposit services income increased $4.7 million, or 16.9%, in 2000 compared to 1999 and $2.9 million, or 11.7%, in 1999 compared to 1998 generally as a result of growth in the Company’s customer base and overall transaction volume. Miscellaneous income increased $12.7 million, or 25.3%, in 2000 compared to 1999 primarily due to an $8.5 million increase in gains recognized on the sale of mortgage loans resulting from the Company’s acquisition of Cornerstone Mortgage Company in February 2000. This increase was also due to growth in investment sales activities and timing differences in the recognition of insurance commissions compared to the same period in 1999.

Noninterest expense

Noninterest expense was $595.5 million in 2000, an increase of $115.7 million, or 24.1%, from 1999. Noninterest expense in 1999 was $479.8 million, an increase of $24.1 million, or 5.3%, from 1998. A significant portion of these increases relates to salaries and employee benefits which increased $48.2 million, or 22.3%, in 2000 compared to 1999 and $33.4 million, or 18.3%, in 1999 compared to 1998 resulting from an increase in the Company’s employee base as the Company has expanded into new markets and increased its customer base.

Communications and supplies expense increased $17.9 million, or 30.6%, in 2000 compared to 1999 largely due to increased credit card promotion activity. Equipment rentals, depreciation and maintenance expense increased $4.7 million, or 9.4%, in 2000 compared to 1999 and $4.8 million, or 10.5%, in 1999 compared to 1998 and net occupancy expense increased $12.7 million, or 41.7%, in 2000 compared to 1999. These equipment and occupancy-related expenses increased primarily from the Company’s expansion into new markets, growth in the Company’s customer base and processing volumes and continued investments in technology. Processing expense increased $7.6 million, or 27.5%, in 2000 compared to 1999. This increase largely relates to the acquisition of credit card portfolios and increased merchant processing volumes. Professional services was $33.3 million in 2000, an increase of $7.8 million, or 30.5%, from 1999 while professional services was $25.5 million in 1999, a $18.6 million, or 42.2%, decrease from 1998. The increase in 2000 compared to 1999 relates to higher costs incurred to acquire additional merchant processing customers and increased professional fees incurred related to company growth. The decrease in 1999 compared to 1998 is principally due to decreased fees paid to a third party merchant sales organization. Loan servicing expense increased $3.9 million, or 14.8%, in 1999 compared to 1998. This increase resulted primarily from the Company’s increased collection efforts during 1999 as well as increased costs for credit reports and costs related to acquiring additional agent bank relationships. Goodwill and other intangibles amortization increased $5.4 million, or 25.3%, in 2000 compared to 1999 and $2.8 million, or 15.3%, in 1999 compared to 1998 largely due to increased amortization of premiums paid for credit card portfolio acquisitions. Miscellaneous expense increased $11.5 million, or 59.7%, in 2000 compared to 1999 primarily due to an increase in the Company’s contributions to community projects and initiatives.

Loans

Credit Card

The Company securitizes credit card loans on a revolving basis as a funding vehicle to supplement its use of core deposits as its primary source of funding. The securitizations result in differences in the amount of reported loans versus managed loans. Reported loans reflect the removal of these securitized loans from the balance sheet in accordance with generally accepted accounting principles while managed loans include both securitized loans and reported loans. The following table reflects the reconciliation between reported and managed loans for the total loan portfolio and credit card loans, net of unearned income, at December 31, 2000 and December 31, 1999.

	December 31, 2000			December 31, 1999
	Reported	Securitized	Managed	Reported	Securitized	Managed

(in thousands)
Managed Loan Data

As of Year End:
Total loans outstanding	$6,905,608	$1,412,038	$8,317,646	$6,298,303	$651,044	$6,949,347
Total credit card loans outstanding	$2,214,474	$1,412,038	$3,626,512	$2,448,910	$651,044	$3,099,954
Annual Average:
Total loans outstanding	$6,505,669	$ 913,006	$7,418,675	$5,741,204	$652,599	$6,393,803
Total credit card loans outstanding	$2,253,450	$ 913,006	$3,166,456	$2,445,615	$652,599	$3,098,214

The decrease in reported credit card loans outstanding at December 31, 2000 is primarily attributable to a net increase in securitization volume of $761 million during 2000. In addition to credit card securitization activities, the Company acquired 14 credit card loan portfolios totaling $154 million throughout 2000.

Real Estate

The Company has been successful in expanding its real estate lending activities. Total real estate loans outstanding were $2.1 billion and $1.5 billion at December 31, 2000 and 1999, respectively. The Company is diversified in its real estate lending by providing construction, permanent and land development financing to a variety of borrowers throughout the Company's operating regions in Nebraska, Colorado, Kansas, South Dakota, Iowa and Texas. These real estate loans are generally secured by the underlying property being financed. The Company regularly monitors concentrations of its real estate loans based on geography, loan type and borrower.

Asset Quality

The Company's loan delinquency rates and net charge-off activity reflect, among other factors, general economic conditions, the quality of the loans, the average seasoning of the loans and the success of the Company's collection efforts. The Company's objective in managing its loan portfolio is to balance and optimize the profitability of the loans within the context of acceptable risk characteristics. The Company continually monitors the risks embedded in the credit card loan portfolio with the use of statistically-based simulation models which incorporate historical net charge-off trends on past due accounts and net charge-off trends related to bankruptcies, deceased credit card holders and account settlements.

The level of loan delinquencies and net charge-offs has improved compared to 1999 levels. Delinquencies have now declined to a more acceptable range of 4% to 5% for the Company’s national credit card portfolio. Charge-offs are still slightly above desired levels, but are following delinquencies down to a reasonable rate.

The following table reflects the delinquency rates for the Company's overall loan portfolio and the credit card portfolio. An account is contractually delinquent if the minimum payment is not received by the specified due date. The overall delinquency rate as a percentage of total loans improved to a level of 2.53% at December 31, 2000 compared with 2.86% at December 31, 1999. The delinquency rate as a percentage of total credit card loans was 4.67% at December 31, 2000 down from 5.06% at December 31, 1999.

Delinquent Loans:
	December 31, 2000			December 31, 1999

(in thousands)

Total Loans			% of Loans			% of Loans
Loans outstanding	$	6,905,608		$	6,298,303
Loans delinquent:
30 - 89 days	$	124,069	1.80%	$	121,465	1.93%
90 days or more & still accruing		50,081	0.73%		58,809	0.93%

Total delinquent loans	$	174,150	2.53%	$	180,274	2.86%

Nonaccrual loans	$	14,839	.21%	$	11,766	.19%


Credit Card Loans
Loans outstanding	$	2,214,474		$	2,448,910
Loans delinquent:
30 - 89 days	$	61,323	2.77%	$	72,603	2.96%
90 days or more & still accruing		41,976	1.90%		51,512	2.10%

Total delinquent loans	$	103,299	4.67%	$	124,115	5.06%

Nonaccrual loans		--	--		--	--

The Company's policy is to charge off credit card loans and consumer lines of credit when they become 180 days contractually past due. Generally, other consumer loans are charged off when they become 120 days contractually past due. Net charge-offs include the principal amount of losses resulting from borrowers’ unwillingness or inability to pay, in addition to bankruptcies, deceased borrowers and account settlements less current period recoveries of previously charged off loans. The allowance for loan losses is intended to cover losses inherent in the Company's loan portfolio as of the reporting date. The provision for loan losses is charged against earnings to cover both current period net charge-offs and to maintain the allowance at an acceptable level to cover losses inherent in the portfolio as of the reporting date. Net charge-offs for the Company’s overall portfolio were $123.6 million for the year ended December 31, 2000 compared to $163 million for the same period in 1999. Net charge-offs as a percentage of average loans were 1.9% for 2000 compared to 2.84% for 1999. The allowance as a percentage of loans was 1.52% as of December 31, 2000 compared to 1.69% as of December 31, 1999.

The following table presents the activity in the Company's allowance for loan losses with a breakdown of charge-off and recovery activity related to credit card loans.

Allowance for Loan Losses:
	For the Years Ended December 31,
	2000		1999

(in thousands)

Balance at January 1	$ 106,484		$ 121,877
Provision for loan losses	131,073		144,573
Addition due to acquisitions of loans	3,518		3,054
Reduction due to sales of loans	(12,210	)	—
Loans charged off:
Credit card loans	(135,046	)	(179,794	)
All other loans	(11,260	)	(11,463	)
Loans recovered:
Credit card loans	19,584		24,619
All other loans	3,161		3,618

Total net charge-offs	(123,561	)	(163,020	)


Balance at December 31	$ 105,304		$ 106,484

Allowance as a percentage of loans	1.52	%	1.69	%
Total net charge-offs as a percentage
of average loans	1.90	%	2.84	%

Capital Resources

The Company’s primary source of capital is its retained earnings. The Company has historically retained approximately 85% of net income in capital to fund growth of future operations and to maintain minimum capital standards.

As described in Note M, the Company and its banking subsidiaries are required to maintain minimum capital in accordance with regulatory guidelines. At December 31, 2000, the Bank and all other banking subsidiaries of the Company exceeded the minimum requirements for the "well capitalized" category as established by supervisory agencies. The Company intends to maintain sufficient capital in each of its banking subsidiaries for them to remain in the "well capitalized" category.

The Company monitors its capital on a regular basis and performs necessary forecasts of capital needs based upon anticipated growth in loans and earnings. The Company and its banking subsidiaries have potential under current capital rules to increase their capital by the issuance of debt instruments including trust preferred securities and subordinate debt.

In 1995, the Bank issued $75 million in 15 year subordinated capital notes. During 1999, First National Bank South Dakota, another banking subsidiary of the Company, issued $2.3 million in capital notes related to the acquisition and merger of a bank. These capital notes, along with the parent company’s $16.3 million in capital notes outstanding as of December 31, 2000 issued in connection with the Company’s previous acquisitions, count towards meeting the required capital standards, subject to certain limitations.

Liquidity Management

Adequate liquidity levels are necessary to ensure that sufficient funds are available for loan growth and deposit withdrawals. These funding needs are offset by funds generated from loan repayments, investment maturities, and core deposit growth. The Company's Asset and Liability Committee is responsible for monitoring the current and forecasted balance sheet structure to ensure anticipated funding needs can be met at a reasonable cost. Contingency plans are in place to meet unanticipated funding needs or loss of funding sources. The parent company's cash flows are dependent upon the receipt of dividends from its banking subsidiaries which are subject to regulatory restrictions.

The Company continues to place a priority on obtaining retail consumer deposits as its primary source of funding. This strategy is being supported by our entry into the Dallas, Texas, and Denver, Colorado market places. The Company also has access to a variety of other funding sources to augment the total funding needs of the Company. These other sources

include securities sold under repurchase agreements, federal funds purchased, credit card-backed securitizations, Federal Home Loan Bank advances, other debt agreements and subordinated capital notes.

The Company utilizes credit card-backed securitization vehicles to assist in its management of liquidity, interest rate risk and capital. At December 31, 2000 and 1999, $1.4 billion and $651 million, respectively, of the Company's managed credit card portfolio was securitized with an additional $130 million and $255 million, respectively, in unused securitization lines available. Additionally, the Company had Federal Home Loan Bank advances of $189.3 million as of December 31, 2000 and $372.1 million as of December 31, 1999. At December 31, 2000, the parent company had $23 million outstanding under a $125 million syndicated revolving credit facility.

Market Risk

The Company's primary component of market risk is interest rate volatility. It is the goal of the Company to maximize profits while effectively managing rather than eliminating interest rate risk. Two primary measures are used to measure and manage interest rate risk: Net Interest Income Simulation Modeling and Interest Rate Sensitivity Gap Analysis.

Net Interest Income Simulation
The Company uses a simulation model to analyze net interest income sensitivity to movements in interest rates. The simulation model projects net interest income based on both upward and downward interest rate shifts over a twelve month period. Alternative scenarios are simulated by applying immediate shifts in interest rates (rate shocks) and gradual shifts in interest rates (rate ramps). These interest rate shifts are applied to a projected balance sheet for the Company for the twelve month simulation period. Based on the information and assumptions in effect at December 31, 2000, management believes that a 200 basis point rate shock or rate ramp over a twelve month period, up or down, would not significantly affect the Company's annualized net interest income.

The Company has established guidelines that limit the acceptable potential change in net interest margin and net income under these interest rate and balance sheet scenarios. The Company intends to use interest rate swap agreements on a limited basis in the future to change the characteristics of selected fixed rate exposures as an element of its risk management policy.

Interest Rate Sensitivity Gap Analysis
The Company uses interest rate sensitivity gap analysis to monitor the relationship between the maturity and repricing of its interest-earning assets and interest-bearing liabilities, while maintaining an acceptable interest rate spread. Interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing 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, and 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. Conversely, during a period of falling interest rates, a negative gap would result in an increase in net interest income, while a positive gap would negatively affect net interest income. Management's goal is to maintain a reasonable balance between exposure to interest rate fluctuations and earnings.

The following table represents management's estimate of projected maturity or repricing of the Company's interest-earning assets and interest-bearing liabilities at December 31, 2000. Management believes that the table will approximate actual experience; however, it should be noted that the gap analysis is a point in time measurement that does not capture all aspects of interest rate risk.

As of December 31, 2000	Three Months or Less			Greater Than Three Months Less Than One Year			One Year Through Five Years			Over Five Years		Total





(in thousands)

Earning assets:
Investment activities	$	411,594			$ 356,465		$	593,590		$ 63,205		$1,424,854
Lending activities	3,388,236				808,130		2,146,387			562,855		6,905,608


Earning assets	3,799,830				1,164,595		2,739,977			626,060		8,330,462
Interest-bearing liabilities	3,601,474				2,263,804		1,371,194			187,634		7,424,106


Interest sensitive gap		198,356		(1,099,209		)	1,368,783			438,426		906,356
Gap as a percent of earning assets		2.38	%		(13.20	)%		16.43	%	5.26	%	10.88	%


Cumulative interest sensitive gap		198,356			(900,853	)		467,930		906,356
Cumulative gap as a percent of
earning assets		2.38	%		(10.81	)%		5.62	%	10.88	%

First National of Nebraska and Subsidiaries
Selected Quarterly Financial Information


				For the quarters ended
	December 31,		September 30,		June 30,		March 31,

(in thousands except per share data)

2000
Total interest income	$	237,801	$	230,382	$	214,334	$	211,513
Net interest income		132,514		127,762		123,159		126,714
Net income		42,560		20,057		18,866		23,994
Net income per common share		127.24		59.96		56.40		71.73


1999
Total interest income	$	213,723	$	207,973	$	201,349	$	202,583
Net interest income		132,050		131,479		126,988		127,578
Net income		26,195		22,926		23,771		19,469
Net income per common share		78.30		68.54		71.06		58.12

First National of Nebraska and Subsidiaries
Selected Financial Data


		Years ended December 31,
	2000	1999	1998		1997	1996

(in thousands except per share data)

Total interest income and
noninterest income	$ 1,275,455	$1,074,245	$1,094,319		$1,032,285	$ 926,022
Provision for loan losses	131,073	144,573	173,311		201,494	180,059
Net income	105,477	92,361	86,492		75,187	70,232
Net income per share	315.33	276.02	258.19		220.68	202.53
Cash dividends per share	46.47	38.72	35.00		33.76	37.22
Dividend payout ratio	14.7%	14.0%	13.6	%	15.3%	18.4%
Total assets	9,283,314	8,560,444	8,187,815		7,332,021	6,912,057
Managed assets (1)	10,695,352	9,211,488	8,840,837		8,282,021	7,112,057
Average equity to average assets ratio	7.9%	7.8%	7.4%		7.0%	7.4%
Other borrowings	91,098	3,758	4,504		24,489	6,520
Capital notes	93,594	94,389	92,864		94,052	96,616
Federal Home Loan Bank advances	189,325	372,077	28,535		3,957	740

The Company's stock is traded over-the-counter.
Bid price quotes per share, high and low, by quarter (2)

			2000					1999
		High			Low		High			Low


1st quarter	$	2,985		$	1,875	$	3,390		$	2,900
2nd quarter		2,150			1,950		3,000			2,950
3rd quarter		2,275			2,080		2,985			2,725
4th quarter		2,153			1,800		2,725			2,400



Dividends per share

			2000					1999

1st quarter			$16.47					$12.47
2nd quarter			20.00					17.50
3rd quarter			10.00					8.75

Number of stockholders As of January 29, 2001, there were 334,500 shares of common stock issued and outstanding which were held by 313 shareholders of record. The shareholders of record number does not reflect the persons or entities who hold their stock in nominee or "street" name.
(1)	Reported assets plus securitized credit card loans
(2)	Source: Kirkpatrick Pettis Inc., Omaha, Nebraska Such over-the-counter market quotations reflect interdealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The Company's common stock experiences limited trading.

First National of Nebraska
Officers and Directors*

Bruce R. Lauritzen*
Chairman

J. William Henry*
President

Elias J. Eliopoulos*
Executive Vice President

Dennis A. O'Neal*
Executive Vice President

Daniel K. O'Neill*
Senior Vice President
Executive Vice President, Lauritzen Corporation

F. Phillips Giltner*
Chairman Emeritus

Margaret Lauritzen Dodge*
Finance Officer
First National Bank of Omaha

Timothy D. Hart
Secretary & Treasurer

Steven K. Ritzman
Senior Vice President

First National Bank Of Omaha Senior Officers and Directors					Omaha, Nebraska


Bruce R. Lauritzen, Chairman

	Elias J.Eliopoulos		J. William Henry	Dennis A. O’Neal
	President, Consumer Banking		Executive Vice President	President, Corporate Banking


	Nicholas W. Baxter		Senior Vice President, First of Omaha Merchant Processing
	Richard A. Frandeen		Senior Vice President, Real Estate Lending
	Charles H. Fries, Jr		Senior Vice President, Corporate & Financial Institutions
	Thomas R. Haller		Senior Vice President, Retail Banking
	Timothy D. Hart		Senior Vice President, Corporate Administration
	Frances A. Marshall		Senior Vice President, Human Resources
	Craig V. McGarry		Senior Vice President, Trust
	Russell K. Oatman		Senior Vice President, First Financial Services
	James C.C. Schmidt		Senior Vice President, Technology Services


	Margaret L. Dodge	Finance Officer			James L. Doody
	F. Phillips Giltner	Chairman Emeritus			Robert W. Tritsch


First National Bank Frisco Office (A Branch of First National Bank of Omaha)					Frisco, Texas


R. Chris Tompkins, President


First National Loan Production Office					Lincoln, Nebraska


Richard L. Herink, President


First National Bank of Colorado				Boulder - Longmont - Louisville - Broomfield - Denver, Colorado


David M. Gilman, Chairman & President

Directors
	Richard L. Byyny		Larry F. Frey	Richard E. Geesaman, M.D.	David M. Gilman
	Dorothy A Horrell, Ph.D		Caroline J. Hoyt	Earl McLaughlin	Dennis A. O'Neal
	Thomas C. Stokes


First National Bank				Fort Collins - Loveland, Colorado


Thomas J.Gleason, Chairman				Mark P. Driscoll, President

Directors
	Mark P. Driscoll		John A. Duffey	Dwight L. Ghent	Thomas J. Gleason
	Roger G. Gunlikson		Lucia A. Liley	Douglas E. Markley	Dennis A. O'Neal
	Merlin G. Otteman, M.D.		Stephen J. Schrader	Wayne K. Schrader	David L. Wood
	Mark J. Soukup, Director Emeritus


First National Bank and Trust Company of Columbus		Columbus - Norfolk, Nebraska


John M. Peck, Chairman & President		James R. Mangels, President - Norfolk


Directors
James M. Bator	Donald N. Dworak	Randal J. Emrich	Clark D. Lehr
John F. Lohr	Robert P. Loshbaugh	James R. Mangels	Larry D. Marik
John M. Peck	Steven K. Ritzman	Richard A. Robinson	Noyes W. Rogers
Donald M. Schupbach	Dwayne G. Smith

First National Bank of Kansas		Overland Park - Fairway - Olathe - Shawnee, Kansas

	Stuart C. Lang, President


Directors
Linda A. Acker	Ben T. Embry	Blair L. Gogel	J. William Henry
Mary Kay Horner	Stuart C. Lang	James A. Polsinelli	Marilyn Scafe


First National Bank	North Platte - Alliance - Chadron - Gering - Scottsbluff, Nebraska


L.H. "Rick" Kolkman, President		William J. Pfister, President - Scottsbluff


Directors
Gary L. Conell, M.D.	Orville A. Kaschke	James D. Keenan	L. H. “Rick” Kolkman
Daniel K. O’Neill	William J. Pfister	William C. Snodgrass	Gary M. Trego
Ralph M. Tysdal


The Fremont National Bank and Trust Company			Fremont, Nebraska

Thomas J. Milliken, Chairman		David N. Simmons, President

Directors
Kenneth D. Beebe	Jim A. Hoshor	Rodney K. Koerber, M.D.	Helen J. Krause
Thomas J. Milliken	Bart E. Qualsett	David N. Simmons	Neil A. Stanley

Platte Valley State Bank & Trust Company			Kearney, Nebraska

Wayne R. McKinney, Chairman		Mark A. Sutko, President

Directors
Jeff G. Beattie	Gerald L. Dulitz	Byron D. Hansen	Peter G. Kotsiopulos
Robin W. Marshall	Wayne R. McKinney	Daniel K. O’Neill	John H. Schulte, M.D.
Mark A. Sutko	Gerald J. Tomka	Robert P. Sahling, Honorary	Carl C. Spelts, Honorary

First National Bank South Dakota		Yankton - Mitchell - Huron - Woonsocket, South Dakota


Randall A. Johnson, President		Michael D. Rieck, President - Mitchell


Directors
Joseph W. Barry	Mark R. Buche		J. William Henry
Randall A. Johnson	Joleen M. Smith		Jerry Thomsen


Union Colony Bank					Greeley - Windsor - Johnstown - Brighton, Colorado

		Lawrence W. Menefee, Chairman			Thomas J. Flanagan, Jr., President

Directors
	Victor J. Campbell		George W. Doering		Harold G. Evans	Thomas J. Flanagan, Jr.
	Kay Kosmicki		James R. Listen		Lawrence W. Menefee	Dennis A. O'Neal
	Robert A. Ruyle		Masoud S. Shirazi		Michael V. Shoop	F. Scott Thomas
	John M. Todd		John C. Todd, Director Emeritus

Cornerstone Mortgage Company				Houston - Austin - Beaumont - Bryan - Dallas
				San Antonio - Temple - Waco, Texas
				Scottsdale - Tucson - Sierra Vista, Arizona
				Boulder - Greeley - Ft. Collins, Colorado

		Marc N. Laird, President			Judith A. Belanger, Executive Vice President

Data Management Products			Omaha, Nebraska

James A. Mills, President
		Michael J Reynolds, Senior Vice President		Darren L. Snodgrass, Vice President

First Affinity Reinsurance Company, Ltd.					Nevis, West Indies
First Agent Reinsurance Company, Ltd.
First Premium Reinsurance Company, Ltd.
First Standard Reinsurance Company, Ltd.
First State Reinsurance Company, Ltd.

		Michael P. Feimer, President			Jean L. Koenck, Vice President and Treasurer

First Integrated Systems			Omaha, Nebraska

		James A. Mills, President			William G. Pierce, National Sales Manager

First National Information Solutions					Omaha - Des Moines - Denver - Kansas City St. Paul - Minneapolis - Washington D.C.

Russell K. Oatman, Chairman
Christopher P.Candela, President, Mountain States Imaging
Kurtis H. Shedenhelm, President, Path Technology Group

First National Services Corporation			Omaha, Nebraska

			R. Ray Lockhart, Director of Risk Management
		Paul J. Brinker, Director of Compliance			Donald A. Fees, Director of Loan Review
		David E. Harris, Director of Risk Consulting			Robert J. Wuggazer, Director of Audit
			Bernard K. Williams, Operations Officer


First of Omaha Merchant Processing					Omaha, Nebraska


	Nicholas W. Baxter, President Christa M. Titus, Vice President & Chief Financial Officer Matt T. Minchow, Vice President of Business Development & Sales Operations Brian D. Ridder, Vice President of Customer Service Colleen M. Haack, Vice President of Operations Michael J. Dunnetts, Vice President of Product Development







First Technology Solutions					Omaha, Nebraska

	James C.C. Schmidt, President
	Charles M. Huetter, Vice President		Kimberly M. Whittaker, Regional Sales Manager

FNC Trust Group		Fort Collins - Boulder - Greeley - Loveland, Colorado

	Craig V. McGarry, Chairman & President
	Sean P. Shelley, Senior Vice President			Brian M. Thurston, Vice President - Denver/Boulder
	Cheryl M. Jarchow, Vice President			Barbara L. Meneely, Vice President - Boulder
	David C. Jordon, Vice President & Investment Manager			Mark K. Ritter, Vice President - Greeley
	Cathy L.Schott, Vice President - Fort Collins			Gaylen R. Williams, Vice President - Loveland

Gregory’s Insurance, Inc.					Alliance, Nebraska

	Daniel S. Contonis, Vice President of Sales			Gary L. Tomlin, Vice President of Sales

InfiCorp Holdings, Inc.					Atlanta, Georgia
InfiBank
InfiLink Corporation
InfiStar Corporation

	Matthew W. Lawver, Chairman				Jerry D. Craft, President
	Clay G. Battle, Chief Financial Officer D. Andrew Mathieson, Managing Director, Credit Card Management Ray S. Costner, Managing Director, Systems & Operations Keith J. Floen, Managing Director, Credit Union Business Development David L. Strider, Managing Director, InfiLink

Nebraska Trust Company		Fremont - Columbus - Kearney - North Platte, Nebraska

	Craig V. McGarry, Chairman			David N. Simmons, President

	Stephen C. Wade, Chief Operating Officer - Fremont			Leanne K. Anderson, Vice President - North Platte
	Jeffery S. Arnold, Secretary & Cashier - Fremont			John R. Scott, Vice President - Columbus
	Mark L. Andrews, Trust Officer - Fremont			Bruce T. Lear, Vice President - Kearney

Platinum Recovery Solutions					Omaha, Nebraska

	Joseph W. Barry, President
	John A. Ostrowski, Managing Director			James W. Shanahan, Vice President

Whitetail Finance Company		North Platte - Scottsbluff - Fremont - Lexington, Nebraska
		Gillette, Wyoming
		Sterling, Colorado

	DiAnn Kolkman, President		William J. Pfister, Treasurer