UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934

                   For the fiscal year ended December 31, 2006

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
               For the transition period from _______ to ________

                        Commission File Number - 0-20632

                                FIRST BANKS, INC.
             (Exact name of registrant as specified in its charter)

             MISSOURI                                    43-1175538
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                 135 North Meramec, Clayton, Missouri     63105
               (Address of principal executive offices) (Zip code)

                                 (314) 854-4600
              (Registrant's telephone number, including area code)

                   -------------------------------------------

           Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of each exchange
               Title of each class                      on which registered
               -------------------                      -------------------

 8.15% Cumulative Trust Preferred Securities
(issued by First Preferred Capital Trust IV and       New York Stock Exchange
       guaranteed by First Banks, Inc.)

           Securities registered pursuant to Section 12(g) of the Act:

                                      None
                                (Title of class)

         Indicate  by check  mark if the  registrant  is a  well-known  seasoned
issuer, as defined in Rule 405 of the Securities Act. [ ] Yes [X] No

         Indicate  by  check  mark if the  registrant  is not  required  to file
reports pursuant to Section 13 or 15(d) of the Act. [X] Yes [ ] No

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K (ss.229.405 of this chapter) is not contained herein,
and will not be contained,  to the best of registrant's knowledge, in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

         Indicate by check mark whether the  registrant  is a large  accelerated
filer,  an accelerated  filer,  or a  non-accelerated  filer.  See definition of
"accelerated  filer and large  accelerated  filer" in Rule 12b-2 of the Exchange
Act. (Check one): Large   accelerated   filer  [ ]   Accelerated filer  [ ] Non-
accelerated filer [X]

         Indicate by check mark whether the  registrant  is a shell  company (as
defined in Rule 12b-2 of the Act). [ ] Yes [X] No

         None of the voting stock of the Company is held by non-affiliates.  All
of the  voting  stock of the  Company  is owned by  various  trusts,  which were
established  by and for the  benefit of Mr.  James F.  Dierberg,  the  Company's
Chairman of the Board of Directors, and members of his immediate family.

         At March 28, 2007, there were 23,661 shares of the registrant's  common
stock outstanding.

<PAGE>
<TABLE>
<CAPTION>
                                               FIRST BANKS, INC.

                                          2006 ANNUAL REPORT ON FORM 10-K

                                                TABLE OF CONTENTS
                                                                                                            Page
                                                                                                            ----
                                                      Part I
<S>             <C>                                                                                           <C>
     Item 1.    Business...............................................................................       1
     Item 1A.   Risk Factors...........................................................................      14
     Item 1B.   Unresolved Staff Comments..............................................................      16
     Item 2.    Properties.............................................................................      16
     Item 3.    Legal Proceedings......................................................................      16
     Item 4.    Submission of Matters to a Vote of Security Holders....................................      16

                                                      Part II
     Item 5.    Market for the Registrant's Common Equity, Related Stockholder Matters
                    and Issuer Purchases of Equity Securities..........................................      16
     Item 6.    Selected Financial Data................................................................      17
     Item 7.    Management's Discussion and Analysis of Financial Condition and
                    Results of Operations..............................................................      18
     Item 7A.   Quantitative and Qualitative Disclosures About Market Risk.............................      51
     Item 8.    Financial Statements and Supplementary Data............................................      52
     Item 9.    Changes in and Disagreements with Accountants on Accounting
                    and Financial Disclosure...........................................................      52
     Item 9A.   Controls and Procedures................................................................      52
     Item 9B.   Other Information......................................................................      52

                                                      Part III
     Item 10.   Directors, Executive Officers and Corporate Governance.................................      52
     Item 11.   Executive Compensation.................................................................      56
     Item 12.   Security Ownership of Certain Beneficial Owners and Management
                    and Related Stockholder Matters....................................................      60
     Item 13.   Certain Relationships and Related Transactions, and Director Independence..............      61
     Item 14.   Principal Accounting Fees and Services.................................................      62

                                                      Part IV
     Item 15.   Exhibits, Financial Statement Schedules................................................      62

     Signatures .......................................................................................     109
</TABLE>
                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain forward-looking statements with
respect  to  our  financial  condition,  results  of  operations  and  business.
Generally, forward-looking statements may be identified through the use of words
such as: "believe,"  "expect,"  "anticipate,"  "intend," "plan,"  "estimate," or
words of  similar  meaning  or  future or  conditional  terms  such as:  "will,"
"would," "should," "could," "may," "likely," "probably," or "possibly." Examples
of  forward-looking  statements  include,  but are not limited to,  estimates or
projections  with  respect to our future  financial  condition,  and expected or
anticipated revenues with respect to our results of operations and our business.
These forward-looking statements are subject to certain risks and uncertainties,
not all of which can be  predicted  or  anticipated.  Factors that may cause our
actual   results  to  differ   materially   from  those   contemplated   by  the
forward-looking   statements   herein  include  market  conditions  as  well  as
conditions  affecting  the  banking  industry  generally  and  factors  having a
specific  impact on us,  including but not limited to:  fluctuations in interest
rates and in the economy,  including the threat of future terrorist  activities,
existing  and  potential  wars and/or  military  actions  related  thereto,  and
domestic responses to terrorism or threats of terrorism;  the impact of laws and
regulations  applicable  to us and  changes  therein;  the impact of  accounting
pronouncements  applicable to us and changes therein;  competitive conditions in
the  markets in which we conduct  our  operations,  including  competition  from
banking and non-banking  companies with substantially greater resources than us,
some of which may offer and develop products and services not offered by us; our
ability to control  the  composition  of our loan  portfolio  without  adversely
affecting interest income; the credit risk associated with consumers who may not
repay loans;  the geographic  dispersion of our offices;  the impact our hedging
activities may have on our operating results;  the highly regulated  environment
in which we operate;  and our ability to respond to changes in technology.  With
regard to our efforts to grow  through  acquisitions,  factors that could affect
the accuracy or  completeness of  forward-looking  statements  contained  herein
include:  our ability to consummate  pending  acquisitions;  the  competition of
larger  acquirers with greater  resources;  fluctuations  in the prices at which
acquisition targets may be available for sale; the impact of making acquisitions
without  using our common stock;  and possible  asset  quality  issues,  unknown
liabilities  or integration  issues with the  businesses  that we have acquired.
Refer to further  discussion under "Business --Item 1A Risk Factors" for factors
that may impact these forward-looking  statements.  We do not have a duty to and
will not update these forward-looking statements.  Readers of this Annual Report
on Form  10-K  should  therefore  consider  these  risks  and  uncertainties  in
evaluating  forward-looking  statements  and should not place undue  reliance on
these statements.



<PAGE>

                                     PART I

Item 1.  Business

General.  We are a registered bank holding  company  incorporated in Missouri in
1978 and  headquartered  in St. Louis,  Missouri.  We operate through our wholly
owned subsidiary bank holding company,  The San Francisco  Company,  or SFC, and
SFC's wholly owned subsidiary bank, First Bank, both headquartered in St. Louis,
Missouri. First Bank operates through its subsidiaries, as listed below, and its
branch banking offices.  First Bank's  subsidiaries are wholly owned, except for
SBLS LLC,  which was 51.0% owned by First Bank and 49.0% owned by First  Capital
America, Inc. as of December 31, 2006.

         >>   First Bank Business Capital, Inc.;
         >>   Missouri Valley Partners, Inc., or MVP;
         >>   Adrian N. Baker & Company, or Adrian Baker;
         >>   Universal Premium Acceptance  Corporation  and  its  wholly  owned
              subsidiary,  UPAC of California,  Inc., or collectively, UPAC; and
         >>   Small Business Loan Source LLC, or SBLS LLC.

First Bank  currently  operates  195 branch  offices  in  California,  Illinois,
Missouri and Texas, with 217 automated teller machines, or ATMs, across the four
states.  Over the last ten  years,  our  organization  has grown  significantly,
primarily as a result of our acquisition  strategy,  as well as through internal
growth.  At December 31, 2006, we had assets of $10.16  billion,  loans,  net of
unearned discount, of $7.67 billion, deposits of $8.44 billion and stockholders'
equity of $800.4 million.

Through  First Bank,  we offer a broad range of  financial  services,  including
commercial and personal deposit products,  commercial and consumer lending,  and
many other  financial  products and services.  Commercial  and personal  deposit
products include demand,  savings,  money market and time deposit  accounts.  In
addition,  we market  combined  basic  services  for  various  customer  groups,
including  packaged  accounts for more affluent  customers,  and sweep accounts,
lock-box  deposits  and  cash  management  products  for  commercial  customers.
Commercial lending includes  commercial,  financial and agricultural loans, real
estate  construction and development loans,  commercial real estate loans, small
business  lending,  asset-based  loans,  trade  financing and insurance  premium
financing.  Consumer lending includes  residential real estate,  home equity and
installment  lending.  Other financial services include mortgage banking,  debit
cards,  brokerage  services,   employee  benefit  and  commercial  and  personal
insurance services,  internet banking,  remote deposit, ATMs, telephone banking,
safe  deposit  boxes,  and  trust,   private  banking  and  institutional  money
management  services.  The revenues generated by First Bank and its subsidiaries
consist  primarily of interest  income,  generated  from our loan and investment
security  portfolios,  service  charges  and fees  generated  from  our  deposit
products and services,  and fees  generated by our mortgage  banking,  insurance
services, and trust, private banking and institutional money management services
businesses. Our extensive line of products and services are offered to customers
primarily within our geographic areas, which include eastern Missouri, Illinois,
including the Chicago metropolitan area, southern and northern  California,  and
Houston and Dallas, Texas. Certain loan products, including small business loans
and insurance  premium  financing  loans, are available  nationwide  through our
subsidiaries, SBLS LLC and UPAC.

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

Various  trusts,  established by and  administered by and for the benefit of Mr.
James F.  Dierberg,  our  Chairman of the Board,  and  members of his  immediate
family,  own all of our voting stock.  Mr.  Dierberg and his family,  therefore,
control our management and policies.

We have formed numerous affiliated Delaware or Connecticut business or statutory
trusts. These trusts operate as financing entities and were created for the sole
purpose of issuing trust preferred securities, and the sole assets of the trusts
are our  subordinated  debentures.  In  conjunction  with the  formation  of our
financing  entities and their  issuance of the trust  preferred  securities,  we
issued  subordinated  debentures  to each of our  financing  entities in amounts
equivalent to the respective  trust preferred  securities plus the amount of the
common  securities of the individual  trusts, as outlined in the following table
and more fully described in Note 12 to our Consolidated Financial Statements. We
pay  interest  on  our  subordinated  debentures  to  our  respective  financing
entities.  In turn, our financing  entities pay  distributions to the holders of
the  trust  preferred  securities.  The  interest  payable  on our  subordinated
debentures  is included in interest  expense in our  consolidated  statements of
income.
<PAGE>

The trust preferred  securities  issued by First Preferred  Capital Trust IV are
publicly held and traded on the New York Stock Exchange,  or NYSE. The remaining
trust  preferred  securities  were  issued  in  private  placements.  The  trust
preferred   securities   have  no  voting  rights  except  in  certain   limited
circumstances. A summary of the outstanding trust preferred securities issued by
our  affiliated  statutory  and business  trusts,  and our related  subordinated
debentures  issued  to our  respective  trusts  in  conjunction  with the  trust
preferred securities offerings, is as follows:
<TABLE>
<CAPTION>

                                     Date of                                Interest     Preferred      Subordinated
        Name of Trust            Trust Formation     Type of Offering         Rate       Securities      Debentures
        -------------            ---------------     ----------------         ----       ----------      ----------

<S>                                <C>               <C>                    <C>         <C>             <C>
First Bank Capital Trust           April 2002        Private Placement      Variable    $25,000,000     $25,774,000
First Preferred Capital Trust IV  January 2003     Publicly Underwritten      8.15%      46,000,000      47,422,700
First Bank Statutory Trust         March 2003        Private Placement        8.10%      25,000,000      25,774,000
First Bank Statutory Trust II    September 2004      Private Placement      Variable     20,000,000      20,619,000
First Bank Statutory Trust III    November 2004      Private Placement      Variable     40,000,000      41,238,000
First Bank Statutory Trust IV     February 2006      Private Placement      Variable     40,000,000      41,238,000
First Bank Statutory Trust V       April 2006        Private Placement      Variable     20,000,000      20,619,000
First Bank Statutory Trust VI       June 2006        Private Placement      Variable     25,000,000      25,774,000
First Bank Statutory Trust VII    December 2006      Private Placement      Variable     50,000,000      51,547,000
First Bank Statutory Trust VIII   February 2007      Private Placement      Variable     25,000,000      25,774,000
</TABLE>

Recent  Developments.  At the regular meeting of the First Banks, Inc., or First
Banks, Board of Directors held on January 26, 2007, Mr. Allen H. Blake announced
his  retirement  and resigned his  positions  as Director,  President  and Chief
Executive  Officer of First Banks,  effective March 31, 2007. Upon acceptance of
Mr. Blake's resignation, the Board of Directors elected Mr. Terrance M. McCarthy
as President  and Chief  Executive  Officer of First Banks,  effective  April 1,
2007.

Strategy.  In the  development  of our  banking  franchise,  we have  focused on
building and  reorganizing  our  infrastructure  as necessary to accomplish  our
objectives for organic  growth,  and to supplement  this growth with de novo and
acquisition strategies to further expand our banking franchise. Our organization
is structured to leverage a strong sales force in each of our major market areas
in an effort to continue to provide quality  financial  products and the highest
level of customer service to our expanding  customer base. Within the individual
markets, the sales organization is supported by a regional structure to position
it to serve the  market  opportunities  within  each area in the four  states in
which we operate.  We are committed to serving the small  business and mid-sized
commercial  segments  along with the retail  consumer  market.  We have  devoted
significant  resources  to  improving  our  infrastructure  dedicated  to  rapid
approval,  underwriting and  documentation of consumer loans,  strengthening our
small business  services area,  increasing our commercial  business  development
staff,  reorganizing our marketing and product  management areas,  improving the
quality and depth of our regional commercial and consumer management groups, and
increasing  resources for financial  service product line and delivery  systems,
branch development and training, and administrative and operational support.

In the past three  years,  we have added  three  business  lines,  including  an
insurance premium financing company,  an insurance  brokerage agency and a small
business lending group,  providing our customers with new and expanded  products
and services to complement our existing line of financial services. In line with
our small  business  lending  strategy,  we segmented the loan  origination  and
servicing functions and added new business  development  officers throughout our
markets.  With the significant expansion of our Chicago banking franchise in the
past three years, we have created a complete  regional  structure in the Chicago
area as well as three additional  commercial banking groups to enable our credit
administration,  commercial  real estate and commercial  and industrial  banking
groups, branch  administration,  credit review, and human resources and training
functions to better serve our customers and  employees.  We continue to focus on
modifying and effectively  repositioning our internal and external  resources to
better serve the markets in which we operate. Although these efforts have led to
certain increased capital expenditures and noninterest  expenses, we expect they
will lead to additional internal growth, more efficient  operations and improved
profitability  over the long term,  in accordance  with our long-term  corporate
vision.

In the development of our banking franchise, we acquire other entities providing
financial  services  as one means of  achieving  our  growth  objectives  and to
augment  internal  growth.  Acquisitions  may serve to enhance our presence in a
given market, to expand the extent of our market area, to enable us to enter new
or  noncontiguous  markets  or to  enable us to  expand  the array of  financial
services that we provide. Due to the nature of our ownership, we have elected to
engage only in those acquisitions that can be accomplished for cash, rather than
by issuing securities,  which given the characteristics of the acquisition arena
may,  at  times,  place  us at a  competitive  disadvantage  relative  to  other
acquirers   offering   stock   transactions.   This   results  from  the  market
attractiveness  of other  financial  institutions'  stock and the  advantages of
tax-free exchanges to the selling shareholders.  Our acquisition  activities are
generally somewhat sporadic because we may consummate multiple transactions in a
particular period,  followed by a substantially less active acquisition  period.

<PAGE>

Furthermore,   the  intangible   assets  recorded  in  conjunction   with  these
acquisitions create an immediate reduction in our regulatory capital,  providing
further financial disincentives to paying large premiums in cash acquisitions.

Recognizing   these  facts,  we  generally   follow  certain   patterns  in  our
acquisitions.   First,  we  generally  acquire  several  smaller   institutions,
sometimes over an extended  period of time,  rather than a single larger one. We
attribute  this  approach  to the  constraints  imposed  by the  amount of funds
required for a larger  transaction,  as well as the  opportunity to minimize the
aggregate  premium required  through smaller  individual  transactions.  We may,
however,  periodically  acquire  larger  institutions  that  provide us with the
opportunity  to rapidly  expand our market  presence in a highly  desired market
area.  Secondly,  in  some  acquisitions,  we may  acquire  institutions  having
significant asset-quality,  ownership,  regulatory or other problems. We seek to
address  the  risks  of these  issues  by  adjusting  the  acquisition  pricing,
accompanied  by  appropriate   remedial  attention  after  consummation  of  the
transaction.   In  these   institutions,   these  issues  may   diminish   their
attractiveness to other potential acquirers, and therefore may reduce the amount
of acquisition premium required. Finally, we may pursue our acquisition strategy
in other geographic areas, or pursue internal growth more  aggressively  because
cash  transactions  may not be  economically  viable  in  extremely  competitive
acquisition markets.

Our acquisitions have allowed us to significantly expand our presence throughout
our  geographic  markets,  improve  operational  efficiencies,   convey  a  more
consistent  image and quality of service and more cohesively  market and deliver
our products and services. Following our acquisitions,  various undertakings are
necessary  to  effectively  integrate  the acquired  entities  into our business
systems and culture.  While the specific  activities required are dependent upon
the individual circumstances  surrounding each acquisition,  the majority of our
efforts have been  concentrated in various areas including,  but not limited to:
(a)  improving  asset  quality;  (b) reducing  unnecessary,  duplicative  and/or
excessive expenses including personnel, information technology and certain other
operational and administrative expenses; (c) maintaining, repairing and, in some
cases,  refurbishing bank premises necessitated by the deferral of such projects
by some of the  acquired  entities;  (d)  renegotiating  long-term  leases  that
provide space in excess of that necessary for banking activities and/or at rates
in excess of current market rates, or subleasing  excess space to third parties;
(e) relocating branch offices that are not adequate, conducive or convenient for
banking operations; and (f) managing actual or potential litigation that existed
with respect to acquired  entities to minimize the overall costs of negotiation,
settlement or litigation.

The  post-acquisition  process  also  includes  the  combining  of separate  and
distinct  entities  together  to  form  a  cohesive   organization  with  common
objectives  and focus.  We have  invested  and  continue  to invest  significant
resources to reorganize  staff,  recruit and train personnel  where needed,  and
establish  the direction  and focus  necessary  for the combined  entity to take
advantage  of the  opportunities  available  to it.  This  investment  generally
contributes to increases in noninterest  expense, and results in the creation of
new banking units within the newly integrated  combined  entity,  which convey a
more  consistent  image and quality of service.  The new banking units provide a
broad  array of  banking  products  to their  customers  and  generally  compete
effectively  in their  marketplaces,  even in the  presence  of other  financial
institutions with much greater resources.  While some of these  modifications do
not  contribute to reductions of  noninterest  expense,  they  contribute to the
commercial and retail business  development  efforts of the combined entity, and
ultimately to their prospects for improving future profitability.

Our business  strategy also encompasses the opening of de novo branch offices as
another  means  of  achieving  our  growth  objectives,  particularly  when  our
acquisition  prospects  are  somewhat  limited,  primarily  due  to  the  market
environment  requiring  significantly  higher  premiums  in  order  to  transact
financial  institution  acquisitions.  Our de novo branch strategy also provides
similar  opportunities to our acquisition strategy by allowing us to enhance our
presence  in our  existing  markets  and enter  new  markets.  Additionally,  we
generally have more  flexibility in selecting the most  opportunistic  sites for
our de novo branches,  constructing  the branch  offices in accordance  with our
standard business model and marketing and promoting our customized  products and
services under our  long-established  trade name. We have plans underway to open
several de novo  branch  offices  over the next few years.  We expect to further
concentrate  our  efforts  on  this  portion  of  our  business  strategy  while
continuing to identify viable acquisition  candidates at reasonable  acquisition
premiums that are commensurate with our established acquisition strategy.

Acquisitions.  In the  continuing  development  of  our  banking  franchise,  we
emphasize   acquiring  other  financial   institutions  and  financial  services
companies as one means of achieving our growth  objectives.  After we consummate
an  acquisition,  we expect to enhance the  franchise of the acquired  entity by
supplementing  the  marketing  and business  development  efforts to broaden the
customer  bases,  strengthening  particular  segments of the business or filling
voids in the overall market coverage.

During  the  three  years  ended  December  31,  2006,  we  completed  ten  bank
acquisitions,  four branch office  purchases,  the  acquisition  of an insurance
premium  financing  company and an insurance  brokerage  agency,  and  purchased
substantially  all of the assets and assumed  certain  liabilities  of a company
that  originates,  sells and services SBA loans to small business  concerns.  As

<PAGE>
demonstrated  in the following  table,  our  acquisitions  during the past three
years have significantly increased our banking franchise presence in the dynamic
market areas of metropolitan Chicago,  Dallas and Houston, and further augmented
our existing  markets in southern  California  and the Midwest.  We funded these
acquisitions  from available cash reserves,  borrowings under our secured credit
facility and proceeds from the issuance of subordinated debentures.

These  transactions,  which are further  described in Note 2 to our Consolidated
Financial Statements, are summarized as follows:
<TABLE>
<CAPTION>
                                                Loans,                                                      Net
                                                Net of                                       Goodwill     Banking
          Entity /                   Total     Unearned   Investment              Purchase   and Other   Locations
        Closing Date                 Assets    Discount   Securities    Deposits   Price    Intangibles   Acquired
        ------------                 ------    --------   ----------    --------   -----    -----------   --------
                                                         (dollars expressed in thousands)
2006
----
   MidAmerica National Bank
     Peoria and Bloomington,
     Illinois
     Branch Offices (1)
<S>                                <C>          <C>             <C>       <C>           <C>     <C>          <C>
     November 10, 2006             $ 158,300    154,100         --        48,200        --      2,400        1

   First Bank of Beverly Hills
     Beverly Hills, California
     Branch Office (2)
     November 3, 2006                157,500         --         --       156,100        --      8,700        1

   TeamCo, Inc.
     Oak Lawn, Illinois
     August 31, 2006                  67,900     43,100     16,100        60,100    13,900      9,600        2

   San Diego Community Bank
     Chula Vista, California
     August 15, 2006                  91,700     78,600      2,800        76,100    25,500     11,800        3

   Universal Premium Acceptance
     Corporation
     Lenexa, Kansas
     May 31, 2006                    152,800    149,200         --            --    52,700 (3) 44,700       --

   First Independent National Bank
     Plano, Texas
     May 1, 2006                      68,200     59,600        800        55,500    19,200     11,800        3

   Pittsfield Community Bancorp, Inc.
     Pittsfield, Illinois (4)
     April 28, 2006                   17,600     11,100      3,300        12,300     5,100      1,300       --

   Adrian N. Baker & Company
     Clayton, Missouri
     March 31, 2006                    3,000         --         --            --     7,400      8,000       --

   Dallas National Bank
     Richardson, Texas
     Branch Office (5)
     January 20, 2006                  1,100        100         --         1,100        --         --        1

   First National Bank of Sachse
     Sachse, Texas
     January 3, 2006                  76,200     49,300     14,300        66,200    20,800     12,400        1
                                   ---------   --------   --------    ----------  --------   --------       --
                                   $ 794,300    545,100     37,300       475,600   144,600    110,700       12
                                   =========   ========   ========    ==========  ========   ========       ==
2005
----
   Northway State Bank
     Grayslake, Illinois
     October 31, 2005              $  50,400     41,800         --        45,200    10,300      5,400        1

   International Bank of California
     Los Angeles, California
     September 30, 2005              151,600    113,500     14,700       132,100    33,700     15,800        5

   Bank and Trust Company
     Roodhouse, Illinois
     Branch Office (6)
     September 23, 2005                5,000         --         --         5,100        --        100       --

   FBA Bancorp, Inc.
     Chicago, Illinois
     April 29, 2005                   73,300     54,300      5,400        55,700    10,500      4,500        3
                                   ---------   --------   --------    ----------  --------   --------       --
                                   $ 280,300    209,600     20,100       238,100    54,500     25,800        9
                                   =========   ========   ========    ==========  ========   ========       ==
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                Loans,                                                      Net
                                                Net of                                       Goodwill     Banking
          Entity /                   Total     Unearned   Investment              Purchase   and Other   Locations
        Closing Date                 Assets    Discount   Securities    Deposits   Price    Intangibles   Acquired
        ------------                 ------    --------   ----------    --------   -----    -----------   --------
                                                         (dollars expressed in thousands)
2004
----
   Hillside Investors, Ltd.
     Hillside, Illinois
<S>           <C> <C>             <C>           <C>        <C>         <C>          <C>        <C>          <C>
     November 30, 2004            $1,196,700    683,300    393,200     1,102,000    67,400     10,600       16

   Small Business Loan
     Source, Inc. (7)
     Houston, Texas
     August 31, 2004                  47,100     24,000         --            --    45,600      5,900       --

   Continental Mortgage
     Corporation - Delaware
     Aurora, Illinois
     July 30, 2004                   140,700     73,600     44,800       104,600     4,200 (8)  2,100        2
                                  ----------   --------   --------    ----------  --------   --------       --
                                  $1,384,500    780,900    438,000     1,206,600   117,200     18,600       18
                                  ==========   ========   ========    ==========  ========   ========       ==
---------------------------
(1)  The Peoria and Bloomington,  Illinois branch offices of MidAmerica National Bank, or MidAmerica, were acquired
     by First  Bank  through a purchase  of certain  assets and  assumption  of certain  liabilities  of the branch
     offices. Total assets consisted primarily of loans and fixed assets.  Concurrent with this transaction,  First
     Bank closed and merged one of the former MidAmerica banking offices into an existing First Bank banking office
     located in Peoria,  Illinois,  and,  in  addition,  First Bank closed and merged one of its  existing  banking
     offices into one of the former MidAmerica banking offices located in Peoria, Illinois.
(2)  The Beverly Hills,  California branch office of First Bank of Beverly Hills was acquired by First Bank through
     a purchase  of certain  assets and  assumption  of certain  liabilities  of the branch  office.  Total  assets
     consisted primarily of cash received upon assumption of the deposit liabilities and certain assets.
(3)  In conjunction with the acquisition of UPAC, First Bank repaid in full the outstanding senior and subordinated
     notes of UPAC, including accumulated accrued and unpaid interest, totaling $125.9 million.
(4)  Community Bank operated two banking offices, one in Pittsfield,  Illinois and one in Mount Sterling, Illinois.
     On June 16, 2006, First Bank sold the Mount Sterling,  Illinois banking office to Beardstown Savings,  s.b. At
     the time of the sale, the Mount Sterling  banking  office had assets of $2.7 million,  loans,  net of unearned
     discount,  of $2.4 million, and deposits of $3.7 million.  First Bank consolidated its existing banking office
     in Pittsfield with and into the acquired Pittsfield banking office.
(5)  The  Richardson,  Texas branch office of Dallas National Bank was acquired by First Bank through a purchase of
     certain assets and assumption of certain liabilities of the branch office. Total assets consisted primarily of
     cash received upon assumption of the deposit liabilities and certain assets.
(6)  The  Roodhouse,  Illinois  branch of Bank and Trust  Company was  acquired by First Bank through a purchase of
     certain assets and assumption of certain liabilities of the branch office. Total assets consisted primarily of
     cash received upon assumption of the deposit liabilities.
(7)  SBLS LLC, a Nevada-based limited liability company and subsidiary of First Bank,  purchased  substantially all
     of the assets and assumed  certain  liabilities of Small  Business Loan Source,  Inc., or SBLS. In conjunction
     with this  transaction,  on August 30, 2004,  First Bank granted to First  Capital  America,  Inc.,  or FCA, a
     corporation  owned by our  Chairman  and members of his  immediate  family,  an option to purchase  Membership
     Interests of SBLS LLC. FCA exercised this option on June 30, 2005 and paid First Bank $7.4 million in cash. As
     a result of this transaction, SBLS LLC became 51.0% owned by First Bank and 49.0% owned by FCA.
(8)  In  conjunction  with the  acquisition  of Continental  Mortgage  Corporation - Delaware,  or CMC, First Banks
     redeemed in full all of the outstanding  subordinated  promissory notes of CMC, including  accumulated accrued
     and unpaid interest, totaling $4.5 million in aggregate.
</TABLE>

Despite the significant expenses we incurred in the amalgamation of the acquired
entities  into our  corporate  culture and systems,  and in the expansion of our
organizational  capabilities,  the  earnings of the  acquired  entities  and the
increased net interest  income  resulting from the transition in the composition
of our loan and deposit portfolios have contributed to improving net income. For
the years ended December 31, 2006, 2005 and 2004, net income was $111.7 million,
$96.9 million and $82.9 million, respectively. Additional information pertaining
to our business and results of  operations  is included in the  information  set
forth in pages 18 through 51 of Item 7, "Management's Discussion and Analysis of
Financial  Condition and Results of Operations," and in pages 101 through 102 of
"Note 20 to our Consolidated  Financial  Statements," and is incorporated herein
by reference.  Although we may encounter certain  short-term  adverse effects on
our operating  results  associated with  acquisitions,  we believe the long-term
benefits  of  our  acquisition   program  will  exceed  the  short-term   issues
encountered with certain acquisitions. Accordingly, in addition to concentrating
on internal  growth through  continued  efforts to further develop our corporate
infrastructure  and  product  and  service  offerings,  we expect to continue to
identify and pursue  opportunities  for further growth through  acquisitions and
expansionary de novo branch activities.

Pending Acquisitions. On November 7, 2006, we entered into an Agreement and Plan
of Reorganization  providing for the acquisition of Royal Oaks Bancshares,  Inc.
and its wholly owned banking  subsidiary,  Royal Oaks Bank,  ssb  (collectively,
Royal Oaks).  Royal Oaks was  headquartered in Houston,  Texas and operated five
banking  offices  in the  Houston  area and was in the  process  of  opening  an
additional de novo branch banking office,  which is now scheduled to open in the
second  quarter of 2007.  As further  described  in Note 25 to our  Consolidated
Financial Statements, we completed our acquisition of Royal Oaks on February 28,
2007.
<PAGE>
De Novo Branch  Offices.  During the three years ended  December  31,  2006,  we
opened the following five de novo branch offices:

         Branch Office Location                  Date Opened
         ----------------------                  -----------
            Farmington, Missouri              January 18, 2005
            San Diego, California              August 16, 2004
            McKinney, Texas                     July 19, 2004
            Wildwood, Missouri                February 20, 2004
            Houston, Texas                    February 9, 2004

Acquisition  and   Integration   Costs.   Certain  costs   associated  with  our
acquisitions  are accrued as of the  respective  consummation  dates,  including
costs that we incur related to salary continuation agreements,  or other similar
agreements,  of executive management and certain other employees of the acquired
entities that were in place prior to the acquisition  dates,  and costs relating
to  adjustments  to the  staffing  levels  of the  acquired  entities  or to the
anticipated  termination of information  technology or item processing contracts
of the acquired entities prior to their stated  contractual  expiration dates. A
summary of the cumulative  acquisition and integration costs attributable to our
acquisitions,  which were accrued as of the consummation dates of the respective
acquisition,  are summarized in Note 2 to our Consolidated Financial Statements.
These  acquisition  and  integration  costs are  reflected  in accrued and other
liabilities  in our  consolidated  balance  sheets.  As the  obligation  to make
payments  under  these  agreements  is accrued at the  consummation  date,  such
payments do not have any impact on our  consolidated  statements  of income.  We
also incur  integration costs associated with our acquisitions that are expensed
in our consolidated  statements of income that relate  principally to additional
costs incurred in conjunction with the information technology conversions of the
respective  entities,  as further discussed under  "Management's  Discussion and
Analysis of  Financial  Condition  and  Results of  Operations  --Comparison  of
Results  of  Operations  for 2006 and  2005,  and  --Comparison  of  Results  of
Operations for 2005 and 2004."

Lending  Activities.  As further  discussed under  "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations --Loans and Allowance
for Loan Losses," our business  development efforts are primarily focused on the
origination  of the  following  general loan types:  commercial,  financial  and
agricultural  loans;  real  estate  construction  and  land  development  loans;
commercial real estate mortgage loans; and to a lesser extent,  residential real
estate mortgage  loans.  Our lending  strategy  emphasizes  quality,  growth and
diversification.   Throughout  our  organization,  we  employ  a  common  credit
underwriting  policy.  In  addition  to  underwriting  based  on  estimates  and
projection of financial strength,  collateral values and future cash flows, most
loans to borrowing entities other than individuals  require the guarantee of the
parent  company  or entity  sponsor,  or in the case of  smaller  entities,  the
personal  guarantees  of  the  principals.  Our  enhanced  business  development
resources  continue  to assist  in the  realignment  of  certain  acquired  loan
portfolios, which were skewed toward loan types that reflected the abilities and
experiences  of the  management  members of the acquired  entities.  In order to
achieve a more diversified  portfolio,  to address  asset-quality  issues in the
portfolios  and to achieve a higher  interest  yield on our loan  portfolio,  we
reduced a  substantial  portion  of the  loans  that were  acquired  in  certain
acquisitions  through payments,  refinancing with other financial  institutions,
charge-offs  and, in certain  instances,  sales of loans.  As the acquired  loan
portfolios  decrease,  we attempt to replenish  them with higher  yielding loans
that are internally  generated by our business  development  function.  With our
acquisitions,  we have expanded our business development function into the newly
acquired  market  areas.  We also  continued  to grow through  internal  growth.
Consequently,  in spite of  relatively  large  reductions  in  certain  acquired
portfolios,  our aggregate loan portfolio,  net of unearned discount,  increased
41.7% from $5.41  billion at December 31, 2001, to $7.67 billion at December 31,
2006.

In addition to  restructuring  our loan  portfolio,  we also have  experienced a
change in the  composition  of our deposit  base,  through  deposit  development
programs and the mix of deposits  acquired  through our recent  acquisitions.  A
majority of our deposit  development  programs  are  directed  toward  increased
transaction  accounts,  such as demand and savings  accounts.  However,  we have
recently experienced increased time deposits,  coupled with higher deposit rates
paid on certain products,  resulting from the highly competitive rate market. We
have also  expanded  our  development  of multiple  account  relationships  with
individual  customers by broadening our relationship with existing customers and
the  products  provided  to  our  customers.  This  growth  is  accomplished  by
cross-selling  various  products  and  services,  packaging  account  types  and
offering  incentives  to  deposit  customers  on other  deposit  or  non-deposit
services. The expansion of our small business market lending provides additional
opportunities to cross sell other financial services such as investment,  trust,
insurance and traditional personal banking services to small business owners. In
addition,  commercial  borrowers  are  encouraged  to maintain  their  operating
deposit  accounts with us. Our time deposits have  increased to $3.83 billion at
December 31, 2006,  representing  45.3% of total deposits,  as compared to $3.15
billion,  or 41.8% of total  deposits,  at  December  31,  2005.  Our demand and
savings  accounts  have  increased  to  $4.62  billion  at  December  31,  2006,
representing 54.7% of total deposits,  as compared to $4.39 billion, or 58.2% of
total  deposits,  at  December  31,  2005,  reflecting  our  continued  focus on
transactional   accounts  and  full  service  deposit   relationships  with  our
customers.
<PAGE>
Commercial,   Financial  and   Agricultural.   Our  commercial,   financial  and
agricultural loan portfolio,  including lease financing,  was $1.93 billion,  or
25.2% of total loans, at December 31, 2006,  compared to $1.62 billion, or 23.1%
of total  loans,  at December  31, 2005.  The primary  component of  commercial,
financial and agricultural  loans is commercial  loans,  which are made based on
the borrowers'  general  credit  strength and ability to generate cash flows for
repayment from income sources.  Most of these loans are made on a secured basis,
generally  involving the use of company  equipment,  inventory  and/or  accounts
receivable,  and, from time to time, real estate,  as collateral.  Regardless of
collateral, substantial emphasis is placed on the borrowers' ability to generate
cash flow  sufficient  to operate  the  business  and  provide  coverage of debt
servicing  requirements.  Commercial  loans are frequently  renewable  annually,
although some terms may be as long as five years.  These loans typically require
the  borrower  to  maintain  certain  operating  covenants  appropriate  for the
specific  business,  such as  profitability,  debt service  coverage and current
asset and leverage  ratios,  which are  generally  reported  and  monitored on a
quarterly basis and subject to more detailed annual  reviews.  Commercial  loans
are made to customers  primarily  located in First Bank's geographic trade areas
of California,  Illinois,  Missouri and Texas who are engaged in  manufacturing,
retailing,   wholesaling   and  service   businesses.   This  portfolio  is  not
concentrated  in large  specific  industry  segments that are  characterized  by
sufficient homogeneity that would result in significant concentrations of credit
exposure.  Rather,  it is a highly  diversified  portfolio that encompasses many
industry   segments.   Within  both  our  real  estate  and  commercial  lending
portfolios,  we strive for the highest degree of diversity that is  practicable.
We also emphasize the development of other service  relationships,  particularly
deposit accounts, with our commercial borrowers.

Real Estate Construction and Development.  Our real estate construction and land
development  loan  portfolio  was $1.83  billion,  or 23.9% of total  loans,  at
December  31,  2006,  compared to $1.56  billion,  or 22.3% of total  loans,  at
December 31, 2005. Real estate  construction and land development  loans include
commitments  for  construction of both  residential  and commercial  properties.
Commercial  real  estate  projects  often  require   commitments  for  permanent
financing from other lenders upon completion of the project and, more typically,
may include a short-term  amortizing  component of the financing  from the bank.
Commitments  for  construction  of  multi-tenant  commercial and retail projects
generally require lease commitments from a substantial primary tenant or tenants
prior to  commencement  of  construction.  We typically  engage in  multi-phase,
multi-tenant  projects, as opposed to large vertical projects,  that allow us to
complete the projects in phases and limit the number of tenant  building  starts
based upon  successful  lease and/or sale of the tenant  units.  We finance some
projects for  borrowers  whose home office is located  within our trade area but
the  particular  project  may be outside  our normal  trade  area.  Although  we
generally do not engage in developing  commercial and  residential  construction
lending  business  outside of our trade area,  certain loans  acquired in recent
acquisitions  have been related to projects outside our trade area.  Residential
real estate  construction  and  development  loans are made based on the cost of
land acquisition and development, as well as the construction of the residential
units.  Although we finance the cost of display units and units held for sale, a
substantial portion of the loans for individual  residential units have purchase
commitments prior to funding. Residential condominium projects are funded as the
building  construction  progresses,  but funding of unit  finishing is generally
based on firm sales contracts.

Commercial  Real Estate.  Our  commercial  real estate loan  portfolio was $2.20
billion,  or 28.7% of total  loans,  at  December  31,  2006,  compared to $2.11
billion,  or 30.1% of total loans, at December 31, 2005.  Commercial real estate
loans  include  loans for which the  intended  source of repayment is rental and
other  income  from  the real  estate.  This  includes  commercial  real  estate
developed  for lease to third  parties  as well as the  owner's  occupancy.  The
underwriting of owner occupied  commercial  real estate loans generally  follows
the  procedures  for  commercial  lending  described  above,   except  that  the
collateral is real estate, and the loan term may be longer. The primary emphasis
in  underwriting  loans for which the source of repayment is the  performance of
the  collateral is the projected cash flow from the real estate and its adequacy
to cover the operating  costs of the project and the debt service  requirements.
Secondary emphasis is placed on the appraised value of the real estate, with the
requirement  that the  appraised  liquidation  value of the  collateral  must be
adequate  to repay  the debt and  related  interest  in the  event the cash flow
becomes insufficient to service the debt. Generally,  underwriting terms require
the loan  principal not to exceed 80% of the appraised  value of the  collateral
and the loan maturity not to exceed ten years.  Commercial real estate loans are
made for commercial office space, retail properties, hospitality, industrial and
warehouse facilities and recreational  properties.  We rarely finance commercial
real  estate or  rental  properties  that do not have  lease  commitments  for a
majority of the rentable space.
<PAGE>

Residential  Real Estate  Mortgage.  Our  residential  real estate mortgage loan
portfolio  was $1.27  billion,  or 16.6% of total  loans,  at December 31, 2006,
compared  to $1.21  billion,  or 17.3% of total  loans,  at December  31,  2005.
Residential   real  estate   mortgage  loans  are  primarily  loans  secured  by
single-family,  owner-occupied  properties.  These loans include both adjustable
rate and fixed rate mortgage loans.  Although we typically originate residential
real estate mortgage loans for sale in the secondary mortgage market in the form
of a mortgage-backed security or to various private third-party investors,  from
time-to-time, we retain certain residential mortgage loans in our loan portfolio
as directed by management's business strategies.  These strategies are reflected
in the expansion of our  one-to-four  family  residential  real estate  mortgage
loans,  excluding  loans held for sale,  since 2004,  with a home equity product
line  campaign in mid-2004  and our  business  strategy  decision in mid-2003 to
retain  a  portion  of our new  loan  production  in our  real  estate  mortgage
portfolio  to provide  more  diversification  within our loan  portfolio  and to
compensate for continued weak loan demand in other sectors of our loan portfolio
at that time.  In addition,  in the third  quarter of 2005,  we began  retaining
additional  mortgage loan  production in our  residential  real estate  mortgage
portfolio, including 15-year fixed rate, conforming conventional adjustable rate
mortgages and other similar  products,  which contributed to an increase in this
portion of our loan portfolio and represented a strategy we employed  throughout
the first and second  quarters  of 2006 prior to  reverting  to our  longer-term
business strategy of selling the majority of our mortgage loan production in the
secondary mortgage market.

Nonperforming  Loans. Our nonperforming loans were $48.7 million,  $97.2 million
and  $85.8  million  at  December  31,  2006,   2005  and  2004,   respectively,
representing  0.64%, 1.38% and 1.40%,  respectively,  of total loans, as further
discussed under "Management's Discussion and Analysis of Financial Condition and
Results of Operations  --Loans and  Allowance for Loan Losses."  These levels of
nonperforming  loans,  particularly  in 2004  and  2005,  are  higher  than  our
historical  averages which we attribute to our  acquisitions,  growth within our
loan  portfolio and increased  commercial  lending  activities.  During 2004 and
2005, our commercial real estate  portfolio  experienced  increasing  amounts of
nonperforming loans, largely attributable to the problem loans acquired with our
acquisition of CIB Bank in November  2004, as further  discussed  below.  During
2004, 2005 and 2006, we also  experienced  increasing  amounts of  nonperforming
loans  within our real  estate  construction  and  development  loan  portfolio,
reflective  of  current  market  conditions  surrounding  land  acquisition  and
development loans, including slowdowns in unit sales.

Although  the level of  nonperforming  loans  associated  with our  acquisitions
completed in 2006 and 2005 was not significant, the level of nonperforming loans
associated with our acquisitions completed in 2004 was substantial.  We had been
experiencing  higher  levels  of  nonperforming  loans  during  2002  and  2003,
primarily  attributable  to general  economic  conditions,  additional  problems
identified in certain  acquired loan portfolios and the continued  deterioration
of the portfolio of leases in our commercial leasing portfolio, particularly the
segment  related to the airline  industry  following the events of September 11,
2001. Throughout 2004, we had begun to exhibit a substantial  improvement in the
level of our  nonperforming  loans,  primarily as a result of  significant  loan
payoffs,  the sale of a portion of our commercial leasing portfolio in mid-2004,
the sale of certain acquired  nonperforming  loans, the strengthening of certain
loans  and  our  continued  efforts  to  improve  asset  quality.   However,  we
experienced  a  significant  increase  in the level of our  nonperforming  loans
associated  with our acquisition of CIB Bank in November 2004. As of the date of
the  acquisition,  CIB Bank had $60.3  million  of  nonperforming  loans,  which
represented  approximately  8.8% of CIB  Bank's  total loan  portfolio,  largely
attributable  to a significant  concentration  in  commercial  real estate loans
outstanding to a relatively small number of borrowers.  When we analyzed the CIB
Bank acquisition  during our due diligence process prior to the acquisition,  we
determined  the level of problem  loans that we  expected  to acquire  with this
acquisition  would,  when  combined  with our existing  portfolio of such loans,
result  in a level  of  problem  loans  that  was  unacceptable  to  management.
Consequently,  during  the  fourth  quarter of 2004,  we  completed  the sale of
approximately  $50.2  million  of  problem  loans,  including  $19.1  million of
nonperforming  loans,  which include loans on nonaccrual status and restructured
loans. We had anticipated these problems in negotiating the acquisition price of
CIB Bank.  While CIB Bank had utilized a long-term  workout  strategy to address
certain  nonperforming  assets,  our strategy was to address problem assets in a
more accelerated manner.  Accordingly,  we elected to hold for sale a portion of
the problem  assets  acquired  from CIB Bank. In December  2004, we  transferred
$18.3  million  of CIB  Bank's  nonperforming  loans to loans  held for sale and
recorded a corresponding charge of $5.4 million to our allowance for loan losses
to reduce the loans held for sale to their  estimated fair value,  net of costs,

<PAGE>

that was  expected to be realized  at the time of the sale,  resulting  in $12.9
million of loans  classified  as held for sale at December 31,  2004,  that were
subsequently  sold in early 2005, as further  discussed below.  Furthermore,  we
increased  the  allowance  for loan  losses  by $15.7  million  to  reflect  the
additional reserves associated with the loans transferred to loans held for sale
and the  application  of our loss  factors to CIB  Bank's  loan  portfolio  risk
ratings.  This reflects our use of  strategies  for more rapid  disposition  and
recovery of certain acquired  classified and nonperforming  assets. The level of
nonperforming  loans  related  to our CIB  Bank  acquisition  declined  to $50.5
million at December  31,  2004,  representing  58.8% of our total  nonperforming
loans. As further described in Note 2 to our Consolidated  Financial Statements,
we completed the sale of the loans during the first and second quarters of 2005.
As a result of loan payoffs prior to the sales and sales prices significantly in
excess of the original  third-party  bid  estimates  for certain  loans held for
sale, we recorded a $10.0 million reduction in goodwill to adjust loans held for
sale, net of the related tax effect.

During  2005,  we  experienced   continued   improvement  in  our  portfolio  of
nonperforming loans through the first nine months of the year, however,  further
deterioration   of  certain  acquired  loans  in  the  fourth  quarter  of  2005
contributed to an increase in  nonperforming  loans for 2005 and the decision to
sell certain loans and transfer them to our loans held for sale portfolio.  This
increase was primarily  associated with the  deterioration of a few large credit
relationships  during the fourth  quarter of 2005,  including two  relationships
totaling $31.5 million.  As a result,  on December 31, 2005, we recognized  $7.6
million of loan  charge-offs in conjunction  with the transfer of  approximately
$59.7 million of  nonperforming  loans to our held for sale  portfolio (of which
$6.0  million  in  charge-offs  and  $56.1  million  of loans  transferred  were
associated with the CIB Bank acquired  portfolio).  These loans included the two
large credit  relationships  that had deteriorated  during the fourth quarter of
2005  and one  credit  relationship  of  $12.4  million  that  was  included  in
nonperforming  loans at December 31, 2004 with a value of $14.5 million,  all of
which were acquired in the purchase of CIB Bank.  The $59.7 million  represented
the estimated fair value, net of costs,  that was expected to be realized at the
time of sale. The overall increase in nonperforming  loans in 2005 was partially
offset by significant  improvement of 21.0% in the level of nonperforming  loans
during  the first  three  quarters  of 2005  resulting  from the sale of certain
acquired  nonperforming loans,  strengthening of certain loans, and loan payoffs
and/or external  refinancing of various  credits.  A portion of the loan payoffs
and sales  during the first  quarter  of 2005  pertaining  to  certain  acquired
nonperforming  loans that were  classified as loans held for sale as of December
31, 2004  contributed to a reallocation of the purchase price on our acquisition
of CIB Bank,  as  previously  discussed  and further  described in Note 2 to our
Consolidated  Financial Statements.  The level of nonperforming loans related to
our CIB Bank acquisition,  which had declined to $32.8 million at the end of the
third quarter of 2005 from sales of loans and additional loan payoffs, increased
to $55.0 million,  or 56.6% of  nonperforming  loans,  at December 31, 2005 as a
result of the  further  deterioration  of the few  credit  relationships  in the
fourth quarter of 2005, as previously mentioned.  Through loan payoffs, the sale
of certain remaining  nonperforming  loans and continued  aggressive  collection
efforts, we did not have any nonperforming loans associated with our acquisition
of CIB Bank at December 31, 2006, as further discussed below.

In January 2006, we received a payoff on one of the  nonperforming  loans in our
held for sale  portfolio,  reducing the held for sale portfolio by $12.4 million
and resulting in the  recognition of a $5.0 million loan recovery.  In addition,
in March 2006, we completed  the sale of a majority of the remaining  nonaccrual
loans in our held for sale  portfolio,  reducing the held for sale  portfolio by
$32.5 million, and in September 2006, we recorded a $1.1 million write-down on a
remaining  nonperforming loan in our held for sale portfolio and transferred the
loan at its estimated fair value of $13.5 million back to our loan portfolio. We
subsequently  received a payoff on this nonperforming loan for the amount of the
adjusted carrying value in December 2006. Furthermore,  in the fourth quarter of
2006,  we  elected  to sell  certain  nonperforming  loans and  recognized  loan
charge-offs of $2.3 million in conjunction with the transfer of $32.6 million of
certain  loans to our held for sale  portfolio  prior to their  sale,  including
$14.8 million of nonperforming  loans. We completed the sale of these loans held
for sale in December 2006 and  recognized a pre-tax gain of $3.7 million.  These
reductions in loans during 2006 were partially  offset by  deterioration  within
our  one-to-four  family  residential  loan  portfolio  primarily due to current
market conditions, as well as several credit relationships, primarily within our
residential  development  and  construction  portfolio  in late 2006,  that were
placed on nonaccrual status during 2006.
<PAGE>

We believe the levels of our nonperforming assets, while largely attributable to
our acquisitions and the overall risk in our loan portfolio, are also reflective
of  cyclical  trends  experienced  within the  banking  industry  as a result of
economic  conditions  within our market  areas.  During  2006,  we  successfully
reduced our nonperforming loans by $48.5 million, or 49.9%, and we will continue
our  efforts to further  reduce the  overall  level of these  assets  through an
ongoing   process  of  problem  loan   work-outs,   loan  payoffs  and  external
refinancings,  and possibly  additional  sales of certain  nonperforming  loans.
Loans past due 90 days or more and still accruing interest  remained  relatively
flat,  totaling  $5.7 million at December 31, 2006,  compared to $5.6 million at
December 31, 2005, but showed significant  improvement  during 2005,  decreasing
$23.1 million from $28.7 million at December 31, 2004. Loan charge-offs,  net of
recoveries, decreased to $6.8 million for 2006, from $13.4 million for 2005, and
$24.8 million for 2004, as further discussed under "Management's  Discussion and
Analysis of Financial  Condition and Results of Operations --Loans and Allowance
for Loan Losses."

SBLS LLC's  purchase of  substantially  all of the assets of SBLS in August 2004
resulted  in  an  increase  to  nonperforming  loans  of  $8.8  million,   which
represented  approximately  36.7%  of  SBLS's  loan  portfolio  at the  time  of
acquisition. SBLS LLC held a significant concentration of assets associated with
the shrimping  vessel  industry,  reflected in both loans and other  repossessed
assets.  The shrimping  vessel industry  concentration  and its depressed status
were reflected in our net asset purchase price.  SBLS LLC's asset  concentration
associated with the distressed  shrimping vessels industry further  deteriorated
in 2005 due to higher  interest  rates,  increased fuel costs,  and the physical
damage to several of the  vessels by  Hurricane  Katrina.  As a result,  the SBA
agreed to repurchase SBLS LLC's entire shrimping  vessels  portfolio,  and these
loans  were  placed  in  liquidation  status  resulting  in the  recognition  of
substantial  loan losses in 2005.  Throughout  2006, the majority of these loans
have  been  fully  liquidated  via  completion  of the  sale  of the  underlying
collateral and/or the collection of insurance  proceeds  associated with vessels
that were deemed to be irreparable. SBLS LLC's nonperforming loans have declined
substantially  since the date of  acquisition  to $1.6  million at December  31,
2006,  from  $1.8  million  and $6.2  million  at  December  31,  2005 and 2004,
respectively.  SBLS LLC's net loan charge-offs were $256,000 for 2006,  compared
to $3.8 million in 2005 and $690,000 in 2004.

Market Areas. As of December 31, 2006, First Bank's 187 banking  facilities were
located in California,  Illinois, Missouri and Texas. First Bank operates in the
St.  Louis  metropolitan  area,  in eastern  Missouri and  throughout  Illinois,
including Chicago.  First Bank also operates in southern  California,  including
San Diego and the greater  Los  Angeles  metropolitan  area,  including  Ventura
County, Riverside County and Orange County; in Santa Barbara County; in northern
California,  including  the  greater  San  Francisco,  San Jose  and  Sacramento
metropolitan  areas; and in Texas in the Houston and Dallas  metropolitan areas.
Our larger  networks  of branch  offices  are  located in high  growth  markets,
specifically the Los Angeles, Chicago and St. Louis metropolitan areas.

The  following  table  lists the  geographic  market  areas in which  First Bank
operates,  total  deposits,  deposits as a percentage of total  deposits and the
number of locations as of December 31, 2006:

<TABLE>
<CAPTION>

                                                                           Total          Deposits        Number
                                                                         Deposits      as a Percentage      of
                               Geographic Area                         (in millions)  of Total Deposits  Locations
                               ---------------                         -------------  -----------------  ---------

<S>                                                                      <C>                 <C>            <C>
Southern California..................................................    $ 2,128.9           25.2%          40
Northern Illinois....................................................      1,603.7           19.0           36
St. Louis, Missouri metropolitan area................................      1,530.3           18.1           31
Northern California..................................................      1,163.2           13.8           17
Central and southern Illinois........................................      1,080.8           12.8           34
Texas................................................................        514.1            6.1           15
Missouri (excluding the St. Louis metropolitan area).................        422.1            5.0           14
                                                                         ---------          -----          ---
Total deposits.......................................................    $ 8,443.1          100.0%         187
                                                                         =========          =====          ===
</TABLE>
<PAGE>

Competition and Branch  Banking.  The activities in which First Bank engages are
highly competitive. Those activities and the geographic markets served primarily
involve  competition  with other banks,  some of which are affiliated with large
regional or national holding companies,  and other financial services companies.
Financial  institutions  compete  based upon  interest  rates offered on deposit
accounts and other credit and service charges, the types of products and quality
of services  rendered,  the  convenience  of branch  facilities,  interest rates
charged  on loans  and,  in the case of  loans  to large  commercial  borrowers,
relative lending limits.

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

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

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

Supervision and Regulation

General.  Along with First Bank,  we are  extensively  regulated  by Federal and
state laws and  regulations  which are designed to protect  depositors  of First
Bank  and  the  safety  and  soundness  of the  U.S.  banking  system,  not  our
stockholders.  To the extent this  discussion  refers to statutory or regulatory
provisions, it is not intended to summarize all such provisions and is qualified
in  its  entirety  by  reference  to  the  relevant   statutory  and  regulatory
provisions.  Changes in applicable laws,  regulations or regulatory policies may
have a material  effect on our business and prospects.  We are unable to predict
the  nature or extent of the  effects  on our  business  and  earnings  that new
federal and state  legislation  or  regulation  may have.  The  enactment of the
legislation  described  below has  significantly  affected the banking  industry
generally  and is likely to have  ongoing  effects  on First  Bank and us in the
future.

As a registered bank holding company under the Bank Holding Company Act of 1956,
as  amended,  we are  subject  to  regulation  and  supervision  of the Board of
Governors of the Federal  Reserve  System,  or Federal  Reserve.  We file annual
reports with the Federal Reserve and provide to the Federal  Reserve  additional
information as it may require.

Since First Bank is an  institution  chartered  by the State of  Missouri  and a
member of the Federal  Reserve,  both the State of Missouri  Division of Finance
and the Federal Reserve  supervise,  regulate and examine First Bank. First Bank
is also regulated by the Federal Deposit Insurance  Corporation,  or FDIC, which
provides deposit insurance of up to $100,000 for each insured depositor.
<PAGE>

Bank Holding Company  Regulation.  The activities of bank holding  companies are
generally limited to the business of banking, managing or controlling banks, and
other  activities  that the  Federal  Reserve  has  determined  to be so closely
related to banking or managing or  controlling  banks as to the proper  incident
thereto. In addition,  under the  Gramm-Leach-Bliley  Act, or GLB Act, which was
enacted in November 1999 and is further discussed below, a bank holding company,
whose control depository  institutions are "well-capitalized" and "well-managed"
(as defined in Federal Banking  Regulations),  and which obtains  "satisfactory"
Community Reinvestment Act (discussed briefly below) ratings, may declare itself
to be a "financial holding company" and engage in a broader range of activities.
As of this date, we are not a "financial holding company."

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

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

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

         >>    merging or consolidating with another bank holding company.

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

Safety  and  Soundness  and  Similar  Regulations.  We are  subject  to  various
regulations and regulatory policies directed at the financial soundness of First
Bank.  These include,  but are not limited to, the Federal  Reserve's  source of
strength  policy,  which  obligates a bank holding company such as us to provide
financial and managerial  strength to its subsidiary banks;  restrictions on the
nature and size of certain affiliate transactions between a bank holding company
and its subsidiary  depository  institutions  and  restrictions on extensions of
credit by its  subsidiary  banks to  executive  officers,  directors,  principal
stockholders and the related interests of such persons.

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

Under the risk-based capital standard,  the minimum  consolidated ratio of total
capital to  risk-adjusted  assets required for bank holding  companies is 8%. At
least one-half of the total capital must be composed of common equity,  retained
earnings,  qualifying  noncumulative perpetual preferred stock, a limited amount
of qualifying cumulative perpetual preferred stock and minority interests in the
equity  accounts  of  consolidated  subsidiaries,  less  certain  items  such as
goodwill and certain  other  intangible  assets,  which amount is referred to as
"Tier I  capital."  The  remainder  may  consist of  qualifying  hybrid  capital
instruments,  perpetual debt, mandatory  convertible debt securities,  a limited
amount of  subordinated  debt,  preferred  stock that does not qualify as Tier I
capital  and a limited  amount of loan and lease loss  reserves,  which  amount,
together with Tier I capital, is referred to as "Total Risk-Based Capital."

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

Information  regarding our capital  levels and First Bank's capital levels under
the federal  capital  requirements  is contained in Note 21 to our  Consolidated
Financial Statements appearing elsewhere in this report. As further described in

<PAGE>

Note 21 to our Consolidated Financial Statements,  on March 1, 2005, the Federal
Reserve  adopted a final rule,  Risk-Based  Capital  Standards:  Trust Preferred
Securities  and the  Definition  of  Capital,  which  allows  for the  continued
inclusion,  on a limited basis, of trust preferred securities in Tier I capital.
Under the final rule,  trust  preferred  securities  and other  restricted  core
capital elements will be subject to stricter  quantitative  limits.  The Federal
Reserve's final rule limits  restricted core capital  elements to 25% of the sum
of all core capital elements, including restricted core capital elements, net of
goodwill less any associated deferred tax liability.

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

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

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

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

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

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

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

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

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

Dividends.  Our primary source of funds in the future is the dividends,  if any,
paid by First  Bank.  The ability of First Bank to pay  dividends  is limited by
federal laws, by regulations  promulgated by the bank regulatory agencies and by
principles  of prudent  bank  management.  Under the most  restrictive  of these
requirements,  the  future  payment of  dividends  from First Bank is limited to
approximately  $135.0 million at December 31, 2006,  unless prior  permission of
the regulatory authorities is obtained.

Customer Protection. First Bank is also subject to consumer laws and regulations
intended to protect consumers in transactions with depository  institutions,  as
well as other laws or regulations affecting customers of financial  institutions
generally.  These laws and regulations  mandate various disclosure  requirements
and substantively  regulate the manner in which financial institutions must deal
with their customers.  First Bank must comply with numerous  regulations in this
regard and is subject to periodic  examinations  with respect to its  compliance
with the requirements.

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

The  Gramm-Leach-Bliley  Act. The GLB Act, enacted in 1999, amended and repealed
portions  of the  Glass-Steagall  Act and other  federal  laws  restricting  the
ability of bank holding companies,  securities firms and insurance  companies to
affiliate  with  each  other and to enter  new  lines of  business.  The GLB Act
established a comprehensive  framework to permit  financial  companies to expand
their activities, including through such affiliations, and to modify the federal
regulatory  structure  governing  some  financial  services   activities.   This
authority of financial firms to broaden the types of financial  services offered
to customers and to affiliates with other types of financial  services companies
may lead to further  consolidation in the financial services industry.  However,
it may lead to  additional  competition  in the  markets  in which we operate by
allowing new entrants  into various  segments of those  markets that are not the
traditional competitors in those segments. Furthermore, the authority granted by
the GLB Act may encourage the growth of larger competitors.

The GLB  Act  also  adopted  consumer  privacy  safeguards  requiring  financial
services  providers to disclose their policies regarding the privacy of customer
information  to  their  customers  and,  subject  to some  exceptions,  allowing
customers  to "opt  out" of  policies  permitting  such  companies  to  disclose
confidential financial information to non-affiliated third parties.

The  Sarbanes-Oxley  Act.  In July  2002,  the  Sarbanes-Oxley  Act of 2002,  or
Sarbanes-Oxley,  was  enacted.  Sarbanes-Oxley  imposes  a myriad  of  corporate
governance   and   accounting    measures   designed   to   increase   corporate
responsibility,  to provide for enhanced  penalties for  accounting and auditing
improprieties  at  publicly  traded  companies,  and  to  protect  investors  by
improving the accuracy and reliability of disclosures under securities laws. All
public  companies  that file periodic  reports with the  Securities and Exchange
Commission, or SEC, are affected by Sarbanes-Oxley.

Sarbanes-Oxley   addresses,   among  other  matters:  (i)  the  creation  of  an
independent  accounting oversight board to oversee the audit of public companies
and auditors who perform such audits; (ii) auditor independence provisions which
restrict  non-audit  services that independent  accountants may provide to their
audit clients; (iii) additional corporate governance and responsibility measures
which require the chief executive officer and chief financial officer to certify
financial statements,  to forfeit salary and bonuses in certain situations,  and
protect  whistleblowers and informants;  (iv) expansion of the audit committee's
authority and  responsibility  by requiring that the audit committee have direct
control  of the  outside  auditor,  be able to hire and fire  the  auditor,  and
approve all non-audit services; (v) requirements that audit committee members be
independent;  (vi) disclosure of a code of ethics;  and (vii) enhanced penalties
for fraud and other violations.  The provisions of  Sarbanes-Oxley  also require
that  management  assess the  effectiveness  of internal  control over financial
reporting  and that the  independent  auditor  issue a  report  on  management's
attestation on internal control over financial  reporting.  However,  because we
are a non-accelerated  filer,  this provision of Sarbanes-Oxley  will not become
effective for us until the fiscal year ended December 31, 2007.

Sarbanes-Oxley  has and is expected to continue to increase  the  administrative
costs of doing  business for public  companies;  however,  we cannot predict the
significance of such increase.

The USA Patriot  Act. The Patriot Act was enacted in October 2001 in response to
the  terrorist  attacks in New York,  Pennsylvania  and  Washington,  D.C.  that
occurred on September 11, 2001.  The Patriot Act is intended to  strengthen  the
ability of U.S. law  enforcement  agencies and the  intelligence  communities to
work cohesively to combat terrorism on a variety of fronts. The potential impact
of the Patriot Act on financial  institutions  of all kinds is  significant  and
wide  ranging.  The Patriot Act  contains  sweeping  anti-money  laundering  and
financial transparency laws and imposes various regulations, including standards
for verifying client  identification  at account  opening,  and rules to promote
cooperation  among  financial  institutions,   regulators  and  law  enforcement
entities in  identifying  parties  that may be involved  in  terrorism  or money
laundering. The Patriot Act is expected to increase the administrative costs and
burden of doing business for financial  institutions;  however,  while we cannot
predict the full impact of such an increase,  we do not expect it to differ from
that of other financial institutions.

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

First Bank is a member of the Federal  Reserve  System and the Federal Home Loan
Bank System. As a member, First Bank is required to hold investments in regional
banks within those systems. First Bank was in compliance with these requirements
at December 31, 2006, with  investments of $10.3 million in stock of the Federal
Home Loan Bank of Des Moines and $24.9  million in stock of the Federal  Reserve
Bank of St.  Louis.  First Bank also holds an investment of $784,000 in stock of
the Federal Home Loan Bank of San  Francisco and $54,000 in stock of the Federal

<PAGE>

Home Loan Bank of Dallas, as a nonmember,  to collateralize certain Federal Home
Loan Bank advances assumed in conjunction with certain acquisition transactions.

Monetary  Policy and  Economic  Control.  The  commercial  banking  business  is
affected by legislation,  regulatory policies and general economic conditions as
well as the  monetary  policies  of the  Federal  Reserve.  The  instruments  of
monetary  policy  available to the Federal  Reserve  include the following:  (i)
changes in the discount rate on member bank borrowings and the targeted  federal
funds rate; (ii) the availability of credit at the discount  window;  (iii) open
market  operations;  (iv) the  imposition  of changes  in  reserve  requirements
against  deposits of domestic  banks;  (v) the  imposition of changes in reserve
requirements  against  deposits  and  assets of foreign  branches;  and (vi) the
imposition of and changes in reserve  requirements against certain borrowings by
banks and their affiliates.

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

Employees

As of March 28, 2007, we employed  approximately  2,930  employees.  None of the
employees  are subject to a  collective  bargaining  agreement.  We consider our
relationships with our employees to be good.

Item 1A.   Risk Factors

Readers of our  Annual  Report on Form 10-K  should  consider  the risk  factors
described  below in  conjunction  with the other  information  included  in this
Annual Report on Form 10-K,  including  Management's  Discussion and Analysis of
Financial Condition and Results of Operations,  our Selected Financial Data, our
Consolidated  Financial  Statements  and  the  related  notes  thereto,  and the
financial and other data contained  elsewhere in this report.  See also "Special
Note Regarding  Forward-Looking  Statements"  appearing at the beginning of this
report.

We pursue acquisitions to supplement our internal growth.  Acquisitions  involve
varying   degrees  of  inherent  risk  that  could  affect  our   profitability.
Acquisitions  of other  banks  or  businesses  may  expose  us to asset  quality
problems,  higher than anticipated expenses,  operational problems or unknown or
contingent  liabilities  of the  entities we acquire.  If the  quantity of these
problems  exceeds our  estimates,  our earnings and  financial  condition may be
adversely affected.  Furthermore,  acquisitions generally require integration of
the  acquired  entity's  systems and  procedures  with ours in order to make the
transaction  economically feasible.  This integration process is complicated and
time  consuming  and can also be  disruptive  to the  customers  of the acquired
business.  If the  integration  process is not conducted  successfully  and with
minimal  effect  on the  business  and its  customers,  we may not  realize  the
anticipated  economic  benefits of particular  acquisitions  within the expected
time  frame,  and we may lose  higher  than  expected  numbers of  customers  or
employees of the acquired business.

Competition for acquisitions in the financial  services  industry and our status
as a  privately  held  company  make our  efforts to grow  through  acquisitions
difficult.  We face intense  competition  from other  financial  institutions in
pursuing   acquisitions,   particularly   related  to  price.  Prices  at  which
acquisitions can be made fluctuate with market  conditions.  We have experienced
times during which  acquisitions could not be made in specific markets at prices
our  management  considered  acceptable,  and we expect that this situation will
happen again.  Because of our intention to remain a closely held company,  we do
not use our common stock to make  acquisitions.  Our use of cash as  acquisition
consideration   can  be  a  disadvantage  in  acquisitions   relative  to  other
prospective  acquirers in those instances in which selling stockholders desire a
tax-free exchange.

Geographic  distance between our operations  increases operating costs and makes
efforts to standardize operations more difficult.  We operate banking offices in
California,  Illinois,  Missouri and Texas. The noncontiguous  nature of many of
our geographic markets increases operating costs and makes it more difficult for
us to  standardize  our business  practices and  procedures.  As a result of our
geographic  dispersion,  we face the following  challenges,  among  others:  (a)
operation of  information  technology  and item  processing  functions at remote
locations including the transportation of documents and increased communications
line  charges  from  various  service  providers;  (b) control of  correspondent
accounts,  reserve  balances and wire  transfers in  different  time zones;  (c)
familiarizing  personnel with our business  environment,  banking  practices and
customer  requirements  at  geographically  dispersed  locations;  (d) providing
administrative   support,   including   accounting,   human  resources,   credit
administration,  loan servicing, internal audit and credit review at significant
distances;  and (e)  establishing  and monitoring  compliance with our corporate
policies and procedures in different areas.
<PAGE>

Our emphasis on commercial real estate lending and real estate  construction and
development  lending  has  increased  our credit  risk.  Our  expanded  level of
commercial real estate and construction  and development  lending may carry with
it greater credit risk than the credit risk  associated  with  residential  real
estate  lending.  A  substantial  portion of our loans are secured by commercial
real estate. Commercial real estate and real estate construction and development
loans were $2.20 billion and $1.83 billion,  respectively, at December 31, 2006,
representing  29.6% and 24.6%,  respectively,  of our loan portfolio,  excluding
loans  held  for  sale.  As  previously   discussed  under  "Business  --Lending
Activities,"  during  2004  and  2005,  we  experienced  increasing  amounts  of
nonperforming  loans  within  our  commercial  real  estate  portfolio,  largely
attributable  to the problem loans acquired with our  acquisition of CIB Bank in
November  2004,  and we have taken  steps to  significantly  reduce the level of
nonperforming loans during 2005 and 2006. During 2006, we experienced increasing
amounts  of  nonperforming   loans  within  our  real  estate  construction  and
development loan portfolios, reflective of current market conditions surrounding
land  acquisition  and  development  loans,  including  slowdowns in unit sales.
Adverse  developments  affecting real estate in one or more of our markets could
further increase the credit risk associated with our loan portfolio,  as further
discussed under "Business --Lending Activities" and "Management's Discussion and
Analysis of Financial  Condition and Results of Operations --Loans and Allowance
for Loan  Losses." The  Department  of the  Treasury,  Federal  Reserve and FDIC
collectively issued guidance entitled, "Concentrations in Commercial Real Estate
Lending,   Sound  Risk   Management   Practices,"   that  focuses  on  financial
institutions  that have high and increasing  concentrations  of commercial  real
estate loans on their balance sheets that make them more  vulnerable to cyclical
commercial real estate markets,  and is intended to reinforce the  institution's
risk management  practices and appropriate  capital levels associated with these
concentrations.

Decreases in interest rates could have a negative  impact on our  profitability.
Our earnings are  principally  dependent on our ability to generate net interest
income.  Net  interest  income is  affected by many  factors  that are partly or
completely  beyond  our  control,   including   competition,   general  economic
conditions  and the policies of regulatory  authorities,  including the monetary
policies of the Federal Reserve.  Under our current interest rate risk position,
our net interest  income could be  negatively  affected by a decline in interest
rates,  as further  discussed  under  "Management's  Discussion  and Analysis of
Financial Condition and Results of Operations --Interest Rate Risk Management."

Our interest rate risk hedging  activities may not effectively reduce volatility
in  earnings.  To offset  the risks  associated  with the  effects of changes in
market interest rates, we periodically enter into transactions designed to hedge
our interest rate risk. The accounting  for such hedging  activities  under U.S.
generally accepted accounting  principles requires our hedging instruments to be
recorded at fair  value.  The effect of certain of our  hedging  strategies  may
result in  volatility in our  quarterly  and annual  earnings as interest  rates
change or as the volatility in the underlying  derivatives  markets increases or
decreases. The volatility in earnings is primarily a result of marking to market
certain of our hedging  instruments and/or modifying our overall hedge position,
as further  discussed under  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations --Interest Rate Risk Management."

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

We may not be able to  implement  technological  change  as  effectively  as our
competitors.  The financial  services  industry has in the past and continues to
undergo  rapid  technological  change  related to delivery and  availability  of
products  and   services  and   operating   efficiencies.   In  many   instances
technological improvements require significant capital expenditures, and many of
our larger  competitors  have  significantly  greater  resources  to absorb such
capital expenditures than we may have available.

We operate in a highly regulated  environment.  Recently  enacted,  proposed and
future  legislation and regulations may increase our cost of doing business.  We
and our  subsidiaries  are subject to extensive  federal and state  legislation,
regulation and supervision.  Recently enacted,  proposed and future  legislation
and  regulations  have had and are  expected to  continue to have a  significant
impact  on  the  financial  services  industry.  Some  of  the  legislative  and
regulatory  changes,  including the  Sarbanes-Oxley Act and the USA Patriot Act,

<PAGE>

have and are  expected  to continue  to  increase  our costs of doing  business,
particularly  personnel and technology expenses necessary to maintain compliance
with the expanded  regulatory  requirements.  Additionally,  the legislative and
regulatory  changes could reduce our ability to compete in certain  markets,  as
further discussed under "Business -- Supervision and Regulation."

Item 1B.  Unresolved Staff Comments

We are not an accelerated filer or a large accelerated filer, as defined in Rule
12b-2 of the Securities  Exchange Act of 1934, or the Exchange Act, nor are we a
well-known  seasoned  issuer  as  defined  in Rule  405 of the  Securities  Act.
Consequently, Item 1B is not applicable to us.

Item 2.  Properties

We own our office  building,  which  houses  our  principal  place of  business,
located at 135 North Meramec,  Clayton,  Missouri 63105. The property is in good
condition   and  consists  of   approximately   60,353  square  feet,  of  which
approximately  1,791 square feet is currently leased to others. Of our other 186
offices and four operations and administrative  facilities at December 31, 2006,
105 are located in buildings that we own and 85 are located in buildings that we
lease.

We consider  the  properties  at which we do  business  to be in good  condition
generally  and  suitable for our business  conducted  at each  location.  To the
extent our  properties or those acquired in connection  with our  acquisition of
other  entities  provide  space in excess of that  effectively  utilized  in the
operations  of First Bank,  we seek to lease or  sub-lease  any excess  space to
third  parties.  Additional  information  regarding  the premises and  equipment
utilized  by  First  Bank  appears  in  Note  7 to  our  Consolidated  Financial
Statements appearing elsewhere in this report.

Item 3.  Legal Proceedings

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

Item 4.  Submission of Matters to a Vote of Security Holders

None.




                                     PART II


Item 5. Market for Registrant's  Common Equity,  Related Stockholder Matters and
        Issuer Purchases of Equity Securities

Market Information. There is no established public trading market for our common
stock. Various trusts, which were established by and are administered by and for
the benefit of Mr. James F. Dierberg,  our Chairman of the Board, and members of
his immediate family, own all of our voting stock.

Dividends.  In recent  years,  we have  paid  minimal  dividends  on our Class A
Convertible  Adjustable  Rate  Preferred  Stock and our Class B  Non-Convertible
Adjustable Rate Preferred Stock, and have paid no dividends on our Common Stock.
Our  ability to pay  dividends  is limited by  regulatory  requirements  and our
credit agreement, and by the receipt of dividend payments from First Bank, which
is also subject to regulatory requirements. The dividend limitations are further
described  in  Note  11 and  Note 22 to our  Consolidated  Financial  Statements
appearing elsewhere in this report.

Item 6.  Selected Financial Data

The selected  consolidated  financial  data set forth below are derived from our
consolidated financial statements. This information is qualified by reference to
our Consolidated  Financial  Statements appearing elsewhere in this report. This
information  should  be read in  conjunction  with such  Consolidated  Financial
Statements,  the related notes thereto and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

<PAGE>

<TABLE>
<CAPTION>

                                                                As of or For the Year Ended December 31, (1)
                                                       ------------------------------------------------------------
                                                           2006         2005        2004         2003        2002
                                                           ----         ----        ----         ----        ----
                                                     (dollars expressed in thousands, except share and per share data)

Income Statement Data:
<S>                                                    <C>             <C>         <C>          <C>         <C>
    Interest income................................... $   646,304     493,940     394,782      391,153     425,721
    Interest expense..................................     261,862     168,259      94,767      104,026     157,551
                                                       -----------   ---------   ---------    ---------   ---------
      Net interest income.............................     384,442     325,681     300,015      287,127     268,170
    Provision for loan losses.........................      12,000      (4,000)     25,750       49,000      55,500
                                                       -----------   ---------   ---------    ---------   ---------
      Net interest income after provision for
        loan losses...................................     372,442     329,681     274,265      238,127     212,670
    Noninterest income................................     112,943      96,085      87,199       87,519      67,649
    Noninterest expense...............................     319,216     277,638     233,218      226,880     210,950
                                                       -----------   ---------   ---------    ---------   ---------
      Income before provision for income taxes and
        minority interest in (loss) income of
        subsidiary....................................     166,169     148,128     128,246       98,766      69,369
    Provision for income taxes........................      55,062      52,509      45,338       35,955      22,771
                                                       -----------   ---------   ---------    ---------   ---------
      Income before minority interest in (loss)
        income of subsidiary..........................     111,107      95,619      82,908       62,811      46,598
    Minority interest in (loss) income of subsidiary..        (587)     (1,287)         --           --       1,431
                                                       -----------   ---------   ---------    ---------   ---------
      Net income...................................... $   111,694      96,906      82,908       62,811      45,167
                                                       ===========   =========   =========    =========   =========

Dividends:
    Preferred stock................................... $       786         786         786          786         786
    Common stock......................................          --          --          --           --          --
    Ratio of total dividends declared to net income...        0.70%       0.81%       0.95%        1.25%       1.74%

Per Share Data:
    Earnings per common share:
       Basic.......................................... $  4,687.38    4,062.36    3,470.80     2,621.39    1,875.69
       Diluted........................................    4,630.72    4,007.46    3,421.58     2,588.31    1,853.64
    Weighted average shares of common stock
       outstanding....................................      23,661      23,661      23,661       23,661      23,661

Balance Sheet Data:
    Investment securities............................. $ 1,464,946   1,340,783   1,813,349    1,049,714   1,145,670
    Loans, net of unearned discount...................   7,666,481   7,020,771   6,137,968    5,328,075   5,432,588
    Total assets......................................  10,158,714   9,170,333   8,732,841    7,106,940   7,351,177
    Total deposits....................................   8,443,086   7,541,831   7,151,970    5,961,615   6,172,820
    Notes payable.....................................      65,000     100,000      15,000       17,000       7,000
    Subordinated debentures...........................     297,966     215,461     273,300      209,320     278,389
    Common stockholders' equity.......................     787,372     665,875     587,830      536,752     505,978
    Total stockholders' equity........................     800,435     678,938     600,893      549,815     519,041

Earnings Ratios:
    Return on average assets..........................        1.16%       1.10%       1.10%        0.87%       0.64%
    Return on average stockholders' equity............       15.26       15.11       14.44        11.68        9.44
    Efficiency ratio (2)..............................       64.18       65.83       60.23        60.56       62.82
    Net interest margin (3)...........................        4.36        4.01        4.36         4.45        4.23

Asset Quality Ratios:
    Allowance for loan losses to loans................        1.90        1.93        2.46         2.19        1.83
    Nonperforming loans to loans (4)..................        0.64        1.38        1.40         1.41        1.38
    Allowance for loan losses to nonperforming
      loans (4).......................................      299.05      139.23      175.65       154.52      132.29
    Nonperforming assets to loans and
      other real estate (5)...........................        0.72        1.41        1.46         1.62        1.52
    Net loan charge-offs to average loans.............        0.09        0.21        0.45         0.61        1.01

Capital Ratios:
    Average total stockholders' equity to
      average total assets............................        7.61        7.28        7.61         7.48        6.78
    Total risk-based capital ratio....................       10.25       10.14       10.61        10.27       10.68
    Leverage ratio....................................        8.13        8.13        7.89         7.62        6.45
---------------------------------
(1) The  comparability  of the selected data presented is affected by the  acquisitions  of 12 banks,  an insurance
    brokerage agency, an insurance premium financing company, a loan origination  business and seven branch offices
    during the five-year period ended December 31, 2006.  The selected  data  includes  the financial  position and
    results  of  operations  of  each  acquired entity  only for  the  periods subsequent to its respective date of
    acquisition.
(2) Efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.
(3) Net interest rate margin is the ratio of net interest income  (expressed on a tax-equivalent  basis) to average
    interest-earning  assets.
(4) Nonperforming loans consist of nonaccrual loans and certain loans with restructured terms.
(5) Nonperforming assets consist of nonperforming loans and other real estate.

</TABLE>

<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

The following  presents  management's  discussion  and analysis of our financial
condition  and  results  of  operations  as of the  dates  and for  the  periods
indicated.  This  discussion  should be read in  conjunction  with our "Selected
Financial  Data," our  Consolidated  Financial  Statements and the related notes
thereto,  and the other financial data appearing  elsewhere in this report. This
discussion  set forth in  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of Operations  contains  forward-looking  statements  with
respect to our financial  condition,  results of operations and business.  These
forward-looking  statements are subject to certain risks and uncertainties,  not
all of which can be  predicted  or  anticipated.  Various  factors may cause our
actual   results  to  differ   materially   from  those   contemplated   by  the
forward-looking  statements herein. We do not have a duty to and will not update
these  forward-looking  statements.  Readers of our  Annual  Report on Form 10-K
should   therefore   consider  these  risks  and   uncertainties  in  evaluating
forward-looking   statements   and   should   not  place   undue   reliance   on
forward-looking   statements.   See  "Special  Note  Regarding   Forward-Looking
Statements"  appearing  at the  beginning  of this  report  and  "Item 1A - Risk
Factors," appearing elsewhere in this report.

RESULTS OF OPERATIONS

Overview

Net income was $111.7  million,  $96.9  million and $82.9  million for the years
ended  December 31,  2006,  2005 and 2004,  respectively.  Our return on average
assets and our return on average  stockholders'  equity  were 1.16% and  15.26%,
respectively,  for the year  ended  December  31,  2006,  compared  to 1.10% and
15.11%, respectively,  for 2005, and 1.10% and 14.44%,  respectively,  for 2004.
Our financial results for 2006 represented  record earnings for us, both for the
year and for the fourth  quarter of 2006,  and  resulted in our  achievement  of
surpassing the $100.0 million earnings milestone.

Our record  earnings  in 2006 were driven by an 18.0%  increase in net  interest
income and a 17.5% increase in noninterest income. Our average  interest-earning
assets  increased  8.7% and,  coupled  with higher  prevailing  interest  rates,
contributed to a $58.8 million  increase in net interest  income and improvement
in our net interest  margin,  which increased 35 basis points to 4.36% for 2006,
from 4.01% for 2005.  Noninterest  income  increased to $112.9  million in 2006,
from $96.1 million in 2005. The increases in net interest income and noninterest
income were partially offset by an increase in our provision for loan losses and
higher levels of noninterest  expense.  Noninterest  expense  increased 15.0% to
$319.2 million in 2006, from $277.6 million in 2005. The increased  expenses are
commensurate  with  significant  expansion  of our  branch  office  network  and
employee base in several key markets  resulting from our  acquisitions  of other
financial  institutions  in 2005 and 2006,  and the  acquisition of an insurance
premium  financing  company  and an  insurance  brokerage  agency  in 2006.  Our
aggressive  and diligent  efforts to improve asset  quality  resulted in a 44.4%
reduction in  nonperforming  assets during 2006.  The increase in net income for
2005 was primarily  attributable to a significant reduction in our provision for
loan losses,  as further  discussed  below,  and increased  net interest  income
resulting from net interest-earning assets provided by our acquisitions,  higher
yields  earned on those  assets  and  internal  loan  growth.  However,  our net
interest income was adversely affected by a decline in earnings on interest rate
swap  agreements  associated  with our interest  rate risk  management  program,
primarily  resulting from increasing  prevailing interest rates and the maturity
and termination of certain interest rate swap agreements,  as further  discussed
under "--Interest Rate Risk Management."

We  recorded a  provision  for loan  losses of $12.0  million for the year ended
December  31,  2006,  compared to a negative  provision  for loan losses of $4.0
million for the year ended December 31, 2005, and a provision for loan losses of
$25.8 million for the year ended December 31, 2004. We attribute the increase in
our provision for loan losses in 2006 primarily to loan portfolio  growth,  both
external and organic,  coupled with the  deterioration  of certain  large credit
relationships  primarily  associated  with the real  estate  sector  of our loan
portfolio,  including our one-to-four  family  residential  loan portfolio.  The
decrease  in our  provision  for loan losses in 2005 was  commensurate  with the
decreasing credit risk that existed in our loan portfolio at that time. While we
had recorded a negative  provision for loan losses of $8.0 million for the first
nine months of 2005,  reflecting  a 21.0%  improvement  in  nonperforming  loans
during this period from the sale of certain  acquired  nonperforming  loans, the
strengthening  of certain  loans,  loan payoffs and/or  external  refinancing of
various credits, and a significant reduction in net loan charge-offs,  the level
of  nonperforming  loans increased during the fourth quarter of 2005 as a result
of further deterioration of a small number of large credit relationships,  which
resulted  in a fourth  quarter  provision  for loan losses of $4.0  million.  We
continue to closely monitor the level of our nonperforming  assets in accordance
with our credit risk  guidelines  and focus on methods to improve our management
of these  assets based on changing  economic  conditions  throughout  our market
areas.



<PAGE>


Financial Condition and Average Balances

Our average  total  assets were $9.61  billion for the year ended  December  31,
2006,  compared to $8.81 billion and $7.54 billion for the years ended  December
31, 2005 and 2004,  respectively,  reflecting  increases  of $797.7  million and
$1.27  billion,  respectively.  Our total assets reached a record high of $10.16
billion at December 31,  2006,  compared to $9.17  billion and $8.73  billion at
December  31,  2005 and 2004,  respectively,  representing  increases  of $988.4
million and $437.5 million, respectively. We attribute the increase in our total
assets in 2006 and 2005 to a combination  of organic  growth and growth  through
acquisitions  in our target  markets  completed  during  the past  three  years,
including our  acquisition of CIB Bank in late 2004,  which  provided  assets of
$1.20 billion. Our acquisitions  completed in 2004, 2005 and 2006 provided total
assets at the time of the  transactions  of $1.38  billion,  $280.3  million and
$794.3 million,  in aggregate,  respectively,  as well as the related intangible
assets  associated  with  these  transactions.   As  previously  mentioned,  our
acquisitions completed in 2006 included the acquisition of two financial service
companies,  an insurance premium  financing  company and an insurance  brokerage
company,  thereby providing our business with new  opportunities,  and expanding
the broad array of products and services available to our customers.

Our  interest-earning  assets averaged $8.86 billion for the year ended December
31,  2006,  compared  to $8.15  billion  and $6.91  billion  for the years ended
December 31, 2005 and 2004, respectively, while our interest-bearing liabilities
averaged $7.50 billion for the year ended  December 31, 2006,  compared to $6.82
billion  and $5.78  billion  for the years  ended  December  31,  2005 and 2004,
respectively.  We used  funds  from the  growth of  average  deposits  of $809.9
million and maturities of investment securities to fund internal loan growth and
to  reinvest  in  higher-yielding  investment  securities  in  2006.  We  issued
additional  subordinated  debentures,  as  further  described  below,  which  we
primarily used to fund our bank acquisitions in 2006 and to refinance  existing,
higher-cost  subordinated  debentures on their  optional call date at the end of
the year. Our average other borrowings  declined $191.2 million as a result of a
reduction of certain term repurchase agreements utilized in conjunction with our
interest rate risk  management  program.  The increase in our average assets for
2005 was primarily  funded by an increase in average  deposits of $1.04 billion;
an increase in average other  borrowings of $85.7 million,  an increase in notes
payable of $33.2 million; and an increase in average subordinated  debentures of
$38.8  million.   Funds  available  from  maturities  and  sales  of  investment
securities during 2005 were primarily used to fund loan growth, and a portion of
the remaining  funds  available from  maturities of investment  securities  were
reinvested in higher-yielding available-for-sale investment securities.

Average loans, net of unearned discount,  were $7.47 billion,  $6.44 billion and
$5.51  billion  for  the  years  ended   December  31,  2006,   2005  and  2004,
respectively.  Our  acquisitions  completed  during 2005 and 2006 provided total
loans,  net  of  unearned  discount,  of  $209.6  million  and  $545.1  million,
respectively. Internal loan growth of $584.2 million for 2006 reflects: a $234.1
million increase in our real estate construction and development portfolio;  and
a $289.8 million increase in our real estate mortgage  portfolio  resulting from
management's  business  decision to retain  certain  residential  mortgage  loan
production in our residential  real estate mortgage  portfolio  during the first
half of 2006,  partially  offset  by the  securitization  of $138.9  million  of
certain  residential  mortgage loans in early 2006 which shifted these assets to
available-for-sale  investment  securities;  and the  transfer of  approximately
$130.0  million  of  certain  loans to our held for sale  portfolio,  which were
subsequently sold in 2006 in conjunction with sales of existing loans originated
and held for sale.  Internal  loan growth for 2006 also  resulted  from a $120.4
million  increase  in our loans  held for sale  portfolio,  reflecting:  (a) the
timing of loan  originations and subsequent sales of residential  mortgage loans
in the secondary  mortgage  market;  partially offset by (b) the sale of certain
nonperforming  loans that were  transferred  to our held for sale  portfolio  on
December 31, 2005,  (c) the transfer and subsequent  sale of certain  performing
and nonperforming loans in the fourth quarter of 2006; and (d) the payoff of two
significant  nonperforming loans, totaling $27.3 million in aggregate, that were
included  in our held for sale  portfolio  at  December  31,  2005,  as  further
discussed under "--Loans and Allowance for Loan Losses." Internal loan growth of
$687.5 million for 2005 was primarily  generated from a $286.8 million  increase
in our real estate  mortgage  portfolio  resulting  from  management's  business
decision  to  retain  additional   mortgage  loan  product   production  in  our
residential  real estate  mortgage  portfolio,  and a home equity  product  line
campaign that we held in mid-2004;  a $241.9 million increase in our real estate
construction  and development  portfolio;  and a $194.8 million  increase in our
loans  held  for  sale  portfolio,  including  approximately  $59.7  million  of
nonperforming  loans that were  transferred to the loans held for sale portfolio
at December 31, 2005, as further discussed under "--Loans and Allowance for Loan
Losses." This  increase was  partially  offset by reductions in a portion of our
nonperforming loan portfolio due to the sale of certain  nonperforming  loans in
early 2005, loan payoffs and/or external refinancing of various credits.

Investment  securities  averaged $1.27 billion,  $1.64 billion and $1.28 billion
for the years  ended  December  31,  2006,  2005 and 2004,  respectively.  Funds
available from  maturities of investment  securities,  deposit growth and excess
short-term  investments  were  utilized to fund  internal loan growth during the
majority of 2006,  and the remaining  funds were  reinvested in  higher-yielding

<PAGE>

investment  securities.  These securities  purchases  primarily occurred late in
2006 and resulted  from funds  available  from deposit  growth in excess of loan
demand. The sale of available-for-sale investment securities associated with the
termination of $200.0 million of term repurchase agreements in the first half of
2006 was partially offset by an increase in the securities  portfolio due to the
securitization  of $138.9 million of certain of our  residential  mortgage loans
held in our loan portfolio,  an increase in our trading securities  portfolio of
$77.8 million, and the addition of $37.3 million of securities obtained with our
bank acquisitions completed in 2006. We attribute the increase in 2005 primarily
to our 2004 and 2005  acquisitions,  which provided  investment  securities,  in
aggregate,  of $438.0 million and $20.1 million,  respectively.  Funds available
from maturities of investment securities,  deposit growth and an increase in our
other  borrowings  were used to fund loan  growth  and for the  reinvestment  in
additional higher-yielding  available-for-sale investment securities. Throughout
2005,  short-tem  investments  were  utilized  to fund an  anticipated  level of
attrition  associated with our  acquisitions,  primarily time deposits  acquired
with CIB Bank.  Average short-term  investments  declined $49.1 million to $70.3
million for the year ended December 31, 2005, from $119.4 million in 2004.

Nonearning assets averaged $754.7 million, $662.4 million and $633.2 million for
the years ended December 31, 2006, 2005 and 2004, respectively. The increases in
2006 and 2005 are largely attributable to our acquisitions completed in 2005 and
2006, which increased our capital expenditures,  thus contributing to an overall
increase in bank premises and equipment,  partially offset by continued  related
depreciation and  amortization,  and an increase in intangible assets recognized
in conjunction with the  acquisitions.  Aggregate  intangible assets recorded in
conjunction  with  our  acquisitions  completed  in  2005  and  2006,  including
goodwill,   core  deposit  intangibles  associated  with  our  bank  and  branch
acquisitions, and the customer list intangibles associated with our purchases of
Adrian Baker and UPAC, were $25.8 million and $110.7 million,  respectively. Our
derivative  financial  instruments  averaged ($4.0) million,  ($3.1) million and
$25.9  million  for  the  years  ended   December  31,  2006,   2005  and  2004,
respectively.  This  reflects a decline in the fair value of certain  derivative
financial  instruments  and the maturity  and/or  termination  of certain of our
interest rate swap agreements  during 2005 and 2006, as further  discussed under
"--Interest Rate Risk  Management" and in Note 5 to our  Consolidated  Financial
Statements.  In addition,  purchases of land,  bank  premises and  equipment for
future de novo branch offices  further  contributed to the overall  increases in
nonearning assets during these periods.

We use deposits as our primary funding source and acquire them from a broad base
of local markets,  including both individual and corporate  customers.  Deposits
averaged  $8.01  billion,  $7.20  billion and $6.17  billion for the years ended
December 31, 2006, 2005 and 2004, respectively. Our year-end deposits were $8.44
billion,  $7.54 billion and $7.15  billion at December 31, 2006,  2005 and 2004,
respectively, reflecting increases of $901.3 million for 2006 and $389.9 million
for 2005. The increases in 2006 and 2005 were primarily  attributable to organic
growth stemming from our deposit  development  programs  throughout the periods,
including   enhanced  product  and  service  offerings  coupled  with  marketing
campaigns,  in  addition to our  acquisitions  of banks  and/or  branches in our
target  markets that were completed in 2005 and 2006,  which provided  aggregate
deposits of $238.1  million  and $475.6  million,  respectively,  at the time of
their  acquisition.  The change in the  composition  of our deposit mix reflects
continued  efforts to expand our existing  customer  relationships by increasing
the number and types of products  provided,  efforts to  increase  transactional
accounts,  such as savings and demand accounts  through our deposit  development
campaigns, coupled with trends toward increased time deposits and higher deposit
rates paid on certain products resulting from the highly competitive rate market
environment.  Average time deposits were $3.63 billion,  $2.91 billion and $2.04
billion for the years ended  December  31,  2006,  2005 and 2004,  respectively.
Average demand and savings deposits were $4.38 billion,  $4.30 billion and $4.13
billion for the years ended December 31, 2006, 2005 and 2004, respectively.  The
overall  growth in deposits  was  partially  offset by an  anticipated  level of
attrition associated with our recent acquisitions, particularly savings and time
deposits acquired from CIB Bank,  including brokered and internet deposits,  and
continued aggressive competition within our market areas.

Other borrowings averaged $380.5 million,  $571.7 million and $486.0 million for
the years ended December 31, 2006, 2005 and 2004, respectively.  The decrease in
the average  balances for 2006 reflects the  termination  of $150.0  million and
$50.0 million of term repurchase  agreements in the first and second quarters of
2006,  respectively,  partially  offset  by a  $100.0  million  term  repurchase
agreement  entered into in the third  quarter of 2006,  as further  described in
Note 5 and Note 10 to our Consolidated  Financial Statements.  We also attribute
the decrease to the  prepayment  of $35.3  million of Federal Home Loan Bank, or
FHLB, advances that were assumed with certain bank acquisitions,  and a decrease
in  daily  repurchase  agreements,  principally  in  connection  with  the  cash
management  activities of our commercial deposit customers.  The increase in the
average balances for 2005 reflects $250.0 million of term repurchase  agreements
that we entered  into in  conjunction  with our  interest  rate risk  management
program  during 2004,  partially  offset by the  termination of $50.0 million of
term  repurchase  agreements  in the fourth  quarter of 2005.  The  increase  in
average  balances  for 2005  also  reflects  an  increase  in  daily  repurchase
agreements,  as  well  as  an  increase  in  average  FHLB  advances,  primarily
associated with our bank  acquisitions,  to $44.2 million for 2005,  compared to
$21.0 million for 2004.
<PAGE>

Our notes payable averaged $88.8 million, $36.8 million and $3.7 million for the
years ended  December 31, 2006,  2005 and 2004,  respectively.  The increases in
2006 and 2005 were  attributable  to the addition of a term loan in  conjunction
with  the  restructuring  of our  overall  financing  arrangement  in  2005.  In
conjunction  with our Amended and  Restated  Secured  Credit  Agreement  that we
entered into in August 2005 to restructure our overall financing arrangement, we
borrowed  $80.0  million  on the  term  loan in  August  2005 and  borrowed  the
remaining  $20.0 million on the term loan in November  2005. The proceeds of the
term loan were used to fund our acquisition of International Bank of California,
or  IBOC,  and to  partially  fund  the  repayment  of our  10.24%  subordinated
debentures  issued to First Preferred Capital Trust II, or FPCT II, in September
2005,  as  further  discussed  below.  As  further  described  in Note 11 to our
Consolidated  Financial  Statements,  on August 10,  2006,  we  entered  into an
amendment  to our Amended and  Restated  Secured  Credit  Agreement  and reduced
certain components of our financing  arrangement,  including the overall pricing
structure.  We  subsequently  repaid $35.0 million of the term loan during 2006,
reducing the balance to $65.0 million at December 31, 2006,  from $100.0 million
at December 31,  2005.  Furthermore,  during  2005,  we repaid in full the $15.0
million  outstanding  advance drawn under our  revolving  credit line in 2004 to
partially fund our acquisition of CIB Bank.

Subordinated  debentures issued to our affiliated  statutory and business trusts
averaged $281.5  million,  $259.2 million and $220.4 million for the years ended
December 31, 2006, 2005 and 2004,  respectively.  During 2006, we issued a total
of $139.2 million of variable rate subordinated debentures in private placements
through four newly-formed statutory trusts:  specifically,  $41.2 million issued
to First Bank Statutory Trust IV on March 1, 2006; $20.6 million issued to First
Bank  Statutory  Trust V on April 28, 2006;  $25.8 million  issued to First Bank
Statutory  Trust VI on June 16,  2006;  and $51.5  million  issued to First Bank
Statutory  Trust VII on December  14, 2006.  On December 31, 2006,  we repaid in
full  $56.9  million  of 9.0% fixed  rate  subordinated  debentures,  as further
described in Note 12 to our Consolidated  Financial Statements.  The increase in
2005  reflects  our  issuance  of $61.9  million of variable  rate  subordinated
debentures  late in 2004,  specifically,  $20.6  million  issued  to First  Bank
Statutory  Trust II in  September  2004 and $41.2  million  issued to First Bank
Statutory Trust III in November 2004,  partially offset by the repayment in full
of $59.3  million of 10.24%  subordinated  debentures on September 30, 2005 that
were  issued to FPCT II, as  further  described  in Note 12 to our  Consolidated
Financial Statements.  The repayment of these subordinated debentures was funded
by the term loan.

Stockholders' equity averaged $731.9 million,  $641.5 million and $574.3 million
for the years ended December 31, 2006, 2005 and 2004, respectively. The increase
for 2006  reflects  net income of $111.7  million,  a $6.8  million  increase in
accumulated  other  comprehensive  income,  which was  comprised of $4.9 million
associated   with  the   change  in  our   unrealized   gains   and   losses  on
available-for-sale  investment  securities and $1.9 million  associated with the
change in the fair  value of our  derivative  financial  instruments,  partially
offset  by  dividends  paid on our  Class  A and  Class B  preferred  stock.  We
primarily  attribute  the  increase  for 2005 to net  income  of $96.9  million,
partially  offset by dividends paid on our Class A and Class B preferred  stock,
and an $18.1 million decrease in accumulated other comprehensive  income,  which
was  comprised of $13.8  million  associated  with the change in our  unrealized
gains and losses on  available-for-sale  investment  securities and $4.3 million
associated  with the  change  in the  fair  value  of our  derivative  financial
instruments.  These decreases were reflective of changes in prevailing  interest
rates, a decline in the fair value of our derivative financial instruments,  and
the maturity of certain  interest rate swap  agreements  designated as cash flow
hedges during 2005, as further discussed under "--Interest Rate Risk Management"
and in Note 5 to our Consolidated Financial Statements.



<PAGE>


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

                                                                   Years Ended December 31,
                                   ------------------------------------------------------------------------------------------
                                              2006                           2005                            2004
                                   ---------------------------   ------------------------------   ---------------------------
                                               Interest                        Interest                       Interest
                                     Average   Income/  Yield/     Average     Income/   Yield/     Average   Income/  Yield/
                                     Balance   Expense   Rate      Balance     Expense    Rate      Balance   Expense   Rate
                                     -------   -------   ----      -------     -------    ----      -------   -------   ----
                                                               (dollars expressed in thousands)

                   ASSETS
                   ------

Interest-earning assets:
  Loans: (1)(2)(3)
<S>                                <C>         <C>       <C>     <C>           <C>       <C>     <C>          <C>       <C>
    Taxable....................... $7,451,016  580,448   7.79%   $6,422,341    423,361   6.59%    $5,493,867  340,660   6.20%
    Tax-exempt (4)................     21,073    1,623   7.70        14,629      1,129   7.72         15,187    1,260   8.30
  Investment securities:
    Taxable.......................  1,220,785   57,017   4.67     1,599,161     65,895   4.12      1,245,226   50,170   4.03
    Tax-exempt (4)................     47,946    2,885   6.02        45,626      2,675   5.86         37,775    2,292   6.07
  Short-term investments..........    116,630    5,909   5.07        70,251      2,211   3.15        119,370    1,643   1.38
                                   ----------  -------           ----------    -------            ----------  -------
      Total interest-earning
         assets...................  8,857,450  647,882   7.31     8,152,008    495,271   6.08      6,911,425  396,025   5.73
                                               -------                         -------                        -------
Nonearning assets.................    754,678                       662,396                          633,154
                                   ----------                    ----------                       ----------
      Total assets................ $9,612,128                    $8,814,404                       $7,544,579
                                   ==========                    ==========                       ==========

               LIABILITIES AND
            STOCKHOLDERS' EQUITY
            --------------------

Interest-bearing liabilities:
  Interest-bearing deposits:
    Interest-bearing demand
      deposits.................... $  962,956    8,147   0.85%   $  905,613      4,398   0.49%    $  856,765    3,472   0.41%
    Savings deposits..............  2,152,419   53,297   2.48     2,135,156     29,592   1.39      2,175,425   20,128   0.93
    Time deposits (3).............  3,631,516  155,252   4.28     2,906,601     93,167   3.21      2,036,323   49,467   2.43
                                   ----------  -------           ----------    -------            ----------  -------
      Total interest-bearing
         deposits.................  6,746,891  216,696   3.21     5,947,370    127,157   2.14      5,068,513   73,067   1.44
  Other borrowings................    380,546   16,803   4.42       571,717     18,240   3.19        485,994    6,102   1.26
  Notes payable (5)...............     88,843    5,530   6.22        36,849      2,305   6.26          3,657      506  13.84
  Subordinated debentures (3).....    281,500   22,833   8.11       259,214     20,557   7.93        220,428   15,092   6.85
                                   ----------  -------           ----------    -------            ----------  -------
      Total interest-bearing
         liabilities..............  7,497,780  261,862   3.49     6,815,150    168,259   2.47      5,778,592   94,767   1.64
                                               -------                         -------                        -------
Noninterest-bearing liabilities:
  Demand deposits.................  1,267,681                     1,257,277                        1,100,072
  Other liabilities...............    114,735                       100,462                           91,660
                                   ----------                    ----------                       ----------
      Total liabilities...........  8,880,196                     8,172,889                        6,970,324
Stockholders' equity..............    731,932                       641,515                          574,255
                                   ----------                    ----------                       ----------
      Total liabilities and
         stockholders' equity..... $9,612,128                    $8,814,404                       $7,544,579
                                   ==========                    ==========                       ==========
Net interest income...............             386,020                         327,012                        301,258
                                               =======                         =======                        =======
Interest rate spread..............                       3.82                            3.61                           4.09
Net interest margin (6)...........                       4.36%                           4.01%                          4.36%
                                                         ====                            ====                           ====
------------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income and interest expense include the effects of interest rate swap agreements.
(4) Information  is  presented  on  a tax-equivalent  basis  assuming  a  tax rate  of 35%.  The tax-equivalent  adjustments  were
    approximately $1.6 million, $1.3 million and $1.2 million for the years ended December 31, 2006, 2005  and 2004, respectively.
(5) Interest expense on our notes payable includes commitment, arrangement and renewal fees. Exclusive of these fees, the interest
    rates paid were 6.11%, 4.93% and 2.87% for the years ended December 31, 2006, 2005 and 2004, respectively.
(6) Net interest  margin is  the ratio  of net  interest income (expressed  on a tax-equivalent basis) to average interest-earning
    assets.
</TABLE>


<PAGE>
The  following  table  indicates,  on a  tax-equivalent  basis,  the  changes in
interest income and interest expense that are attributable to changes in average
volume and changes in average rates,  in comparison with the preceding year. The
change in interest due to the combined  rate/volume  variance has been allocated
to rate and volume  changes in proportion to the dollar amounts of the change in
each.
<TABLE>
<CAPTION>

                                                          Increase (Decrease) Attributable to Change in:
                                             ---------------------------------------------------------------------
                                                December 31, 2006 Compared           December 31, 2005 Compared
                                                   to December 31, 2005                 to December 31, 2004
                                             --------------------------------     --------------------------------
                                                                         Net                                  Net
                                              Volume        Rate       Change      Volume       Rate        Change
                                              ------        ----       ------      ------       ----        ------
                                                                (dollars expressed in thousands)

Interest earned on:
    Loans: (1)(2)(3)
<S>                                          <C>           <C>        <C>          <C>         <C>          <C>
       Taxable.............................  $ 73,513      83,574     157,087      60,269      22,432       82,701
       Tax-exempt (4)......................       497          (3)        494         (45)        (86)        (131)
    Investment securities:
       Taxable.............................   (16,922)      8,044      (8,878)     14,579       1,146       15,725
       Tax-exempt (4)......................       137          73         210         464         (81)         383
    Short-term investments.................     1,923       1,775       3,698        (888)      1,456          568
                                             --------     -------     -------     -------     -------      -------
           Total interest income...........    59,148      93,463     152,611      74,379      24,867       99,246
                                             --------     -------     -------     -------     -------      -------
Interest paid on:
    Interest-bearing demand deposits.......       297       3,452       3,749         209         717          926
    Savings deposits.......................       242      23,463      23,705        (381)      9,845        9,464
    Time deposits (3)......................    26,572      35,513      62,085      24,956      18,744       43,700
    Other borrowings.......................    (7,199)      5,762      (1,437)      1,253      10,885       12,138
    Notes payable (5)......................     3,240         (15)      3,225       2,219        (420)       1,799
    Subordinated debentures (3)............     1,801         475       2,276       2,882       2,583        5,465
                                             --------     -------     -------     -------     -------      -------
           Total interest expense..........    24,953      68,650      93,603      31,138      42,354       73,492
                                             --------     -------     -------     -------     -------      -------
           Net interest income.............  $ 34,195      24,813      59,008      43,241     (17,487)      25,754
                                             ========     =======     =======     =======     =======      =======
-------------------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income and interest expense include the effect of interest rate swap agreements.
(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%.
(5) Interest expense on our notes payable includes commitment, arrangement and renewal fees.
</TABLE>

Net Interest Income

The primary  source of our income is net interest  income.  Net interest  income
(expressed on a  tax-equivalent  basis) increased to $386.0 million for the year
ended  December 31, 2006,  from $327.0  million and $301.3 million for the years
ended  December 31, 2005 and 2004,  respectively.  Our net  interest  margin was
4.36% for the year ended December 31, 2006,  compared to 4.01% and 4.36% for the
years ended December 31, 2005 and 2004, respectively. Net interest income is the
difference between the interest earned on our  interest-earning  assets, such as
loans and investment  securities,  and the interest paid on our interest-bearing
liabilities, such as deposits and borrowings. Net interest income is affected by
the level and composition of assets,  liabilities and  stockholders'  equity, as
well as the  general  level of interest  rates and  changes in  interest  rates.
Interest  income on a  tax-equivalent  basis includes the  additional  amount of
interest  income  that  would  have been  earned if our  investment  in  certain
tax-exempt  interest-earning  assets had been made in assets subject to federal,
state and local income taxes  yielding the same after-tax  income.  Net interest
margin is determined by dividing net interest income on a  tax-equivalent  basis
by average  interest-earning  assets. The interest rate spread is the difference
between the average equivalent yield earned on  interest-earning  assets and the
average rate paid on interest-bearing liabilities.

We attribute the increase in net interest  income in 2006 to an 8.7% increase in
our average  interest-earning  assets  stemming from internal  growth and growth
through  acquisitions of banks and other financial service  companies,  combined
with higher yields on those assets  commensurate  with the  prevailing  interest
rates in our markets. The increase in average  interest-earning  assets reflects
increases in average loans and average short-term investments,  and the transfer
of funding from lower-yielding  investment securities to higher-yielding  loans.
The increase in our interest income was partially  offset by increased  interest
expense  related  to  increasing   deposit   balances  along  with  a  continued
redistribution  of deposit balances toward  higher-yielding  products and higher
interest rates paid on those  deposits,  as well as increased  interest  expense
paid on the overall levels of our other borrowings and subordinated  debentures.
Our overall  borrowing  levels  reflect the  reduction in the use of higher cost
funding  sources,  such as term  repurchase  agreements and FHLB  advances.  Our
average  notes  payable  increased  $52.0  million  as a result of the term loan
advances we borrowed in August 2005 and November 2005. Our average  subordinated
debentures, which support acquisitions and are also utilized for other corporate

<PAGE>

purposes,  increased $22.3 million as a result of our issuance of $139.2 million
of variable rate subordinated  debentures  through four  newly-formed  statutory
trusts,  partially  offset by the  repayment of $56.9 million of 9.0% fixed rate
subordinated  debentures  on December  31, 2006.  In addition,  our net interest
income was adversely affected by a decline in earnings on our interest rate swap
agreements  that were entered into in  conjunction  with our interest  rate risk
management program, as further discussed below.

We  primarily   credit  the   increase  in  net  interest   income  in  2005  to
interest-earning assets provided by our acquisitions completed in 2004 and 2005,
internal   loan   growth   coupled   with  higher   interest   rates  on  loans,
higher-yielding   investment   securities   and  the  repayment  of  our  10.24%
subordinated  debentures  in  September  2005.  The overall  increase in our net
interest  income  was  partially  offset  by:  (a)  increased  interest  expense
associated  with deposit growth,  higher interest rates paid on deposits,  and a
redistribution of deposit balances toward higher-yielding  products; (b) the mix
of the CIB Bank deposit base acquired; (c) increased levels of other borrowings,
including  our  term  loan,  coupled  with  increased  interest  rates  on  such
borrowings;  and (d) the issuance of $61.9  million of  additional  subordinated
debentures  in late 2004 through two newly formed  statutory  trusts;  partially
offset by our  repayment of $59.3 million of 10.24%  subordinated  debentures in
September 2005. These transactions, coupled with our use of derivative financial
instruments,  have allowed us to reduce our overall interest expense  associated
with our subordinated  debentures as the additional subordinated debentures have
been issued at significantly lower interest rates.

Derivative financial  instruments that were entered into in conjunction with our
interest  rate risk  management  program to mitigate  the effects of  decreasing
interest  rates  reduced our net  interest  income by $5.0  million for the year
ended  December  31,  2006,  whereas  these  derivative  financial   instruments
contributed  to increases  in our net interest  income of $2.2 million and $50.1
million,  respectively,  for the years ended  December  31,  2005 and 2004.  The
decreased  earnings  on our  interest  rate  swap  agreements  for 2006 and 2005
contributed  to reductions  in our net interest  margin of  approximately  eight
basis points and 59 basis points,  respectively,  and reflects  higher  interest
rates and  maturities  of  $750.0  million  of  interest  rate  swap  agreements
designated  as cash  flow  hedges  and  $50.0  million  of  interest  rate  swap
agreements  designated as fair value hedges during 2004;  the maturity of $200.0
million and $100.0 million of interest rate swap  agreements  designated as cash
flow hedges in March 2005 and April 2006,  respectively;  and the termination of
$150.0  million,  $101.2  million  and  $25.0  million  of  interest  rate  swap
agreements  designated  as fair  value  hedges in  February  2005,  May 2005 and
February  2006,  respectively.  However,  the earnings on our interest rate swap
agreements significantly contributed to our ability to maintain our net interest
margin in 2004. During the third quarter of 2006, we significantly  expanded our
utilization of derivative financial instruments,  as further described in Note 5
to our  Consolidated  Financial  Statements,  to reduce our  exposure to falling
interest rates. The Company has implemented various methods to reduce the effect
of decreasing  interest rates on our net interest income,  including the funding
of  investment  security  purchases  through  the  issuance  of term  repurchase
agreements.  However,  the  reduction of our interest rate swap  agreements  has
resulted  in a  substantial  reduction  of our net  interest  income and further
compression of our net interest  margin,  which has been partially offset by the
impact of the rising rate  environment  experienced in 2005 and 2006, as further
discussed below.

The yield on our loan  portfolio was 7.79% for the year ended December 31, 2006,
compared to 6.59% and 6.21% for 2005 and 2004, respectively.  Average loans, net
of unearned  discount,  were $7.47 billion for the year ended December 31, 2006,
in comparison  to $6.44  billion and $5.51 billion for the years ended  December
31, 2005 and 2004,  respectively.  Increases in prevailing  interest  rates that
began in mid-2004 and  continued  throughout  2005 and 2006  contributed  to the
increased  yields on our loan portfolio  during 2005 and 2006.  During 2006, the
Federal  Reserve  increased the targeted  federal funds rate,  resulting in four
increases in the prime rate of interest from 7.25% at December 31, 2005 to 8.25%
at December 31, 2006.  During 2005, the Federal  Reserve  increased the targeted
federal funds rate,  resulting in eight  increases in the prime rate of interest
from 5.25% at December 31, 2004 to 7.25% at December 31, 2005. The prime rate of
interest  increased from 4.00% at January 1, 2004 to 5.25% at December 31, 2004.
These  interest  rates are reflected not only in the rate of interest  earned on
loans  that  are  indexed  to the  prime  rate,  but also in  other  assets  and
liabilities  which  either have  variable  or  adjustable  rates,  or which have
matured or repriced  during these  periods.  Although the rising  interest  rate
environment contributed to the increase in our loan yields during 2005 and 2006,
total interest income on our loan portfolio was adversely  impacted by decreased
earnings on our interest  rate swap  agreements  designated as cash flow hedges.
These interest rate swap agreements reduced our interest income on loans by $4.2
million for the year ended  December 31,  2006,  in contrast to  increasing  our
interest  income on loans by $2.6  million  and $38.3  million in 2005 and 2004,
respectively.  The yields on our loan portfolio were impacted by higher interest
rates and the maturities  and/or  termination  of interest rate swap  agreements
designated as cash flow hedges of $750.0 million in 2004, $200.0 million in 2005
and $100.0  million in 2006,  which  resulted in decreased  earnings on our swap
agreements,  thereby  contributing  to a  reduction  in  interest  on  our  loan
portfolio.  Specifically,  the  impact  of the  swap  agreements  resulted  in a
compression of our net interest  income of  approximately  $6.9 million for 2006
compared  to 2005,  and $35.7  million  for 2005  compared  to 2004,  as further
discussed under "--Interest Rate Risk  Management."  Interest income on our loan

<PAGE>

portfolio  for 2006  includes a $2.0 million  recovery of interest and fees from
the payoff of a single  nonaccrual loan, as further described under "--Loans and
Allowance  for Loan Losses." The lower yield on our loan  portfolio  during 2004
reflected increased competition,  continued weak loan demand and generally lower
prevailing interest rates during the period,  despite the increases in the prime
lending rate during the second half of 2004.

For the years ended  December 31, 2006,  2005 and 2004,  the aggregate  weighted
average rate paid on our interest-bearing deposit portfolio was 3.21%, 2.14% and
1.44%,  respectively.  We attribute the increase in 2006 to the continued rising
interest rate  environment and a change in the mix of our average deposits which
reflects a trend towards  increased time deposits over  transactional  accounts,
coupled with higher interest rates paid on deposits commensurate with the highly
competitive  rate market that  continues  to exert  pressure on our net interest
margin.  We  attribute  the  increase  in  2005  to  the  rising  interest  rate
environment  and the mix of the CIB Bank deposit base acquired in November 2004,
which  included  higher cost time  deposits,  including  brokered  and  internet
deposits.  In  addition,  decreased  earnings  associated  with  certain  of our
interest rate swap  agreements  designated as fair value hedges,  as well as the
termination of $150.0 million  notional  amount of fair value hedges in February
2005,  resulted in a decrease in our net interest income of  approximately  $8.5
million  for 2005,  compared  to 2004,  as  further  described  in Note 5 to our
Consolidated Financial Statements.  While deposit growth continues to provide an
adequate  funding  source  for our  loan  portfolio,  competitive  pressures  on
deposits within our markets continue to impact our deposit pricing.

The aggregate  weighted  average rate paid on our other borrowings was 4.42% for
the year ended  December  31,  2006,  compared  to 3.19% and 1.26% for the years
ended  December  31,  2005 and 2004,  respectively,  reflecting  changes  in the
short-term interest rate environment that began in mid-2004. The increase in the
aggregate  weighted  average rates paid on our other borrowings in 2006 and 2005
also reflects the termination of $200.0 million of term repurchase agreements in
2006,  partially  offset by a $100.0 million term repurchase  agreement  entered
into  during  2006,  and the  termination  of a $50.0  million  term  repurchase
agreement in November 2005, and the impact of the related  spreads to the London
Interbank Offering Rate, or LIBOR, as further described in Note 5 and Note 10 to
our Consolidated Financial Statements.

The aggregate  weighted  average rate on our notes payable was 6.22%,  6.26% and
13.84% for the years ended December 31, 2006, 2005 and 2004,  respectively.  The
aggregate  weighted  average rates paid reflect  changing  market interest rates
during these periods, and unused credit commitment and letter of credit facility
fees on our secured  credit  agreement  with a group of  unaffiliated  financial
institutions,  as well as other fees paid in conjunction with the annual renewal
of this  financing  arrangement.  The overall cost of this funding source during
2004 was  significantly  higher due to fees  associated with the credit facility
coupled with minimal  borrowings  under the  revolving  credit line during 2004.
Exclusive of these fees, the aggregate  weighted  average rate paid on our notes
payable was 6.11%,  4.93% and 2.87% for the years ended December 31, 2006,  2005
and 2004, respectively. Amounts outstanding under our term loan bear interest at
a floating rate equal to LIBOR, plus a margin determined by the outstanding loan
balances and our profitability for the preceding four calendar quarters. Amounts
outstanding  under our revolving line of credit bear interest at a floating rate
equal to the lead bank's  prime rate or, at our  option,  at LIBOR plus a margin
determined  by the  outstanding  loan  balances  and our  profitability  for the
preceding four calendar quarters.  Thus, our secured credit agreement represents
a relatively  high-cost funding source as increased  advances have the effect of
increasing the weighted average rate of our non-deposit liabilities.  As further
described in Note 11 to our Consolidated Financial Statements, we borrowed $80.0
million  on our term loan in August  2005 and $20.0  million on our term loan in
November  2005,  and on August 10,  2006,  we entered  into an  amendment to our
Amended and Restated Secured Credit Agreement and reduced certain  components of
our financing arrangement, including the overall pricing structure. During 2006,
we repaid $35.0 million of the term loan,  reducing the balance to $65.0 million
at December 31, 2006,  from $100.0  million at December 31, 2005.  Also,  during
2005, we repaid the remaining  outstanding  balance of $15.0 million drawn under
our revolving  credit line that we had drawn in November 2004 to partially  fund
our acquisition of CIB Bank.

The aggregate  weighted  average rate paid on our  subordinated  debentures  was
8.11%,  7.93% and 6.85% for the years ended  December 31,  2006,  2005 and 2004,
respectively.  The  aggregate  weighted  average  rates  reflect the issuance of
$139.2 million of variable rate  subordinated  debentures in private  placements
through four newly formed statutory trusts, partially offset by the repayment of
$56.9 million of 9.0% fixed rate  subordinated  debentures on December 31, 2006,
as well as the repayment of $59.3 million of 10.24%  subordinated  debentures in
September 2005 and the issuance of $61.9 million of  subordinated  debentures in
late 2004.  The  refinancing of the  outstanding  subordinated  debentures  that
carried a higher fixed  interest rate  improved our net interest  income and net
interest  margin.  However,  the  earnings  impact  of our  interest  rate  swap
agreements  had  a  declining  impact  on  the  reduction  of  interest  expense
associated  with  our   subordinated   debentures.   These  interest  rate  swap
agreements,  which  reduced  interest  expense by $5.7  million and $2.0 million
during  2004 and 2005,  respectively,  increased  interest  expense by  $814,000
during 2006. These swap agreements,  which were designated as fair value hedges,
were  terminated  in May 2005 and  February  2006,  as further  discussed  under
"--Interest Rate Risk  Management" and in Note 5 to our  Consolidated  Financial
Statements.
<PAGE>


Comparison of Results of Operations for 2006 and 2005

Net Income.  Net income was $111.7 million for the year ended December 31, 2006,
compared to $96.9 million for 2005.  Our return on average assets and our return
on average  stockholders'  equity were 1.16% and 15.26%,  respectively,  for the
year ended December 31, 2006,  compared to 1.10% and 15.11%,  respectively,  for
2005. Net income for 2006 reflects increased net interest income and noninterest
income, partially offset by an increase in our provision for loan losses, higher
levels of noninterest expense and an increase in our provision for income taxes.

The increase in earnings in 2006 reflects our  continuing  efforts to strengthen
earnings  while  focusing on reducing  the  overall  level of our  nonperforming
assets.  The increase in net interest  income and net interest  margin  resulted
from (a) an increase in average  interest-earning  assets stemming from internal
loan growth and growth  through  acquisitions,  and (b) higher  yields earned on
those assets as a result of an increased  interest rate  environment;  partially
offset by increased  interest expense associated with an increasing deposit base
coupled with higher  interest  rates paid on deposits and on our  short-term and
long-term  borrowings,  and the  adverse  impact of a decline in earnings on our
interest rate swap agreements  associated with our interest rate risk management
program, as further discussed under "--Net Interest Income." The increase in net
income in 2006 was partially  offset by a significant  increase in our provision
for loan losses, which resulted from loan portfolio growth and the deterioration
of  certain  credit   relationships   despite  an  overall  improvement  in  our
nonperforming loans throughout 2006, as further discussed under "--Provision for
Loan Losses." The increase in our noninterest income in 2006 was attributable to
increased gains on loans sold and held for sale associated with mortgage banking
activities and the sale of certain loans,  commission fee income associated with
our insurance brokerage agency acquired in March 2006, increased service charges
on deposit accounts and customer service fees related to higher deposit balances
stemming from product  development efforts and deposits associated with our 2005
and  2006  acquisitions,  and  gains on the sale of  other  assets,  as  further
discussed  under  "--Noninterest  Income." The overall  increase in the level of
noninterest  expense for 2006 reflects  increased salaries and employee benefits
expense, occupancy expenses and amortization of intangible assets,  commensurate
with the  significant  expansion of our branch office  network and employee base
resulting from our acquisitions of an insurance premium financing company and an
insurance brokerage agency in 2006, the addition of 20 branch offices associated
with acquisitions in 2005 and 2006, and an increase in the full-time  equivalent
employee base during 2006, as further discussed under  "--Noninterest  Expense."

Provision  for Loan  Losses.  We recorded a  provision  for loan losses of $12.0
million for the year ended December 31, 2006. The provision recorded during 2006
was primarily  driven by significant  growth within our loan portfolio,  coupled
with  deterioration  within our  one-to-four  family  residential  portfolio  in
addition to the  deterioration  of certain other  credits,  including four large
credit  relationships  within  our  residential   development  and  construction
portfolio  during the later part of 2006 that were  primarily  driven by current
market conditions, including slowdowns in unit sales, as further discussed under
"Business -- Lending Activities" and "--Loans and Allowance for Loan Losses." We
recorded a $4.0 million  negative  provision  for loan losses for the year ended
December  31,  2005  to  reduce  our  allowance  for  loan  losses  to  a  level
commensurate  with the decreasing credit risk that existed in the loan portfolio
at that time. Our  nonperforming  loans  decreased  $48.5 million,  or 49.9%, to
$48.7 million at December 31, 2006, from $97.2 million at December 31, 2005. The
decrease in the overall  level of  nonperforming  loans during 2006 reflects our
efforts to improve asset  quality  through the sale of  nonperforming  loans and
loan payoffs, as well as the strengthening of certain credit  relationships,  as
further  discussed  under  "--Loans and  Allowance for Loan Losses." The overall
decrease was partially offset by several  significant credit  relationships that
were  downgraded  and placed on  nonaccrual  status  during 2006,  as previously
mentioned.

Our allowance for loan losses was $145.7 million at December 31, 2006,  compared
to $135.3 million at December 31, 2005,  representing  1.90% and 1.93% of loans,
net of unearned discount, respectively, and 299.05% and 139.23% of nonperforming
loans, respectively. The allowance for loan losses at December 31, 2006 includes
$5.2 million of balances acquired in conjunction with our 2006 acquisitions. Our
net loan  charge-offs  declined to $6.8 million from $13.4 million for the years
ended December 31, 2006 and 2005,  respectively.  Our net loan  charge-offs  for
2006 were 0.09% of average loans,  representing a significant  improvement  over
0.21% in 2005. Loan charge-offs  were $22.2 million for 2006,  compared to $33.1
million in 2005, and loan  recoveries  were $15.4 million for 2006,  compared to
$19.8 million in 2005.  Loan  charge-offs for 2006 included  approximately  $3.3
million  of  loan  charge-offs  associated  with  two  significant   residential
development  project  relationships that were placed on nonaccrual status during
2006, in addition to $2.3 million of charge-offs  recorded in  conjunction  with
the  transfer of certain  portfolio  loans to our loans held for sale  portfolio
prior to their sale in December  2006.  Loan  recoveries  for 2006 included $5.0
million recorded on the payoff of a single loan that was transferred to our held
for sale portfolio on December 31, 2005.
<PAGE>

Under our loan policy,  loans are placed on nonaccrual  status once principal or
interest payments become 90 days past due. However, individual loan officers may
submit  written  requests  for  approval to continue  the accrual of interest on
loans  that  become 90 days past  due.  These  requests  must be  submitted  for
approval  consistent  with the authority  levels provided in our credit approval
policies,  and they are only granted if an expected near term future event, such
as a pending renewal or expected payoff,  exists at the time the loan becomes 90
days  past  due.  If the  expected  near  term  future  event  does not occur as
anticipated,  the loan is then placed on nonaccrual status. Management considers
the nonperforming assets trends in its overall assessment of the adequacy of the
allowance for loan losses.

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

Noninterest  Income and Expense.  The  following  table  summarizes  noninterest
income and noninterest expense for the years ended December 31, 2006 and 2005:
<TABLE>
<CAPTION>

                                                                            December 31,       Increase (Decrease)
                                                                        --------------------   -------------------
                                                                          2006        2005     Amount         %
                                                                          ----        ----     ------        ---
                                                                              (dollars expressed in thousands)
Noninterest income:
<S>                                                                     <C>           <C>       <C>          <C>
    Service charges on deposit accounts and customer service fees....   $  43,310     39,776    3,534        8.88%
    Gain on loans sold and held for sale.............................      26,020     20,804    5,216       25.07
    Net loss on investment securities................................      (1,813)    (2,873)   1,060       36.90
    Bank-owned life insurance investment income......................       3,103      4,860   (1,757)     (36.15)
    Investment management income.....................................       8,412      8,573     (161)      (1.88)
    Insurance product income.........................................       4,848         --    4,848      100.00
    Other............................................................      29,063     24,945    4,118       16.51
                                                                        ---------    -------   ------
       Total noninterest income......................................   $ 112,943     96,085   16,858       17.54
                                                                        =========    =======   ======      ======
Noninterest expense:
    Salaries and employee benefits...................................   $ 166,864    139,764   27,100       19.39%
    Occupancy, net of rental income..................................      26,953     22,081    4,872       22.06
    Furniture and equipment..........................................      16,960     16,015      945        5.90
    Postage, printing and supplies...................................       6,721      5,743      978       17.03
    Information technology fees......................................      37,099     35,472    1,627        4.59
    Legal, examination and professional fees.........................       8,783      9,319     (536)      (5.75)
    Amortization of intangible assets................................       8,195      4,850    3,345       68.97
    Communications...................................................       2,425      2,012      413       20.53
    Advertising and business development.............................       7,128      7,043       85        1.21
    Charitable contributions.........................................       6,462      5,922      540        9.12
    Other............................................................      31,626     29,417    2,209        7.51
                                                                        ---------    -------   ------
       Total noninterest expense.....................................   $ 319,216    277,638   41,578       14.98
                                                                        =========    =======   ======      ======
</TABLE>

Noninterest  Income.  Noninterest  income was $112.9  million for the year ended
December 31, 2006, in comparison to $96.1 million for 2005.  Noninterest  income
consists  primarily of service charges on deposit  accounts and customer service
fees, mortgage-banking revenues, investment management income and other income.

Service charges on deposit accounts and customer service fees increased to $43.3
million  from $39.8  million  for the years  ended  December  31, 2006 and 2005,
respectively.  The  increase in service  charges and  customer  service  fees is
primarily  attributable to: (a) increased  deposit account  balances  associated
with internal  growth and our  acquisitions of banks completed in 2005 and 2006,
as further discussed under  "--Financial  Condition and Average Balances" and in
Note 2 to our Consolidated  Financial  Statements;  (b) additional  products and
services available and utilized by our retail and commercial  customer base; (c)
increased fee income from customer service charges for non-sufficient  funds and
returned  check fees  coupled  with  enhanced  control of fee  waivers;  and (d)
pricing   increases  on  certain  service  charges  and  customer  service  fees
instituted to reflect current market conditions.

The gain on loans sold and held for sale  increased to $26.0  million from $20.8
million  for the  years  ended  December  31,  2006 and 2005,  respectively.  We
primarily  attribute  the increase in 2006 to: (a) a $1.7 million  gain,  before
applicable income taxes,  recorded on the sale of certain nonperforming loans in
March  2006  that  were  transferred  to our loans  held for sale  portfolio  on
December 31, 2005; (b) the recognition of $1.2 million and $927,000 of income in
March 2006 and April 2006,  respectively,  generated from the  capitalization of
mortgage  servicing rights pertaining to the  securitization and transfer to our
investment  portfolio  of $77.1  million  and $61.8  million,  respectively,  of
residential  mortgage loans held in our loan portfolio,  as further described in
Note 6 to our Consolidated  Financial Statements;  (c) net gains of $2.4 million
recorded on the sale of $278.7 million of certain residential mortgage loans, as
further  discussed  under  "--Mortgage  Banking  Activities"  and  "--Loans  and
Allowance  for Loan  Losses;" and (d) a $3.7  million  gain,  before  applicable
income taxes,  recorded on the sale, in December  2006, of 44 loans in our loans
held  for sale  portfolio,  of which 26 were  nonperforming  loans,  as  further

<PAGE>

discussed  under  "--Loans and  Allowance  for Loan Losses." The increase in our
gain on loans  sold and held for sale was  partially  offset  by a $1.1  million
write-down of the carrying value of a nonperforming loan that was transferred to
our loans  held for sale  portfolio  on  December  31,  2005,  and  subsequently
transferred  back into our loan  portfolio at fair value in September  2006,  as
further discussed under "--Loans and Allowance for Loan Losses."

Noninterest income includes a net loss on investment  securities of $1.8 million
and $2.9 million for the years ended  December 31, 2006 and 2005,  respectively.
The  net   loss  for   2006   resulted   primarily   from   sales   of   certain
available-for-sale investment securities associated with the full termination of
three $50.0 million term  repurchase  agreements and the partial  termination of
$50.0  million  of a  $150.0  million  term  repurchase  agreement,  as  further
described  in  Note  3,  Note  5 and  Note  10  to  our  Consolidated  Financial
Statements,  partially  offset by a gain of $389,000 on the redemption of common
stock held as an available-for-sale  investment security.  The net loss for 2005
resulted  from  the sale of  certain  available-for-sale  investment  securities
associated with the termination of a $50.0 million term repurchase agreement.

Bank-owned life insurance  investment income was $3.1 million for the year ended
December 31, 2006, in comparison to $4.9 million in 2005. The decrease  reflects
a reduced return on the  performance of the underlying  investments  surrounding
the insurance contracts which is primarily  attributable to the portfolio mix of
investments and overall market conditions.

Investment   management  income  generated  by  MVP,  our  institutional   money
management subsidiary, was $8.4 million for the year ended December 31, 2006, in
comparison to $8.6 million in 2005,  reflecting  decreased portfolio  management
fee income as a result of current market conditions.

Insurance  product  income  generated by Adrian Baker,  our insurance  brokerage
agency  acquired  on March  31,  2006,  as  further  described  in Note 2 to our
Consolidated Financial Statements,  was $4.8 million for the year ended December
31, 2006.

Other income was $29.1  million and $24.9  million for the years ended  December
31, 2006 and 2005,  respectively.  We attribute  the primary  components  of the
increase in other income to:

     >>   an  increase  of $3.1  million  in gains  on  sales  of other  assets,
          including a $2.8 million gain  recognized on the sale of an asset that
          was  acquired as  settlement  in full of a loan  charged-off  in prior
          years and a gain of  $885,000  recognized  on the sale of assets  that
          were acquired with our acquisition of CIB Bank;

     >>   an  increase  of $1.7  million  attributable  to  interest  due on tax
          refunds  associated  with the  filing of  amended  federal  income tax
          returns for the years from 2000 through 2004;

     >>   a release fee of  $938,000  received  on funds  collected  from a loan
          previously sold in March 2005, in which First Bank was entitled to 25%
          of any future fees  collected on the loan under a defined  release fee
          agreement that was entered into in conjunction with the loan sale;

     >>   a net increase of $839,000 in loan servicing fees, which was primarily
          attributable  to a decrease of $966,000 in  impairment  charges on SBA
          servicing rights and a decrease of $1.5 million in the amortization of
          servicing  rights,  as further described in Note 6 to our Consolidated
          Financial  Statements;  partially offset by a decrease of $1.6 million
          in fees from loans serviced for others;

     >>   a decrease of $680,000 in net losses on our derivative instruments;

     >>   an increase of $652,000 in gains on sales of other real estate.  Gains
          on sales of other real  estate  were $2.0  million  for the year ended
          December 31, 2006, and included a $1.5 million gain  recognized on the
          sale of a parcel of other real estate in January  2006  acquired  with
          our  acquisition of CIB Bank.  Gains on sales of other real estate for
          the year ended December 31, 2005 were $1.3 million; and

     >>   income  associated with continued  growth and expansion of our banking
          franchise,  including our de novo branch offices and our  acquisitions
          completed during 2005 and 2006; partially offset by

     >>   a decrease of $2.5 million in  recoveries  of certain  loan  principal
          balances  that  had  been  previously  charged-off  by  the  financial
          institutions prior to their acquisitions by First Banks.

Noninterest  Expense.  Noninterest expense was $319.2 million for the year ended
December 31, 2006,  in  comparison to $277.6  million for 2005.  Our  efficiency
ratio was 64.18% for the year ended  December 31,  2006,  compared to 65.83% for
2005. The efficiency ratio is used by the financial services industry to measure
an  organization's  operating  efficiency.  The efficiency  ratio represents the
ratio of noninterest  expense to the sum of net interest  income and noninterest
income.  The increase in noninterest  expense was primarily  attributable to our
2005 and 2006  acquisitions,  including  salaries and employee benefits expense,
occupancy  expense and  information  technology  fees,  as well as  increases in
amortization of intangible assets and other expense.
<PAGE>

We record the majority of integration costs  attributable to our acquisitions as
of the  consummation  date of our purchase  business  combinations.  These costs
include, but are not limited to, items such as:

     >>   write-downs  and  impairment  of assets of the acquired  entities that
          will  no  longer  be  usable  subsequent  to  the  consummation  date,
          primarily  data  processing   equipment,   incompatible  hardware  and
          software,  bank signage, etc. These adjustments are generally recorded
          as of the  consummation  date as an allocation  of the purchase  price
          with the  offsetting  adjustment  recorded as an increase to goodwill.
          For all periods  presented,  these adjustments are not material to our
          operations;

     >>   costs  associated  with a planned  exit of an activity of the acquired
          entity  that is not  associated  with or is not  expected  to generate
          revenues  after the  consummation  date,  such as credit card lending.
          These costs are generally recorded as of the consummation date through
          the   establishment  of  an  accrued  liability  with  the  offsetting
          adjustment  recorded  as an  increase  to  goodwill.  These  costs are
          infrequently  encountered  and,  for all  periods  presented,  are not
          material to our operations;

     >>   planned  involuntary   employee  termination   benefits,   as  further
          discussed under "Business --Acquisitions - Acquisition and Integration
          Costs" and Note 2 to our Consolidated Financial Statements; and

     >>   contractual obligations of the acquired entities that existed prior to
          the  consummation  date that either  have no  economic  benefit to the
          combined  entity or have a penalty  that we will  incur to cancel  the
          contractual obligation. These contractual obligations generally relate
          to existing  information  technology and item processing  contracts of
          the acquired  entities that include  penalties for early  termination.
          The acquisition of specialized  entities does not typically  result in
          costs associated with integration of information technology systems as
          the existing systems remain in use. In conjunction with the merger and
          integration of our  acquisitions,  the acquired banks are converted to
          our  existing  information  technology  and item  processing  systems.
          Consequently,  the costs  associated  with  terminating  the  existing
          contracts of the acquired  entities are  generally  recorded as of the
          consummation  date through the  establishment of an accrued  liability
          with the offsetting  adjustment recorded as an increase to goodwill as
          further  discussed  under  "Business -- Acquisitions - Acquisition and
          Integration   Costs"  and  Note  2  to  our   Consolidated   Financial
          Statements.

We make  adjustments  to the fair  value of the  acquired  entities'  assets and
liabilities for these items as of the consummation  date and include them in the
allocation of the overall  acquisition cost. We also incur costs associated with
our  acquisitions  that are expensed in our  consolidated  statements of income.
These costs relate specifically to additional costs incurred in conjunction with
the  information  technology  and item  processing  conversions  of the acquired
entities,  as well as training of personnel on First Bank's systems,  as further
described and quantified below.

Salaries and employee benefits  increased by $27.1 million to $166.9 million for
the year ended December 31, 2006,  from $139.8 million in 2005. We attribute the
overall increase to increased salaries and employee benefits expenses associated
with an aggregate of 20 additional  branches  acquired in 2005 and 2006,  one de
novo  branch  opened in 2005,  the  acquisitions  of UPAC and Adrian  Baker,  in
addition to generally  higher salary and employee  benefit costs associated with
employing and retaining  qualified  personnel,  including the  implementation of
enhanced incentive  compensation and employee benefit plans. Our total full-time
equivalent  employees increased to approximately 2,630 at December 31, 2006 from
approximately 2,290 at December 31, 2005.

Occupancy,  net of rental income,  and furniture and equipment expense was $43.9
million  and $38.1  million  for the years  ended  December  31,  2006 and 2005,
respectively.  The increase reflects higher levels of expense resulting from our
de novo  activities and  acquisitions  in 2005 and 2006, as discussed  above, as
well as increased  technology  equipment  expenditures,  continued expansion and
renovation of certain corporate and branch offices,  and increased  depreciation
expense associated with acquisitions and capital expenditures.

Information  technology  and item  processing  fees were $37.1 million and $35.5
million for the years ended  December 31, 2006 and 2005,  respectively.  As more
fully  described  in Note 19 to our  Consolidated  Financial  Statements,  First
Services,  L.P.,  a limited  partnership  indirectly  owned by our  Chairman and
members of his immediate  family,  provides  information  technology and various
operational support services to our subsidiaries and us. Information  technology
fees also include fees paid to outside  servicers  associated  with our mortgage
lending and trust divisions,  our small business lending and institutional money
management  subsidiaries,  and UPAC and Adrian  Baker.  The  increased  level of
information  technology fees was primarily attributable to the additional branch
offices provided by our acquisitions and de novo branch office openings; certain
de-conversion  costs  from other  providers  associated  with our  acquisitions;
growth and  technological  advancements  consistent with our product and service
offerings;  and  continued  expansion and upgrades to  technological  equipment,

<PAGE>

networks and  communication  channels,  including costs to maintain security and
provide  compliance with the  Sarbanes-Oxley  Act of 2002;  partially  offset by
expense  reductions  resulting from  information  technology  conversions of our
acquisitions  completed in 2005 and 2006, as well as the  achievement of certain
efficiencies associated with the implementation of various technology projects.

Legal,  examination and professional  fees was $8.8 million and $9.3 million for
the  years  ended  December  31,  2006 and  2005,  respectively.  The  continued
expansion of overall corporate  activities,  the ongoing  professional  services
utilized  by  certain  of our  acquired  entities,  and the levels of legal fees
associated with certain  litigation  matters have all contributed to the overall
expense levels in 2005 and 2006.

Amortization  of  intangible  assets was $8.2  million and $4.9  million for the
years  ended  December  31,  2006  and  2005,  respectively.   The  increase  is
attributable  to core  deposit  intangibles  associated  with  our  acquisitions
completed  in 2005 and  2006,  in  addition  to the  customer  list  intangibles
associated with our  acquisitions of Adrian Baker and UPAC in March 2006 and May
2006,  respectively,  as  further  described  in  Note  2  and  Note  8  to  our
Consolidated Financial Statements.

Charitable contributions expense was $6.5 million and $5.9 million for the years
ended  December  31, 2006 and 2005,  respectively.  The  increase  is  primarily
attributable  to an increase in  charitable  contributions  made to the Dierberg
Operating Foundation,  Inc. and The Dierberg Foundation,  charitable foundations
established  by our Chairman  and members of his  immediate  family,  as further
described in Note 19 to our Consolidated Financial Statements.

Other expense was $31.6  million and $29.4 million for the years ended  December
31, 2006 and 2005, respectively.  Other expense encompasses numerous general and
administrative  expenses  including  insurance,  freight and  courier  services,
correspondent  bank charges,  miscellaneous  losses and recoveries,  expenses on
other real estate owned,  memberships  and  subscriptions,  transfer agent fees,
sales taxes and travel,  meals and entertainment.  The increase in other expense
was primarily attributable to:

     >>   a $617,000 specific reserve  established in March 2006 and an increase
          of $746,000  to the  specific  reserve in June 2006 for the  estimated
          loss associated with a $3.1 million unfunded letter of credit acquired
          with our acquisition of CIB Bank;

     >>   a $470,000 loss recognized on a liquidation  sale of residential  real
          estate and personal property of an SBA guaranteed loan; and

     >>   expenses associated with continued growth and expansion of our banking
          franchise,  including our de novo branch offices and our  acquisitions
          completed during 2005 and 2006; partially offset by

     >>   a decrease  of $1.5  million  of  expenditures  on other real  estate.
          Expenses  on other  real  estate  were  $520,000  for the  year  ended
          December 31, 2006. Expenses on other real estate were $2.0 million for
          the year ended  December 31, 2005, and included  expenditures  of $1.1
          million  related  to  a  parcel  of  other  real  estate  acquired  in
          conjunction with our CIB Bank acquisition.

Provision for Income Taxes. The provision for income taxes was $55.1 million for
the year ended December 31, 2006,  representing an effective  income tax rate of
33.1%, in comparison to $52.5 million, representing an effective income tax rate
of 35.5%,  for the year ended  December 31, 2005.  The increase in our provision
for income taxes primarily reflects our increased earnings. In 2006, we reversed
a $2.9 million  federal tax reserve and a $1.9 million state tax reserve as they
were no longer deemed necessary as a result of the resolution of a potential tax
liability.  In 2005,  we reversed a $3.3 million  state tax reserve as it was no
longer  deemed  necessary  as a result  of the  resolution  of a  potential  tax
liability.  In  addition,  we recorded net tax benefits of $5.6 million and $2.1
million relating to the utilization of certain federal and state tax credits for
the years  ended  December  31,  2006 and 2005,  respectively.  Excluding  these
transactions,  our  effective  income tax rate was 38.5% and 38.4% for the years
ended December 31, 2006 and 2005, respectively.

Comparison of Results of Operations for 2005 and 2004

Net Income.  Net income was $96.9 million for the year ended  December 31, 2005,
compared to $82.9 million for 2004.  Our return on average assets and our return
on average  stockholders'  equity were 1.10% and 15.11%,  respectively,  for the
year ended December 31, 2005,  compared to 1.10% and 14.44%,  respectively,  for
2004.  Results for 2005 reflect  increased net interest  income and  noninterest
income, and a negative provision for loan losses,  partially offset by increased
noninterest expense and an increased provision for income taxes. The increase in
2005 reflects our continuing  efforts to strengthen  earnings and simultaneously
improve asset quality. Net interest-earning assets provided by our 2004 and 2005
acquisitions,  higher-yielding  investment securities,  and internal loan growth
coupled with higher  interest rates on loans  contributed to increased  interest
income in 2005. However, net interest income was adversely affected by a decline
in earnings on our interest rate swap  agreements  associated  with our interest

<PAGE>

rate risk management  program,  primarily  resulting from increasing  prevailing
interest rates and the maturity and  termination  of certain  interest rate swap
agreements;  increased  interest expense as a result of higher interest rates on
deposits  and  a  redistribution  of  deposit  balances  toward  higher-yielding
products in  conjunction  with the CIB Bank  deposit  base  acquired in November
2004;  increased  levels of  borrowings  coupled  with  increased  rates on such
borrowings;  and the issuance of additional subordinated debentures late in 2004
to partially fund our acquisition of CIB Bank, as further discussed under "--Net
Interest  Income."  Despite the increasing  interest rate  environment,  overall
conditions  within our  markets and the impact of the decline in earnings on our
interest  rate swap  agreements  continue to exert  pressure on our net interest
income and our net  interest  margin.  The  increase  in net income in 2005 also
resulted  from a  significant  reduction in our  provision  for loan losses as a
result of overall improvement in our nonperforming loans during 2005,  exclusive
of a  deterioration  of certain  credits  in the fourth  quarter of 2005 that we
transferred to our loans held for sale  portfolio,  as further  discussed  under
"--Provision for Loan Losses." We primarily attribute the increased  noninterest
income  to  additional  noninterest  income  associated  with  our 2004 and 2005
acquisitions,  increased  gains on  mortgage  loans  sold  and  held  for  sale,
increased  investment  management fee income,  and increased  service charges on
deposit accounts and customer  service fees related to higher deposit  balances;
partially  offset  by net  losses  on  sales  of  available-for-sale  investment
securities  and the  recognition of impairment on our SBA servicing  assets,  as
further  discussed  under  "--Noninterest  Income." The overall  increase in our
operating expenses for 2005, as further discussed under "--Noninterest Expense,"
primarily  reflects  increased  expense levels  resulting from our 2004 and 2005
acquisitions  and the addition of five de novo branch  offices in 2004 and 2005,
significant  charitable  contributions  expense and  increases  in salaries  and
employee benefits expenses.

Provision  for Loan Losses.  We recorded a $4.0 million  negative  provision for
loan losses for the year ended  December 31, 2005,  in comparison to a provision
for loan losses of $25.8 million for the year ended  December 31, 2004.  Our net
loan  charge-offs  declined to $13.4  million  from $24.8  million for the years
ended  December  31, 2005 and 2004,  respectively.  As further  discussed  under
"--Lending Activities" and "--Loans and Allowance for Loan Losses," while we had
recorded a negative provision for loan losses of $8.0 million for the first nine
months of 2005, reflecting a 21.0% improvement in our nonperforming loans during
this period as a result of the sale of certain acquired nonperforming loans, the
strengthening of certain loans, loan payoffs and external refinancing of various
credits,  and a  significant  reduction  in net loan  charge-offs,  the level of
nonperforming  loans  increased  during  the fourth  quarter  of 2005  following
further deterioration of a few large credit relationships, resulting in a fourth
quarter  provision for loan losses of $4.0  million.  Our  nonperforming  loans,
which had decreased to $67.8 million at September 30, 2005 from $85.8 million at
December 31, 2004,  increased  $29.4 million  during the fourth quarter of 2005,
resulting in a balance of $97.2  million at December  31, 2005.  The increase in
nonperforming  loans in the fourth quarter of 2005 is primarily  attributable to
further deterioration of a small number of credit  relationships,  including two
large  credit  relationships  associated  with  our CIB Bank  purchase  of $14.9
million and $16.6 million, or $31.5 million in aggregate.  On December 31, 2005,
we  recognized  $7.6  million of loan  charge-offs  to reduce the loans to their
estimated fair value, net of costs,  that is expected to be realized at the time
of the sale, and transferred  approximately $59.7 million of nonperforming loans
to our held for sale portfolio, which included several of the relationships that
deteriorated during the fourth quarter of 2005. Included in the loan charge-offs
and loans  transferred  to our held for sale portfolio were $6.0 million of loan
charge-offs and  approximately  $49.6 million of  nonperforming  loans that were
associated with our CIB Bank purchase.  In January 2006, we received a payoff of
one of the  nonperforming  loans  in our  held  for  sale  portfolio  that had a
carrying  value of $12.4  million at  December  31,  2005,  and  recorded a $5.0
million loan  recovery.  Furthermore,  in March 2006, we completed the sale of a
majority of the remaining  nonaccrual  loans in our held for sale portfolio that
had a carrying value of  approximately  $32.5 million in aggregate,  at December
31, 2005.

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



<PAGE>


Noninterest  Income and Expense.  The  following  table  summarizes  noninterest
income and noninterest expense for the years ended December 31, 2005 and 2004:
<TABLE>
<CAPTION>

                                                                            December 31,       Increase (Decrease)
                                                                        --------------------   -------------------
                                                                          2005        2004     Amount        %
                                                                          ----        ----     ------       ---
                                                                              (dollars expressed in thousands)
Noninterest income:
<S>                                                                     <C>           <C>       <C>          <C>
    Service charges on deposit accounts and customer service fees....   $  39,776     38,230    1,546        4.04%
    Gain on loans sold and held for sale.............................      20,804     18,497    2,307       12.47
    Net (loss) gain on investment securities.........................      (2,873)       257   (3,130)  (1,217.90)
    Bank-owned life insurance investment income......................       4,860      5,201     (341)      (6.56)
    Investment management income.....................................       8,573      6,870    1,703       24.79
    Other............................................................      24,945     18,144    6,801       37.48
                                                                        ---------    -------   ------
       Total noninterest income......................................   $  96,085     87,199    8,886       10.19
                                                                        =========    =======   ======   =========
Noninterest expense:
    Salaries and employee benefits...................................   $ 139,764    117,492   22,272       18.96%
    Occupancy, net of rental income..................................      22,081     19,882    2,199       11.06
    Furniture and equipment..........................................      16,015     17,017   (1,002)      (5.89)
    Postage, printing and supplies...................................       5,743      5,010      733       14.63
    Information technology fees......................................      35,472     32,019    3,453       10.78
    Legal, examination and professional fees.........................       9,319      7,412    1,907       25.73
    Amortization of intangible assets................................       4,850      2,912    1,938       66.55
    Communications...................................................       2,012      1,866      146        7.82
    Advertising and business development.............................       7,043      5,493    1,550       28.22
    Charitable contributions.........................................       5,922        577    5,345      926.34
    Other............................................................      29,417     23,538    5,879       24.98
                                                                        ---------    -------   ------
       Total noninterest expense.....................................   $ 277,638    233,218   44,420       19.05
                                                                        =========    =======   ======   =========
</TABLE>

Noninterest  Income.  Noninterest  income was $96.1  million  for the year ended
December 31, 2005, in comparison to $87.2 million for 2004.  Noninterest  income
consists  primarily of service charges on deposit  accounts and customer service
fees, mortgage-banking revenues, investment management income and other income.

Service charges on deposit accounts and customer service fees increased to $39.8
million  from $38.2  million  for the years  ended  December  31, 2005 and 2004,
respectively.  The  increase in service  charges and  customer  service  fees is
primarily attributable to:

     >>   increased  demand deposit  account  balances  associated with internal
          growth and our  acquisitions  of Continental  Community Bank and Trust
          Company,  or CCB, and CIB Bank completed in 2004, and our acquisitions
          completed in 2005;

     >>   additional  products and services available and utilized by our retail
          and commercial customer base;

     >>   increased fee income from customer service charges for  non-sufficient
          funds and returned  check fees coupled  with  enhanced  control of fee
          waivers;

     >>   higher earnings allowances on commercial deposit accounts;

     >>   increased fee income associated with automated teller machine services
          and debit cards; and

     >>   pricing increases on certain service charges and customer service fees
          instituted to reflect current market conditions.

The gain on loans sold and held for sale  increased to $20.8  million from $18.5
million  for the years  ended  December  31,  2005 and 2004,  respectively.  The
increase in 2005 is  partially  attributable  to an increase of $2.0  million of
gains on SBA loans sold by SBLS LLC.  The  increase is also  attributable  to an
increase  in gains on  mortgage  loans sold  resulting  from an  increase in the
volume of mortgage loan sales in the  secondary  market as a result of increased
loan origination  volumes. In general,  new residential mortgage loan production
of 15-year fixed rate,  conforming  conventional  adjustable  rate mortgages and
other similar  products is being retained in our  portfolio,  while other loans,
primarily  20 and 30-year  fixed rate  loans,  are  typically  being sold in the
secondary loan markets.

Noninterest income includes a net loss on investment  securities of $2.9 million
for the year ended  December 31, 2005, in comparison to a net gain on investment
securities of $257,000 in 2004.  The net loss for 2005 resulted from the sale of
certain available-for-sale investment securities associated with the termination
of a $50.0 million term repurchase  agreement in the fourth quarter of 2005. The
net   gain  for   2004   resulted   primarily   from   the   sales  of   certain
available-for-sale  investment securities held by acquired institutions that did
not meet our overall investment objectives.
<PAGE>

Bank-owned life insurance  investment income was $4.9 million for the year ended
December  31,  2005,  in  comparison  to $5.2  million in 2004.  The decrease in
investment income reflects a reduced return on the performance of the underlying
securities  surrounding the insurance contracts which is primarily  attributable
to the portfolio mix of investments and overall market conditions.

Investment  management  income  generated  by MVP was $8.6  million for the year
ended  December  31, 2005,  in  comparison  to $6.9 million in 2004,  reflecting
increased   portfolio   management  fee  income  attributable  to  new  business
development and overall growth in assets under management.

Other income was $24.9  million and $18.1  million for the years ended  December
31, 2005 and 2004,  respectively.  We attribute  the primary  components  of the
increase in other income to:

     >>   an increase of $3.6 million attributable to recoveries of certain loan
          principal balances that had been charged-off by the various respective
          financial institutions prior to their acquisition by First Banks;

     >>   an increase of $3.1 million attributable to the reversal of a specific
          reserve on a letter of credit  assumed  with the CIB Bank  acquisition
          and collection of the related fees resulting from the  cancellation of
          the letter of credit;

     >>   a net  decrease  in  losses  on  the  valuation  or  sale  of  certain
          repossessed  assets,  primarily  related  to  our  commercial  leasing
          portfolio.  Net gains for 2005 were $696,000 and included  $464,000 of
          gains on two sales of repossessed  leasing  equipment.  Net losses for
          2004  were  $1.6  million  and  included  a  $750,000   write-down  on
          repossessed  aircraft leasing equipment and a $1.3 million  write-down
          on repossessed equipment unrelated to the airline industry,  partially
          offset by gains of $350,000 on the sale of other repossessed  aircraft
          leasing equipment;

     >>   an  increase  of  $713,000  reflecting   reductions  of  a  contingent
          liability established in conjunction with the sale of a portion of our
          commercial  leasing  portfolio  in June 2004.  The  reductions  of the
          contingent  liability in 2005 and 2004 of $1.1  million and  $375,000,
          respectively,  were the result of further  reductions in related lease
          balances for the specific pools of leases sold;

     >>   a recovery of agent loan collection  expenses of $739,000 as permitted
          under a loan  participation  agreement  prior to recovery of principal
          and interest,  from funds  collected from the liquidation of a portion
          of the collateral that secured the loan by the receiver;

     >>   a $602,000 net increase in loan  servicing  fees.  The net increase is
          primarily  attributable  to:  increased  fees from loans  serviced for
          others,  primarily attributable to a $2.3 million increase in SBLS LLC
          loan servicing fees, offset by an $887,000 increase in amortization of
          SBA servicing rights and the recognition of a $2.4 million  impairment
          charge on our SBA servicing  rights  following  substantial  damage to
          several shrimping vessels within the servicing portfolio caused by the
          effects of Hurricane  Katrina;  a $199,000  decrease in mortgage  loan
          servicing  fees,  including  a lower level of  interest  shortfall  on
          mortgage loans,  offset by a $1.6 million  decrease in amortization of
          mortgage  servicing  rights;  and increased unused  commitment fees of
          $281,000;

     >>   an increase of $584,000 in fees from fiduciary activities;

     >>   a $448,000 decrease in net losses on our derivative instruments; and

     >>   our acquisitions completed in 2004 and 2005; partially offset by

     >>   a decrease  of $2.4  million  in gains on sales of other real  estate.
          Gains on sales of other real  estate  were $1.3  million  for the year
          ended December 31, 2005, and included  approximately $972,000 of gains
          recorded on the sale of six  holdings of other real  estate.  Gains on
          sales of other  real  estate  were  $3.7  million  for the year  ended
          December  31, 2004,  and included a $2.7 million gain  recorded in the
          first  quarter  of 2004 on the sale of  residential  and  recreational
          development  property  that was  transferred  to other real  estate in
          January 2003 and approximately  $390,000 of gains recorded on the sale
          of two additional holdings of other real estate;

     >>   a decline of $1.2  million in rental  income  associated  with reduced
          commercial leasing activities;

     >>   a  decrease  of $1.0  million  in gains on sales of  branches,  net of
          expenses.  Gains, net of expenses,  on the sale of two Midwest banking
          offices  totaled $1.0 million and  reflected a $390,000  gain,  net of
          expenses, on the sale of one of our Missouri branch banking offices in
          February 2004,  and a $630,000  gain, net of expenses,  on the sale of
          one of our Illinois banking offices in April 2004. There were no sales
          of branch banking offices in 2005; and
<PAGE>

     >>   a net increase in losses,  net of gains, on the disposition of certain
          assets,  primarily  attributable to a $459,000 net loss resulting from
          the demolition of a branch drive-thru facility and a $277,000 net loss
          resulting  from the sale of a former CIB Bank branch  facility  during
          2005.

Noninterest  Expense.  Noninterest expense was $277.6 million for the year ended
December 31, 2005,  in  comparison to $233.2  million for 2004.  Our  efficiency
ratio was 65.83% for the year ended  December 31,  2005,  compared to 60.23% for
2004.  The increases in noninterest  expense and our  efficiency  ratio for 2005
were primarily attributable to increases in expenses resulting from our 2004 and
2005  acquisitions  and the addition of five de novo branch  offices in 2004 and
2005,  and  increases  in salaries and employee  benefits  expense,  information
technology expense,  charitable  contributions  expense,  expenses on other real
estate, and other expense.

Salaries and employee benefits  increased by $22.3 million to $139.8 million for
the year ended December 31, 2005,  from $117.5 million in 2004. We attribute the
overall increase to increased salaries and employee benefits expenses associated
with an aggregate of 27 additional  branches  acquired in 2004 and 2005 and five
de novo  branches  opened  in 2004 and  2005;  and the  addition  of a  regional
structure in Chicago  following our significant  expansion in the Chicago market
area, including credit administration, commercial real estate and commercial and
industrial  banking  groups,  branch  administration,  credit  review  and human
resource and training functions.  The increase is also attributable to generally
higher salary and employee benefit costs associated with employing and retaining
qualified  personnel,  including  enhanced  incentive  compensation and employee
benefits  plans.  Our  number  of  employees  on a  full-time  equivalent  basis
increased to approximately  2,290 at December 31, 2005, from approximately 2,170
at December 31, 2004.

Occupancy,  net of rental income,  and furniture and equipment  expense  totaled
$38.1 million and $36.9 million for the years ended  December 31, 2005 and 2004,
respectively. The increase is primarily attributable to higher levels of expense
resulting from our acquisitions in 2004 and 2005, which added 27 branch offices,
and the opening of five de novo branch  offices in 2004 and 2005, as well as the
formation of separate small business banking loan origination offices in most of
our market  areas.  The increase is also  attributable  to increased  technology
equipment expenditures,  continued expansion and renovation of certain corporate
and branch offices,  including additional production and administrative offices,
and increased  depreciation  expense  associated with  acquisitions  and capital
expenditures.

Information  technology  and item  processing  fees were $35.5 million and $32.0
million  for the years  ended  December  31,  2005 and 2004,  respectively.  The
increased  level of fees is  primarily  attributable  to the  additional  branch
offices provided by our acquisitions and de novo branch office openings; certain
de-conversion  costs  from other  providers  associated  with our  acquisitions,
growth and  technological  advancements  consistent with our product and service
offerings;  and  continued  expansion and upgrades to  technological  equipment,
networks and  communication  channels;  partially  offset by expense  reductions
resulting from information  technology conversions of our acquisitions completed
in 2004, as well as the achievement of certain efficiencies  associated with the
implementation  of  various   technology   projects.   Legal,   examination  and
professional  fees were  $9.3  million  and $7.4  million  for the  years  ended
December 31, 2005 and 2004,  respectively.  The  continued  expansion of overall
corporate  activities,  the ongoing professional services utilized by certain of
our acquired entities,  and increased legal fees associated with commercial loan
documentation, collection efforts and certain litigation costs primarily related
to our various  acquired  entities have all  contributed to the overall  expense
levels in 2004 and 2005. The increase in 2005 is also  attributable  to $471,000
of fees  paid for  accounting  and other  services,  including  operational  and
systems  support,  provided  by the  seller  of CIB Bank  pursuant  to a service
agreement  to provide  services  from the  November  2004 sale date  through the
system conversion date in February 2005.

Amortization  of  intangible  assets was $4.9  million and $2.9  million for the
years  ended  December  31,  2005  and  2004,  respectively.   The  increase  is
attributable  to core  deposit  intangibles  associated  with  our  acquisitions
completed in 2004 and 2005.

Communications  and  advertising  and business  development  expenses  were $9.1
million  and $7.4  million  for the  years  ended  December  31,  2005 and 2004,
respectively.  The  expansion of our sales,  marketing and product group in 2004
and broadened  advertising campaigns have contributed to higher expenditures and
are consistent with our continued  focus on expanding our banking  franchise and
the  products  and  services  available  to our  customers.  Our spring and fall
advertising  campaigns have contributed to the increase in 2005. We continue our
efforts to manage these expenses through  renegotiation  of contracts,  enhanced
focus on advertising  and  promotional  activities in markets that offer greater
benefits, as well as ongoing cost containment efforts.

Charitable  contribution  expense was $5.9  million and  $577,000  for the years
ended  December  31,  2005 and  2004,  respectively.  The  increase  in 2005 was
primarily  attributable  to  charitable  contributions  of $2.5 million and $1.5
million,  respectively,  in December  2005 to The  Dierberg  Foundation  and the
Dierberg Operating Foundation,  Inc. The increase is also attributable to a $1.5
million contribution in May 2005 to an urban revitalization  development project

<PAGE>

located in the city of St. Louis. In exchange for this contribution, we received
Missouri  state tax credits that will be utilized to reduce certain state income
taxes.

Other expense was $29.4  million and $23.5 million for the years ended  December
31, 2005 and 2004, respectively.  Other expense encompasses numerous general and
administrative  expenses  including  insurance,  freight and  courier  services,
correspondent  bank charges,  miscellaneous  losses and recoveries,  expenses on
other real estate owned,  memberships  and  subscriptions,  transfer agent fees,
sales taxes and  travel,  meals and  entertainment.  The  increase is  primarily
attributable to:

     >>   an  increase of $1.6  million of  expenditures  on other real  estate.
          Expenditures on other real estate were $2.0 million for the year ended
          December  31,  2005,   and  included   expenses  of  $1.1  million  in
          preparation  for the sale of a parcel of other  real  estate  acquired
          with the  acquisition of CIB Bank.  Expenditures  on other real estate
          were $364,000 for the year ended December 31, 2004;

     >>   increased  losses and  adjustments  to the  carrying  value of certain
          affordable housing credit partnership investments; and

     >>   expenses associated with continued growth and expansion of our banking
          franchise,  including  our de novo  branch  offices  and  acquisitions
          completed during 2004 and 2005, particularly CIB Bank.

Provision for Income Taxes. The provision for income taxes was $52.5 million for
the year ended December 31, 2005,  representing an effective  income tax rate of
35.5%, in comparison to $45.3 million, representing an effective income tax rate
of 35.4%,  for the year ended  December 31, 2004.  The increase in our provision
for income taxes  primarily  reflects our  increased  earnings.  During 2005 and
2004,  we  reversed  $3.3  million  and  $2.8  million  of state  tax  reserves,
respectively, that were no longer deemed necessary as a result of the resolution
of a  potential  tax  liability.  Additionally,  in 2005,  we recorded a net tax
benefit of $2.1 million relating to our utilization of certain federal and state
tax credits.  Excluding these  transactions,  our effective  income tax rate was
38.4% and 37.5% for the years ended December 31, 2005 and 2004.

Interest Rate Risk Management

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

We strive to manage our interest rate risk by:

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

     >>   employing a financial  simulation  model to determine  our exposure to
          changes in interest rates;

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

     >>   utilizing various financial  instruments,  including  derivatives,  to
          offset inherent interest rate risk should it become excessive.

The objective of these procedures is to limit the adverse impact that changes in
interest rates may have on our net interest income.

The ALCO has overall  responsibility  for the  effective  management of interest
rate risk and the approval of policy guidelines. The ALCO includes our President
and Chief Executive Officer,  Chief Operating Officer,  Chief Financial Officer,
Chief Investment Officer and the senior officers of finance and risk management,
and certain other officers. The Asset Liability Management Group, which monitors
interest rate risk,  supports the ALCO, prepares analyses for review by the ALCO
and  implements  actions  that are either  specifically  directed by the ALCO or
established by policy guidelines.
<PAGE>

In managing  sensitivity,  we strive to reduce the adverse impact on earnings by
managing interest rate risk within internal policy constraints. Our policy is to
manage  exposure to potential risks  associated with changing  interest rates by
maintaining a balance  sheet posture in which annual net interest  income is not
significantly  impacted by  reasonably  possible  near-term  changes in interest
rates. To measure the effect of interest rate changes, we project our net income
over a two-year  horizon on a pro forma  basis.  The  analysis  assumes  various
scenarios  for  increases  and  decreases  in  interest  rates   including  both
instantaneous  and gradual,  and parallel and  non-parallel  shifts in the yield
curve,  in varying  amounts.  For  purposes of arriving at  reasonably  possible
near-term  changes  in  interest  rates,  we include  scenarios  based on actual
changes  in  interest  rates,  which  have  occurred  over  a  two-year  period,
simulating both a declining and rising interest rate scenario.

We are  "asset-sensitive,"  indicating that our assets would  generally  reprice
with  changes in  interest  rates more  rapidly  than our  liabilities,  and our
simulation  model  indicates a loss of  projected  net  interest  income  should
interest rates decline. While a decline in interest rates of less than 100 basis
points  has  a  relatively  minimal  impact  on  our  net  interest  income,  an
instantaneous  parallel  decline in the interest yield curve of 100 basis points
indicates a pre-tax projected loss of approximately 3.7% of net interest income,
based on assets  and  liabilities  at  December  31,  2006.  Although  we do not
anticipate  that  instantaneous  shifts in the yield curve as  projected  in our
simulation  model are likely,  these are indications of the effects that changes
in interest rates would have over time.

We also prepare and review a more traditional interest rate sensitivity position
in conjunction  with the results of our simulation  model.  The following  table
presents the projected maturities and periods to repricing of our rate sensitive
assets and  liabilities  as of  December  31,  2006,  adjusted  to  account  for
anticipated prepayments:
<TABLE>
<CAPTION>


                                                                 Over       Over
                                                                 Three      Six        Over
                                                    Three       through    through     One        Over
                                                    Months       Six       Twelve     through     Five
                                                    or Less     Months     Months   Five Years    Years      Total
                                                    -------     ------     ------   ----------    -----      -----
                                                                  (dollars expressed in thousands)

Interest-earning assets:
<S>                                               <C>           <C>        <C>      <C>          <C>       <C>
   Loans (1)....................................  $4,550,231    416,290    580,060  1,890,766    229,134   7,666,481
   Investment securities........................     350,854    167,462    161,407    557,480    227,743   1,464,946
   Short-term investments.......................     153,583         --         --         --         --     153,583
                                                  ----------  ---------  ---------  ---------  ---------   ---------
       Total interest-earning assets............   5,054,668    583,752    741,467  2,448,246    456,877   9,285,010
   Effect of interest rate swap agreements......    (600,000)        --    200,000    400,000         --          --
                                                  ----------  ---------  ---------  ---------  ---------   ---------
       Total interest-earning assets after
         the effect of interest
         rate swap agreements...................  $4,454,668    583,752    941,467  2,848,246    456,877   9,285,010
                                                  ==========  =========  =========  =========  =========   =========
Interest-bearing liabilities:
   Interest-bearing demand deposits.............  $  363,317    225,846    147,291    108,013    137,472     981,939
   Money market deposits........................   1,733,483         --         --         --         --   1,733,483
   Savings deposits.............................     105,246     86,673     74,291    105,245    247,637     619,092
   Time deposits................................   1,205,768    785,312  1,196,107    628,577     11,700   3,827,464
   Other borrowings.............................     369,950         77      3,157        715         --     373,899
   Notes payable................................      65,000         --         --         --         --      65,000
   Subordinated debentures......................     201,035     25,736         --         --     71,195     297,966
                                                  ----------  ---------  ---------  ---------  ---------   ---------
       Total interest-bearing liabilities.......  $4,043,799  1,123,644  1,420,846    842,550    468,004   7,898,843
                                                  ==========  =========  =========  =========  =========   =========
Interest-sensitivity gap:
   Periodic.....................................  $  410,869   (539,892)  (479,379) 2,005,696    (11,127)  1,386,167
                                                                                                           =========
   Cumulative...................................     410,869   (129,023)  (608,402) 1,397,294  1,386,167
                                                  ==========  =========  =========  =========  =========
Ratio of interest-sensitive assets to
   interest-sensitive liabilities:
       Periodic.................................        1.10       0.52       0.66       3.38       0.98        1.18
                                                                                                           =========
       Cumulative...............................        1.10       0.98       0.91       1.19       1.18
                                                  ==========  =========  =========  =========  =========
-------------------------
(1) Loans are presented net of unearned discount.
</TABLE>
<PAGE>

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

     >>   loans will repay at projected repayment rates;

     >>   mortgage-backed  securities,  included in investment securities,  will
          repay at projected repayment rates;

     >>   interest-bearing demand accounts and savings deposits will behave in a
          projected manner with regard to their interest rate sensitivity; and

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

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

Our overall  asset-sensitive  position at December 31, 2006 remained  relatively
consistent at $1.39 billion, or 13.65% of our total assets, in comparison to our
overall  asset-sensitive  position  of $1.34  billion,  or  14.60%  of our total
assets, at December 31, 2005. However, we were in a liability-sensitive position
on a cumulative basis through the  twelve-month  time horizon of $608.4 million,
or 5.99% of our total  assets,  at  December  31,  2006,  whereas  we were in an
asset-sensitive  position on a cumulative  basis through the  twelve-month  time
horizon of $117.1 million,  or 1.28% of our total assets,  at December 31, 2005.
We primarily  attribute the  liability-sensitive  position on a cumulative basis
through the  twelve-month  time  horizon in 2006 to an increase in money  market
deposits  and  an  increase  in  the  repricing  of  time  deposits  within  the
twelve-month  time horizon as a result of the current  interest rate environment
and economic conditions.

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

As previously  discussed,  we utilize derivative financial instruments to assist
in our  management of interest  rate  sensitivity  by modifying  the  repricing,
maturity  and option  characteristics  of certain  assets and  liabilities.  The
derivative  financial  instruments  we held as of December 31, 2006 and 2005 are
summarized as follows:
<TABLE>
<CAPTION>


                                                                            December 31,
                                                        ----------------------------------------------------
                                                                   2006                      2005
                                                        ------------------------   -------------------------
                                                          Notional      Credit       Notional      Credit
                                                           Amount      Exposure       Amount      Exposure
                                                           ------      --------       ------      --------
                                                                  (dollars expressed in thousands)

<S>                                                       <C>            <C>          <C>             <C>
         Cash flow hedges............................     $600,000       4,369        300,000         114
         Fair value hedges...........................           --          --         25,000         748
         Interest rate floor agreements..............      300,000         376        100,000          70
         Interest rate cap agreements................      400,000         139             --          --
         Interest rate lock commitments..............        5,900          --          5,900          --
         Forward commitments to sell
           mortgage-backed securities................       54,000          --         47,000          --
                                                          ========      ======       ========       =====
</TABLE>

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

For the year ended  December 31, 2006, we realized net interest  expense of $5.0
million on our  derivative  financial  instruments,  whereas for the years ended
December 31, 2005 and 2004, we realized net interest  income of $2.2 million and
$50.1  million,  respectively,  on our  derivative  financial  instruments.  The
decreased earnings for 2006 and 2005 are primarily  attributable to increases in
prevailing  interest  rates,  the maturity of $200.0  million and $100.0 million
notional amount of interest rate swap agreements  designated as cash flow hedges
in March  2005 and  April  2006,  respectively,  and the  termination  of $150.0
million,  $101.2 million and $25.0 million notional amount of interest rate swap
agreements  designated  as fair  value  hedges in  February  2005,  May 2005 and
February  2006,  respectively.  Although we have  implemented  other  methods to
mitigate the reduction in net interest income  associated with our  derivatives,
the  maturity  and  termination  of  the  swap  agreements  has  resulted  in  a
compression of our net interest margin of  approximately  eight basis points for
the year ended  December 31,  2006,  in  comparison  to 2005.  In addition,  the
increasing  interest rate  environment  has mitigated a portion of the effect of
the reduced earnings on our derivative financial  instruments.  During the third
quarter  of 2006,  we  significantly  expanded  our  utilization  of  derivative
financial  instruments,  as  further  described  in  Note 5 to our  Consolidated
Financial  Statements,  in an effort to reduce the adverse  impact that  falling
interest rates could have on our net interest income.

We  recorded  net  losses  on  derivative  instruments,  which are  included  in
noninterest income in our consolidated  statements of income, of $390,000,  $1.1
million and $1.5 million for the years ended  December 31, 2006,  2005 and 2004,
respectively.  The net losses  recorded in 2006 reflect  changes in the value of
our interest rate floor agreements  entered into in September 2005 and 2006, and
changes  in the  value of our  interest  rate  cap  agreements  entered  into in
September  2006. The net losses recorded in 2005 reflect changes in the value of
our fair value hedges and the underlying hedged liabilities,  and changes in the
value of our interest  rate floor  agreement  entered  into in  September  2005.
Information regarding our derivative financial instruments outlined in the table
above is further  discussed in Note 5 to our Consolidated  Financial  Statements
appearing elsewhere in this report.

Mortgage Banking Activities

Our  mortgage  banking  activities  consist  of the  origination,  purchase  and
servicing of residential  mortgage  loans.  The purchase of loans to be held for
sale is  primarily  limited to loans that we  acquire  in  conjunction  with our
acquisition of other financial  institutions.  Generally, we sell our production
of  residential  mortgage  loans in the  secondary  loan  markets.  However,  in
mid-2003, as a result of continued weak loan demand in other sectors of our loan
portfolio,  we made a  business  strategy  decision  to retain a portion  of new
residential  mortgage  loan  production in our real estate  mortgage  portfolio,
generally  represented  by  production  originated  in our St. Louis  production
offices  with the  exception  of 20 and  30-year  fixed  rate  loans  which  are
typically sold in the secondary loan markets.  Furthermore, in the third quarter
of 2005, we revised our strategy and began  retaining  additional  mortgage loan
production in our residential real estate mortgage portfolio,  including 15-year
fixed rate, conforming  conventional adjustable rate mortgages and other similar
products,  and continued this strategy  through the first six months of 2006, as
further  discussed in "--Loans and Allowance for Loan Losses."  Servicing rights
may either be retained  or released  with  respect to  conventional,  FHA and VA
conforming  fixed-rate and  conventional  adjustable rate  residential  mortgage
loans.

For the three  years ended  December  31,  2006,  2005 and 2004,  we  originated
residential  mortgage loans held for sale and held for portfolio  totaling $1.28
billion,  $1.60 billion and $1.14 billion,  respectively,  and sold  residential
mortgage  loans  totaling  $1.11  billion,  $1.14  billion  and  $1.03  billion,
respectively. The origination and purchase of residential mortgage loans and the
related  sale  of the  loans  provides  us with  additional  sources  of  income
including the gain or loss realized upon sale, the interest  income earned while
the loan is held  awaiting  sale and the ongoing  loan  servicing  fees from the
loans sold with servicing rights retained. Mortgage loans serviced for investors
aggregated $1.04 billion,  $1.01 billion and $1.06 billion at December 31, 2006,
2005 and 2004, respectively.
<PAGE>

The gain on mortgage loans originated for resale,  including loans sold and held
for sale, was $18.6 million, $18.1 million and $17.8 million for the years ended
December 31, 2006, 2005 and 2004, respectively. We determine these gains, net of
losses, on a lower of cost or market basis. These gains are realized at the time
of sale. The cost basis reflects both the  adjustments of the carrying values of
loans  held for  sale to the  lower of cost,  adjusted  to  include  the cost of
hedging  the loans  held for sale,  or  current  market  values,  as well as the
adjustments  for any gains or losses on loan  commitments for which the interest
rate has been established,  net of anticipated  underwriting "fallout," adjusted
for the cost of hedging these loan  commitments.  Fallout  represents  loans not
funded due to issues discovered during the underwriting process or withdrawal of
the loan  request by the  customer.  The  increase in gains in 2006 is primarily
attributable  to the recognition of $2.1 million of servicing  income  generated
from  the   capitalization  of  mortgage  servicing  rights  pertaining  to  the
securitization  and transfer to our  investment  portfolio of $138.9  million of
residential  mortgage loans held in our loan portfolio,  as further described in
Note 6 to our Consolidated Financial Statements; and net gains of $386,000, $1.1
million and $909,000 recorded on the sale of $100.0 million,  $101.6 million and
$77.1 million of certain residential mortgage loans in August 2006, October 2006
and December 2006, respectively,  of which $127.8 million represented loans held
in our portfolio and $150.9 million  represented loans held for sale;  partially
offset  by  management's  decision  to  retain  additional  loan  volume  in our
residential real estate mortgage  portfolio during the first six months of 2006,
as discussed  above.  The increase  for 2005 is  primarily  attributable  to the
continued  growth of our mortgage  banking  activities and the  relatively  high
volume of loans originated and sold  commensurate  with the prevailing  interest
rate environment, partially offset by management's decision to retain additional
loan volume in our  residential  real estate  mortgage  portfolio,  as discussed
above.

Interest  income on loans  held for sale was $18.2  million  for the year  ended
December 31, 2006, in comparison to $11.7 million and $8.8 million for the years
ended December 31, 2005 and 2004,  respectively.  The amount of interest  income
realized on loans held for sale is a function  of the  average  balance of loans
held for sale,  the  period  for  which  the  loans are held and the  prevailing
interest  rates when the loans are made.  The average  balance of loans held for
sale was $247.0  million,  $184.1 million and $133.3 million for the years ended
December 31, 2006,  2005 and 2004,  respectively.  On an annualized  basis,  our
yield on the portfolio of loans held for sale was 7.39%, 6.36% and 6.61% for the
years ended December 31, 2006, 2005 and 2004,  respectively.  This compares with
our cost of funds, as a percentage of average interest-bearing  liabilities,  of
3.49%,  2.47% and 1.64% for the years ended  December 31,  2006,  2005 and 2004,
respectively.

We  report  mortgage  loan  servicing  fees in other  noninterest  income in our
consolidated  statements of income,  net of amortization  of mortgage  servicing
rights,  interest shortfall and mortgage-backed  security guarantee fee expense.
Interest  shortfall equals the difference  between the interest collected from a
loan-servicing  customer upon prepayment of the loan and a full month's interest
that is required to be remitted to the security  owner.  Our net  mortgage  loan
servicing  fees  contributed  to an overall  reduction in our other  noninterest
income of $1.4  million,  $1.2  million  and $2.6  million  for the years  ended
December 31, 2006, 2005 and 2004, respectively,  which included the amortization
of mortgage servicing rights of $4.1 million,  $5.0 million and $6.5 million for
the years ended December 31, 2006, 2005 and 2004, respectively. We attribute the
slight  decrease  in net  loan  servicing  fees in 2006 to a  reduction  in fees
associated with the retention of a portion of loan production in our residential
mortgage loan portfolio,  as previously  discussed,  partially offset by reduced
amortization of mortgage servicing rights. We attribute the increase in net loan
servicing fees in 2005 to reduced  amortization  of mortgage  servicing  rights,
partially  offset by a reduction in fees associated with a lower volume of loans
serviced  for others and the  retention of a portion of loan  production  in our
residential mortgage loan portfolio.

Our interest rate risk management policy provides certain hedging  parameters to
reduce the interest rate risk exposure  arising from changes in loan prices from
the time of  commitment  until the sale of the security or loan.  To reduce this
exposure,  we  use  forward  commitments  to  sell  fixed-rate   mortgage-backed
securities  at a specified  date in the future.  At December 31, 2006,  2005 and
2004, we had $56.0 million,  $47.7 million and $35.3 million,  respectively,  of
loans held for sale and related  commitments,  net of  committed  loan sales and
estimated  underwriting fallout, of which $54.0 million, $47.0 million and $34.0
million, respectively, were hedged through the use of such forward commitments.
<PAGE>

Investment Securities

We classify the securities within our investment portfolio as trading, available
for  sale  or held to  maturity.  Our  investment  security  portfolio  consists
primarily of  securities  designated  as available  for sale.  During the fourth
quarter of 2005, we began to engage in the trading of investment securities. The
investment  security portfolio was $1.46 billion at December 31, 2006,  compared
to $1.34 billion and $1.81 billion at December 31, 2005 and 2004,  respectively.
We attribute the increase in the investment  securities portfolio in 2006 to: an
increase   in   the   available-for-sale   securities   portfolio   due  to  the
securitization  of $138.9 million of certain of our  residential  mortgage loans
held in our loan portfolio;  an increase in our trading securities  portfolio of
$77.8   million;   reinvestment   of  funds   available   from   maturities   in
higher-yielding  securities;  and an  increase  of  $37.3  million  relating  to
securities acquired through our acquisitions completed in 2006; partially offset
by  the  sale  of  the  underlying   available-for-sale   investment  securities
associated with the termination of $200.0 million of term repurchase agreements,
as further described in Note 3, Note 5 and Note 10 to our Consolidated Financial
Statements. Funds available from maturities of investment securities during 2005
were  primarily  used to fund loan  growth,  resulting  in the  decrease  in our
investment  securities  portfolio  in 2005.  A portion  of the  remaining  funds
available  from   maturities  of  investment   securities   were  reinvested  in
higher-yielding  available-for-sale  investment  securities.  The decrease  also
reflects the sale of the  underlying  available-for-sale  investment  securities
associated with the termination of a $50.0 million term repurchase agreement.

Loans and Allowance for Loan Losses

Interest earned on our loan portfolio  represents the principal source of income
for First Bank.  Interest and fees on loans were 90.0%, 85.9% and 86.5% of total
interest  income  for  the  years  ended  December  31,  2006,  2005  and  2004,
respectively.  We  recognize  interest  and fees on loans as  income  using  the
interest method of accounting.  Loan  origination fees are deferred and accreted
to interest  income  over the  estimated  life of the loans  using the  interest
method of accounting.  The accrual of interest on loans is discontinued  when it
appears  that  interest or principal  may not be paid in a timely  manner in the
normal course of business.  We generally record payments  received on nonaccrual
and  impaired  loans as  principal  reductions,  and  defer the  recognition  of
interest  income on loans until all principal has been repaid or an  improvement
in the condition of the loan has occurred  that would warrant the  resumption of
interest accruals.

Loans, net of unearned discount,  represented 75.5% of our assets as of December
31, 2006,  compared to 76.6% of our assets at December 31, 2005.  Loans,  net of
unearned  discount,  increased  $645.7  million to $7.67 billion at December 31,
2006 from $7.02 billion at December 31, 2005. The overall increase in loans, net
of unearned discount, in 2006 is primarily  attributable to internal loan growth
of $584.2 million and our acquisitions  completed in 2006, which provided loans,
net of unearned  discount,  of $545.1 million,  in aggregate.  This increase was
partially offset by the  securitization  of certain  residential  mortgage loans
that we transferred to our investment  portfolio,  and the sale and/or payoff of
certain  nonperforming loans, as further discussed below. Loans, net of unearned
discount,  increased  $882.8  million to $7.02 billion at December 31, 2005 from
$6.14 billion at December 31, 2004. Our acquisitions  completed in 2005 provided
loans, net of unearned discount,  of $209.6 million, in aggregate.  Exclusive of
these  acquisitions,  our loans,  net of  unearned  discount,  increased  $687.5
million in 2005,  as a result of internal loan growth.  In addition,  we reduced
our loans and leases by $14.3  million in the first and second  quarters of 2005
from  the sale of  certain  nonperforming  loans,  resulting  from  management's
business decision in late 2004 to reduce the level of our  nonperforming  assets
through the sale of certain  nonperforming  loans. We attribute the net increase
in our loan portfolio in 2006 primarily to:

     >>   an  increase  of  $315.1  million  in our  commercial,  financial  and
          agricultural  portfolio,  primarily  attributable  to an  increase  of
          $214.9 million associated with our acquisitions completed during 2006,
          including  $149.2 million of loans provided by our acquisition of UPAC
          in May 2006, in addition to continued  internal loan production growth
          within this portfolio;

     >>   an increase  of $268.2  million in our real  estate  construction  and
          development  portfolio  resulting from internal growth due to new loan
          originations  and  seasonal  fluctuations  on existing  and  available
          credit lines, as well as a $34.2 million increase  associated with our
          acquisitions completed in 2006; and
<PAGE>

     >>   an increase of $145.4  million in our real estate  mortgage  portfolio
          resulting  from: (a) internal loan growth of $289.8  million,  largely
          attributable  to the retention of certain  mortgage loan production in
          our residential  real estate mortgage  portfolio  during the first six
          months of 2006 following  management's  business  strategy decision in
          the third quarter of 2005 to retain certain  additional  mortgage loan
          product production in our residential real estate mortgage  portfolio;
          (b) our acquisitions completed during 2006, which provided real estate
          mortgage  loans  of  $293.0  million;  partially  offset  by  (c)  the
          securitization   of  $77.1   million  and  $61.8  million  of  certain
          residential mortgage loans in March 2006 and April 2006, respectively,
          which  resulted in a change in our asset  structure  from  residential
          mortgage loans to available-for-sale  investment  securities;  and (d)
          the sale of approximately $127.8 million of residential mortgage loans
          in the third and fourth quarters of 2006; partially offset by

     >>   a decrease of $98.8 million in loans held for sale  resulting from (a)
          the timing of loan  originations and subsequent sales in the secondary
          mortgage  market;  (b) the payoff and/or sale of  approximately  $44.9
          million of certain  acquired loans that we transferred to our held for
          sale  portfolio on December 31, 2005;  and (c) the transfer of a $13.5
          million  nonperforming  loan from our loans held for sale portfolio to
          our  commercial  real estate  loan  portfolio  after  recording a $1.1
          million  write-down of the credit to its  estimated  fair value at the
          time of transfer. We subsequently received a payoff on this credit for
          the amount of its revised carrying value in December 2006.

In our  evaluation  of  acquisitions,  it is  anticipated  that as we apply  our
standards for credit structuring,  underwriting,  documentation and approval,  a
portion of the  existing  borrowers  will elect to  refinance  their  loans with
another financial institution,  because of one or more of the following factors:
(a) there may be an aggressive effort by other financial institutions to attract
them;  (b) they do not accept the  changes  involved,  or (c) they are unable to
meet our credit requirements.  In addition, another portion of the portfolio may
either enter our remedial  collection process to reduce undue credit exposure or
improve problem loans, or may be charged-off.  The amount of this attrition will
vary substantially  among acquisitions  depending on the strength and discipline
within the  credit  function  of the  acquired  institution;  the  magnitude  of
problems  contained in the acquired  portfolio;  the aggressiveness of competing
institutions  to  attract  business;   and  the  significance  of  the  acquired
institution  to the  overall  banking  market.  Typically,  in  acquisitions  of
institutions  that have strong credit cultures prior to their  acquisitions  and
operate in moderately large markets,  there is relatively  little attrition that
occurs after the acquisition. However, in those acquisitions in which the credit
discipline has been weak, and particularly  those in small metropolitan or rural
areas,  we can  experience  substantially  greater  attrition.  Generally,  this
process  occurs within  approximately  six to 12 months after  completion of the
acquisition.

During the five years ended December 31, 2006, loans, net of unearned  discount,
increased  from $5.41  billion at December 31, 2001 to $7.67 billion at December
31, 2006, an increase of $2.26 billion,  or 41.7%.  Throughout  this period,  we
have achieved  significant  growth  through  implementation  of our  acquisition
strategy and we have also enhanced our  capabilities  for achieving and managing
internal  growth.  A key element of this  process has been the  expansion of our
corporate  business  development  staff,  which is responsible  for the internal
development  and  management  of  both  loan  and  deposit   relationships  with
commercial customers. While this process was occurring, in an attempt to achieve
more  diversification,  a higher  level of  interest  yield and a  reduction  in
interest rate risk within our loan portfolio,  we also focused on  repositioning
our  portfolio.  As the  corporate  business  development  effort  continued  to
originate  a  substantial  volume of new  loans,  nearly  all of our  conforming
residential  mortgage loan  production  was  historically  sold in the secondary
mortgage market until  management's  decision in 2003 to retain a portion of the
new loan  production in our real estate mortgage  portfolio to offset  continued
weak  loan  demand  in other  sectors  of our loan  portfolio  and  management's
decision in the third quarter of 2005 to retain additional mortgage loan product
production in our residential real estate mortgage portfolio,  including 15-year
fixed rate, conforming  conventional adjustable rate mortgages and other similar
products.  Furthermore,  our lease financing portfolio,  which now represents an
insignificant portion of our loan portfolio,  was reduced as a result of (a) the
discontinuation  of our New Mexico based leasing operation in 2002, the transfer
of all responsibilities for the existing portfolio to a new leasing staff in St.
Louis,  Missouri, a change in our overall business strategy resulting in reduced
commercial leasing activities and repayment of leases by borrowers,  and (b) the
sale of a significant  portion of our remaining  commercial  leasing  portfolio,
which  reduced the portfolio by  approximately  $33.1 million to $9.6 million at
June 30, 2004. We have also reduced our consumer  lending by  discontinuing  the
origination  of indirect auto loans and selling our student loan and credit card
loan portfolios. This allowed us to fund part of the growth in corporate lending
through reductions in indirect automobile and other consumer-related loans.
<PAGE>

As previously mentioned, our acquisitions have contributed to an increase in the
portfolios  of new loans  during the five years  ended  December  31,  2006.  In
certain cases, these acquired  portfolios  contained  significant loan problems,
which we had anticipated  and attempted to consider in our acquisition  pricing.
As we resolved the asset quality issues, the portfolios of the acquired entities
tended to decline due to the  elimination  of problem  loans and because many of
the resources that would otherwise be directed toward  generating new loans were
concentrated  on improving or eliminating  existing  problem  relationships.  We
continued  to  experience  this  trend,  most  significantly  as a result of our
acquisition  of CIB Bank in November 2004,  although we have been  successful in
satisfactorily addressing the problem credits acquired with that acquisition, as
further discussed below.

The following table  summarizes the components of changes in our loan portfolio,
net of unearned discount, for the five years ended December 31, 2006:
<TABLE>
<CAPTION>


                                                            Increase (Decrease) For the Year Ended December 31,
                                                        ------------------------------------------------------------
                                                             2006        2005        2004         2003        2002
                                                             ----        ----        ----         ----        ----
                                                                       (dollars expressed in thousands)
Internal loan volume increase (decrease):
<S>                                                     <C>            <C>          <C>         <C>        <C>
     Commercial lending..............................   $  160,642     204,494      91,760      (22,211)   (119,295)
     Residential real estate lending (1).............      410,181     481,642      32,348     (103,573)     36,074
     Consumer lending, net of unearned discount......       13,412       1,383     (11,900)     (22,429)    (44,060)
Loans and leases sold................................     (344,687)    (14,337)    (83,216)          --          --
Loans provided by acquisitions.......................      545,106     209,621     780,901       43,700     151,000
Securitization of loans..............................     (138,944)         --          --           --          --
                                                        ----------     -------     -------     --------    --------
     Total increase (decrease).......................   $  645,710     882,803     809,893     (104,513)     23,719
                                                        ==========     =======     =======     ========    ========
--------------------------------
(1) Includes loans held for sale.
</TABLE>

We seek to  maintain a lending  strategy  that  emphasizes  quality,  growth and
diversification.   Throughout  our  organization,  we  employ  a  common  credit
underwriting  policy.  Our  commercial  lenders  focus  principally  on small to
middle-market  companies.  Consumer  lenders focus  principally  on  residential
loans,  including home equity loans and other consumer  financing  opportunities
arising out of our branch banking network.

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

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

                                                                          December 31,
                               --------------------------------------------------------------------------------------------------
                                      2006                2005                2004                2003                2002
                               ------------------  ------------------  ------------------   -----------------  ------------------
                                  Amount      %      Amount       %      Amount       %      Amount       %      Amount       %
                                  ------      -      ------       -      ------       -      ------       -      ------       -
                                                         (dollars expressed in thousands)

Commercial, financial
<S>                             <C>         <C>    <C>          <C>    <C>          <C>    <C>          <C>     <C>         <C>
    and agricultural..........  $1,934,908  26.0%  $1,616,841   24.1%  $1,569,321   26.1%  $1,407,626   27.1%  $1,443,016   28.4%
Real estate construction
    and development...........   1,832,504  24.6    1,564,255   23.3    1,318,413   22.0    1,063,889   20.5      989,650   19.5
Real estate mortgage:
    One-to-four-family
      residential loans.......   1,270,158  17.0    1,214,121   18.1      870,889   14.5      811,650   15.7      694,604   13.7
    Multi-family residential
      loans...................     141,341   1.9      143,663    2.2      102,447    1.7      108,163    2.1      112,517    2.2
    Commercial real estate
      loans...................   2,203,649  29.6    2,112,004   31.5    2,088,245   34.8    1,662,451   32.1    1,637,001   32.2
Lease financing...............           4    --        2,981     --        5,911    0.1       67,282    1.3      126,738    2.5
Consumer and installment,
    net of unearned
    discount..................      67,590   0.9       51,772    0.8       49,677    0.8       61,268    1.2       79,097    1.5
                                ---------- -----   ----------  -----   ----------  -----   ----------  -----    ---------  -----
        Total loans,
           excluding loans
           held for sale......   7,450,154 100.0%   6,705,637  100.0%   6,004,903  100.0%   5,182,329  100.0%   5,082,623  100.0%
                                           =====               =====               =====               =====               =====
Loans held for sale...........     216,327            315,134             133,065             145,746             349,965
                                ----------         ----------          ----------          ----------          ----------
        Total loans...........  $7,666,481         $7,020,771          $6,137,968          $5,328,075          $5,432,588
                                ==========         ==========          ==========          ==========          ==========

</TABLE>


<TABLE>
<CAPTION>

Loans at December 31, 2006 mature as follows:

                                                                              Over One Year
                                                                              Through Five
                                                                                 Years                Over Five Years
                                                                          ---------------------     -------------------
                                                               One Year     Fixed      Floating       Fixed    Floating
                                                               or Less      Rate         Rate         Rate       Rate        Total
                                                               -------      ----         ----         ----       ----        -----
                                                                            (dollars expressed in thousands)

<S>                                                          <C>             <C>        <C>          <C>        <C>        <C>
Commercial, financial and agricultural....................   $1,208,583      63,055     133,517      243,697    286,056    1,934,908
Real estate construction and development... ..............    1,098,508     114,593     555,247       33,526     30,630    1,832,504
Real estate mortgage:
    One-to-four family residential loans..................       91,421     163,450      48,235      162,845    804,207    1,270,158
    Multi-family residential loans........................        9,964      60,688      41,148       18,332     11,209      141,341
    Commercial real estate loans..........................      409,604     800,092     301,190      362,776    329,987    2,203,649
Lease financing...........................................           --           4          --           --         --            4
Consumer and installment, net of unearned discount........       22,567      38,278       2,628        2,126      1,991       67,590
Loans held for sale.......................................      216,327          --          --           --         --      216,327
                                                             ----------   ---------   ---------     --------  ---------    ---------
      Total loans.........................................   $3,056,974   1,240,160   1,081,965      823,302  1,464,080    7,666,481
                                                             ==========   =========   =========     ========  =========    =========
</TABLE>
<PAGE>


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

<TABLE>
<CAPTION>

                                                                              December 31,
                                                    ---------------------------------------------------------------
                                                        2006         2005         2004         2003         2002
                                                        ----         ----         ----         ----         ----
                                                                    (dollars expressed in thousands)

Commercial, financial and agricultural:
<S>                                                 <C>               <C>         <C>          <C>          <C>
   Nonaccrual.....................................  $    9,879        4,937       10,147       26,876       15,787
   Restructured terms.............................          --           --            4           --           --
Real estate construction and development:
   Nonaccrual.....................................      13,344       11,137       13,435        6,402       23,378
Real estate mortgage:
   One-to-four family residential loans:
     Nonaccrual...................................      18,885        9,576        9,881       21,611       14,833
     Restructured terms...........................           9           10           11           13           15
   Multi-family residential loans:
     Nonaccrual...................................         272          740          434          804          772
   Commercial real estate loans:
     Nonaccrual...................................       6,260       70,625       50,671       13,994        8,890
     Restructured terms...........................          --           --           --           --        1,907
Lease financing:
   Nonaccrual ....................................          --           11          907        5,328        8,723
Consumer and installment:
   Nonaccrual ....................................          81          160          310          336          860
                                                    ----------    ---------    ---------    ---------    ---------
          Total nonperforming loans...............      48,730       97,196       85,800       75,364       75,165
Other real estate.................................       6,433        2,025        4,030       11,130        7,609
                                                    ----------    ---------    ---------    ---------    ---------
          Total nonperforming assets..............  $   55,163       99,221       89,830       86,494       82,774
                                                    ==========    =========    =========    =========    =========

Loans, net of unearned discount...................  $7,666,481    7,020,771    6,137,968    5,328,075    5,432,588
                                                    ==========    =========    =========    =========    =========

Loans past due 90 days or more
  and still accruing..............................  $    5,653        5,576       28,689        2,776        4,635
                                                    ==========    =========    =========    =========    =========

Ratio of:
   Allowance for loan losses to loans.............        1.90%        1.93%        2.46%        2.19%        1.83%
   Nonperforming loans to loans...................        0.64         1.38         1.40         1.41         1.38
   Allowance for loan losses to
     nonperforming loans..........................      299.05       139.23       175.65       154.52       132.29
   Nonperforming assets to loans and
     other real estate............................        0.72         1.41         1.46         1.62         1.52
                                                    ==========    =========    =========    =========    =========
</TABLE>

Nonperforming  loans,  consisting  of loans on  nonaccrual  status  and  certain
restructured  loans,  were $48.7  million at December 31, 2006, in comparison to
$97.2  million and $85.8  million at December  31, 2005 and 2004,  respectively.
Other real estate  owned was $6.4  million,  $2.0  million  and $4.0  million at
December  31,  2006,  2005 and 2004,  respectively.  Our  nonperforming  assets,
consisting  of  nonperforming  loans and other  real  estate  owned,  were $55.2
million,  $99.2 million and $89.8  million at December 31, 2006,  2005 and 2004,
respectively.  A significant portion of our nonperforming loans in 2004 and 2005
included  loans  associated  with our  acquisition of CIB Bank in November 2004,
which totaled $55.0 million,  or 56.6% of our  nonperforming  loans, at December
31, 2005, and $50.5 million,  or 58.8% of our  nonperforming  loans, at December
31,  2004.  At  December  31,  2006,  we did not  have any  nonperforming  loans
associated with our CIB Bank  acquisition.  The decrease in nonperforming  loans
primarily  resulted from our plans to reduce  nonperforming  assets  through the
sale of certain nonperforming loans, loan payoffs and/or external refinancing of
certain  credit  relationships.  We  attribute  the  44.4% net  decrease  in our
nonperforming assets during the year ended December 31, 2006 to the following:
<PAGE>

     >>   the  payoff of two  significant  nonperforming  loans  totaling  $27.3
          million, in aggregate;

     >>   following   the   transfer   of  11   nonperforming   loans   totaling
          approximately $59.7 million to our held for sale portfolio on December
          31, 2005, as further  discussed  below, in January 2006, we received a
          payoff on one of the loans held for sale that had a carrying  value of
          $12.4 million at December 31, 2005. In  conjunction  with this payoff,
          we  recognized  a loan  recovery of $5.0 million and interest and late
          fees of $2.0  million on the  payoff of the loan.  In March  2006,  we
          completed  the sale of the  majority of the  remaining  loans held for
          sale that had a carrying  value of  approximately  $32.5  million,  in
          aggregate,  at  December  31,  2005,  and  recorded a pre-tax  gain of
          approximately  $1.7 million on the sale of these loans.  Additionally,
          in September 2006, we recorded a $1.1 million write-down on the single
          remaining nonperforming loan held for sale and transferred the loan at
          its  estimated  fair  value  of  $13.5  million  back  into  our  loan
          portfolio.  We  subsequently  received a payoff on this  nonperforming
          loan in December  2006 in the amount of the loan's  adjusted  carrying
          value;

     >>   in December  2006,  we completed  the sale of $32.6  million of loans,
          which included  approximately $14.8 million of acquired  nonperforming
          loans,  and recorded a pre-tax gain of  approximately  $3.7 million on
          the sale of these loans. In addition,  we recognized loan  charge-offs
          of $2.3 million in conjunction  with the transfer of these  commercial
          loans to our loans held for sale portfolio prior to their sale; and

     >>   overall  improvement in the level of  nonperforming  assets  resulting
          from our continued focus on improving asset quality through an ongoing
          process of problem loan work-outs,  exclusive of the  deterioration of
          certain  credit  relationships  discussed  below;  the sale of certain
          acquired  nonperforming loans; the strengthening of certain loans; and
          loan  payoffs  and/or  external  refinancing  of various  credits,  as
          further discussed below.

The  overall  reduction  in our  nonperforming  assets was  partially  offset by
deterioration  within our  one-to-four  family  residential  loan portfolio as a
result of current market  conditions,  and the  deterioration  of several credit
relationships,  primarily  within our residential  development and  construction
portfolio,  during  the later part of 2006 that were  driven by  current  market
conditions, including slowdowns in unit sales.

As further  discussed under  "Business  --Lending  Activities,"  the increase in
nonperforming loans in 2005 was primarily attributable to the deterioration of a
few large credit  relationships  in our Midwest region during the fourth quarter
of 2005, partially offset by significant improvement in the overall level of our
nonperforming  loans  during  the first nine  months of 2005.  The  increase  in
nonperforming loans in the fourth quarter of 2005 was primarily  attributable to
further  deterioration of a small number of credit  relationships in our Midwest
region, including two large relationships of $14.9 million and $16.6 million, or
$31.5 million in  aggregate,  that were acquired in the purchase of CIB Bank. On
December 31, 2005, we recognized $7.6 million of loan  charge-offs to reduce the
loans to their  estimated  fair  value,  net of costs,  that was  expected to be
realized at the time of the sale, and transferred approximately $59.7 million of
nonperforming  loans to our held for sale portfolio,  which included  several of
the relationships  that  deteriorated  during the fourth quarter of 2005 and one
credit relationship of $12.4 million,  which was included in nonperforming loans
at  December  31,  2004 with a value of $14.5  million.  Included  in these loan
charge-offs  and  loans  transferred  to our held for sale  portfolio  were $6.0
million of loan  charge-offs and  approximately  $49.6 million of  nonperforming
loans that were associated with our CIB Bank purchase.  As previously discussed,
during 2006, we sold the majority of these loans held in our loans held for sale
portfolio,  received payoffs on certain  credits,  and transferred one loan back
into  our  loan  portfolio  and  subsequently  received  payment  in full of the
remaining balance.

The improvement of our nonperforming  loans during the first nine months of 2005
primarily resulted from: our continued emphasis on improving asset quality;  the
sale of  approximately  $14.3 million of certain acquired  nonperforming  loans;
strengthening of certain loans; and loan payoffs and/or external  refinancing of
various  credits,   including  $97.3  million  of  loan  payoffs  on  14  credit
relationships  during the first and second  quarters  of 2005.  A portion of the
loan payoffs and sales during the first  quarter of 2005  pertaining  to certain
acquired  nonperforming  loans that were classified as loans held for sale as of
December 31, 2004  contributed  to a  reallocation  of the purchase price on our
acquisition  of CIB Bank,  as further  described  in Note 2 to our  Consolidated
Financial Statements.  We also recorded a $1.6 million write-down on an acquired
parcel of other  real  estate  owned to its  estimated  fair  value  based  upon
additional data received. This write-down was recorded as an acquisition-related
adjustment  in the first  quarter of 2005 and is further  discussed in Note 2 to
our Consolidated  Financial  Statements.  In addition,  our nonperforming assets

<PAGE>

associated with our acquisition of SBLS in August 2004 decreased by $4.0 million
during 2005,  primarily  resulting from $3.8 million of loan charge-offs,  which
reduced  SBLS LLC's  nonperforming  assets to $2.3 million at December 31, 2005.
SBLS LLC previously had a significant  concentration  of assets  associated with
the shrimping vessels industry, which were reflected in both nonperforming loans
and other  repossessed  assets.  The SBA agreed to repurchase  SBLS LLC's entire
shrimping vessels  portfolio,  and these loans were placed in liquidation status
in 2005. Throughout 2006, the majority of these loans have been fully liquidated
via completion of the sale of the underlying collateral and/or the collection of
insurance  proceeds  associated  with  vessels  that  were  heavily  damaged  by
Hurricane Katrina and deemed to be irreparable.

The increase in  nonperforming  loans in 2004 was primarily  associated with our
2004 acquisitions,  partially offset by substantial  improvement in our existing
portfolio of nonperforming  assets as a result of significant loan payoffs,  the
liquidation of foreclosed property,  the sale of certain nonperforming loans and
the sale of a portion of our  commercial  leasing  portfolio.  The  increase  in
nonperforming  loans in 2003 and 2002 was primarily  attributable to the current
economic  conditions  that existed  during those  periods,  additional  problems
identified in two acquired loan portfolios and continuing  deterioration  in our
commercial leasing portfolio,  particularly the segment of the portfolio related
to the airline industry.

Loans past due 90 days or more and still accruing interest were $5.7 million and
$5.6 million at December 31, 2006 and 2005, respectively,  reflecting a decrease
of  approximately  $23.1  million from $28.7  million at December 31, 2004.  The
overall levels of such delinquencies at December 31, 2006 and 2005 are primarily
reflective  of the  continued  growth  in our loan  portfolio.  The  substantial
increase  in 2004  resulted  from our  acquisitions  of CIB Bank and CCB,  which
comprised $27.2 million of our loans past due 90 days or more and still accruing
interest at December 31, 2004.  A  significant  portion of these loans were past
due as to  contractual  maturity  and  pending  renewal at  December  31,  2004;
however,  the majority of the loan payments were current and in accordance  with
the contractual terms of the underlying credit agreements.

Our  allowance  for loan  losses  as a  percentage  of  loans,  net of  unearned
discount,  was  1.90%,  1.93% and 2.46% at  December  31,  2006,  2005 and 2004,
respectively.  Our allowance  for loan losses as a percentage  of  nonperforming
loans  increased to 299.05% at December  31,  2006,  from 139.23% and 175.65% at
December  31,  2005 and 2004,  respectively,  and  primarily  resulted  from the
reduction in  nonperforming  loans in 2006.  Our  allowance  for loan losses was
$145.7  million at December  31,  2006,  compared  to $135.3  million and $150.7
million at December 31, 2005 and 2004, respectively. As further described in the
table below and under "--Business - Lending  Activities," the allowance for loan
losses also  reflects an increase of $5.2  million and $2.0  million in 2006 and
2005,  respectively,  and an  increase  of $33.8  million in 2004,  of  balances
acquired  in  conjunction  with  our  acquisitions,  including  a $15.7  million
increase  to reflect  the  application  of our loss  factors to CIB Bank's  loan
portfolio risk ratings,  reflecting our strategies for more rapid  resolution of
certain  acquired  classified  and  nonperforming  assets.  This  adjustment was
partially  offset by our  reclassification,  at the time of acquisition,  of CIB
Bank's  specific  reserves of $21.7  million as a reduction  of the basis of the
individual  loan  relationships  (which had no impact on our net loan balances),
and the transfer of $18.3 million of nonperforming loans to loans held for sale,
resulting in a  corresponding  charge of $5.4 million to the  allowance for loan
losses to reduce the loans held for sale to their  estimated fair value,  net of
broker costs, that was expected to be realized at the time of sale.

Loan  charge-offs  decreased  to $22.2  million for the year ended  December 31,
2006,  compared to $33.1 million and $50.6 million for the comparable periods in
2005 and 2004,  respectively.  Loan  recoveries  were $15.4 million for the year
ended  December 31, 2006,  compared to $19.8  million and $25.9  million for the
comparable  periods in 2005 and 2004,  respectively.  Loan  charge-offs,  net of
recoveries,  decreased  to $6.8  million for the year ended  December  31, 2006,
compared to $13.4 million and $24.8 million for the  comparable  periods in 2005
and 2004,  respectively.  Net loan  charge-offs for 2006 include $2.3 million of
loans  charged-off in conjunction with the transfer of certain  commercial loans
to the loans held for sale  portfolio  prior to their sale in the fourth quarter
of 2006, and a $5.0 recovery recorded in the first quarter of 2006 on the payoff
of a single  nonperforming  loan.  Net loan  charge-offs  for 2005 included $7.6
million of charge-offs associated with the $59.7 million of loans transferred to
our held for sale  portfolio at December 31, 2005, as previously  discussed.  We
continue  to  closely  monitor  our  loan  portfolio  and  address  the  ongoing
challenges posed by the economic environment,  including reduced loan demand and
highly  competitive  markets within certain  sectors of our loan  portfolio.  We
consider  this in our overall  assessment  of the adequacy of the  allowance for
loan losses.

The  level of  nonperforming  assets  from our 2004  acquisitions  significantly
contributed  to  increased  levels of problem  loans and past due loans,  and we
anticipated  the level of  nonperforming  and  delinquent  loans would  continue
during  2005 and,  to a lesser  degree,  during 2006 as we worked to resolve the
underlying  issues  associated  with the  nonperforming  assets of the  acquired
portfolios,  including  our  efforts to actively  market and sell a  significant
portion of the nonperforming loans, as discussed above. In addition, although we
have  experienced  improvement  in our  nonperforming  asset levels in 2006,  we
continue our efforts to reduce the overall  level of these assets in  accordance
with our credit risk guidelines.
<PAGE>

As of December  31, 2006,  2005,  2004,  2003 and 2002,  $67.1  million,  $124.3
million,  $161.8  million,  $109.4 million and $98.2 million,  respectively,  of
loans not included in the table above were  identified  by  management as having
potential credit problems, or problem loans. The decline in the level of problem
loans during 2005 and 2006 primarily  reflects  improvement in the management of
these loans and success in  resolving  certain of the problem  loans  associated
with our 2004 and 2005  acquisitions.  The significant  increase in the level of
problem loans for the year ended December 31, 2004 was primarily attributable to
our  acquisition  of CIB Bank,  in  addition to  internal  portfolio  growth and
economic  conditions  within certain sectors of the markets in which we operate.
The significant  level of problem loans for the year ended December 31, 2003 was
primarily due to continuing  deterioration of our commercial  leasing portfolio,
internal and external  portfolio growth, the gradual slow down and uncertainties
that  occurred in the  economy in the  markets in which we  operate,  as well as
residual  problem  loans  stemming  from one of our 2001  acquisitions.  Certain
acquired loan  portfolios  exhibited  varying degrees of distress prior to their
acquisition.  While these  problems had been  identified  and  considered in our
acquisition pricing, the acquisitions led to an increase in nonperforming assets
and problem loans.  Management continues its efforts to reduce nonperforming and
problem loans and re-define  overall strategy and business plans with respect to
our loan portfolio as deemed necessary.

Our credit  management  policies and procedures focus on identifying,  measuring
and controlling  credit  exposure.  These procedures  employ a  lender-initiated
system of rating  credits,  which is ratified in the loan  approval  process and
subsequently  tested in internal credit reviews,  external audits and regulatory
bank examinations.  The system requires the rating of all loans at the time they
are originated or acquired,  except for homogeneous categories of loans, such as
residential  real estate  mortgage loans and consumer loans.  These  homogeneous
loans are assigned an initial rating based on our  experience  with each type of
loan. We adjust the ratings of the homogeneous loans based on payment experience
subsequent to their origination.

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

Each  month,  the credit  administration  department  provides  management  with
detailed  lists of loans on the watch  list and  summaries  of the  entire  loan
portfolio by risk rating. These are coupled with analyses of changes in the risk
profile  of the  portfolio,  changes in  past-due  and  nonperforming  loans and
changes  in watch  list and  classified  loans over  time.  In this  manner,  we
continually  monitor the overall  increases or decreases in the level of risk in
our loan portfolio.  Factors are applied to the loan portfolio for each category
of loan risk to determine  acceptable  levels of allowance  for loan losses.  In
addition,  a quarterly  evaluation  of each lending  unit is performed  based on
certain factors,  such as lending personnel  experience,  recent credit reviews,
loan concentrations and other factors. Based on this evaluation,  changes to the
allowance  for  loan  losses  may  be  required  due to the  perceived  risk  of
particular  portfolios.  The calculated  allowance required for the portfolio is
then  compared to the actual  allowance  balance to  determine  the  adjustments
necessary  to maintain  the  allowance  at an  appropriate  level.  In addition,
management exercises a certain degree of judgment in its analysis of the overall
adequacy of the allowance for losses. In its analysis,  management considers the
changes in the portfolio,  including growth, composition, the ratio of net loans
to total assets, and the economic conditions of the regions in which we operate.
Based on this quantitative and qualitative analysis, adjustments are made to the
allowance for loan losses.  Such  adjustments are reflected in our  consolidated
statements of income.

The  allocation of the allowance for loan losses by loan category is a result of
the application of our risk rating system augmented by qualitative analysis. The
same  procedures we employ to determine  the overall risk in our loan  portfolio
and  our   requirements   for  the  allowance  for  loan  losses  determine  the
distribution of the allowance by loan category.  Consequently,  the distribution
of the  allowance  will  change  from period to period due to (a) changes in the
aggregate loan balances by loan category;  (b) changes in the identified risk in
each loan in the portfolio over time, excluding those homogeneous  categories of
loans  such as  consumer  and  installment  loans and  residential  real  estate
mortgage loans for which risk ratings are changed based on payment  performance;
and (c) changes in loan concentrations by borrower.
<PAGE>

Since  the  methods  of  calculating   the  allowance   requirements   have  not
significantly changed over time, the reallocations among different categories of
loans that appear  between  periods are the result of changes in the balances of
the  individual  loans that comprise the aggregate  portfolio due to the factors
listed above.  However,  the perception of risk with respect to particular loans
within the  portfolio  will change over time as a result of the  characteristics
and  performance  of those  loans,  as well as the overall  economic  trends and
market trends,  including our actual and expected trends in nonperforming loans.
Consequently, while there are no specific allocations of the allowance resulting
from economic or market conditions or actual or expected trends in nonperforming
loans, these factors are considered in the initial assignment of risk ratings to
loans and in subsequent changes to those risk ratings.

The following  table is a summary of our loan loss experience for the five years
ended December 31, 2006:
<TABLE>
<CAPTION>

                                                                As of or For the Years Ended December 31,
                                                      -------------------------------------------------------------
                                                           2006        2005        2004         2003        2002
                                                           ----        ----        ----         ----        ----
                                                                       (dollars expressed in thousands)

<S>                                                   <C>            <C>         <C>           <C>          <C>
Allowance for loan losses, beginning of year......... $  135,330     150,707     116,451       99,439       97,164
Acquired allowances for loan losses..................      5,208       1,989      33,752          757        1,366
Other adjustments (1)................................         --          --        (479)          --           --
                                                      ----------   ---------   ---------    ---------    ---------
                                                         140,538     152,696     149,724      100,196       98,530
                                                      ----------   ---------   ---------    ---------    ---------
Loans charged-off:
    Commercial, financial and agricultural...........     (6,905)    (10,500)    (26,550)     (23,476)     (45,697)
    Real estate construction and development.........     (6,202)     (7,838)     (3,481)      (5,825)      (7,778)
    Real estate mortgage:
       One-to-four family residential loans..........     (3,779)     (3,399)     (4,891)      (4,167)      (2,697)
       Multi-family residential loans................       (241)         --        (139)         (87)        (109)
       Commercial real estate loans..................     (3,635)     (9,699)     (9,995)      (1,708)      (2,747)
    Lease financing..................................       (607)       (491)     (4,536)     (19,160)      (8,426)
    Consumer and installment.........................       (834)     (1,196)     (1,051)      (1,350)      (3,070)
                                                      ----------   ---------   ---------    ---------    ---------
          Total......................................    (22,203)    (33,123)    (50,643)     (55,773)     (70,524)
                                                      ----------   ---------   ---------    ---------    ---------
Recoveries of loans previously charged-off:
    Commercial, financial and agricultural...........      5,237      10,802      14,983       10,147        8,331
    Real estate construction and development.........      1,661       1,963         748        1,659          631
    Real estate mortgage:
       One-to-four family residential loans..........      1,066       1,953       1,597          781          628
       Multi-family residential loans................         --          --          27           99          792
       Commercial real estate loans..................      6,048       2,901       2,659        4,174        3,491
    Lease financing..................................        731       1,501       4,878        4,805          494
    Consumer and installment.........................        651         637         984        1,363        1,566
                                                      ----------   ---------   ---------    ---------    ---------
          Total......................................     15,394      19,757      25,876       23,028       15,933
                                                      ----------   ---------   ---------    ---------    ---------
          Net loans charged-off......................     (6,809)    (13,366)    (24,767)     (32,745)     (54,591)
                                                      ----------   ---------   ---------    ---------    ---------
Provision for loan losses............................     12,000      (4,000)     25,750       49,000       55,500
                                                      ----------   ---------   ---------    ---------    ---------
Allowance for loan losses, end of year............... $  145,729     135,330     150,707      116,451       99,439
                                                      ==========   =========   =========    =========    =========

Loans outstanding, net of unearned discount:
    Average.......................................... $7,472,089   6,436,970   5,509,054    5,385,363    5,424,508
    End of year......................................  7,666,481   7,020,771   6,137,968    5,328,075    5,432,588
    End of year, excluding loans held for sale.......  7,450,154   6,705,637   6,004,903    5,182,329    5,082,623
                                                      ==========   =========   =========    =========    =========

Ratio of allowance for loan losses
  to loans outstanding:
    Average..........................................       1.95%       2.10%       2.74%        2.16%        1.83%
    End of year......................................       1.90        1.93        2.46         2.19         1.83
    End of year, excluding loans held for sale.......       1.96        2.02        2.51         2.25         1.96
Ratio of net charge-offs to average
  loans outstanding..................................       0.09        0.21        0.45         0.61         1.01
Ratio of current year recoveries to
  preceding year's charge-offs.......................      46.48       39.01       46.40        32.65        50.66
                                                      ==========   =========   =========    =========    =========
---------------
(1) In December 2003, we established a $1.0 million  specific reserve for estimated losses on a $5.3 million letter
of credit that was recorded in accrued and other  liabilities in our consolidated  balance sheets. In January 2004,
the letter of credit was fully funded as a loan and the related $1.0 million specific reserve was reclassified from
accrued and other liabilities to the allowance for loan losses. In June 2004, we reclassified $1.5 million from the
allowance for loan losses to accrued and other  liabilities  to establish a specific  reserve  associated  with our
commercial leasing portfolio sale and related recourse obligations for certain leases sold.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>
The following table is a summary of the allocation of the allowance for loan
losses for the five years ended December 31, 2006:

                                          2006              2005             2004              2003              2002
                                    ---------------- ----------------- ---------------- -----------------  ----------------
                                             Percent           Percent          Percent           Percent           Percent
                                               of                of               of                of                of
                                            Category          Category         Category          Category          Category
                                               of                of               of                of                of
                                              Loans             Loans            Loans             Loans             Loans
                                               to                to               to                to                to
                                              Total             Total            Total             Total             Total
                                     Amount   Loans   Amount    Loans   Amount   Loans   Amount    Loans   Amount    Loans
                                     ------   -----   ------    -----   ------   -----   ------    -----   ------    -----
                                                            (dollars expressed in thousands)
Commercial, financial
<S>                                 <C>       <C>    <C>        <C>    <C>       <C>    <C>        <C>     <C>       <C>
  and agricultural................  $ 47,973  25.24% $ 39,245   23.03% $ 46,195  25.57% $ 37,142   26.42%  $34,915   26.56%
Real estate construction
  and development.................    40,410  23.90    32,638   22.28    38,525  21.48    26,782   19.97    22,667   18.22
Real estate mortgage:
    One-to-four family
      residential loans...........    13,308  16.57    10,526   17.29     8,466  14.19     9,684   15.23     7,913   12.79
    Multi-family residential
      loans.......................        95   1.84        67    2.05        20   1.67       186    2.03        32    2.07
    Commercial real estate loans..    41,833  28.75    51,199   30.08    55,922  34.01    36,632   31.20    28,477   30.13
Lease financing...................        87     --       315    0.04       628   0.10     4,830    1.26     3,649    2.33
Consumer and installment..........     1,035   0.88       757    0.74       617   0.81       668    1.15       703    1.46
Loans held for sale...............       988   2.82       583    4.49       334   2.17       527    2.74     1,083    6.44
                                    -------- ------  --------  ------  -------- ------  --------  ------   -------  ------
      Total.......................  $145,729 100.00% $135,330  100.00% $150,707 100.00% $116,451  100.00%  $99,439  100.00%
                                    ======== ======  ========  ======  ======== ======  ========  ======   =======  ======
</TABLE>

Deposits

Deposits are the primary  source of funds for First Bank.  Our deposits  consist
principally of core deposits from our local market areas,  including  individual
and corporate customers.

The following table sets forth the  distribution of our average deposit accounts
for the years indicated and the weighted average interest rates on each category
of deposits:

<TABLE>
<CAPTION>

                                                               Year Ended December 31,
                                ----------------------------------------------------------------------------------------
                                          2006                          2005                           2004
                                --------------------------  -----------------------------  -----------------------------
                                            Percent                       Percent                        Percent
                                              of                            of                             of
                                  Amount   Deposits  Rate     Amount     Deposits  Rate       Amount    Deposits   Rate
                                  ------   --------  ----     ------     --------  ----       ------    --------   ----
                                                          (dollars expressed in thousands)

Noninterest-bearing demand
<S>                             <C>          <C>     <C>    <C>            <C>      <C>     <C>           <C>        <C>
  deposits....................  $1,267,681   15.82%    --%  $1,257,277     17.45%    --%    $1,100,072    17.83%     --%
Interest-bearing demand
  deposits....................     962,956   12.01   0.85      905,613     12.57   0.49        856,765    13.89    0.41
Savings deposits..............   2,152,419   26.86   2.48    2,135,156     29.64   1.39      2,175,425    35.27    0.93
Time deposits.................   3,631,516   45.31   4.28    2,906,601     40.34   3.21      2,036,323    33.01    2.43
                                ----------  ------   ====   ----------    ------   ====     ----------   ------    ====
    Total average deposits....  $8,014,572  100.00%         $7,204,647    100.00%           $6,168,585   100.00%
                                ==========  ======          ==========    ======            ==========   ======
</TABLE>

Capital and Dividends

Historically,  we have  accumulated  capital  to  support  our  acquisitions  by
retaining most of our earnings. We pay relatively small dividends on our Class A
convertible,  adjustable  rate preferred  stock and our Class B adjustable  rate
preferred stock,  totaling  $786,000 for the years ended December 31, 2006, 2005
and 2004.

Management  believes  as of December  31, 2006 and 2005,  First Bank and we were
"well  capitalized,"  as defined in  regulations  adopted  pursuant  to the FDIC
Improvement Act of 1991. First Bank's and our actual and required capital ratios
are further described in Note 21 to our Consolidated Financial Statements.

As of  December  31,  2006,  we had  nine  affiliated  Delaware  or  Connecticut
statutory and business  trusts that were created for the sole purpose of issuing
trust preferred securities.  As further described in Note 12 to our Consolidated
Financial  Statements,  the sole assets of the statutory and business trusts are
our subordinated debentures.

<PAGE>


A summary of the outstanding trust preferred securities issued by our affiliated
statutory and business trusts, and our related subordinated debentures issued to
the  respective  trusts  in  conjunction  with the  trust  preferred  securities
offerings as of December 31, 2006, is as follows:
<TABLE>
<CAPTION>

                                  Date of Trust                              Interest     Preferred     Subordinated
    Name of Trust                   Formation         Type of Offering         Rate       Securities     Debentures
    -------------                   ---------         ----------------         ----       ----------     ----------

<S>                                <C>                <C>                    <C>         <C>            <C>
First Bank Capital Trust           April 2002         Private Placement      Variable    $25,000,000    $25,774,000
First Preferred Capital Trust IV  January 2003      Publicly Underwritten      8.15%      46,000,000     47,422,700
First Bank Statutory Trust         March 2003         Private Placement        8.10%      25,000,000     25,774,000
First Bank Statutory Trust II    September 2004       Private Placement      Variable     20,000,000     20,619,000
First Bank Statutory Trust III    November 2004       Private Placement      Variable     40,000,000     41,238,000
First Bank Statutory Trust IV     February 2006       Private Placement      Variable     40,000,000     41,238,000
First Bank Statutory Trust V       April 2006         Private Placement      Variable     20,000,000     20,619,000
First Bank Statutory Trust VI       June 2006         Private Placement      Variable     25,000,000     25,774,000
First Bank Statutory Trust VII    December 2006       Private Placement      Variable     50,000,000     51,547,000
</TABLE>

For regulatory  reporting purposes,  the trust preferred securities are eligible
for inclusion, subject to certain limitations, in our Tier 1 capital. Because of
these limitations, as of December 31, 2006, $19.8 million of the trust preferred
securities was not eligible for inclusion in our Tier 1 capital;  however,  this
amount was eligible for inclusion in our total risk-based  capital. In addition,
as further  described in Note 25 to our Consolidated  Financial  Statements,  in
February 2007, we issued $25.8 million of subordinated  debentures to First Bank
Statutory Trust VIII, a newly-formed Delaware statutory trust.

Liquidity

Our  liquidity  is the  ability to maintain a cash flow that is adequate to fund
operations,  service debt obligations and meet obligations and other commitments
on a timely basis. We receive funds for liquidity from customer  deposits,  loan
payments,  maturities  of  loans  and  investments,  sales  of  investments  and
earnings.  In  addition,  we may avail  ourselves  of other  sources of funds by
issuing  certificates of deposit in denominations of $100,000 or more, borrowing
federal funds,  selling  securities under agreements to repurchase and utilizing
borrowings from the FHLB and other  borrowings,  including our term loan and our
revolving  credit line.  The  aggregate  funds  acquired from these sources were
$1.86 billion and $1.72 billion at December 31, 2006 and 2005, respectively.

The following  table  presents the maturity  structure of these other sources of
funds,  which consists of  certificates of deposit of $100,000 or more and other
borrowings, including our notes payable, at December 31, 2006:
<TABLE>
<CAPTION>

                                                          Certificates of Deposit    Other
                                                            of $100,000 or More    Borrowings        Total
                                                            -------------------    ----------        -----
                                                                      (dollars expressed in thousands)

<S>                                                             <C>                  <C>             <C>
     Three months or less....................................   $  506,143           174,874         681,017
     Over three months through six months....................      323,862             5,000         328,862
     Over six months through twelve months...................      410,917            13,000         423,917
     Over twelve months......................................      178,657           246,025         424,682
                                                                ----------         ---------       ---------
         Total...............................................   $1,419,579           438,899       1,858,478
                                                                ==========         =========       =========
</TABLE>

In addition to these  sources of funds,  First Bank has  established a borrowing
relationship  with  the  Federal  Reserve  Bank  of St.  Louis.  This  borrowing
relationship,  which is secured by  commercial  loans,  provides  an  additional
liquidity  facility that may be utilized for contingency  purposes.  At December
31, 2006 and 2005,  First Bank's  borrowing  capacity  under the  agreement  was
approximately  $639.1  million and $743.6  million,  respectively.  In addition,
First  Bank's  borrowing  capacity  through its  relationship  with the FHLB was
approximately  $666.0  million and $679.3 million at December 31, 2006 and 2005,
respectively. We had FHLB advances outstanding of $4.0 million and $39.3 million
at December 31, 2006 and 2005,  respectively,  all of which  represent  advances
assumed in conjunction with various acquisitions.  On March 17, 2006 and May 10,
2006, we prepaid $20.5 million and $14.8 million of FHLB advances, respectively,
that  were  assumed  in  conjunction  with  previous  acquisitions,  as  further
described in Note 10 to our Consolidated Financial Statements.



<PAGE>
In addition to our owned  banking  facilities,  we have entered  into  long-term
leasing  arrangements to support our ongoing  activities.  The required payments
under such  commitments  and other  obligations  at  December  31,  2006 were as
follows:
<TABLE>
<CAPTION>
                                                Less Than         1-3          3-5         Over
                                                  1 Year         Years        Years       5 Years      Total
                                                  ------         -----        -----       -------      -----
                                                                 (dollars expressed in thousands)

<S>                                             <C>              <C>          <C>          <C>          <C>
     Operating leases.......................    $   14,175       25,728       16,106       36,984       92,993
     Certificates of deposit (1)............     3,185,226      513,793      116,744       11,701    3,827,464
     Other borrowings.......................       172,874      201,025           --           --      373,899
     Notes payable..........................        30,000       35,000           --           --       65,000
     Subordinated debentures................            --           --           --      297,966      297,966
     Other contractual obligations (2)......        57,861          135            8           15       58,019
                                                ----------     --------     --------     --------    ---------
         Total..............................    $3,460,136      775,681      132,858      346,666    4,715,341
                                                ==========     ========     ========     ========    =========
     ----------------------------
     (1)  Amounts  exclude  the  related interest expense accrued on these obligations as of December 31, 2006.
     (2)  Amounts include the obligation related to our repayment in full of the $56.9 million of  subordinated
          debentures  issued  to  First  Preferred  Capital  Trust  III, which is included in accrued and other
          liabilities in our consolidated balance sheets, as further described in Note 12 to  our  Consolidated
          Financial  Statements.  Amounts exclude the related interest expense accrued on this obligation as of
          December 31, 2006.
</TABLE>

Management  believes the available liquidity and operating results of First Bank
will be sufficient to provide funds for growth and to permit the distribution of
dividends to us sufficient to meet our operating and debt service  requirements,
both  on a  short-term  and  long-term  basis,  and to pay the  interest  on the
subordinated  debentures that we issued to our affiliated statutory and business
financing trusts.

Critical Accounting Policies

Our financial condition and results of operations  presented in our Consolidated
Financial   Statements,   accompanying  notes  to  our  Consolidated   Financial
Statements,  selected  consolidated and other financial data appearing elsewhere
in this report, and management's  discussion and analysis of financial condition
and results of operations are, to a large degree,  dependent upon our accounting
policies.  The selection and  application  of our  accounting  policies  involve
judgments, estimates and uncertainties that are susceptible to change.

We have  identified  the following  accounting  policies that we believe are the
most critical to the  understanding  of our  financial  condition and results of
operations.   These  critical  accounting  policies  require  management's  most
difficult,  subjective and complex  judgments  about matters that are inherently
uncertain.  In the  event  that  different  assumptions  or  conditions  were to
prevail,  and depending upon the severity of such changes,  the possibility of a
materially different financial condition and/or results of operations could be a
reasonable  likelihood.  The  impact  and any  associated  risks  related to our
critical accounting policies on our business operations is discussed  throughout
"--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations,"  where such  policies  affect our reported  and expected  financial
results. A detailed  discussion on the application of these and other accounting
policies  is  summarized  in  Note 1 to our  Consolidated  Financial  Statements
appearing elsewhere in this report.

Loans and Allowance for Loan Losses. We maintain an allowance for loan losses at
a level  we  consider  adequate  to  provide  for  probable  losses  in our loan
portfolio.   The  determination  of  our  allowance  for  loan  losses  requires
management to make  significant  judgments  and estimates  based upon a periodic
analysis of our loans held for  portfolio and held for sale  considering,  among
other factors,  current economic conditions,  loan portfolio  composition,  past
loan loss experience,  independent appraisals, the fair value of underlying loan
collateral,  our  customers'  ability  to repay  their  loans and  selected  key
financial  ratios.  If actual events prove the estimates and assumptions we used
in determining our allowance for loan losses were incorrect, we may need to make
additional provisions for loan losses. For further discussion, refer to "--Loans
and  Allowance  for  Loan  Losses"  and  Note  4 to our  Consolidated  Financial
Statements appearing elsewhere in this report.

Derivative Financial Instruments. We utilize derivative financial instruments to
assist  in  our  management  of  interest  rate  sensitivity  by  modifying  the
repricing,   maturity  and  option   characteristics   of  certain   assets  and
liabilities.  The  judgments  and  assumptions  that  are most  critical  to the
application  of  this  critical   accounting  policy  are  those  affecting  the
estimation of fair value and hedge effectiveness.  Fair value is based on quoted
market prices where  available.  If quoted market prices are  unavailable,  fair
value is based on quoted  market prices of  comparable  derivative  instruments.
Factors that affect  hedge  effectiveness  include the initial  selection of the
derivative that will be used as a hedge and how well changes in its cash flow or
fair value have  correlated  and are expected to  correlate  with changes in the
cash  flow or fair  value of the  underlying  hedged  asset or  liability.  Past
correlation  is easy to  demonstrate,  but  expected  correlation  depends  upon
projections and trends that may not always hold true within  acceptable  limits.

<PAGE>

Changes in  assumptions  and  conditions  could result in greater than  expected
inefficiencies  that,  if large  enough,  could reduce or eliminate the economic
benefits   anticipated  when  the  hedges  were  established  and/or  invalidate
continuation of hedge accounting. Greater inefficiency and/or discontinuation of
hedge  accounting  are likely to result in increased  volatility in our reported
earnings.  For cash flow hedges,  this would result as more or all of the change
in the fair value of the  affected  derivative  being  reported  in  noninterest
income. For fair value hedges, there may be some impact on our reported earnings
as the change in the fair value of the affected  derivative may not be offset by
changes in the fair  value of the  underlying  hedged  asset or  liability.  For
further   discussion,   refer  to  "--Effects  of  New  Accounting   Standards,"
"--Interest  Rate  Risk  Management"  and Note 5 to our  Consolidated  Financial
Statements appearing elsewhere in this report.

Deferred Tax Assets.  We recognize  deferred tax assets for the estimated future
tax effects of temporary  differences,  net operating loss carryforwards and tax
credits. We recognize deferred tax assets subject to management's judgment based
upon available  evidence that  realization is more likely than not. Our deferred
tax  assets  are  reduced,  if  necessary,  by a  deferred  tax asset  valuation
allowance. In the event that we determine we would not be able to realize all or
part of our  deferred  tax  assets in the  future,  we would  need to adjust the
recorded value of our deferred tax assets, which would result in a direct charge
to our provision for income taxes in the period in which such  determination  is
made. For further  discussion,  refer to  "--Comparison of Results of Operations
for 2006 and 2005 - Provision  for Income  Taxes,"  "--Comparison  of Results of
Operations  for 2005 and 2004 - Provision for Income  Taxes," and Note 13 to our
Consolidated Financial Statements appearing elsewhere in this report.

Business  Combinations.  We emphasize acquiring other financial  institutions as
one means of achieving  our growth  objectives.  The  determination  of the fair
value of the assets and liabilities  acquired in these transactions,  as well as
the returns on  investment  that may be achieved,  requires  management  to make
significant judgments and estimates based upon detailed analyses of the existing
and future  economic  value of such  assets and  liabilities  and/or the related
income  streams,  including the resulting  intangible  assets.  If actual events
prove the estimates and  assumptions we used in  determining  the fair values of
the  acquired  assets and  liabilities  or the  projected  income  streams  were
incorrect,  we may need to make additional adjustments to the recorded values of
such assets and liabilities,  which could result in increased  volatility in our
reported earnings.  In addition,  we may need to make additional  adjustments to
the  recorded  value of our  intangible  assets,  which may impact our  reported
earnings  and  directly  impacts  our  regulatory  capital  levels.  For further
discussion,  refer to  "--Acquisitions"  and  Note 2,  Note 8 and Note 21 to our
Consolidated Financial Statements appearing elsewhere in this report.

Effects of New Accounting Standards

In November 2005, the Financial Accounting Standards Board, or FASB, issued FASB
Staff   Position,   or  FSP,   FAS  115-1  and  FAS   124-1,   The   Meaning  of
Other-Than-Temporary  Impairment and Its Application to Certain Investments. The
FSP addresses  determining when an investment is considered impaired and whether
that impairment is other than temporary,  and measuring an impairment  loss. The
FSP  also   addresses   the   accounting   after   an   entity   recognizes   an
other-than-temporary   impairment,   and  requires  certain   disclosures  about
unrealized  losses  that the entity did not  recognize  as  other-than-temporary
impairment. The FSP was effective for reporting periods beginning after December
15, 2005. On January 1, 2006, we implemented  the  requirements of FSP FAS 115-1
and FAS 124-1,  which did not have a material effect on our financial  condition
or results of operations.

In May 2005,  the FASB  issued  SFAS No.  154 --  Accounting  Changes  and Error
Corrections.  SFAS No. 154, a  replacement  of  Accounting  Principles  Bulletin
Opinion  No. 20 --  Accounting  Changes and SFAS No. 3 --  Reporting  Accounting
Changes in Interim Financial Statements,  requires retrospective application for
voluntary changes in accounting  principles unless it is impracticable to do so.
SFAS No. 154 was effective for accounting  changes and  corrections of errors in
fiscal years beginning after December 15, 2005. Early  application was permitted
for accounting  changes and  corrections of errors during fiscal years beginning
after June 1, 2005. On January 1, 2006, we implemented the  requirements of SFAS
No. 154,  which did not have a material  effect on our  financial  condition  or
results of operations.

In February  2006, the FASB issued SFAS No. 155 -- Accounting For Certain Hybrid
Financial Instruments, an amendment of SFAS No. 133 -- Accounting For Derivative
Instruments  and  Hedging  Activities  and SFAS No.  140.  SFAS No.  155  allows
entities to remeasure at fair value a hybrid financial  instrument that contains
an embedded  derivative that otherwise would require  bifurcation  from the host
instrument, if the holder irrevocably elects to account for the whole instrument
on a fair value basis.  Subsequent  changes in the fair value of the  instrument
would be recognized in earnings. In January 2007, the FASB posted to its website
revisions to certain SFAS No. 133  implementation  issues that were  affected by
the issuance of SFAS No. 155 and SFAS No. 156 (discussed below). These revisions
provide  a narrow  scope  exception  for  securitized  interests  in  prepayable
financial assets that only contain an embedded  derivative that results from the
embedded call options in the underlying  prepayable  financial assets if certain
criteria are met. SFAS No. 155 is effective for financial  instruments acquired,
issued, or subject to a remeasurement event occurring after the beginning of the

<PAGE>

first  fiscal year that begins  after  September  15,  2006.  Early  adoption is
permitted  as of the  beginning of the fiscal year unless the entity has already
issued interim  financial  statements  during that fiscal year. We are currently
evaluating  the  requirements  of SFAS No.  155 to  determine  its impact on our
financial condition and results of operations.

In March 2006,  the FASB  issued  SFAS No. 156 -  Accounting  for  Servicing  of
Financial  Assets.  SFAS No. 156, an amendment of FASB SFAS No. 140 - Accounting
for  Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
Liabilities,  addresses the recognition and measurement of separately recognized
servicing  assets and  liabilities  and  allows  mark-to-market  accounting  for
servicing  rights  resulting  in  reporting  that is similar to fair value hedge
accounting, but without the effort and system costs needed to identify effective
hedging  instruments  and  document  hedging  relationships.  SFAS  No.  156  is
effective for fiscal years beginning after September 15, 2006. Early adoption is
permitted as of the  beginning of an entity's  fiscal year unless the entity has
already  issued  interim  financial  statements  during  that  fiscal  year.  We
implemented  SFAS No.  156 on  January  1,  2007,  which did not have a material
impact on our financial condition or results of operations.

In June 2006,  the FASB  issued FASB  Interpretation  No. 48 --  Accounting  for
Uncertainty in Income Taxes, an Interpretation of SFAS No. 109 -- Accounting for
Income  Taxes.  FASB   Interpretation   No.  48  clarifies  the  accounting  for
uncertainty in income taxes in financial statements and prescribes a recognition
threshold and  measurement  attribute for financial  statement  recognition  and
measurement  of a  tax  position  taken  or  expected  to  be  taken.  The  FASB
Interpretation also provides guidance on derecognition, classification, interest
and penalties,  accounting in interim  periods,  disclosure and transition.  The
FASB  Interpretation  is effective for fiscal years beginning after December 15,
2006. We implemented  FASB  Interpretation  No. 48 on January 1, 2007, which did
not have a material impact on our financial condition, results of operations, or
our beginning retained earnings.

In September 2006, the SEC issued SEC Staff Accounting Bulletin, or SAB, No. 108
-  Considering  the  Effects  of  Prior  Year   Misstatements  when  Quantifying
Misstatements  in Current Year Financial  Statements.  SAB No. 108 addresses the
methods in which uncorrected  errors in previous years should be considered when
quantifying errors in current-year financial statements,  and requires an entity
to consider  the effect of all carry over and  reversing  effects of  prior-year
misstatements when quantifying errors in current-year financial statements.  The
SAB  does not  change  the SEC  staff's  previous  guidance  on  evaluating  the
materiality of errors in financial  statements.  SAB No. 108 allows an entity to
record the effects of adopting the guidance as a cumulative-effect adjustment to
retained  earnings.  This adjustment must be reported as of the beginning of the
first  fiscal year  ending  after  November  15,  2006.  In  December  2006,  we
implemented  the  requirements  of SAB  No.  108,  which  had no  impact  on our
financial condition or results of operations.

In September 2006, the FASB issued SFAS No. 157 - Fair Value Measurements.  SFAS
No. 157 defines fair value,  establishes a framework for measuring fair value in
U.S. generally accepted  accounting  principles,  and expands  disclosures about
fair  value   measurements.   SFAS  No.  157  applies  under  other   accounting
pronouncements  that  require or permit  fair value  measurements,  and does not
require any new fair value  measurements.  SFAS No. 157 is effective  for fiscal
years beginning after November 15, 2007, and interim periods within those fiscal
years.  Early  adoption is permitted as of the  beginning of an entity's  fiscal
year unless the entity has already issued interim  financial  statements  during
that fiscal year. We are currently  evaluating the  requirements of SFAS No. 157
to determine its impact on our financial condition and results of operations.

In  February  2007,  the FASB  issued  SFAS No. 159 - The Fair Value  Option for
Financial Assets and Financial  Liabilities,  including an amendment of SFAS No.
115. SFAS No. 159 provides entities with an option to report selected  financial
assets and  liabilities at fair value in an effort to reduce both  complexity in
accounting for financial  instruments  and the volatility in earnings  caused by
measuring related assets and liabilities differently.  SFAS No. 159 is effective
for fiscal years beginning after November 15, 2007. Retrospective application is
not allowed.  Early  adoption is  permitted  as of the  beginning of an entity's
fiscal year that begins on or before November 15, 2007, provided the entity also
elects  to adopt all of the  provisions  of SFAS No.  157 at the early  adoption
date. We are currently  evaluating the requirements of SFAS No. 159 to determine
their impact on our financial condition and results of operations.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

The  quantitative  and  qualitative  disclosures  about market risk are included
under "Item 7 - Management's  Discussion and Analysis of Financial Condition and
Results of  Operations - Interest  Rate Risk  Management"  appearing on pages 35
through 37 of this report.

Effects of Inflation

Inflation  affects  financial  institutions  less than other types of companies.
Financial  institutions make relatively few significant asset  acquisitions that
are directly  affected by changing prices.  Instead,  the assets and liabilities
are  primarily  monetary  in  nature.  Consequently,  interest  rates  are  more

<PAGE>

significant  to the  performance  of financial  institutions  than the effect of
general inflation levels. While a relationship exists between the inflation rate
and  interest  rates,  we  believe  this is  generally  manageable  through  our
asset-liability management program.

Item 8.   Financial Statements and Supplementary Data

The financial  statements and supplementary  data appear on pages 63 through 106
of this report.

Item 9.   Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure

None.

Item 9A.  Controls and Procedures

Our Chief Executive  Officer and our Chief Financial  Officer have evaluated the
effectiveness  of our "disclosure  controls and procedures" (as defined in Rules
13a-15(e)  and  15d-15(e)  under the Exchange  Act), as of the end of the period
covered by this report.  Based on such evaluation,  our Chief Executive  Officer
and our Chief  Financial  Officer  have  concluded  that,  as of the end of such
period,  the  Company's  disclosure  controls and  procedures  are  effective in
recording, processing, summarizing and reporting, on a timely basis, information
required to be  disclosed by the Company in the reports that it files or submits
under  the  Exchange  Act.  There  have not been any  changes  in the  Company's
internal  control  over  financial  reporting  (as such term is defined in Rules
13a-15(f)  and 15d-15(f)  under the Exchange  Act) during the fourth  quarter of
2006 that have  materially  affected,  or are  reasonably  likely to  materially
affect, the Company's internal control over financial reporting.

Item 9B.  Other Information

None.

                                    PART III

Item 10.  Directors, Executive Officers and Corporate Governance

Board of Directors and Committees of the Board

Our Board of Directors  consists of seven  members.  The Board  determined  that
Messrs.  Gundaker,  Steward and Yaeger are  independent.  Each of our  directors
identified in the  following  table was elected or appointed to serve a one-year
term and until his successor has been duly qualified for office.

<TABLE>
<CAPTION>


                                       Director               Principal Occupation(s) During Last Five Years
           Name                 Age      Since                    and Directorships of Public Companies
           ----                 ---      -----                    -------------------------------------


<S>                              <C>     <C>       <C>
James F. Dierberg (1)            69      1979      Chairman of the Board of Directors of First Banks, Inc. since 1988;
                                                   Chief  Executive  Officer of First  Banks,  Inc. from 1988 to April
                                                   2003;  President  of First  Banks,  Inc. from 1979 to 1992 and from
                                                   1994 to October 1999; Chairman of the Board of Directors, President
                                                   and Chief Executive  Officer of First Banks America,  Inc.from 1994
                                                   until its merger with First Banks, Inc. in December 2002.

Allen H. Blake (2)               64      1988      President of First Banks,  Inc. since October 1999; Chief Executive
                                                   Officer of First  Banks,  Inc.  since April 2003;  Chief  Financial
                                                   Officer of First Banks,  Inc. from 1984 to September  1999 and from
                                                   May 2001 to August  31,  2005;  Chief  Operating  Officer  of First
                                                   Banks,  Inc. from 1998 to July 2002;  Director of First Banks, Inc.
                                                   since 1988;  Director,  Executive Vice  President,  Chief Operating
                                                   Officer and Secretary of First Banks America,  Inc. from 1998 until
                                                   its  merger  with  First  Banks,   Inc.  in  December  2002;  Chief
                                                   Financial  Officer  of  First  Banks  America,  Inc.  from  1994 to
                                                   September 1999 and from May 2001 until December 2002.



<PAGE>



Terrance M. McCarthy (2)         52      2003      Senior  Executive  Vice  President and Chief  Operating  Officer of
                                                   First Banks, Inc. since August 2002;  Director of First Banks, Inc.
                                                   since April 2003;  Director of First Banks America,  Inc. from July
                                                   2001 until its merger with First  Banks,  Inc.  in  December  2002;
                                                   Executive Vice President of First Banks America,  Inc. from 1999 to
                                                   December  2002;  Chairman of the Board of  Directors  of First Bank
                                                   since January 2003;  President and Chief Executive Officer of First
                                                   Bank  since  August  2002;  Chairman  of the  Board  of  Directors,
                                                   President and Chief Executive  Officer of First Bank and Trust from
                                                   April 2000 until its merger with and into First Bank in March 2003.

Steven F. Schepman (1)           34      2004      Director  of  First  Banks,  Inc.  since  July  2004;  Senior  Vice
                                                   President and Chief  Financial  Officer of First Banks,  Inc. since
                                                   August 31, 2005;  Director of First Bank from April 2001 to October
                                                   2004;  Senior Vice President - Private Banking,  Wealth  Management
                                                   and Trust  Services of First Bank from  November 2000 to August 31,
                                                   2005;  From May 1999 to November 2000, Mr. Schepman was employed in
                                                   various other senior management capacities with First Banks, Inc.

Gordon A. Gundaker (3)           73      2001      President and Chief Executive  Officer of Coldwell Banker Gundaker,
                                                   a  full-service  real  estate  brokerage  company,  in  St.  Louis,
                                                   Missouri.

David L. Steward (3)             55      2000      Chairman  of the  Board  of  Directors  of  World  Wide  Technology
                                                   Holding Co., Inc., an electronic  procurement and logistics company
                                                   in the information  technology  industry,  in St. Louis,  Missouri;
                                                   Director   of   Centene   Corporation,   Civic   Progress   of  St.
                                                   Louis,  the St. Louis  Regional  Commerce  and Growth  Association,
                                                   the Regional Business Council,  Webster  University,  Barnes Jewish
                                                   Hospital,  the United  Way of Greater  St.  Louis and  Greater  St.
                                                   Louis Area Council - Boy Scouts of America.

Douglas H. Yaeger (3)(4)         58      2000      Chairman of the Board of Directors,  President and Chief  Executive
                                                   Officer  of The  Laclede  Group,  Inc.,  an exempt  public  utility
                                                   holding company in St. Louis,  Missouri since 2001; Chairman of the
                                                   Board of  Directors,  President  and  Chief  Executive  Officer  of
                                                   Laclede Gas Company  since 1999;  President  of Laclede Gas Company
                                                   since 1997;  Director  and Chief  Operating  Officer of Laclede Gas
                                                   Company from 1997 to 1999;  Executive  Vice  President - Operations
                                                   and  Marketing of Laclede Gas Company  from 1995 to 1997;  Director
                                                   and  past  Chairman of  the  Board  of  Directors  of the St. Louis
                                                   Regional  Commerce  and  Growth  Association;  Director  and   past
                                                   Chairman of  Southern  Gas  Association;  Director of  American Gas
                                                   Association; Director and incoming Chairman of the Missouri  Energy
                                                   Development  Association;  Commissioner  of  the  St. Louis Science
                                                   Center;  Director of  Barnes-Jewish  Hospital,  Greater  St.  Louis
                                                   Area  Council  - Boy  Scouts of  America,  The   Municipal  Theatre
                                                   Association  of St.  Louis,  the  United Way of Greater  St.  Louis
                                                   and  Webster  University;  President  of Civic Progress.
--------------------------------------
(1)  Mr. Steven F. Schepman is the son-in-law of Mr. James F. Dierberg.
(2)  At the regular meeting of the First Banks, Inc. Board of Directors  held  on January 26, 2007, Mr. Allen H. Blake
     announced his retirement and resigned his positions as a Director, President and Chief Executive Officer of First
     Banks,  effective  March 31, 2007.  Upon  acceptance  of  Mr. Blake's resignation, the Board of Directors elected
     Mr. Terrance M. McCarthy as President and Chief Executive Officer of First Banks, effective April 1, 2007.
(3)  Member of the Audit Committee.
(4)  Mr. Douglas H. Yaeger serves as Chairman of the Audit Committee and the audit committee financial expert.
</TABLE>


Committees and Meetings of the Board of Directors

Three members of our Board of Directors  currently serve on the Audit Committee,
all of whom the Board of Directors  determined to be  independent;  there are no
other  committees of the Board of  Directors.  The Audit  Committee  assists the
Board of Directors in fulfilling  the Board's  oversight  responsibilities  with
respect to the quality and integrity of the consolidated  financial  statements,
financial  reporting  process  and  systems  of  internal  controls.  The  Audit
Committee also assists the Board of Directors in monitoring the independence and
performance of the independent  auditors,  the internal audit department and the
operation  of ethics  programs.  The Audit  Committee  operates  under a written
charter adopted by the Board of Directors.

The  members  of the Audit  Committee  as of March 28,  2007 were Mr.  Gordon A.
Gundaker,  Mr.  David L. Steward and Mr.  Douglas H.  Yaeger,  who serves as the
Chairman of the Audit Committee and the audit committee financial expert.

<PAGE>

Audit Committee Report

The Audit  Committee is  responsible  for oversight of our  financial  reporting
process  on  behalf  of  the  Board  of   Directors.   Management   has  primary
responsibility for our financial statements and financial  reporting,  including
internal controls, subject to the oversight of the Audit Committee and the Board
of Directors.  In fulfilling its responsibilities,  the Audit Committee reviewed
the audited consolidated  financial statements with management and discussed the
acceptability  of  the  accounting   principles  used,  the   reasonableness  of
significant judgments made and the clarity of the disclosures.

The Audit Committee  reviewed with the Independent  Registered Public Accounting
Firm,  who is  responsible  for  planning  and  carrying  out a proper audit and
expressing an opinion on the  conformity of our audited  consolidated  financial
statements with U.S. generally accepted accounting  principles,  their judgments
as to the  acceptability  of the  accounting  principles  we use, and such other
matters as are required to be discussed with the Audit Committee by Statement on
Auditing Standards No. 61, Communications with Audit Committees,  as amended. In
addition,  the Audit Committee discussed with the Independent  Registered Public
Accounting Firm its independence from management and the Company,  including the
matters required by Standard No. 1 of the Independence  Standards Board, and the
Audit Committee  considered the compatibility of non-audit  services provided by
the Independent  Registered Public Accounting Firm with the firm's independence.
KPMG LLP has  provided  the Audit  Committee  with the written  disclosures  and
letter required by Standard No. 1 of the Independence Standards Board.

The Audit Committee discussed with our Internal Audit Department and Independent
Registered  Public  Accounting  Firm the  overall  scope  and  plans  for  their
respective  audits.  The Audit Committee met with the Internal Audit  Department
and Independent  Registered Public  Accounting Firm with and without  management
present to discuss the results of their  examinations,  their evaluations of our
internal controls and the overall quality of our financial reporting.

In  reliance  on the  reviews  and  discussions  referred  to  above,  the Audit
Committee  recommended to the Board of Directors  that the audited  consolidated
financial statements be included in the Annual Report on Form 10-K as of and for
the year ended December 31, 2006 for filing with the SEC.

                              Audit Committee
                              ---------------

                              Douglas H. Yaeger, Chairman of the Audit Committee
                              Gordon A. Gundaker
                              David L. Steward

Code of Ethics for Principal Executive Officer and Financial Professionals

The Board of  Directors  has approved a Code of Ethics for  Principal  Executive
Officer and Financial Professionals that covers the Principal Executive Officer,
the Chief  Financial  Officer,  the Chief  Operating  Officer,  the Chief Credit
Officer, the Chief Investment Officer, the Senior Vice President and Controller,
the Senior  Vice  President - Director  of Taxes,  the Senior  Vice  President -
Director of Management Accounting,  and all professionals serving in a Corporate
Finance, Accounting, Treasury, Tax or Investor Relations role. These individuals
are also  subject to the  policies  and  procedures  adopted by First Banks that
govern the  conduct of all of its  employees.  The Code of Ethics for  Principal
Executive Officer and Financial  Professionals is included as an exhibit to this
Annual Report on Form 10-K.

Code of Conduct for Employees, Officers and Directors

The  Board  of  Directors  has  approved  a Code of  Conduct  applicable  to all
employees,  officers and  directors of First Banks that  addresses  conflicts of
interest,  honesty and fair dealing,  accounting and auditing matters, political
activities and application  and enforcement of the Code of Conduct.  The Code of
Conduct is available on First Banks' website,  www.firstbanks.com,  under "About
us."                                           ------------------




<PAGE>


Executive Officers

Our executive  officers,  each of whom was elected to the office(s) indicated by
the Board of Directors, as of March 28, 2007, were as follows:

<TABLE>
<CAPTION>

                                             Current First Banks                     Principal Occupation(s)
          Name                 Age              Office(s) Held                       During Last Five Years
          ----                 ---              --------------                       ----------------------

<S>                            <C>   <C>                                     <C>
James F. Dierberg              69    Chairman of the Board of Directors.     See  "Item  10  -  Directors,  Executive
                                                                             Officers  and  Corporate   Governance  -
                                                                             Board of Directors."

Allen H. Blake                 64    President,  Chief Executive  Officer    See  "Item  10  -  Directors,  Executive
                                     and Director.                           Officers  and  Corporate   Governance  -
                                                                             Board of Directors."

Terrance M. McCarthy           52    Senior   Executive  Vice  President,    See  "Item  10  -  Directors,  Executive
                                     Chief    Operating    Officer    and    Officers  and  Corporate   Governance  -
                                     Director;  Chairman  of the Board of    Board of Directors."
                                     Directors,   President   and   Chief
                                     Executive Officer of First Bank.

Steven F. Schepman             34    Senior   Vice    President,    Chief    See  "Item  10  -  Directors,  Executive
                                     Financial Officer and Director.         Officers  and  Corporate   Governance  -
                                                                             Board of Directors."

Russell L. Goldammer           50    Executive  Vice  President and Chief    Executive   Vice   President  and  Chief
                                     Information Officer.                    Information   Officer   since   November
                                                                             2004;  Chief   Information   Officer  of
                                                                             Outsourcing Solutions,  Inc., St. Louis,
                                                                             Missouri,  from  April  2001 to  October
                                                                             2004;  Senior  Vice  President  of  U.S.
                                                                             Bank  in  Milwaukee,   Wisconsin,   from
                                                                             October 1999 to April 2001.

Daniel W. Jasper               61    Executive  Vice  President and Chief    Executive   Vice   President  and  Chief
                                     Credit    Officer;    Director   and    Credit  Officer  of  First  Banks,  Inc.
                                     Executive  Vice  President  of First    since   October   2003;    Senior   Vice
                                     Bank.                                   President   and  Acting   Chief   Credit
                                                                             Officer of First  Banks,  Inc.  from May
                                                                             2003  to  October   2003;   Senior  Vice
                                                                             President  -  Credit  Administration  of
                                                                             First Banks, Inc. from 1995 to May 2003.

F. Christopher McLaughlin      53    Executive    Vice   President    and    Executive Vice President and Director of
                                     Director  of  Sales,  Marketing  and    Sales,  Marketing and of Products  First
                                     Products; Director of First Bank.       Banks,   Inc.  since   September   2003;
                                                                             Director  of  First  Bank  since  Otober
                                                                             2004; Executive  Vice President-Personal
                                                                             Banking  Division,   HSBC  Bank  USA  in
                                                                             Buffalo,  New  York  from  1998  to June
                                                                             2002; Independent  Consultant  from July
                                                                             2002 to August 2003.


Mary P. Sherrill               52    Executive    Vice    President   and    Executive  Vice  President  and Director
                                     Director of Operations;  Director of    of  Operations  of  First  Banks,   Inc.
                                     First Bank.                             since  April  2003;  Director  of  First
                                                                             Bank  since  April  2003; Director, Vice
                                                                             Chairman  and  Chief  of Bank Operations
                                                                             Southwest  Bank  in  St. Louis, Missouri
                                                                             from April 1999 to March 2003.

</TABLE>

Item 11.  Executive Compensation

Compensation  Discussion and Analysis.  As outlined in the stock ownership table
included  in "Item 12 -  Security  Ownership  of Certain  Beneficial  Owners and
Management and Related Stockholder Matters," all of our voting stock is owned by
various  trusts,  established by and  administered by and for the benefit of Mr.

<PAGE>

James F.  Dierberg,  our  Chairman of the Board,  and  members of his  immediate
family. Therefore, we do not use equity awards in our compensation program.

The objective of our executive compensation policies and practices is to attract
and retain  talented key executives  that will  contribute to the achievement of
strategic  goals and the growth and  success of the  Company in order to enhance
the long-term  value of our Company.  Compensation is based upon the achievement
of corporate  goals and objectives,  as established by key corporate  executives
and reported to the Board of Directors.  Rewards for performance are designed to
motivate the  continued  strong  performance  of key  executives  on a long-term
basis.

Our executive  compensation  programs are designed to reward the  achievement of
financial  results in accordance with our corporate  goals and  objectives.  The
elements of our  executive  compensation  programs  include base salary,  annual
bonus  compensation  and the ability to participate  in a nonqualified  deferred
compensation plan. Our executive compensation programs are cash-based and do not
include any other forms of  non-cash  compensation.  We do not provide the named
executive  officers  with  employment  contracts  or severance  agreements,  and
consequently,  we are under no obligation to make additional  payments to any of
the named  executive  officers  in the event of  severance,  change in  control,
retirement  or  resignation.   The  individual  components  of  compensation  to
executive officers are periodically  evaluated using various factors, as further
discussed below.

Salary. Base salaries of executive officers are dependent upon the evaluation of
certain factors and are based, in part, on non-quantifiable  considerations,  at
the discretion of the Chairman and/or certain executive  officers.  The level of
base  salaries  of  executive  officers  is  designed  to reward  the  officer's
performance  based  upon  an  evaluation  of  the  following  factors:  (i)  the
performance  of  the  Company  and  the   achievement  of  corporate  goals  and
objectives,  considering general business and industry  conditions,  among other
factors,  and the  contributions  of  specific  executives  towards  the overall
performance;  (ii) each  executive  officer's  areas of  responsibility  and the
Company's  performance in those areas; and (iii) the level of compensation  paid
to comparable  executives by other financial  institutions of comparable size in
the  market  areas in which we  operate  to ensure  we  maintain  a  competitive
compensation  package.  Our corporate  goals and objectives  provide  particular
measurements  to which the Board of Directors  and executive  management  assign
significance,  such as net income,  organic and external growth in target market
areas,  expense  control,  net interest margin,  credit quality,  and regulatory
examination results.  These factors are taken into consideration by the Chairman
of the Board,  who  evaluates  the  appropriate  base salary and related  annual
salary  increases  of the  President  and Chief  Executive  Officer,  and by the
Chairman of the Board and certain senior  executive  officers,  who evaluate the
appropriate  base  salary and  related  annual  salary  increases  of  executive
officers and other employees.  Base salaries of executive  officers are reviewed
on an ongoing  basis and are generally  adjusted on an annual basis,  and may be
further   adjusted   periodically   as  a  result  of  significant   changes  in
responsibility, employment market conditions, and other factors.

Bonus. We offer our key executive officers  additional  compensation  through an
Executive  Incentive  Compensation Plan, or the Plan. The objectives of the Plan
are to promote superior  short-term and long-term  financial  performance of the
Company through its key executives;  to reward those key executive  officers who
deliver  solid  results  with  market-competitive  incentives;  and to  attract,
motivate and retain  skilled and  experienced  individuals  who can increase the
size and  profitability  of the  Company.  Our  Chairman  of the  Board has full
discretion to determine on an annual basis those  executives who are eligible to
participate in the Plan. Each of the named  executive  officers is a participant
in the Plan, along with certain other executive officers,  with the exception of
Mr. Schepman,  son-in-law to Mr. James F. Dierberg, as lineal descendants of Mr.
Dierberg and their spouses are not eligible to participate in Plan. Mr. Schepman
received a discretionary bonus in 2006.

The bonus award amounts under the Plan are determined by a mathematical  formula
that is based primarily on our weighted average return on equity multiplied by a
weighting  component and the named executive  officer's annual salary.  Payments
under the Plan are made annually based upon the results of the  above-referenced
formulas,  unless  determined  otherwise by the Board of Directors for the Chief
Executive Officer or by the Chief Executive Officer for the other  participants.
In considering any adjustment to payments to other executive officers, the Chief
Executive  Officer  will  evaluate  each  executive  officer's  contribution  to
improving our return on equity during the plan year.

Deferred  Compensation.  We offer a deferred  compensation plan to the executive
officers and other key  employees to promote  retention by providing a long-term
savings opportunity on a tax-effective basis.

The Board of Directors and President and Chief  Executive  Officer  periodically
review the  various  components  of our  executive  compensation  programs.  The
salaries paid, annual bonuses awarded and deferred compensation balances for the
named  executives  in 2006 are further  described in the  "Summary  Compensation
Table" and "Nonqualified Deferred Compensation Table" below.



<PAGE>


Executive  Compensation.  The  following  table sets forth  certain  information
regarding compensation earned by the named executive officers for the year ended
December 31, 2006:
<TABLE>
<CAPTION>

                                      SUMMARY COMPENSATION TABLE
                                      --------------------------


                                                                      All Other
Name and Principal Position(s)            Salary (1)    Bonus (1)    Compensation (2)     Total (1)
------------------------------            ------        -----        ------------         -----

<S>                                     <C>            <C>               <C>             <C>
James F. Dierberg                       $ 610,000           --           8,800           618,800
Chairman of the Board of Directors

Allen H. Blake                            470,000      413,800           8,800           892,600
President and Chief Executive Officer

Steven F. Schepman                        175,400       20,000           8,300           203,700
Senior Vice President
and Chief Financial Officer

Terrance M. McCarthy                      409,000      345,000           8,800           762,800
Senior Executive Vice President
and Chief Operating Officer

Daniel W. Jasper                          245,600      215,000           8,800           469,400
Executive Vice President
and Chief Credit Officer
--------------------------
(1) Salary and bonus reported for Messrs.  Allen H. Blake, Steven F. Schepman,  Terrance M. McCarthy
    and Daniel W. Jasper include  payments  deferred in our NQDC Plan, as further  described  below,
    of $300,900, $5,000, $213,400 and $67,600,   respectively,  or  an aggregate of $586,900. Salary
    reported for Mr.  Dierberg  did not include  any  payments  deferred in our NQDC Plan.  Earnings
    by  the  named  executives  on  their  NQDC  Plan  balances did  not include any above-market or
    preferential earnings.
(2) All other compensation reported reflects matching contributions to our 401(k) Plan.
</TABLE>

Nonqualified Deferred Compensation. Officers that meet certain position and base
salary  criteria and  non-employee  directors are eligible to participate in our
Nonqualified Deferred Compensation Plan, or NQDC Plan.  Participants are allowed
to defer,  on an annual basis, up to 25% of their salary and up to 100% of their
bonus  payments,   and  hypothetically  invest  in  various  investment  options
available  in the NQDC  Plan that are  selected  by the  participant  and may be
changed by the  participant  at any time.  These  investment  options mirror the
investment  options  that we offer  through our 401(k) plan and include  various
investment  funds  such as equity  funds,  international  stock  funds,  capital
appreciation  funds,  money market  funds,  bond funds,  mid-cap value funds and
growth funds.

The NQDC Plan allows for us to credit the deferred  compensation accounts of any
participant with discretionary contributions, however, we have not made any such
discretionary  contributions  under the NQDC Plan since its inception.  Any such
contributions,  if made, would vest over a five-year period.  Earnings or losses
on participant  account  balances  resulting from the  participant's  investment
choices are credited or charged to the participant  accounts on a monthly basis.
We recognized these earnings or losses in our consolidated  statements of income
on a monthly basis. In the event of retirement, payment of the vested portion of
the participant's deferred compensation account balance is either made through a
single lump sum payment or annual  payments  over five or ten years,  subject to
the  election  by  the  participant.  Payment  of  the  vested  portion  of  the
participant's  deferred  compensation  account  balance is made through a single
lump sum payment in the event the  participant  terminates his or her employment
for  reasons  other  than  retirement.  We  did  not  make  any  withdrawals  or
distributions to the named executive officers or the non-employee directors from
our NQDC Plan for the year ended December 31, 2006.



<PAGE>


The  following  table  sets forth  certain  information  regarding  nonqualified
deferred  compensation earned by the named executive officers for the year ended
December 31, 2006:
<TABLE>
<CAPTION>


                         NONQUALIFIED DEFERRED COMPENSATION TABLE
                         ----------------------------------------


                                       Executive             Aggregate           Aggregate
                                    Contributions in        Earnings in          Balance at
Name and Principal Position(s)      Last Fiscal Year (1) Last Fiscal Year    December 31, 2006
------------------------------      ----------------     ----------------    -----------------

<S>                                   <C>                     <C>                 <C>
James F. Dierberg                     $      --               22,200              392,800 (2)
Chairman of the Board of Directors

Allen H. Blake (3)                      300,900               65,700            1,111,100 (4)
President and Chief Executive Officer

Steven F. Schepman                        5,000                  200                5,200
Senior Vice President
and Chief Financial Officer

Terrance M. McCarthy                    213,400               52,700              502,300 (5)
Senior Executive Vice President
and Chief Operating Officer

Daniel W. Jasper                         67,600               18,600              187,200 (6)
Executive Vice President
and Chief Credit Officer
----------------------------
(1)  All executive contributions represent the deferral of base salary and/or  bonus  payments
     reflected  in  the "Summary  Compensation Table."  We  did  not  make  any  discretionary
     contributions under the NQDC Plan as of and for the year ended December 31, 2006.
(2)  Of this amount, $305,500 represents deferrals of cash consideration from prior years that
     were reflected in the "Summary Compensation Table" in our  Annual Report on Form 10-K for
     the  relevant  years.  The  remaining  balance  represents the cumulative earnings on the
     original deferred amounts and the participant's 2006 activity.
(3)  Following his retirement,  which  will be effective on March 31, 2007, Mr. Allen H. Blake
     will receive his NQDC Plan participant account balance, which  is fully vested, in annual
     distributions over a period of ten years.
(4)  Of this amount, $605,800 represents deferrals of cash consideration from prior years that
     were reflected in the "Summary Compensation Table" in our  Annual Report on Form 10-K for
     the relevant years. The  remaining  balance  represents  the  cumulative earnings on  the
     original deferred amounts and the participant's 2006 activity.
(5)  Of this amount, $189,900 represents deferrals of cash consideration from prior years that
     were reflected in the "Summary Compensation Table" in our  Annual Report on Form 10-K for
     the  relevant  years. The  remaining  balance  represents the cumulative  earnings on the
     original deferred amounts and the participant's 2006 activity.
(6)  Of this amount, $92,500 represents deferrals of cash consideration from  prior years that
     were reflected in the "Summary Compensation Table" in our  Annual Report on Form 10-K for
     the  relevant years. The  remaining  balance  represents  the  cumulative earnings on the
     original deferred amounts and the participant's 2006 activity.
</TABLE>

Potential  Payments  Upon  Termination.  Upon  termination  of  employment,  the
executive  officers  will  receive  payments  of  their  vested  portion  of the
executive's  deferred  compensation  account  balance  under  our  NQDC  Plan as
described above.
<PAGE>

Compensation of Directors. The following table sets forth compensation earned by
the named non-employee directors for the year ended December 31, 2006:


                           DIRECTOR COMPENSATION TABLE
                           ---------------------------


                                           Fees
                                          Earned
                                          or Paid
Name                                      in Cash          Total
----                                      -------          -----

Gordon A. Gundaker                       $ 29,000         29,000

David L. Steward (1)                       29,000         29,000

Hal J. Upbin (2)                            8,000          8,000

Douglas H. Yaeger (1)(3)                   33,000         33,000
-----------------------------
(1)  Fees  paid   for  Messrs. David L. Steward  and  Douglas H. Yaeger  include
     payments deferred in our NQDC Plan of $29,000 and $33,000, respectively, or
     an aggregate of $62,000. Earnings  by  the  directors on  their  NQDC  Plan
     balances did not include any above-market or preferential earnings.
(2)  Mr. Hal J. Upbin resigned his positions as a Director and as an independent
     member  of  the  Audit  Committee at the regular meeting of the First Banks
     Board of Directors held on January 27, 2006.
(3)  Mr. Douglas H. Yaeger  serves  as  Chairman  of the Audit Committee and the
     audit committee financial expert.

Our executive officers that are also directors do not receive remuneration other
than  salaries  and bonuses for  serving on our Board of  Directors.  Only those
directors who are neither our employees nor employees of any of our subsidiaries
receive cash  remuneration  for their services as directors.  Such  non-employee
directors,  as shown in the table above, received a fee of $3,000 for each Board
meeting  attended and $1,000 for each Audit Committee  meeting attended in 2006.
Messr.  Douglas H. Yaeger also received a fee of $4,000 per calendar quarter for
his service as Chairman of the Audit Committee,  and Messrs. Gordon A. Gundaker,
David L.  Steward  and Hal J. Upbin also  received a fee of $3,000 per  calendar
quarter for their service as members of the Audit  Committee.  Our  non-employee
directors are also eligible to  participate  in our NQDC Plan.  Our directors do
not receive any retainers or other  compensation,  and there are no arrangements
for amounts to be paid to directors upon resignation or any other termination of
such  director or a change in control of the  Company.  The Audit  Committee  is
currently the only committee of our Board of Directors.

Compensation  Committee Interlocks and Insider  Participation.  We do not have a
compensation committee, therefore, our Board of Directors performs the functions
of such a committee.  Messrs.  Dierberg,  Blake,  McCarthy and Schepman serve or
have served as  executive  officers  and/or  members of our Board of  Directors.
Except for the foregoing, none of our executive officers served during 2006 as a
member of our compensation  committee, or any other committee performing similar
functions,  or as a director of another entity,  any of whose executive officers
or directors served on our Board of Directors.

See further information  regarding  transactions with related parties in Note 19
to our Consolidated  Financial  Statements appearing on pages 100 through 101 of
this report.

Compensation Committee Report.

Our  Board of  Directors,  which  performs  the  functions  of our  compensation
committee,  has reviewed the Compensation  Discussion and Analysis and discussed
such  with  management.  Based on such  review  and  discussions,  the  Board of
Directors  recommended the  Compensation  Discussion and Analysis be included in
the Company's  Annual Report on Form 10-K as of and for the year ended  December
31, 2006.

                           Board of Directors
                           ------------------

                           James F. Dierberg, Chairman of the Board of Directors
                           Allen H. Blake
                           Gordon A. Gundaker
                           Terrance M. McCarthy
                           Steven F. Schepman
                           David L. Steward
                           Douglas H. Yaeger



<PAGE>


Item 12.  Security  Ownership of Certain  Beneficial  Owners and  Management and
          Related Stockholder Matters

The following table sets forth, as of March 28, 2007,  certain  information with
respect to the  beneficial  ownership of all classes of our voting capital stock
by each person known to us to be the beneficial  owner of more than five percent
of the outstanding shares of the respective classes of our stock:
<TABLE>
<CAPTION>

                                                                                                  Percent of
                                                                        Number of                    Total
                          Title of Class                                 Shares        Percent      Voting
                         and Name of Owner                               Owned         of Class      Power
                         -----------------                               -----         --------      -----

Common Stock ($250.00 par value)
--------------------------------

<S>                                                                    <C>       <C>    <C>             <C>
     James F. Dierberg II Family Trust (1)........................     7,714.677 (2)    32.605%         *
     Ellen C. Dierberg Family Trust (1)...........................     7,714.676 (2)    32.605          *
     Michael J. Dierberg Family Trust (1).........................     4,255.319 (2)    17.985          *
     Michael J. Dierberg Irrevocable Trust (1)....................     3,459.358 (2)    14.621          *
     First Trust (Mary W. Dierberg and First Bank, Trustees) (1)..       516.830 (3)     2.184          *

Class A Convertible Adjustable Rate Preferred Stock
---------------------------------------------------
($20.00 par value)
------------------

     James F. Dierberg, Trustee of the James F. Dierberg
         Living Trust (1).........................................       641,082 (4)(5)    100%      77.7%

Class B Non-Convertible Adjustable Rate Preferred Stock
-------------------------------------------------------
($1.50 par value)
-----------------

     James F. Dierberg, Trustee of the James F. Dierberg
         Living Trust (1).........................................       160,505 (5)       100%      19.4%

All executive officers and directors
     other than Mr. James F. Dierberg
     and members of his immediate family..........................             0             0%       0.0%
--------------------
 *    Represents less than 1.0%.
(1)   Each of the above-named trustees and beneficial owners are  United  States  citizens, and the business
      address for each such individual is 135 North Meramec, Clayton, Missouri 63105. Mr. James F. Dierberg,
      our  Chairman  of  the  Board, and  Mrs. Mary W. Dierberg, are husband and wife, and Messrs.  James F.
      Dierberg II and Michael J. Dierberg  and  Mrs. Ellen D. Schepman, formerly Ms. Ellen C. Dierberg,  are
      their adult children.
(2)   Due to the relationship  between Mr. James F. Dierberg,  his wife and their children,  Mr. Dierberg is
      deemed to share voting and investment power over these shares.
(3)   Due to the  relationship  between Mr.  James F.  Dierberg,  his wife and First Bank,  Mr.  Dierberg is
      deemed to share voting and investment power over these shares.
(4)   Convertible  into  common  stock, based  on  the  appraised  value of  the common stock at the date of
      conversion.  Assuming  an  appraised  value of the common stock equal to the book value, the number of
      shares of common stock into  which  the Class A Preferred Stock is convertible at December 31, 2006 is
      385, which shares are not included in the above table.
(5)   Sole voting and investment power.
</TABLE>


<PAGE>


Item  13. Certain   Relationships  and  Related   Transactions,   and   Director
          Independence

Review and Approval of Related Person Transactions.  We review all relationships
and transactions in which we and our directors and executive  officers and their
immediate  family  members and entities in which such persons have a significant
interest are  participants  to  determine  whether such persons have a direct or
indirect  material  interest.  Our  management  collects  information  from  the
executive officers and the directors  regarding the related person  transactions
and determines  whether we or a related person has a direct or indirect material
interest in the  transaction.  If we determine that a transaction is directly or
indirectly material to us or a related person, then the transaction is disclosed
in accordance with applicable requirements.  In addition, the Audit Committee of
our Board of  Directors  reviews and  approves or  ratifies  any related  person
transaction  that is required to be so disclosed.  In the event that a member of
the Audit  Committee is a related person to such a transaction,  such member may
not participate in the discussion or vote regarding  approval or ratification of
the transaction.

Related  Person  Transactions.  Outside  of normal  customer  relationships,  no
directors,  executive  officers or  shareholders  holding  over 5% of our voting
securities, and no corporations or firms with which such persons or entities are
associated,  currently  maintain or have  maintained  since the beginning of the
last full fiscal year, any significant  business or personal  relationship  with
our  subsidiaries or us, other than that which arises by virtue of such position
or ownership interest in our subsidiaries or us, except as set forth in "Item 11
- Executive  Compensation -  Compensation  of Directors," or as described in the
following paragraphs.

First Bank has had in the past,  and may have in the future,  loan  transactions
and  related  banking  services  in the  ordinary  course of  business  with our
directors and/or their affiliates. These loan transactions have been made on the
same terms, including interest rates and collateral,  as those prevailing at the
time for comparable  transactions with unaffiliated  persons and did not involve
more  than the  normal  risk of  collectibility  or  present  other  unfavorable
features.  First Bank does not extend  credit to our  officers or to officers of
First  Bank,  except  extensions  of credit  secured by  mortgages  on  personal
residences, loans to purchase automobiles and personal credit card accounts.

Certain  of our  shareholders,  directors  and  officers  and  their  respective
affiliates have deposit  accounts and related banking  services with First Bank.
It is First  Bank's  policy not to permit any of its  officers or  directors  or
their affiliates to overdraw their respective deposit accounts.  Deposit account
overdraft  protection  may be  approved  for  persons or  entities  under a plan
whereby a credit  limit has been  established  in  accordance  with First Bank's
standard credit criteria.

Transactions  with  related  parties,  including  transactions  with  affiliated
persons and  entities,  are described in Note 19 to our  Consolidated  Financial
Statements on pages 100 through 101 of this report.

Director Independence. Our Board of Directors has determined that Messrs. Gordon
A.  Gundaker,   David  L.  Steward  and  Douglas  H.  Yaeger  have  no  material
relationship  with us and each is independent.  Our Audit Committee of the Board
of  Directors  is  composed  only  of  independent  directors.  In  order  to be
considered  independent,  our Board of Directors  must determine that a director
does not have any direct or indirect  material  relationship with us as provided
under the  rules of the New York  Stock  Exchange,  or NYSE.  In  making  such a
determination, the Board of Directors considers all relationships between us, or
any of our  subsidiaries,  and  the  director,  or any of his  immediate  family
members,  or any entity with which the director or any of his  immediate  family
members  is  affiliated  by reason of being a partner,  officer  or  significant
shareholder  thereof. In assessing the independence of our directors,  the Board
of Directors  considered all  relationships  between us and our directors  based
primarily  upon  responses  of  the  directors  to  questions  posed  through  a
directors' and officers'  questionnaire.  The Board of Directors considered each
of the related person  transaction  discussed  above in making its  independence
determination.

First Banks has only preferred  securities  listed on the NYSE and,  pursuant to
the General  Application  section of NYSE Rule 303A, is not subject to NYSE Rule
303A.01 requiring a majority of independent directors.  Messrs. Dierberg, Blake,
McCarthy  and  Schepman  are not  independent  because  they are each current or
former executive officers of the company.



<PAGE>


Item 14.  Principal Accounting Fees and Services

Fees of Independent Registered Public Accounting Firm

During  2006 and 2005,  KPMG LLP  served as our  Independent  Registered  Public
Accounting  Firm and provided  services to our  affiliates and us. The following
table sets forth fees for professional  audit services  rendered by KPMG LLP for
the audit of our consolidated  financial  statements and other audit services in
2006 and 2005:
<TABLE>
<CAPTION>

                                                                                       2006          2005
                                                                                       ----          ----

<S>                                                                                 <C>            <C>
           Audit fees, excluding audit related fees (1).........................    $ 601,500      820,500
           Audit related fees...................................................           --           --
           Tax fees (2).........................................................       82,637      111,676
           All other fees.......................................................           --           --
                                                                                    ---------     --------
                  Total.........................................................    $ 684,137      932,176
                                                                                    =========     ========
           ------------------------
          (1)  For 2006 and 2005, audit fees include the audits of the consolidated financial statements of
               First Banks and SBLS LLC, as well as services  provided  for  reporting  requirements  under
               FDICIA and mortgage banking activities, which are included in the audit fees of First Banks,
               as these services are closely  related to the audit of First Banks'  consolidated  financial
               statements. Audit fees also include other accounting and reporting consultations. Audit fees
               for 2005 also  include  audits of the  consolidated  financial  statements  of Hillside  and
               subsidiaries.
          (2)  For 2006, tax services include tax compliance and general tax planning and advice. For 2005,
               tax services include  preparation of amended income tax returns,  tax compliance and general
               tax planning and advice.
</TABLE>

Policy  Regarding  the Approval of  Independent  Auditor  Provision of Audit and
Non-Audit Services

Consistent with the Securities and Exchange  Commission  requirements  regarding
auditor   independence,   the  Audit  Committee  recognizes  the  importance  of
maintaining  the  independence,  in  fact  and  appearance,  of our  independent
auditors.  As such, the Audit Committee has adopted a policy for pre-approval of
all  audit  and  permissible  non-audit  services  provided  by our  independent
auditors.  Under the policy, the Audit Committee, or its designated member, must
pre-approve  services  prior  to  commencement  of the  specified  service.  The
requests for pre-approval are submitted to the Audit Committee or its designated
member by the  Director of Audit with a statement  as to whether in his/her view
the request is consistent with the Securities and Exchange Commission's rules on
auditor independence.  The Audit Committee reviews the pre-approval requests and
the fees paid for such services at their regularly  scheduled quarterly meetings
or at special meetings.





                                     PART IV

Item 15.  Exhibits, Financial Statement Schedules

         (a)  1.  Financial  Statements  and  Supplementary Data - The financial
                  statements and supplementary data filed as part of this Report
                  are included in Item 8.

              2.  Financial  Statement  Schedules - These schedules are  omitted
                  for the reason they are not required or are not applicable.

              3.  Exhibits - The exhibits  are listed  in the  index of exhibits
                  required by Item 601 of  Regulation S-K at Item (b) below  and
                  are incorporated herein by reference.

         (b)   The index of required exhibits is included beginning on  page 110
               of this Report.

         (c)   Not Applicable.



<PAGE>


                                FIRST BANKS, INC.

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------






The Board of Directors and Stockholders
First Banks, Inc.:

We have audited the  accompanying  consolidated  balance  sheets of First Banks,
Inc. and  subsidiaries  (the Company) as of December 31, 2006 and 2005,  and the
related consolidated  statements of income,  changes in stockholders' equity and
comprehensive  income,  and cash  flows for each of the years in the  three-year
period ended December 31, 2006. These consolidated  financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial  position of First Banks, Inc.
and  subsidiaries  as of December  31,  2006 and 2005,  and the results of their
operations and their cash flows for each of the years in the  three-year  period
ended December 31, 2006, in conformity with U.S. generally  accepted  accounting
principles.




                                                /s/ KPMG LLP
                                                ------------


St. Louis, Missouri
March 28, 2007


<PAGE>

<TABLE>
<CAPTION>

                                                 FIRST BANKS, INC.

                                            CONSOLIDATED BALANCE SHEETS

------------------------------------------------------------------------------------------------------------------

                         (dollars expressed in thousands, except share and per share data)


                                                                                               December 31,
                                                                                      ----------------------------
                                                                                         2006              2005
                                                                                         ----              ----

                                                       ASSETS
                                                       ------

Cash and cash equivalents:
<S>                                                                                    <C>                 <C>
     Cash and due from banks........................................................  $   215,974          212,667
     Short-term investments.........................................................      153,583           73,985
                                                                                      -----------        ---------
          Total cash and cash equivalents...........................................      369,557          286,652
                                                                                      -----------        ---------

Investment securities:
     Trading........................................................................       81,168            3,389
     Available for sale.............................................................    1,359,729        1,311,289
     Held to maturity (fair value of $23,971 and $25,791, respectively).............       24,049           26,105
                                                                                      -----------        ---------
          Total investment securities...............................................    1,464,946        1,340,783
                                                                                      -----------        ---------

Loans:
     Commercial, financial and agricultural.........................................    1,934,912        1,619,822
     Real estate construction and development.......................................    1,832,504        1,564,255
     Real estate mortgage...........................................................    3,615,148        3,469,788
     Consumer and installment.......................................................       83,008           64,724
     Loans held for sale............................................................      216,327          315,134
                                                                                      -----------        ---------
          Total loans...............................................................    7,681,899        7,033,723
     Unearned discount..............................................................      (15,418)         (12,952)
     Allowance for loan losses......................................................     (145,729)        (135,330)
                                                                                      -----------        ---------
          Net loans.................................................................    7,520,752        6,885,441
                                                                                      -----------        ---------

Bank premises and equipment, net....................................................      178,417          144,941
Goodwill and other intangible assets................................................      295,382          191,901
Bank-owned life insurance...........................................................      113,778          111,442
Deferred income taxes...............................................................      100,175          128,938
Other assets........................................................................      115,707           80,235
                                                                                      -----------        ---------
          Total assets..............................................................  $10,158,714        9,170,333
                                                                                      ===========        =========

                                                    LIABILITIES
                                                    -----------

Deposits:
     Noninterest-bearing demand.....................................................  $ 1,281,108        1,299,350
     Interest-bearing demand........................................................      981,939          981,837
     Savings........................................................................    2,352,575        2,106,470
     Time deposits of $100 or more..................................................    1,419,579        1,076,908
     Other time deposits............................................................    2,407,885        2,077,266
                                                                                      -----------        ---------
          Total deposits............................................................    8,443,086        7,541,831
Other borrowings....................................................................      373,899          539,174
Notes payable.......................................................................       65,000          100,000
Subordinated debentures.............................................................      297,966          215,461
Deferred income taxes...............................................................       42,826           27,104
Accrued expenses and other liabilities..............................................      130,033           61,762
Minority interest in subsidiary.....................................................        5,469            6,063
                                                                                      -----------        ---------
          Total liabilities.........................................................    9,358,279        8,491,395
                                                                                      -----------        ---------
<PAGE>

                                                STOCKHOLDERS' EQUITY
                                                --------------------

Preferred stock:
     $1.00 par value, 5,000,000 shares authorized, no shares issued
       and outstanding..............................................................           --               --
     Class A convertible, adjustable rate, $20.00 par value, 750,000
       shares authorized, 641,082 shares issued and outstanding.....................       12,822           12,822
     Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
       160,505 shares issued and outstanding........................................          241              241
Common stock, $250.00 par value, 25,000 shares authorized,
     23,661 shares issued and outstanding...........................................        5,915            5,915
Additional paid-in capital..........................................................        9,685            5,910
Retained earnings...................................................................      784,864          673,956
Accumulated other comprehensive loss................................................      (13,092)         (19,906)
                                                                                      -----------        ---------
          Total stockholders' equity................................................      800,435          678,938
                                                                                      -----------        ---------
          Total liabilities and stockholders' equity................................  $10,158,714        9,170,333
                                                                                      ===========        =========

The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                                                  FIRST BANKS, INC.

                                          CONSOLIDATED STATEMENTS OF INCOME

------------------------------------------------------------------------------------------------------------------

                          (dollars expressed in thousands, except share and per share data)

                                                                                     Years Ended December 31,
                                                                                ----------------------------------
                                                                                   2006        2005         2004
                                                                                   ----        ----         ----

 Interest income:
<S>                                                                             <C>           <C>          <C>
    Interest and fees on loans...............................................   $ 581,503     424,095      341,479
    Investment securities:
      Taxable................................................................      57,017      65,895       50,170
      Nontaxable.............................................................       1,875       1,739        1,490
    Short-term investments...................................................       5,909       2,211        1,643
                                                                                ---------    --------     --------
        Total interest income................................................     646,304     493,940      394,782
                                                                                ---------    --------     --------
 Interest expense:
    Deposits:
      Interest-bearing demand................................................       8,147       4,398        3,472
      Savings................................................................      53,297      29,592       20,128
      Time deposits of $100 or more..........................................      59,114      28,010       13,762
      Other time deposits....................................................      96,138      65,157       35,705
    Other borrowings.........................................................      16,803      18,240        6,102
    Notes payable............................................................       5,530       2,305          506
    Subordinated debentures..................................................      22,833      20,557       15,092
                                                                                ---------    --------     --------
        Total interest expense...............................................     261,862     168,259       94,767
                                                                                ---------    --------     --------
        Net interest income..................................................     384,442     325,681      300,015
 Provision for loan losses...................................................      12,000      (4,000)      25,750
                                                                                ---------    --------     --------
        Net interest income after provision for loan losses..................     372,442     329,681      274,265
                                                                                ---------    --------     --------
 Noninterest income:
    Service charges on deposit accounts and customer service fees............      43,310      39,776       38,230
    Gain on loans sold and held for sale.....................................      26,020      20,804       18,497
    Net (loss) gain on investment securities.................................      (1,813)     (2,873)         257
    Bank-owned life insurance investment income..............................       3,103       4,860        5,201
    Investment management income.............................................       8,412       8,573        6,870
    Insurance product income.................................................       4,848          --           --
    Other....................................................................      29,063      24,945       18,144
                                                                                ---------    --------     --------
        Total noninterest income.............................................     112,943      96,085       87,199
                                                                                ---------    --------     --------
 Noninterest expense:
    Salaries and employee benefits...........................................     166,864     139,764      117,492
    Occupancy, net of rental income..........................................      26,953      22,081       19,882
    Furniture and equipment..................................................      16,960      16,015       17,017
    Postage, printing and supplies...........................................       6,721       5,743        5,010
    Information technology fees..............................................      37,099      35,472       32,019
    Legal, examination and professional fees.................................       8,783       9,319        7,412
    Amortization of intangible assets........................................       8,195       4,850        2,912
    Communications...........................................................       2,425       2,012        1,866
    Advertising and business development.....................................       7,128       7,043        5,493
    Charitable contributions.................................................       6,462       5,922          577
    Other....................................................................      31,626      29,417       23,538
                                                                                ---------    --------     --------
        Total noninterest expense............................................     319,216     277,638      233,218
                                                                                ---------    --------     --------
        Income before provision for income taxes and minority interest in
           loss of subsidiary................................................     166,169     148,128      128,246
 Provision for income taxes..................................................      55,062      52,509       45,338
                                                                                ---------    --------     --------
        Income before minority interest in loss of subsidiary................     111,107      95,619       82,908
 Minority interest in loss of subsidiary.....................................        (587)     (1,287)          --
                                                                                ---------    --------     --------
        Net income...........................................................     111,694      96,906       82,908
 Preferred stock dividends...................................................         786         786          786
                                                                                ---------    --------     --------
        Net income available to common stockholders..........................   $ 110,908      96,120       82,122
                                                                                =========    ========     ========
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

<S>                                                                             <C>          <C>          <C>
 Basic earnings per common share.............................................   $4,687.38    4,062.36     3,470.80
                                                                                =========    ========     ========

 Diluted earnings per common share...........................................   $4,630.72    4,007.46     3,421.58
                                                                                =========    ========     ========

 Weighted average shares of common stock outstanding.........................      23,661      23,661       23,661
                                                                                =========    ========     ========

 The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                                            FIRST BANKS, INC.

                           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                                                  Three Years Ended December 31, 2006

------------------------------------------------------------------------------------------------------------------------------------

                                        (dollars expressed in thousands, except per share data)

                                                                                                                  Accu-
                                                            Adjustable Rate                                      mulated
                                                            Preferred Stock                                      Other
                                                          -------------------                                    Compre-    Total
                                                          Class A                         Additional             hensive    Stock-
                                                          Conver-                Common    Paid-in    Retained   Income    holders'
                                                           tible      Class B    Stock     Capital    Earnings   (Loss)     Equity
                                                           -----      -------    -----     -------    --------   ------     ------

<S>                                                       <C>           <C>      <C>        <C>        <C>        <C>       <C>
Consolidated balances, January 1, 2004...............     $12,822       241      5,915      5,910      495,714    29,213    549,815
                                                                                                                            -------
Year ended December 31, 2004:
    Comprehensive income:
      Net income.....................................          --        --         --         --       82,908        --     82,908
      Other comprehensive loss, net of tax:
        Unrealized losses on investment securities...          --        --         --         --           --    (5,711)    (5,711)
        Reclassification adjustment for investment
          securities gains included in net income....          --        --         --         --           --      (167)      (167)
        Derivative instruments:
          Current period transactions................          --        --         --         --           --   (25,166)   (25,166)
                                                                                                                            -------
    Total comprehensive income.......................                                                                        51,864
    Class A preferred stock dividends,
      $1.20 per share................................          --        --         --         --         (769)       --       (769)
    Class B preferred stock dividends,
      $0.11 per share................................          --        --         --         --          (17)       --        (17)
                                                          -------       ---      -----      -----      -------   -------    -------
Consolidated balances, December 31, 2004.............      12,822       241      5,915      5,910      577,836    (1,831)   600,893
                                                                                                                            -------
Year ended December 31, 2005:
    Comprehensive income:
      Net income.....................................          --        --         --         --       96,906        --     96,906
      Other comprehensive loss, net of tax:
        Unrealized losses on investment securities...          --        --         --         --           --   (15,659)   (15,659)
        Reclassification adjustment for investment
          securities losses included in net income...          --        --         --         --           --     1,867      1,867
        Derivative instruments:
          Current period transactions................          --        --         --         --           --    (4,283)    (4,283)
                                                                                                                            -------
    Total comprehensive income.......................                                                                        78,831
    Class A preferred stock dividends,
      $1.20 per share................................          --        --         --         --         (769)       --       (769)
    Class B preferred stock dividends,
      $0.11 per share................................          --        --         --         --          (17)       --        (17)
                                                          -------       ---      -----      -----      -------   -------    -------
Consolidated balances, December 31, 2005.............      12,822       241      5,915      5,910      673,956   (19,906)   678,938
                                                                                                                            -------
Year ended December 31, 2006:
    Comprehensive income:
      Net income.....................................          --        --         --         --      111,694        --    111,694
      Other comprehensive income, net of tax:
        Unrealized gains on investment securities....          --        --         --         --           --     3,666      3,666
        Reclassification adjustment for investment
          securities losses included in net income...          --        --         --         --           --     1,242      1,242
        Derivative instruments
          Current period transactions................          --        --         --         --           --     1,906      1,906
                                                                                                                            -------
    Total comprehensive income.......................                                                                       118,508
    Adjustment for the utilization of net
        operating losses associated with prior
        acquisitions.................................          --        --         --      3,775           --        --      3,775
    Class A preferred stock dividends,
      $1.20 per share................................          --        --         --         --         (769)       --       (769)
    Class B preferred stock dividends,
      $0.11 per share................................          --        --         --         --          (17)       --        (17)
                                                          -------       ---      -----      -----      -------   -------    -------
Consolidated balances, December 31, 2006.............     $12,822       241      5,915      9,685      784,864   (13,092)   800,435
                                                          =======       ===      =====      =====      =======   =======    =======

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                                                 FIRST BANKS, INC.

                                       CONSOLIDATED STATEMENTS OF CASH FLOWS

-------------------------------------------------------------------------------------------------------------------

                                         (dollars expressed in thousands)

                                                                                      Years ended December 31,
                                                                               ------------------------------------
                                                                                   2006         2005         2004
                                                                                   ----         ----         ----
Cash flows from operating activities:
<S>                                                                            <C>              <C>          <C>
     Net income..............................................................  $  111,694       96,906       82,908
     Adjustments to reconcile net income to net cash
       provided by operating activities:
          Depreciation and amortization of bank premises and equipment.......      18,912       17,381       18,579
          Amortization, net of accretion.....................................      13,863       16,111       17,102
          Originations and purchases of loans held for sale..................  (1,000,765)  (1,327,890)  (1,036,548)
          Proceeds from sales of loans held for sale.........................   1,229,574    1,201,695    1,104,254
          Provision for loan losses..........................................      12,000       (4,000)      25,750
          Provision for deferred income taxes................................      10,208       (1,216)        (747)
          Increase in accrued interest receivable............................      (9,781)      (2,280)        (696)
          Increase in accrued interest payable...............................       6,230        6,115        1,361
          Proceeds from sales of trading securities..........................       9,947           --           --
          Purchases of trading securities....................................     (88,494)      (3,389)          --
          Gain on loans sold and held for sale...............................     (26,020)     (20,804)     (18,497)
          Net loss (gain) on sales of investment securities..................       1,813        2,873         (257)
          Gain on sales of branches, net of expenses.........................          --           --       (1,000)
          Other operating activities, net....................................      42,973       20,323       13,513
          Minority interest in loss of subsidiary............................        (587)      (1,287)          --
                                                                               ----------   ----------   ----------
               Net cash provided by operating activities.....................     331,567          538      205,722
                                                                               ----------   ----------   ----------

Cash flows from investing activities:
     Cash (paid) received for acquired entities, net of cash and
       cash equivalents received (paid)......................................    (204,690)     (11,579)      21,098
     Proceeds from sales of investment securities available for sale.........     198,061      147,120       26,340
     Maturities of investment securities available for sale..................   1,003,970      658,803      680,631
     Maturities of investment securities held to maturity....................       2,887        5,635        4,632
     Purchases of investment securities available for sale...................  (1,065,738)    (325,642)  (1,029,993)
     Purchases of investment securities held to maturity.....................        (865)      (6,509)     (19,031)
     Proceeds from sale of leases............................................          --           --       35,544
     Net increase in loans...................................................    (510,054)    (569,255)    (211,104)
     Recoveries of loans previously charged-off..............................      15,394       19,757       25,876
     Purchases of bank premises and equipment................................     (37,904)     (17,128)     (10,960)
     Sale of minority interest in subsidiary.................................          --        7,350           --
     Other investing activities, net.........................................          12        1,834       15,358
                                                                               ----------   ----------   ----------
               Net cash used in investing activities.........................    (598,927)     (89,614)    (461,609)
                                                                               ----------   ----------   ----------

Cash flows from financing activities:
     Increase (decrease) in demand and savings deposits......................      10,185      (50,119)      23,355
     Increase (decrease) in time deposits....................................     415,562      199,255      (11,521)
     Decrease in Federal Home Loan Bank advances.............................     (43,410)      (6,144)     (29,020)
     Decrease in federal funds purchased.....................................          --          (78)          --
     (Decrease) increase in securities sold under agreements to repurchase...    (135,464)     (59,232)     286,928
     Advances drawn on notes payable.........................................          --      100,000       15,000
     Repayments of notes payable.............................................     (35,000)     (15,000)     (17,000)
     Proceeds from issuance of subordinated debentures.......................     139,178           --       61,857
     Repayments of subordinated debentures...................................          --      (59,278)          --
     Cash paid for sales of branches, net of cash and cash equivalents sold..          --           --      (19,353)
     Payment of preferred stock dividends....................................        (786)        (786)        (786)
                                                                               ----------   ----------   ----------
               Net cash provided by financing activities.....................     350,265      108,618      309,460
                                                                               ----------   ----------   ----------
               Net increase in cash and cash equivalents.....................      82,905       19,542       53,573
Cash and cash equivalents, beginning of year.................................     286,652      267,110      213,537
                                                                               ----------   ----------   ----------
Cash and cash equivalents, end of year.......................................  $  369,557      286,652      267,110
                                                                               ==========   ==========   ==========

Supplemental disclosures of cash flow information:
     Cash paid during the period for:
       Interest on liabilities...............................................  $  255,632      162,144       93,406
       Income taxes..........................................................      45,497       56,591       42,701
                                                                               ==========   ==========   ==========
     Noncash investing and financing activities:
       Securitization and transfer of loans to investment securities.........  $  138,944           --           --
       Loans transferred to other real estate................................       7,542        3,737        5,142
                                                                               ==========   ==========   ==========

The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


<PAGE>

                                FIRST BANKS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The  following  is a summary  of the  significant  accounting  policies
followed by First Banks, Inc. and subsidiaries (First Banks or the Company):

         Basis  of  Presentation.   The  accompanying   consolidated   financial
statements of First Banks have been prepared in accordance  with U.S.  generally
accepted accounting  principles and conform to predominant  practices within the
banking  industry.  Management of First Banks has made a number of estimates and
assumptions  relating  to the  reporting  of  assets  and  liabilities  and  the
disclosure  of contingent  assets and  liabilities  to prepare the  consolidated
financial  statements  in conformity  with U.S.  generally  accepted  accounting
principles. Actual results could differ from those estimates.

         Principles of  Consolidation.  The  consolidated  financial  statements
include the accounts of the parent company and its  subsidiaries,  giving effect
to the minority  interest in one subsidiary,  as more fully described below, and
in Note 2 and Note 19 to the Consolidated Financial Statements.  All significant
intercompany   accounts  and   transactions   have  been   eliminated.   Certain
reclassifications of 2005 and 2004 amounts have been made to conform to the 2006
presentation.

         First Banks operates  through its wholly owned  subsidiary bank holding
company,  The San Francisco  Company  (SFC),  and SFC's wholly owned  subsidiary
bank, First Bank, both headquartered in St. Louis, Missouri. First Bank operates
through  its branch  banking  offices  and  subsidiaries:  First  Bank  Business
Capital,  Inc.; Missouri Valley Partners,  Inc. (MVP); Adrian N. Baker & Company
(Adrian Baker);  Universal Premium Acceptance  Corporation (UPAC) and its wholly
owned subsidiary,  UPAC of California,  Inc.; and Small Business Loan Source LLC
(SBLS LLC). All of the subsidiaries are wholly owned, except for SBLS LLC, which
is 51.0%  owned by First Bank and 49.0%  owned by First  Capital  America,  Inc.
(FCA) as of December 31, 2006.

         Cash  and  Cash  Equivalents.  Cash,  due  from  banks  and  short-term
investments, which include federal funds sold and interest-bearing deposits, are
considered  to be cash and cash  equivalents  for  purposes of the  consolidated
statements  of cash  flows.  Federal  funds sold were  $152.2  million and $65.0
million  at  December  31,  2006 and 2005,  respectively,  and  interest-bearing
deposits  were $1.4  million  and $9.0  million at  December  31, 2006 and 2005,
respectively.

         First Bank is required to maintain  certain daily  reserve  balances on
hand  in  accordance  with  regulatory  requirements.   These  reserve  balances
maintained in  accordance  with such  requirements  were $24.7 million and $24.3
million at December 31, 2006 and 2005, respectively.

         Investment  Securities.  The classification of investment securities as
trading,  available  for sale or held to maturity is  determined  at the date of
purchase.

         Investment  securities  designated  as  trading,  which  represent  any
security  held for near term  sale,  are  stated  at fair  value.  Realized  and
unrealized gains and losses are included in noninterest income.

         Investment securities designated as available for sale, which represent
any  security  that First Banks has no  immediate  plan to sell but which may be
sold in the future  under  different  circumstances,  are stated at fair  value.
Realized  gains and losses are  included  in  noninterest  income,  based on the
amortized cost of the individual security sold. Unrealized gains and losses, net
of related income tax effects,  are recorded in accumulated other  comprehensive
income.  All previous fair value adjustments  included in the separate component
of  accumulated  other  comprehensive  income  (loss)  are  reversed  upon sale.
Premiums  and  discounts  incurred  relative  to the  par  value  of  securities
purchased are amortized or accreted,  respectively,  on the  level-yield  method
taking into consideration the level of current and anticipated prepayments.

         Investment securities  designated as held to maturity,  which represent
any  security  that First Banks has the  positive  intent and ability to hold to
maturity,  are stated at cost, net of  amortization of premiums and accretion of
discounts computed on the level-yield method taking into consideration the level
of current and anticipated prepayments.

         A  decline  in  the   market   value  of  any   available-for-sale   or
held-to-maturity  investment security below its carrying value that is deemed to
be other than temporary results in a reduction in the cost basis of the carrying
value  to  fair  value.  The  other-than-temporary   impairment  is  charged  to
noninterest  income  and a new  cost  basis  is  established.  When  determining
other-than-temporary  impairment,  consideration  is given as to  whether  First

<PAGE>

Banks has the ability and intent to hold the investment  security until a market
price  recovery  and  whether  evidence  indicating  the  carrying  value of the
investment security is recoverable outweighs evidence to the contrary.

         Loans Held for Portfolio. Loans held for portfolio are carried at cost,
adjusted  for  amortization  of premiums and  accretion  of discounts  using the
interest  method.  Interest and fees on loans are recognized as income using the
interest  method.  Loan  origination  fees are deferred and accreted to interest
income over the  estimated  life of the loans using the interest  method.  Loans
held for  portfolio  are stated at cost as First Banks has the ability and it is
management's intention to hold them to maturity.

         The accrual of interest on loans is  discontinued  when it appears that
interest or principal may not be paid in a timely manner in the normal course of
business or once  principal or interest  payments  become 90 days past due under
the contractual  terms of the loan agreement.  Generally,  payments  received on
nonaccrual  and impaired  loans are recorded as principal  reductions.  Interest
income  is  recognized  after all  delinquent  principal  has been  repaid or an
improvement  in the condition of the loan has occurred that warrants  resumption
of interest accruals.

         A loan is considered impaired when it is probable that First Banks will
be unable to collect all amounts due, both principal and interest,  according to
the  contractual  terms of the loan  agreement.  Loans on nonaccrual  status are
considered to be impaired loans. When measuring impairment,  the expected future
cash flows of an impaired loan are discounted at the loan's  effective  interest
rate. Alternatively, impairment is measured by reference to an observable market
price,   if  one   exists,   or  the  fair  value  of  the   collateral   for  a
collateral-dependent loan. Regardless of the historical measurement method used,
First Banks measures  impairment  based on the fair value of the collateral when
foreclosure  is probable.  Additionally,  impairment of a  restructured  loan is
measured  by  discounting  the total  expected  future  cash flows at the loan's
effective rate of interest as stated in the original loan agreement.

         Loans Held for Sale.  Loans held for sale are comprised of  residential
mortgage loans held for sale in the secondary mortgage market, frequently in the
form of a mortgage-backed  security,  U.S. Small Business  Administration  (SBA)
loans  awaiting sale of the guaranteed  portion to the SBA, and commercial  real
estate  loans which may be  identified  for sale to  specific  buyers to achieve
credit or loan concentration objectives.  Loans held for sale are carried at the
lower of cost or market value,  which is determined on an individual loan basis.
Additionally, the carrying value of the residential mortgage loans held for sale
also  includes the cost of hedging the loans held for sale.  The amount by which
cost exceeds market value is recorded in a valuation allowance as a reduction of
loans held for sale. Changes in the valuation allowance are reflected as part of
the gain on loans  sold and  held  for sale in the  consolidated  statements  of
income in the periods in which the changes occur. Gains or losses on the sale of
loans  held for sale are  determined  on a  specific  identification  basis  and
reflect the  difference  between the value  received  upon sale and the carrying
value of the loans held for sale,  including the cost of hedging the residential
mortgage loans held for sale.  Loans held for sale transferred to loans held for
portfolio or  available-for-sale  investment  securities are transferred at fair
value.

         Loan Servicing Income. Loan servicing income is included in noninterest
income and represents fees earned for servicing real estate mortgage loans owned
by investors and originated by First Bank's mortgage banking operation,  as well
as SBA loans to small  business  concerns that are originated by SBLS LLC, First
Bank's majority-owned subsidiary that originates,  sells and services SBA loans.
These  fees  are net of  federal  agency  guarantee  fees,  interest  shortfall,
amortization of loan servicing rights and impairment valuation allowances.  Such
fees are generally calculated on the outstanding  principal balance of the loans
serviced and are recorded as income when earned.

         Allowance for Loan Losses.  The allowance for loan losses is maintained
at a level considered adequate to provide for probable losses. The provision for
loan  losses is based on a monthly  analysis  of the loans  held for  portfolio,
considering,  among other factors,  current economic conditions,  loan portfolio
composition, past loan loss experience, independent appraisals, loan collateral,
payment experience and selected key financial ratios.  Adjustments are reflected
in the  consolidated  statements  of income in the  periods in which they become
known. In addition,  various regulatory  agencies,  as an integral part of their
examination  process,  periodically  review the allowance for loan losses.  Such
agencies may require  First Banks to modify its  allowance for loan losses based
on  their  judgment  about  information  available  to them at the time of their
examination.

         Derivative  Instruments  and Hedging  Activities.  First Banks utilizes
derivative  instruments  and hedging  strategies to assist in the  management of
interest  rate  sensitivity  and to modify the  repricing,  maturity  and option
characteristics  of  certain  assets  and  liabilities.  First  Banks  uses such
derivative  instruments  solely  to reduce  its  interest  rate  risk  exposure.
Derivative  instruments  are  recorded in the  consolidated  balance  sheets and

<PAGE>

measured at fair value.  At inception of a derivative  transaction,  First Banks
designates  the  derivative  instrument as either a hedge of the fair value of a
recognized asset or liability or of an unrecognized  firm commitment (fair value
hedges) or a hedge of a forecasted  transaction or the variability of cash flows
to be received or paid  related to a recognized  asset or  liability  (cash flow
hedges).  For all  hedging  relationships,  First  Banks  documents  the hedging
relationship and its  risk-management  objectives and strategy for entering into
the hedging relationship  including the hedging instrument,  the hedged item(s),
the nature of the risk being hedged, how the hedging instrument's  effectiveness
in offsetting  the hedged risk will be assessed and a description  of the method
the Company will  utilize to measure  hedge  ineffectiveness.  This process also
includes  linking all derivative  instruments  that are designated as fair value
hedges or cash flow  hedges  to the  underlying  assets  and  liabilities  or to
specific firm commitments or forecasted transactions. First Banks also assesses,
both at the hedge's  inception and on an ongoing  basis,  whether the derivative
instruments  that are used in  hedging  transactions  are  highly  effective  in
offsetting  changes in fair  values or cash flows of the hedged  item(s).  First
Banks discontinues hedge accounting prospectively when it is determined that the
derivative  instrument is no longer effective in offsetting  changes in the fair
value or cash flows of the hedged item(s), the derivative  instrument expires or
is sold, terminated, or exercised, the derivative instrument is de-designated as
a hedging instrument  because it is unlikely that a forecasted  transaction will
occur,  a hedged  firm  commitment  no  longer  meets the  definition  of a firm
commitment,   or  management  determines  that  designation  of  the  derivative
instrument as a hedging transaction is no longer appropriate.

         A  summary  of First  Banks'  accounting  policies  for its  derivative
instruments and hedging activities is as follows:

         >>    Interest Rate Swap  Agreements - Cash Flow Hedges.  Interest rate
               swap agreements  designated as cash flow hedges are accounted for
               at fair value.  The  effective  portion of the change in the cash
               flow hedge's gain or loss is initially reported as a component of
               other  comprehensive  income and subsequently  reclassified  into
               noninterest  income  when  the  underlying   transaction  affects
               earnings.  The ineffective portion of the change in the cash flow
               hedge's  gain or loss is recorded in  noninterest  income on each
               monthly  measurement  date.  The  net  interest  differential  is
               recognized  as an  adjustment  to  interest  income  or  interest
               expense of the related asset or liability  being  hedged.  In the
               event of early termination,  the net proceeds received or paid on
               the interest rate swap  agreements are recognized  immediately in
               noninterest income.

         >>    Interest Rate Swap Agreements - Fair Value Hedges.  Interest rate
               swap agreements designated as fair value hedges are accounted for
               at fair value.  Changes in the fair value of the swap  agreements
               are recognized currently in noninterest income. The change in the
               fair value of the  underlying  hedged  item is  recognized  as an
               adjustment to the carrying  amount of the underlying  hedged item
               and is  also  reflected  currently  in  noninterest  income.  All
               changes in fair value are  measured on a monthly  basis.  The net
               interest  differential is recognized as an adjustment to interest
               income or  interest  expense of the  related  asset or  liability
               being   hedged.   In  the   event   of   early   termination   or
               ineffectiveness,  the  net  proceeds  received  or  paid  on  the
               interest  rate swap  agreements  are  recognized  immediately  in
               noninterest income and the future net interest  differential,  if
               any, is  recognized  prospectively  in  noninterest  income.  The
               cumulative change in the fair value of the underlying hedged item
               is deferred  and  amortized  or  accreted  to interest  income or
               interest  expense over the  weighted  average life of the related
               asset or liability.  If, however,  the underlying  hedged item is
               repaid, the cumulative change in the fair value of the underlying
               hedged item is recognized immediately in noninterest income.

         >>    Interest  Rate Cap and Floor  Agreements.  Interest  rate cap and
               floor agreements are accounted for at fair value.  Changes in the
               fair  value  of  interest  rate  cap  and  floor  agreements  are
               recognized  in  noninterest  income on each  monthly  measurement
               date.

         >>    Interest Rate Lock  Commitments.  Commitments to originate  loans
               for subsequent sale in the secondary  market  (interest rate lock
               commitments), which primarily consist of commitments to originate
               fixed rate  residential  mortgage  loans,  are  recorded  at fair
               value.  Changes in the fair value are  recognized in  noninterest
               income on a monthly basis.

         >>    Forward Commitments to Sell Mortgage-Backed  Securities.  Forward
               commitments  to sell  mortgage-backed  securities are recorded at
               fair value.  Changes in the fair value of forward  commitments to
               sell  mortgage-backed  securities  are  recognized in noninterest
               income on a monthly basis.
<PAGE>

         Bank  Premises and  Equipment,  Net.  Bank  premises and  equipment are
carried at cost less accumulated depreciation and amortization.  Depreciation is
computed using the  straight-line  method over the estimated useful lives of the
related assets.  Amortization of leasehold  improvements is calculated using the
straight-line method over the shorter of the useful life of the related asset or
the term of the lease.  Bank premises and improvements are depreciated over five
to 40 years and equipment is depreciated over three to seven years.

         Goodwill and Other  Intangible  Assets.  Goodwill and other  intangible
assets  consist  of  goodwill,   core  deposit  intangibles  and  customer  list
intangibles. Goodwill and intangible assets with indefinite useful lives are not
amortized,  but instead  tested for  impairment  at least  annually.  Intangible
assets with definite useful lives are amortized over their respective  estimated
useful lives to their estimated  residual values, and reviewed for impairment in
accordance with SFAS No. 144. First Banks amortizes,  on a straight-line  basis,
its core deposit intangibles,  customer list intangibles and goodwill associated
with  transactions  structured as purchases of certain  assets and assumption of
selected liabilities (P&A Transactions).  Core deposit intangibles are amortized
over the estimated periods to be benefited,  which has been estimated at five to
seven years,  and customer list  intangibles  are  amortized  over the estimated
periods to be benefited, which has been estimated at seven to 16 years. Goodwill
associated with P&A  Transactions is amortized over the estimated  periods to be
benefited,  which has been estimated to be 15 years.  Goodwill  associated  with
stock purchases is not amortized, but instead, is tested annually for impairment
in  accordance  with First Banks'  existing  methods of measuring  and recording
impairment losses, as described below.

         First Banks reviews intangible assets for impairment whenever events or
changes in circumstances  indicate the carrying value of an underlying asset may
not be recoverable.  First Banks measures  recoverability  based upon the future
cash  flows  expected  to result  from the use of the  underlying  asset and its
eventual disposition. If the sum of the expected future cash flows (undiscounted
and without interest  charges) is less than the carrying value of the underlying
asset, First Banks recognizes an impairment loss. The impairment loss recognized
represents  the  amount  by which the  carrying  value of the  underlying  asset
exceeds the fair value of the  underlying  asset.  If an asset being  tested for
recoverability  was acquired in a business  combination  accounted for using the
purchase  method,  goodwill that arose in the transaction is included as part of
the asset  grouping in  determining  recoverability.  If some but not all of the
assets acquired in that  transaction are being tested,  goodwill is allocated to
the  assets  being  tested  for  recoverability  on a pro rata  basis  using the
relative  fair  values of the  long-lived  assets and  identifiable  intangibles
acquired at the  acquisition  dates.  In instances  where goodwill is identified
with assets that are subject to an impairment  loss, the carrying  amount of the
identified  goodwill is  eliminated  before  reducing  the  carrying  amounts of
impaired  long-lived  assets and identifiable  intangibles.  As such adjustments
become necessary, they are reflected in the consolidated statements of income in
the periods in which they become known.

         Mortgage Servicing Rights. Mortgage servicing rights are capitalized by
allocating the total cost of the mortgage loans to mortgage servicing rights and
the loans (without mortgage  servicing rights) based on the relative fair values
of the two components. Upon capitalizing the mortgage servicing rights, they are
amortized,  in  proportion to the related  estimated  net servicing  income on a
basis that approximates the  disaggregated,  discounted basis, over the expected
lives of the related  loans,  which is  approximately  five to seven years.  The
weighted   average   amortization   period  of  mortgage   servicing  rights  is
approximately five years.

         The value of  mortgage  servicing  rights is  adversely  affected  when
mortgage  interest rates decline which normally causes mortgage loan prepayments
to  increase.  When loans are prepaid or  refinanced,  the  related  unamortized
balance of the mortgage servicing rights is charged to amortization expense. The
determination  of the fair value of the mortgage  servicing  rights is performed
quarterly  based  upon an  independent  third  party  valuation.  Based on these
analyses,  a comparison of the fair value of the mortgage  servicing rights with
the carrying value of the mortgage servicing rights is made, with impairment, if
any,  recognized  at that time.  The  impairment  analyses  are  prepared  using
stratifications  of the mortgage  servicing rights based on the predominant risk
characteristics of the underlying mortgage loans, including size, interest rate,
weighted  average original term,  weighted average  remaining term and estimated
prepayment  speeds.  As part of these  analyses,  the fair value of the mortgage
servicing  rights for each  stratum is  compared  to the  carrying  value of the
mortgage servicing rights for each stratum.  To the extent the carrying value of
the mortgage  servicing rights exceeds the fair value of the mortgage  servicing
rights for a stratum,  First Banks recognizes  impairment equal to the amount by
which the carrying value of the mortgage  servicing rights for a stratum exceeds
the fair value.  Impairment is recognized through a valuation  allowance that is
recorded as a reduction of mortgage  servicing rights.  The valuation  allowance
may be  reversed  based  upon  subsequent  improvement  in the  fair  value of a
stratum;  however,  First Banks does not  recognize  fair value of the  mortgage

<PAGE>

servicing  rights in excess of the carrying value of mortgage  servicing  rights
for any  stratum.  Changes  in the  valuation  allowance  are  reflected  in the
consolidated statements of income in the periods in which the change occurs.

         SBA  Servicing   Rights.   SBA  servicing  rights  are  capitalized  by
allocating  the total  cost of the SBA loans to  servicing  rights and the loans
(without  servicing  rights)  based  on the  relative  fair  values  of the  two
components.  The fair value of  servicing  rights is computed  using the present
value  of the  estimated  future  servicing  income  in  excess  of such  income
estimated at a normal  servicing  fee rate.  The  servicing  rights,  net of the
valuation allowance, are amortized in proportion to, and over the period of, the
estimated net servicing  revenue of the underlying  SBA loans,  which range from
seven to 25 years. The weighted average amortization period of the SBA servicing
rights is approximately 18 years. The determination of the fair value of the SBA
servicing  rights is performed  monthly based upon quarterly  independent  third
party  valuation  analyses.  Based on these  analyses,  a comparison of the fair
value of the SBA servicing  rights with the carrying  value of the SBA servicing
rights  is  made,  with  impairment,  if  any,  recognized  at  that  time.  The
predominant  risk  characteristics  of the underlying SBA loans used to stratify
SBA servicing rights for purposes of measuring impairment include size, interest
rate,  weighted  average  original  term,  weighted  average  remaining term and
estimated  prepayment  speeds.  To the  extent  the  carrying  value  of the SBA
servicing rights exceeds the fair value of the SBA servicing rights, First Banks
recognizes impairment equal to the amount by which the carrying value of the SBA
servicing  rights  exceeds the fair value.  Impairment is  recognized  through a
valuation  allowance  that is recorded as a reduction of SBA  servicing  rights.
Changes in the valuation allowance are reflected in the consolidated  statements
of income in the  periods  in which the  change  occurs.  First  Banks  does not
recognize fair value of the SBA servicing rights in excess of the carrying value
of SBA servicing rights for any stratum.

         Other  Real  Estate.  Other  real  estate,  consisting  of real  estate
acquired  through  foreclosure or deed in lieu of foreclosure,  is stated at the
lower of cost or fair value less  applicable  selling costs.  The excess of cost
over fair value of the  property  at the date of  acquisition  is charged to the
allowance for loan losses.  Subsequent  reductions in carrying value, to reflect
current fair value or costs incurred in maintaining the properties,  are charged
to expense as  incurred.  Other real estate was $6.4 million and $2.0 million at
December 31, 2006 and 2005, respectively.

         Income  Taxes.  Deferred tax assets and  liabilities  are  reflected at
currently  enacted  income  tax  rates  applicable  to the  period  in which the
deferred tax assets or  liabilities  are expected to be realized or settled.  As
changes  in the  tax  laws  or  rates  are  enacted,  deferred  tax  assets  and
liabilities  are adjusted  through the provision for income taxes.  First Banks,
Inc. and its eligible subsidiaries file a consolidated federal income tax return
and unitary or consolidated state income tax returns in all applicable states.

         Financial   Instruments  With  Off-Balance   Sheet  Risk.  A  financial
instrument is defined as cash,  evidence of an ownership  interest in an entity,
or a contract  that  conveys or  imposes on an entity the  contractual  right or
obligation to either  receive or deliver cash or another  financial  instrument.
First Banks  utilizes  financial  instruments  to reduce the interest  rate risk
arising from its financial assets and liabilities. These instruments involve, in
varying degrees, elements of interest rate risk and credit risk in excess of the
amount  recognized in the consolidated  balance sheets.  "Interest rate risk" is
defined as the  possibility  that interest rates may move  unfavorably  from the
perspective  of First  Banks due to maturity  and/or  interest  rate  adjustment
timing  differences  between   interest-earning   assets  and   interest-bearing
liabilities.  The risk that a counterparty to an agreement entered into by First
Banks may default is defined as "credit risk."

         First Banks is a party to  commitments  to extend credit and commercial
and  standby  letters of credit in the  normal  course of  business  to meet the
financing needs of its customers. These commitments involve, in varying degrees,
elements of interest rate risk and credit risk in excess of the amount reflected
in the consolidated balance sheets.

         Earnings Per Common  Share.  Basic  earnings per common share (EPS) are
computed by dividing the income available to common stockholders (the numerator)
by the  weighted  average  number of shares of  common  stock  outstanding  (the
denominator)  during the year. The computation of dilutive EPS is similar except
the  denominator  is  increased  to include the number of  additional  shares of
common stock that would have been  outstanding if the dilutive  potential shares
had been issued.  In addition,  in computing the dilutive  effect of convertible
securities,  the  numerator  is adjusted to add back any  convertible  preferred
dividends.



<PAGE>

(2)      ACQUISITIONS AND INTEGRATION COSTS

         Completed Acquisitions. During the three years ended December 31, 2006,
First Banks completed the following acquisitions:

<TABLE>
<CAPTION>
                                                                                                     Goodwill
                                                                          Total        Purchase      and Other
             Entity                                  Date                Assets          Price      Intangibles
             ------                                  ----                ------          -----      -----------
                                                                           (dollars expressed in thousands)
     2006
     ----
       MidAmerica National Bank
         Peoria and Bloomington, Illinois
<S>                                            <C>                     <C>                   <C>        <C>
         Branch Offices (1)                    November 10, 2006       $  158,300            --         2,400

       First Bank of Beverly Hills
         Beverly Hills, California
         Branch Office (1)                     November 3, 2006           157,500            --         8,700

       TeamCo, Inc.
         Oak Lawn, Illinois                     August 31, 2006            67,900        13,900         9,600

       San Diego Community Bank
         Chula Vista, California                August 15, 2006            91,700        25,500        11,800

       Universal Premium Acceptance
         Corporation (2)
         Lenexa, Kansas                          May 31, 2006             152,800        52,700        44,700

       First Independent National Bank
         Plano, Texas                             May 1, 2006              68,200        19,200        11,800

       Pittsfield Community Bancorp, Inc.
         Pittsfield, Illinois                   April 28, 2006             17,600         5,100         1,300

       Adrian N. Baker & Company
         Clayton, Missouri                      March 31, 2006              3,000         7,400         8,000

       Dallas National Bank
         Richardson, Texas
         Branch Office (1)                     January 20, 2006             1,100            --            --

       First National Bank of Sachse
         Sachse, Texas                          January 3, 2006            76,200        20,800        12,400
                                                                       ----------      --------      --------
                                                                       $  794,300       144,600       110,700
                                                                       ==========      ========      ========
     2005
     ----
       Northway State Bank
         Grayslake, Illinois                   October 31, 2005        $   50,400        10,300         5,400

       International Bank of California
         Los Angeles, California              September 30, 2005          151,600        33,700        15,800

       Bank and Trust Company
         Roodhouse, Illinois
         Branch Office (1)                    September 23, 2005            5,000            --           100

       FBA Bancorp, Inc.
         Chicago, Illinois                      April 29, 2005             73,300        10,500         4,500
                                                                       ----------      --------      --------
                                                                       $  280,300        54,500        25,800
                                                                       ==========      ========      ========

<PAGE>

     2004
     ----
       Hillside Investors, Ltd.
         Hillside, Illinois                    November 30, 2004       $1,196,700        67,400        10,600

       Small Business Loan Source, Inc.
         Houston, Texas                         August 31, 2004            47,100        45,600         5,900

       Continental Mortgage Corporation -
         Delaware (3)
         Aurora, Illinois                        July 30, 2004            140,700         4,200         2,100
                                                                       ----------      --------      --------
                                                                       $1,384,500       117,200        18,600
                                                                       ==========      ========      ========
     ---------------
     (1) First Bank acquired the branch offices through a purchase of certain assets and assumption of certain
         liabilities of the branch offices.  Total assets  consisted of  cash received upon  assumption of the
         deposit liabilities and loans.
     (2) In conjunction with the acquisition of UPAC, First Bank repaid in  full  the  outstanding senior  and
         subordinated  notes  of  UPAC, including  accumulated  accrued  and unpaid interest, totaling  $125.9
         million.
     (3) In conjunction with the acquisition of Continental Mortgage Corporation- Delaware (CMC), First  Banks
         redeemed in full all of the outstanding  subordinated promissory notes of CMC, including  accumulated
         accrued and unpaid interest, totaling $4.5 million in aggregate.
</TABLE>

         Goodwill and other intangible  assets  associated with the acquisitions
included  in the  table  above are not  deductible  for tax  purposes,  with the
exception of P&A Transactions  and the goodwill  associated with the purchase of
assets and assumption of liabilities of Small Business Loan Source, Inc. (SBLS).
For 2006, 2005 and 2004  acquisitions,  goodwill and other intangible  assets in
the amounts of $110.7  million,  $25.8 million and $18.6 million,  respectively,
were assigned to First Bank.

         The consolidated  financial  statements  include the financial position
and results of operations  of the  aforementioned  transactions  for the periods
subsequent to the  respective  acquisition  dates,  and the assets  acquired and
liabilities  assumed  were  recorded  at  their  estimated  fair  value  on  the
acquisition dates.  These fair value adjustments for the acquisitions  completed
in 2006 represent  current  estimates and are subject to further  adjustments as
the valuation data is finalized.  The  aforementioned  acquisitions  were funded
from  available  cash  reserves,  borrowings  under  First  Banks' term loan and
revolving credit  agreements,  and/or proceeds from the issuance of subordinated
debentures.

         On July 30, 2004,  First Banks completed its acquisition of CMC and its
wholly owned banking  subsidiary,  Continental  Community Bank and Trust Company
(CCB) for $4.2  million in cash,  and  redeemed  in full all of the  outstanding
subordinated  promissory notes of CMC, including  accumulated accrued and unpaid
interest,  totaling $4.5 million in aggregate.  The acquisition served to expand
First Banks' banking franchise in Chicago,  Illinois. The transaction was funded
through  internally  generated  funds.  CMC,  through CCB,  operated two banking
offices in the Chicago  suburban  communities  of Aurora and Villa Park.  At the
time of the  transaction,  CMC had  assets  of  $140.7  million,  loans,  net of
unearned discount, of $73.6 million and deposits of $104.6 million.  Preliminary
goodwill of $1.5 million was subsequently  adjusted to $100,000 during the third
quarter of 2005,  and the core deposit  intangibles,  which are being  amortized
over seven years utilizing the straight-line  method, were $2.0 million. CMC was
merged with and into SFC and CCB was merged with and into First Bank at the time
of the acquisition.

         On August 31, 2004, SBLS LLC, a Nevada-based  limited liability company
and  subsidiary  of First Bank,  purchased  substantially  all of the assets and
assumed  certain  liabilities  of SBLS,  headquartered  in  Houston,  Texas,  in
exchange  for cash and  certain  payments  contingent  on future  valuations  of
specifically   identified  assets,   including  servicing  assets  and  retained
interests  in   securitizations,   as  further  described  in  Note  24  to  the
Consolidated Financial Statements. The transaction was funded through internally
generated  funds. At the time of the  transaction,  SBLS LLC purchased from SBLS
assets of $47.1 million,  including $24.0 million of SBA loans,  net of unearned
discount, and $15.1 million of SBA servicing rights, and assumed $1.5 million of
liabilities, resulting in a net cash payment of $45.6 million. Goodwill was $5.9
million.  In conjunction with this  transaction,  on August 30, 2004, First Bank
granted to FCA, a corporation  owned by First Banks' Chairman and members of his
immediate  family, an option to purchase  Membership  Interests of SBLS LLC. FCA
exercised this option on June 30, 2005 and paid First Bank $7.4 million in cash.
As a result of this  transaction,  SBLS LLC became 51.0% owned by First Bank and
49.0% owned by FCA, and  accordingly,  effective June 30, 2005,  FCA's ownership
interest is  recognized as minority  interest in subsidiary in the  consolidated
balance sheets and,  beginning July 1, 2005,  the related  minority  interest in
income or loss of subsidiary is  recognized  in the  consolidated  statements of
income.
<PAGE>

         On November 30, 2004, First Banks completed its acquisition of Hillside
Investors,  Ltd.  (Hillside) and its wholly owned banking  subsidiary,  CIB Bank
(collectively, CIB Bank), headquartered in Hillside, Illinois, for approximately
$67.4 million in cash.  The  acquisition  served to  significantly  expand First
Banks'  banking  franchise  in Chicago,  Illinois.  The  transaction  was funded
through the  issuance of  subordinated  debentures  associated  with two private
placements of $60.0 million in aggregate of trust preferred  securities  through
newly formed affiliated statutory trusts, as further described in Note 12 to the
Consolidated  Financial  Statements.  The  acquisition  was also funded  through
borrowings  under  the  Company's  revolving  line of  credit  with a  group  of
unaffiliated financial institutions. CIB Bank operated 16 banking offices in the
Chicago, Illinois metropolitan area, including ten offices in Cook County, three
offices in Lake  County,  two  offices  in Will  County and one office in DuPage
County.  At the time of the  transaction,  CIB Bank had assets of $1.20 billion,
loans, net of unearned  discount,  of $683.3 million,  investment  securities of
$393.2  million and  deposits of $1.10  billion.  Preliminary  goodwill was $4.3
million and the core deposit  intangibles,  which are being amortized over seven
years  utilizing  the  straight-line  method,  were  $13.4  million.  As further
described  below,  goodwill  and  core  deposit  intangibles  were  subsequently
adjusted during the first quarter of 2005. Hillside was merged with and into SFC
and CIB Bank was merged with and into First Bank on December 1, 2004.

         During  the  first  quarter  of  2005,  First  Banks  recorded  certain
acquisition-related  adjustments  pertaining  to its  acquisition  of CIB  Bank.
Acquisition-related   adjustments   included   additional   purchase  accounting
adjustments  necessary to appropriately  adjust the preliminary goodwill of $4.3
million  recorded at the time of the  acquisition,  which was based upon current
estimates available at that time, to reflect the receipt of additional valuation
data. The aggregate  adjustments resulted in a purchase price reallocation among
goodwill, core deposit intangibles and bank premises and equipment. The purchase
price  reallocation  resulted in the  reallocation  of $3.1  million of negative
goodwill to core deposit  intangibles  and bank premises and equipment,  thereby
reducing  such assets by $2.8 million and $2.4  million,  net of the related tax
effect of $1.1 million and $941,000, respectively.  Following the recognition of
the  acquisition-related  adjustments,  goodwill  recorded was reduced from $4.3
million to zero and the core deposit intangibles, which are being amortized over
seven years utilizing the straight-line  method, were reduced from $13.4 million
to $10.6 million,  net of the related tax effect.  The individual  components of
the  $4.3  million  acquisition-related  adjustments  to  goodwill  and the $3.1
million  purchase price  reallocation  recorded in the first quarter of 2005 are
summarized as follows:

         >>    a $1.6 million increase in goodwill to adjust time deposits,  net
               of the related tax effect, to their estimated fair value;

         >>    a $967,000  increase  in  goodwill  to adjust  other real  estate
               owned,  net of the  related  tax effect,  to its  estimated  fair
               value;

         >>    a $10.0  million  reduction  in goodwill to adjust loans held for
               sale,  net of the  related tax effect,  to their  estimated  fair
               value.  These  adjustments  were based  upon the  receipt of loan
               payoffs and  significantly  higher sales prices received over the
               original  third-party  bid estimates,  for certain loans held for
               sale. All of the acquired  nonperforming loans that had been held
               for sale as of  December  31, 2004 had either been sold or repaid
               as  of  March  31,  2005,   with  the  exception  of  one  credit
               relationship, which was subsequently sold in April 2005;

         >>    a $1.7  million  increase  in  goodwill,  net of the  related tax
               effect,  and a related  decrease in core deposit  intangibles  of
               $2.8 million, resulting from the purchase price reallocation; and

         >>    a $1.4  million  increase  in  goodwill,  net of the  related tax
               effect,  and a related decrease in bank premises and equipment of
               $2.4 million, resulting from the purchase price reallocation.

         On April  29,  2005,  First  Banks  completed  its  acquisition  of FBA
Bancorp, Inc. (FBA) and its wholly owned subsidiary, First Bank of the Americas,
S.S.B.  (FBOTA),  for $10.5 million in cash.  The  acquisition  served to expand
First Banks' banking franchise in Chicago,  Illinois. The transaction was funded
through internally generated funds. FBA was headquartered in Chicago,  Illinois,
and through FBOTA,  operated three banking offices in the  southwestern  Chicago
metropolitan communities of Back of the Yards, Little Village and Cicero. At the
time of the acquisition, FBA had assets of $73.3 million, loans, net of unearned
discount,  of $54.3  million and  deposits of $55.7  million.  Goodwill was $2.8
million, and the core deposit intangibles,  which are being amortized over seven
years utilizing the straight-line method, were $1.7 million. FBA was merged with
and into SFC,  and FBOTA was merged  with and into First Bank at the time of the
acquisition.
<PAGE>

         On September 23, 2005,  First Bank completed its acquisition of certain
assets and  assumption of the deposit  liabilities  of the  Roodhouse,  Illinois
branch office of Bank and Trust Company,  an Illinois commercial bank (Roodhouse
Branch).  At the time of the  transaction,  the  Roodhouse  Branch  had  deposit
liabilities of $5.1 million.  Total assets consisted  primarily of cash received
upon assumption of the deposit liabilities. The core deposit intangibles,  which
are being amortized over seven years utilizing the  straight-line  method,  were
$100,000.

         On  September  30,  2005,  First Banks  completed  its  acquisition  of
International  Bank  of  California  (IBOC)  for  $33.7  million  in  cash.  The
acquisition  served to further expand First Banks' banking franchise in Southern
California,   providing  five   additional   banking  offices  in  Los  Angeles,
California,  including  one branch in downtown Los Angeles and four  branches in
eastern Los Angeles County, in Alhambra,  Arcadia,  Artesia and Rowland Heights.
The transaction was funded with a portion of the proceeds of First Banks' $100.0
million term loan, as further described in Note 11 to the Consolidated Financial
Statements.  At the time of the acquisition,  IBOC had assets of $151.6 million,
loans,  net of  unearned  discount,  of $113.5  million  and  deposits of $132.1
million. Goodwill was $12.0 million, and the core deposit intangibles, which are
being amortized over seven years utilizing the straight-line  method,  were $3.8
million.  IBOC  was  merged  with  and  into  First  Bank  at  the  time  of the
acquisition.

         On October 31, 2005,  First Banks completed its acquisition of Northway
State Bank (NSB) for $10.3  million in cash.  The  acquisition  served to expand
First Banks' banking franchise in Chicago,  Illinois. The transaction was funded
through  internally   generated  funds.  NSB  was  headquartered  in  Grayslake,
Illinois, and operated one banking office in Lake County in the northern Chicago
metropolitan  area.  At the time of the  acquisition,  NSB had  assets  of $50.4
million, loans, net of unearned discount, of $41.8 million and deposits of $45.2
million.  Preliminary goodwill of $3.8 million was subsequently adjusted to $4.5
million  during the third  quarter of 2006,  and the core  deposit  intangibles,
which are being amortized over seven years utilizing the  straight-line  method,
were  $909,000.  NSB was  merged  with  and into  First  Bank at the time of the
acquisition.

         On  January  3,  2006,   First  Banks  acquired  the  majority  of  the
outstanding   common  stock  of  First  National  Bank  of  Sachse  (FNBS),  and
subsequently  acquired the remaining outstanding common stock of FNBS in January
2006,  for $20.8  million in cash,  in  aggregate.  FNBS was  headquartered  and
operated one banking office in Sachse,  Texas,  located in the northeast  Dallas
metropolitan  area.  The  acquisition  served to  expand  First  Banks'  banking
franchise in Texas.  The  transaction  was funded through  internally  generated
funds. At the time of the acquisition,  FNBS had assets of $76.2 million, loans,
net of  unearned  discount,  of $49.3  million,  deposits  of $66.2  million and
stockholders'  equity of $9.9 million.  Goodwill was $8.8 million,  and the core
deposit  intangibles,  which are being  amortized over five years  utilizing the
straight-line  method,  were $3.6  million.  FNBS was merged with and into First
Bank on January 24, 2006.

         On January 20, 2006, First Bank completed its acquisition of the branch
office of Dallas National Bank in Richardson,  Texas (Richardson Branch). At the
time of the  acquisition,  the  Richardson  Branch had  assets of $1.1  million,
including loans,  net of unearned  discount,  of $144,000,  and deposits of $1.1
million.  Total  assets  consisted  primarily  of loans,  fixed  assets and cash
received upon assumption of deposit liabilities and certain assets.

         On March 31, 2006, First Bank completed its acquisition of Adrian Baker
for $7.4 million in cash and certain payments  contingent on the future earnings
of Adrian Baker for each of the years in the  three-year  period  following  the
closing date of the transaction.  Adrian Baker is an insurance  brokerage agency
based in  Clayton,  Missouri  that  provides a  comprehensive  range of employee
benefit and commercial and personal  insurance  services on a nationwide  basis.
The  acquisition  served to diversify First Banks' products and services in this
specialized  industry.  The transaction was funded through internally  generated
funds. At the time of the  acquisition,  Adrian Baker had assets of $3.0 million
and  stockholders'  equity  of  $810,000.  Goodwill  was $4.3  million,  and the
customer list intangibles, which are being amortized over 15 years utilizing the
straight-line method, were $3.7 million. Adrian Baker operates as a wholly owned
subsidiary of First Bank.


<PAGE>

         On April 28, 2006,  First Banks completed its acquisition of Pittsfield
Community Bancorp, Inc. and its wholly owned banking subsidiary,  Community Bank
of Pittsfield (collectively, Community Bank) for $5.1 million in cash. Community
Bank was headquartered in Pittsfield, Illinois and operated two banking offices,
one in Pittsfield,  Illinois,  and one in Mount Sterling,  Illinois. On June 16,
2006,  First Bank completed its sale of the Mount Sterling  office to Beardstown
Savings, s.b. The acquisition served to expand First Banks' banking franchise in
Pittsfield,  Illinois.  The transaction was funded through internally  generated
funds.  At the time of the  acquisition,  after giving effect to the sale of the
Mount Sterling office, Community Bank had assets of $17.6 million, loans, net of
unearned discount, of $11.1 million, deposits of $12.3 million and stockholder's
equity of $3.9 million. Goodwill was $807,000, and the core deposit intangibles,
which are being  amortized over five years utilizing the  straight-line  method,
were $517,000. Community Bank was merged with and into First Bank at the time of
the acquisition.

         On May 1, 2006,  First Banks  acquired the majority of the  outstanding
common  stock  of First  Independent  National  Bank  (FINB),  and  subsequently
acquired the remaining  outstanding  common stock in May 2006, for $19.2 million
in cash, in aggregate.  FINB was headquartered in Plano,  Texas and operated two
banking offices in Plano, Texas,  located in Collin County. In addition,  at the
time of the  acquisition,  FINB was in the  process of opening a de novo  branch
banking office located in the Preston Forest  Shopping  Center in Dallas County,
which  subsequently  opened on June 26, 2006. The  acquisition  served to expand
First Banks'  banking  franchise in Texas.  The  transaction  was funded through
internally   generated  funds  and  the  issuance  of  subordinated   debentures
associated  with a  private  placement  of  $40.0  million  of  trust  preferred
securities  through  a newly  formed  affiliated  statutory  trust,  as  further
described in Note 12 to the Consolidated  Financial  Statements.  At the time of
the  acquisition,  FINB had  assets of $68.2  million,  loans,  net of  unearned
discount,  of $59.6 million,  deposits of $55.5 million and stockholders' equity
of $7.3 million.  Goodwill was $9.3 million,  and the core deposit  intangibles,
which are being  amortized over five years utilizing the  straight-line  method,
were $2.5 million. FINB was merged with and into First Bank on May 16, 2006.

         On May 31, 2006,  First Bank completed its acquisition of KIF, Inc., an
Iowa  corporation,   and  its  wholly  owned  subsidiaries,   UPAC,  a  Missouri
corporation,   and  UPAC  of   California,   Inc.,  a   California   corporation
(collectively,  UPAC),  for  $52.7  million  in cash.  In  conjunction  with the
acquisition  of UPAC,  First  Banks  repaid in full the  outstanding  senior and
subordinated  notes of UPAC,  which  totaled  $125.9  million at the time of the
acquisition. UPAC is an insurance premium financing company headquartered in the
Kansas City suburb of Lenexa,  Kansas and operates in 49 states. The acquisition
served   to   diversify   First   Banks'   products   and   services   in   this
highly-specialized  industry.  The  transaction  was funded  through  internally
generated  funds and a $52.0  million  short-term  Federal Home Loan Bank (FHLB)
advance.  At the time of the  acquisition,  UPAC had  assets of $152.8  million,
loans, net of unearned discount,  of $149.2 million and stockholders'  equity of
$18.3 million.  Goodwill was $25.4 million,  and the customer list  intangibles,
which are being amortized over 16 years utilizing the straight-line method, were
$19.3 million. KIF, Inc. was merged with and into UPAC on June 30, 2006. UPAC of
California,  Inc.  operates as a wholly owned subsidiary of UPAC, which operates
as a wholly owned subsidiary of First Bank.

         On August 15, 2006,  First Banks completed its acquisition of San Diego
Community Bank (SDCB) for $25.5 million in cash. SDCB was headquartered in Chula
Vista,  California,  which is located  approximately ten miles south of downtown
San Diego, and operated two other banking offices in Kearney Mesa and Otay Mesa.
The  acquisition  served to expand  First Banks'  banking  franchise in southern
California.  The transaction was funded through  internally  generated funds and
the issuance of subordinated debentures associated with the private placement of
$20.0 million of trust preferred  securities  through a newly formed  affiliated
statutory trust, as further  described in Note 12 to the Consolidated  Financial
Statements.  At the time of the  acquisition,  SDCB had assets of $91.7 million,
loans, net of unearned discount, of $78.6 million, deposits of $76.1 million and
stockholders'  equity of $12.3 million.  Goodwill was $7.5 million, and the core
deposit  intangibles,  which are being  amortized over five years  utilizing the
straight-line  method,  were $4.3  million.  SDCB was merged with and into First
Bank at the time of the acquisition.
<PAGE>

         On August 31, 2006,  First Banks  completed its  acquisition of TeamCo,
Inc. and its wholly owned banking subsidiary,  Oak Lawn Bank (collectively,  Oak
Lawn)  for  $13.9  million  in cash.  Oak Lawn was  headquartered  in Oak  Lawn,
Illinois,  which is located approximately 15 miles southwest of the Chicago Loop
in Chicago  Southland,  and  operated a second  banking  office in Orland  Park,
Illinois, which is located approximately 39 miles southwest of downtown Chicago.
The  acquisition  served to expand  First Banks'  banking  franchise in Chicago,
Illinois.  The transaction was funded through internally generated funds and the
issuance of subordinated  debentures  associated  with the private  placement of
$25.0 million of trust preferred  securities  through a newly formed  affiliated
statutory trust, as further  described in Note 12 to the Consolidated  Financial
Statements.  At the  time of the  acquisition,  Oak  Lawn  had  assets  of $67.9
million,  loans, net of unearned discount,  of $43.1 million,  deposits of $60.1
million and stockholders' equity of $5.5 million. Goodwill was $7.3 million, and
the core  deposit  intangibles,  which  are  being  amortized  over  five  years
utilizing the straight-line  method, were $2.3 million. Oak Lawn was merged with
and into First Bank at the time of the acquisition.

         On November 3, 2006,  First Bank completed its acquisition of the First
Bank of Beverly  Hills'  banking  office  located in Beverly  Hills,  California
(Beverly Drive Office). At the time of the acquisition, the Beverly Drive Office
had assets of $157.5  million  and  deposits  of $156.1  million.  Total  assets
consisted  primarily of cash received upon assumption of deposit liabilities and
certain  assets.  The core deposit  intangibles,  which are being amortized over
five years utilizing the straight-line method, were $8.7 million.

         On  November  10,  2006,   First  Bank  completed  its  acquisition  of
MidAmerica   National  Bank's  three  banking  offices  located  in  Peoria  and
Bloomington,  Illinois  (collectively,  MidAmerica Offices).  At the time of the
acquisition,  the MidAmerica Offices had, on a combined basis,  assets of $158.3
million  including  loans,  net of unearned  discount,  of $154.1  million,  and
deposits  of $48.2  million.  The core  deposit  intangibles,  which  are  being
amortized over five years utilizing the straight-line method, were $2.4 million.

         Pending Acquisitions.  On November 7, 2006, First Banks entered into an
Agreement and Plan of Reorganization providing for the acquisition of Royal Oaks
Bancshares,  Inc. and its wholly owned banking subsidiary,  Royal Oaks Bank, ssb
(collectively,  Royal Oaks). Royal Oaks was headquartered in Houston,  Texas and
operated five banking  offices in the Houston area. In addition,  at the time of
the  acquisition,  Royal Oaks was in the  process  of  opening a de novo  branch
banking office located in the Heights, near downtown Houston,  which is expected
to be completed in the second  quarter of 2007. As further  described in Note 25
to the Consolidated Financial Statements,  First Banks completed its acquisition
of Royal Oaks on February 28, 2007.

         Acquisition  and Integration  Costs.  First Banks accrues certain costs
associated with its  acquisitions as of the respective  consummation  dates. The
accrued  costs  relate to  adjustments  to the  staffing  levels of the acquired
entities or to the  anticipated  termination of  information  technology or item
processing  contracts of the acquired entities prior to their stated contractual
expiration  dates. The most significant  costs that First Banks incurs relate to
salary  continuation  agreements,  or other  similar  agreements,  of  executive
management  and certain  other  employees of the acquired  entities that were in
place prior to the acquisition dates. These agreements provide for payments over
periods  generally ranging from two to 15 years and are triggered as a result of
the change in control of the  acquired  entity.  Other  severance  benefits  for
employees  that  are  terminated  in  conjunction  with the  integration  of the
acquired entities into First Banks' existing operations are normally paid to the
recipients  within 90 days of the respective  consummation date and are expensed
in the  consolidated  statements  of income as incurred.  The accrued  severance
balance of $386,000 as of December  31, 2006,  as  summarized  in the  following
table,  is  comprised  of  contractual  obligations  under  salary  continuation
agreements to seven individuals with remaining terms ranging from  approximately

<PAGE>

two  months to nine  years.  As the  obligation  to make  payments  under  these
agreements is accrued at the  consummation  date,  such payments do not have any
impact on the  consolidated  statements  of  income.  First  Banks  also  incurs
integration  costs  associated  with  acquisitions  that  are  expensed  in  the
consolidated  statements of income. These costs relate principally to additional
costs incurred in conjunction with the information technology conversions of the
respective entities.  The following table summarizes the cumulative  acquisition
and integration  costs  attributable to the Company's  acquisitions,  which were
accrued  as of the  consummation  dates of the  respective  acquisition  and are
reflected in accrued and other liabilities in the consolidated balance sheets:

<TABLE>
<CAPTION>
                                                                                  Information
                                                                Severance       Technology Fees        Total
                                                                ---------       ---------------        -----
                                                                       (dollars expressed in thousands)

<S>                                                              <C>                  <C>              <C>
         Balance at December 31, 2003.........................   $ 1,412                --             1,412
         Year Ended December 31, 2004:
           Amounts accrued at acquisition date................       180               496               676
           Payments...........................................      (831)             (496)           (1,327)
                                                                 -------           -------           -------
         Balance at December 31, 2004.........................       761                --               761
                                                                 -------           -------           -------
         Year Ended December 31, 2005:
           Amounts accrued at acquisition date................       785             1,265             2,050
           Payments...........................................    (1,004)           (1,131)           (2,135)
                                                                 -------           -------           -------

         Balance at December 31, 2005.........................       542               134               676
                                                                 -------           -------           -------
         Year Ended December 31, 2006:
           Amounts accrued at acquisition date................     1,702             1,949             3,651
           Payments...........................................    (1,858)           (2,083)           (3,941)
                                                                 -------           -------           -------
         Balance at December 31, 2006.........................   $   386                --               386
                                                                 =======           =======           =======

</TABLE>

<PAGE>


(3)      INVESTMENTS IN DEBT AND EQUITY SECURITIES


         Securities   Available  for  Sale.  The  amortized  cost,   contractual
maturity,  gross  unrealized  gains  and  losses  and fair  value of  investment
securities available for sale at December 31, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>



                                                    Maturity
                                       ----------------------------------       Total          Gross
                                                                    After       Amor-        Unrealized                    Weighted
                                        1 Year     1-5     5-10      10         tized    ------------------     Fair       Average
                                        or Less   Years    Years    Years       Cost      Gains      Losses     Value       Yield
                                        -------   -----    -----    -----       ----      -----      ------     -----       -----
                                                                      (dollars expressed in thousands)
 December 31, 2006:
   Carrying value:
     U.S. Government sponsored
<S>                                    <C>        <C>      <C>         <C>     <C>           <C>       <C>      <C>          <C>
       agencies.....................   $344,636   29,737   4,032       966     379,371       81        (742)    378,710      4.99%
     Mortgage-backed securities.....        438   11,477  50,670   839,172     901,757      610     (19,514)    882,853      4.76
     State and political
       subdivisions.................      4,102   16,294  11,493     2,122      34,011      260         (56)     34,215      3.90
     Equity investments ............         --       --      --    26,608      26,608    1,527        (234)     27,901      4.06
     Federal Home Loan Bank and
       Federal Reserve Bank stock
       (no stated maturity).........     36,050       --      --        --      36,050       --          --      36,050      5.49
                                       --------  -------  ------   -------   ---------   ------     -------   ---------
          Total.....................   $385,226   57,508  66,195   868,868   1,377,797    2,478     (20,546)  1,359,729      4.81
                                       ========  =======  ======   =======   =========   ======     =======   =========      ====

   Fair value:
     Debt securities................   $348,448   57,480  65,580   824,270
     Equity securities..............     36,050       --      --    27,901
                                       --------  -------  ------   -------
          Total.....................   $384,498   57,480  65,580   852,171
                                       ========  =======  ======   =======

   Weighted average yield...........       5.01%    4.69%   4.57%     4.75%
                                       ========  =======  ======   =======

 December 31, 2005:
   Carrying value:
     U.S. Government sponsored
       agencies.....................   $212,869  181,800   4,400        --     399,069       --      (4,725)    394,344      3.32%
     Mortgage-backed securities.....        281    9,899  52,121   783,831     846,132      149     (22,156)    824,125      4.60
     State and political
       subdivisions.................      5,574   17,242   8,864       710      32,390      293        (109)     32,574      3.79
     Corporate debt securities......      7,721       --      --        --       7,721       --         (15)      7,706      4.58
     Equity investments.............        156       --      --    16,995      17,151      961          --      18,112      4.64
     Federal Home Loan Bank and
       Federal Reserve Bank stock
       (no stated maturity).........     34,428       --      --        --      34,428       --          --      34,428      4.87
                                       --------  -------  ------   -------   ---------   ------     -------   ---------
          Total.....................   $261,029  208,941  65,385   801,536   1,336,891    1,403     (27,005)  1,311,289      4.21
                                       ========  =======  ======   =======   =========   ======     =======   =========      ====

   Fair value:
     Debt securities................   $224,429  206,076  64,207   764,037
     Equity securities..............     34,584       --      --    17,956
                                       --------  -------  ------   -------
       Total........................   $259,013  206,076  64,207   781,993
                                       ========  =======  ======   =======

   Weighted average yield...........       3.27%    3.72%   4.33%     4.62%
                                       ========  =======  ======   =======

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

         Securities Held to Maturity.  The amortized cost, contractual maturity,
gross unrealized  gains and losses and fair value of investment  securities held
to maturity at December 31, 2006 and 2005 were as follows:

                                                     Maturity
                                       ------------------------------------      Total          Gross
                                                                     After       Amor-        Unrealized                  Weighted
                                        1 Year      1-5    5-10       10         tized   --------------------    Fair      Average
                                        or Less    Years   Years     Years       Cost     Gains       Losses     Value      Yield
                                        -------    -----   -----     -----       ----     -----       ------     -----      -----
                                                             (dollars expressed in thousands)

 December 31, 2006:
   Carrying value:
<S>                                    <C>           <C>   <C>       <C>        <C>           <C>      <C>       <C>         <C>
     Mortgage-backed securities.....   $     --       --   6,875     7,213      14,088        7        (132)     13,963      5.13%
     State and political
       subdivisions.................      1,482    6,861   1,355       263       9,961       97         (50)     10,008      4.18
                                       --------   ------  ------    ------      ------     ----        ----      ------
          Total.....................   $  1,482    6,861   8,230     7,476      24,049      104        (182)     23,971      4.74
                                       ========   ======  ======    ======      ======     ====        ====      ======      ====

   Fair value:
     Debt securities................   $  1,479    6,848   8,278     7,366
                                       ========   ======  ======    ======

   Weighted average yield...........       3.84%    4.21%   5.02%     5.07%
                                       ========   ======  ======    ======

 December 31, 2005:
   Carrying value:
     Mortgage-backed securities.....   $     --       --   6,970     8,495      15,465        9        (321)     15,153      5.09%
     State and political
       subdivisions.................      1,350    8,331     695       264      10,640       67         (69)     10,638      4.20
                                       --------   ------  ------    ------      ------     ----        ----      ------
          Total.....................   $  1,350    8,331   7,665     8,759      26,105       76        (390)     25,791      4.73
                                       ========   ======  ======    ======      ======     ====        ====      ======      ====

   Fair value:
     Debt securities................   $  1,355    8,328   7,509     8,599
                                       ========   ======  ======    ======

   Weighted average yield...........       4.40%    4.20%   5.03%     5.02%
                                       ========   ======  ======    ======
</TABLE>

         Proceeds from sales of  available-for-sale  investment  securities were
$198.0  million,  $147.1  million and $26.3 million for the years ended December
31, 2006, 2005 and 2004, respectively. Gross gains of $389,300 and $257,100 were
realized  on sales of  available-for-sale  investment  securities  for the years
ended December 31, 2006 and 2004, respectively. There were no gross gains on the
sale of these  securities  during the year ended December 31, 2005. Gross losses
of $2.7 million and $2.9 million  were  realized on sales of  available-for-sale
investment  securities  during  the  years  ended  December  31,  2006 and 2005,
respectively.  The gross  losses for the year ended  December 31, 2006 include a
loss  of  $2.7  million  that  resulted  from  the  sale of  $197.0  million  of
available-for-sale  investment securities for liquidity purposes,  including the
related   termination  of  $200.0  million  in  aggregate  of  term   repurchase
agreements,  as  further  described  in Note 5 and  Note 10 to the  Consolidated
Financial Statements. The gross loss of $2.9 million for the year ended December
31,  2005  resulted  from  the  sale of  $150.0  million  of  available-for-sale
investment securities for liquidity purposes,  including the related termination
of a $50.0 million term repurchase agreement,  as further described in Note 5 to
the Consolidated  Financial  Statements.  There were no gross losses realized on
sales of available-for-sale investment securities in 2004.

         Proceeds from calls of investment securities were $27.5 million,  $16.6
million and $63.1 million for the years ended December 31, 2006,  2005 and 2004,
respectively.  There were no gross gains realized on called  securities in 2006,
2005 and 2004.  Gross losses of $2,100 and $3,800 were  realized on these called
securities  during the years ended  December  31,  2006 and 2005,  respectively.
There were no gross losses  realized on called  securities in 2004. Net gains on
trading securities for the year ended December 31, 2006 were $97,000.

         First Bank is a member of the Federal Home Loan Bank (FHLB)  system and
the Federal Reserve Bank (FRB) system and maintains  investments in FHLB and FRB
stock.  These  investments  are recorded at cost,  which  represents  redemption
value.  The  investment  in FRB stock is  maintained at a minimum of 6% of First
Bank's capital stock and capital  surplus.  The investment in FHLB of Des Moines
stock is  maintained at an amount equal to 0.12% of First Bank's total assets as
of December 31, 2004, up to a maximum of $10.0  million,  plus 4.45% of advances
and 0.15% of  outstanding  standby  letters of credit.  First Bank also holds an
investment  in stock of the FHLB of Dallas and the FHLB of San  Francisco,  as a
nonmember,  to  collateralize  certain FHLB advances assumed in conjunction with
certain  acquisition  transactions.  The  investment  in FHLB of Dallas stock is
maintained  at a minimum of 4.10% of  advances.  The  investment  in FHLB of San
Francisco stock is maintained at a minimum of 4.70% of advances.
<PAGE>

         Investment  securities  with a carrying value of  approximately  $586.4
million and $619.4  million at December  31, 2006 and 2005,  respectively,  were
pledged in connection  with deposits of public and trust funds,  securities sold
under agreements to repurchase and for other purposes as required by law.

         Gross unrealized losses on investment  securities and the fair value of
the related  securities,  aggregated by  investment  category and length of time
that individual  securities have been in a continuous  unrealized loss position,
at December 31, 2006 and 2005, were as follows:

<TABLE>
<CAPTION>

                                                                    December 31, 2006
                                       ---------------------------------------------------------------------------
                                         Less than 12 months        12 months or more               Total
                                       -----------------------   -----------------------   -----------------------
                                         Fair       Unrealized     Fair       Unrealized     Fair       Unrealized
                                         Value        Losses       Value        Losses       Value        Losses
                                       ---------    ----------   ---------    ----------   ---------    ----------
                                                            (dollars expressed in thousands)
 Available for sale:
   U.S. Government sponsored
<S>                                    <C>              <C>        <C>            <C>        <C>            <C>
     agencies.......................   $ 202,459        (304)      64,799         (438)      267,258         (742)
   Mortgage-backed securities.......     197,214      (3,912)     597,394      (15,602)      794,608      (19,514)
   State and political subdivisions.       3,088          (7)       5,656          (49)        8,744          (56)
   Equity investments...............       5,602        (234)          --           --         5,602         (234)
                                       ---------     -------     --------     --------     ---------     --------
        Total.......................   $ 408,363      (4,457)     667,849      (16,089)    1,076,212      (20,546)
                                       =========     =======     ========     ========     =========     ========

 Held to maturity:
   Mortgage-backed securities.......   $      --          --       13,682         (132)       13,682         (132)
   State and political subdivisions.         199          (1)       4,630          (49)        4,829          (50)
                                       ---------     -------     --------     --------     ---------     --------
        Total.......................   $     199          (1)      18,312         (181)       18,511         (182)
                                       =========     =======     ========     ========     =========     ========


                                                                    December 31, 2005
                                       ---------------------------------------------------------------------------
                                         Less than 12 months        12 months or more               Total
                                       -----------------------   -----------------------   -----------------------
                                         Fair       Unrealized     Fair       Unrealized     Fair       Unrealized
                                         Value        Losses       Value        Losses       Value        Losses
                                       ---------    ----------   ---------    ----------   ---------    ----------
                                                            (dollars expressed in thousands)
 Available for sale:
   U.S. Government sponsored
     agencies.......................   $ 206,641      (2,374)     187,702       (2,351)      394,343       (4,725)
   Mortgage-backed securities.......     375,462      (8,368)     411,640      (13,788)      787,102      (22,156)
   State and political subdivisions.      11,653         (97)         833          (12)       12,486         (109)
   Corporate debt securities........       7,706         (15)          --           --         7,706          (15)
                                       ---------     -------     --------     --------     ---------     --------
        Total.......................   $ 601,462     (10,854)     600,175      (16,151)    1,201,637      (27,005)
                                       =========     =======     ========     ========     =========     ========

 Held to maturity:
   Mortgage-backed securities.......   $  14,828        (321)          --           --        14,828         (321)
   State and political subdivisions.       4,462         (58)         365          (11)        4,827          (69)
                                       ---------     -------     --------     --------     ---------     --------
        Total.......................   $  19,290        (379)         365          (11)       19,655         (390)
                                       =========     =======     ========     ========     =========     ========
</TABLE>

         U.S. Government sponsored agencies and mortgage-backed securities - The
unrealized losses on investments in mortgage-backed  securities and other agency
securities were caused by fluctuations in interest rates. The contractual  terms
of these securities are guaranteed by  government-sponsored  enterprises.  It is
expected  that the  securities  would not be  settled  at a price  less than the
amortized  cost.  Because  First  Banks has the ability and intent to hold these
investments until a market price recovery or maturity, these investments are not
considered other-than-temporarily impaired. At December 31, 2006, the unrealized
losses for U.S. government  sponsored agencies for 12 months or more included 19
securities,  and the  unrealized  losses for  mortgage-backed  securities for 12
months or more included 138  securities.  At December 31, 2005,  the  unrealized
losses for U.S. government  sponsored agencies for 12 months or more included 14
securities,  and the  unrealized  losses for  mortgage-backed  securities for 12
months or more included 62 securities.

         State and political  subdivisions  and corporate debt  securities - The
unrealized  losses  on  investments  in state  and  political  subdivisions  and
corporate debt  securities  were caused by fluctuations in interest rates. It is
expected  that the  securities  would not be  settled  at a price  less than the
amortized cost.  Because the decline in fair value is attributable to changes in
interest rates and not credit  quality,  and because First Banks has the ability
and intent to hold these  investments until a market price recovery or maturity,
these  investments  are  not  considered   other-than-temporarily  impaired.  At

<PAGE>

December 31, 2006,  the unrealized  losses for state and political  subdivisions
for 12  months or more  included  53  securities.  At  December  31,  2005,  the
unrealized  losses for state and  political  subdivisions  for 12 months or more
included seven securities.

(4)      LOANS AND ALLOWANCE FOR LOAN LOSSES

         Changes in the allowance  for loan losses for the years ended  December
31, 2006, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>


                                                                                 2006        2005        2004
                                                                                 ----        ----        ----
                                                                               (dollars expressed in thousands)

<S>                                                                          <C>           <C>         <C>
         Balance, beginning of year......................................    $ 135,330     150,707     116,451
         Acquired allowances for loan losses.............................        5,208       1,989      33,752
         Other adjustments (1)...........................................           --          --        (479)
                                                                             ---------    --------    --------
                                                                               140,538     152,696     149,724
                                                                             ---------    --------    --------
         Loans charged-off...............................................      (22,203)    (33,123)    (50,643)
         Recoveries of loans previously charged-off......................       15,394      19,757      25,876
                                                                             ---------    --------    --------
              Net loans charged-off......................................       (6,809)    (13,366)    (24,767)
                                                                             ---------    --------    --------
         Provision for loan losses.......................................       12,000      (4,000)     25,750
                                                                             ---------    --------    --------
         Balance, end of year............................................    $ 145,729     135,330     150,707
                                                                             =========    ========    ========
         ---------------
         (1)   In December 2003,  First Bank  established a $1.0 million specific reserve for estimated losses
               on a $5.3 million  letter of credit that was recorded in accrued and other  liabilities  in the
               consolidated  balance sheets.  In January 2004, the letter of credit was fully funded as a loan
               and the  related  $1.0  million  specific  reserve  was  reclassified  from  accrued  and other
               liabilities  to the  allowance  for  loan  losses.  Additionally,  in  June  2004,  First  Bank
               reclassified  $1.5 million from the allowance for loan losses to accrued and other  liabilities
               to establish a specific  reserve  associated  with the  commercial  leasing  portfolio sale and
               related  recourse  obligations  for certain  leases sold.  This  liability  has been reduced to
               $410,000 at December 31, 2006.
</TABLE>

         At December 31, 2006 and 2005,  First Banks had $48.7 million and $97.2
million of impaired loans, consisting of loans on nonaccrual status. Interest on
nonaccrual  loans that would have been recorded  under the original terms of the
loans was $3.7  million,  $9.9  million  and $4.4  million  for the years  ended
December 31, 2006, 2005 and 2004, respectively.  Of these amounts, $1.3 million,
$3.4 million and $716,000 was recorded as interest income on such loans in 2006,
2005  and  2004,  respectively.  The  allowance  for  loan  losses  includes  an
allocation for each impaired loan. The aggregate allocation of the allowance for
loan losses related to impaired loans was  approximately  $9.7 million and $20.1
million at  December  31,  2006 and 2005,  respectively.  The  average  recorded
investment in impaired loans was $73.6 million,  $79.9 million and $77.3 million
for the years ended December 31, 2006, 2005 and 2004,  respectively.  The amount
of interest income recognized using a cash basis method of accounting during the
time these loans were  impaired was $3.7  million,  $3.6 million and $717,000 in
2006, 2005 and 2004,  respectively.  At December 31, 2006 and 2005,  First Banks
had $5.7 million and $5.6  million,  respectively,  of loans past due 90 days or
more and still accruing interest.

         First Banks' primary market areas are the states of Missouri, Illinois,
Texas and California.  At December 31, 2006 and 2005,  approximately 90% and 91%
of the total loan  portfolio,  respectively,  and 77% and 83% of the commercial,
financial and agricultural loan portfolio,  respectively, were made to borrowers
within these states.

         Real estate lending  constituted the only significant  concentration of
credit risk. Real estate loans comprised  approximately  74% and 76% of the loan
portfolio  at December  31, 2006 and 2005,  respectively,  of which 26% and 27%,
respectively,  were made to  consumers  in the form of  residential  real estate
mortgages  and home equity lines of credit.  First Bank also offers  residential
real estate  mortgage loans with terms that require  interest only payments.  At
December 31, 2006, the balance of such loans was $332.6 million, of which $276.5
million  were held for  portfolio  and  $56.1  million  were  held for sale.  At
December 31, 2005, the balance of such loans was $332.3 million, of which $194.6
million were held for portfolio and $137.7 million were held for sale.

         In general,  First Banks is a secured lender.  At December 31, 2006 and
2005,  99% of the loan portfolio was  collateralized.  Collateral is required in
accordance   with  the  normal   credit   evaluation   process  based  upon  the
creditworthiness  of the  customer  and the  credit  risk  associated  with  the
particular transaction.

         Loans to directors,  their  affiliates and executive  officers of First
Banks, Inc. were  approximately  $55.9 million and $37.9 million at December 31,
2006 and 2005, respectively, as further described in Note 19 to the Consolidated
Financial Statements.
<PAGE>


(5)      DERIVATIVE INSTRUMENTS

         First Banks utilizes derivative financial  instruments to assist in the
management of interest rate sensitivity by modifying the repricing, maturity and
option  characteristics of certain assets and liabilities.  Derivative financial
instruments  held by First Banks at December 31, 2006 and 2005 are summarized as
follows:
<TABLE>
<CAPTION>

                                                                            December 31,
                                                        --------------------------------------------------
                                                                  2006                       2005
                                                        ------------------------    ----------------------
                                                           Notional     Credit        Notional    Credit
                                                            Amount     Exposure        Amount    Exposure
                                                            ------     --------        ------    --------
                                                                  (dollars expressed in thousands)

<S>                                                        <C>          <C>            <C>          <C>
         Cash flow hedges.............................     $600,000     4,369          300,000      114
         Fair value hedges............................           --        --           25,000      748
         Interest rate floor agreements...............      300,000       376          100,000       70
         Interest rate cap agreements.................      400,000       139               --       --
         Interest rate lock commitments...............        5,900        --            5,900       --
         Forward commitments to sell
             mortgage-backed securities...............       54,000        --           47,000       --
                                                           ========     =====         ========     ====
</TABLE>

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

         For the year ended December 31, 2006, First Banks realized net interest
expense of $5.0 million on its derivative financial instruments, whereas for the
years ended December 31, 2005 and 2004, First Banks realized net interest income
of $2.2 million and $50.1 million,  respectively,  on its  derivative  financial
instruments.  First Banks recorded net losses on derivative  instruments,  which
are included in noninterest income in the consolidated  statements of income, of
$390,000,  $1.1 million and $1.5 million for the years ended  December 31, 2006,
2005 and 2004, respectively.

         Cash Flow Hedges.  First Banks entered into the following interest rate
swap agreements,  which have been designated as cash flow hedges, to effectively
lengthen the repricing  characteristics  of certain  interest-earning  assets to
correspond  more  closely  with  their  funding  source  with the  objective  of
stabilizing cash flow, and accordingly, net interest income over time:

         >>    During  September 2000,  March 2001, April 2001,  March 2002  and
               July 2003, First Banks entered into interest rate swap agreements
               of $600.0 million, $200.0 million, $175.0 million, $150.0 million
               and $200.0 million notional amount, respectively.  The underlying
               hedged  assets are certain  loans within First Banks'  commercial
               loan portfolio.  The swap  agreements  provide for First Banks to
               receive a fixed rate of interest  and pay an  adjustable  rate of
               interest  equivalent  to the weighted  average prime lending rate
               minus 2.70%,  2.82%,  2.82%, 2.80% and 2.85%,  respectively.  The
               terms of the swap  agreements  provide for First Banks to pay and
               receive  interest on a quarterly  basis. In November 2001,  First
               Banks  terminated  $75.0  million  notional  amount  of the  swap
               agreements  originally  entered  into in  April  2001 in order to
               appropriately  modify its overall  hedge  position in  accordance
               with its interest rate risk management  program,  and on April 2,
               2006, the remaining  $100.0 million notional amount of these swap
               agreements matured. In addition, the $150.0 million notional swap
               agreement  that was entered  into in March 2002  matured in March
               2004,  the $600.0  million  notional  swap  agreements  that were
               entered into in September 2000 matured in September 2004, and the
               $200.0  million  notional swap agreement that was entered into in
               March 2001 matured in March 2005.

         >>    On September 14, 2006,  First Banks entered into a $200.0 million
               notional  amount  three-year  interest rate swap  agreement and a
               $200.0  million  notional  amount  four-year  interest  rate swap
               agreement.  The underlying hedged assets are certain loans within
               First  Banks'  commercial  loan  portfolio.  The swap  agreements
               provide for First  Banks to receive a fixed rate of interest  and
               pay an  adjustable  rate of interest  equivalent  to the weighted
               average  prime  lending rate minus  2.86%.  The terms of the swap
               agreements provide for First Banks to pay and receive interest on
               a quarterly basis.
<PAGE>

         The amount receivable by First Banks under the swap agreements was $7.0
million and $2.4  million at December 31, 2006 and 2005,  respectively,  and the
amount  payable by First Banks under the swap  agreements  was $2.7  million and
$2.5 million at December 31, 2006 and 2005, respectively.

         The maturity dates, notional amounts,  interest rates paid and received
and fair value of First Banks' interest rate swap agreements  designated as cash
flow hedges as of December 31, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>


                                                        Notional     Interest Rate   Interest Rate      Fair
                             Maturity Date               Amount          Paid          Received         Value
                             -------------               ------          ----          --------         -----
                                                                   (dollars expressed in thousands)

         December 31, 2006:
<S>              <C> <C>                               <C>               <C>             <C>          <C>
            July 31, 2007...........................   $ 200,000         5.40%           3.08%        $ (2,705)
            September 18, 2009......................     200,000         5.39            5.20               98
            September 20, 2010......................     200,000         5.39            5.20              449
                                                       ---------                                      --------
                                                       $ 600,000         5.39            4.49         $ (2,158)
                                                       =========        =====           =====         ========

         December 31, 2005:
            April 2, 2006...........................   $ 100,000         4.43%           5.45%        $    205
            July 31, 2007...........................     200,000         4.40            3.08           (5,296)
                                                       ---------                                      --------
                                                       $ 300,000         4.41            3.87         $ (5,091)
                                                       =========        =====           =====         ========
</TABLE>

         Fair Value Hedges. First Banks entered into the following interest rate
swap agreements, which have been designated as fair value hedges, to effectively
shorten the repricing characteristics of certain interest-bearing liabilities to
correspond  more  closely  with  their  funding  source  with the  objective  of
stabilizing net interest income over time:

         >>    During  January  2001,  First Banks  entered into $150.0  million
               notional  amount of five-year  interest rate swap agreements that
               provided  for First Banks to receive a fixed rate of interest and
               pay an adjustable rate of interest  equivalent to the three-month
               London  Interbank  Offering Rate (LIBOR).  The underlying  hedged
               liabilities  were a portion of First Banks' other time  deposits.
               The terms of the swap agreements  provided for First Banks to pay
               interest  on  a  quarterly  basis  and  receive   interest  on  a
               semiannual  basis. In February 2005,  First Banks  terminated the
               swap agreements.  The termination of the swap agreements resulted
               from an increasing level of  ineffectiveness  associated with the
               correlation of the hedge  positions  between the swap  agreements
               and the underlying  hedged  liabilities that had been anticipated
               as the swap agreements neared their originally scheduled maturity
               dates  in  January  2006.   The  resulting   $3.1  million  basis
               adjustment of the underlying  hedged  liabilities was recorded as
               interest expense over the remaining  weighted average maturity of
               the underlying hedged liabilities of approximately ten months. At
               December 31, 2005, the basis  adjustments  associated  with these
               swap agreements were fully amortized.

         >>    During May 2002,  March 2003 and April 2003,  First Banks entered
               into $55.2  million,  $25.0  million and $46.0  million  notional
               amount,  respectively,  of  interest  rate swap  agreements  that
               provided  for First Banks to receive a fixed rate of interest and
               pay an adjustable rate of interest  equivalent to the three-month
               LIBOR plus 2.30%, 2.55% and 2.58%,  respectively.  The underlying
               hedged  liabilities  were a portion of First Banks'  subordinated
               debentures.  The terms of the swap agreements  provided for First
               Banks to pay and  receive  interest  on a  quarterly  basis.  The
               amounts  receivable  and  payable by First  Banks  under the swap
               agreements  at December  31,  2005 were  $506,000  and  $420,000,
               respectively.  In May  2005,  First  Banks  terminated  the $55.2
               million and $46.0 million  notional  swap  agreements in order to
               appropriately  modify future hedge  positions in accordance  with
               First Banks' interest rate risk management program. The resulting
               $854,000 basis adjustment of the underlying  hedged  liabilities,
               in  aggregate,  was being  recorded  as a  reduction  of interest
               expense over the remaining  maturities of the  underlying  hedged
               liabilities,  which ranged from 26 to 28 years at the time of the
               termination.  Effective February 16, 2006, First Banks terminated
               the  remaining  $25.0  million   notional  swap   agreement.   In
               conjunction  with this  transaction,  First  Banks  recorded  the
               resulting $1.7 million basis adjustment of the underlying  hedged
               liabilities  and the remaining  balance of the basis  adjustments
               associated  with the swap  agreements that were terminated in May
               2005,  totaling  $834,000,  in  the  consolidated  statements  of

<PAGE>

               income.  The  recognition of the net basis  adjustments on all of
               the terminated fair value interest rate swap agreements  resulted
               in a pre-tax loss of $849,000 that was recorded in February 2006.

         The maturity date, notional amount, interest rate paid and received and
fair value of First Banks'  interest  rate swap  agreement  designated as a fair
value hedge as of December 31, 2005 was as follows:

<TABLE>
<CAPTION>
                                                        Notional     Interest Rate   Interest Rate      Fair
                             Maturity Date               Amount          Paid          Received         Value
                             -------------               ------          ----          --------         -----
                                                                   (dollars expressed in thousands)

         December 31, 2005:
<S>                   <C>                               <C>              <C>             <C>          <C>
            March 20, 2033.........................     $ 25,000         6.57%           8.10%        $ (1,460)
                                                        ========        =====           =====         ========
</TABLE>

         Interest Rate Floor  Agreements.  In September 2005, First Bank entered
into a $100.0 million notional amount  three-year  interest rate floor agreement
in conjunction with its interest rate risk management program. The interest rate
floor  agreement  provides  for First Bank to receive a quarterly  fixed rate of
interest of 5.00%  should the  three-month  LIBOR equal or fall below the strike
price of 2.00%.  On August 24, 2006,  First Bank  entered into a $200.0  million
notional amount three-year interest rate floor agreement in conjunction with the
restructuring of a term repurchase agreement, as further described in Note 10 to
the Consolidated Financial Statements,  to further stabilize net interest income
in the event of a declining  rate  scenario.  The interest rate floor  agreement
provides  for First  Bank to receive a  quarterly  adjustable  rate of  interest
equivalent  to the  differential  between  the  strike  price of  4.00%  and the
three-month  LIBOR should the  three-month  LIBOR equal or fall below the strike
price.  The  carrying  value of the  interest  rate floor  agreements,  which is
included in other assets in the  consolidated  balance sheets,  was $376,000 and
$70,000 at December 31, 2006 and 2005, respectively.

         Interest Rate Floor Agreements Embedded in Term Repurchase  Agreements.
First Bank has term repurchase  agreements  under master  repurchase  agreements
with  unaffiliated  third  parties,  as  further  described  in  Note  10 to the
Consolidated Financial Statements. The underlying securities associated with the
term  repurchase  agreements  are  mortgage-backed  securities and callable U.S.
Government agency securities and are held by other financial  institutions under
safekeeping  agreements.  The term repurchase  agreements were entered into with
the objective of stabilizing net interest income over time,  further  protecting
net interest margin against changes in interest rates and providing  funding for
security purchases.  The interest rate floor agreements included within the term
repurchase  agreements (and the interest rate cap agreements previously included
within the term repurchase agreements) represent embedded derivative instruments
which, in accordance with existing accounting  literature  governing  derivative
instruments,  are  not  required  to  be  separated  from  the  term  repurchase
agreements and accounted for separately as a derivative financial instrument. As
such, the term  repurchase  agreements are reflected in other  borrowings in the
consolidated  balance  sheets and the related  interest  expense is reflected as
interest expense on other  borrowings in the consolidated  statements of income.
As further  described in Note 10 to the Consolidated  Financial  Statements,  in
March 2005, in  accordance  with the  Company's  interest  rate risk  management
program,  First  Bank  modified  its term  repurchase  agreements  under  master
repurchase  agreements with unaffiliated third parties to terminate the interest
rate cap agreements previously embedded within the agreements and simultaneously
enter into interest rate floor agreements,  also embedded within the agreements.
These modifications resulted in adjustments to the existing interest rate spread
to  LIBOR  for  the  underlying  agreements.  The  modified  terms  of the  term
repurchase  agreements became effective during the second quarter of 2005. First
Bank did not incur any costs associated with the modifications of the agreements
nor did the modifications  result in a change to the accounting treatment of the
embedded derivative instruments.

         As  further  described  in  Note  3 and  Note  10 to  the  Consolidated
Financial Statements,  in November 2005, First Bank terminated its $50.0 million
term  repurchase  agreement  with a  maturity  date  of  August  15,  2006,  and
simultaneously   recognized   a  loss   of   $2.9   million   on  the   sale  of
available-for-sale  investment securities associated with the termination of the

<PAGE>

term  repurchase  agreement.  In  addition,  on February  14,  2006,  First Bank
terminated its two $50.0 million term repurchase  agreements with maturity dates
of June 14,  2007,  and  recognized  a $1.6  million  loss on the sale of $100.0
million  of   available-for-sale   investment  securities  associated  with  the
termination of the term  repurchase  agreements;  on March 28, 2006,  First Bank
terminated the $50.0 million term  repurchase  agreement with a maturity date of
August 1, 2007,  and  recognized a $746,000 loss on the sale of $50.0 million of
available-for-sale  investment securities associated with the termination of the
term repurchase  agreement;  and on April 28, 2006,  First Bank terminated $50.0
million of the $150.0 million term repurchase  agreement with a maturity date of
January 12, 2007, and recognized a $310,000 loss on the sale of $50.0 million of
available-for-sale  investment securities associated with the termination of the
term repurchase agreement.  The Company's termination  transactions entered into
in 2006  resulted  in a  reduction  of  $200.0  million  of its term  repurchase
agreements, the recognition of a $2.7 million loss on the sale of $200.0 million
of investment  securities held in its  available-for-sale  investment portfolio,
and  prepayment  penalties of $306,000  incurred in  conjunction  with the early
termination of the term repurchase agreements. Additionally, on August 24, 2006,
First Bank  restructured the remaining $100.0 million term repurchase  agreement
to extend the  maturity  date to  October  12,  2010 and to modify  the  pricing
structure,  including the interest rate floor strike price, as further described
in Note 10 to the Consolidated  Financial  Statements.  First Bank did not incur
any costs associated with the restructuring of the agreement.

         On July 14, 2006,  First Bank entered into a $100.0  million  four-year
term  repurchase   agreement  under  a  master  repurchase   agreement  with  an
unaffiliated  third party, as further  described in Note 10 to the  Consolidated
Financial  Statements.  The  underlying  securities  associated  with  the  term
repurchase  agreement  are  U.S.  Government  agency   collateralized   mortgage
obligation  securities  and are held by  other  financial  institutions  under a
safekeeping agreement.

         Interest Rate Cap Agreements. On September 14, 2006, First Bank entered
into a $200.0 million notional amount three-year interest rate cap agreement and
a $200.0  million  notional  amount  four-year  interest  rate cap  agreement in
conjunction  with the  interest  rate swap  agreements  designated  as cash flow
hedges that First Banks  entered  into on  September  14,  2006,  as  previously
described,  to limit the net  interest  expense  associated  with  First  Banks'
interest rate swap agreements in the event of a rising rate scenario. The $200.0
million  notional  amount  three-year  interest rate cap agreement  provides for
First Bank to receive a quarterly  adjustable rate of interest equivalent to the
differential  between the three-month LIBOR and the strike price of 7.00% should
the  three-month  LIBOR exceed the strike  price.  The $200.0  million  notional
amount four-year  interest rate cap agreement provides for First Bank to receive
a quarterly  adjustable rate of interest equivalent to the differential  between
the three-month LIBOR and the strike price of 7.50% should the three-month LIBOR
exceed the strike price. The carrying value of the interest rate cap agreements,
which is  included  in other  assets in the  consolidated  balance  sheets,  was
$139,000 at December 31, 2006.

         Pledged Collateral. At December 31, 2006, First Banks had accepted cash
of $4.2  million  as  collateral  in  connection  with its  interest  rate  swap
agreements.  At December  31,  2005,  First Banks had a $2.0  million  letter of
credit  issued on its  behalf to the  counterparty  and had  pledged  investment
securities available for sale with a fair value of $5.1 million and cash of $1.8
million as collateral in connection with its interest rate swap agreements.

         Interest  Rate  Lock   Commitments  /  Forward   Commitments   to  Sell
Mortgage-Backed  Securities.  Derivative  financial  instruments issued by First
Banks consist of interest rate lock commitments to originate fixed-rate loans to
be  sold.  Commitments  to  originate  fixed-rate  loans  consist  primarily  of
residential  real estate loans.  These net loan  commitments  and loans held for
sale are hedged with forward contracts to sell mortgage-backed  securities.  The
carrying value of these interest rate lock commitments  included in other assets
in the  consolidated  balance sheets was ($17,000) and ($49,000) at December 31,
2006 and 2005, respectively.




<PAGE>
(6)      SERVICING RIGHTS

         Mortgage Banking Activities. At December 31, 2006 and 2005, First Banks
serviced  mortgage  loans for others  totaling  $1.04 billion and $1.01 billion,
respectively.  Borrowers' escrow balances held by First Banks on such loans were
$5.7  million  and $5.0  million at December  31,  2006 and 2005,  respectively.
Changes in mortgage servicing rights,  net of amortization,  for the years ended
December 31, 2006 and 2005 were as follows:

<TABLE>
<CAPTION>
                                                                                      2006          2005
                                                                                      ----          ----
                                                                               (dollars expressed in thousands)

<S>                                                                                 <C>            <C>
         Balance, beginning of year.............................................    $  6,623       10,242
         Mortgage servicing rights acquired.....................................          --          435
         Originated mortgage servicing rights (1)...............................       3,298          904
         Amortization...........................................................      (4,054)      (4,958)
                                                                                    --------      -------
         Balance, end of year...................................................    $  5,867        6,623
                                                                                    ========      =======
         ------------------------
         (1)  In March 2006, First Banks capitalized mortgage servicing rights of $1.2 million associated with the
              securitization  of $77.1 million  of  certain residential mortgage loans held in the  Company's loan
              portfolio,  resulting  in  the recognition  of $1.2 million  in loan servicing income related to the
              future  servicing  of  the  underlying loans. Additionally, in  April 2006, First Banks  capitalized
              mortgage servicing rights of $927,000 associated with the securitization of $61.8 million of certain
              residential  mortgage  loans  held  in the Company's loan portfolio, resulting in the recognition of
              $927,000 in loan servicing income related to
              the future servicing of the underlying loans.
</TABLE>

         First Banks did not incur any impairment of mortgage  servicing  rights
during the years ended December 31, 2006, 2005 and 2004.

         Amortization of mortgage servicing rights at December 31, 2006 has been
estimated in the following table:
<TABLE>
<CAPTION>
                                                                               (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                         <C>
              2007....................................................................    $ 2,250
              2008....................................................................      1,226
              2009....................................................................        761
              2010....................................................................        567
              2011....................................................................        446
              Thereafter..............................................................        617
                                                                                          -------
                  Total...............................................................    $ 5,867
                                                                                          =======
</TABLE>

         Other Servicing Activities.  At December 31, 2006 and 2005, First Banks
serviced  SBA loans for others  totaling  $143.4  million  and  $163.4  million,
respectively.   Changes  in  SBA  servicing  rights,  net  of  amortization  and
impairment, for the years ended December 31, 2006 and 2005 were as follows:

<TABLE>
<CAPTION>
                                                                                      2006          2005
                                                                                      ----          ----
                                                                               (dollars expressed in thousands)

<S>                                                                                 <C>            <C>
         Balance, beginning of year.............................................    $  9,489       13,013
         Originated SBA servicing rights........................................       1,630        1,065
         Amortization...........................................................      (1,662)      (2,230)
         Impairment.............................................................      (1,393)      (2,359)
                                                                                    --------      -------
         Balance, end of year...................................................    $  8,064        9,489
                                                                                    ========      =======
</TABLE>

         First Banks  recognized  impairment of $1.4  million,  $2.4 million and
$459,000 for the years ended December 31, 2006, 2005 and 2004, respectively. The
impairment  of $1.4  million  recorded  for the year  ended  December  31,  2006
primarily  resulted from a decline in the fair value of the SBA servicing assets
below the carrying  value  attributable  to the  placement  of certain  loans on
nonaccrual status and payoffs received on certain existing loans. The impairment
of $2.4 million  recorded for the year ended  December 31, 2005  resulted from a
decline in the fair value of the SBA servicing  assets below the carrying  value
following  substantial  damage to several shrimping vessels within the servicing
portfolio  caused by the  effects of  Hurricane  Katrina,  as well as  continued
distress  affecting  the  U.S.  shrimping  industry  and the  ability  of  these
borrowers to repay their loans.



<PAGE>


         Amortization  of SBA  servicing  rights at  December  31, 2006 has been
estimated in the following table:
<TABLE>
<CAPTION>

                                                                              (dollars expressed in thousands)

         Year ending December 31:
<S>           <C>                                                                         <C>
              2007....................................................................    $ 1,498
              2008....................................................................      1,243
              2009....................................................................      1,030
              2010....................................................................        850
              2011....................................................................        701
              Thereafter..............................................................      2,742
                                                                                          -------
                  Total...............................................................    $ 8,064
                                                                                          =======
</TABLE>

(7)      BANK PREMISES AND EQUIPMENT, NET

         Bank  premises  and  equipment,  net of  accumulated  depreciation  and
amortization, were comprised of the following at December 31, 2006 and 2005:
<TABLE>
<CAPTION>


                                                                                      2006         2005
                                                                                      ----         ----
                                                                              (dollars expressed in thousands)

<S>                                                                                <C>             <C>
         Land.................................................................     $  42,386       33,191
         Buildings and improvements...........................................       126,903      118,426
         Furniture, fixtures and equipment....................................       124,980      111,238
         Leasehold improvements...............................................        25,250       25,494
         Construction in progress.............................................        18,066        2,269
                                                                                   ---------     --------
              Total...........................................................       337,585      290,618
         Less accumulated depreciation and amortization.......................       159,168      145,677
                                                                                   ---------     --------
              Bank premises and equipment, net................................     $ 178,417      144,941
                                                                                   =========     ========
</TABLE>

         Depreciation and amortization  expense for the years ended December 31,
2006,  2005 and  2004 was  $18.9  million,  $17.4  million  and  $18.6  million,
respectively.

         First  Banks  leases  land,   office  properties  and  equipment  under
operating  leases.  Certain of the leases contain renewal options and escalation
clauses.  Total rent expense was $18.0 million,  $15.5 million and $13.2 million
for the years ended  December  31,  2006,  2005 and 2004,  respectively.  Future
minimum lease payments under noncancellable operating leases extend through 2084
as follows:
<TABLE>
<CAPTION>

                                                                             (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                        <C>
              2007...................................................................    $ 14,175
              2008...................................................................      13,716
              2009...................................................................      12,012
              2010...................................................................       9,914
              2011...................................................................       6,192
              Thereafter.............................................................      36,984
                                                                                         --------
                  Total future minimum lease payments................................    $ 92,993
                                                                                         ========
</TABLE>

         First Banks also leases to  unrelated  parties a portion of its banking
facilities.  Rental income  associated with these leases was $5.9 million,  $6.4
million and $5.8 million for the years ended  December 31, 2006,  2005 and 2004,
respectively.



<PAGE>

(8)      GOODWILL AND OTHER INTANGIBLE ASSETS

         Goodwill  and  other  intangible  assets,  net  of  amortization,  were
comprised of the following at December 31, 2006 and 2005:
<TABLE>
<CAPTION>

                                                                2006                           2005
                                                      -------------------------     --------------------------
                                                         Gross                         Gross
                                                       Carrying    Accumulated       Carrying     Accumulated
                                                        Amount    Amortization        Amount     Amortization
                                                        ------    ------------        ------     ------------
                                                                  (dollars expressed in thousands)

         Amortized intangible assets:
<S>                                                   <C>            <C>               <C>          <C>
              Core deposit intangibles............    $  60,867      (18,850)          36,555       (11,710)
              Customer list intangibles...........       23,320         (913)              --            --
              Goodwill associated with
                P&A Transactions..................        2,210       (1,288)           2,210        (1,146)
                                                      ---------     --------         --------      --------
                  Total...........................    $  86,397      (21,051)          38,765       (12,856)
                                                      =========     ========         ========      ========

         Unamortized intangible assets:
              Goodwill associated with
                stock purchases...................    $ 230,036                       165,992
                                                      =========                      ========
</TABLE>

         Amortization  of intangible  assets was $8.2 million,  $4.9 million and
$2.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.
As of December 31, 2006, the remaining estimated life of the amortization period
for core deposit intangibles,  customer list intangibles and goodwill associated
with P&A  Transactions  was six years,  16 years and eight years,  respectively.
Amortization  of  intangible  assets,  including  amortization  of core  deposit
intangibles,   customer  list  intangibles  and  goodwill  associated  with  P&A
Transactions,  has been estimated in the following table, and does not take into
consideration any potential future acquisitions or branch office purchases.
<TABLE>
<CAPTION>

                                                                               (dollars expressed in thousands)

         Year ending December 31:
<S>           <C>                                                                           <C>
              2007.....................................................................     $11,706
              2008.....................................................................      11,706
              2009.....................................................................       9,803
              2010.....................................................................       9,342
              2011.....................................................................       7,041
              Thereafter...............................................................      15,748
                                                                                            -------
                  Total................................................................     $65,346
                                                                                            =======
</TABLE>
         Changes in the carrying amount of goodwill for the years ended December
31, 2006 and 2005 were as follows:

<TABLE>
<CAPTION>
                                                                                       2006          2005
                                                                                       ----          ----
                                                                               (dollars expressed in thousands)

<S>                                                                                 <C>             <C>
         Balance, beginning of year.............................................    $ 167,056       156,849
         Goodwill acquired during the year......................................       63,378        18,579
         Acquisition-related adjustments (1)....................................          666        (8,229)
         Amortization - P&A Transactions........................................         (142)         (143)
                                                                                    ---------      --------
         Balance, end of year...................................................    $ 230,958       167,056
                                                                                    =========      ========
         --------------------
         (1)   Acquisition-related  adjustments  recorded  in  2006,  as  further  described  in Note 2 to the
               Consolidated  Financial  Statements,  included  $646,000  recorded in the third quarter of 2006
               pertaining  to the  acquisition  of Northway  State Bank in October  2005.  Acquisition-related
               adjustments  recorded in 2005  included  $4.3  million  recorded  in the first  quarter of 2005
               pertaining to the acquisition of CIB Bank in November 2004, $1.4 million  recorded in the third
               quarter of 2005 pertaining to the acquisition of CMC in July 2004, and $2.5 million recorded in
               the fourth quarter of 2005  pertaining to the  acquisition  of Bank of Ste.  Genevieve in March
               2003.  Acquisition-related  adjustments  included additional  purchase  accounting  adjustments
               necessary to appropriately adjust preliminary goodwill recorded at the time of the acquisition,
               which was based upon  current  estimates  available  at that time,  to reflect  the  receipt of
               additional valuation data.
</TABLE>



<PAGE>


 (9)     MATURITIES OF TIME DEPOSITS

         A summary of  maturities of time deposits of $100,000 or more and other
time deposits as of December 31, 2006 is as follows:
<TABLE>
<CAPTION>

                                                              Time deposits of   Other time
                                                              $100,000 or more    deposits         Total
                                                              ----------------    --------         -----
                                                                      (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                               <C>              <C>             <C>
              2007............................................  $ 1,240,922      1,944,304       3,185,226
              2008............................................      112,728        322,275         435,003
              2009............................................       18,611         60,179          78,790
              2010............................................       19,299         56,515          75,814
              2011............................................       17,734         23,196          40,930
              Thereafter......................................       10,285          1,416          11,701
                                                                -----------     ----------      ----------
                  Total.......................................  $ 1,419,579      2,407,885       3,827,464
                                                                ===========     ==========      ==========
</TABLE>

(10)     OTHER  BORROWINGS

         Other  borrowings  were comprised of the following at December 31, 2006
and 2005:
<TABLE>
<CAPTION>

                                                                                        2006          2005
                                                                                        ----          ----
                                                                                (dollars expressed in thousands)

         Securities sold under agreements to repurchase:
<S>                                                                                  <C>             <C>
              Daily...............................................................   $ 169,874       199,874
              Term................................................................     200,000       300,000
         FHLB advances (1)........................................................       4,025        39,300
                                                                                     ---------      --------
                  Total...........................................................   $ 373,899       539,174
                                                                                     =========      ========
         ----------------------
         (1)   On March 17,  2006 and May 10,  2006,  First Bank  prepaid  $20.5  million  and $14.8  million,
               respectively,  of FHLB advances that were assumed in  conjunction  with previous  acquisitions.
               First Bank did not incur any losses associated with the prepayment of the FHLB advances.
</TABLE>

         The average  balance of other  borrowings was $380.5 million and $571.7
million, respectively, and the maximum month-end balance of other borrowings was
$535.7 million and $604.3  million,  respectively,  for the years ended December
31, 2006 and 2005. The average rates paid on other  borrowings  during the years
ended  December  31,  2006,   2005  and  2004  were  4.42%,   3.19%  and  1.26%,
respectively. Interest expense on securities sold under agreements to repurchase
was $16.1  million,  $16.5 million and $5.4 million for the years ended December
31, 2006,  2005 and 2004,  respectively.  Interest  expense on FHLB advances was
$689,000,  $1.6 million and $716,000 for the years ended December 31, 2006, 2005
and 2004,  respectively.  The assets  underlying the daily securities sold under
agreements  to  repurchase  and the FHLB  advances are held by First Banks.  The
underlying  securities  associated  with  the  term  repurchase  agreements  are
mortgage-backed  securities and callable U.S.  Government  agency securities and
are  held by other  financial  institutions  under  safekeeping  agreements.  As
further  described  in  Note 5 to the  Consolidated  Financial  Statements,  the
interest rate floor  agreements  included within the term repurchase  agreements
(and the  interest  rate cap  agreements  previously  included  within  the term
repurchase agreements) represent embedded derivative instruments.  In accordance
with the Company's  interest rate risk management  program,  First Bank modified
its  term  repurchase   agreements  under  master  repurchase   agreements  with
unaffiliated  third  parties in March 2005 to terminate  the  interest  rate cap
agreements  previously  embedded within the agreements and simultaneously  enter
into interest rate floor agreements, also embedded within the agreements.  These
modifications  resulted in adjustments  to the existing  interest rate spread to
LIBOR for the underlying  agreements,  as set forth in the following  table. The
modified terms of the agreements  became  effective during the second quarter of
2005.  First Bank did not incur any costs  associated with the  modifications of
the  agreements nor did the  modifications  result in a change to the accounting
treatment of the embedded derivative instruments.



<PAGE>


         The maturity  dates,  par amounts,  interest  rate spreads and interest
rate floor  strike  prices on First  Bank's  term  repurchase  agreements  as of
December 31, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>

                                                      Par               Interest Rate      Interest Rate Floor
                Maturity Date                        Amount                 Spread             Strike Price
                -------------                        ------                 ------             ------------
                                              (dollars expressed
                                                 in thousands)
         December 31, 2006:
<S>                                                <C>                  <C>            <C>        <C>   <C>
             July 19, 2010 (1).................    $ 100,000           LIBOR + 0.5475% (3)        5.00% (3)
             October 12, 2010 (2)..............      100,000           LIBOR + 0.5100% (3)        4.50% (3)
                                                   ---------
                                                   $ 200,000
                                                   =========



         December 31, 2005:
             January 12, 2007 (2)..............    $ 150,000           LIBOR + 0.0050% (4)        3.00% (4)
             June 14, 2007 (5).................       50,000           LIBOR - 0.3300% (4)        3.00% (4)
             June 14, 2007 (5).................       50,000           LIBOR - 0.3400% (4)        3.00% (4)
             August 1, 2007 (6)................       50,000           LIBOR + 0.0800% (4)        3.00% (4)
                                                   ---------
                                                   $ 300,000
                                                   =========
         -----------------------
         (1)  First Bank entered into this $100.0 million  four-year term  repurchase  agreement under  a master
              repurchase agreement on July 14, 2006.  Interest is paid quarterly, beginning on October 18, 2006.
         (2)  First Bank terminated $50.0 million of this term repurchase agreement on April 28, 2006, resulting
              in an $83,000  prepayment  penalty  and  the  recognition  of  a  $310,000  loss  on  the  sale of
              $50.0  million of available-for-sale  investment securities associated with the termination of the
              term repurchase agreement, as further described in Note 3 and Note 5 to the Consolidated Financial
              Statements.  On  August 24, 2006, First  Bank  restructured  the  remaining  $100.0  million  term
              repurchase  agreement to extend the maturity date to  October 12, 2010 and to modify  the  pricing
              structure,  including  the  interest rate floor strike  price,  which  was  effective  immediately
              following the next quarterly  scheduled interest payment date of October 12, 2006.  First Bank did
              not incur any costs in conjunction with the restructure of this term repurchase agreement.
         (3)  The interest rate paid on these term repurchase agreements is  based on the three-month LIBOR plus
              the  spread  amount shown minus  a floating  rate, subject  to  a 0% floor, equal to two times the
              differential between the three-month LIBOR and the strike  price  shown, if the  three-month LIBOR
              falls below the strike price associated with the interest rate floor agreements.
         (4)  The interest rate paid on these term repurchase agreements is  based on the LIBOR reset in arrears
              plus or minus the spread amount shown minus a floating amount  equal to the  differential  between
              the three-month LIBOR reset in arrears and the strike  price shown, if the three-month LIBOR reset
              in arrears falls below the strike price associated with the interest rate floor agreements.
         (5)  First Bank terminated these term repurchase agreements on February 14, 2006, and recognized a $1.6
              million loss on the sale of $100.0  million of available-for-sale investment securities associated
              with the termination of the term repurchase agreements, as further described  in Note 3 and Note 5
              to the Consolidated Financial Statements.
         (6)  First Bank terminated this term repurchase agreement on March 28, 2006, resulting in a  prepayment
              penalty of $223,000, and  the  recognition of  a $746,000  loss  on  the sale  of $50.0 million of
              available-for-sale investment securities associated with the  termination  of  the term repurchase
              agreement, as further described in Note 3 and Note 5 to the Consolidated Financial Statements.

</TABLE>

(11)     NOTES PAYABLE

         On August 10, 2006,  First Banks entered into a First  Amendment to its
Amended and  Restated  Secured  Credit  Agreement  with a group of  unaffiliated
financial institutions (Amended Credit Agreement). The Amended Credit Agreement,
in the amount of $96.0  million,  amended  the  previous  Amended  and  Restated
Secured Credit  Agreement  dated August 11, 2005 in the amount of $122.5 million
that provided a $15.0 million senior secured  revolving credit facility,  a $7.5
million  senior secured  standby letter of credit  facility and a $100.0 million
senior  secured  term  loan  facility  (Term  Loan)  (collectively,  the  Credit
Agreements).  The primary changes to the structure of the financing  arrangement
relate to a reduction of certain components of the secured credit facilities,  a
reduction in the overall pricing structure of the secured credit facilities, and
the renewal of the revolving credit and letter of credit facilities. The Amended
Credit  Agreement  provides a $10.0  million  senior  secured  revolving  credit
facility  (Revolving  Credit)  that matures on August 9, 2007 and a $1.0 million
senior secured  standby letter of credit  facility (LC Facility) that matures on
August 9, 2007, in addition to the existing Term Loan that matures on August 10,
2008 and had a  balance  of $85.0  million  at the  time of the  amendment.  The
Amended  Credit  Agreement  also provides  First Banks an option to increase the
Revolving Credit, which is limited to two increase requests from August 10, 2006
until its  maturity  date,  by an amount of up to $40.0  million  provided  such
increase will not cause the Revolving  Credit to exceed $50.0 million.  Interest
is payable on the outstanding principal loan balances under the Revolving Credit
at a floating  rate equal to either the lender's  prime rate or, at First Banks'
option,  LIBOR plus a margin  determined  by the  outstanding  loan balances and
First Banks' net income for the preceding  four calendar  quarters.  If the loan
balances  outstanding under the Revolving Credit are accruing at the prime rate,

<PAGE>

interest is payable quarterly in arrears. If the loan balances outstanding under
the  Revolving  Credit are accruing at LIBOR,  interest is payable  based on the
one, two, three or six-month  LIBOR, as selected by First Banks.  First Banks is
also  subject  to a  quarterly  commitment  fee on  the  unused  portion  of the
Revolving Credit. First Banks had not drawn any advances on the Revolving Credit
as of December 31, 2006.  First Banks borrowed $80.0 million on the Term Loan in
August 2005 and borrowed the remaining $20.0 million in November 2005.  Interest
is  payable  on the  outstanding  principal  loan  balance of the Term Loan at a
floating rate equal to LIBOR plus a margin  determined by the  outstanding  loan
balance and First Banks' net income for the preceding  four  calendar  quarters.
The  outstanding  principal  balance of the Term Loan is  payable  in  quarterly
installments of $5.0 million, at a minimum,  with the remainder of the Term Loan
balance to be repaid in full,  including any unpaid interest,  upon its maturity
date. As of December 31, 2006, First Banks had made payments of $35.0 million on
the outstanding  principal  balance of the Term Loan,  reducing the balance from
$100.0  million at December 31, 2005 to $65.0 million at December 31, 2006.  The
interest rate for outstanding borrowings under the Credit Agreements at December
31, 2006 and 2005 was 6.25% and 5.38%, respectively. Letters of credit issued to
unaffiliated  third parties on behalf of First Banks under the Credit Agreements
were $450,000 and $2.9 million at December 31, 2006 and 2005, respectively,  and
had not been drawn on by the counterparties.

         The Amended Credit  Agreement  requires  maintenance of certain minimum
capital  ratios for First Banks and First Bank,  certain  maximum  nonperforming
assets  ratios  for First  Bank and a minimum  return on assets  ratio for First
Banks. In addition, it contains additional covenants,  including a limitation on
the  amount  of  dividends  on First  Banks'  common  stock  that may be paid to
stockholders.  The Amended Credit Agreement is secured by First Banks' ownership
interest in the capital stock of SFC and First Bank.  First Banks and First Bank
were  in  compliance  with  all  restrictions  and  requirements  of the  Credit
Agreements at December 31, 2006 and 2005.

         The  average  balance  and  maximum  month-end  balance  of  borrowings
outstanding under the Credit Agreements during the years ended December 31, 2006
and 2005 were as follows:
<TABLE>
<CAPTION>

                                                                                       2006          2005
                                                                                       ----          ----
                                                                                (dollars expressed in thousands)

<S>                                                                                  <C>             <C>
         Average balance..........................................................   $ 88,843        36,849
         Maximum month-end balance................................................    100,000       100,000
                                                                                     ========      ========
</TABLE>

         The average rates paid on the outstanding  borrowings  during the years
ended  December  31,  2006,  2005  and  2004  were  6.22%,   6.26%  and  13.84%,
respectively. Interest expense recognized on borrowings under the Amended Credit
Agreement  includes  commitment,  arrangement and renewal fees. During 2004, the
average rate paid on the outstanding  borrowings  reflects a marginal  increased
level of  commitment,  arrangement  and renewal  fees on a much  smaller base of
borrowings outstanding during the year, thereby causing the average rate paid to
be significantly higher than in 2006 and 2005.


(12)     SUBORDINATED DEBENTURES

         First  Banks has formed  various  affiliated  Delaware  or  Connecticut
statutory and business trusts  (collectively,  the Trusts) that were created for
the sole purpose of issuing  trust  preferred  securities.  The trust  preferred
securities  were  issued in  private  placements,  with the  exception  of First
Preferred  Capital  Trust  II,  First  Preferred  Capital  Trust  III and  First
Preferred Capital Trust IV, which were issued in underwritten  public offerings.
First Banks owns all of the common securities of the Trusts.  The gross proceeds
of the offerings were used by the Trusts to purchase fixed rate or variable rate
subordinated  debentures from First Banks. The  subordinated  debentures are the
sole asset of the Trusts.



<PAGE>


         A  summary  of the  subordinated  debentures  issued  to the  Trusts in
conjunction with the trust preferred  securities  offerings at December 31, 2006
and 2005 were as follows:
<TABLE>
<CAPTION>
                                                                                                                      Subordinated
                                                                                                          Trust        Debentures
                                                        Maturity             Call            Interest   Preferred   ---------------
     Name of Trust                  Issuance Date         Date               Date            Rate (1)   Securities   2006     2005
     -------------                  -------------         ----               ----            ----       ----------   ----     ----

Variable Rate
-------------
<S>                                        <C>                 <C>        <C>               <C>          <C>        <C>      <C>
First Bank Capital Trust             April 2002      April 22, 2032      April 22, 2007     + 387.5 bp   $25,000    25,774   25,774
First Bank Statutory Trust II      September 2004  September 20, 2034  September 20, 2009   + 205.0 bp    20,000    20,619   20,619
First Bank Statutory Trust III      November 2004   December 15, 2034   December 15, 2009   + 218.0 bp    40,000    41,238   41,238
First Bank Statutory Trust IV        March 2006      March 15, 2036      March 15, 2011     + 142.0 bp    40,000    41,238       --
First Bank Statutory Trust V         April 2006      June 15, 2036       June 15, 2011      + 145.0 bp    20,000    20,619       --
First Bank Statutory Trust VI        June 2006       July 7, 2036        July 7, 2011       + 165.0 bp    25,000    25,774       --
First Bank Statutory Trust VII      December 2006   December 15, 2036   December 15, 2011   + 185.0 bp    50,000    51,547       --

Fixed Rate
----------
First Preferred Capital
   Trust II (2)                     October 2000   September 30, 2030  September 30, 2005       10.24%    57,500        --       --
First Preferred Capital
   Trust III (3)                    November 2001   December 31, 2031   December 31, 2006        9.00%    55,200        --   56,907
First Bank Statutory Trust           March 2003      March 20, 2033      March 20, 2008          8.10%    25,000    25,774   25,774
First Preferred Capital
   Trust IV                          April 2003      June 30, 2033       June 30, 2008           8.15%    46,000    47,423   47,423

----------------------------
(1)  The interest rates paid on the trust preferred securities were based  on either a fixed rate or  a variable rate.  The variable
     rate was based on the  three-month LIBOR plus the  basis point  spread as shown above, with the exception of First Bank Capital
     Trust, which was based on the six-month LIBOR plus the basis point spread shown above.
(2)  On September 30, 2005, First Banks redeemed the cumulative fixed rate trust  preferred  securities at  the liquidation value of
     $25 per preferred security, together with distributions accumulated and unpaid to the redemption date. In conjunction with this
     transaction, First Banks paid in full its outstanding $59.3 million of subordinated debentures that were  issued by First Banks
     to First Preferred Capital Trust II. The funds necessary for the redemption of the subordinated debentures were provided from a
     portion of the proceeds of First Banks' Term Loan.
(3)  On December 31, 2006, First Banks redeemed the cumulative fixed rate trust preferred securities at the liquidation value of $25
     per preferred security, together with distributions accumulated and unpaid to the  redemption date. In  conjunction  with  this
     transaction, First Banks paid in full its outstanding $56.9 million of subordinated debentures that were  issued by First Banks
     to First Preferred Capital Trust III. The net proceeds  associated with these  transactions  were paid  on January 2, 2007. The
     funds necessary for the redemption of the subordinated  debentures were  provided by  internally  generated  funds  and the net
     proceeds from the issuance of additional subordinated debentures to First Bank Statutory VII on December 14, 2006.
</TABLE>

         In  connection  with the  issuance of the trust  preferred  securities,
First Banks made certain  guarantees  and  commitments  that, in the  aggregate,
constitute a full and unconditional  guarantee by First Banks of the obligations
of the Trusts under the trust preferred  securities.  First Banks' distributions
accrued on the  subordinated  debentures  were $22.4 million,  $20.9 million and
$19.0  million  for  the  years  ended   December  31,  2006,   2005  and  2004,
respectively.  The  distributions  payable on all of First  Banks'  subordinated
debentures are included in interest  expense in the  consolidated  statements of
income.  Deferred  issuance  costs  associated  with First  Banks'  subordinated
debentures  are  included  as a  reduction  of  subordinated  debentures  in the
consolidated balance sheets and are amortized on a straight-line basis.

         Subsequent  to December 31, 2006,  First Banks,  through a newly formed
statutory trust affiliate,  issued $25.8 million of subordinated debentures,  as
more fully described in Note 25 to the Consolidated  Financial  Statements.  The
structure of the trust preferred  securities  currently satisfies the regulatory
requirements  for  inclusion,  subject to certain  limitations,  in First Banks'
capital base.



<PAGE>



(13)     INCOME TAXES

         Provision  for income  taxes  attributable  to income  from  continuing
operations for the years ended December 31, 2006, 2005 and 2004 consists of:
<TABLE>
<CAPTION>

                                                                                    2006       2005        2004
                                                                                    ----       ----        ----
                                                                                 (dollars expressed in thousands)
         Current provision for taxes:
<S>                                                                               <C>         <C>         <C>
              Federal........................................................     $41,582     48,306      36,578
              State..........................................................       3,272      5,419       9,507
                                                                                  -------    -------     -------
                                                                                   44,854     53,725      46,085
                                                                                  -------    -------     -------
         Deferred provision for taxes:
              Federal........................................................      10,062        116         236
              State..........................................................         146     (1,332)       (983)
                                                                                  -------    -------     -------
                                                                                   10,208     (1,216)       (747)
                                                                                  -------    -------     -------
                  Total......................................................     $55,062     52,509      45,338
                                                                                  =======    =======     =======

</TABLE>



         The  effective  rates of  federal  income  taxes  for the  years  ended
December  31,  2006,  2005 and 2004 differ from the federal  statutory  rates of
taxation as follows:
<TABLE>
<CAPTION>

                                                                          Years Ended December 31,
                                                        -----------------------------------------------------------
                                                               2006                 2005                2004
                                                        -------------------  ------------------ -------------------
                                                          Amount   Percent     Amount   Percent   Amount   Percent
                                                          ------   -------     ------   -------   ------   -------
                                                                      (dollars expressed in thousands)

         Income before provision for income taxes
           and minority interest in loss of
<S>                                                     <C>                   <C>               <C>
           subsidiary................................   $ 166,169             $148,128          $ 128,246
                                                        =========             ========          =========
         Provision for income taxes calculated
           at federal statutory income tax rates.....   $  58,159    35.0%    $ 51,845   35.0%  $  44,886    35.0%
         Effects of differences in tax reporting:
           Tax-exempt interest income, net of
               tax preference adjustment.............        (908)   (0.5)        (814)  (0.5)       (791)   (0.6)
           State income taxes........................       3,487     2.0        4,773    3.2       5,541     4.3
           Reduction in prior year contingency
               reserve...............................      (4,154)   (2.5)      (2,116)  (1.4)     (2,825)   (2.2)
           Bank owned life insurance, net of
               premium...............................      (1,039)   (0.6)      (1,602)  (1.1)     (1,670)   (1.3)
           Other, net................................        (483)   (0.3)         423    0.3         197     0.2
                                                        ---------    ----     --------   ----   ---------    ----
                 Provision for income taxes..........   $  55,062    33.1%    $ 52,509   35.5%  $  45,338    35.4%
                                                        =========    ====     ========   ====   =========    ====
</TABLE>

         The $4.2 million, $2.1 million and $2.8 million reductions in the prior
year  contingency  reserve,  reflected  in 2006,  2005 and  2004,  respectively,
resulted  from  reversals  of federal and state tax  reserves  no longer  deemed
necessary.



<PAGE>


         The tax effects of temporary  differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2006 and 2005 were as follows:
<TABLE>
<CAPTION>

                                                                                          December 31,
                                                                                          ------------
                                                                                        2006        2005
                                                                                        ----        ----
                                                                                (dollars expressed in thousands)
              Deferred tax assets:
<S>                                                                                  <C>            <C>
                  Net operating loss carryforwards................................   $  26,267      35,513
                  Deferred built-in loss carryforward.............................       3,345       3,824
                  Allowance for loan losses.......................................      60,052      57,137
                  Loans held for sale.............................................         572       5,562
                  Alternative minimum and general business tax credits............       3,510       2,770
                  Interest on nonaccrual loans....................................       2,286       3,582
                  Servicing rights................................................          --      10,081
                  Deferred compensation...........................................       7,732       6,462
                  Net fair value adjustment for available-for-sale
                     investment securities........................................       6,312       8,954
                  Net fair value adjustment for derivative instruments............         755       1,782
                  Partnership investments.........................................       7,079       4,161
                  State taxes.....................................................          --         515
                  Other...........................................................       3,666       6,349
                                                                                     ---------    --------
                      Gross deferred tax assets...................................     121,576     146,692
                                                                                     ---------    --------
                  Valuation allowance.............................................     (21,401)    (17,754)
                                                                                     ---------    --------
                      Deferred tax assets, net of valuation allowance.............     100,175     128,938
                                                                                     ---------    --------
              Deferred tax liabilities:
                  Depreciation on bank premises and equipment.....................       8,445       8,407
                  Servicing rights................................................         919          --
                  Unrealized gains on investment securities.......................          --         144
                  Core deposit intangibles........................................       8,887       6,491
                  Customer list intangibles.......................................       9,307          --
                  Discount on loans...............................................       5,446       4,878
                  Equity investments..............................................       6,103       6,331
                  State taxes.....................................................       2,594          --
                  Other...........................................................       1,125         853
                                                                                     ---------    --------
                      Deferred tax liabilities....................................      42,826      27,104
                                                                                     ---------    --------
                      Net deferred tax assets.....................................   $  57,349     101,834
                                                                                     =========    ========
</TABLE>

         The realization of First Banks' net deferred tax assets is based on the
availability of carrybacks to prior taxable  periods,  the expectation of future
taxable income and the  utilization of tax planning  strategies.  Based on these
factors,  management  believes  it is more likely than not that First Banks will
realize the  recognized net deferred tax assets of $57.5 million at December 31,
2006.

         Changes in the deferred  tax asset  valuation  allowance  for the years
ended December 31, 2006, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>

                                                                                   2006       2005       2004
                                                                                   ----       ----       ----
                                                                                (dollars expressed in thousands)

<S>                                                                              <C>         <C>
         Balance, beginning of year...........................................   $17,754     17,767         --
         Purchase acquisitions................................................        --         --     17,767
         Adjustment to purchase acquisitions completed in prior periods.......     3,647        (13)        --
                                                                                 -------    -------    -------
         Balance, end of year.................................................   $21,401     17,754     17,767
                                                                                 =======    =======    =======
</TABLE>

         Upon  completion of the  acquisition  of CIB Bank, the net deferred tax
assets associated with the acquisition were evaluated to determine whether it is
more likely than not that the net deferred tax assets will be  recognized in the
future.  The  ability  to  utilize  the net  deferred  tax  assets  recorded  in
connection  with the  acquisition is subject to a number of  limitations.  Among
these  limitations is the restriction that any built-in loss (the fair value was
less than the tax basis) that  existed at the date of  acquisition,  if realized
within the first  five  years  subsequent  to the date of  acquisition,  will be
deferred and must be carried forward and subjected to rules similar to the rules
for carrying forward net operating losses. Based upon these factors,  management
determined that a valuation  allowance should be established for CIB Bank in the
amount of $21.4 million.  Subsequent  reductions in the valuation allowance will
be credited to goodwill.

         At  December  31,  2006 and  2005,  the  accumulation  of prior  years'
earnings  representing tax bad debt deductions was approximately  $29.8 million.
If these tax bad debt  reserves  were  charged  for  losses  other than bad debt
losses,  First Banks would be required to recognize taxable income in the amount
of the charge. It is not contemplated that such tax-restricted retained earnings
will be used in a manner that would create federal income tax liabilities.

         At December 31, 2006 and 2005, for federal income taxes purposes, First
Banks had net  operating  loss  carryforwards  relating to  pre-acquisition  tax
losses of acquired  entities of approximately  $75.0 million and $101.5 million,
respectively.  At December 31, 2006,  the net operating loss  carryforwards  for
First Banks expire as follows:
<TABLE>
<CAPTION>

                                                                              (dollars expressed in thousands)
         Year ending December 31:
<S>           <C>                                                                        <C>
              2007..................................................................     $   1,718
              2008..................................................................        11,924
              2009..................................................................         6,114
              2010..................................................................             7
              2011 - 2025...........................................................        55,287
                                                                                         ---------
                  Total.............................................................     $  75,050
                                                                                         =========
</TABLE>

         During 2004, First Banks recognized built-in losses associated with the
acquisition of CIB Bank. A portion of the realized  built-in losses was deferred
for 2004 and is required to be carried  forward  subject to rules similar to the
rules for carrying  forward net operating  losses.  Utilization  of the realized
built-in  losses is allowed  subsequent to the  utilization of any net operating
loss carryforwards associated with the acquisition of CIB Bank. Consequently, at
December  31, 2006,  First Banks had deferred  built-in  loss  carryforwards  of
approximately   $8.0  million.   Utilization  of  the  deferred   built-in  loss
carryforwards is allowed beginning in the year 2020, and such losses will expire
in the year 2024.


(14)     EARNINGS PER COMMON SHARE

         The  following  is a  reconciliation  of basic and  diluted EPS for the
years ended December 31, 2006, 2005 and 2004:
<TABLE>
<CAPTION>

                                                                                                      Per Share
                                                                             Income       Shares        Amount
                                                                             ------       ------        ------
                                                                  (dollars in thousands, except share and per share data)

         Year ended December 31, 2006:
<S>                                                                        <C>             <C>         <C>
           Basic EPS - income available to common stockholders.........    $ 110,908       23,661      $4,687.38
           Effect of dilutive securities:
              Class A convertible preferred stock......................          769          456         (56.66)
                                                                           ---------     --------      ---------
           Diluted EPS - income available to common stockholders.......    $ 111,677       24,117      $4,630.72
                                                                           =========     ========      =========

         Year ended December 31, 2005:
           Basic EPS - income available to common stockholders.........    $  96,120       23,661      $4,062.36
           Effect of dilutive securities:
              Class A convertible preferred stock......................          769          516         (54.90)
                                                                           ---------     --------      ---------
           Diluted EPS - income available to common stockholders.......    $  96,889       24,177      $4,007.46
                                                                           =========     ========      =========

         Year ended December 31, 2004:
           Basic EPS - income available to common stockholders.........    $  82,123       23,661      $3,470.80
           Effect of dilutive securities:
              Class A convertible preferred stock......................          769          565         (49.22)
                                                                           ---------     --------      ---------
           Diluted EPS - income available to common stockholders.......    $  82,892       24,226      $3,421.58
                                                                           =========     ========      =========
</TABLE>
<PAGE>

(15)     CREDIT COMMITMENTS

         First Banks is a party to  commitments  to extend credit and commercial
and  standby  letters of credit in the  normal  course of  business  to meet the
financing needs of its customers. These instruments involve, in varying degrees,
elements  of  credit  risk  and  interest  rate  risk in  excess  of the  amount
recognized in the consolidated balance sheets. The interest rate risk associated
with these credit commitments  relates primarily to the commitments to originate
fixed-rate  loans.  As  more  fully  described  in  Note 5 to  the  Consolidated
Financial  Statements,  the interest rate risk of the  commitments  to originate
fixed-rate   loans  has  been   hedged   with   forward   commitments   to  sell
mortgage-backed securities. The credit risk amounts are equal to the contractual
amounts,  assuming the amounts are fully  advanced and the  collateral  or other
security is of no value.  First Banks uses the same credit  policies in granting
commitments and conditional obligations as it does for on-balance sheet items.

         Commitments  to extend fixed and variable rate credit,  and  commercial
and standby letters of credit at December 31, 2006 and 2005 were as follows:
<TABLE>
<CAPTION>


                                                                                             December 31,
                                                                                   --------------------------------
                                                                                          2006          2005
                                                                                          ----          ----
                                                                                   (dollars expressed in thousands)

<S>                                                                                   <C>             <C>
         Commitments to extend credit.............................................    $ 3,092,804     2,785,028
         Commercial and standby letters of credit.................................        171,097       191,634
                                                                                      -----------    ----------
                                                                                      $ 3,263,901     2,976,662
                                                                                      ===========    ==========
</TABLE>

         Commitments  to extend  credit are  agreements to lend to a customer as
long as there is no  violation of any  condition  established  in the  contract.
Commitments  generally have fixed expiration dates or other termination  clauses
and may require  payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent  future  cash  requirements.   Each  customer's   creditworthiness  is
evaluated on a case-by-case basis. The amount of collateral obtained,  if deemed
necessary upon extension of credit,  is based on management's  credit evaluation
of the counterparty. Collateral held varies but may include accounts receivable,
inventory, property, plant, equipment, income-producing commercial properties or
single family  residential  properties.  In the event of  nonperformance,  First
Banks may obtain and liquidate the collateral to recover  amounts paid under its
guarantees on these financial instruments.

         Commercial and standby  letters of credit are  conditional  commitments
issued to guarantee the performance of a customer to a third party.  The letters
of  credit  are  primarily  issued  to  support  public  and  private  borrowing
arrangements,   including   commercial   paper,   bond   financing  and  similar
transactions.  Most letters of credit extend for less than one year.  The credit
risk  involved  in  issuing  letters of credit is  essentially  the same as that
involved  in  extending  loan  facilities  to  customers.  Upon  issuance of the
commitments, First Banks typically holds marketable securities,  certificates of
deposit, inventory, real property or other assets as collateral supporting those
commitments  for which  collateral is deemed  necessary.  The standby letters of
credit at December 31, 2006 expire, at various dates, within 10 years.


(16)     FAIR VALUE OF FINANCIAL INSTRUMENTS

         The fair value of financial instruments is management's estimate of the
values at which the  instruments  could be  exchanged in a  transaction  between
willing parties.  These estimates are subjective and may vary significantly from
amounts  that would be  realized  in actual  transactions.  In  addition,  other
significant  assets are not  considered  financial  assets  including  servicing
assets, deferred income tax assets, bank premises and equipment and goodwill and
other intangible assets. Furthermore, the income taxes that would be incurred if
First Banks were to realize any of the  unrealized  gains or  unrealized  losses
indicated  between the estimated fair values and  corresponding  carrying values
could have a  significant  effect on the fair value  estimates and have not been
considered in any of the estimates.



<PAGE>


         The  estimated  fair value of First  Banks'  financial  instruments  at
December 31, 2006 and 2005 were as follows:

<TABLE>
<CAPTION>

                                                                     2006                           2005
                                                          --------------------------     --------------------------
                                                            Carrying      Estimated       Carrying       Estimated
                                                              Value      Fair Value         Value       Fair Value
                                                              -----      ----------         -----       ----------
                                                                      (dollars expressed in thousands)
         Financial Assets:
<S>                                                        <C>              <C>             <C>            <C>
           Cash and cash equivalents...................    $  369,557       369,557         286,652        286,652
           Investment securities:
               Trading.................................        81,168        81,168           3,389          3,389
               Available for sale......................     1,359,729     1,359,729       1,311,289      1,311,289
               Held to maturity........................        24,049        23,971          26,105         25,791
           Net loans...................................     7,520,752     7,471,250       6,885,441      6,847,421
           Derivative instruments......................        (1,659)       (1,659)         (6,530)        (6,530)
           Bank-owned life insurance...................       113,778       113,778         111,442        111,442
           Accrued interest receivable.................        55,464        55,464          43,280         43,280
           Interest rate lock commitments..............           (17)          (17)            (49)           (49)
           Forward commitments to sell
               mortgage-backed securities..............            86            86            (538)          (538)
                                                           ==========    ==========      ==========     ==========

         Financial Liabilities:
           Deposits:
               Noninterest-bearing demand..............    $1,281,108     1,281,108       1,299,350      1,299,350
               Interest-bearing demand.................       981,939       981,939         981,837        981,837
               Savings.................................     2,352,575     2,352,575       2,106,470      2,106,470
               Time deposits...........................     3,827,464     3,827,464       3,154,174      3,154,174
           Other borrowings............................       373,899       373,899         539,174        539,174
           Notes payable...............................        65,000        65,000         100,000        100,000
           Accrued interest payable....................        28,176        28,176          21,023         21,023
           Subordinated debentures.....................       297,966       303,302         215,461        219,675
                                                           ==========    ==========      ==========     ==========

         Off-Balance Sheet Financial Instruments.......    $       --            --              --             --
                                                           ==========    ==========      ==========     ==========
</TABLE>

         The following  methods and assumptions were used in estimating the fair
value of financial instruments:

         Cash and cash equivalents and accrued interest receivable: The carrying
values reported in the consolidated balance sheets approximate fair value.

         Investment securities: The fair value of trading and available-for-sale
investment securities is the amount reported in the consolidated balance sheets.
The fair  value of  held-to-maturity  investment  securities  is based on quoted
market prices where available.  If quoted market prices were not available,  the
fair value was based on quoted market prices of comparable instruments.

         Net  loans:  The  fair  value of most  loans  held  for  portfolio  was
estimated  utilizing  discounted cash flow  calculations  that applied  interest
rates  currently  being offered for similar loans to borrowers with similar risk
profiles. The fair value of loans held for sale, which is the amount reported in
the  consolidated  balance  sheets,  is  based on  quoted  market  prices  where
available. If quoted market prices were not available,  the fair value was based
on quoted market prices of comparable  instruments.  The carrying value of loans
is net of the allowance for loan losses and unearned discount.

         Derivative instruments and bank-owned life insurance: The fair value of
derivative instruments,  including cash flow hedges, fair value hedges, interest
rate  floor  and  cap  agreements,  and  interest  rate  lock  commitments,  and
bank-owned life insurance is based on quoted market prices where  available.  If
quoted  market  prices  were not  available,  the fair value was based on quoted
market prices of comparable instruments.

         Forward commitments to sell mortgage-backed  securities: The fair value
of forward  commitments  to sell  mortgage-backed  securities is based on quoted
market  prices.  The fair value of these  commitments  has been reflected in the
consolidated  balance  sheets in the  carrying  value of the loans held for sale
portfolio.

         Deposits: The fair value of deposits generally payable on demand (i.e.,
noninterest-bearing   and  interest-bearing  demand  and  savings  accounts)  is
considered  equal  to their  respective  carrying  amounts  as  reported  in the
consolidated  balance sheets. The fair value of demand deposits does not include
the  benefit  that  results  from  the  low-cost  funding  provided  by  deposit

<PAGE>

liabilities  compared to the cost of  borrowing  funds in the  market.  The fair
value disclosed for time deposits was estimated utilizing a discounted cash flow
calculation  that applied  interest  rates  currently  being  offered on similar
deposits to a schedule of aggregated monthly maturities of time deposits. If the
estimated  fair value is lower than the carrying  value,  the carrying  value is
reported as the fair value of time deposits.

         Other  borrowings,  notes  payable and accrued  interest  payable:  The
carrying values reported in the  consolidated  balance sheets  approximate  fair
value.

         Subordinated  debentures:  The fair  value is  based on  quoted  market
prices.

         Off-Balance Sheet Financial Instruments:  The fair value of commitments
to  extend  credit,  standby  letters  of credit  and  financial  guarantees  is
estimated  using the fees  currently  charged to enter into similar  agreements,
taking into account the remaining terms of the agreements, the likelihood of the
counterparties  drawing on such financial  instruments and the credit worthiness
of the counterparties.  These fees in aggregate are not considered material, and
as such, were not assigned a value for purposes of this disclosure.


(17)     EMPLOYEE BENEFITS

         First Banks' 401(k) plan is a  self-administered  savings and incentive
plan covering  substantially  all employees.  Employer match  contributions  are
determined annually under the plan by First Banks' Board of Directors.  Employee
contributions  were  limited to $15,000 of gross  compensation  for 2006.  Total
employer  contributions under the plan were $3.9 million,  $2.4 million and $2.1
million for the years ended December 31, 2006, 2005 and 2004, respectively.  The
plan assets are held and managed under a trust agreement with First Bank's trust
department.

         First Banks'  nonqualified  deferred  compensation plan, which covers a
select group of employees,  is administered by an independent  third party.  The
plan  is  exempt  from  the  participation,   vesting,   funding  and  fiduciary
requirements   of  the  Employee   Retirement   Income  Security  Act  of  1974.
Participants  may  contribute  from 1% to 25% of their  salary and up to 100% of
their bonuses on a pre-tax basis. Balances outstanding under the plan, which are
reflected in accrued and other  liabilities in the consolidated  balance sheets,
were $8.1 million and $6.2 million at December 31, 2006 and 2005,  respectively.
Plan  expense  recorded  under the plan,  which is  reflected  in  salaries  and
employee  benefits  expense  in  the  consolidated  statements  of  income,  was
$845,000,  $592,000 and $450,000 for the years ended December 31, 2006, 2005 and
2004, respectively.


(18)     STOCKHOLDERS' EQUITY

         First Banks has two classes of preferred stock outstanding. The Class A
preferred  stock is  convertible  into shares of common stock at a rate based on
the ratio of the par value of the preferred stock to the current market value of
the common stock at the date of  conversion,  to be  determined  by  independent
appraisal at the time of  conversion.  Shares of Class A preferred  stock may be
redeemed  by  First  Banks at any  time at  105.0%  of par  value.  The  Class B
preferred stock may not be redeemed or converted. The redemption of any issue of
preferred  stock  requires  the prior  approval of the Board of Governors of the
Federal Reserve System (Federal Reserve). The holders of the Class A and Class B
preferred  stock have full voting  rights.  Dividends on the Class A and Class B
preferred  stock are adjustable  quarterly  based on the highest of the Treasury
Bill  Rate or the Ten  Year  Constant  Maturity  Rate  for the  two-week  period
immediately  preceding the beginning of the quarter. This rate shall not be less
than 6.0% nor more than 12.0% on the Class A preferred  stock, or less than 7.0%
nor more than 15.0% on the Class B preferred  stock.  The annual  dividend rates
for the Class A and Class B  preferred  stock were 6.0% and 7.0%,  respectively,
for the years ended December 31, 2006, 2005 and 2004.

         Other comprehensive income (loss) of $6.8 million,  ($18.1) million and
($31.0)  million,  as presented in the accompanying  Consolidated  Statements of
Changes in Stockholders'  Equity and  Comprehensive  Income, is reflected net of
income tax expense (benefit) of $3.7 million, ($9.7) million and ($16.7) million
at December 31, 2006, 2005 and 2004, respectively.

         In  December  2006,  First Banks  recorded  an  increase in  additional
paid-in  capital  of  $3.8  million  which  related  to the  utilization  of net
operating losses that were acquired with the acquisition of First Banks America,
Inc. (FBA) and its wholly-owned  subsidiary  BankTEXAS N.A., in 1994.  Effective
December  1994,  the FBA Board of  Directors  approved the  implementation  of a

<PAGE>

quasi-reorganization.  In  accordance  with the  provisions  of SFAS No. 109 and
under the requirements for completing the quasi-reorganization, tax benefits for
deductible  temporary  differences  and net operating  loss  carryforwards  that
existed at the date of the  quasi-reorganization and are subsequently recognized
are generally reported as a direct addition to contributed capital.

(19)     TRANSACTIONS WITH RELATED PARTIES

         Outside of normal customer  relationships,  no directors or officers of
First Banks, no shareholders  holding over 5% of First Banks' voting  securities
and no  corporations or firms with which such persons or entities are associated
currently  maintain or have  maintained,  since the  beginning  of the last full
fiscal year, any significant business or personal relationships with First Banks
or its subsidiaries,  other than that which arises by virtue of such position or
ownership  interest in First Banks or its  subsidiaries,  except as described in
the following paragraphs.

         First Services,  L.P., a limited partnership  indirectly owned by First
Banks'  Chairman  and  members of his  immediate  family,  provides  information
technology,  item processing and various related  services to First Banks,  Inc.
and its subsidiaries.  Fees paid under agreements with First Services, L.P. were
$30.6 million,  $29.6 million and $26.6 million for the years ended December 31,
2006,  2005 and 2004,  respectively.  First Services,  L.P.  leases  information
technology  and other  equipment  from First Bank.  During 2006,  2005 and 2004,
First  Services,  L.P.  paid  First Bank $4.2  million,  $4.3  million  and $4.3
million, respectively, in rental fees for the use of that equipment.

         First Brokerage America, L.L.C., a limited liability company indirectly
owned by First Banks'  Chairman and members of his  immediate  family,  received
approximately  $3.0  million,  $2.6 million and $3.3 million for the years ended
December 31, 2006, 2005 and 2004,  respectively,  in gross  commissions  paid by
unaffiliated  third-party companies.  The commissions received were primarily in
connection with the sales of annuities,  securities and other insurance products
to customers of First Bank.

         First Title  Guaranty LLC D/B/A First Banc Insurors  (First  Title),  a
limited  liability  company  owned by First  Banks'  Chairman and members of his
immediate family, received approximately $221,000, $379,000 and $514,000 for the
years ended December 31, 2006, 2005 and 2004,  respectively,  in commissions for
insurance  policies  purchased  by First Banks or  customers  of First Bank from
unaffiliated  third-party  insurers.  The  insurance  premiums  on  which  these
commissions  were  earned  were  competitively  bid,  and First  Banks deems the
commissions  First Title earned from  unaffiliated  third-party  companies to be
comparable to those that would have been earned by an  unaffiliated  third-party
agent.

         On May 31, 2006,  Adrian Baker,  a newly  acquired  subsidiary of First
Bank,  purchased  the personal and  commercial  insurance  book of business from
First Title. First Bank engaged an independent third party to perform a business
valuation  of the personal and  commercial  insurance  book of business of First
Title, which was determined to be approximately  $270,000 and is being amortized
over seven years utilizing the straight-line method.

         During  2006,  First  Bank  contributed  $5.0  million  in  cash to the
Dierberg  Operating  Foundation,  Inc., a charitable  foundation  established by
First  Banks'  Chairman and members of his  immediate  family.  In addition,  on
November 15, 2006, First Banks contributed 26,962 shares of common stock held in
its available-for-sale investment securities portfolio with a fair value of $1.0
million to the Dierberg  Operating  Foundation,  Inc. In  conjunction  with this
transaction,  First  Banks  recorded  charitable  contribution  expense  of $1.0
million,  which  was  partially  offset by a gain on the  contribution  of these
available-for-sale   investment   securities  of  $121,000,   representing   the
difference  between the cost basis and the fair value of the common stock on the
date of the contribution.  In addition,  First Banks recognized a tax benefit of
$522,000  associated with this transaction.  During 2005, First Bank contributed
$2.5  million  in cash  to The  Dierberg  Foundation,  a  charitable  foundation
established by First Banks'  Chairman and members of his immediate  family,  and
$1.5 million in cash to the Dierberg Operating Foundation,  Inc. First Banks did
not make any charitable contributions to these organizations during 2004.

         First Banks  periodically  purchases  various products from Hermannhof,
Inc. and Dierberg Star Lane  Vineyards,  entities  that are  controlled by First
Banks' Chairman and members of his immediate family.  First Banks utilizes these
products primarily for customer and employee events and promotions, and business
development functions.  During the years ended December 31, 2006, 2005 and 2004,
First Banks purchased products aggregating approximately $376,000,  $320,000 and
$189,000, respectively, from these entities.

         First Bank leases certain of its in-store  branch offices and ATM sites
from Dierbergs Markets,  Inc., a grocery store chain headquartered in St. Louis,
Missouri that is owned and operated by the brother of First Banks'  Chairman and
members of his immediate family. Total rent expense incurred by First Bank under
the lease obligation contracts was $385,000, $335,000 and $297,000 for the years
ended December 31, 2006, 2005 and 2004, respectively.
<PAGE>

         In August 2004, First Bank granted to FCA, a corporation owned by First
Banks'  Chairman  and  members  of his  immediate  family,  a written  option to
purchase 735 Membership  Interests of SBLS LLC, a wholly owned limited liability
company of First Bank, at a price of $10,000 per  Membership  Interest,  or $7.4
million in  aggregate.  The option could have been  exercised by FCA at any time
prior to its expiration,  which was extended to June 30, 2005. On June 30, 2005,
FCA exercised this option and paid $7.4 million in cash. Consequently,  SBLS LLC
became 51.0% owned by First Bank and 49.0% owned by FCA as of June 30, 2005.

         In June 2005,  SBLS LLC executed a  Multi-Party  Agreement by and among
SBLS LLC, First Bank, Colson Services Corp.,  fiscal transfer agent for the SBA,
and the SBA,  in addition to a Loan and  Security  Agreement  by and among First
Bank and the SBA  (collectively,  the  Agreement)  that provides a $50.0 million
warehouse line of credit for loan funding purposes.  The Agreement  provided for
an initial  maturity date of June 30, 2008,  which was extended on June 15, 2006
by First Bank to June 30, 2009.  Interest is payable monthly, in arrears, on the
outstanding  loan  balances at a rate equal to First Bank's  prime  lending rate
minus  50  basis  points.  Advances  under  the  Agreement  are  secured  by the
assignment  of the  majority of the assets of SBLS LLC.  The balance of advances
outstanding  under this line of credit was $47.5  million  and $31.4  million at
December 31, 2006 and 2005,  respectively.  Interest  expense recorded under the
Agreement  by SBLS LLC was $3.0  million  and $1.9  million  for the years ended
December 31, 2006 and 2005, respectively.  The balance of the advances under the
Agreement  and the related  interest  expense  recognized  by SBLS LLC are fully
eliminated for purposes of the Consolidated Financial Statements.

         First  Bank  has had in the  past,  and may  have in the  future,  loan
transactions in the ordinary course of business with its directors  and/or their
affiliates.  These loan transactions have been made on the same terms, including
interest rates and  collateral,  as those  prevailing at the time for comparable
transactions with unaffiliated  persons and did not involve more than the normal
risk  of  collectibility  or  present  other  unfavorable  features.   Loans  to
directors,  their  affiliates and executive  officers of First Banks,  Inc. were
approximately  $55.9  million and $37.9  million at December  31, 2006 and 2005,
respectively.  First Bank does not extend  credit to its officers or to officers
of First  Banks,  Inc.,  except  extensions  of credit  secured by  mortgages on
personal  residences,  loans  to  purchase  automobiles,  personal  credit  card
accounts and deposit account overdraft  protection under a plan whereby a credit
limit has been  established  in  accordance  with First Bank's  standard  credit
criteria.

         In August  2005,  First Bank  entered  into a contract  with World Wide
Technology,  Inc.  (WWT),  a wholly owned  subsidiary  of World Wide  Technology
Holding Co.,  Inc.  (WWTHC).  WWTHC is an electronic  procurement  and logistics
company in the  information  technology  industry  headquartered  in St.  Louis,
Missouri.  The  contract  provided  for WWT to  provide  information  technology
services  associated with the initial phase of the upgrade of personal computers
to First  Bank  employees  in an  ongoing  effort  to  further  standardize  the
technological  infrastructure  throughout the First Bank branch banking network.
Mr.  David L.  Steward,  a  director  of First  Banks  and a member of the Audit
Committee  of First  Banks,  serves as the Chairman of the Board of Directors of
WWTHC. Prior to entering into this contract,  the Audit Committee of First Banks
reviewed and approved the utilization of WWT for information technology services
for this phase of the project with fees not to exceed $500,000.  First Bank made
payments of $7,000 and  $471,000  under the  contract for the first phase of the
project for the years ended  December  31, 2006 and 2005,  respectively.  During
2006,  First Bank  evaluated  the second  phase of its  corporate-wide  personal
computer upgrade project and entered into a contract with WWT on August 21, 2006
for  additional  information  technology  services.  Prior to entering into this
contract,  the  Audit  Committee  of  First  Banks  reviewed  and  approved  the
utilization  of WWT for  this  phase of the  project  with  fees  not to  exceed
$500,000. First Bank made payments of $367,000 under the contract for the second
phase of the project for the year ended December 31, 2006.

(20)     BUSINESS SEGMENT RESULTS

         First Banks'  business  segment is First Bank. The reportable  business
segment is consistent with the management  structure of First Banks,  First Bank
and the internal reporting system that monitors performance. First Bank provides
similar products and services in its defined geographic areas through its branch
network.  The products and services  offered include a broad range of commercial
and personal deposit products,  including demand, savings, money market and time
deposit  accounts.  In addition,  First Bank markets combined basic services for
various  customer  groups,   including   packaged  accounts  for  more  affluent
customers,  and sweep accounts,  lock-box deposits and cash management  products
for  commercial  customers.  First Bank also offers both consumer and commercial
loans.  Consumer  lending  includes  residential  real  estate,  home equity and
installment  lending.  Commercial  lending  includes  commercial,  financial and
agricultural loans, real estate  construction and development loans,  commercial

<PAGE>

real estate loans,  asset-based  loans,  trade  financing and insurance  premium
financing.  Other financial  services  include  mortgage  banking,  debit cards,
brokerage  services,  employee  benefit and  commercial  and personal  insurance
services,  internet banking, automated teller machines,  telephone banking, safe
deposit boxes and trust,  private  banking and  institutional  money  management
services.  The  revenues  generated by First Bank and its  subsidiaries  consist
primarily of interest  income,  generated from the loan and investment  security
portfolios,  service  charges and fees generated  from the deposit  products and
services,  and fees generated by our mortgage banking,  insurance services,  and
trust,  private banking and institutional money management services  businesses.
The geographic  areas include eastern  Missouri,  Illinois,  including  Chicago,
southern and northern  California,  and Houston and Dallas,  Texas. The products
and services are offered to customers  primarily within First Banks'  respective
geographic areas.

         The business  segment results are consistent with First Banks' internal
reporting system and, in all material  respects,  with U.S.  generally  accepted
accounting  principles and practices  predominant in the banking industry.  Such
principles and practices are summarized in Note 1 to the Consolidated  Financial
Statements. The business segment results are summarized as follows:
<TABLE>
<CAPTION>

                                                                         Corporate, Other
                                                                         and Intercompany
                                            First Bank                 Reclassifications (1)             Consolidated Totals
                                ---------------------------------  -----------------------------  ----------------------------------
                                    2006        2005       2004      2006      2005      2004         2006        2005        2004
                                    ----        ----       ----      ----      ----      ----         ----        ----        ----
                                                              (dollars expressed in thousands)
Balance sheet information:

<S>                             <C>          <C>        <C>          <C>       <C>        <C>      <C>         <C>         <C>
Investment securities.........  $ 1,439,118  1,324,219  1,803,454    25,828    16,564     9,895    1,464,946   1,340,783   1,813,349
Loans, net of unearned
   discount...................    7,666,481  7,020,771  6,137,968        --        --        --    7,666,481   7,020,771   6,137,968
Goodwill and other
   intangible assets..........      295,382    191,901    182,669        --        --        --      295,382     191,901     182,669
Total assets..................   10,116,246  9,148,931  8,720,331    42,468    21,402    12,510   10,158,714   9,170,333   8,732,841
Deposits......................    8,550,062  7,601,162  7,161,636  (106,976)  (59,331)   (9,666)   8,443,086   7,541,831   7,151,970
Notes payable.................           --         --         --    65,000   100,000    15,000       65,000     100,000      15,000
Subordinated debentures.......           --         --         --   297,966   215,461   273,300      297,966     215,461     273,300
Stockholders' equity..........    1,086,876    931,192    877,473  (286,441) (252,254) (276,580)     800,435     678,938     600,893
                                ===========  =========  =========  ========  ========  ========   ==========   =========   =========

Income statement information:

Interest income...............  $   645,100    493,182    394,196     1,204       758       586      646,304     493,940     394,782
Interest expense..............      233,982    145,608     79,260    27,880    22,651    15,507      261,862     168,259      94,767
                                -----------  ---------  ---------  --------  --------  --------   ----------   ---------   ---------
      Net interest income.....      411,118    347,574    314,936   (26,676)  (21,893)  (14,921)     384,442     325,681     300,015
Provision for loan losses.....       12,000     (4,000)    25,750        --        --        --       12,000      (4,000)     25,750
                                -----------  ---------  ---------  --------  --------  --------   ----------   ---------   ---------
      Net interest income
           after provision
           for loan losses....      399,118    351,574    289,186   (26,676)  (21,893)  (14,921)     372,442     329,681     274,265
Noninterest income............      112,549     96,871     87,790       394      (786)     (591)     112,943      96,085      87,199
Noninterest expense...........      315,663    274,484    229,896     3,553     3,154     3,322      319,216     277,638     233,218
                                -----------  ---------  ---------  --------  --------  --------   ----------   ---------   ---------
      Income before provision
        for income taxes and
        minority interest in
        loss of subsidiary....      196,004    173,961    147,080   (29,835)  (25,833)  (18,834)     166,169     148,128     128,246
Provision for income taxes....       65,752     61,517     54,682   (10,690)   (9,008)   (9,344)      55,062      52,509      45,338
                                -----------  ---------  ---------  --------  --------  --------   ----------   ---------   ---------
      Income before minority
         interest in loss
         of subsidiary........      130,252    112,444     92,398   (19,145)  (16,825)   (9,490)     111,107      95,619      82,908
Minority interest in loss
   of subsidiary..............         (587)    (1,287)        --        --        --        --         (587)     (1,287)         --
                                -----------  ---------  ---------  --------  --------  --------   ----------   ---------   ---------
      Net income..............  $   130,839    113,731     92,398   (19,145)  (16,825)   (9,490)     111,694      96,906      82,908
                                ===========  =========  =========  ========  ========  ========   ==========   =========   =========

------------------------
(1)  Corporate and other includes $14.8 million,  $13.4 million and $9.8 million of interest expense on subordinated debentures,
     after applicable income tax benefit of $8.0 million,  $7.2 million and $5.3 million for the years ended  December 31, 2006,
     2005 and 2004, respectively.
</TABLE>

(21)     REGULATORY CAPITAL

         First  Banks and First Bank are subject to various  regulatory  capital
requirements administered by the federal and state banking agencies.  Failure to
meet minimum capital  requirements can initiate  certain  mandatory and possibly
additional discretionary actions by regulators that, if undertaken, could have a
direct  material  effect on First Banks'  financial  statements.  Under  capital
adequacy  guidelines and the regulatory  framework for prompt corrective action,
First Banks and First Bank must meet specific  capital  guidelines  that involve

<PAGE>

quantitative measures of assets, liabilities and certain off-balance sheet items
as  calculated  under  regulatory  accounting  practices.  Capital  amounts  and
classifications  are also subject to  qualitative  judgments  by the  regulators
about components, risk weightings and other factors.

         Quantitative  measures  established  by  regulation  to ensure  capital
adequacy  require  First  Banks and First Bank to maintain  minimum  amounts and
ratios  of  total  and  Tier  1  capital  (as  defined  in the  regulations)  to
risk-weighted  assets,  and of Tier 1  capital  to  average  assets.  Management
believes, as of December 31, 2006 and 2005, First Banks and First Bank were each
well  capitalized.  As of December 31, 2006, the most recent  notification  from
First Banks' primary  regulator  categorized  First Banks and First Bank as well
capitalized under the regulatory  framework for prompt corrective  action. To be
categorized  as well  capitalized,  First  Banks  and First  Bank must  maintain
minimum total  risk-based,  Tier 1 risk-based and Tier 1 leverage  ratios as set
forth in the following table.

         At December 31, 2006 and 2005,  First Banks' and First Bank's  required
and actual capital ratios were as follows:
<TABLE>
<CAPTION>


                                                             Actual
                                           ------------------------------------------      For         To be Well
                                                   2006                  2005            Capital    Capitalized Under
                                           --------------------  --------------------   Adequacy    Prompt Corrective
                                             Amount     Ratio      Amount     Ratio     Purposes    Action Provisions
                                             ------     -----      ------     -----     --------    -----------------
                                                (dollars expressed in thousands)

Total capital (to risk-weighted assets):
<S>                                        <C>          <C>      <C>          <C>         <C>              <C>
    First Banks.........................   $ 929,688    10.25%   $ 826,893    10.14%      8.0%             10.0%
    First Bank..........................     925,013    10.23      868,393    10.66       8.0              10.0

Tier 1 capital (to risk-weighted assets):
    First Banks.........................     789,967     8.71      724,501     8.88       4.0               6.0
    First Bank..........................     811,530     8.97      766,148     9.41       4.0               6.0

Tier 1 capital (to average assets):
    First Banks.........................     789,967     8.13      724,501     8.13       3.0               5.0
    First Bank..........................     811,530     8.38      766,148     8.61       3.0               5.0
</TABLE>

         In March 2005,  the Federal  Reserve  adopted a final rule,  Risk-Based
Capital  Standards:  Trust  Preferred  Securities and the Definition of Capital,
which allows for the continued limited  inclusion of trust preferred  securities
in Tier 1 capital.  The  Federal  Reserve's  final rule limits  restricted  core
capital  elements  to 25% of the sum of all  core  capital  elements,  including
restricted core capital elements,  net of goodwill less any associated  deferred
tax liability.  Amounts of restricted  core capital  elements in excess of these
limits may  generally  be included in Tier 2 capital.  Specifically,  amounts of
qualifying trust preferred  securities and cumulative  perpetual preferred stock
in  excess  of the 25%  limit may be  included  in Tier 2  capital,  but will be
limited,  together with subordinated  debt and limited-life  preferred stock, to
50% of Tier 1 capital.  In addition,  the final rule  provides  that in the last
five  years  before  the  maturity  of the  underlying  subordinated  note,  the
outstanding  amount  of  the  associated  trust  preferred  securities  is to be
excluded  from  Tier 1  capital  and  included  in Tier 2  capital,  subject  to
one-fifth  amortization  per  year.  The final  rule  provides  for a  five-year
transition   period,   ending  March  31,  2009,  for  the  application  of  the
quantitative  limits.  Until March 31, 2009, the aggregate  amount of qualifying
cumulative  perpetual preferred stock and qualifying trust preferred  securities
that may be  included  in Tier 1  capital  is  limited  to 25% of the sum of the
following  core  capital  elements:   qualifying  common  stockholders'  equity,
qualifying  noncumulative and cumulative  perpetual preferred stock,  qualifying
minority  interest  in the equity  accounts  of  consolidated  subsidiaries  and
qualifying trust preferred  securities.  First Banks has evaluated the impact of
the final rule on the Company's  financial  condition and results of operations,
and determined the implementation of the Federal Reserve's final rules that will
be  effective  in March  2009  would  reduce  First  Banks'  Tier 1 capital  (to
risk-weighted assets) and Tier 1 capital (to average assets) to 7.86% and 7.34%,
respectively,  and would not have an impact on total  capital (to  risk-weighted
assets), as of December 31, 2006.


(22)     DISTRIBUTION OF EARNINGS OF FIRST BANK

         First Bank is restricted by various state and federal regulations as to
the amount of dividends  that are  available  for payment to First  Banks,  Inc.
Under  the most  restrictive  of  these  requirements,  the  future  payment  of
dividends from First Bank is limited to approximately $135.0 million at December
31, 2006, unless prior permission of the regulatory authorities is obtained.



<PAGE>


(23)     PARENT COMPANY ONLY FINANCIAL INFORMATION

         Following  are  condensed  balance  sheets of First  Banks,  Inc. as of
December 31, 2006 and 2005,  and  condensed  statements of income and cash flows
for the years ended December 31, 2006, 2005 and 2004:
<TABLE>
<CAPTION>


                                           CONDENSED BALANCE SHEETS

                                                                                          December 31,
                                                                                     ----------------------
                                                                                        2006         2005
                                                                                        ----         ----
                                                                                (dollars expressed in thousands)
                                                   Assets
                                                   ------

<S>                                                                                  <C>             <C>
         Cash deposited in First Bank............................................    $   16,688      59,036
         Cash deposited in unaffiliated financial institutions...................            26       1,789
                                                                                     ----------   ---------
              Total cash.........................................................        16,714      60,825
         Investment securities...................................................        25,828      16,564
         Investment in subsidiaries..............................................     1,087,356     931,690
         Advances due from subsidiary bank holding company.......................        90,000          --
         Other assets............................................................        17,014       3,425
                                                                                     ----------   ---------
              Total assets.......................................................    $1,236,912   1,012,504
                                                                                     ==========   =========

                                     Liabilities and Stockholders' Equity

         Notes payable...........................................................    $   65,000     100,000
         Subordinated debentures.................................................       297,966     215,461
         Accrued expenses and other liabilities..................................        73,511      18,105
                                                                                     ----------   ---------
              Total liabilities..................................................       436,477     333,566
         Stockholders' equity....................................................       800,435     678,938
                                                                                     ----------   ---------
              Total liabilities and stockholders' equity.........................    $1,236,912   1,012,504
                                                                                     ==========   =========

                                       CONDENSED STATEMENTS OF INCOME


                                                                                  Years Ended December 31,
                                                                             ----------------------------------
                                                                                 2006        2005        2004
                                                                                 ----        ----        ----
                                                                              (dollars expressed in thousands)

         Income:
           Dividends from subsidiaries...................................    $  70,000      94,050      40,000
           Management fees from subsidiaries.............................       35,525      31,975      27,853
           Gain on sale of available-for-sale investment securities......          767          --          --
           Other.........................................................        2,284       1,049         710
                                                                             ---------    --------    --------
              Total income...............................................      108,576     127,074      68,563
                                                                             ---------    --------    --------
         Expense:
           Interest......................................................       28,356      22,860      15,597
           Salaries and employee benefits................................       25,530      23,238      20,699
           Legal, examination and professional fees......................        3,796       3,959       2,943
           Charitable contributions......................................        1,068         100          43
           Other.........................................................        9,660       8,687       8,114
                                                                             ---------    --------    --------
              Total expense..............................................       68,410      58,844      47,396
                                                                             ---------    --------    --------
              Income before benefit for income taxes and equity
                in undistributed earnings of subsidiaries................       40,166      68,230      21,167
         Benefit for income taxes........................................      (10,690)     (9,004)     (9,344)
                                                                             ---------    --------    --------
              Income before equity in undistributed earnings
                of subsidiaries..........................................       50,856      77,234      30,511
         Equity in undistributed earnings of subsidiaries................       60,838      19,672      52,397
                                                                             ---------    --------    --------
              Net income.................................................    $ 111,694      96,906      82,908
                                                                             =========    ========    ========
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                                     CONDENSED STATEMENTS OF CASH FLOWS

                                                                                  Years Ended December 31,
                                                                             ----------------------------------
                                                                                 2006        2005        2004
                                                                                 ----        ----        ----
                                                                               (dollars expressed in thousands)

         Cash flows from operating activities:
<S>                                                                          <C>            <C>         <C>
           Net income....................................................    $ 111,694      96,906      82,908
           Adjustments to reconcile net income to net cash provided by
              operating activities:
                Net income of subsidiaries...............................     (130,838)   (113,722)    (92,397)
                Dividends from subsidiaries..............................       70,000      94,050      40,000
                Other, net...............................................     (100,610)      4,882      (3,262)
                                                                             ---------    --------    --------
                  Net cash (used in) provided by operating activities....      (49,754)     82,116      27,249
                                                                             ---------    --------    --------

         Cash flows from investing activities:
           Increase in investment securities.............................       (6,375)     (5,304)       (915)
           Investment in common securities of affiliated business
              and statutory trusts.......................................       (4,178)         --      (1,857)
           Payments from redemption of investment in common securities
              of affiliated business and statutory trusts................           --       1,778          --
           Acquisitions of subsidiaries..................................      (85,514)    (52,400)    (76,067)
           Capital contributions to subsidiaries.........................           --          --     (15,000)
           Other, net....................................................       (1,682)      1,340         (39)
                                                                             ---------    --------    --------
                  Net cash used in investing activities..................      (97,749)    (54,586)    (93,878)
                                                                             ---------    --------    --------

         Cash flows from financing activities:
           Advances drawn on notes payable...............................           --     100,000      15,000
           Repayments of notes payable...................................      (35,000)    (15,000)    (17,000)
           Proceeds from issuance of subordinated debentures.............      139,178          --      61,857
           Repayments of subordinated debentures.........................           --     (59,278)         --
           Payment of preferred stock dividends..........................         (786)       (786)       (786)
                                                                             ---------    --------    --------
                  Net cash provided by financing activities..............      103,392      24,936      59,071
                                                                             ---------    --------    --------
                  Net (decrease) increase in cash........................      (44,111)     52,466      (7,558)
         Cash, beginning of year.........................................       60,825       8,359      15,917
                                                                             ---------    --------    --------
         Cash, end of year...............................................    $  16,714      60,825       8,359
                                                                             =========    ========    ========

         Noncash investing activities:
           Cash paid for interest........................................    $  28,843      18,690      13,527
                                                                             =========    ========    ========
</TABLE>

(24)     CONTINGENT LIABILITIES

         In October  2000,  First Banks  entered  into two  continuing  guaranty
contracts.  For value  received,  and for the purpose of inducing a pension fund
and its  trustees  and a welfare  fund and its  trustees  (the Funds) to conduct
business with MVP, First Bank's institutional  investment management subsidiary,
First Banks irrevocably and  unconditionally  guaranteed payment of and promised
to pay to each of the Funds any  amounts  up to the sum of $5.0  million  to the
extent  MVP is liable to the  Funds  for a breach of the  Investment  Management
Agreements   (including   the   Investment   Policy   Statement  and  Investment
Guidelines),  by and  between  MVP and the Funds  and/or  any  violation  of the
Employee  Retirement  Income  Security Act by MVP  resulting in liability to the
Funds.  The  guaranties are continuing  guaranties of all  obligations  that may
arise  for  transactions  occurring  prior  to  termination  of  the  Investment
Management  Agreements  and are  coexistent  with  the  term  of the  Investment
Management  Agreements.  The Investment  Management Agreements have no specified
term but may be terminated  at any time upon written  notice by the Trustees or,
at First Banks' option, upon thirty days written notice to the Trustees.  In the
event of termination of the Investment Management  Agreements,  such termination
shall have no effect on the liability of First Banks with respect to obligations
incurred before such  termination.  The obligations of First Banks are joint and
several  with those of MVP.  First Banks does not have any  recourse  provisions
that would  enable it to recover  from third  parties any amounts paid under the
contracts  nor does  First  Banks  hold any  assets  as  collateral  that,  upon
occurrence  of a required  payment  under the  contract,  could be liquidated to
recover all or a portion of the  amount(s)  paid.  At December 31,  2006,  First
Banks had not recorded a liability  for the  obligations  associated  with these
guaranty  contracts as the likelihood  that First Banks will be required to make
payments under the contracts is remote.
<PAGE>

         In August 2004, SBLS LLC acquired  substantially  all of the assets and
assumed  certain  liabilities  of SBLS,  as further  described  in Note 2 to the
Consolidated  Financial  Statements.  The Amended and  Restated  Asset  Purchase
Agreement (Asset Purchase  Agreement)  governing this  transaction  provided for
certain payments to the seller  contingent on future  valuations of specifically
identified  assets,   including  servicing  assets  and  retained  interests  in
securitizations. SBLS LLC was not required to make any payments to the seller as
of September 30, 2006 and September 30, 2005,  the first and second  measurement
dates under the terms of the Asset Purchase Agreement. However, in October 2006,
SBLS LLC made a payment of $375,000,  as settlement  in full of all  obligations
associated with these contingent payments pursuant to a mutual agreement amongst
the parties.  As of December 31, 2005, SBLS LLC had not recorded a liability for
the obligations  associated with these  contingent  payments,  as the likelihood
that SBLS LLC  would be  required  to make  payments  under  the Asset  Purchase
Agreement was not ascertainable at that time.

         In the ordinary  course of business,  First Banks and its  subsidiaries
become involved in legal  proceedings.  Management,  in consultation  with legal
counsel,  believes the ultimate  resolution of these proceedings will not have a
material  adverse effect on the financial  condition or results of operations of
First Banks and/or its subsidiaries.

(25)     SUBSEQUENT EVENTS (UNAUDITED)

         On February 23, 2007,  First Bank  Statutory  Trust VIII (FBST VIII), a
newly  formed  Delaware  statutory  trust,  issued  25,000  variable  rate trust
preferred  securities at $1,000 per security in a private placement,  and issued
774 common  securities to First Banks at $1,000 per  security.  First Banks owns
all of the common  securities of FBST VIII.  The gross  proceeds of the offering
were used by FBST VIII to purchase  $25.8 million of variable rate  subordinated
debentures  from First Banks,  maturing on March 30, 2037.  The maturity date of
the subordinated debentures may be shortened, at the option of First Banks, to a
date not  earlier  than March 30,  2012,  if  certain  conditions  are met.  The
subordinated  debentures are the sole asset of FBST VIII. In connection with the
issuance  of the FBST  VIII  preferred  securities,  First  Banks  made  certain
guarantees  and  commitments  that,  in the  aggregate,  constitute  a full  and
unconditional guarantee by First Banks of the obligations of FBST VIII under the
FBST VIII preferred  securities.  Proceeds from the issuance of the subordinated
debentures  to FBST VIII,  net of offering  expenses,  were $25.8  million.  The
distribution  rate on the FBST VIII  preferred  securities  is equivalent to the
three-month  LIBOR plus 161.0 basis points,  and is payable quarterly in arrears
beginning March 30, 2007.

         On February 28, 2007,  First Banks  completed its  acquisition of Royal
Oaks,  located in Houston,  Texas,  for $38.6 million in cash.  The  acquisition
served  to  expand  First  Banks'  banking  franchise  in  Houston,  Texas.  The
transaction  was funded through  internally  generated funds and the issuance of
the FBST VIII trust preferred securities. At the time of the acquisition,  Royal
Oaks had assets of $206.9 million,  loans, net of unearned  discount,  of $175.5
million,  deposits of $159.1 million and  stockholders'  equity of $9.6 million.
The assets  acquired and  liabilities  assumed were recorded at their  estimated
fair value on the acquisition date. The fair value adjustments represent current
estimates  and are  subject  to  further  adjustment  as the  valuation  data is
finalized.  Preliminary goodwill,  which is not deductible for tax purposes, was
approximately  $29.0 million.  Royal Oaks was merged with and into First Bank at
the time of the acquisition.


<PAGE>
<TABLE>
<CAPTION>

                                                   FIRST BANKS, INC.

                                    QUARTERLY CONDENSED FINANCIAL DATA -- UNAUDITED

---------------------------------------------------------------------------------------------------------------------


                                                                                 2006 Quarter Ended
                                                               ------------------------------------------------------
                                                                March 31       June 30    September 30    December 31
                                                                --------       -------    ------------    -----------
                                                               (dollars expressed in thousands, except per share data)

<S>                                                            <C>             <C>           <C>            <C>
  Interest income............................................  $ 147,234       157,731       168,293        173,046
  Interest expense...........................................     56,368        62,051        69,109         74,334
                                                               ---------      --------      --------       --------
     Net interest income.....................................     90,866        95,680        99,184         98,712
  Provision for loan losses..................................      1,000         5,000         2,000          4,000
                                                               ---------      --------      --------       --------
     Net interest income after provision for loan losses.....     89,866        90,680        97,184         94,712
  Noninterest income.........................................     25,497        25,879        29,994         31,573
  Noninterest expense........................................     74,815        81,051        80,473         82,877
                                                               ---------      --------      --------       --------
     Income before provision for income taxes and minority
       interest in loss of subsidiary........................     40,548        35,508        46,705         43,408
  Provision for income taxes.................................     11,703        13,500        17,249         12,610
                                                               ---------      --------      --------       --------
     Income before minority interest in loss of subsidiary...     28,845        22,008        29,456         30,798
  Minority interest in loss of subsidiary....................       (158)          (78)         (204)          (147)
                                                               ---------      --------      --------       --------
     Net income..............................................  $  29,003        22,086        29,660         30,945
                                                               =========      ========      ========       ========

  Earnings per common share:
     Basic...................................................  $1,217.49        927.86      1,245.28       1,296.75
                                                               =========      ========      ========       ========

     Diluted.................................................  $1,202.46        916.31      1,231.06       1,285.63
                                                               =========      ========      ========       ========


                                                                                 2005 Quarter Ended
                                                               ------------------------------------------------------
                                                                March 31       June 30    September 30    December 31
                                                                --------       -------    ------------    -----------
                                                               (dollars expressed in thousands, except per share data)

  Interest income............................................  $ 112,228       117,188       127,801        136,723
  Interest expense...........................................     34,149        39,367        45,155         49,588
                                                               ---------      --------      --------       --------
     Net interest income.....................................     78,079        77,821        82,646         87,135
  Provision for loan losses..................................         --        (8,000)           --          4,000
                                                               ---------      --------      --------       --------
     Net interest income after provision for loan losses.....     78,079        85,821        82,646         83,135
  Noninterest income.........................................     21,215        26,191        24,948         23,731
  Noninterest expense........................................     63,869        70,161        67,852         75,756
                                                               ---------      --------      --------       --------
     Income before provision for income taxes and minority
       interest in loss of subsidiary........................     35,425        41,851        39,742         31,110
  Provision for income taxes.................................     13,298        15,005        13,265         10,941
                                                               ---------      --------      --------       --------
     Income before minority interest in loss of subsidiary...     22,127        26,846        26,477         20,169
  Minority interest in loss of subsidiary....................         --            --        (1,036)          (251)
                                                               ---------      --------      --------       --------
     Net income..............................................  $  22,127        26,846        27,513         20,420
                                                               =========      ========      ========       ========

  Earnings per common share:
     Basic...................................................  $  926.87      1,129.05      1,154.52         851.91
                                                               =========      ========      ========       ========

     Diluted.................................................  $  915.04      1,110.42      1,139.46         846.12
                                                               =========      ========      ========       ========
</TABLE>




<PAGE>


                                FIRST BANKS, INC.

                              INVESTOR INFORMATION
--------------------------------------------------------------------------------

FIRST BANKS, INC. PREFERRED SECURITIES
--------------------------------------

         The preferred securities of First Preferred Capital Trust IV are traded
on the New York Stock  Exchange with the ticker  symbol  "FBSPrA." The preferred
securities  of First  Preferred  Capital  Trust IV are  represented  by a global
security  that  has  been  deposited  with  and  registered  in the  name of The
Depository  Trust Company,  New York, New York (DTC).  The beneficial  ownership
interests of these preferred  securities are recorded through the DTC book-entry
system. The high and low preferred  securities prices and the dividends declared
for 2006 and 2005 are summarized as follows:
<TABLE>
<CAPTION>


                                  FIRST PREFERRED CAPITAL TRUST IV (ISSUE DATE - APRIL 2003) - FBSPrA

                                                                     2006                  2005
                                                              ------------------   -------------------   Dividend
                                                                High       Low       High       Low      Declared
                                                                ----       ---       ----       ---      --------
<S>                                                            <C>        <C>        <C>       <C>      <C>
         First quarter......................................   $28.00     25.76      27.80     26.00    $ 0.509375
         Second quarter.....................................    27.65     26.38      27.55     25.75      0.509375
         Third quarter......................................    28.05     26.70      27.40     26.28      0.509375
         Fourth quarter.....................................    29.20     26.75      27.61     25.97      0.509375
                                                                                                        ----------
                                                                                                        $ 2.037500
                                                                                                        ==========
</TABLE>
<TABLE>
<CAPTION>



FOR INFORMATION CONCERNING FIRST BANKS, PLEASE CONTACT:
-------------------------------------------------------

<S>                                   <C>                                     <C>
Allen H. Blake                        Terrance M. McCarthy                    Steven F. Schepman
President and                         Senior Executive Vice President         Senior Vice President
   Chief Executive Officer               and Chief Operating Officer             and Chief Financial Officer
600 James S. McDonnell Blvd.          600 James S. McDonnell Blvd.            600 James S. McDonnell Blvd.
Mail Code - M1-199-014                Mail Code - M1-199-071                  Mail Code - M1-199-014
Hazelwood, Missouri 63042             Hazelwood, Missouri 63042               Hazelwood, Missouri 63042
Telephone - (314) 592-5000            Telephone - (314) 592-5000              Telephone - (314) 592-5000
www.firstbanks.com                    www.firstbanks.com                      www.firstbanks.com
------------------                    ------------------                      ------------------



TRANSFER AGENT:
--------------

Computershare Investor Services, LLC
2 North LaSalle Street
Chicago, Illinois 60602
Telephone - (312) 588-4990
www.computershare.com
---------------------
</TABLE>




<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                   FIRST BANKS, INC.


                                   By: /s/ Allen H. Blake
                                       -----------------------------------------
                                           Allen H. Blake
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


                                    By: /s/ Steven F. Schepman
                                        ----------------------------------------
                                            Steven F. Schepman
                                            Senior Vice President and
                                            Chief Financial Officer
                                            (Principal Financial and
                                            Accounting Officer)
<TABLE>
<CAPTION>

Date:    March 28, 2007

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.

         Signatures                                            Title                           Date
-------------------------------------------------------------------------------------------------------------------

<S>                                                          <C>                          <C>
   /s/ James F. Dierberg                                     Director                     March 28, 2007
   -----------------------------------------
       James F. Dierberg

   /s/ Allen H. Blake                                        Director                     March 28, 2007
   -----------------------------------------
       Allen H. Blake

   /s/ Terrance M. McCarthy                                  Director                     March 28, 2007
   -----------------------------------------
       Terrance M. McCarthy

   /s/ Steven F. Schepman                                    Director                     March 28, 2007
   -----------------------------------------
       Steven F. Schepman

   /s/ Gordon A. Gundaker                                    Director                     March 28, 2007
   -----------------------------------------
       Gordon A. Gundaker

   /s/ David L. Steward                                      Director                     March 28, 2007
   -----------------------------------------
       David L. Steward

   /s/ Douglas H. Yaeger                                     Director                     March 28, 2007
   -----------------------------------------
       Douglas H. Yaeger
</TABLE>


<PAGE>


                                     INDEX TO EXHIBITS

     Exhibit
     Number                             Description
     ------                             -----------

      2.1     Stock Purchase  Agreement by and among First Banks,  Inc., The San
              Francisco   Company,   CIB  Marine  Bancshares,   Inc.,   Hillside
              Investors, Ltd., and CIB Bank, dated August 12, 2004 (incorporated
              herein by  reference  to  Exhibit  10.6 to the  Company's  Current
              Report on Form 8-K dated August 12, 2004).

      3.1     Restated  Articles of  Incorporation  of the  Company,  as amended
              (incorporated herein by reference to Exhibit 3(i) to the Company's
              Annual Report on Form 10-K for the year ended December 31, 1993).

      3.2     By-Laws  of the  Company  (incorporated  herein  by  reference  to
              Exhibit  3.2 to  Amendment  No.  2 to the  Company's  Registration
              Statement on Form S-1,  File No.  33-50576,  dated  September  15,
              1992).

      4.1     Agreement as to Expenses and Liabilities between First Banks, Inc.
              and  First  Preferred  Capital  Trust  IV,  dated  April  1,  2003
              (relating to First  Preferred  Capital Trust IV ("First  Preferred
              IV"))  (incorporated  herein by reference to Exhibit  10.20 to the
              Company's Quarterly Report on Form 10-Q for the quarter ended June
              30, 2003).

      4.2     Preferred  Securities  Guarantee  Agreement  by and between  First
              Banks, Inc. and Fifth Third Bank, dated April 1, 2003 (relating to
              First Preferred IV)  (incorporated  herein by reference to Exhibit
              10.21  to the  Company's  Quarterly  Report  on Form  10-Q for the
              quarter ended June 30, 2003).

      4.3     Indenture  between  First  Banks,  Inc.  and Fifth Third Bank,  as
              Trustee,  dated April 1, 2003  (relating  to First  Preferred  IV)
              (incorporated   herein  by  reference  to  Exhibit  10.22  to  the
              Company's Quarterly Report on Form 10-Q for the quarter ended June
              30, 2003).

      4.4     Amended and Restated Trust Agreement  among First Banks,  Inc., as
              Depositor, Fifth Third Bank, as Property Trustee, Wilmington Trust
              Company,  as Delaware Trustee,  and the  Administrative  Trustees,
              dated April 1, 2003 (relating to First Preferred IV) (incorporated
              herein by reference to Exhibit  10.23 to the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended June 30, 2003).

      4.5     Indenture  between First Banks,  Inc., as Issuer,  and  Wilmington
              Trust   Company,   as   Trustee,   dated  as  of  April  10,  2002
              (incorporated herein by reference to Exhibit 4.15 to the Company's
              Quarterly  Report  on Form  10-Q for the  quarter  ended  June 30,
              2002).

      4.6     Guarantee  Agreement  for First Bank  Capital  Trust,  dated as of
              April 10, 2002  (incorporated  herein by reference to Exhibit 4.16
              to the  Company's  Quarterly  Report on Form 10-Q for the  quarter
              ended June 30, 2002).

      4.7     Amended and  Restated  Declaration  of Trust of First Bank Capital
              Trust,  dated  as  of  April  10,  2002  (incorporated  herein  by
              reference to Exhibit  4.17 to the  Company's  Quarterly  Report on
              Form 10-Q for the quarter ended June 30, 2002).

      4.8     Floating Rate Junior  Subordinated  Debt Security  Certificate  of
              First Banks,  Inc., dated April 10, 2002  (incorporated  herein by
              reference to Exhibit  4.18 to the  Company's  Quarterly  Report on
              Form 10-Q for the quarter ended June 30, 2002).

      4.9     Capital Security Certificate of First Bank Capital Trust, dated as
              of April 10, 2002  (incorporated  herein by  reference  to Exhibit
              4.19  to the  Company's  Quarterly  Report  on Form  10-Q  for the
              quarter ended June 30, 2002).

      4.10    Indenture  between  First Banks,  Inc.,  as Issuer,  and U.S. Bank
              National  Association,  as  Trustee,  dated as of March  20,  2003
              (incorporated herein by reference to Exhibit 10.6 to Amendment No.
              4 to the  Company's  Registration  Statement on Form S-2, File No.
              333-102549, dated March 24, 2003).
<PAGE>

      4.11    Amended and Restated  Declaration  of Trust by and among U.S. Bank
              National Association, as Institutional Trustee, First Banks, Inc.,
              as Sponsor,  and Allen H. Blake,  Terrance M. McCarthy and Lisa K.
              Vansickle,   as  Administrators,   dated  as  of  March  20,  2003
              (incorporated herein by reference to Exhibit 10.7 to Amendment No.
              4 to the  Company's  Registration  Statement on Form S-2, File No.
              333-102549, dated March 24, 2003).

      4.12    Guarantee Agreement by and between First Banks, Inc. and U.S. Bank
              National  Association,  dated as of March 20,  2003  (incorporated
              herein by  reference  to Exhibit  10.8 to  Amendment  No. 4 to the
              Company's Registration Statement on Form S-2, File No. 333-102549,
              dated March 24, 2003).

      4.13    Placement  Agreement  by and among First Banks,  Inc.,  First Bank
              Statutory Trust and SunTrust  Capital  Markets,  Inc., dated as of
              March 20, 2003  (incorporated  herein by reference to Exhibit 10.9
              to Amendment No. 4 to the Company's Registration Statement on Form
              S-2, File No. 333-102549, dated March 24, 2003).

      4.14    Junior  Subordinated  Debenture of First Banks,  Inc., dated as of
              March 20, 2003 (incorporated  herein by reference to Exhibit 10.10
              to Amendment No. 4 to the Company's Registration Statement on Form
              S-2, File No. 333-102549, dated March 24, 2003).

      4.15    Capital Securities  Subscription Agreement by and among First Bank
              Statutory Trust, First Banks, Inc. and STI Investment  Management,
              Inc., dated as of March 20, 2003 (incorporated herein by reference
              to Exhibit 10.11 to Amendment No. 4 to the Company's  Registration
              Statement on Form S-2, File No. 333-102549, dated March 24, 2003).

      4.16    Common Securities Subscription Agreement by and between First Bank
              Statutory Trust and First Banks,  Inc., dated as of March 20, 2003
              (incorporated  herein by reference  to Exhibit  10.12 to Amendment
              No. 4 to the  Company's  Registration  Statement on Form S-2, File
              No. 333-102549, dated March 24, 2003).

      4.17    Debenture  Subscription Agreement by and between First Banks, Inc.
              and  First  Bank  Statutory  Trust,  dated  as of March  20,  2003
              (incorporated  herein by reference  to Exhibit  10.13 to Amendment
              No. 4 to the  Company's  Registration  Statement on Form S-2, File
              No. 333-102549, dated March 24, 2003).

      4.18    Indenture  between First Banks,  Inc., as Issuer,  and  Wilmington
              Trust  Company,  as  Trustee,  dated  as  of  September  20,  2004
              (incorporated herein by reference to Exhibit 4.26 to the Company's
              Annual Report on Form 10-K for the year ended December 31, 2004).

      4.19    Amended and Restated  Declaration of Trust by and among Wilmington
              Trust Company, as Delaware Trustee and the Institutional  Trustee,
              First Banks,  Inc.,  as Sponsor,  and Allen H. Blake,  Terrance M.
              McCarthy and Lisa K.  Vansickle,  as  Administrators,  dated as of
              September  20, 2004  (incorporated  herein by reference to Exhibit
              4.27 to the  Company's  Annual  Report  on Form  10-K for the year
              ended December 31, 2004).

      4.20    Guarantee   Agreement  by  and  between  First  Banks,   Inc.  and
              Wilmington   Trust  Company,   dated  as  of  September  20,  2004
              (incorporated herein by reference to Exhibit 4.28 to the Company's
              Annual Report on Form 10-K for the year ended December 31, 2004).

      4.21    Placement  Agreement  by and among First Banks,  Inc.,  First Bank
              Statutory  Trust II and FTN Financial  Capital  Markets and Keefe,
              Bruyette & Woods, as Placement  Agents,  dated as of September 10,
              2004  (incorporated  herein by  reference  to Exhibit  4.29 to the
              Company's  Annual Report on Form 10-K for the year ended  December
              31, 2004).

      4.22    Floating Rate Junior Subordinated Deferrable Interest Debenture of
              First Banks,  Inc.,  dated as of September 20, 2004  (incorporated
              herein by reference to Exhibit 4.30 to the Company's Annual Report
              on Form 10-K for the year ended December 31, 2004).

      4.23    Capital Securities  Subscription Agreement by and among First Bank
              Statutory  Trust II, First Banks,  Inc. and First  Tennessee  Bank
              National Association, dated as of September 20, 2004 (incorporated
              herein by reference to Exhibit 4.31 to the Company's Annual Report
              on Form 10-K for the year ended December 31, 2004).
<PAGE>

      4.24    Capital  Securities  Subscription  Agreement by and between  First
              Bank  Statutory  Trust II, First Banks,  Inc. and  Preferred  Term
              Securities XV, Ltd., dated as of September 20, 2004  (incorporated
              herein by reference to Exhibit 4.32 to the Company's Annual Report
              on Form 10-K for the year ended December 31, 2004).

      4.25    Capital  Securities  Certificate P-1 of First Bank Statutory Trust
              II, dated September 20, 2004 (incorporated  herein by reference to
              Exhibit 4.33 to the  Company's  Annual Report on Form 10-K for the
              year ended December 31, 2004).

      4.26    Capital  Securities  Certificate P-2 of First Bank Statutory Trust
              II, dated September 20, 2004 (incorporated  herein by reference to
              Exhibit 4.34 to the  Company's  Annual Report on Form 10-K for the
              year ended December 31, 2004).

      4.27    Indenture  between First Banks,  Inc., as Issuer,  and  Wilmington
              Trust  Company,  as  Trustee,   dated  as  of  November  23,  2004
              (incorporated herein by reference to Exhibit 4.35 to the Company's
              Annual Report on Form 10-K for the year ended December 31, 2004).

      4.28    Amended and Restated  Declaration of Trust by and among Wilmington
              Trust Company, as Delaware Trustee and the Institutional  Trustee,
              First Banks, Inc., as Sponsor, and Terrance M. McCarthy,  Peter D.
              Wimmer  and  Lisa K.  Vansickle,  as  Administrators,  dated as of
              November  23, 2004  (incorporated  herein by  reference to Exhibit
              4.36 to the  Company's  Annual  Report  on Form  10-K for the year
              ended December 31, 2004).

      4.29    Guarantee   Agreement  by  and  between  First  Banks,   Inc.  and
              Wilmington   Trust   Company,   dated  as  of  November  23,  2004
              (incorporated herein by reference to Exhibit 4.37 to the Company's
              Annual Report on Form 10-K for the year ended December 31, 2004).

      4.30    Placement  Agreement  by and among First Banks,  Inc.,  First Bank
              Statutory  Trust III and FTN Financial  Capital Markets and Keefe,
              Bruyette & Woods,  as Placement  Agents,  dated as of November 22,
              2004  (incorporated  herein by  reference  to Exhibit  4.38 to the
              Company's  Annual Report on Form 10-K for the year ended  December
              31, 2004).

      4.31    Floating Rate Junior Subordinated Deferrable Interest Debenture of
              First Banks,  Inc.,  dated as of November  23, 2004  (incorporated
              herein by reference to Exhibit 4.39 to the Company's Annual Report
              on Form 10-K for the year ended December 31, 2004).

      4.32    Capital Securities  Subscription Agreement by and among First Bank
              Statutory  Trust III, First Banks,  Inc. and First  Tennessee Bank
              National Association,  dated as of November 23, 2004 (incorporated
              herein by reference to Exhibit 4.40 to the Company's Annual Report
              on Form 10-K for the year ended December 31, 2004).

      4.33    Capital  Securities  Certificate P-1 of First Bank Statutory Trust
              III, dated November 23, 2004 (incorporated  herein by reference to
              Exhibit 4.41 to the  Company's  Annual Report on Form 10-K for the
              year ended December 31, 2004).

      4.34    Indenture  between First Banks,  Inc., as Issuer,  and  Wilmington
              Trust Company, as Trustee, dated as of March 1, 2006 (incorporated
              herein by  reference  to Exhibit  4.1 to the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended March 31, 2006).

      4.35    Amended and Restated  Declaration of Trust by and among Wilmington
              Trust Company, as Delaware Trustee and the Institutional  Trustee,
              First Banks, Inc., as Sponsor, and Allen H. Blake, Peter D. Wimmer
              and Lisa K.  Vansickle,  as  Administrators,  dated as of March 1,
              2006  (incorporated  herein by  reference  to  Exhibit  4.2 to the
              Company's  Quarterly  Report  on Form 10-Q for the  quarter  ended
              March 31, 2006).

      4.36    Guarantee   Agreement  by  and  between  First  Banks,   Inc.  and
              Wilmington Trust Company,  dated as of March 1, 2006 (incorporated
              herein by  reference  to Exhibit  4.3 to the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended March 31, 2006).

      4.37    Placement  Agreement  by and among First Banks,  Inc.,  First Bank
              Statutory  Trust IV and FTN Financial  Capital  Markets and Keefe,
              Bruyette & Woods,  as Placement  Agents,  dated as of February 16,
              2006  (incorporated  herein by  reference  to  Exhibit  4.4 to the
              Company's  Quarterly  Report  on Form 10-Q for the  quarter  ended
              March 31, 2006).
<PAGE>

      4.38    Floating Rate Junior Subordinated Deferrable Interest Debenture of
              First Banks, Inc., dated as of March 1, 2006 (incorporated  herein
              by reference to Exhibit 4.5 to the Company's  Quarterly  Report on
              Form 10-Q for the quarter ended March 31, 2006).

      4.39    Capital Securities  Subscription Agreement by and among First Bank
              Statutory  Trust IV, First Banks,  Inc. and First  Tennessee  Bank
              National  Association,  dated as of March  1,  2006  (incorporated
              herein by  reference  to Exhibit  4.6 to the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended March 31, 2006).

      4.40    Capital Securities  Subscription Agreement by and among First Bank
              Statutory   Trust  IV,  First  Banks,   Inc.  and  Preferred  Term
              Securities  XXI,  Ltd.,  dated as of March 1,  2006  (incorporated
              herein by  reference  to Exhibit  4.7 to the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended March 31, 2006).

      4.41    Capital  Securities  Certificate P-1 of First Bank Statutory Trust
              IV,  dated  March 1, 2006  (incorporated  herein by  reference  to
              Exhibit 4.8 to the Company's Quarterly Report on Form 10-Q for the
              quarter ended March 31, 2006).

      4.42    Capital  Securities  Certificate P-2 of First Bank Statutory Trust
              IV,  dated  March 1, 2006  (incorporated  herein by  reference  to
              Exhibit 4.9 to the Company's Quarterly Report on Form 10-Q for the
              quarter ended March 31, 2006).

      4.43    Indenture  between First Banks,  Inc., as Issuer,  and  Wilmington
              Trust   Company,   as   Trustee,   dated  as  of  April  28,  2006
              (incorporated  herein by reference to Exhibit 4.1 to the Company's
              Quarterly  Report  on Form  10-Q for the  quarter  ended  June 30,
              2006).

      4.44    Amended and Restated  Declaration of Trust of First Bank Statutory
              Trust V by and among Wilmington Trust Company, as Delaware Trustee
              and the Institutional  Trustee, First Banks, Inc., as Sponsor, and
              Allen  H.  Blake,  Peter  D.  Wimmer  and  Lisa K.  Vansickle,  as
              Administrators, dated as of April 28, 2006 (incorporated herein by
              reference to Exhibit 4.2 to the Company's Quarterly Report on Form
              10-Q for the quarter ended June 30, 2006).

      4.45    Guarantee   Agreement  by  and  between  First  Banks,   Inc.  and
              Wilmington Trust Company, dated as of April 28, 2006 (incorporated
              herein by  reference  to Exhibit  4.3 to the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended June 30, 2006).

      4.46    Placement  Agreement  by and among First Banks,  Inc.,  First Bank
              Statutory  Trust V and FTN  Financial  Capital  Markets and Keefe,
              Bruyette & Woods, as Placement Agents,  dated as of April 27, 2006
              (incorporated  herein by reference to Exhibit 4.4 to the Company's
              Quarterly  Report  on Form  10-Q for the  quarter  ended  June 30,
              2006).

      4.47    Floating Rate Junior Subordinated Deferrable Interest Debenture of
              First Banks, Inc., dated as of April 28, 2006 (incorporated herein
              by reference to Exhibit 4.5 to the Company's  Quarterly  Report on
              Form 10-Q for the quarter ended June 30, 2006).

      4.48    Capital Securities  Subscription Agreement by and among First Bank
              Statutory  Trust V, First  Banks,  Inc. and First  Tennessee  Bank
              National  Association,  dated as of April 28,  2006  (incorporated
              herein by  reference  to Exhibit  4.6 to the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended June 30, 2006).

      4.49    Capital  Securities  Certificate P-1 of First Bank Statutory Trust
              V, dated as of April 28, 2006 (incorporated herein by reference to
              Exhibit 4.7 to the Company's Quarterly Report on Form 10-Q for the
              quarter ended June 30, 2006).

      4.50    Indenture  between First Banks,  Inc., as Issuer,  and Wells Fargo
              Bank, National Association,  as Trustee, dated as of June 16, 2006
              (incorporated  herein by reference to Exhibit 4.8 to the Company's
              Quarterly  Report  on Form  10-Q for the  quarter  ended  June 30,
              2006).

      4.51    Amended and Restated  Declaration of Trust of First Bank Statutory
              Trust VI by and among  Wells  Fargo  Delaware  Trust  Company,  as
              Delaware  Trustee,  Wells Fargo  Bank,  National  Association,  as
              Institutional Trustee, First Banks, Inc., as Sponsor, and Allen H.
              Blake and Lisa K. Vansickle,  as Administrators,  dated as of June
              16, 2006  (incorporated  herein by reference to Exhibit 4.9 to the
              Company's Quarterly Report on Form 10-Q for the quarter ended June
              30, 2006).

      4.52    Guarantee  Agreement by and between  First  Banks,  Inc. and Wells
              Fargo  Bank,  National  Association,  dated  as of June  16,  2006
              (incorporated herein by reference to Exhibit 4.10 to the Company's
              Quarterly  Report  on Form  10-Q for the  quarter  ended  June 30,
              2006).

      4.53    Purchase  Agreement  among First Bank Statutory  Trust VI, Issuer,
              First Banks, Inc., Sponsor,  and Bear, Stearns & Co. Inc., Initial
              Purchaser,  dated  as of June 14,  2006  (incorporated  herein  by
              reference to Exhibit  4.11 to the  Company's  Quarterly  Report on
              Form 10-Q for the quarter ended June 30, 2006).

      4.54    Junior  Subordinated Debt Security due 2036 of First Banks,  Inc.,
              dated as of June 16, 2006  (incorporated  herein by  reference  to
              Exhibit 4.12 to the  Company's  Quarterly  Report on Form 10-Q for
              the quarter ended June 30, 2006).

      4.55    Debenture  Subscription Agreement by and between First Banks, Inc.
              and  First  Bank  Statutory  Trust VI,  dated as of June 16,  2006
              (incorporated herein by reference to Exhibit 4.13 to the Company's
              Quarterly  Report  on Form  10-Q for the  quarter  ended  June 30,
              2006).

      4.56    Capital Securities Certificate P-001 of First Bank Statutory Trust
              VI, dated as of June 16, 2006 (incorporated herein by reference to
              Exhibit 4.14 to the  Company's  Quarterly  Report on Form 10-Q for
              the quarter ended June 30, 2006).

      4.57    Indenture  between First Banks,  Inc., as Issuer,  and  Wilmington
              Trust Company,  as Trustee,  dated as of December 14, 2006 - filed
              herewith.

      4.58    Amended and Restated  Declaration of Trust of First Bank Statutory
              Trust VII by and  among  Wilmington  Trust  Company,  as  Delaware
              Trustee and the  Institutional  Trustee,  First  Banks,  Inc.,  as
              Sponsor,  and  Terrance M.  McCarthy,  Peter D. Wimmer and Lisa K.
              Vansickle,  as  Administrators,  dated as of  December  14, 2006 -
              filed herewith.

      4.59    Guarantee   Agreement  by  and  between  First  Banks,   Inc.  and
              Wilmington  Trust  Company,  dated as of December 14, 2006 - filed
              herewith.

      4.60    Placement  Agreement  by and among First Banks,  Inc.,  First Bank
              Statutory  Trust VII and FTN Financial  Capital Markets and Keefe,
              Bruyette & Woods,  as  Placement  Agents,  dated as of December 6,
              2006 - filed herewith.

      4.61    Floating Rate Junior Subordinated Deferrable Interest Debenture of
              First Banks, Inc., dated as of December 14, 2006 - filed herewith.

      4.62    Capital Securities  Subscription Agreement by and among First Bank
              Statutory  Trust VII, First Banks,  Inc. and First  Tennessee Bank
              National  Association,  dated  as of  December  14,  2006 -  filed
              herewith.

      4.63    Capital Securities  Subscription Agreement by and among First Bank
              Statutory  Trust  VII,  First  Banks,   Inc.  and  Preferred  Term
              Securities  XXIV,  Ltd.,  dated as of  December  14,  2006 - filed
              herewith.

      4.64    Capital  Securities  Certificate P-1 of First Bank Statutory Trust
              VII, dated as of December 14, 2006 - filed herewith.

      4.65    Capital  Securities  Certificate P-2 of First Bank Statutory Trust
              VII, dated as of December 14, 2006 - filed herewith.

      10.1    Shareholders' Agreement by and among James F. Dierberg II and Mary
              W. Dierberg,  Trustees under the Living Trust of James F. Dierberg
              II,  dated  July 24,  1989,  Michael  James  Dierberg  and Mary W.
              Dierberg,  Trustees  under  the  Living  Trust  of  Michael  James
              Dierberg,  dated  July 24,  1989;  Ellen C.  Dierberg  and Mary W.
              Dierberg,  Trustees  under the Living  Trust of Ellen C.  Dierberg
              dated July 17, 1992, and First Banks, Inc. (incorporated herein by
              reference to Exhibit 10.3 to the Company's  Registration Statement
              on Form S-1, File No 33-50576, dated August 6, 1992).

      10.2    Comprehensive  Banking System License and Service  Agreement dated
              as of July 24,  1991,  by and  between the Company and FiServ CIR,
              Inc.  (incorporated  herein by  reference  to Exhibit  10.4 to the
              Company's  Registration  Statement on Form S-1, File No. 33-50576,
              dated August 6, 1992).

      10.3    AFS  Customer  Agreement  by and between  First  Banks,  Inc.  and
              Advanced  Financial  Solutions,   Inc.,  dated  January  29,  2004
              (incorporated herein by reference to Exhibit 10.1 to the Company's
              Quarterly  Report on Form  10-Q for the  quarter  ended  March 31,
              2004).

      10.4    Management Services Agreement by and between First Banks, Inc. and
              First  Bank,  dated  February  28,  2004  (incorporated  herein by
              reference to Exhibit  10.2 to the  Company's  Quarterly  Report on
              Form 10-Q for the quarter ended March 31, 2004).

      10.5    Service  Agreement by and between First  Services,  L.P. and First
              Banks, Inc., dated May 1, 2004  (incorporated  herein by reference
              to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for
              the quarter ended June 30, 2004).

      10.6    Service  Agreement by and between First  Services,  L.P. and First
              Bank,  dated May 1, 2004  (incorporated  herein  by  reference  to
              Exhibit 10.4 to the  Company's  Quarterly  Report on Form 10-Q for
              the quarter ended June 30, 2004).

      10.7    Service  Agreement  by and between  First  Banks,  Inc.  and First
              Services,   L.P.,  dated  May  1,  2004  (incorporated  herein  by
              reference to Exhibit  10.5 to the  Company's  Quarterly  Report on
              Form 10-Q for the quarter ended June 30, 2004).

      10.8*   First  Banks,   Inc.   Executive   Incentive   Compensation   Plan
              (incorporated   herein  by  reference  to  Exhibit  10.10  to  the
              Company's  Annual Report on Form 10-K for the year ended  December
              31, 2004).

      10.9*   First  Banks,  Inc.   Nonqualified   Deferred   Compensation  Plan
              (incorporated   herein  by  reference  to  Exhibit  10.11  to  the
              Company's  Annual Report on Form 10-K for the year ended  December
              31, 2004).

      10.10*  First  Amendment  to  First  Banks,  Inc.   Nonqualified  Deferred
              Compensation  Plan  (incorporated  herein by  reference to Exhibit
              10.12 to the  Company's  Annual  Report  on Form 10-K for the year
              ended December 31, 2004).

      10.11   Amended and Restated Secured Credit Agreement ($100.0 million Term
              Loan Facility,  $15.0 million  Revolving  Credit Facility and $7.5
              million Letter of Credit  Facility),  dated as of August 11, 2005,
              by and among First  Banks,  Inc.  and Wells  Fargo Bank,  National
              Association,  as Agent, JP Morgan Chase Bank,  N.A.,  LaSalle Bank
              National  Association,  The Northern Trust Company,  Union Bank of
              California,  N.A.,  Fifth  Third  Bank  (Chicago)  and  U.S.  Bank
              National Association  (incorporated herein by reference to Exhibit
              10 to the Company's  Quarterly Report on Form 10-Q for the quarter
              ended September 30, 2005).

      10.12   First  Amendment  to  the  Amended  and  Restated  Secured  Credit
              Agreement  ($85.0  million  Term  Loan  Facility,   $10.0  million
              Revolving  Credit  Facility  and $1.0  million  Letter  of  Credit
              Facility),  dated as of August 10, 2006, by and among First Banks,
              Inc.  and Wells Fargo Bank,  National  Association,  as Agent,  JP
              Morgan Chase Bank, N.A.,  LaSalle Bank National  Association,  The
              Northern Trust  Company,  Union Bank of  California,  N.A.,  Fifth
              Third  Bank   (Chicago)  and  U.S.   Bank   National   Association
              (incorporated  herein by reference to Exhibit 10 to the  Company's
              Quarterly  Report on Form 10-Q for the quarter ended September 30,
              2006).

      14.1    Code of Ethics  for  Principal  Executive  Officer  and  Financial
              Professionals  (incorporated  herein by reference to Exhibit 14 to
              the  Company's  Annual  Report  on Form  10-K for the  year  ended
              December 31, 2003).

      21.1    Subsidiaries of the Company - filed herewith.

      31.1    Rule  13a-14(a)  /  15d-14(a)  Certifications  of Chief  Executive
              Officer - filed herewith.

      31.2    Rule  13a-14(a)  /  15d-14(a)  Certifications  of Chief  Financial
              Officer - filed herewith.

      32.1    Section 1350  Certifications  of Chief  Executive  Officer - filed
              herewith.

      32.2    Section 1350  Certifications  of Chief  Financial  Officer - filed
              herewith.

      *       Exhibits designated by an asterisk in the Index to Exhibits relate
              to management contracts and/or compensatory plans or arrangements.