SECURITIES ACT OF 1933, AS AMENDED



                      REGISTRATION STATEMENT NO. 333-91896

[LOGO]                                                   [LETTERHEAD]

                                  NEWS RELEASE

H. Patrick Dee                                           Brian C. Reinhardt
Chief Operating Officer                                  Chief Financial Officer
(505) 241-7102                                           (505) 241-7598

                First State Bancorporation Receives Fed Approval
                   to Acquire First Community Industrial Bank

         Albuquerque NM--July 25, 2002--First State Bancorporation (NASDAQ:FSNM)
today announced that approval has been received from the Federal Reserve Bank of
Kansas City for its acquisition of First Community Industrial Bank, a wholly
owned indirect subsidiary of Washington Mutual, Inc. First Community is an
industrial bank headquartered in Denver, Colorado. The acquisition may not be
consummated before August 9, 2002, or after October 25, 2002, unless such period
is extended by the Federal Reserve System. Previously, approval of the
transaction was received from the State of New Mexico Financial Institutions
Division, the Colorado Division of Banking, and the Utah Department of Financial

         "The approval of the Federal Reserve Bank is another key step towards
completion of our acquisition of First Community," commented President and Chief
Executive Officer Michael R. Stanford. "Our management team is working
diligently with the First Community staff on a detailed timeline of tasks to
complete the transition process for this transaction," continued Stanford.

         First State expects to finance the transaction through the issuance of
equity securities, in addition to the $25 million in trust preferred securities
issued June 26, 2002. The acquisition of First Community is expected to close in
the early part of the fourth quarter of 2002, with operational integration to
follow soon after.

         First State Bancorporation is the only publicly traded New Mexico based
commercial bank holding company. First State provides services to customers from
a total of 21 locations in Albuquerque, Taos, Rio Rancho, Santa Fe, Los Lunas,
Bernalillo, Placitas, Questa, Moriarty, Belen, and Pojoaque, New Mexico. On
Thursday, July 25, 2002, First State's stock closed at $21.78 per share.

         This news release includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. For example, the discussions regarding
prospects of the pending acquisition of First Community Industrial Bank and its
financing include forward-looking statements. Other forward-looking statements
can be identified by the use of forward-looking words such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "estimates," or "anticipates" or the negative of those words or other
comparable terminology. Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual results to
differ materially from those in the forward-looking statement. Some factors
include fluctuations in interest rates, inflation, government regulations, loss
of key personnel, faster or slower than anticipated growth, economic conditions,
competition's responses to First State's marketing strategy, and competition in
the geographic and business areas in which First State conducts its operations.
Other factors are described in First State's filings with the Securities and
Exchange Commission. First State is under no obligation to update any
forward-looking statements.

         First State's news releases and filings with the Securities and
Exchange Commission are available through the Investor Relations section of
First State's website at